CPR 46.9(3), Informed Consent And The Dangers Of Oral Retainers

MURRAY & ANOR V RICHARD SLADE AND COMPANY LTD | FULL DECISION

MASTER HAWORTH:

33. In my judgment, I am required to determine two preliminary issues in this assessment.  Firstly, in the Counsel fee bill, whether Mr Moraes was instructed by the First Claimant or on the Defendant’s own initiative, and, secondly, in the Hodders matter, whether the CFA that [sic] was terminated by the First Claimant’s email to the Defendant of 4 July 2018.  I make my findings having heard the cross-examination at length of two witnesses, the First Claimant and Mr Slade on behalf of the Defendant.  I was made aware prior to the hearing of the First Claimant’s dyslexia and the impact that may have upon him in the way that he gave his oral evidence.  During the course of that evidence, Mrs Preen sat with the First Claimant to assist him.  So far as I could see, Mrs Preen was simply there to assist the First Claimant, largely handing him the documents to which he was referred by the Advocates.  She took no part in formulating his replies or assisting him so far as I could see in any other way.  Looking at matters in the round, the First Claimant gave his evidence forcefully.  He had the clear impression that the “deal” reached by himself and Mr Slade at the meeting in December 2017 was a barter and that he was pleased to have negotiated the Defendant down to a fixed fee of £50,000 including VAT, from the £77,000 where they started.  His recollection was that it was an all-in fee.  By contrast, Mr Slade gave his evidence by his own admission as a litigator of the old school.  I accept that he was trying to help the Court but during the course of his cross-examination, I found his answers to questions long-winded, repetitious and with a view to pre-empting the next question or the point he wished to make.

34. The Counsel’s fee dispute relates to an oral contract.  The agreement reached by the First Claimant and the Defendant at the meeting on 21 December 2017 was not recorded in writing.  “Cook on Costs” Chapter 1, para 1.3 deals with this point as follows:

“Where there is a dispute between a solicitor and his client about the terms of an oral retainer, the word of the client is to be preferred to the word of the solicitor, or, at least, more weight is to be given to it.  The reason is plain.  It is because the client is ignorant and the solicitor, or should be, learned in the law.  If the solicitor does not take the precaution of getting a written retainer, he has only himself to blame for being at variance with his client over it and must take the consequences.  The onus on the solicitor to establish the terms of the retainer in the absence of persuasive evidence, the Court should prefer the client’s version.  It is up to the client to take the appropriate steps to clarify precisely the extent of his retainer (Gray v Buss Merton (a firm) [1999] PN[L]R 882 & 892).”

35. In Gestmin SGPS S.A. v Credit Suisse (UK) Ltd (1) Credit Suisse Securities (Europe) Ltd (2) [2013] EWHC 3560 (Comm), Leggatt J at paragraph 22 said:

“In the light of these considerations the best approach for a Judge to adopt in the trial of a commercial case is, in my view, to place little, if any, reliance at all on witnesses’ recollections of what was said in meetings and conversations and to base factual findings on inferences drawn from the documentary evidence on known or probable facts.  This does not mean that oral testimony serves no useful purpose – though its utility is often disproportionate to its length.  But its value lies largely, as I see it, in the opportunity which cross-examination affords to subject the documentary record to critical scrutiny and to gauge the personality, motivations and working practices of a witness, rather than in testimony of what the witness recalled a particular conversation and event.  Above all, it is important to avoid the fallacy of supposing that, because a witness has confidence in his or her recollection and is honest, evidence based on that recollection provides any reliable guide to the truth.”

36. The evidence of the First Claimant in cross-examination was at variance with his pleaded case in the Points of Dispute. Point 1 of his Points of Dispute makes clear that the agreement reached at the meeting in December 2017 was that all work from 1 December 2017 to the end of the case would be subject to a fixed fee of £50,000 plus VAT including all disbursements.  This was to include the fees for Counsel of the Defendant’s choice for interim hearings and the trial, and was subject to the exception that if the First Claimant wanted a more senior barrister he would have to pay extra.

In cross-examination the First Claimant was at pains to make the point that so far as he was concerned the agreement reached in December 2017 was an all-in fee.  This was based on the history of his dealing with the Defendant, his previous complaints and the need to achieve a bargain.  In reality there is little between the parties in relation to the First Claimant’s pleaded case in the Points of Dispute and Mr Slade’s version of the meeting in December 2017.

37. The nub of the issue appears to be what transpired in relation to the instruction of Mr Moraes in May 2018.  What is clear from the evidence of both First Claimant and Mr Slade is that the First Claimant was unhappy with the outcome of the pre-trial review, and in particular the performance of his barrister Mr Hunter.  Under cross-examination his evidence was that he told Mr Slade “you had better get this sorted out, you had better get this sorted”.

38. The trial of the Murray claim was imminent and on 10 May 2018 Mr Slade confirmed in cross-examination that he telephoned Counsel’s clerk and instructed a different barrister, Mr Moraes.  The Defendant’s computerised time records show that from 10 May 2018 there were a series of telephone calls between the Defendant firm, Finian Davern and Counsel with regard to the Murray claim.  It was not until 16 May 2018 that Mr Slade emailed the First Claimant to tell him that he had lined up a different barrister and was already working on a hand-over from Mr Hunter, his previous Counsel.

Mr Slade’s evidence is that the following day he telephoned Mr Murray with whom he had not spoken the previous day, explaining to him that Mr Moraes’ services would cost him a further £15,000 plus VAT.

