England and Wales High Court (Queen's Bench Division) Decisions

IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION

		Royal Courts of Justice Strand, London, WC2A 2LL
		03/02/2011

Mr Justice Tugendhat:

1. Following a hearing on 25 January 2011 I dismissed the appeal of the Claimant ("the client") against the decision of Master Gordon-Saker made on 21 April 2010. That decision was made in the course of a detailed assessment of the cost between the client and the Defendant ("the solicitors"). The following are the reasons.
2. The background to the matter is as follows. The solicitors had been instructed by the client in respect of an action which the client had brought against another firm of solicitors previously engaged by it ("the former solicitors"). That was a claim for professional negligence. In December 2001 following a ten day trial, the client obtained a judgment but for no more than nominal damages. The Court of Appeal ordered a retrial. On 11 June 2004 Creswell J handed down a reserved judgment in writing awarding to the client £300,000 in damages: see [2004] EWHC 1362 (QB).
3. About a year later, on 17 June 2005, Cresswell J decided issues as to costs. Immediately after a hearing he delivered a judgment on that day which was subsequently transcribed: see [2005] EWHC 1541 (QB).
4. The issue between the parties which gave rise to the decision which is the subject of this appeal is set out in writing in the client's Amended Points of Dispute and in the solicitors' Reply.
5. The client's Points of Dispute include the following:

"[3] The letter dated 2^nd July 2007.

In this correspondence [the solicitors] confirms that he will '…not be rendering a charge in respect of work carried out since the handing down of the judgement of Mr Justice Cresswell'.

In addition the letter states that there would be no charge for any work connected with the assessment process save for the fees payable to the Costs Draftsman…

In view of these statements the Claimant considers that any item of work in the breakdown related to the assessment process or done after the date of the judgment should be disallowed".

6. There appears the following in the solicitors' Reply:

"Letter dated 2^nd July 2007

The [solicitor] does not dispute what was said in the 2^nd July 2007 letter which for the avoidance of doubt was referring to the judgment handed down by Cresswell J on 17 June 2005; and the inter partes assessment of costs payable by [the former solicitors]".

7. The hearing before the Master took a number of days. By the time he came to make the decision the subject of this appeal the contentions of the parties had been clarified. They were, as recorded by him:

"[the client] contend that [the solicitors] agreed not to charge for work done from 11 June 2004, when judgment was handed down by Mr Justice Cresswell. The [solicitors] say that is not what was agreed and that in any event any waiver by them is not enforceable by reason of a lack of consideration".

8. The Master in his judgment then set out the work that had been done after June 2004. He found that November 2005 seemed to be the point at which no further work was done by the solicitors in relation to the action against the former solicitors. The correspondence between the client and the solicitor which preceded the letter of 2 July 2007 and which related to costs started in June 2005. Mr Marven took the court through that correspondence for the purpose of supporting the ground raised in the Respondents' Notice. The Master picked up the correspondence with a letter immediately preceding the letter of 2 July 2007, namely one dated 27 June, written on behalf of the client. In it the client requested "the entire fee notes of your firm which remains interim and generated since 2001 and detailed time sheets of each fee earner".
9. As the Master recorded, it was in response to that request that on 2 July 2007 the solicitors wrote to the client the letter which includes the following:

"In light of your observations, I shall now render a final invoice if you so wish, however, by doing so I shall be incurring certain liabilities, e.g. VAT. As you are aware and as is demonstrated by the correspondence I have had with you, I have at all times tried to accommodate you with your cash flow constraints. However, on the rendering of the final bill shall require payment of the full amount. I do confirm, however, that I shall not be rendering a charge in respect of work carried out since the handing down of the judgment before Mr Justice Cresswell. In this regard please note:

(a) I have indicated to you in correspondence that in the event that permission was granted from the Court of Appeal that judgment I would conduct such an appeal on a conditional fee arrangement;

(b) I agreed that I would not render any charge in respect of the assessment process currently underway, so that you would be responsible for the fees of [the Costs Draftsman]

As a consequence the final bill will take into account the value of all work undertaken from the inception of my instructions on this matter up to and including the trial of Mr Justice Cresswell".

