QUEEN'S BENCH DIVISION
Strand, London, WC2A 2LL
B e f o r e :
Master WRIGHT and Mr Simon VEYSEY, Assessors
| KRIS MOTOR SPARES LIMITED
|- and -
|FOX WILLIAMS LLP
Mr Nicholas Bacon (instructed by Fox Williams LLP) for the Defendant/Respondent
Hearing dates: 7th, 8th & 15th October, 2009
Crown Copyright ©
Mr Justice Holroyde:
"3.2 FW has agreed to act for the Clients on the basis that it will charge the Clients for all of its own work at a discounted hourly rate in the event that the Clients lose all of the Claims but it will charge its ordinary hourly rate in the event that the Clients win the Claims together with a Success Fee
3.3 If the Clients lose the Claims, FW agrees to charge the Clients its own legal fees calculated at 70% of the hourly rates set out in Cl 5. These will form the Non-Conditional Fees …
3.4 FW will render monthly interim invoices on account of costs to the Clients for sums not more than the amount of the Non-Conditional Fees … together with 'Disbursement only' invoices, and those invoices will be payable within 14 days of receipt …
3.5 If the Clients win the Claims FW will charge its own legal fees at the full hourly rates (100% of the hourly rates) set out in Cl 5 below, hereby referred to as the Ordinary Fees. In addition FW will charge the Clients a Success Fee calculated in accordance with Cl 7 below.
3.6 The difference between the amount of the Non-Conditional Fees and the Ordinary Fees will form the Conditional Fees".
"(2.1) give FW full, proper and timely instructions that allow FW to work properly;
(2.2) not ask FW to work in an improper or unreasonable way;
(2.3) not deliberately or negligently mislead FW;
(2.4) cooperate fully, properly and in a timely manner with FW when asked;
(2.5) pay the Non-Conditional Fees … within 14 days of receipt of a request for payment …".
"FW can end this agreement if the Clients do not meet their responsibilities in Condition 2. FW is then entitled to decide whether the Clients must
(a) pay FW's Non-Conditional Fees, Conditional Fees and disbursements but not the Success Fee, when FW asks for them; or
(b) pay FW's Non-Conditional Fees, Conditional Fees and disbursements, and the Success Fee if the Clients go on to win the claim".
"This is a complex case which depends substantially on the oral evidence of witnesses and experts. There are also difficult questions of law involved".
"(e) No business/company for which Mr Craze is an agent, employee, director or shareholder has ever received any form of payment from Mr Krishnani.
(f) Mr Craze will continue to receive payments for any work he does for Mr Krishnani on the same basis as set out above.
(g) No business/company for which Mr Craze is an agent, employee, director or shareholder is due to receive any form of payment from Mr Krishnani".
"CDK: I knew they were friends.
[leading counsel]: You must have known more than that".
"We hereby give you notice of termination of the CFA dated 29th March 2006, effective immediately. Any further work which we undertake on your and/or the Claimants' behalf, including accepting the settlement offer from BD which lapses at 4pm today (if that is what you decide to do), will be charged at our normal rates and according to our normal terms of business. We will let you have an engagement letter confirming these in full."
"I am afraid that this is only one of many examples where I was wholly unconvinced by [Mr Krishnani's] evidence."
i) Inv 41138 related to counsel's fees;
ii) Inv 41217 did relate to work done on the BD litigation, but only £2,266.36 was outstanding;
iii) Invs 41594 and 41602 related to work done after the termination of the CFA or in relation to the Sibley litigation;
iv) Inv 41581 was mostly for disbursements, with solicitors' work in relation to the BD litigation amounting to little more than £550;
v) Inv 41883 was for a total of £84,688.60 disbursements. The vast majority of the charges were for photocopying and other expenses of document preparation in connection with the BD litigation. The bill did however also include some charges for taxi fares and meals when one of the solicitors was working late on the case. These charges amounted to about £400 in total.
"There are certain elements of the account which I want to discuss with you and hopefully reach agreement"
"if we can agree a reasonable fixed amount that I have to pay and then if you want there is an uplift on the success of the claim".
"I am disappointed with the way this matter was dealt with and costs paid to Barlow Lyde on the disclosure application. You have asked for taxi fares/meals etc which I do not think were part of arrangement. Your cost estimate are not accurate … Under protest I will settle your account and expect the papers to be immediately transferred to [the new solicitors]. I now formally demand that you tax/assess your costs pursuant to Solicitors Act 1974".
"As you will recall, Mr Krishnani has settled the balance of your account under protest and asked that you have your fees assessed. He has not heard from you to confirm your intentions, and therefore I presume that you have elected, as is your right, to decline to accept the invitation and force him to make an application".
