England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE QUEEN'S BENCH DIVISION
Mr Justice Mackay
Master O'Hare
07/P8/1251
(2008) EWHC 1831 (QB)

		A2/2008/2033 Royal Courts of Justice Strand, London, WC2A 2LL
		23 February 2010

Lord Justice Dyson:

1. The principal issues that arise on this appeal are whether (i) the appellant solicitors were entitled to terminate their retainer and (ii) whether they were entitled to their profit costs and disbursements up to the date of termination.
2. The appellants were retained by Mr Mills-Owens to advise upon and prosecute a statutory appeal under section 288 of the Town and Country Planning Act 1990 ("the 1990 Act") against a decision to grant planning permission by the Planning Inspector on behalf of the First Secretary of State. They terminated the retainer because Mr Mills-Owens insisted that they and counsel who had been instructed in the case should advance certain points which neither they nor counsel considered to be properly arguable.
3. Following the termination of the retainer, the appellants submitted their final fee account which showed a balance due of £6,605.41. Mr Mills-Owens wanted the fees to be assessed by a Costs Judge. The assessment came before Master O'Hare who on 31 January 2008 held that the appellants should not have terminated their retainer, but should have carried out the instructions of Mr Mills-Owens even though they were of the view that "such instructions were doomed to disaster". In the result, since "they were retained for the entire business", Master O'Hare held that they were not entitled to recover any costs other than for disbursements.
4. The appellants appealed. In a reserved judgment given on 28 July 2008, Mackay J, sitting with Master Simons and Mr Martin Cockx as assessors, dismissed the appeal. In agreement with Master O'Hare, he held that the appellants were not entitled to terminate their retainer. This was an entire contract which could only be terminated for "just cause". Importantly, he said that, if a client wants a claim to be advanced on a particular basis which does not involve impropriety on the part of the solicitor or counsel, it is no answer for the solicitor to say that he believes that the claim, if so advanced, is bound to fail. He cannot refuse to advance the claim for that reason. He cannot terminate the retainer unless to continue would involve impropriety or misleading the court. On the facts of this case, the appellants were not entitled to any profit costs, although, with minor exceptions, they were entitled to their disbursements. Mr Mills-Owens had already made substantial payments on account of profit costs and disbursements. The appellants appeal with the permission of Waller LJ. The Law Society were given permission to intervene in the appeal because in their view the case raises an issue of considerable importance to the solicitors' profession: in what circumstances can a solicitor instructed in litigation lawfully terminate his retainer prior to the conclusion of the case whilst maintaining his right to be paid for the work that he has done? Mr Richard Drabble QC submits on behalf of The Law Society that the statement by Mackay J that, absent any impropriety or misleading of the court, the solicitor is not entitled to terminate his retainer is incorrect. We have been assisted by the submissions of Mr Drabble, assistance which was not available to Mackay J.

The retainer

5. The appellants were instructed in June 2005 to advise on and prosecute an appeal against a Planning Inspector's decision confirming the grant of planning permission in respect of Hangersley House, a property close to the Mr Mills-Owens' property at Westwood, St Aubyns Lane, Hangersley, Ringwood, Hampshire.
6. Section 288(1) of the 1990 Act provides:

"(1) If any person

(b) is aggrieved by any action on the part of the Secretary of State to which this section applies and wishes to question the validity of that action on the grounds—

(i) that the action is not within the powers of this Act, or

(ii) that any of the relevant requirements have not been complied with in relation to that action,

he may make an application to the High Court under this section."

7. Mr Mills-Owen agreed the appellants' terms of business which included:

" 2. Charges and expenses

Basis for charging.

Our charges are based on the time we spend dealing with a case. Time spent will include meetings with you and perhaps others (for example, counsel and experts); attending court; any time spent travelling; considering, preparing and working on papers; correspondence; writing and receiving letters; and making and receiving telephone calls. Charges are assessed in units of 6 minutes (1/10th. of an hour).

…………

Payments on account

It is normal practice to ask clients to pay sums of money from time to time on account of the charges and expenses that are expected in the following weeks or months. Such monies will be placed on client account, and will not be withdrawn from there other than to meet disbursements without our invoicing you. Prompt payment on account helps to avoid delay in the progress of their case. We particularly like to have cover for fees of people we instruct on your behalf, such as counsel and experts. We will offset any such payments against your final bill, but it is important that you understand that your total charges and expenses may be greater than any advance payments.

………..

3. Billing arrangements

In longer running matters, we may send you interim bills for our charges and expenses while the work is in progress. These may be sent at agreed intervals, for example quarterly, or (it often happens) as "milestones" in a case are passed (sic). We will send you a final bill after completion of the work

………..

Termination

You may terminate your instructions to us in writing at any time. However we may keep all your papers and documents while there is money owing to us for our charges and expenses. You are still liable for those until we stop acting. In practice, appropriate arrangements will be made with your new advisers, in continuing litigation matters, particularly where these are legally aided.