10. As the Master records in his judgment, what is described as a pro-forma invoice was sent by the solicitors to the client under cover of a letter dated some six weeks later, namely 20 August 2007. That letter included the following:

"The pro forma invoice takes into account all the costs of this firm as at 20 August 2007, but specifically excludes the following:

1) The costs incurred up to 31 October 2001. I had agreed the costs of this firm as between us in the sum of £8000 plus VAT plus disbursements to include counsel's fees and VAT thereon.

2) This firm's costs of the present ongoing detailed assessment proceedings pursuant to the order of Mr Justice Cresswell please note that the costs of [the] costs draftsman is chargeable and appears as a separate item.

3) This firm's costs of Court of Appeal proceedings against the decision of Mr Justice Cresswell".

11. The Master then set out what is the substantive part of his judgement as follows:

"9 The first question, it seems to me, is the interpretation or construction of the letter 2 July 2007. On behalf of the [solicitors] Mr Marven argues that the handing down of the Judgment of Mr Justice Cresswell, refers to the point at which the order consequent on that judgment was drawn, or at least work done in relation to the drawing of the order was not included in the concession.

10 Words should be given their ordinary meaning, and it seems to me that the handing down of the judgement of Mr Justice Cresswell would ordinarily be taken to mean the handing down of the judgment, in this case the reserved judgment, which was handed down at the conclusion of the trial on 11 June 2004.

11 Insofar as may be relevant, I do not think that the [solicitors] are assisted by the last paragraph of that letter as quoted by me earlier. It seems to me that "work done up to and including the trial before Mr Justice Cresswell" means work done during the trial which concluded with the judgement on 11 June 2004. In my judgement the concession that is made in the letter of 2 July 2007 is therefore in relation to all work done after 11 June 2004.

12 The second question, it seems to me, is whether there was any consideration given for that concession which therefore precludes the [solicitors] from claiming fees for work done after 11 June 2004.

13 Despite Mr Ruthven's best efforts to find some, it seems to me that there was no consideration for that. While it may well be that the [client] was unhappy that the prospective appeal had not been pursued within time, and the costs may well have been wasted as a consequence, there is no evidence of agreement on his part not to pursue a complaint or claim in relation to the failure to pursue the appeal timeously or in relation to any costs which may have been wasted. His concern as to the costs or any costs that may have been wasted in relation to the prospective appeal was met by the [solicitors'] indication that they would not charge for work done in relation to the appeal. The position was clarified in the [solicitors'] letter of 20 August 2007 when the [client] was informed that the final bills specifically included the costs of the Court of Appeal proceedings. While the [solicitors'] intentions as articulated in their letter of 2 July 2007 may be somewhat ambiguous, their letter of 20 August 2007 makes clear what work they will not be charging for. And, I am told, that work is not claimed.

14 In the absence of any consideration for the concession apparently made in the letter of 2 July 2007 it seems to me that there is nothing to preclude the Defendant from claiming costs in respect done after 11 June 2004 so far as it did not relate to the prospective appeal to the Court of Appeal".

12. The grounds of appeal thus relate to what the master referred to as the second question. The Respondent's Notice refers to the first question.
13. The grounds of appeal include the following:

"The short point in issue in the appeal is that there was evidence before the learned Costs Judge to the effect that [the solicitors] had agreed not to render any charges to the client after a certain date (11 June 2004) despite that agreement (alternatively a waiver of any charge which could otherwise have been made) [the solicitors] included in its bill to [the client] profit costs and counsel's fees for work done after that date… the learned judge allowed those costs against [the client]. He was wrong to do so

4. Alternatively even if [the solicitors] was not entitled to render these charges, or was not estopped from doing so, the fact of the apparent waiver or agreement (even if not binding) was a factor the court should have taken into account when considering whether it was reasonable for [the solicitors] to seek to recover these charges on assessment. The costs should have been disallowed on this basis also. The learned judge was wrong not to do so.

5. The sum in issue on this single point on appeal is approximately £47,000 plus VAT in profit costs and £59,052 plus VAT in respect of counsel's fees".