"(1) Where before the expiration of one month from the delivery of a solicitor's bill an application is made by the party chargeable with the bill, the High Court shall, without requiring any sum to be paid into court, order that the bill be taxed and that no action be commenced on the bill until the taxation is completed.
(2) Where no such application is made before the expiration of the period mentioned in subsection (1), then, on an application being made by the solicitor or, subject to subsections (3) and (4), by the party chargeable with the bill, the court may on such terms, if any, as it thinks fit (not being terms as to the costs of the taxation), order –
(a) that the bill be taxed; and
(b) that no action be commenced on the bill, and that any action already commenced be stayed, until the taxation is completed.
(3) Where an application under subsection (2) is made by the party chargeable with the bill …
( c) after the bill has been paid, but before the expiration of 12 months from the payment of the bill,
no order shall be made except in special circumstances and, if an order is made, it may contain such terms as regards the costs of the taxation as the court may think fit."
i) Mr Greager's evidence was clear and consistent (para 24 of the judgment).
ii) Miss Roake's evidence was compelling not only in the modest and composed way in which it was given, but also in its consistency and truthfulness (para 26).
iii) Mr Craze was evasive, and unwilling to accept the consequences of the documents relating to payments. As to what was said at the lunch on 4th July 2006, Master Rogers rejected Mr Craze's evidence and accepted that of Mr Greager (para 31).
iv) Mr Krishnani was a very unsatisfactory witness, unwilling to accept the evidence of documents or of other witnesses who contradicted him. Where his evidence was contradicted by FW's witnesses, Master Rogers "unhesitatingly" rejected Mr Krishnani's evidence and preferred that of Mr Greager and Miss Roake (para 32).
i) KMS were in breach of condition 2 of the CFA (para 79);
ii) FW were entitled to terminate the CFA pursuant to condition 8.5, and so were entitled to charge both their non-conditional and their conditional fees (para 80);
iii) FW did in fact terminate the CFA on the grounds of a breach of condition 2: "Half way through the 'crisis meeting' [Mr Krishnani] was accused of effectively concealing the facts from his legal team and he accepted the termination without complaint" (para 83);
iv) There was no necessity for FW to give reasonable notice because the termination of the CFA did not determine the retainer between them and KMS (para 85);
v) There were no special circumstances entitling KMS to a detailed assessment (para 96).
i) It is submitted that Master Rogers should have found that FW were not entitled to terminate the CFA as they did. It is agreed between the parties that if the termination of the CFA was unlawful, KMS are entitled to a detailed assessment.
ii) Even if the termination of the CFA was lawful, it is submitted that Master Rogers ought to have found that a combination of some or all of the following four factors amounted to special circumstances:
a) The fact that there was an express reservation of the right to tax
b) The fact that payment of the outstanding balance of £144,498 was only made under protest about the amount of the bill
c) The fact that Mr Krishnani was under pressure to pay the bill because he needed the release to his new solicitors of the papers relating to the Sibleys assessment
d) The fact that at least some aspects of the bill were disputed, and there was an issue as to whether a particular interim bill (number 41217) had or had not been paid.
i) The Square Mile invoices made it quite clear that Square Mile had invoiced Mr Krishnani direct for the work done by Mr Symes and Mr Craze. He did not accept the evidence of Mr Craze to the effect that all monies were paid to him personally, and that he in turn paid Mr Symes (para 63 of the judgment).
ii) On the totality of the evidence, he took the view that Mr Symes and Mr Craze were working together on the expert's report and were not therefore independent, and that Mr Krishnani knew this (para 64).
iii) The attendance notes of the consultation on the 2nd March indicate that Mr Krishnani was aware of Square Mile and its involvement in the case and had deliberately concealed that fact from FW. He did not accept Mr Krishnani's evidence to the contrary (para 67).
iv) After the termination letter had been handed to him, Mr Krishnani agreed to FW continuing to represent him and accepted he would have to pay their full rates for any further work. It was only some weeks later that the retainer between KMS and FW was terminated (para 70).
v) Contrary to his denial, Mr Krishnani did receive and read FW's letter of 22nd March 2007, and the enclosed fee note and accompanying documents (para 76).
i) The absence of any satisfactory explanation from either witness as to why the invoices and statements of account were in the form they were if the true position was as the witnesses claimed.
ii) The fact that Mr Krishnani had never mentioned the role of Square Mile and Dawn Traders until specifically asked to produce invoices, even though BLG were clearly pressing for full disclosure of anything relating to the payment of Messrs Craze and Symes, and had on the contrary sought – when such questions were first raised by BLG – to avoid any reference at all to the financial arrangements between himself and Mr Craze.
