Contingency fee claimed by surveyors for successful negotiations resulting in a saving of rates by securing a reduction in rateable value — Arrangement held not to offend against the ancient common law of champerty–Fee to be equal to amount of rates saved in one year–Agreement contemplated that agreement would be reached with valuation officer before date for hearing by local valuation court and that there would be a formal decision recording the agreed valuation–The parties did not contemplate matters proceeding to a contested hearing–Negotiations resulted in a substantial reduction of rateable value and saving of rates and a formal decision of the local valuation court was recorded–Defendants refused to pay the agreed fee and tendered a much smaller sum–Among several defences the defendants submitted that the agreement was champertous and unenforceable because it involved the payment of part of the proceeds of successful pursuit in a legal process, ‘trafficking in litigation’–Defences rejected–As regards the allegation of champerty, it failed on two grounds–First, negotiation, agreement and formal recording in a local valuation court did not represent litigation–Secondly, a local valuation court was not a court of law–Attorney-General v BBC–Even if the agreement had contemplated a contest before the local valuation court, it would not have been champertous–Obiter dictum as to proceedings before a ‘rent tribunal’–Case of importance to chartered surveyors’ and certain other professions–Plaintiffs’ claim upheld.
In this action
Jeremy Pickering, trading as City Agents (a firm), sued the defendants, Sogex
Services (UK) Ltd, for a contingency fee based on an agreement to endeavour to
reduce the rateable value of the defendants’ premises. The fee was to be equal
to the amount of the reduction in rates for the period April 1977 to March
1978. If no reduction was secured no fee would be payable. In the event the
plaintiff firm claimed a sum of £22,935.41, including VAT.
Patrick A
Twigg (instructed by Grangewoods) appeared on behalf of the plaintiff firm; A C
L Thornton (instructed by Allen & Overy) represented the defendants.
Giving
judgment KILNER BROWN J said: In this action the plaintiff firm claims a
contingency fee, that is to say the amount of one year’s savings on rates payable
if as a result of the firm’s endeavours there was a reduction in the rateable
value of the defendants’ premises. The case is of importance to the chartered
surveyors’ profession and it may be to other professions as well, apart from
solicitors and barristers, who operate under their own rules. The agreement on
which the claim is based was contained in a letter dated February 17 1978. At
that time the rateable value was £142,472. In November 1979 the rateable value
was reduced to £116,638 and the extra rates which had been paid for the year
ended March 31 1978 and which became recoverable and thereby saved amounted to
£19,943.84. Value added tax on that sum came to £2,991.57. Thus the plaintiff
firm claim the total of £22,935.41.
The letter on
which the agreement was based was sent by Mr David Rogers of the plaintiff firm
to Mr Rudge, the general services manager of the defendant company, and the
relevant parts read as follows:
Further to our
recent meeting I confirm that we would be happy to investigate the level of the
rating assessment on your offices.
In order to
discuss the matter with the valuation officer, it is necessary to submit a
formal proposal to him. As a result of these discussions, we would advise you
whether we consider the assessment to be fair in relation to other property in
the area. If we consider the figure to be incorrect, we are usually able to
agree the matter with the valuation officer, but failing such agreement, the
matter could be heard by the local valuation court and subsequently by the
Lands Tribunal. In our experience, however, it is most unusual for the matter
to go this far.
As I
explained, if we submit a proposal before March 31 1978, the effect of any
reduction in the assessment subsequently obtained, is retrospective to April 1
1977.
Concerning
the professional fees for these services, we would be willing to accept as a
fee, the amount of rates actually saved in the year April 1977 to March 1978.
As I explained, the alternative is for us to charge a fee in accordance with
the recommended scales, which in round terms is a little over 2% of the
rateable value and this is payable whatever the outcome of our investigation. I
would add, that the above suggestion as to fees, would only apply if the matter
does not have to go to court.’