In some circumstances, you may consider we ought to stop acting for you, for example, if you cannot give clear or proper instructions on how we are to proceed, or if it is clear that you have lost confidence in how we are carrying out your work.

We may decide to stop acting for you only with good reason, for example, if you do not pay an interim bill or comply with our request for a payment on account. We must give you reasonable notice that we will stop acting for you."

The facts

8. Pursuant to their instructions, the appellants obtained the advice of specialist counsel, Mr James Findlay. In an opinion dated 1 July 2005, Mr Findlay explained that challenges to an Inspector's decision can only be made on points of law and that a difference of view as to the merits, particularly if those merits concern matters of planning judgment, does not give rise to an error of law. At paragraph 6, he said: "The hurdles that face somebody wishing to challenge a decision are thus high. In this case, I consider there is no reasonable prospect of success for any challenge." Having considered a number of points of detail to which it is not necessary to refer, he concluded at paragraph 15:

"Whilst I can fully appreciate Mr Mills-Owens' frustrations, which in part at least appear to be shared by the local planning authority, the Inspector reached a decision that he was entitled to come to and there is no reasonable prospect of challenging it."

9. Despite this advice, the appellants were instructed to issue proceedings. This they did on 5 July. Because of the time limits for lodging grounds of appeal, these were drafted at short notice. Four grounds were included in the claim form:

a) The Inspector failed properly to deal with the issue of exceptional circumstances in his consideration of the applicability of the policy NF-H3 and the cumulative effect and consequences of the two interdependent applications.

(b) The permission granted when read together with the application gives no explanation of precisely what the permission is for.

(c) The appeal process has left the claimant without the ability to make proper representations on appeal and not allowed the appeal to be considered in a proper manner.

(d). There was no proper consideration or screening of the necessity for an environmental impact assessment. This was important given that the area is a National Park."

10. On 16 September, the appellants instructed new counsel, Mr Peter Harrison. On 25 September, he emailed the appellants and said that he considered that there was a "proper argument that the Inspector has misapplied policy NF-H3 and hence made an error of law which would justify quashing the decision". He said that there were arguments the other way and the prospects of success were "still perhaps 50/50 but I do think that the point is worth taking and should be argued."
11. Mr Harrison drafted a skeleton argument which was shown to Mr Mills-Owens on 19 December. It dealt only with ground (a) of the four grounds identified in the claim form. On 20 December, Mr Mills-Owens wrote a long letter to the appellants commenting in detail on the skeleton argument. He said that the skeleton argument made no mention of the development being in the New Forest National Park Area, of the importance of the environmental law in respect of it, or that the planning process had given no consideration to the effects on the environment of the development. He also said that the skeleton argument should include grounds (b), (c) and (d).
12. On 28 December, he wrote again repeating that the matters referred to in his earlier letter must be included in the skeleton argument. His concern was that the skeleton argument did not address his serious concerns about the environmental effects of the development and that the planning authorities had not given due consideration to them. He said that putting the whole emphasis on seeking to prevent an increase in the size of the development to the exclusion of environmental consequences might appear to the court to be petty. The inclusion of the devastation already caused and that would be caused might give the court a true picture of his real concern which he wished the court to address.
13. During the following weeks, correspondence continued between Mr Mills-Owens and the appellants. The appellants stated and maintained their position that grounds (b), (c) and (d) were not arguable errors of law, whereas ground (a) was. Mr Mills-Owens was adamant that all four grounds should be included in the skeleton argument and advanced at the hearing. Mr Harrison was asked to reconsider the matter. He prepared a Note dated 3 January 2006. He stated that he could only operate "within the very tight parameters set by the law". He dealt with grounds (b) to (d) in the following terms:

"8. In ground b) Mr Mills Owens suggests that he had difficulty in determining the precise scope and detail of the planning application and what would actually be allowed by the grant of permission. It is clear that the latest application is one in series and that it is designed to be the last stage in a staged expansion of the buildings on the plot. This point was considered by the Inspector who makes clear in paragraphs 6, 7 and 12 of the Decision Letter that he has judged that he had sufficient material before him to be clear what he was being asked to grant planning permission for and the effects of it. Unfortunately this is precisely the type of judgment that the court will say was for the decision maker and will not itself made a second decision on. This is the case even if the court itself considers that it may have come to a different view.

9. In ground c) it is suggested that the inquiry procedure did not permit Mr Mills Owens to make the most effective representations opposing the appeal. However, in this case the relevant rules and regulations were followed. Mr Mills Owens did put written representations before the Inspector and the High Court will not, in my view, be prepared to rule that the current regulations which govern all written representation appeals are unfair or that decisions taken under them should be quashed.

10. Ground d) raises the issue of whether or not an EIA [Environmental Impact Assessment] should have been required. However, despite the fact the proposals are in a National Park I do not consider that the regulations or the relevant case law would require an EIA in relation to the development for which planning permission was granted in this case."

