Candey Limited v Stephen Finnan

A written and signed agreement between solicitor and client may constitute a contentious business agreement even where it permits charging by reference to hourly rates. Under Solicitors Act 1974, the court must determine the agreement’s validity and effect and may enforce it where it is fair and reasonable.

Separate provisions for a fixed payment and an hourly-rate liability should be read as part of the agreement as a whole. A solicitor’s decision not to enforce an available hourly-rate liability does not sever or invalidate the agreement. Defective drafting of the enforcement application may cause confusion, but does not retrospectively make the underlying agreement unfair or unreasonable.

Candey Limited applied under section 61 of the Solicitors Act 1974 to enforce a written funding agreement with its former client, Stephen Finnan. The agreement required payment of £60,000 plus VAT on account, a further £40,000 plus VAT if specified success conditions were met, and permitted recovery by hourly rates in defined circumstances.

Mr Finnan alleged dishonesty, misrepresentation, unfairness, unreasonableness, uncertainty and invalidity. He also challenged the presentation of the claim, particularly references to a further invoice and to sums payable being at least the stated amounts. The central issues were whether the agreement was a contentious business agreement, whether it was enforceable, and what sum was payable.

1. Agreement and statutory jurisdiction. The agreement was a contentious business agreement in the form of a CFA. Its reference to hourly-rate charging did not prevent that conclusion. Section 61 of the Solicitors Act 1974 gave the court jurisdiction to determine its validity, effect and enforceability.
2. Validity and fairness. The allegations of dishonesty, misrepresentation, unfairness and unreasonableness were rejected. Mr Finnan had sufficient time and intellectual sophistication to understand the straightforward agreement, had considered alternative firms, and was not under duress. The Claimant’s unsatisfactory pursuit of payment did not retrospectively make the agreement itself unreasonable.
3. Construction of the CFA. Clauses 3 and 4 were not contradictory and had to be read together as one document. Clause 3 created an hourly-rate liability where a costs order in Mr Finnan’s favour arose or the petition was settled on a damages-plus-costs basis. The Claimant’s commercial decision not to enforce that liability did not amount to severance or withdrawal of clause 3.
4. Clause 4 required £60,000 plus VAT on account and a further £40,000 plus VAT when the specified success conditions were met. Clause 5 concerned disbursements, including counsel’s and expert’s fees, rather than additional charges for the Claimant’s own services.
5. The settlement triggered the further £40,000 payment. The agreement was not an arrangement permitting recovery of a success fee exceeding 100 per cent. The additional invoice represented actual base costs and, in any event, had been withdrawn.
6. The claim form and supporting evidence were clumsily drafted and reasonably caused concern about further liability. That defect did not invalidate or render unenforceable the underlying CFA.
7. The agreement was enforced under section 61(2)(a). Mr Finnan was ordered to pay £100,000 plus VAT, with credit for sums paid on account. The question of timing of payment, interest and costs of the costs-only proceedings was adjourned for a further hearing. The reference to payment within 12 months of judgment included compromise by settlement.