Westlaw Services Ltd & Anor v Boddy & Anor [2010] EWCA Civ 929

Case No A2/2009/1496[2010] EWCA Civ 929
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
Venue LEEDS DISTRICT REGISTRY, Royal Courts of Justice, Strand, London, WC2A 2LLDate 30/07/2010
Before
LORD JUSTICE RIXLORD JUSTICE ETHERTONLORD JUSTICE GROSS
Between
(1) Westlaw Services LimitedAppellants(2) Tahir KhanAppellant(1) Lisa Ann BoddyRespondents(2) Solicitors Regulation AuthorityRespondent
(Transcript of the Handed Down Judgment ofWordWave International LimitedA Merrill Communications Company165 Fleet Street, London EC4A 2DYTel No: 020 7404 1400, Fax No: 020 7404 1424Official Shorthand Writers to the Court)
Mr Robert Englehart QC (instructed by Carter Fox) for First AppellantMr Kevin Metzger (instructed by Carter Fox) for Second AppellantMr William Buck (instructed by Close Thornton) for First RespondentJames McClelland (instructed by Russell Cooke) Second RespondentHearing Hearing dates: 9th July 2010
JudgmentLORD JUSTICE ETHERTON :Introduction
[1]This is an appeal from an order on 22 June 2009 of His Honour Judge Langan QC, sitting as a High Court judge, by which he dismissed the claim of the First Appellant, Westlaw Services Limited (“Westlaw”), pursuant to CPR 3.4, and he dismissed the claim of the Second Appellant, Tahir Khan (“Mr Khan”), pursuant to CPR 3.4 and CPR Part 24. Westlaw claimed as assignee of Kush Verma (“Mr Verma”). The claims were for payment for services provided by Mr Verma and Mr Khan to Peter Boddy (“Mr Boddy”), a solicitor, who died on 19 February 2004. The claims were against Mr Boddy’s widow, Lisa Ann Boddy, as executrix of her husband’s estate. She is the First Respondent to these appeals. The essence of the reasoning of the Judge was that the alleged agreements between Mr Verma and Mr Khan with Mr Boddy were unlawful agreements to share fees, in breach of Rule 7(1) (“Rule 7(1)”) of the Solicitors’ Practice Rules (“the SPR”) 1990, and so were void and unenforceable.[2]The Second Respondent is the Solicitors Regulation Authority (“the SRA”), which has intervened in the appeals as an interested party.

Rule 7(1)

[3]At the date of the alleged agreements with Mr Boddy Rule 7(1) was as follows:
“(1) (Fee sharing – the general rule) A solicitor shall not share or agree to share his or her professional fess with any person except: (a) a practising solicitor; (b) a practising lawyer of another jurisdiction (other than a lawyer who has been struck off the register of foreign lawyers or the register of European lawyers, or whose registration has been suspended); (ba) a non-registered European lawyer partner in a partnership permitted by paragraph (6)(c) of this rule; (bb) a body corporate wholly owned and controlled, for the purpose of practising law, by lawyers within sub-paragraph (b) above, but without the involvement of registered European lawyers or registered foreign lawyers practising as such as directors, members or owners of shares; (bc) a body corporate permitted under Rule 9(1)(a) of the Solicitors’ Overseas Practice Rules; (c) the solicitor’s bona fide employee, which provision shall not permit under the cloak of employment a partnership prohibited by paragraph (6) of this rule; or (d) the retired partner or predecessor of the solicitor or the dependants or personal representatives of a deceased partner or predecessor; or (e) a charity (as defined in Rule 18(2)(aa) of these rules) …”
[4]A new Rule 7(1A) was introduced from about March 2004, which provided an exception for a third party “fee sharer” if the purpose of the fee sharing arrangement was solely to facilitate the provision of services to a practice. It was as follows: (1A) (Fee sharing – exception for introducing capital or providing services) Notwithstanding paragraph (1) of this rule a solicitor may share his or her professional fees with a third party (“the fee sharer”) provided that:(a) the purpose of the fee sharing arrangement is solely to facilitate the introduction of capital and/or the provision of services to a practice;(b) neither the fee sharing agreement between the solicitor and a fee sharer, nor the extent of the fees the solicitor shares with fee sharers, permits any fee sharer to influence or constrain the solicitor’s professional judgment in relation to the advice given to any client;(c) the operation of the agreement does not result in a partnership prohibited by paragraph (6) of this rule;(d) if requested by the Law Society to do so, the solicitor supplies details of all agreements between the solicitor and fee sharers and the percentage of the annual gross fees of the practice which has been paid to each fee sharer; and(e) the fee sharing agreement does not involve a breach of the Solicitors’ Introduction and Referral Code. ‘Fee sharer’ means a person who or which shares a solicitor’s fees in reliance on the exception contained in this paragraph, and the expression includes any person connected to or associated with the fee sharer.”

