Riordan and Ors v Moon Beever Solicitors (a firm) [2018] EWHC 1452 (QB)
Since the introduction of the CPR in 1999 the Courts have had unfettered control to vary any Court Order, including Consent Orders. However, it seems to be the general consensus that where there has been a genuine agreement by both/all parties (as opposed to simply being unopposed) the Courts should be slow to interfere. The Court’s power to intervene where there is a Consent Order in place was recently demonstrated by Foskett J in Riordan v Moon Beevor Solicitors [2018] EWHC 1452 (QB).
The case arose out of litigation that progressed all the way to the Supreme Court in 2015 in which the Claimants lost. The previous Court of Appeal decision was upheld which allowed an appeal against a High Court Order granting relief to the Claimants against a debarring Order. The net effect of this litigation was that the Claimants were consequently liable to pay in excess of £2.2m in damages, plus costs in the region of £3.5m.
At the time the debarring Order was made, the Claimants were represented by a firm of Solicitors in Gateshead. However, the Claimants had complained about the conduct of their former Solicitors, blaming them for the debarring Order having followed their advice.
The Defendant firm thereafter represented the Claimants with the assistance of Leading and Junior Counsel until the retainer was terminated on 30 March 2015. At that stage, leave to appeal to the Supreme Court had been given, though it was not heard until17 November 2015. Judgment was thereafter given on 16 December 2015.
Unsurprisingly, the Claimants placed the blame at the feet of both their original instructed Solicitors and the Defendant in these proceedings for the overall outcome and submitted that they had lost millions of pounds due to their combined negligence.
The Defendant firm billed the Claimants approximately £1.2m in fees of which more than £200,000 was VAT (for which the Defendant had accounted for) and £582,000 plus VAT owed to Counsel.
Shortly before the 12 month deadline the Claimants applied for a detailed assessment of the bill under section 70 of the Solicitors Act 1974. The Claimants subsequently failed to comply with procedural Directions to file and serve evidence and therefore, Master Haworth struck it out.
The Claimants accordingly applied for relief which led to a Consent Order being agreed between the Solicitors and their former clients under which there would be an assessment of the Solicitors’ bill subject to a payment of £650,000 (approximately half of the bill), by 2 February 2018, unless they made an Application for an extension of time by 5 January 2018. In the event the Claimants failed to pay, the Claimants’ claim would be dismissed (again).
The Claimants did in fact fail to make good on the payment, but instead applied for the Consent Order to be varied to stay the assessment process as a result of a material change that in that the Claimants had only recently come to appreciate that they were in a position to pursue a claim for professional negligence against the Defendant and therefore, if successful, may “eclipse any costs due to the Defendant”.
Master Haworth ruled that this was a material change and therefore, stayed the Order.
However, what had not come to light at that stage was the fact that the Claimants had written to the Defendant back in October 2015 advising that a potential claim for negligence was being contemplated. Could this be considered a “material change” in the circumstances?
The matter thereafter came before Foskett J on appeal to consider this point.
In his Judgement, he said:
- “The master, who is very experienced in these matters, was of the clear view that, given the assertion of this professional negligence case, it would not be appropriate at this stage to shut out a detailed assessment of the defendant’s bill of costs: it is possible that the issues raised in the forthcoming litigation may have a bearing on the detailed assessment in due course. In my view, it was not strictly necessary to look for a ‘material change in circumstances’ since the consent order was made to justify such a decision. It was sufficient to say that the order should not be implemented in the situation prevailing at the time the court was invited to consider the issue. However, if it was necessary to look for a ‘material change in circumstances’, on the material before him, the master was certainly entitled to come to that decision. He did not have the letter of 9 October 2015 before him and so it is impossible to know what influence that might have had on his decision. For my part, had I been considering the issue, I might have been less persuaded that there was such a change of circumstances (in the sense of a supervening event) for the reasons mentioned by [the defendant’s counsel], although, at the end of the day, the difference between the position taken in the 9 October 2015 letter and the most recent letter is stark: in the former, there is a wholly unspecific and general allegation of negligence; in the latter there is a fully particularised case. That could well be seen as a significantly changed position.”
Accordingly, Foskett J ruled that the Master’s decision, “was well within his powers and, indeed, I respectfully consider it to have been correct”.
Notwithstanding that, he added that he would have been, “strongly minded to impose a time limit on the stay by reference to an appropriate date for the commencement of the proposed action”, rather than the Order for an indefinite stay, but the Court was reminded that this was not the subject of the appeal “and, in any event, should be seen as a case-management decision which could not said to be wrong”.
Foskett J concluded: “With some reluctance, I accept those contentions. The Defendants’ protection in this regard must come from the ‘liberty to apply’ provision.” Accordingly, the appeal was dismissed.