Cawdery Kaye Fireman & Taylor v Minkin

A solicitor’s retainer to conduct litigation is ordinarily an entire contract, but express terms may permit suspension for non-payment. Suspension and termination are distinct. Whether withholding payment has reasonable justification is a value judgment of mixed fact and law, reviewable on appeal. Exceeding a clearly non-binding estimate, financial strain and a wish to await recovery from an opponent did not justify withholding payment once the increase was explained and the bill could be challenged. The solicitor validly suspended work. The client then terminated after losing confidence, leaving the solicitor entitled to costs properly incurred.

The solicitors acted for Mr Gary Minkin in family proceedings concerning non-molestation and occupation orders involving the former matrimonial home. The work became more extensive after the property was let to tenants, and the interim bill exceeded the estimate. When Mr Minkin questioned the bill and sought further work concerning possession and rent, the solicitors stated that they would do no further substantive work until they were in funds. He later expressed loss of confidence and indicated that he wanted the matter reviewed by a senior partner.

Master O’Hare held that the solicitors had wrongfully terminated an entire retainer and ordered repayment of fees received, subject to the assessed bills. Cranston J upheld that decision. The appeal concerned whether the solicitors had validly suspended performance, whether the client or solicitors terminated the retainer, and what costs remained payable.

The Court of Appeal unanimously allowed the appeal. Ward LJ gave the principal judgment. Stanley Burnton LJ and Elias LJ agreed.

1. Statutory withdrawal. Solicitors Act 1974, section 65(2), was not the basis on which the retainer ended. Although requests for payment on account had been made, the solicitors had not clearly notified the client that they were withdrawing under that subsection.
2. Construction of the contractual terms. The common-law retainer was ordinarily an entire contract to conduct the litigation to its conclusion, as explained in Underwood, Son & Piper v Lewis [1894] 2 Q.B. 306. Clauses 6 and 13 of the Terms of Business addressed different matters. Clause 6 provided a fact-specific power to suspend, and also to terminate where an account was overdue without reasonable justification. The payment terms already warned that bills were payable on presentation. Reasonable notice could not be implied into clause 6. Clause 13 separately governed general termination and expressly required reasonable prior notice.
3. Reasonable justification. Whether non-payment had reasonable justification was a value judgment, or conclusion of mixed fact and law, rather than a discretion. The appellate court could draw inferences from undisputed facts and decide whether the conclusion below was right or wrong, while respecting the expertise of the costs judge. Mr Minkin had no reasonable justification for withholding payment. The estimate was expressly non-binding, the increased work was explained, and he could challenge the bill by the available assessment or complaints procedures. He could not require the solicitors to await recovery from the opposing party. Elias LJ agreed that raising concerns was initially justified, but continued refusal after a cogent explanation was unreasonable. Stanley Burnton LJ cautioned that termination was not confined to cases involving conduct that was frivolous, trivial or in bad faith.
4. Effect of the communications. The email of 20 August 2009 suspended further work until payment. The later communications reaffirmed that suspension and did not terminate the retainer. Mr Minkin’s email of 1 September, expressing loss of confidence and stating that he would have liked to continue but felt the matter had gone nowhere, terminated his instructions under clause 13. That termination released the solicitors from further performance but did not release Mr Minkin from paying costs properly incurred. The costs judge was therefore wrong to refuse payment of the assessed costs and to order repayment.

1. Court of Appeal (Civil Division) — The appeal was unanimously allowed. The court held that the retainer had been suspended by the solicitors and subsequently terminated by the client, who remained liable for costs properly incurred. [2012] EWCA Civ 546
2. Queen’s Bench Division — Cranston J, sitting with assessors, dismissed the solicitors’ appeal on 7 February 2011 and upheld Master O’Hare’s decision.
3. Costs assessment — Master O’Hare, Costs Judge, held on 16 September 2010 that the solicitors had wrongfully terminated the retainer, ordered repayment of £1,437.50 and awarded the client the costs of assessment.