14. He then considered whether there was any harm in raising these points anyway. He said that his experience was that it was counter-productive to raise points "which are not going to succeed". He gave a number of reasons for this, including that such points distract from the strength of clear points on which there is a strong argument. Judges look less favourably on a case "where they feel that points which are clearly outside the scope which the law allows are being set up alongside points supported by arguments which the law supports." He added that ground (a) was the only argument which "has any proper chance of succeeding and that to put forward the other points would be wrong in law and not helpful to the case overall." He concluded by saying that his skeleton argument should be amended to give some more context for ground (a) by making clear that it was Mr Mills-Owens' concern to protect the environment which was the motivation behind the challenge.
15. The skeleton argument was amended to reflect this advice and Mr Mills-Owens' concern to protect the environment was amplified, but in its amended form the skeleton argument was still unacceptable to Mr Mills-Owens. On 6 January, he insisted that it should not be lodged with the court since it was "fundamentally flawed". He instructed the appellants to seek an adjournment of the hearing to enable him to consider the matter fully.
16. In his reply of 7 January, Mr Buxton said that an impasse had been reached. The skeleton argument had to be lodged by 16 January. A request for an adjournment was "unrealistic". He then said this:

"Perhaps I have not made it clear that counsel is constrained in what can be said in the skeleton argument. Quite apart from the likely effect on costs, he will personally be criticised by the court if he makes points that he considers unarguable.

I enclose a transcript of a decision by Sullivan J. one of the most respected planning judges, which sets out the Court's approach in these types of circumstances. You will gather why we take the view we do. I refer to the sidelined sections towards the beginning of the judgment.

Your underlying concern relates as you quite understandably put it to the "legal responsibility of the relevant authorities to conserve and enhance the natural beauty wildlife and cultural heritage" in the National Park. You must understand that such responsibilities have been dealt with already in the development plan. It is that which the inspector has, we say, failed to adhere to. If you get the decision quashed, then the matter goes back for reconsideration on a proper basis, taking those points properly into account – as you require. It is not the High Court's job to do that now, and it will not.

The above reflects my and counsel's opinion. We entirely respect your views and of course have to respect your instructions. In such circumstances there are three possible courses of action:

To accept what we say and allow the skeleton to go in as amended (as sent to you with my last letter) though you are welcome to make suggestions as to specific amendments you consider should be made to the text eg. to correct what you say are inaccuracies.

To take a second opinion from another barrister experienced in this field. Time is relatively tight, but this is nevertheless easily done. You could even do this via another firm of solicitors though it would be more efficient for me to do so.

Withdraw your instructions to us and simply go elsewhere. This would be disappointing but we cannot act for you if we are at cross purposes.

Please let me know what you want to do."

17. On 11 January, Mr Mills-Owens replied that he had been to London to request the adjournment. He said: "I am sorry that you have left me at this late stage to do my Skeleton Argument myself. I will of course pay your bill where monies are owing but would like it taxed."
18. On 14 January, Mr Buxton suggested that the skeleton argument as drafted should be lodged by the 16^th. That would leave open the option of putting a supplementary skeleton argument in at a later stage. On 16 January, Mr Mills-Owens replied that he expected Mr Buxton to follow his "abundantly clear" instructions. He said that he would prepare his own skeleton argument which he would submit to the court shortly.
19. On 17 January, Mr Buxton wrote that the instructions of Mr Mills-Owens were not clear "(a) as to whether you wish us to continue acting for you and if so (b) whether to instruct counsel to appear on your behalf on 6^th February and if so (c) what is to become of the skeleton argument". He asked what Mr Mills-Owens wanted him to do.
20. Mr Mills-Owens lodged his own skeleton argument with the court. The first Mr Buxton knew of this was when he received a communication from the Treasury Solicitor. Mr Buxton had drafted a letter to be sent by his firm to the court explaining why he had not submitted a skeleton argument. On 24 January, he spoke to the Law Society and was advised that he could not send the letter or even disclose the existence of another skeleton argument without the authority of Mr Mills-Owens. Mr Buxton explained the facts to the Law Society representative and was told that, on those facts, the appellants' position was "untenable" and that they had "good reason" to terminate the retainer.
21. On 25 January, Mr Buxton wrote to Mr Mills-Owens saying that, unless he authorised him to send the letter to the court or gave revised instructions "such that we do indeed represent you along the lines we recommend", he would have to terminate the retainer and apply to the court to come off the record. Mr Buxton said that he had read Mr Mills-Owens' skeleton argument and said that it did not "properly address the legal point in the case".
22. On 26 January, Mr Mills-Owens said that Mr Buxton did not have his permission to discuss his (Mr Mills-Owens') skeleton argument or any other document with the defence. He said that the letter to the court "is not correct and therefore prejudicial to me". He had made it abundantly clear that he did not and would not approve of the skeleton argument drafted by counsel. He said: "At the risk of being blunt may I suggest you read my letters and address and follow my instructions".
23. On 27 January, Mr Buxton said that he had not sent the letter to the court because he had decided to obtain Mr Mills-Owens' authority before doing so. Mr Mills-Owens' skeleton argument was unlikely to find favour with the court. "I am not saying that it will certainly fail, that would be dangerous, but from quite a lot of experience of these types of cases, which are very difficult in the first place, I believe that this is a likely outcome." Later in the letter, he said:

"If you entirely decline to advance any legal argument along the lines of the first skeleton argument (whether the document is put in or not) it seems to me that we will simply be unable to act."