Background

[5]Mr Boddy was a solicitor practising as a sole practitioner under the name “Peter Boddy Solicitors”. His practice was in the conduct of criminal litigation, all or most of which was publicly funded. Prior to 2002 he mostly handled work in the magistrates’ courts. In 2002, with a view to expanding his work in the Crown Court, he entered into agreements with Mr Verma, who carried on business under the name Westlaw Services, and Mr Khan. Mr Verma was, at that time, a law graduate. He has now qualified as a solicitor. Mr Khan was not legally qualified in any way. They were very successful in the pursuit of Crown Court work for the firm.[6]In their amended Particulars of Claim Westlaw and Mr Khan allege that at all material times Mr Verma and Mr Khan were “legal consultants”, and that Mr Boddy separately agreed with each of them that, in return for them assisting him with the work required for him to represent clients charged with criminal offences, he would pay them a percentage of the money received from the Legal Services Commission (“the LSC”) for representing those clients. They allege that Mr Boddy agreed to pay to Mr Verma 75 per cent of the net fee received from the LSC for the work done by him; and that he would pay Mr Khan 50 per cent of the net fee received from the LSC for the particular case in question, less VAT and disbursements; and that Mr Boddy would reimburse disbursements incurred by Mr Verma and Mr Khan in the course of their work for him once payment was received from the LSC; and that, where both Mr Verma and Mr Khan worked on the same case at Mr Boddy’s request, the payment to Mr Verma was treated as a disbursement when calculating the total fee for the purpose of paying Mr Khan.[7]The amended Particulars of Claim allege that clients were introduced by Mr Verma and Mr Khan to Mr Boddy, who then acted for those clients; that they carried out “legal work” to assist Mr Boddy as requested by him, and thereby became entitled to the payment agreed with Mr Boddy. The amended Particulars of Claim allege that, to the best of the knowledge and belief of Westlaw and Mr Khan, all the cases in which Mr Verma and Mr Khan assisted Mr Boddy have been paid by the LSC, but, in breach of contract, Mr Boddy did not pay them, and Mrs Boddy has not yet paid them, the sums due pursuant to their agreements with Mr Boddy. In particular, it is alleged that Westlaw, as assignee of Mr Verma, is entitled to £207,617.20, being 75 per cent of the net sum paid in respect of hours worked by him in cases in which he assisted Mr Boddy; and that Mr Khan is entitled to £169,656.33, being 50 per cent of the gross sum of £398,692.37 paid in respect of cases in which he assisted Mr Boddy, less the VAT, disbursements and payments to Mr Verma in respect of those cases. Westlaw and Mr Khan also claim that, to the best of their knowledge and belief, the total disbursements incurred by Mr Verma and Mr Khan amount to £28,092.52, which ought to be reimbursed. Westlaw and Mr Khan claim that, by reason of breach of the agreements between Mr Verma and Mr Khan and Mr Boddy, Mr Verma and Mr Khan have suffered loss and damage in the sum of at least £378,142.80, being the total of the sums mentioned.[8]A deed of assignment dated 4 April 2008 (“the Assignment”) provided that Mr Verma:
“… formerly trading as Westlaw do assign all rights arising in respect of my contract with the late Mr Peter Boddy (Solicitor) for services performed for the late Mr Peter Boddy (Solicitor) to Westlaw Services Limited”
.

The proceedings

[9]Westlaw issued its claim form on 25 April 2008, as assignee of Mr Verma pursuant to the Assignment.[10]Mr Khan issued his claim form on 16 May 2008.[11]Defences were served by Mrs Boddy to both sets of proceedings.[12]By order dated 11 December 2008 the Judge ordered that the two sets of proceedings be consolidated. The amended Particulars of Claim, to which I have already referred, were served in the consolidated proceedings, purportedly replacing Westlaw, as one of the claimants in the title to the proceedings, with “Kush Verma (Trading as Westlaw Services)”. It was acknowledged by counsel for Westlaw before the Judge, as before us, that this was an error, and that Westlaw has remained one of the two claimants throughout. Further Defences were served by Mrs Boddy. A Reply was served by Westlaw, and a Reply and Defence to Counterclaim were served by Mr Khan.[13]On 28 April 2009 Mrs Boddy issued applications to strike out Westlaw’s claim and to strike out or alternatively obtain summary judgment in respect of Mr Khan’s claim.[14]The applications were heard by the Judge on 22 June 2009. The basis of the application in respect of Mr Khan’s claim was that the agreement between him and Mr Boddy was illegal because it was in breach of Rule 7(1). So far as concerns Westlaw’s claim, Mrs Boddy took the same point as to illegality and breach of Rule 7(1), and in addition a point on the apparent substitution of Mr Verma for Westlaw in the title to the amended Particulars of Claim and consequential alterations to the body of the amended Particulars of Claim.[15]In anticipation of the hearing of the strike out and summary judgment applications, a skeleton argument was prepared on behalf of Westlaw and Mr Khan, who at that stage were represented by the same solicitors and counsel, Mr Simon Myerson QC. After dealing with the question of the apparent substitution of Mr Verma for Westlaw, the following points were made in the skeleton argument. It was asserted that there was no breach of Rule 7 because Mr Boddy was not sharing professional fees, but rather agreeing to pay for work done. It was asserted that Mr Verma and Mr Khan were bona fide employees within Rule 7(1)(c), and that they were not partners because they did not share profits or liabilities, but worked as directed by Mr Boddy and were covered by his policy of indemnity. Reliance was also placed on Rule 7(1A) introduced from March 2004. The skeleton argument further alleged an estoppel by representation or by convention that the work done by Mr Verma and Mr Khan was properly done and accounted for. Reference was also made to Mohammed v Alaga & Co [1999] EWCA Civ 3037, and to a quantum meruit claim which was considered by the Court of Appeal in that case. Paragraph 29 of the skeleton argument said:
“The claim for payment for professional service is exactly what the claimants make in this case. The evidence is that the quantum meruit and the current claim would be indistinguishable”
.

