Stevensdrake Ltd (t/a Stevensdrake Solicitors) v Hunt

An implied contractual term cannot contradict an express term, even where strong background evidence suggests a different commercial understanding. A signed, self-contained conditional fee agreement therefore governs its express payment obligations unless there is a proper contractual basis for incorporating earlier terms.

Estoppel by convention may arise where parties share, communicate and act upon a clear assumption, and it would be unjust or unconscionable to permit departure from it. Appellate courts should give real weight to a trial judge’s evaluation of the overall effect of communications and conduct where the judge made no error of law.

Stevensdrake Limited, a firm of solicitors, appealed from the High Court judgment dated 26 February 2016 dismissing its claim against Stephen Hunt, the liquidator of Sunbow Limited, for fees under a conditional fee agreement dated 10 April 2008.

The High Court held that the parties’ earlier recoveries-only arrangement formed part of the retainer and prevented personal recovery of Stevensdrake’s own charges. It also upheld estoppel by convention and made alternative findings concerning undue influence, negligence and fiduciary duty. The appeal concerned whether the conditional fee agreement imposed personal liability irrespective of recoveries and, alternatively, whether the recoveries-only understanding prevented Stevensdrake from enforcing its contractual rights.

Disposition. The appeal was allowed on ground 1 and dismissed on ground 2. Grounds 3, 4 and 5 did not arise and were not decided.

1. Implied term. The conditional fee agreement was a short, clear, signed and self-contained contract. Schedule 1 expressly made the client personally responsible for payments and stated that liability was not limited by funds available in the liquidation. The proposed recoveries-only term contradicted that express provision.
2. The approach to implied terms stated in Marks and Spencer plc v BNP Paribas Securities Services Trust co (Jersey) Ltd [2015] UKSC 72; [2016] AC 742, reflecting the conditions identified in BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266, barred implication where the contract operated effectively without the term or where the term contradicted an express provision. The earlier 2006 exchange did not provide a contractual basis for overriding the later CFA.
3. Estoppel by convention. The doctrine, as summarised in Republic of India v India Steamship Co Ltd [1988] AC 878 and Christopher Charles Dixon EFI (Loughton) Limited v Blindley Heath Investments Ltd [2016] 4 All ER 490, was correctly directed. The evidence supported a shared understanding that Stevensdrake’s fees would be paid from recoveries and that Hunt would not be personally liable for any shortfall.
4. The relevant question was the overall effect of the parties’ communications and conduct, not the fine interpretation of isolated documents. The trial judge had assessed extensive documentary and oral evidence and made no error of law. The appellate court therefore gave real weight to his conclusion. The apportionment of the recovery from AS, discussions about the TP settlement, later fee discussions, the extension of the CFA and subsequent correspondence all supported the convention.
5. Hunt had seriously relied on the shared understanding. He would otherwise have replaced Stevensdrake with solicitors willing to act only on a recoveries basis. It would therefore be unjust to allow Stevensdrake to resile. The estoppel prevented recovery of Stevensdrake’s fees before recoveries; it did not render the CFA unenforceable. Briggs LJ agreed, while expressing reservations about the alternative findings on undue influence, negligence and fiduciary duty.

• Court of Appeal (Civil Division): In [2017] EWCA Civ 1173, the appeal was allowed on the implied-term ground and dismissed on estoppel by convention. The remaining grounds did not arise.
• High Court of Justice, Chancery Division: On 26 February 2016, His Honour Judge Barker QC dismissed Stevensdrake’s claim for its own charges, holding that the parties’ recoveries-only arrangement governed and that estoppel, among other alternative grounds, prevented recovery.