The letter concluded as follows:

"What I need from you in the immediate future, please, are instructions as to whether you want us to continue to act for you, and if so we must discuss on what terms in relation to arguments that may be advanced.

I may need firmly to clarify with the Law Society what our professional obligations and possibilities are in this very unusual situation, but I suspect that unless you are prepared to take our advice and permit counsel to argue as he sees fit – even on the basis of your skeleton argument while otherwise relying on the witness statement – it will be necessary to come off the court record so that you will have to appear on 6 February as a litigant in person (or with other representation).

Please could you clarify that you understand this. I repeat, please also confirm whether or not you do wish to continue to instruct us (and counsel): if so, we believe it will be vital during the course of next week to have a conference in London with counsel firmly to agree what can and cannot be said. We will also need further putting in funds as previously advised. I should also advise that this recent work has taken us over the monies paid on account to some degree. I will advise in more detail next week following your response."

24. On 30 January, Mr Buxton wrote again to Mr Mills-Owens enclosing a copy of the skeleton argument submitted by the Treasury Solicitor. He said:

"the slow speed of communication by post combined with your recent approach to the case has put us in an impossible position in terms of representing you.....We have however now given you notice at many points that we will have to terminate the retainer if you do not take our advice and we do not received adequate instructions…..So there is just one last chance to try to get matters on to a proper footing and to argue the case as the court would expect at the hearing next week."

25. On 31 January, Mr Mills-Owens repeated many of the points he had already made. He was "appalled and dismayed" to see from the letter of 27 January that Mr Buxton had been discussing his witness statement and skeleton argument with one of the defendants and requested "a typescript of all such conversations and/or copy of the letter(s) with time(s) and date(s) by return and ensure that any statements made which are contrary to my instruction are withdrawn." He went on: "I should make it clear that while you do not follow my instructions you are clearly not acting for me. My instructions are clear and concise and straightforward". He insisted that the skeleton argument drafted by Mr Harrison which he had not accepted was "flawed, factually incorrect and prejudicial to my case." However, he failed to identify any such flaw, error or prejudice. He instructed Mr Buxton to apply to the court for an adjournment so that he had time either to prepare all four grounds of appeal and not just ground (a) or to have time to instruct someone who was prepared to address the true environmental case that he wished to place before the court.
26. In his first letter of 1 February, Mr Buxton wrote that, since he had not heard from Mr Mills-Owens, he was making an application to take his firm off the record. In a second letter of the same date, he wrote:

"I do not like to do it, but professionally have no alternative (unless you are prepared to sit down with me and counsel and discuss the ground rules within which we have to work) to do other than stand down and suggest you seek alternative advice."

27. On 3 February, the appellants wrote to Mr Mills-Owens saying that the appeal was fixed to be heard by Ouseley J on 6 February. They intended to attend in order to assist the judge in case he had questions about the procedural position. Counsel was not instructed to attend, but would be available at short notice should Mr Mills-Owens or the judge so require. Mr Mills-Owens replied on the following day saying: "You are not my solicitor. You do not have my permission to act for me or represent me......I do not want to be approached by you or counsel or indeed anyone representing your firm in court. I would consider that a gross interference in my case."
28. On 6 February, Ouseley J refused Mr Mills-Owens' request for an adjournment. Mr Mills-Owens represented himself. His appeal was dismissed as was his subsequent application for permission to appeal. Ouseley J dealt with ground (b) at paras 8 to 19 of his judgment. At para 19, he said that the understanding of the extent of the demolition could be gleaned from the plans which were incorporated as part of the application. The contention that there was a permission for an unknown or unspecified number of dwelling units was "a simple misreading of the documents". The concerns which Mr Mills-Owens had raised "over the, to him, alarming extent of the permission, are all misconceived."
29. Ouseley J rejected ground (a) at paras 28 to 32. As the appellants were willing to advance this ground of challenge, there is no need to consider what the judge said about it. Ouseley J dealt with ground (d) in the following way:

"36. Mr Mills-Owens next argued that a screening opinion was necessary because this development was development in a National Park which is a sensitive area for the purposes of the Town and Country Planning (Environmental Impact Assessment)(England and Wales) Regulations 1999 SI No 293. However, a screening opinion is necessary to see whether development is EIA development. EIA development has to be schedule 2 development, likely to have a significant effect on the environment. Schedule 2 development means development 'of a description mentioned in Column 2 of the table in Schedule 2 where-(a) any part of that development is to be carried out in a sensitive area or (b) any applicable threshold or criterion in the corresponding part of Column 2 of that table is respectively exceeded or met in relation to that development'. Therefore, if the development does not appear in column 1 of schedule 2, no screening opinion is required even though the development is in a sensitive area.