The judgment

[16]The Judge considered that Mohamed is binding authority that the alleged agreement between Mr Boddy and each of Mr Verma and Mr Khan was unlawful and unenforceable because it contravened Rule 7. He rejected the submission of Mr Myerson, who appeared for Westlaw and Mr Khan, that the factual differences between the present proceedings and those in Mohamed make the point of principle in that case inapplicable to the claims in the present proceedings. The Judge also rejected Mr Myerson’s submission that Mohamed is not applicable because there have been significant developments in the professional regulation of solicitors since 1990 and since the alleged agreements were made in 2002, with particular reference to Rule 7(1A) introduced in March 2004 and the fact that fees were for the most part received by Mr Boddy after that date. Finally, the Judge rejected the submission of Mr Myerson that Mr Verma and Mr Khan were bona fide employees within the exception in Rule 7(1)(c). He observed that the tone and substance of the pleading was, with one small exception, to the effect that Mr Verma and Mr Khan were independent providers of services, and concluded that such persons are not employees for the purposes of Rule 7(1)(c). The Judge concluded that this was a simple case, in which he could see no prospect whatever of the court upholding the contracts relied upon as lawful or enforceable; and that, accordingly, the applications succeeded, and the action had to be dismissed.

The Appeal

[17]There are numerous grounds of appeal, but, in the event, Mr Robert Englehart QC, now representing Westlaw, and Mr Kevin Metzger, now representing Mr Khan, pursued only a few of them on the hearing of the appeal.[18]In their amended Appellants’ Notice, Westlaw and Mr Khan have applied for orders:(1) that they be permitted to amend their pleadings to add an alternative claim for reasonable remuneration for professional services rendered;(2) that they be permitted to raise a new issue as to whether Rule 7(1) was ultra vires and void; and(3) that Mr Khan be given permission to adduce fresh evidence concerning his employment. Only applications (1) and (3) were pursued at the hearing of the appeal.[19]Mr Englehart’s first substantive argument was that the Judge was wrong to hold that Mohamed is conclusive that the effect of contravention of Rule 7(1) was that the alleged agreements with Mr Boddy were void and unenforceable. Mohamed concerned an alleged agreement between the plaintiff and the defendant firm of solicitors by which he agreed to introduce Somali refugees to the defendants and to assist the defendants in the preparation and the presentation of asylum claims, in consideration of being paid half of the legal aid fees received by the defendants. The plaintiff alleged that he had introduced a number of clients to the defendants, and had carried out associated services for them. He claimed 50 per cent of the relevant legal aid fees received by the defendants based on that agreement; alternatively, a reasonable price, being the same as the contractual price (50 per cent of the legal aid fees) for the work he had done at their request; alternatively, a quantum meruit for the services he had rendered. The defendants denied there was any such agreement as alleged. They claimed that, even if there was such an agreement, it was illegal and unenforceable because it was contrary to Rules 3 and 7 of the SPR 1990. The judge made two factual assumptions in favour of the plaintiff: that the alleged agreement had been made, and that the plaintiff was unaware of any prohibition of the fee sharing arrangement. The judge held that, since the agreement was in breach of the SPR, it was void and unenforceable and that any claim by way of restitution also failed. He, accordingly, struck out the claim and dismissed the action. On appeal, it was held by the Court of Appeal that the alleged contract was void and unenforceable by virtue of Rules 3 and 7; and that, since public policy precluded recovery under the contract, the plaintiff could not recover the same relief by bringing a claim in restitution based on the same contractual provisions; but that the plaintiff might properly pursue a quantum meruit claim against the defendants for reasonable remuneration.[20]Lord Bingham CJ, with whose judgment the other members of the Court of Appeal agreed, quoted the following passage in the speech of Lord Diplock in Swain v The Law Society [1983] 1 AC 598 at p. 608, describing the role of the Law Society in making rules such as Rule 3 and Rule 7:
“It is quite otherwise when the Society is acting in its public capacity. The Act of 1974 imposes upon the Society a number of statutory duties in relation to solicitors whether they are members of the Society or not. It also confers upon the Council of the Society, acting either alone or with the concurrence of the Lord Chief Justice and the Master of the Rolls or of the latter only, power to make rules and regulations having the effect of subordinate legislation under the Act. Such rules and regulations may themselves confer upon the Society further statutory powers or impose upon it further statutory duties. The purpose for which these statutory functions are vested in the Society and the Council is the protection of the public or, more specifically that section of the public that may be in need of legal advice, assistance or representation. In exercising its statutory functions the duty of the Council is to act in what it believes to be the best interests of that section of the public, even in the event (unlikely though this may be on any long-term view) that those public interests should conflict with the special interest of members of the Society or of members of the solicitor’s profession as a whole. The Council in exercising its powers under the Act to make rules and regulations and the Society in discharging functions vested in it by the Act or by such rules or regulations are acting in a public capacity and what they do in that capacity is governed by public law; and although the legal consequences of doing it may result in creating rights enforceable in private law, those rights are not necessarily the same as those that would flow in private law from doing a similar act otherwise than in the exercise of statutory powers.”
