Fees – Estimate – Appellant solicitor providing estimate for services to respondent client – Costs of work exceeding estimate – Appellant refusing to continue to act on ground of non-payment of fees – High Court upholding decision of costs master that appellant in repudiatory breach of contract – Whether respondent having reasonable justification for withholding payment where bill exceeding estimate – Appeal allowed
The respondent had separated from his wife and had instructed the appellant firm of solicitors to represent him at a final court hearing in respect of an occupation and non–molestation order that had been made against him.
The appellant had estimated that its overall charges and expenses would amount to £3,500 plus VAT and the respondent paid £2,000 on account. However, its first invoice was for £5,472.50, to which the respondent objected. The appellant explained that the estimate had been exceeded because of additional work caused by the fact that the respondent’s wife had left and was renting out the matrimonial home. After carrying out further work, the appellant submitted a second bill for £1,092 and refused to undertake any more until it was paid.
At the hearing to assess the two bills, a question arose as to whether, during the course of litigation, a solicitor could refuse to undertake further work unless the client paid outstanding fees, or an amount on account, especially if the fees exceeded its estimate. The master, sitting as a costs judge, held that that constituted repudiation of the contract, which meant that the appellant was not entitled to any fees once the respondent had accepted that the contract had come to an end.
The High Court upheld that decision, holding that the appellant was not contractually entitled, under its standard terms, to terminate its retainer on the ground of non–payment. Consequently, its refusal to carry out further work rendered it in repudiatory breach of contract: [2011] EWHC 177 (QB); [2011] PLSCS 51. The appellant appealed.
Held: The appeal was allowed.
The vital question was whether the appellant was entitled to, and did, suspend the retainer or whether it wrongly terminated its engagement. Suspension and termination were different concepts. Suspension was provided for by clause 6 of the appellant’s terms of business only, whereas the right to terminate was provided for both in clause 6, if an account was overdue for payment without reasonable justification, and in clause 13 if the solicitor had reasonable grounds to stop acting and gave the client reasonable prior notice of that decision.
The judge had been wrong to conclude that clause 6 had to be read subject to clause 13 to render the terms as a harmonious whole. The grounds for termination might overlap in that the unjustified failure to pay a bill on presentation might also be a reasonable ground to stop acting but they covered different territory. Clause 6 was fact specific but clause 13 was more general in its application and the client might not appreciate on what grounds the solicitor felt justified in ceasing to act so that the client needed reasonable notice of termination on order to make other arrangements for his representation.
In any event, on the facts of the present case, the respondent had been put on notice of a failure to pay. The fact that the respondent complained promptly could not assist him if his complaint was not a reasonable justification in itself. The complaint that the bill exceeded the estimate could not stand in the face of the fact that the letter enclosing the terms of business, the contents of which the client accepted in writing, made plain that estimates were not intended to be fixed and binding and that other factors might mean that the estimate would be varied from time to time.
The respondent could not reasonably expect his solicitors to wait for payment until they had an order for costs against his wife. The reality was that the respondent was short of money and could not readily pay for his solicitors’ services in coping with a new and unexpected turn of events. The comparatively simple case had become more complicated and, as a result, more expensive. However, an unexpected complication did not justify a refusal to pay a bill which became payable on presentation. The client was obliged by the payment terms set out in the terms of business to pay bills on presentation. He had not done so and that put him in breach.
Therefore the respondent had no reasonable justification for not meeting the bill presented to him and the appellant was entitled to, and did, suspend the operation of the retainer pending receipt of monies on account of past and future costs. Once there was a cogent explanation for the increase it was unreasonable for the respondent to continue to refuse to pay, particularly since if he was dissatisfied with the amounts he could have challenged them. Any other view would compel a solicitor to carry on working for a client even though there might be little realistic prospect of payment.
The respondent’s subsequent termination of the contract absolved the appellant from any further performance of the contract but it did not absolve the respondent from paying the costs properly incurred up to the date of termination. Therefore the costs judge had been wrong not to order the payment of the costs as they were assessed and wrong further to order the appellant to repay the respondent.
Bernard Livesey QC and Joshua Munro (instructed by Cawdery Kaye Fireman & Taylor) appeared for the appellant; Nicholas Bacon and Mark James (instructed by Routh Clarke Solicitors, of Leighton Buzzard) appeared for the respondent.
Eileen O’Grady, barrister
