Home secretary must pay solicitor's fees after client 'vanished'

The home secretary must pay a law firm's fees after the Treasury Solicitor paid money for legal costs directly to a client who 'vanished', the Court of Appeal has ruled.

The court heard that Khans Solicitors in Ilford, Essex, acted for Chama Chifuntwe in a judicial review, which was settled. The Home Office agreed to pay £6,000 to cover his legal costs.

At this point Chifuntwe, who had paid the firm £1,500 on account, wrote to the Treasury Solicitor's costs draftsmen withdrawing his instructions to his solicitor and counsel, accepting the offer and asking for the £6,000 to be paid directly to him.

Khans wrote to their client, warning him not to interfere with the recovery of their costs and to the Treasury Solicitor, and launched an unsuccessful judicial review challenging the compromise agreement accepted by their client.

Delivering judgment in Khans Solicitors v Chifuntwe [2013] EWCA Civ 481, Sir Stephen Sedley said the Treasury Solicitor paid the £6,000 to Chifuntwe, who, "as Khans had warned them might happen - has vanished with it."

He said Khans then issued proceedings under CPR part 8, claiming a declaration that the compromise was not valid and a charge or lien on what would have been the unassessed costs.

Sir Stephen Sedley said the single issue in the case was the "efficacy or inefficacy" of the notice given by Khans to the Treasury Solicitor.

"The ability of a client to dismiss his lawyers and to continue in person is undoubted. Mr Chifuntwe was accordingly free in principle both to compromise his claim for costs and to take payment of the agreed sum himself.

"Neither act, of course, relieved him of his obligation to Khans in the full amount of his solicitor and client bill, less the £1,500 paid by him upfront."

Sir Stephen concluded that the court "will intervene to protect a solicitor's claim on funds recovered or due to be recovered by a client or former client if (a) the paying party is colluding with the client to cheat the solicitor of his fees, or (b) the paying party is on notice that the other party's solicitor has a claim on the funds for outstanding fees.

"The form of protection ought to be preventive but may in a proper case take the form of dual payment."

Sir Stephen ruled that the compromise agreement between the Treasury Solicitor and Chifuntwe acting in person was binding, but, by the time the money was paid, the home secretary was "on clear notice" not to pay Chifuntwe money which was "in every material sense (apart from £1500 of it) Khans'".

He ordered the home secretary to pay £6,000 to the law firm, less the £1,500 which Chifuntwe was entitled to.

Sir Stephen allowed the appeal by the law firm to that extent. Mr Justice Ryder and Lord Justice Rix agreed.