iii) The fact that neither Mr Craze nor Mr Symes had ever mentioned the roles of the two companies either, and that Mr Symes had told a direct lie about the nature and extent of his working relationship with Mr Craze. Mr Craze admitted in cross examination that on the face of the documents, it did look as if the money was going to the companies, though he maintained it had in fact gone to the individuals. As I have already observed, one is bound to wonder why it is, if the involvement of those companies was really believed to be insignificant, that all 3 gentlemen kept quiet about it for so long.
iv) Mr Krishnani's experience and considerable success as a businessman, and the consequent implausibility of any suggestion that he paid no attention to the names on the invoices, and/or did not think it mattered whether or not his expert witness and his "case manager" were directors of the company which invoiced for, and acknowledged receipt of, the fees for their respective services.
v) The fact that Mr Craze was declaring to Companies House that Square Mile was non-trading when the company was issuing the invoices and acknowledging receipt of payment.
i) It is plainly evidence which could with reasonable diligence have been obtained for use before Master Rogers. Even if there was a difficulty about ready access to paid cheques, other sources (such as personal bank account statements) could have provided similar information. I reject the submission that KMS could not have been expected to foresee that there would be any issue about it: given the obvious importance of the overall issue as to the Square Mile invoices, one would have expected KMS to want to put forward all relevant evidence from the outset.
ii) In any event, I do not regard the proposed evidence as being such as would probably have an important influence on the result of the case. It raises more questions than it answers. The figures do not tally with the figures given in the final version of the Craze letter for the sums paid year by year to Mr Craze. It is surprising that 4 different bank accounts were used to make the payments. Moreover, the proposed new material can do nothing to assist KMS on the questions of why the Dawn Traders and Square Mile invoices and statements of account ever came into existence if they do not reflect the reality of the situation, and why Mr Krishnani never mentioned them.
" … it supports the view which I held having heard the totality of the evidence that Mr Symes/Mr Craze were working together on the experts report and were not therefore independent and, crucially, that [Mr Krishnani] knew this."
"Mr Krishnani may have been making out cheques to John Symes or Tony Craze personally, but that does not alter the fact that he was being invoiced by the company (which was, albeit indirectly, receiving payment)".
"… the judgment must enable the appellate court to understand why the judge reached his decision. This does not mean that every factor which weighed with the judge in his appraisal of the evidence has to be identified and explained. But the issues the resolution of which were vital to the judge's conclusion should be identified and the manner in which he resolved them explained. It is not possible to provide a template for this process. It need not involve a lengthy judgment. It does require the judge to identify and record those matters which were critical to his decision. If the critical issue was one of fact, it may be enough to say that one witness was preferred to another because the one manifestly had a clearer recollection of the material facts or the other gave answers which demonstrated that his recollection could not be relied upon."
"… arrived at without sufficient regard being paid to the building blocks of the reasoned judicial process, where the evidence on each issue is marshalled, the weight of the evidence analysed, all tested against the probabilities based on the evidence as a whole, with clear findings of fact and all reasons given."
i) The costs relate to a substantial commercial action, and Mr Krishnani is an experienced, shrewd and successful businessman. In that regard, the nature of the underlying litigation is about as far removed as it could be from that in in re Solicitors.
ii) Mr Krishnani had received, and paid without demur, a series of monthly bills in substantial sums. Each bill had been accompanied by a detailed breakdown of the hours claimed, the fee earners involved, and the nature of the work done and disbursements paid. There had been ample opportunity, as the case had gone on, for specific items to be disputed.
iii) The final bill, which prompted Mr Krishnani's letter, did not all relate to the work under the CFA with which this appeal is concerned. Insofar as it did, the bulk of it was for counsel's fees.
iv) Although objection was made, it was in the vaguest of terms. The only items specified were taxi fares and meals. When the bill is examined, these relate to refreshments and transport home for persons who had worked late on the case in FW's offices. They amounted to a very modest sum in the context of the case as a whole, and were similar to other such items which had been paid without demur at earlier stages. There is to my mind great force in Mr Bacon's submission that a query over some taxi fares does not justify detailed assessment of a total bill of more than £1 million.
v) The issue between the parties in reality relates to the 30% difference between the ordinary fees and the non-conditional fees. It is not an issue as to the details of the fees claimed. The hourly rates were agreed long ago, and there has been little if any challenge to the need for FW to undertake all the work for which they claimed payment.
vi) There has never been any evidence to support an allegation that the fees were excessive.
vii) No right to taxation was claimed until after Mr Krishnani had failed in his attempt to persuade FW to agree favourable terms as to their costs of continuing to act in the Sibley litigation.