Solicitor – Remuneration – Solicitors Act 1974 – Contentious business – Appellant acting for respondent in litigation at agreed hourly rate – Appellant continuing to act on subsequent valuation exercise ordered by court – Appellant’s final bill claiming uplift in light of success of proceedings – Uplift disallowed as impermissible uplift on contentious business – Whether work in rela tion to valuation properly characterised as non-contentious – Whether covered by remuneration agreement – Appeal dismissed
In 2001, the respondent retained the appellant firm of solicitors to act for him in a dispute regarding his interest in a company. The terms of the appellant’s remuneration were agreed by a letter that set out various hourly rates. In successful High Court proceedings issued by the appellant on the respondent’s behalf, the latter was awarded a 50% share in the company. He subsequently obtained an order, on a petition under section 459 of the Companies Act 1985, requiring the company to purchase his registered share at a price to be fixed by a valuer. Following a further hearing, a High Court judge made a final order in the section 459 proceedings, appointing an expert valuer and giving directions as to the basis and conduct of the valuation. The appellant continued to act for the respondent with regard to the valuation. No new agreement was made on fees and it continued to bill the respondent for its work at the agreed hourly rates. The respondent’s share in the company was valued at £6.6m.
In its final invoice to the respondent, the appellant charged an additional sum of £50,000, described as a 16% uplift on all bills since 2001 to reflect the successful outcome of the proceedings. The respondent disputed the uplift and applied for a detailed assessment of the appellant’s bills in respect of that issue. The appellant applied to amend its invoice, claiming that it had wrongly referred to all bills, whereas the uplift related only to the final bill, which covered work on the expert valuation. It accepted that no uplift could be charged on earlier, contentious business, by reason of section 60(4) of the Solicitors Act 1974. However, it argued that work on the expert valuation constituted non-contentious business, which was not covered by the remuneration agreement with the respondent. It submitted that: (i) it was entitled to the fee set out in para 3 of the Solicitors’ (Non-Contentious Business) Remuneration Order 1994, which could include an uplift to reflect a value element; and (ii) the £50,000 should properly be described as such in the invoice.
A master refused the amendment on the ground that the description of the uplift contained in the invoice was intentional and not made in error. However, he directed the respondent to pay the disputed £50,000. That decision was reversed by a High Court judge, on an appeal by the respondent. The appellant appealed.
Held: The appeal was dismissed.
(1) Under section 87(1) of the 1974 Act, contentious business included work undertaken in the litigation and other work carried out before proceedings were brought or during their course “for the purposes of” those proceedings. The phrase “for the purposes of” required the proceedings to be contemporaneous with the work in question or at some future date. Work carried out after the completion of proceedings was not undertaken for the purposes of those proceedings but in consequence of them. There was no justification for extending the normal meaning of the word “proceedings” so as to deem those proceedings as continuing after the final order of the court up to the point when the relief granted by the court had been ascertained. The existence of a dispute did not render business contentious unless court or arbitration proceedings were involved. Thus, work in respect of a valuation carried out by an independent expert, even though highly disputed, was not intrinsically contentious. However, in the instant case, where the valuation of the shares had been carried out under a court order and pursuant to directions given by the court, the work could not sensibly be distinguished from the proceedings. Therefore, the work carried out by the appellant with regard to the expert valuation was contentious business, on which no uplift could be charged.
(2) Moreover, when the appellant continued to act for the respondent after the final order of the High Court without seeking his agreement to change the basis of charging or informing him that another basis would apply, the respondent had been entitled to assume that the charging structure would remain the same. It was incumbent on a solicitor that sought to charge a client on a different basis from that previously agreed to make its intention clear to the client, who had to be given an informed opportunity to agree or reject the change.
(3) The court’s inherent jurisdiction to allow a solicitor to withdraw or amend an incorrect bill should be carefully and sparingly exercised. It should not be exercised where a firm deliberately sought to charge an unjustifiable uplift, as the appellant had done in the instant case. The appellant’s final bill contained an impermissible charge, namely an uplift for contentious business. In the absence of any justification for amending the bill, so as to describe the sum claimed as an uplift under the 1994 Order, the master had been bound to disallow the claim for the uplift.
William Stockler, of Stockler Brunton, appeared for the appellant; Timothy Chelmick (instructed by HC Solicitors LLP, of Peterborough) appeared for the respondent.
Sally Dobson, barrister