The defendant solicitors acted in several matters for a client on terms specifying hourly rates but providing also for ‘a 20% reduction from solicitor/client costs for any lost cases’.
Held: The agreement amounted to a contingency fee agreement which was unenforceable as being contrary to public policy. The court rejected the solicitors’ argument that the agreement might be saved by severing the offending phrase. The clients were not liable for unpaid bills but, where bills had already been paid, the clients were not entitled to a refund: ‘Bills paid
Can it be said that the plaintiffs are entitled to recover their money because the consideration has wholly failed, being a consideration contrary to public policy or rendered under a contract which was void? If so, should such recovery only be on terms allowing TJG some remuneration including disbursements and profit? Can the concept non in pari delicto apply and, if so, what remedy would be open to the plaintiffs? I freely admit to finding these matters of the greatest difficulty. There is no clear guidance to be found in the authorities or in the textbooks. To allow the plaintiffs to recover but on terms would in effect be to allow TJG to recover on a quantum meruit if not to enforce the agreement. This cannot be right. Conversely, can it be a correct approach to take the view that the agreement is unenforceable and that the parties must therefore be left in the position in which they find themselves? This would enable TJG to take advantage of the champertous agreement dependent upon the plaintiffs’ discovery of its true nature. Conversely, is justice done by allowing the plaintiffs to take advantage of the services rendered by TJG without having to pay for them? One aspect of the law is tolerably clear, and that is, where property or goods are transferred under an illegal transaction or a lease granted for an illegal or an immoral purpose, the property will pass and an estate be created (see Feret v Hill (1854) 15 CB 207, [1843-60] All ER Rep 924, Belvoir Finance Co Ltd v Stapleton [1970] 3 All ER 664, [1971] 1 QB 210 and Tinsley v Milligan [1993] 3 All ER 65, [1994] 1 AC 340).
At the end of the day I take the view that, subject to any question of severance, where services have been rendered and paid for under an unenforceable contract in circumstances where it cannot be suggested that the payee has, apart from entering into the agreement, acted unconscionably towards the payer or been unjustly enriched at his expense, it is unreal to hold that the consideration, albeit one contrary to public policy, has wholly failed and that the plaintiff is entitled to recover the price of those services while retaining the benefit of them. The better rationale is that the champertous agreement is unenforceable rather than void or voidable. This view appears to be consistent with Re Hutley’s goods and Cole v Booker (1913) 29 TLR 295. In Rees v De Bernardy [1896] 2 Ch 437 there are references to ‘champertous and void’ but the agreement was apparently treated as voidable and set aside on the grounds of undue influence. Ratification was argued and negatived on the grounds that the co-heiresses at law never knew of their right to rescind the agreement. There could not have been any question of rescinding a void agreement.
Severance
Mr Spearman [for the solicitors] submitted that severance could be effected by deleting the words ‘for any lost cases’ from the sentence ending ‘our bills will be delivered when each matter is finalised in all respects with a 20% reduction from solicitor/client costs for any lost cases’. To my mind, this is not severance but an attempt at unilateral rectification by removing, to TJG’s pecuniary disadvantage, the words creating a differential fee. Severance is not possible.
I therefore conclude as follows: (1) the plaintiffs are not liable for unpaid bills; (2) where bills have been paid, the parties must remain where they find themselves.’
Judges:
Garland J
Citations:
[1995] 4 All ER 695
Jurisdiction:
England and Wales
Legal Professions
Updated: 12 April 2022; Ref: scu.444824