You are here

Firm that 'threatened to down tools' must reimburse client

15 February 2011

A firm which refused to continue acting for a client in a row over fees must repay the entire amount of its fees plus VAT, the High Court has ruled.

The court heard that the firm, in Hampstead, London, told a client that its estimated fee for a matrimonial hearing would be £3,500 plus VAT.

Delivering judgment in Minkin v Cawdery Kaye Fireman & Taylor [2011] EWHC 177 (QB), Mr Justice Cranston said the firm sent Gary Minkin an interim bill for almost £5,500 plus VAT.

Minkin paid the firm £3,000, but the firm replied that it could not continue to act unless it received the rest.

In September last year, Master O’Hare held that Minkin had reasonable justification to delay payment because the invoice exceeded the estimate, but the firm had no right to suspend work.

Cranston J said the master concluded the firm terminated its retainer by refusing to do further work without payment, amounting to a repudiatory breach of contract.

“The breach was a serious breach,” Cranston J said. “The firm ‘downed tools’, in particular in refusing to contact the court, thereby destroying the prospects of a continuing relationship with Mr Minkin.

“The firm was not entitled to any costs. The firm had to refund all the amounts paid, less counsel’s fees.”

Upholding Master O’Hare’s ruling, Cranston J said termination of retainers had to be on “reasonable notice”, under section 65(2) of the Solicitors Act 1974.

He said that the firm’s interim bill of £5,472.50 exceeded the estimate of £3,500 plus VAT by a “considerable margin”.

The firm knew that Minkin had “limited funds” and yet gave him no advanced warning that the estimate was being exceeded, he said.

“The first time he knew that this had occurred was when he received the invoice.”

Cranston J said that there was no flaw in the master’s finding that the retainer was terminated by the firm and not by Minkin.

“The outcome may seem harsh on the firm,” Mr Justice Cranston said. “But the fact is that it should have been clearer in its retainer letter as to the nature of the engagement.

“That may have allowed it to inform Mr Minkin that pursuit of the tenants his wife had allowed into the matrimonial home did not fall within its ambit. It should also have complied with the terms in its retainer letter and those in its standard terms of business.

“Under these it should inform a client in writing when it appears that any previous estimate may be exceeded.

“It must then consider whether, in the circumstances, the client has reasonable justification for not paying and whether it would be reasonable to terminate the contract for non-payment. And it can only do that with reasonable notification.”

Cranston J dismissed the firm’s appeal.

Categorised in:

Risk & Compliance Local government