37. The raising of the roof, or even the raising of the roof and the infill link extension, does not come within any of the heads of development set out in column 1 to schedule 2. This could not remotely be described as an urban development project. Nor could it be described as a change or extension to an urban development project. That point is misconceived."

30. It seems that Ouseley J did not deal separately with ground (c).

The relevant professional codes of conduct

31. The Solicitors' Practice Rules 1990 (as amended to 1 October 1999) provided at para 12.12 that "a solicitor must not terminate his or her retainer with the client except for good reason and upon reasonable notice." The notes to rule 12.12 in the Guide to the Professional Conduct of Solicitors 1999 include:

"1. It is open to a client to terminate a solicitor's retainer for whatever reason. A solicitor must complete the retainer unless he or she has a good reason for terminating it.

2. Examples of good reasons include where a solicitor cannot continue to act without being in breach of the rules or principles of conduct, or where a solicitor is unable to obtain clear instructions from a client or where there is a serious breakdown in confidence between them."

32. With effect from 1 July 2007, the Solicitors' Code of Conduct 2007 came into force. This is not directly applicable in the present case, because it post-dates the appellants' retainer. Nevertheless, it is worth noting that rule 2.01(2) provides that a solicitor "must not cease acting for a client except for good reason and on reasonable notice". The Guidance to rule 2 provides at para 8 that examples of good reasons for ending a retainer include "where there is a breakdown in confidence" and where the solicitor is "unable to obtain proper instructions". Rule 11(3) provides: "you must not construct facts supporting your client's case or draft any documents relating to any proceedings containing: (a) any contention which you do not consider to be properly arguable".
33. The Bar Code of Conduct provides so far as material:

"603. A barrister must not accept any instructions if to do so would cause him to be professionally embarrassed and for this purpose a barrister will be professionally embarrassed:

……….

(c) if the instructions seek to limit the ordinary authority or discretion of barrister in the conduct of proceedings in court or to require a barrister to act otherwise than in conformity with law or with the provisions of this Code;

………….

Drafting documents

704 A barrister must not devise facts which will assist in advancing the lay client's case and must not draft any statement of case, witness statement, affidavit, notice of appeal or other document containing:

………..

(b) any contention which he does not consider to be properly arguable;

…………

provided that nothing in this paragraph shall prevent a barrister drafting a document containing specific factual statements or contentions included by the barrister subject to confirmation or their accuracy by the lay client or witness.

……….

Conduct in Court

708. A barrister when conducting proceedings in Court:

……….

(f) must not make a submission which he does not consider to be properly arguable".

34. Although the Civil Procedure Rules ("CPR") are not formally part of the Solicitors' Rules or Code of Conduct, in discharging their professional obligations in the conduct of litigation, solicitors must also have regard to the CPR. In particular, CPR 1.3 requires the parties to "help the court to further the overriding objective". That duty extends to the legal advisers of the parties, including advocates: see Geberan Trading Co Ltd v Skjevesland [2002] EWCA Civ 1567, [2003] 1 WLR 912 at para 37. The overriding objective is defined in CPR 1.1 as enabling the court to deal with cases justly. In my judgment, it is clear that the overriding objective is not furthered by the parties advancing hopeless arguments.

The judgment of Master O'Hare

35. At para 10 of his judgment, Master O'Hare said:

"Nevertheless, I think the solicitors (although undoubtedly in difficult circumstances) ultimately adopted a course which, I think, was the wrong course. I think they should not have terminated the instructions as they did. I do not think they had just cause, regardless of what notice they gave. I think what they should have done was carry out the client's instructions, even though they had given (and would no doubt repeat) that such instructions were doomed to disaster. Because they have failed to carry out the client's instructions, I do not think they are entitled to charge him fees in this matter. They were retained for the entire business; that is conducting a statutory appeal. That has to be a statutory appeal on the basis of the instructions made by the client, so long as they are legal, honest and decent. Clients cannot instruct solicitors to do anything improper but (however unwise I might think they were) I do not think this client's instructions were, in any way, improper."

36. At para 11, he said:

"There is no reason for cross purposes. So long as the solicitors advise the client that his course of instruction is doomed to failure, I think they ought to follow his instructions. Also, I think it is wrong when [the appellants' letter of 7 January] says, at the start, 'We entirely respect your views and, of course, have to respect your instructions'. Well, it is more than respect for instructions which is needed; so long as they are proper instructions (however misguided solicitors think them) they should not just respect them, they ought to follow them."