14. In his skeleton argument Mr Mallalieu divided these submissions into four grounds:

1. Whether there was a binding agreement or variation of the existing retainer;

2. If not, whether there was an unequivocal waiver by the solicitor;

3. If not whether there was a representation which it would be inequitable to allow the solicitor to resile from;

4. If not, whether the judge was wrong not to conclude that it was unreasonable and unjust for these costs to be allowed.

15. The Respondent's Notice asks that the judgment of the Master be upheld for the reasons that he gave, alternatively for the further reason that he ought to have held that any agreement by the solicitor not to render charges after the judgement of Cresswell J was referring to the judgment handed down on 17 June 2005 (the first question, which was decided by the Master against the solicitors).
16. The issues in the appeal are therefore untypical of issues raised in appeals from a costs judge. The first three are issues that arise under contract law, as to whether there has been a variation to a contract, and if not whether one party to the contract is precluded from relying on the terms of the contract by reason of waiver or estoppel. The points which the Master was in the event asked to decide are not points which it would have been easy to foresee simply by reading the Points of Dispute and the Reply. Had either side been more specific as to the case it proposed to advance before the Master, then it might have been expected that the hearing would have proceeded differently. However, neither side asked for an adjournment, and the Master had to reach a decision on the material before him with the benefit of such submissions as the parties chose to advance.
17. I remind myself that this is an appeal, and not a re-hearing.
18. It is common ground, of course, that for there to be a contract (and that includes a variation of an existing contract) there must be offer, acceptance and consideration. Mr Mallalieu submits, as is not disputed, that the agreement that he contends for represented a variation of the existing retainer. In relation to any work to be done on a possible appeal in the future there was as yet no retainer. He submits that it was in the interests of the solicitors to retain the conduct of the matter, and that accordingly he stood to benefit from the concession recorded in the letter of 2 July 2007. It was, he submits, a promise of substantial potential value to the solicitors. He submits that the client, by allowing the solicitor to continue to act, was forbearing from the immediate instruction of new solicitors to advise and to act. While he accepts that this did not amount to a promise never to pursue such a course it nevertheless was a thing of value to the solicitor.
19. There was no evidential material before the Master other than the correspondence which is referred to in his judgment. There is nothing by way of evidence of what, if anything, the client did following receipt of the letter of 2 July up to and including receipt of the letter of 20 August, which, it is common ground, sets out the solicitors' position in terms which, according to the client, are entirely different.
20. This simple fact is conclusive of this appeal. There is no possible basis for impugning the Master's findings that there was no consideration. A promise does not become contractually binding simply because the making of the promise is potentially advantageous to the promisor. The promisee must do or refrain from doing something. There must be acceptance expressly or by implication. There is simply nothing at all to which Mr Mallalieu can point which might represent acceptance, a promise, forbearance or any reliance by the client on the letter of 2 July 2007.
21. In the course of his written and oral arguments in support of this appeal Mr Mallalieu argued that the letter of 2 July 2007 recorded an oral agreement made at an earlier and unspecified date. The operative part of the letter includes a sentence beginning " I do confirm…" In support of this contention he referred to letters dated 2 and 6 March 2007. However, as Mr Marven submits, it is clear from the transcripts that this is not how the matter had been put to the Master below. So it is not a ground that can be advanced on appeal. Moreover this way of advancing the case suffers from the same difficulty. None of the earlier correspondence can be said to demonstrate an offer and acceptance, supported by consideration. There is no evidence other than the exchange of correspondence itself.
22. Since all of the first three grounds relied upon by Mr Mallalieu must fail essentially for the same reason it only remains to consider the fourth ground. This is advanced on the basis that a comparison or analogy must be drawn with the cases on costs estimates such as Mastercigars Direct Limited v Withers LLP [2007] EWHC 2733. Mr Marven submits that this adds nothing to the other points. In any event he submits that any misunderstanding was corrected by the letter of 20 August 2007 and that even in cases of estimates there has to be reliance of some kind by the client: see paras 101 and 102.
23. I see little analogy between an estimate of costs in the light of which the client may make decisions as to the conduct of litigation over a period of time, and the letter of 2 July 2007 in respect of which there is no evidence that the client did anything during the six weeks before the solicitors' position was made entirely clear on 20 August 2007. There is nothing in this ground either.
24. It is for these reasons that I dismissed this appeal.