Michael Glaser KC & Anor v Katharine Jane Atay

This appeal concerned standard-form contracts between barristers instructed under the Public Access scheme and their lay client and whether a contractual term requiring payment of a fixed fee even if a listed hearing was adjourned or otherwise did not go ahead was an unfair term within Part 2 of the Consumer Rights Act 2015. The Court held that the “Payment Term” was not within the safe harbour for assessment of price under s.64(1)(b) and, on the facts, fell within paragraph 5 of Schedule 2 (the grey list) and was unfair under s.62(4) because it produced a significant imbalance and was contrary to the requirement of good faith.

Because an unfair term is not binding under s.62(1) and the contract remains in effect so far as practicable under s.67, the court examined the contractual remainder (notably the instalment provisions) and the legal consequences. The Court agreed with the High Court that, with the unfair Payment Term removed, counsel had no contractual entitlement to the agreed lump sum for the unperformed hearing and there was no basis on the facts for a further award on a quantum meruit or unjust enrichment basis; the contract had in any event been rendered incapable of performance by the adjournment (frustration), and prior instalments that had fallen due and been paid were addressed in the lower courts’ orders.

Background and parties

• The defendant (Mrs Atay) directly instructed the claimants (Mr Glaser KC and Ms Miller) to act as leading and junior counsel in high-value financial remedy proceedings, including a 10-day final hearing listed for 21 September 2020. The written engagement letters set a fixed fee for preparation and representation and expressly provided that if the hearing concluded early, was adjourned, or did not proceed for any reason beyond counsel’s control the full fee remained payable. Fees were payable by instalments.
• The hearing was adjourned on 26 August 2020 and the client then disinstructed counsel and refused further payments. Counsel sued for the balance; the district/county court judge (HHJ Berkley) found the Payment Term unfair but awarded counsel 70% of the outstanding contractual fees on a quantum meruit basis. Turner J in the High Court allowed the client’s appeal on the quantum meruit point and ordered repayment of sums paid under the First Contracts. The claimants appealed to the Court of Appeal.

Nature of the claim / relief sought

• Counsel claimed unpaid contractual fees under the engagement letters; alternatively they pleaded entitlement to reasonable payment by implied term or on a quantum meruit/unjust enrichment basis.

Issues framed by the court

1. Whether the Payment Term was excluded from fairness assessment as specifying the main subject matter or price under s.64(1) (in particular s.64(1)(b)) of the Consumer Rights Act 2015.
2. Whether the Payment Term fell within paragraph 5 of Schedule 2 (a term permitting a trader to claim a disproportionately high sum where a consumer cancels or does not perform the contract).
3. Whether the Payment Term was unfair under s.62(4) (significant imbalance and contrary to good faith).
4. If the term was unfair and therefore not binding, what the consequences were for counsel’s entitlement: whether contractual entitlement remained (by virtue of instalments fallen due), whether a contractual quantum meruit or restitutionary remedy lay, and whether frustration or the Law Reform (Frustrated Contracts) Act 1943 affected the outcome.

Court’s reasoning and conclusions

• The Court rejected the argument that the Payment Term was within the safe harbour of s.64(1)(b). The dispute was not about whether the total fees were an appropriate price for the services supplied, but about the effect of the timing and non-refundability provision. The Court applied authority (notably Director-General of Fair Trading v First National Bank plc) to construe s.64(1)(b) narrowly.
• The Payment Term was within paragraph 5 of Schedule 2 on its object and effect: it could require the consumer to pay a disproportionately high sum where the consumer decided not to conclude or perform the contract (or where a hearing settled or was otherwise rendered unnecessary) because it made the full lump sum payable even if the bulk of the contracted services were not supplied.
• On the statutory fairness test (s.62) the term caused a significant imbalance in rights and obligations and was contrary to the requirement of good faith. The Court emphasised information asymmetries in direct access arrangements, the presentation of the terms as a fait accompli, the customer’s potential vulnerability and the absence of any mechanism in the term to apportion or rebate payment in differing circumstances.
• Having declared the Payment Term not binding (s.62(1)), the Court considered the contractual remainder. The instalment payment provision remained. The Court accepted that where instalments have been contractually made due they can be recoverable, and that deposits or prepayments can have different consequences, but on the facts the adjournment had already made performance of the contracts impossible (frustration) before the third instalment fell due; counsel therefore had no contractual entitlement to the outstanding lump sum. The Court also rejected the award of a quantum meruit for the unperformed hearing and found that restitutionary recovery would not, on the material before the court, have succeeded for sums in excess of the benefit actually received by the client.

Wider context and implications

• The judgment emphasises the interaction of consumer protection law with professional retainer practice in direct access instructions. The Court indicated that counsel remain able to structure fair contractual protections, but that one-sided non-refundable lump-sum provisions which transfer the entire risk of an adjournment to the consumer risk being struck down as unfair.

This was an appeal from the High Court. The appeal by counsel was dismissed. The Court of Appeal held that the contractual term making the full fixed fee payable even if the hearing was adjourned or did not go ahead was not within the s.64(1)(b) safe harbour, fell within paragraph 5 of Schedule 2 and was unfair under s.62(4) (significant imbalance and contrary to good faith). With the unfair Payment Term removed the contractual instalment provisions remained but, on the facts, the retainer had been rendered incapable of performance by the adjournment before the third instalment fell due; counsel therefore had no contractual right to the outstanding lump sum and no entitlement to a quantum meruit award on the material before the court. The appeal is dismissed; the High Court’s order requiring repayment of the sums identified remained supported by the court’s analysis.

County Court (Winchester) trial before HHJ Berkley (judgment handed down 6 December 2022): held Payment Term unfair and awarded 70% of outstanding contractual fees on quantum meruit. High Court (King’s Bench, Turner J) [2023] EWHC 2539 (KB) (12 October 2023): allowed the defendant’s appeal as to quantum meruit, held the Payment Term unenforceable and that no contractual or quantum meruit entitlement to the agreed lump sum remained; ordered repayment of sums paid. Court of Appeal (Civil Division) [2024] EWCA Civ 1111 (3 October 2024): dismissed counsel’s appeal and upheld the outcome in the High Court.