The judgment of Mackay J

37. Having summarised the correspondence to which I have referred above, Mackay J recorded the submission of Mr Buxton that Mr Mills-Owens was instructing him to advance an improper case and that, for that reason, he was not only entitled to cease acting, but had a professional obligation to do so by reason of rule 12.12 of the Solicitors' Practice Rules (as amended). At para 21 of his judgment, the judge said that there are occasions where the line is difficult to draw between an argument which is "improper" and one which, though bound to fail, can nevertheless be properly advanced. He then said: "but in my judgment at the end of the day if a client who is prepared to pay for a case to be advanced, wants the claim advanced on a particular basis, which does not involve impropriety on the part of the solicitor or counsel, then it is no answer for the solicitor to say that he believes it is bound to fail and therefore he will not do it." At para 22, the judge expressly endorsed the observations of Master O'Hare quoted above.
38. At para 23, he concluded this part of the judgment as follows:

"I have very considerable sympathy for the solicitors here who had a very difficult problem and a difficult client. But the litigator's back must be broad, and provided that he has given clear advice to that client, if that client wishes to pursue a case which the solicitor honestly believes is going to lose, the client is entitled to instruct him to do so, absent any impropriety or misleading of the court. It is my judgment, assisted by but not dependent on the solicitor assessor sitting with me that the position here fell short of the line where the solicitor would have been entitled to terminate the retainer and that the costs judge here was right to assess the matter in the way he did."

Were the appellants entitled to terminate the retainer?

39. I am in no doubt that the retainer was an "entire contract". In Underwood, Son, & Piper v Lewis [1894] 2 QB 306, Lord Esher MR explained:

"when a man goes to a solicitor and instructs him for the purpose of bringing or defending such an action, he does not mean to employ the solicitor to take one step, and then give him fresh instructions to take another step, and so on; he instructs the solicitor as a skilled person to act for him in the action, to take all necessary steps in it, and to carry it on to the end".

40. The appellants were retained to institute and take the statutory appeal to the end. But that did not mean that the retainer could not be terminated before the end. The position at common law is that a solicitor may terminate his retainer before the end on reasonable notice and if he has a "reasonable ground for refusing to act further for the client": per Lord Esher in Underwood at p 313. Where the parties have agreed in what circumstances the solicitor may terminate the retainer, then the matter is governed by their contract. In this case, the parties agreed that the appellants could terminate "only with good reason". That reflects the common law position. Unsurprisingly, it also reflects rule 12.12 of the Solicitors' Practice Rules (as amended) and rule 2.01(2) of the 2007 Code of Conduct.
41. Did the appellants have a good reason to terminate the retainer? There is no comprehensive definition of what amounts to a good reason to terminate in the Solicitors' Practice Rules or the Code of Conduct (although examples are given in both documents), or in any of the authorities that have been cited to us. That is not surprising, since whether there is a good reason to terminate is a fact-sensitive question. I accept the submission of Mr Drabble that it is wrong to restrict the circumstances in which a solicitor can lawfully terminate his retainer to those in which he is instructed to do something improper. I accept that solicitors should not lightly be able lawfully to terminate their retainers, leaving their clients with the task of finding fresh solicitors to complete the job. But the desirability of protecting a client from an arbitrary and unreasonable termination is not a sufficient justification for giving such a narrow interpretation of the phrase "good reason" as the judge has given in this case. Indeed, the 1999 Guide to rule 12.12 of the 1990 Rules (as amended) and the Guidance to the 2007 Code of Conduct give the examples of a solicitor being unable to obtain clear instructions from the client or where there is a serious breakdown in confidence between solicitor and client. Further, section 65(2) of the Solicitors Act 1974 deems a failure by a client within a reasonable time to pay a reasonable sum on account of the costs of contentious business to be "good cause whereby the solicitor may, upon giving reasonable notice to the client, withdraw from the retainer."
42. In Underwood, A.L. Smith LJ said at p 314:

"On the other hand, it is clear that the solicitor may be placed in such a position by the client as to absolve him from the further performance of that contract. It appears to me from the case of Vansandau v Browne and the subsequent cases which have been cited, that the client may put the solicitor in such a position as to entitle him to decline to proceed; for instance, if the solicitor asks for necessary funds for disbursements, and such funds are refused by the client, the solicitor is not bound to go on; and, speaking for myself, I should say that the solicitor is not bound to go on acting for the client if the client insists on some step being taken which the solicitor knows to be dishonourable; and many other cases may be supposed in which the solicitor may be entitled to refuse to act for the client any further. I should say that, when a solicitor is in a position to show that the client has hindered and prevented him from continuing to act as a solicitor should act, then upon notice he may decline to act further, and in such case the solicitor would be entitled to sue for the costs already incurred. But we have not now to deal with such a case. The sole question here is, whether the solicitor is entitled without rhyme or reason to throw up his retainer, having given due notice of his intention to do so. I do not think that he is so entitled."

