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Court of Appeal decides firm is entitled to its costs following suspension of its retainer

Court finds that firm’s refusal to work until outstanding fees were paid amounted to suspension, and not termination, of its retainer

The Court of Appeal, sitting with the Senior Costs Judge as an assessor, has allowed an appeal by a firm of solicitors against an order of Cranston J. In Cawdery Kaye Fireman & Taylor v Minkin [2012] EWCA Civ 546 the Court decided that where solicitors in matrimonial proceedings refused to carry out work until outstanding fees, or an amount on account, were paid, the refusal constituted a suspension of the retainer until payment was made. It did not amount to a repudiation of the contract so that no fees were payable.

The court heard that the respondent, Mr  Minkin,  was involved in matrimonial litigation with his wife, from whom he had separated.

An estimate of fees in the sum of £3,000 + VAT was given to Mr Miskin and he paid £2,000 on account. The firm then sent the client a retainer letter saying "our overall charges and expenses for this matter are likely to be £3,500 plus VAT. I will try and keep costs down as much as possible, hopefully to £3,000 plus VAT." Mr Minkin signed the retainer letter.

The proceedings became more complicated than originally envisaged. The firm sent Mr  Minkin  an interim invoice. It advised him of his right to a detailed assessment of the bill. The bill was for £5,472.50 and gave credit for the £2,000 paid on account.

After various communications concerning the outstanding sum, the firm emailed Mr Minkin to give notice that it would not either obtain a counsel's opinion or launch directly into the proposed proceedings "until we are up to date on fees and have money on account". 

In the Court of Appeal, Ward LJ, giving the lead judgment and referring to the firm's email, said

'[N]ot being prepared to act until money is paid shows a willingness to act when there is money on account.  This is clear language of suspension as the Master correctly held and I regret that I fundamentally disagree with Cranston J.'s view that "the language of these emails is redolent of termination, not suspension".  I do not see it that way.  The message is, "I will not do any more work until you pay up": the message is not, "I will not do any more, goodbye".  The continuing correspondence shows that the parties did not proceed upon the basis that it was all over between them.'

Accordingly there was no repudiation of the retainer.

In due course Mr Minkin told the firm that he had lost confidence in his solicitor and that he did not propose to issue further instructions. The firm wrote to the court stating that they were no longer instructed.

Of this withdrawal of instructions Ward LJ said:

'The client's termination of the contract absolves the solicitor from any further performance of the contract but it does not absolve the client from paying the costs properly incurred to that date.'

The full judgment can be read here.