Smales v Lea & Anor

For a professional-services retainer, completion of a coherent package of work does not necessarily make performance of every obligation a condition precedent to payment. The question depends on the true construction of the contract. A term requiring negotiation with an insurer about fees does not, without more, postpone the client’s liability to pay until negotiations conclude or fail. A cause of action for fees may accrue when the principal work is completed, even though the client may seek indemnity from insurers and the fee remains subject to adjustment.

A surveyor claimed professional fees from the executors of a former client. He had inspected subsidence damage, handled the insurance claim and arranged remedial works. The works were completed by the end of 1998, but the parties continued to dispute the proper basis and amount of his fees.

The Bromley County Court determined limitation as a preliminary issue. HHJ Richardson held that the contractual cause of action accrued in 1999, or at the latest in 2001, and dismissed the claim as statute barred. The surveyor appealed, contending that the retainer was an entire contract and that no cause of action arose until negotiations with the insurers had concluded or broken down.

1. Appeal dismissed. The surveyor’s cause of action accrued no later than 1999, so the claim issued in 2008 was barred by section 5 of the Limitation Act 1980.
2. An entire contract is one in which one party must perform all obligations before the other becomes liable to pay. Whether a contract has that effect depends on its true construction. The retainer imposed a coherent package of obligations, but contained no express term making complete performance a condition precedent to any remuneration. The guidance in Hoenig v Isaacs [1952] 2 All ER 176 supported that conclusion.
3. The surveyor became entitled to recover fees when the remedial works had been completed, the contractors’ accounts agreed and the relevant insurance sums remitted. The client’s ability to claim the fees from insurers, and the surveyor’s duty to negotiate with them, did not postpone contractual liability. The client could dispute the amount or basis of the fee, but could not contend that no cause of action had accrued.
4. Lord Justice Gross and Lord Neuberger agreed. Lord Neuberger additionally stressed that appeal bundles should contain only documents reasonably necessary for determining the appeal, under the relevant Practice Direction to the Civil Procedure Rules 1998.

• Court of Appeal (Civil Division) — [2011] EWCA Civ 1325: appeal from the Bromley County Court dismissed.
• Bromley County Court — HHJ Richardson held that the fee claim accrued in 1999, or alternatively in 2001, and dismissed it as statute barred.