[21]Lord Bingham added, at page 1823C/D, that the requirement that the Master of the Rolls should concur in the making of rules under section 31 was in his judgment enacted to ensure that the wider interest of the public is recognised in any rules that are made.[22]Lord Bingham, at page 1823E-G, summarised as follows the arguments advanced on the appeal by leading counsel for the plaintiff: “(1) In the absence of any statutory or other legal restriction everyone is free to make any contract they like and such contracts are enforceable. (2) While the Solicitors Act confers power on the Law Society to make rules to regulate the conduct of solicitors, the Law Society has no power to regulate the conduct of the public at large who are not solicitors. (3) Thus, while the Law Society may lawfully forbid solicitors to make fee-sharing agreements, it has no power to forbid anyone else, nor to ordain that such agreements shall be unenforceable save by solicitors. (4) In the absence of an effective legal prohibition a non-solicitor party who makes a fee-sharing agreement with a solicitor is entitled to enforce it. (5) it would be repugnant if the party prohibited from making such an agreement (the solicitor) were free to take the benefits accruing to him under the agreement, but were then entitled to plead the illegality of the agreement when called upon to pay the consideration due to the other contracting party, particularly when (as assumed here) that party is ignorant of the prohibition binding on the solicitor.[23]Lord Bingham rejected those arguments, giving the following summary of his reasons at page 1823H to page 1284C:
“(1) Section 31 confers power on the Law Society to make, with the concurrence of the Master of the Rolls, subordinate legislation governing the professional practice and conduct of solicitors. (2) When making such subordinate legislation the Law Society is acting in the public interest and not (should there be any conflict) in the narrower interests of the solicitors’ profession: see Swain v the Law Society [1983] 1AC 598. The concurrence of the Master of the Rolls is required as a guarantee that the interests of the public are fully safeguarded. (3) By rule 3 of the Practice Rules, and by the Referral Code, solicitors are permitted to accept referrals and introductions only provided that introducers are not rewarded by commission or otherwise. (4) By rule 7 solicitors are prohibited from sharing fees or agreeing to do so. (5) Thus there is a prohibition on the making by solicitors of agreements of the kind assumed to have been made in this case. (6) Although it is true that the prohibition is only imposed in terms on solicitors, and they alone are liable to imposition of a professional penalty for breach, a contract requires the concurrence of at least two parties and the effect of the prohibition, if observed, is to outlaw the making of such agreements. (7) There are substantial reasons why, in the public interest, such agreements should be outlawed, some of those reasons being described by Lightman J. (8) It follows that it would defeat the public interest, which rule 7 in particular exists to promote, if a non-solicitor party to a fee sharing agreement could enlist the aid of the court to enforce against a solicitor an agreement which the solicitor is prohibited from making. (9) If the court were to allow its process to be used to enforce agreements of this kind, the risk would inevitably arise that such agreements would abound, outwith the knowledge of the Law Society, to the detriment of the public. … This is in my judgment plainly a case in which the relevant legislation (rule 7) prohibits not only the act but the contract to perform it also.”
[24]Addressing the “restitutionary” claim for payment at the contractual rate, Lord Bingham said, at page 1284H to page 1285A:
“If, contrary to his first submission, the contract between the parties was illegal and unenforceable, Mr McCombe contended that the plaintiff was entitled to pursue a claim in quasi-contract or restitution. In the pleading, and before the judge (and initially before this court), that claim was pursued as a ground for claiming 50 per cent of legal aid fees earned by the defendant, namely the same reward as would have been recovered under the alleged agreement if it had not been illegal or unenforceable. In response to questions by the court, however, Mr. McCombe accepted that if recovery under the contract was precluded on the grounds of public policy, the plaintiff could scarcely hope to recover exactly the same relief by relabelling his ground of claim. He would, as was acknowledged have no ground for claiming 50 per cent, save by reference to the contract which the court has held to be illegal and unenforceable.”
[25]Lord Bingham then addressed the plaintiff’s quantum meruit claim. He referred to the plaintiff’s allegation that he carried out translations and interpretations, wrote letters and attended meetings, and to his claim in quasi-contract for remuneration for those services. The plaintiff’s case was that, even if the alleged agreement was illegal and unenforceable, the plaintiff was entitled to be paid a reasonable sum for professional services rendered by him to the defendants on behalf of the defendants’ clients, the surrounding circumstances being such as to show that such services were not rendered gratuitously. Lord Bingham said, in relation to that claim, that the plaintiff was not seeking to recover any part of the consideration payable under the unlawful contract, but simply a reasonable reward for professional services rendered. He said it was relevant that the parties were not in a situation in which their blameworthiness was equal. The defendants were a solicitors’ firm and bound by the SPR, and should reasonably be assumed to know what the rules were and to comply with them. By contrast, the plaintiff was ignorant that there was any reason why the defendants should not make the agreement which he said was made. Lord Bingham said that, for his part, he would allow the appeal and reinstate the action to the extent of permitting the plaintiff to pursue a quantum meruit claim for reasonable remuneration for professional services rendered.[26]Robert Walker LJ, who agreed with Lord Bingham, gave the only other reasoned judgment. He said the following in relation to the quantum meruit claim, at page 1827E-G:
“In the present case, by contrast, it was common ground that the judge should approach the summons under R.S.C., Ord 14A on the footing that the claimant was innocent in the sense of being unaware of the prohibition on fee-sharing contained in rule 7 of the Solicitors’ Practice Rules. Rule 7 was not of course made for the purpose of protecting persons in the position of the claimant. It was made for the benefit and the protection of the general public, as the judge clearly explained in a passage already read by Lord Bingham of Cornhill C.J. Nevertheless, the claimant may be able to establish at trial that he was not culpable, or was significantly less culpable than the defendant solicitors, and that they should not be unjustly enriched as the result of unremunerated services such as interpreting and translating actually performed by the claimant for the solicitors’ clients. Remuneration which the claimant received on that basis would be a proper disbursement and would not, it seems to me, involve either a payment for introduction or the sharing of part of the solicitors’ own profit costs.”
