Spencer-White v Harding Evans LLP

A solicitor’s breach of a collateral assurance not to act for a client’s former spouse does not, without more, discharge the client’s separate retainer or defeat fees earned under it. The assurance is not implied into each later retainer where the contractual terms already govern and implication is unnecessary. Even if implied, it is not necessarily a condition; breach of a collateral contract ordinarily gives rise to damages, not repudiation of the main contract. A future intention is not an actionable representation of fact on these facts. Fiduciary duties cannot enlarge contractual duties. A contractual lien expressed to cover all papers and documents may extend to files unrelated to the particular unpaid invoice. The appeal was dismissed.

The respondent solicitors acted for the appellant over several years. Following a dispute about a lease variation, the appellant stopped giving new instructions. The respondent claimed unpaid fees for work on an abortive property sale and retained the appellant’s files under its terms of business.

The appellant alleged breach of an assurance that the respondent would not act for his former wife, misrepresentation, breach of fiduciary duty and repudiatory breach. He argued that the fees were not payable and that the respondent had no lien over his files.

After trial, the County Court at Cardiff awarded the respondent 85 per cent of the invoiced sum, awarded the appellant certain sums and damages, and ordered an offset. The appeal concerned the consequences of the assurance and the lien, with a contingent costs ground. The central issues were whether the assurance affected the fees and whether the contractual lien extended to all retained files.

Sharp LJ delivered the judgment, with which Rafferty LJ agreed. The appeal was dismissed.

1. The terms of business provided for charges based on time spent and for charges and expenses incurred up to termination. Payment was not contingent on completion of the proposed sale. The respondent was therefore contractually entitled to the fees payable under the retainer.
2. The assurance that the respondent would not act for the appellant’s former wife was treated, on the parties’ common ground, as a collateral contract. It was not necessary to imply the assurance as a term of each later legal-services retainer because the collateral contract already gave effect to it. The stringent approach to implying contractual terms identified in Marks and Spencer plc v BNP Paribas Securities Services Trust Company (Jersey) Limited and anor [2015] UKSC 72 was not satisfied.
3. Even if the assurance had been implied into the retainer, it could not be characterised as a condition capable of triggering repudiation. A breach of the collateral contract gave rise to damages and did not entitle the appellant to treat the main retainer as discharged, applying McDonald v Dennys Lascelles Ltd (1933) 48 C.L.R. 457. The breach concerning the Pipers Croft transaction was minor and did not amount to a destruction of trust and confidence.
4. The misrepresentation claim failed. The assurance that Mr Jenkins would act in a specified way in the future was a statement of future intention, not an actionable statement of fact. The respondent was not acting for the former wife when the Vineyard Mews retainer was entered into, so there was no false representation capable of inducing that retainer.
5. The solicitor-client relationship is fiduciary, but not every solicitor’s obligation is fiduciary. Fiduciary duties cannot enlarge contractual duties. The assurance arose from the collateral contract and was not inherent in the relationship, so it did not create a fiduciary duty. The principles stated in Bristol & West Building Society v Mothew [1998] Ch 1 and Clark Boyce v Mouat [1994] 1 A.C. 428 supported that conclusion.
6. The lien clause entitled the respondent to retain all papers and documents until all money owed for charges and expenses had been paid. The word all was broad enough to include files unrelated to the particular unpaid fees. The contingent costs ground therefore did not arise for consideration.

1. Court of Appeal (Civil Division): On 14 June 2017, Sharp LJ, with Rafferty LJ agreeing, dismissed the appeal concerning the fees, the alleged assurance and the respondent’s lien: [2017] EWCA Civ 434.
2. County Court at Cardiff: HHJ Milwyn Jarman QC awarded the respondent 85 per cent of the invoiced fees, awarded the appellant certain sums and damages, ordered an offset, and dismissed the remaining counterclaims.