The acceptance
dated March 10 1978 was couched in the following terms:
As confirmed
by our telephone conversation of yesterday we are pleased to request that your
company file an application for reassessment of the rates paid by this company
to the City of Westminster.
As previously
discussed the rating assessment will be conditional as follows:
1. That City Agents agree in writing to take
only the amount of rates reduction as their fee, for the period 1/4/1977 to 1/3
I think that
should be 1978. It is only an interpolation, but I am quoting accurately.
2. That if no reduction is obtained, Sogex will
be under no obligation to pay any fee, charge or service costs whatever.
3. That the application not be pursued further
than the representation to the valuation officer.
Pausing there,
both parties recognised that if a reduction in rateable value could be achieved
it was a continuing benefit and would stand for at least five years and a
proportion of one year’s savings out of at least five was by no means an
excessive proportion of the total amount of the benefit. Furthermore the costs
of a full hearing before a valuation court and on appeal to the Lands Tribunal
might be considerable and therefore there would be a further financial
advantage to the defendants. The arrangement was not only mutually satisfactory
but would seem to be perfectly fair and reasonable. Indeed Mr Rudge, who is no
longer in the employ of the defendants and who gave evidence in support of the
plaintiff’s claim, considered that there was no objection to the claim and that
the defendants were morally, if not legally, bound to accede to it. The
plaintiff was additionally supported by Mr J W Osbourn, a chartered surveyor
and partner in the firm of Garrett, White & Poland, who have not only been
in business since 1898 but bear a high reputation in the City of London. He was
very experienced and by a private arrangement between him and the plaintiff
firm he in fact did the work on the reduction proposals.
Now the common
and accepted practice where an existing rateable value is being challenged is
for the objector or his profes-
provided for by the General Rate Act 1967. Usually, as in the instant case, the
notice of proposal is in general terms merely proposing a reduction in the
assessment on the grounds that the present assessment is excessive and
incorrect. The district valuation officer then, as in this case, serves a notice
of objection. This notice also informs the objector that after the expiration
of 14 days the objector is to be treated as intending to appeal against the
valuation. Thereafter, as the notice sets out, a hearing will be arranged
before a local valuation court unless the matter is previously settled. The
procedure for compromise is set out in section 72 of the General Rate Act 1967.
That is a different method of procedure. However, in the majority of cases the
service of notice is treated by the objector and the district valuation officer
as the formal steps required by the 1967 Act and negotiations continue. If
there is no agreement, the hearing before the local valuation court is an
effective dispute and is contested. But if before the fixed date for hearing
the rateable value is agreed, then the appeal hearing is a mere formality and
the agreed valuation is recorded. According to Mr Osbourn, in his experience
about 95 per cent of objections to proposals are dealt with in this fashion and
the so-called appeal hearing is no more than a formal process of recording an
agreement. This difference between negotiation and agreement to which the
rating officer of the relevant local authority has to give his approval and a
fully contested hearing is well recognised by the chartered surveyors’
profession. The letter of February 17 1978 was in fact suggested by and drafted
by Mr Osbourn himself and is clearly understandable in the light of general
knowledge and practice in this field.