[27]Mr Englehart submitted that Mohamed is not to be regarded as authority that contravention of Rule 7 automatically renders the fee sharing agreement void and unenforceable. He sought to distinguish and limit the scope of Mohamed by reference to three other cases: Thai Trading Co v Taylor [1998] 2B 781, Awwad v Geraghey & Co [2001] QB 570, and Garbutt v Edwards [2006] 1WLR 2907.[28]In Thai Trading the defendant’s solicitor acted on the understanding that he would recover his ordinary profit costs only if the defendant succeeded in the action. The defendant obtained judgment in her favour with costs. The plaintiffs claimed that, by virtue of the indemnity principle, they were not liable to pay the defendant’s solicitor’s profit costs, because the arrangement between the defendant and her solicitor was contrary to public policy and void as an agreement for a contingent fee. That was the view taken by the judge on a review of taxation. The Court of Appeal, allowing the appeal, held that it was not contrary to public policy or unlawful for a solicitor to agree to act for a client on the basis that he would forego all or part of his fee if the client lost, provided that he did not seek to recover more than the ordinary profit costs and the disbursement if he won. Millett LJ gave the principal judgment, with which the other two members of the court agreed. He observed at the outset that there was nothing in the Solicitors Act 1974 which prohibited the charging of contingent fees. The 1987 SPR, by contrast, provided that a solicitor engaged in contentious business should not enter into any arrangement to receive a contingency fee, that is to say a fee payable only in the event of success in the proceedings. Millett LJ said, at page 785H:
“But the fact that a professional rule prohibits a particular practice does not of itself make the practice contrary to law: see Picton Jones & Co v Arcadia Developments Ltd [1989] 1 EGLR 43. Moreover, the Solicitors’ Practice Rules are based on a perception of public policy derived from judicial decisions the correctness of which is in question in this appeal.”
[29]Millett LJ said that the law governing contingent fees outside the scope of the Courts and Legal Services Act 1990 (which subsequently to the 1987 SPR provided an exception for conditional fee arrangements) was derived from the public policy relating to champerty and maintenance. He then considered champerty and maintenance in some detail, and set out the following three propositions, at pages 789F to 790A:
“First, if it is contrary to public policy for a lawyer to have a financial interest in the outcome of a suit this is because (and only because) of the temptations to which it exposes him. At best he may lose his professional objectivity; at worst he may be persuaded to attempt to pervert the course of justice. Secondly, there is nothing improper in a lawyer acting in a case for a meritorious client who to his knowledge cannot afford to pay his costs if the case is lost: see Singh v Observer Ltd. (Note) [1989] 3 All ER 777; A Ltd v B Ltd [1996] Ch.D. 665. Not only is this not improper; it is in accordance with current notions of the public interest that he should do so. Thirdly, if the temptation to win at all costs is present at all, it is present whether or not the lawyer has formally waived his fees if he loses. It arises from his knowledge that in practice he will not be paid unless he wins. In my judgment the reasoning in British Waterways Board v Norman 26 HLR 232 is unsound. Accordingly, either it is improper for a solicitor to act in litigation for a meritorious client who cannot afford to pay him if he loses, or it is not improper for a solicitor to agree to act on the basis that he is to be paid his ordinary costs if he wins but not if he loses. I have no hesitation in concluding that the second of these propositions represents the current state of the law.”
[30]Awwad concerned the legality and enforceability of an agreement between the defendant firm and the plaintiff, for whom they acted in libel proceedings, by which the solicitor agreed to charge her normal hourly rate if the plaintiff won the litigation and a lower rate of £90.00 per hour if he lost. The judge held that those terms were unlawful and unenforceable. It was held by the Court of Appeal that this type of conditional fee agreement (which it called “a conditional normal fee agreement”) was not sanctioned by statute, was prohibited by Rule 8(1) of the 1990 SPR, and was unlawful and unenforceable; and that, for reasons of public policy, any quantum meruit claim also failed. The principal judgment of the court was delivered by Schiemann LJ. He referred to developments in the case law, including Thai Trading and Mohamed,among other cases. He observed (at page 583A) that the Divisional Court (Rose LJ and Mitchell J) in Hughes v Kingston upon Hull City Council [1999] QB 1193 concluded that Millett LJ had erred in Thai Trading when he stated that the fact that the SPR prohibits a particular practice does not of itself make the practice contrary to law. Millett LJ had not been referred to Swain. In relation to Mohamed he noted (at page 584E) that, although Thai Trading was on counsel’s list of authorities in that case, the Court of Appeal was informed that it was of no assistance and so did not look at it or have it in mind. These matters led Schiemann LJ to say the following in Awwad, at page 587D-E:
“It is manifestly unfortunate that the Swain case was not cited in the Thai Trading case … and that neither the Thai Trading case nor the Kingston case … were cited in the Mohamed case. As it seems to me the criticism made of the Thai Trading case in the Kingston case was justified. However, although the court in the Thai Trading case may have been in error in asserting that breach of a professional rule did not involve any illegality, it does not necessarily follow that the court could not have decided that the illegality in question was not of such a nature as to render the whole agreement unenforceable. In that state of the recent authorities in my judgment while this court is bound by the Swain case we are not bound to follow either the Thai Trading case or the Mohamed case. It is unfortunate that, for reasons which in the context of this particular case are perfectly understandable, while Miss Geraghty has argued in favour of following the Thai Trading case, we have heard no argument to the contrary.”
