Slade (t/a Richard Slade And Co) v Abbhi

An oral promise to fund another person’s legal fees is a primary funding obligation where the promisor undertakes to provide the money in any event, rather than only upon the other person’s default. Such an obligation is not a guarantee merely because the client remains contractually liable to the solicitor and payments are routed through the client.

Section 4 of the Statute of Frauds 1677 therefore does not apply to a primary funding promise. If the arrangement had instead been a guarantee, the writing relied upon would have needed to evidence all material terms of that guarantee.

The claimant solicitor acted for a client in substantial litigation. He alleged that the defendant, the client’s son-in-law, orally agreed to provide the funds needed to pay the solicitor’s fees, with payments routed through the client to reduce the defendant’s potential exposure to a third-party costs order.

The defendant denied making the agreement. Alternatively, he argued that any promise was a guarantee unenforceable under section 4 of the Statute of Frauds 1677. The court had to determine whether the oral agreement existed, whether it imposed primary or secondary liability, and the amount of damages and interest recoverable.

1. The claim succeeded in principle. The court preferred the claimant’s evidence of the meeting and found that the defendant had agreed to fund the client’s legal fees. The contemporaneous documents, the surrounding circumstances and the defendant’s changing account supported that conclusion. The court applied the approach in Grace Shipping v Sharp & Co [1987] 1 Lloyd’s Rep 207 and Gestmin SGPS SA v Credit Suisse (UK) Limited [2013] EWHC 3560 (Comm), giving greater weight to documentary evidence and inferences from known or probable facts than to unreliable recollection.
2. The agreement was a primary funding agreement. Its substance was that the defendant would provide the money because the client could not pay. The obligation was not contingent upon prior default by the client. The fact that payments were to be made through the client, and that the client remained liable under the retainer, did not convert the defendant’s promise into a guarantee.
3. The court applied Guild & Co v Conrad [1894] 2 QB 885 and Vossloh Aktiengesellschaft v Alpha Trains (UK) Limited [2010] EWHC 2443 (Ch). A promise to put the claimant in funds in any event is primary, rather than a promise to answer for another’s debt, default or miscarriage. The earlier loan agreement between the defendant and the client prescribed the payment conduit but did not impose a cap on the defendant’s separate obligation to the claimant.
4. Section 4 of the Statute of Frauds 1677 consequently had no application. Alternatively, if the promise had been a guarantee, the emails relied upon did not evidence all material terms or recognise the alleged guarantee. The court considered Golden Ocean Group Ltd v Salgaocar Mining Industries Pvt Ltd [2012] EWCA Civ 265 and Tiverton Estates Limited v Wearwell Ltd [1975] Ch 146.
5. Judgment was given for the claimant, with damages and any interest to be assessed after a further hearing. The court left the issues of quantum and the proper basis for interest, including possible reliance on section 35 of the Senior Courts Act 1981, for further argument.

First-instance judgment in the High Court (Commercial Court). No appellate history is stated.