As soon as the
letter of March 10 1978 was received Mr Osbourn began the process of
endeavouring to obtain a reduction in the rateable value and on March 21 sent
the appropriate notice of proposal for alteration of the valuation list. The
district valuation officer sent his notice of objection to the proposal on May
10 1978 and on May 25 a notification of appeal with the information that the
clerk to the local valuation panel had been served with the notice of proposal
and notice of objection. Mr Osbourn was engaged upon the exercise of measuring
up the various offices and rooms and noting unsatisfactory features, such as
cramped conditions and poor lighting. As might be expected, the matter dragged
on, but came actively to life again in October 1979 when the clerk to the panel
gave notice to the various interested parties that a meeting of the local
valuation court had been fixed for November 20 1979. On November 6 Mr Osbourn
and the district valuation officer’s representative made a joint inspection of
the property. The clerk to the valuation panel was informed that the matter was
under discussion and if not resolved would necessitate an adjournment of the
fixed hearing. Over the next 10 days there was discussion and negotiation
culminating with an agreement to reduce the rateable value from £140,000 to
£116,638. The rating officer of the local authority was informed and there
appeared to be no other interested parties other than the defendants
themselves, who willingly and no doubt happily gave their approval. All that
remained therefore was for the local valuation court to be informed, and the
formal decision of the court was recorded and promulgated on November 20 1979
to the effect that the valuation was £116,638. The treasurer to the Westminster
City Council was informed and a repayment of the appropriate extra rates paid
for the previous year was requested. This was either paid or credited to the
defendants. Consequently the plaintiff firm requested payment of this sum plus
the appropriate amount of value added tax as fees due pursuant to the agreement
between Mr Rogers and Mr Rudge. A Mr Ramez Irani, who was the director of
administration on behalf of the defendants, declined to pay the sum requested.
By letter dated January 11 1980 he tendered the sum of £5,365.34 without
indicating the basis on which he calculated this to be the appropriate fee. So
now there is a disputed claim before me for the full amount.
The only other
relevant document is a letter dated November 5 1979 from the plaintiff firm to
the defendants, which reads as follows:
Further to
your company’s instructions of March 10 1978 and our telephone conversation
today, I confirm that our rating consultants have carried out preliminary
rating investigations and will proceed with the appeal to reduce your rating
assessment which is listed for valuation court on November 20 1979.
The first
point taken by the defendants is that as the matter in fact was listed as an
appeal and was adjudicated upon, albeit as a formality, it went to court. It
certainly went further than ‘representation to the valuation officer’.
Therefore it is submitted that in accordance with the terms of the agreement
the contingency fee did not arise and the matter fell to be dealt with upon the
alternative basis of a scale fee. If the contract has to be considered with
reference only to the last sentence of Mr Rogers’ letter, the point 3 of Mr
Rudge’s letter, this would be an arguable proposition. But the first paragraph
of Mr Rogers’ letter makes it quite plain that ‘going to court’ refers to the
situation where there is no agreement and the matter becomes fully contested
requiring the hearing of evidence and adjudication upon a dispute. From the
correspondence alone it seems to me that it was in the contemplation of both
parties that ‘going to court’ did not apply to the formality of recording an
agreement. The question is put beyond doubt by the evidence of Mr Rudge, who
understood perfectly well that this was the case. I reject this submission on
behalf of the defendants.
The next point
taken referred to the letter of November 5 1979. It was argued that this
represented a variation of the original agreement as to remuneration or was a
waiver by the plaintiff firm of an entitlement to a contingency fee. That
variation is said to be a widening of the original instructions as it was now
contemplated that there would be an appeal after the negotiating process. I
cannot accept this submission. In my opinion this letter is no more than
reporting progress and the words ‘proceed with the appeal’ have to be read in context
with the previous correspondence and agreement that an appeal would only follow
if there was no agreement before the day the case was listed. Nor can it
possibly amount to a waiver of the agreed entitlement to a contingency fee.
Much the most
interesting and important part of this case is the submission that the
agreement was champertous and therefore unenforceable. I find it necessary to
refer to only two authorities out of the welter of reported case law on this
subject. In Trendtex Trading Corporation v Credit Suisse [1981] 3
WLR 766 and [1981] 3 All ER 520 Lord Wilberforce indicated quite clearly that
whereas criminal and tortious liability for champerty was abolished by the
Criminal Law Act 1967, it was expressly preserved in the context of the law of
contract. Lord Wilberforce adopted the definition of champerty expressed in Halsbury’s
Laws of England, 4th ed, vol 9, para 400, in the following terms:
Champerty is
a particular kind of maintenance, namely maintenance of an action in
consideration of a promise to give the maintainer a share in the proceeds or
subject matter of the action.