[31]Schiemann LJ then turned to consider whether public policy prohibited the recovery of conditional normal fees. Having concluded that such fees were prohibited at common law, and having expressed his reluctance to develop the common law at a time when Parliament was in the process of addressing the problem of contingent fees and conditional fees, he held that acting for a client in pursuance of a conditional normal fee agreement, in circumstances not sanctioned by statute, was against public policy.[32]He then referred to the submission of counsel for the defendants that, even if it was a breach of the SPR to enter into a conditional normal fee agreement, it did not follow that the court would totally refuse to enforce the agreement, since that would leave the client with all the benefit of the work done by the solicitor under a concessionary arrangement made for the benefit of the client and would leave the solicitor without any reward for a lot of work. Schiemann LJ rejected that submission, explaining as follows at page 594D-E:
“For my part, I would hesitate to say, in the absence of full argument, that any breach of the rules in the course of reaching a fees agreement necessarily involved forfeiting all possibility of enforcing the agreement. But the present case is one where it seems to me that, if such an agreement is against public policy (as I think it was in 1993) then it should not be enforced by the courts. It would be inappropriate to leave the enforcement of this policy purely to the disciplinary processes of the professional body.”
[33]Schiemann LJ rejected the quantum meruit claim on the same grounds of public policy. He said, at page 596C-E:
“Mr Dutton attempted to make use of that part of the decision in the Mohamed case … which ruled that the interpreter was entitled to be paid a fair fee for his work as interpreter notwithstanding that his agreement to work as such was part of a champertous agreement which the court refused to enforce. In my judgment this attempt should fail. If the court, for reasons of public policy refuses to enforce an agreement that a solicitor should be paid, it must follow that he cannot claim on a quantum meruit. The position in the Mohamed case was totally different. The interpreter was blameless and no public policy was infringed by allowing him to recover a fair fee for interpreting; the public policy element in the case only affected fees for the introduction of clients. In the present case, what public policy seeks to prevent is a solicitor continuing to act for a client under a conditional normal fee arrangement. That is what Miss Geraghty did. That is what she wishes to be paid for. Public policy decrees that she should not be paid.”
[34]May LJ said that the arrangement with the defendants was an arrangement prohibited by Rule 8(1) of the SPR. He also agreed with the Divisional Court in Hughes that, in view of Swain, Millett LJ was wrong to conclude in Thai Trading that “the fact that a professional rule prohibits a particular practice does not of itself make the practice contrary to law”. He then said, at page 598H to page 599B:
“Although no doubt not every trifling breach of the Solicitors' Practice Rules would render a transaction with which it was concerned unenforceable, in my view an arrangement to receive a contingency fee contrary to rule 8(1) would make the fee agreement which it comprised unenforceable. That was the conclusion of this court where there was a breach of rule 7 of the Solicitors' Practice Rules, which forbids fee sharing, in Mohamed…In the context of enforceability, I can see no distinction of substance or quality between an unlawful contingency fee arrangement and an unlawful agreement to share professional fees. The facts of the present case are stronger against enforceability than were those in the Mohamed case. Geraghty & Co are solicitors seeking to enforce an arrangement which, as the judge found, Miss Geraghty knew to be contrary to the Rules of her profession. In the Mohamed case, the plaintiff was not a solicitor and it was assumed that he was unaware of any prohibition on fee sharing agreements. In my judgment, therefore, Rougier J was correct to hold that the fee agreement which he had found was made in this case was both unlawful and unenforceable. ”
[35]May LJ then said that he did not consider that it was lawful in 1990, apart from the SPR, for a lawyer to enter into an arrangement to receive a contingency fee, and gave reasons for that conclusion. He said, at page 600C, that, as the law in 1990 and up to 1993 was, he did not consider that it was strictly necessary for the court to reach any conclusion as to the balance of public policy which underlay that law. He said, at page 600C, that:
“In so far as public policy might enter the present debate, I agree with Schiemann LJ’s conclusion.”
[36]Mr Englehart drew attention to the fact that Lord Bingham, who had given the principal judgment in Mohamed, agreed with both judgments.[37]The issue which arose in Garbutt was whether, pursuant to an order for costs in litigation, the paying party can claim that his or her liability to the receiving party is discharged, or should be reduced, if the solicitor for the receiving party has failed to give to his or her client an estimate of costs in accordance with the Solicitors’ Costs Information and Client Care Code 1999 as required by Rule 15 of the SPR 1990. Arden LJ, with whom the other two judges of the Court agreed, rejected the submission that the failure to give such an estimate of costs rendered unenforceable the contract of retainer between the receiving party and his or her solicitor. Mr Englehart drew attention to the following passage in Arden LJ’s judgment, at page 2917F:
“Mr Morgan [counsel for the defendants] accepts that the mere fact of a breach of the Solicitors' Practice Rules does not render the contract unlawful and unenforceable: Awwad v Geraghty & Co[2001] QB 570.”