43. The particular question that arises on this appeal is whether a solicitor has good reason for terminating a retainer if a client insists on his putting forward a case and instructing counsel to argue a case which is "doomed to disaster" (Master O'Hare) or which the solicitor believes "is bound to fail" (Mackay J). I agree with Mackay J that it may be difficult to draw the line between an argument which can properly be articulated and put forward (but which has little, if any, prospect of success) and an argument which cannot properly be articulated and which is believed to be bound to fail. The Bar Code of Conduct puts the matter very clearly. Counsel may not draft any document (which must include a skeleton argument) containing a contention which he does not consider to be properly arguable; and he may not make any submission in court which he does not consider to be properly arguable. A corresponding provision appears at rule 11.01(3) of the 2007 Code of Conduct for Solicitors. It must be acknowledged that there is no express provision in those terms in the 1990 Rules (as amended). Nevertheless, I am in no doubt that even before the point was spelt out in the 2007 Code, it would have been understood by all solicitors that, as officers of the court, they were under a professional duty (i) not to include in the court documents that they drafted any contention which they did not consider to be properly arguable and (ii) not to instruct counsel to advance contentions which they did not consider to be properly arguable. That duty was reinforced by CPR 1.3.
44. Our attention was drawn to page 6 of Cook on Costs [2010] where there is a reference to the decision of Mackay J in the present case. The author says:

"If a client is prepared for a case to be advanced and wants the claim advanced on a particular basis which did not involve impropriety on the part of the solicitor or counsel, then it is no answer for the solicitor to say that he believes it is bound to fail and therefore he will not do it. Whatever one thought about the client's stance, his instructions were firm and unequivocal as to how the case was to be presented and the solicitor ought to have followed them. The situation fell short of the line where the solicitor would have been entitled to terminate the retainer and the solicitors were not entitled for any fees for the work they had done. I suggest the solicitor should have continued to act and adopted the traditional coded message to the court used in these circumstances: 'I am instructed to say'."

45. For reasons that I am about to give, I consider that the appellants were entitled to terminate the retainer in this case. But I refer to this passage in Cook because I do not agree with the last sentence. In my judgment, if an advocate considers that a point is properly arguable, he should argue it without reservation. If he does not consider it to be properly arguable, he should refuse to argue it. He should not advance a submission but signal to the judge that he thinks that it is weak or hopeless by using the coded language "I am instructed that". Such coded language is well understood as conveying that the advocate expects it to be rejected. In my judgment, such language should be avoided.
46. I now turn to the facts of this case. The contentions which the appellants and both counsel were unwilling to advance were ones which they all considered not to be properly arguable. They were ones which they believed they could not properly articulate as legal arguments and which were hopeless. Mackay J was right to say at para 10 of his judgment that:

"The application was from the start bedevilled by what the costs judge found was a fundamental problem. The client did not understand and still does not understand the limited basis upon which such a planning appeal is possible. He wanted the appeal to be presented on a much wider basis by reference to the merits of the case and the need for the safeguarding of an environment of which he is understandably protective. He found it difficult, indeed impossible, as the costs judge below found, and as I find, to accept that for such an appeal to succeed it is necessary to point to a procedural error or some other legal flaw in the approach of the planning inspector. This was the thrust of an initial advice from counsel received within a week of two of the first instruction of the solicitors, to the effect that there was no reasonable prospect of challenging the decision."

