ASCENSION ASSET MANAGEMENT LIMITED v SKY SOLICITORS LIMITED

A discounted conditional fee agreement is interpreted objectively and as a whole. The fact that it must be in writing does not require a purely literal approach.

Where a claim succeeds through settlement without an express costs order, a term limiting the solicitor-client liability to costs recovered under an inter partes costs order does not ordinarily prevent recovery of reasonable basic charges. Such a reading may be reached by interpretation or, alternatively, by implication where necessary for business efficacy.

Estoppel by convention may also prevent reliance on a contractual construction which would defeat the solicitor’s entitlement, where the parties shared and acted upon a contrary assumption. A broad indication of fees will not cap costs unless it is clear, unequivocal and relied upon to the client’s detriment.

The claimants instructed the defendant solicitors under two discounted conditional fee agreements in related rent and Chancery proceedings. The claims were resolved by a settlement deed under which the parties were to bear their own costs.

The claimants sought assessment of the solicitors’ bill and argued that the agreements limited liability to basic charges recovered from the opponents, or alternatively that representations made during mediation capped liability at £50,000. The defendant claimed entitlement to its basic charges and pursued an alternative damages claim.

The central issues were the proper construction of the agreements, whether a term should be implied, whether the claimants were estopped from relying on the suggested construction, and whether any fee cap arose.

1. Entitlement to basic charges. The defendant was entitled to reasonable basic charges. The agreements were to be interpreted objectively, as a whole, by a unitary and iterative process. The statutory requirement that a conditional fee agreement be in writing did not impose a special literalist method of interpretation.
2. The claimants’ construction of clause 7.3 would make the agreements commercially unworkable. It would allow a client to avoid liability by settling without an express costs provision, potentially leaving the solicitor worse off after success than after failure. Read with clauses 7.1 and 7.2, clause 7.3 limited the client’s liability only where, and to the extent that, a costs order had been made in the client’s favour. It did not apply where the successful settlement contained no costs order.
3. Alternatively, a term to that effect was implied. It was reasonable and equitable, necessary to give the agreements business efficacy, obvious in the relevant sense, capable of clear expression, and consistent with the express terms.
4. In any event, the parties had proceeded on the shared assumption that basic charges would remain payable. The defendant relied on that assumption by continuing to undertake substantial work, and it would be unconscionable to permit the claimants to rely on clause 7.3 to defeat the claim.
5. There was no general obligation requiring the claimants to secure a settlement which protected the solicitors’ costs. The alternative claim based on failure to co-operate would therefore have failed.
6. The alleged £50,000 cap was rejected. No clear or unequivocal representation had been made that total costs would not exceed that amount, and the claimants had not established detrimental reliance. The judge nevertheless indicated that earlier costs estimates might provide a yardstick when assessing reasonableness if the remaining differences could not be resolved.