Such an
agreement is contrary to public policy and is illegal and therefore
unenforceable, since, in Lord Wilberforce’s words, ‘it involves trafficking in
litigation’.
It is argued
on behalf of the defendants that the arrangement in the instant case was
unenforceable because it involved the payment of part of the proceeds of
successful pursuit in a legal process. It is said that the doctrine extends to
negotiations which contemplate an order of court and which require an order of
court before an agreement which may have been reached becomes effective.
Counsel for the defendants elaborated the argument by reference not only to the
Trendtex case but also to several other authorities and also contended
that if such an arrangement was by statute prohibited in the case of
solicitors, then by analogy it should extend to other professions, such as
chartered surveyors or chartered accountants. It was further said that the letter
of November 5, if it was not a variation or waiver, nevertheless converted an
original agreement which might be said to stop short of process in court into
one which extended to actual process in court and thereby became champertous
and unenforceable.
As against
these contentions counsel for the plaintiff took two points, either of which,
it is said, would destroy the argument alleging that the agreement was
champertous and therefore illegal. The first is that the actions of the
plaintiff firm could not be described as trafficking in litigation.
Negotiation, agreement and formal recording in a district valuation court is
not litigation. There is no
partes. The fact that a local authority is an interested party or other
neighbouring ratepayers may be objectors is an irrelevant consideration. It is
not litigation; it is a process of administration. I agree, and on this ground
alone the defence argument fails.
The other
point follows naturally from the contention that there was no process of
litigation. It is said that litigation in the sense in which it is used in the
context of champertous arrangements requires that the process involves possible
recourse to a court of law. A district valuation court is not a court of law.
Support for this proposition can be found in several authorities and more
particularly in the case of Attorney-General v BBC [1981] AC 303.
Although that case concerned the jurisdiction to entertain proceedings for contempt
of court, the status of a valuation court was fully and exhaustively examined
by their Lordships in the House of Lords. In that case, although Lord Salmon
was content to treat the issue in the narrow context of the law relating to
contempt of court, the other four Lords of Appeal all agreed that a local
valuation court is, to use Viscount Dilhorne’s words, ‘constituted to resolve
problems which arise in the course of the administration of the government of
this country’ and further ‘It is just part of the process of rating. It has to
act judicially but that does not make it a court of law’.
Lord
Edmund-Davies and Lord Scarman in their speeches adverted to the case of Society
of Medical Officers of Health v Hope [1960] AC 551, which was also
cited to me. In that case Lord Radcliffe described a local valuation court as a
court of limited jurisdiction, and Lord Keith of Avonholm pointed out, as also
did Viscount Dilhorne, that the creation of local valuation courts was in
substitution for what used to be called assessment committees.
I have no
hesitation in saying that these authoritative analyses of what is the nature
and scope of a valuation court apply with equal force to the facts of the
instant case. It means therefore that, even if the agreement contemplated
recourse to the local valuation court, it falls outside the area where
champerty might be said to arise. Furthermore it would seem to follow logically
that arrangements for payment by a party of contingent financial advantage
where cases are actually conducted and argued could not be said to be
champertous. By the same token there could be no objection in law to a
percentage arrangement where chartered surveyors deal with a landlord’s case in
proceedings before a rent tribunal, because that is a tribunal which would seem
to come within the same general description as to status and purpose as is the
case with a local valuation court. In the instant case the plaintiff firm were
content to move over to a scale fee if the matter required active representation
and argument. It may be, for all I know, that the chartered surveyors’
governing body have their own rules which may be merely advisory and not
professionally binding, but this is a matter for the profession and not for me.
All that I need say is that I cannot see any legal objection.
On the facts
of this case and in the light of the law as I understand it to be, I have no
hesitation in concluding that the plaintiff firm have established their claim
to the sum of £22,935.41 and are entitled to judgment therefor.