47. To the extent that Mr Mills-Owens insisted (as he did) that a challenge should be made to the Planning Inspector's decision on the planning merits of the case, such a challenge could not, as a matter of law, be made under section 288 of the 1990 Act. Mackay J seems to have recognised this at para 10 of his judgment. Mr Mills-Owens would not accept that a challenge could only be made for legal error. It would be improper in a section 288 appeal to advance an argument based on the merits of the decision of the Planning Inspector; and if Mr Mills-Owens insisted that such an argument be advanced, the appellants had good reason for terminating the retainer. Mackay J did not explain why it would not be improper to advance an argument which sought to challenge a decision on the facts when such a challenge is not permitted by section 288.
48. In fact, although the main concern of Mr Mills-Owens was to challenge the Planning Inspector's decision on the facts and although at para 11 of his judgment Mackay J described grounds (b), (c) and (d) in the claim form "as going more to the general merits of the planning decision", in fact those grounds as pleaded were not expressed as going to the merits of the planning decision.
49. The reason why neither Mr Harrison nor the appellants were willing to include grounds (b) to (d) in the skeleton argument was that they considered that they were hopeless and were not properly arguable. In my judgment, they were right to do so. I have already set out at para 14 above what Mr Harrison said about these grounds in his Note dated 3 January 2006. Mr Harrison rightly said in relation to ground (b) that it was a matter of planning judgment for the Inspector whether there was sufficient material for him to be clear as to the subject matter of the application for planning permission. In any event, this ground was dismissed by Ouseley J because the extent of the proposed development was obvious from the plans which were incorporated as part of planning application. Ground (c) was hopeless for the reasons given by Mr Harrison and was not, it seems, pursued before Ouseley J in any event. Ground (d) was hopeless for the reasons given by Ouseley J: see para 30 above.
50. Thus the appellants and Mr Harrison were of the opinion that grounds (b) to (d) could not properly be put forward because they were hopeless arguments. They shared the view expressed by Mr Findlay who (unlike the appellants and Mr Harrison) had not been able to find a single argument which had any prospect of success. Mr Findlay had said that the case had "no reasonable prospect of success" and that it was "doomed to fail". Mr Harrison (who considered that there was a 50:50 chance of success on ground (a)) had similarly said in his Note dated 3 January that grounds (b) to (d) were "outside the scope which the law allows" and were "wrong in law". It is true that in his letter dated 27 January, Mr Buxton said that he was not saying that the skeleton argument drafted by Mr Mills-Owens would certainly fail, but he believed this to be the "likely outcome". That sentence, if taken in isolation, would suggest that Mr Buxton did not consider that grounds (b) to (d) were unarguable and bound to fail. But if the correspondence is viewed as a whole, it is clear that Mr Buxton did not consider that he could properly submit a skeleton argument which included grounds (b) to (d) or instruct counsel to argue those grounds and Mr Harrison agreed with him.
51. I conclude, therefore, that the appellants had good reason to terminate the retainer.

Are the appellants entitled to be paid for work done and disbursements incurred up to the date of termination?

52. The appellants had received payments on account which, in accordance with their terms of business, had been placed in their client account and had not been withdrawn except to meet disbursements. No invoices had been submitted to Mr Mills-Owens before the termination. The appellants' terms of business are silent as to the payment of fees in the event of termination by the appellants for good reason.
53. It is, therefore, necessary to look to the general law to see whether the appellants were entitled to be paid for the work they had done even though they had not completed the "entire contract". It has long been established that, where a solicitor terminates an "entire contract" before completion and does so for good cause or on reasonable grounds, he is entitled to be paid for the work that he has done. In Vansandau and Tindale v Browne (1832) 9 Bing 402, it was held that an attorney is not compelled to proceed to the end of a suit in order to be entitled to his costs, but may for reasonable cause and on reasonable notice abandon the conduct of the suit and recover his costs for the period during which he was employed.
54. In Underwood, solicitors had declined to continue to act for their client before the litigation in which they were acting had been completed. They brought an action for the amount of their bill of costs for work done to date. The trial judge held that a solicitor may terminate his retainer without cause and judgment was entered in favour of the solicitors. As we have seen, the Court of Appeal said that the retainer could only be lawfully terminated on reasonable grounds. They ordered a retrial. It was implicit in the decision to order a retrial that, if the solicitors were able to show that they had a reasonable ground for terminating the retainer, their claim for costs would in principle succeed. In his judgment, Lord Esher said:

"it seems to me that from [the time of Cresswell v Byron (1807) 33 E.R. 525] downwards it has been held that a solicitor cannot sue for his costs until his contract has been entirely fulfilled, unless the case is brought within some recognised exception to the general rule."

An exception to this general rule is where the solicitor terminates the retainer on reasonable grounds.

55. None of the cases cited to us contains a statement of the legal basis for the principle that, where a solicitor terminates his retainer for good reason, subject to any relevant provision contained in the agreement between the parties, he is entitled to be paid his profit costs and disbursements for work done prior to the termination. One possible analysis is that, at any rate in a case such as the present, where the client insists on the solicitor putting forward contentions which the solicitor does not consider to be properly arguable, the client repudiates the retainer and the solicitor accepts the repudiation by terminating. The solicitor may then elect to claim the fees due (if any) under the agreement or on a quantum meruit. It is, however, unnecessary to consider this further, since the common law rule that a solicitor is entitled to be paid for all the work he has done prior to termination if he terminates for good reason has been part of our law for almost 200 years. It follows that the appellants are entitled to be paid their profit costs and disbursements for the work done prior to the termination. There should in principle be no difficulty in calculating these, since the basis for charging was clearly defined in the appellants; terms of business: see para 8 above.

Overall conclusion

56. For the reasons I have given, the appellants were entitled to terminate their retainer and entitled to their proper costs and disbursements for work done prior to the termination. I should add that Mr Mills-Owens has permission to cross appeal in relation to the issue of disbursements, but that issue does not now arise. Finally, I should record my view that, throughout his dealings with Mr Mills-Owens, Mr Buxton has acted in a thoroughly professional manner and has shown conspicuous patience.

Lord Justice Maurice Kay: I agree

The President of the Family Division: I also agree