Global Energy Horizons Corporation v The Winros Partnership

A solicitor’s entitlement to payment after terminating an entire litigation retainer for good reason remains subject to the parties’ agreement. Where payment under a conditional fee agreement depends on success and no success has occurred at termination, the solicitor cannot deliver a bill for fees as though an accrued debt existed, unless the agreement gives that right. The solicitor must elect between contractual termination rights and a damages claim where the agreement so provides.

A retrospective conditional fee agreement may make the client liable for basic charges for earlier work, including work outside an earlier limited retainer, where informed approval and the circumstances justify that result. A retrospective success fee is ordinarily unreasonable without a clear explanation that it may not be recoverable. Advance payments may also render a deferment success fee unreasonable where the client is effectively charged twice for delayed payment.

The claimant instructed the defendant solicitors under three conditional fee agreements concerning litigation against a former associate. Following earlier decisions on enforceability, termination and the character of the bills, the matter was remitted for detailed assessment.

The judgment determined whether the claimant could raise an objection that bills were payable at nil, whether work between two agreements was chargeable, whether earlier work outside the first agreement was covered by the second, and whether five per cent deferment success fees were reasonable.

1. Objection 1 was not an abuse of process. Although the claimant could and should have raised it at the earlier preliminary-issues hearing, the point had not been judicially decided. The earlier discussion of the consequences of repudiation was not part of the decision or ratio. Applying the broad, merits-based approach in Johnson v Gore Wood and the principles concerning interlocutory decisions in Koza Ltd v Koza Altin Isletmeri AS, there was no unjust harassment and any prejudice could be addressed in costs.
2. The defendant was not entitled to deliver the 2016 bill. The conditional fee agreement made payment dependent on the claim being finally won, and no such success had occurred when the retainer ended. The defendant had not exercised its contractual right to terminate under clause 14.3 and claim basic charges and disbursements. Instead, it claimed damages for repudiation. That election was inconsistent with treating the work charges as an immediately payable contractual debt.
3. The principle that a solicitor terminating an entire contract for good reason may recover fees for work done, stated in Richard Buxton v Mills-Owen, is subject to the agreement. It did not overcome the conditionality of the present agreements. The 2016 bill was therefore assessed at nil. The 2012 bill was likewise assessed at nil because the earlier appellate decision had established that no right to payment existed when it was delivered.
4. CFA 2 remained operative until superseded by CFA 3. The defendant could therefore charge basic fees under CFA 2 for the intervening work. The later client-care letter did not itself create or terminate a retainer where the parties intended to enter into a new conditional fee agreement.
5. The claimant was liable under CFA 2 for basic charges for work before its inception, including work outside CFA 1, because the retrospectivity had been informedly approved and was reasonable in the circumstances. It was not liable for retrospective success fees. Under CPR 46.9, absent an explanation that such fees were unusual and might not be recovered from the opponent, they were presumed unreasonable.
6. The five per cent deferment success fees under CFA 1 and CFA 2 were unreasonable and were disallowed. The substantial advance payments, combined with a charge equivalent to interest for delayed payment, meant that the claimant was effectively being asked to pay twice for the same funding benefit without a full and fair explanation.

1. High Court, Senior Courts Costs Office: determined the detailed-assessment objections. Objection 1 was dismissed as an abuse-of-process application. The 2012 and 2016 bills were assessed at nil for the reasons given. The remaining objections were determined as set out in the judgment.
2. High Court, Chancery Division: on appeal, Trower J held that CFA 2 and CFA 3 were enforceable, that CFA 3 had been terminated following the claimant’s repudiation, and that the 2012 bill was not a statute bill: [2021] EWHC 3410 (Ch).
3. Senior Courts Costs Office: Costs Judge James had earlier held that the CFAs were unenforceable, that CFA 2 and CFA 3 had been wrongfully terminated, and that the 2012 bill was not a statute bill: [2020] EWHC B27 (Costs).