The computerised time records for the Defendant record a telephone call on 17 May 2018 by Mr Slade to the First Claimant of 2 units.  In cross-examination

the First Claimant denied having a telephone call with Mr Slade that day.  Further he denies in oral cross-examination and in his witness statement agreeing to pay the additional Counsel’s fee sought by the Defendant.  The First Claimant neither met, spoke or even knew the name of Mr Moraes prior to his instruction.  To my mind alarm bells would have been ringing in the head of an experienced solicitor at that meeting when it was clear that the First Claimant was unhappy with the services of Mr Hunter.

The evidence points to Mr Slade instructing Mr Moraes on 10 May 2018 of his own volition without authority from the client which he did not seek until 17 May 2018, some seven days later, shortly before the trial.

39.

I am satisfied that a telephone call did take place between the First Claimant and Mr Slade on 17 May, but I am not satisfied that the record of that telephone call is the one set out in Mr Slade’s witness statement.  As an experienced litigator I would have expected there to have been an attendance note in relation to this telephone call which was of the utmost importance, varying as it purported to do, the terms of the fixed fee agreement.  In cross-examination Mr Slade stated that he made a note in his day book but that day book was not before the Court and not referred to in his witness statement.  Furthermore,

there was no letter or email to the First Claimant confirming the terms upon which Mr Moreas had been instructed which I would have expected to see, bearing in mind the previous difficulties in the relationship between the First Claimant and Defendant in these and other proceedings.

40. The fee negotiated by Mr Slade with the clerk to Mr Moreas was, in my judgment unusual, in that it was a brief fee of £25,000 plus VAT which included refreshers.  The previous brief fee agreed with Mr Hunter was £10,000 plus £2,000 per day by way of refresher, together with VAT.  The fees set out within the costs budget were £16,000 which included refreshers of £2,000 per day. It would have been obvious to Mr Slade that were the First Claimant to agree to the instruction of Mr Moraes at a substantially increased brief fee, the difference may be irrecoverable in the Murray claim were the First Claimant to obtain a costs order in his favour.  Furthermore, by agreeing a fee of £25,000 plus VAT to include refreshers the First Claimant was liable for this sum even were the matter to settle the following day.

In my judgment Mr Slade was the author of his own misfortune (1) by failing to record his attendance on the First Claimant on 17 May 2018 and  (2) failing to confirm his instructions from the First Claimant to obtain different Counsel at an increased fee of £25,000 plus VAT, together with the consequential effect this would have on the fixed fee agreement.  There is simply no documentary evidence to support Mr Slade’s contention that the First Claimant was made aware of the change of Counsel, his name or the additional fee that was being incurred on his behalf.

41. This is an assessment taking place pursuant to the Solicitors Act 1974.  Consequently, the provisions of Rule 46.9(3) of CPR apply, namely:

“(3)  Subject to paragraph (2) costs are to be assessed on the indemnity basis but are presumed

(a)   to have been reasonably incurred … or implied approval of the client.

(b)  to be reasonable in amount … by the client.

(c)  to be unreasonably incurred if

(i)  they are of an unusual nature or amount; and

(ii)  the solicitor did not tell the client that as a result the costs might not be recovered from the other party.”

42. In cross examination

Mr Slade accepted that he did not advise the First Claimant that as a result of instructing Mr Moraes at an increased brief fee of £25,000 plus VAT, the additional costs over and above those previously agreed may not be recovered from his opponent, were the First Claimant successful in obtaining an order for costs.

43. In McDougal & others v Boote Edgar Esterkin [2001] Costs LR 118, Mr Justice Holland considered sub-paragraphs (b) and (c) of Order 62, Rule 15.2, which has now been largely reproduced in Rule 46.9(3).  The Judge carefully analysed the primary findings of fact made by the Costs Judge and held that for consent to be implied under the Rule sufficiently to displace any indemnity taxation of an item on a subsequent solicitor/client assessment, the approval has to be “informed”.  At paragraph 122 he said:

“To rely on the applicant’s approval, the solicitor must satisfy me that it was secured following a full and fair exposition of the factors relevant to it so that the applicants, lay persons as they are, can be reasonably bound by it.”

44. Whilst this authority was not one which the advocates for both First Claimant and Defendant referred me to, to my mind although the decision pre-dates the Civil Procedure Rules, it remains good law. I am fortified in that conclusion by Dr Friston who, at paragraph 37.11 of Friston on Costs, states “Thus there can be no doubt that Holland J’s analysis has survived the coming into force of the CPR”[.]

On the facts of this case there is no evidence whatsoever, either in the witness statement of Mr Slade or in correspondence passing between the First Claimant and Defendant that any consent by the First Claimant to the instruction of Mr Moraes and the additional costs to be incurred had the informed consent of the First Claimant. Furthermore, the instruction of Mr Moraes at an additional fee of £25,000 plus VAT was an increase of £15,000 over and above the fixed fee agreed with the First Claimant and is in my judgment a disbursement which is both of an unusual nature and amount. Consequently, Mr Slade has not complied with the provisions of Rule 46.9(3) CPR and in that respect the additional Counsel’s fee is irrecoverable from the First Claimant. Consequently, any additional costs incurred in relation to the instruction of Counsel over and above to the fixed fee agreement reached between the First Claimant and Defendant on 21 December 2017 are disallowed.