[38]Mr Englehart submitted that, in the light of all those authorities, particularly the judgment of Schiemann LJ in Awwad, Mohamed is not to be viewed as authority that an arrangement in breach of Rule 7 is automatically void and unenforceable. Rather, it is to be treated as an authority on the consequences of a breach of Rule 3 or at any event Rules 3 and 7 together. In any event, he said, the comments of Schiemann LJ make clear, by way of reconciling all the cases, that a contravention of the SPR will only result in the invalidity and unenforceability of a contract if enforcement of the contract would be contrary to public policy.[39]Mr Englehart submitted that there was nothing objectionable, in policy terms, about the arrangements between Mr Verma and Mr Boddy. Indeed, he said, that was demonstrated by the introduction of Rule 7(1A) of the SPR in March 2004 since the arrangements between Mr Verma and Mr Boddy would have fallen squarely within its provisions. He submitted, further, that the SPR were intended to bind solicitors; they were not intended to produce an unjust situation in which a non-solicitor, such as Mr Verma, is denied the agreed remuneration, or indeed any remuneration, for work which he carried out for an agreed fee, in ignorance of Rule 7(1). Such a situation would be particularly unjust, Mr Englehart emphasised, since it was Mr Boddy who had broken Rule 7(1), of which he was presumably aware or ought to have been aware, and his estate would, in effect, be unjustly enriched by retaining the full LSC payment notwithstanding Mr Boddy’s wrongdoing and Mr Verma’s innocence. Mr Englehart submitted that it was not contrary to public policy for Mr Verma to enforce the contractual arrangements with Mr Boddy in those circumstances; indeed, it would be contrary to good public policy to deny payment to Mr Verma.[40]Mr Metzger adopted those submissions on behalf of Mr Khan.[41]Notwithstanding the skilful and forceful submissions of Mr Englehart, and subject in the case of Mr Khan to his argument based on the employee exception in Rule 7(1)(c), I agree with the Judge that the fee sharing arrangements of Westlaw and Mr Khan were plainly void and unenforceable for the following reasons. First, the SPR have the effect of subordinate legislation made pursuant to section 31 of the Solicitors Act 1974: Swain and Mohamed. Accordingly, the making of an agreement in breach of the SPR is unlawful; and the statement of Millett LJ (to whom Swain was not cited) to the contrary in Thai Trading at page 785H is incorrect: Awwad.[42]Secondly, in making such subordinate legislation the Law Society is acting in the public interest and not merely in the interests of the solicitors’ profession: Swain and Mohamed.[43]Thirdly, the arrangements between Mr Boddy, on the one hand, and Mr Verma and Mr Khan, on the other, were not mere incidental breaches of the SPR, but, as Mr James McClelland, for the SRA, rightly emphasised, were the very matters expressly prohibited by Rule 7(1).[44]Fourthly, Mohamed is authority binding on this court that a fee sharing arrangement in breach of Rule 7 is not only unlawful, but void and unenforceable. Underlying the submissions on behalf of Westlaw and Mr Khan, and it may be said underlying the judgment of Schiemann LJ in Awwad, is the implicit proposition that an agreement made unlawful by statute is only unenforceable if the statute expressly or implicitly so provides and that such an implication cannot be made unless enforcement of the agreement would be contrary to public policy. Even if that proposition is correct, and I can see considerable force in it, the Court of Appeal did reach a decision on that point in Mohamed in relation to a fee sharing agreement in breach of Rule 7. In reaching his decision in that case, Lord Bingham referred both to the fact that the making of such an agreement was in direct contravention of the prohibition of Rule 7, and not merely an incidental breach, and to the public policy considerations underlying Rule 7. The fact that Thai Trading was not mentioned in oral submissions to the court in that case, and not mentioned in Lord Bingham’s judgment, is irrelevant. Thai Trading was about an arrangement in breach of a completely different Rule in the SPR and, moreover, proceeded on the basis of an incorrect assumption (made per incuriam) that an agreement in breach of the SPR was not unlawful. In those circumstances, it is impossible seriously to contend that Mohamed was decided per incuriam. Schiemann LJ was correct to say that Mohamed was not strictly binding in Awwad, not because Mohamed was decided per incuriam, but because Awwad concerned a breach of Rule 8(1) whereas Mohamed was about Rules 3 and 7 and the public policy which underlay them. So far as concerns Rule 7(1), it is to be noted that the unfairness and unjust enrichment arguments advanced by Mr Englehart on this appeal are practically identical to those advanced by counsel for Mr Mohamed (quoted above), and were rejected by Lord Bingham in the light of the terms of Rule 7(1) and the public policy underlying it.[45]Fifthly, there are sound policy reasons underlying the prohibition in Rule 7(1). The skeleton argument prepared by Mr Timothy Dutton QC and Mr McClelland for the SRA sets out what the SRA submits are those policy considerations. They were not challenged by Mr Englehart or Mr Metzger. I accept the SRA’s submissions on this aspect. The fundamental objective underlying the rule against fee sharing is the maintenance of a solicitor’s independence and integrity. In essence, Rule 7(1), as formulated at the date the agreements with Mr Boddy, was intended to ensure that solicitors remained free from external pressure from non-solicitors, who are not subject to equivalent regulatory obligations and might therefore be inclined to prioritise their own interests above those of the client. The provisions of Rule 7(1) complemented the closely associated Rule 7(6), which prohibited partnership with non-solicitors for the very same reasons. Those policy objectives were in effect endorsed by Lord Bingham in Mohamed when he