PIERRE WILSON v THE SPECTER PARTNERSHIP

For the purposes of Solicitors Act 1974, a winding-up petition is an “action” for enforcing a contentious business agreement. A solicitor cannot circumvent the statutory protection by presenting a winding-up petition instead of bringing an ordinary claim.

Whether an agreement is a contentious business agreement depends on substance, not its label. The agreement must be in writing and sufficiently certain to identify how the client will be charged. General terms, unrecorded incorporation into a particular retainer, or a contractual possibility of enhanced charging may prevent the agreement from satisfying that requirement.

A winding-up order is not a nullity merely because the petition debt might have been disputed or the petition might have been barred. Applications to rescind or set aside must be made within the applicable time, subject to a cautious discretion to extend it.

Wilson Properties UK Ltd was wound up on a petition by its solicitors, The Specter Partnership, based on an unpaid costs demand. Pierre Wilson, a shareholder, director and creditor, applied to rescind the winding-up order, contending that the retainer was a contentious business agreement under section 59 of the Solicitors Act 1974. He argued that section 61 prevented the petition and that the order should therefore be set aside.

The appeal also challenged the refusal to extend time for rescission and alleged an inherent jurisdiction to set aside the order. Separately, Mr Wilson sought removal of the liquidators or an order requiring them to assign an alleged claim against Specter. The central issues were whether the retainer was a contentious business agreement, whether the delay could be excused, and whether either application justified relief.

1. Appeal dismissed. The application to remove the liquidators and the application for an assignment of the alleged cause of action were also dismissed.
2. Section 61 of the Solicitors Act 1974, which provides that no action shall be brought on a contentious business agreement, applies to a winding-up petition. The word “action” includes other forms of civil proceedings. The statutory purpose is to give the client an opportunity to challenge the bill, and that protection should not be circumvented by using a winding-up petition. This conclusion was supported by the reasoning in In re a Debtor (No 88 of 1991) and Re Laceward Ltd [1982] WLR 133.
3. Whether an agreement is a contentious business agreement is determined by substance rather than its description. A reference to an agreement as a contentious business agreement is neither necessary nor decisive. The agreement must, however, be in writing and sufficiently certain to tell the client what costs are payable. Chamberlain v Boodle & King [1982] 3 All ER 188 illustrated the required degree of certainty.
4. The signed terms did not clearly constitute a contentious business agreement. They were general terms, with no written agreement showing their application to the particular litigation. They also permitted an enhanced rate in cases of unusual complexity or urgency. That left the charging provisions insufficiently fixed, so the agreement fell outside section 59.
5. The possible existence of a statutory bar did not make the petition or winding-up order a nullity. The court had jurisdiction to make the order. It remained an order until rescinded or set aside. The application to rescind was made about seven months late, without a good explanation, and the discretion to extend time was correctly exercised against the applicant. The approach in Mann v Goldstein [1968] 1 WLR 1091 and Re Calmex Ltd [1989] 1 All ER 485 did not require a different result.
6. There was no general inherent jurisdiction to set aside the drawn-up winding-up order on the grounds advanced. Although Papanicola v Humphreys [2005] EWHC 335 showed that facts existing at the time of the original order may in some circumstances be considered, any error by the District Judge on that point was immaterial. The delay independently defeated the application.
7. Removal of liquidators is a strong remedy. Dissatisfaction with their decision not to pursue an inadequately particularised claim, without evidence of wrongdoing or conflict, did not justify removal. Nor could an assignment be ordered where the applicant had not provided sufficient information about the claim, evidence, merits, value or proposed terms.

High Court (Chancery Division): Appeal from District Judge Farquhar dismissed. The applications for removal of the liquidators and assignment of the alleged cause of action were dismissed.