referred with approval (at page 1824B) to the policy reasons identified by Lightman J, in relation to both Rule 3 and Rule 7 (quoted at pages 1820H to 1821C). The SRA has elaborated on the policy considerations in its skeleton argument as follows: “a. Where a non-solicitor’s remuneration is a proportion of the solicitor’s fee, he or she thereby has an incentive both to influence the volume of remunerated work the solicitor undertakes and to ensure that the fees earned from each client are as high as possible. b. As to the volume of work undertaken, there is a risk that the non-solicitor will bring pressure to bear on the solicitor to take on work in excess of his/her ability to fully and properly discharge his professional duties to his/her clients. c. Further, if the non-solicitor is actually involved in the fee-earning work or in recording fee-earners’ time, there is a risk that they may inflate or mis-record the time spent or the fees accrued. d. In any event, the size of the fee charged to a client will usually depend either on the amount of work done and the number and nature of the services provided to that client. Solicitors are required to determine what work or services are necessary by an assessment of the client’s best interests. This duty to the client potentially conflicts with the non-solicitor’s concern to maximise fee income and, consequently, with the solicitor’s own interest in maintaining its relationship with the non-solicitor in order to continue the supply of services, capital, or other consideration that he or she provides. e. A risk of divided loyalty therefore exists since the arrangement places pressure on the solicitor to consider not only the client’s interests, but also the interests of the fee-sharer. The extent of this pressure may vary substantially according to: i. How much leverage the non-solicitor has over the solicitor: the extent of leverage will usually be determined by the value of the services to the solicitor’s practice. The more valuable or necessary the service (and the greater the solicitor’s need), the higher the risk that solicitors will succumb, despite their fiduciary obligations, to external pressure. ii. How strong an incentive the non-solicitor has to place pressure upon the solicitor: the force of this incentive is likely to be determined by the extent of the non-solicitor’s interest. It is plain that 50% or 75% shares in fees (as in the present case) will provide a greater incentive than a 5% share, though the pressure caused by either is undoubtedly objectionable. f. These pressures may or may not affect the advice actually provided, however the very appearance of divided loyalty is sufficient to damage the reputation of, and public faith in, the profession. g. Separately from conflicts (actual or perceived) between the interests of the non-solicitor and the solicitor’s duty to his/her client, where cases are run on a conditional fee basis, the non-solicitor will have, as a result of the fee-sharing arrangement, a direct pecuniary interest in the outcome of the client’s case. This introduces the risk that the non-solicitor may take, or encourage the solicitor to take, unethical steps in the course of the litigation.” i. How much leverage the non-solicitor has over the solicitor: the extent of leverage will usually be determined by the value of the services to the solicitor’s practice. The more valuable or necessary the service (and the greater the solicitor’s need), the higher the risk that solicitors will succumb, despite their fiduciary obligations, to external pressure. ii. How strong an incentive the non-solicitor has to place pressure upon the solicitor: the force of this incentive is likely to be determined by the extent of the non-solicitor’s interest. It is plain that 50% or 75% shares in fees (as in the present case) will provide a greater incentive than a 5% share, though the pressure caused by either is undoubtedly objectionable.[46]Those policy considerations, or some of them, apply to the fee arrangements between Mr Boddy and Mr Verma and Mr Khan.[47]Sixthly, the fact that the SPR 1990 were subsequently amended by the inclusion of Rule 7(1A) does not assist the argument of Mr Verma and Mr Khan. What is relevant is what was lawful, and, if public policy is relevant, what was public policy, at the time of the agreements and arrangements with Mr Boddy, even if policy changed afterwards: comp. Schiemann LJ at page 594D and May LJ at page 599D/E in Awwad. In any event, it is far from clear that the proviso to Rule 7(1A) was satisfied. The arrangements may well have contravened (b) and, in the case of Mr Khan, (c) of the proviso.[48]As I have said, Mr Khan advances the further and separate submission that he was Mr Boddy’s bona fide employee within Rule 7(1)(c) at all relevant times prior to Mr Boddy’s death. That same argument was advanced by Mr Myerson before the Judge, and was rejected. Mr Metzger submitted that the Judge was wrong to do so on applications to strike out and for summary judgment. Furthermore, he said, this Court should allow further evidence to be taken into account on this issue on the appeal.[49]It appears that the Judge was not referred to any witness statement of, or on behalf of, Mr Khan on his status as an employee. Indeed, Mr Khan did not make any witness statement at all specifically in response to the applications to strike out and for summary judgment. The Judge did have before him Mr Khan’s Reply and Defence to Counterclaim, paragraph 2 of which stated that Mr Khan “was the employee of Mr Boddy, working as directed by him and covered by his professional indemnity insurance policy.” Mr Metzger also referred us to witness statements of Mr Khan dated 28 July 2008, 13 October 2008 and 14 October 2008, which had been filed with the Court on earlier occasions. The first of those statements was in support of an application for directions, and the other two were in opposition to an application by Mrs Boddy for security for costs. In the first of those statements Mr Khan confirmed that he “worked with Peter Boddy Solicitor in his practice as his specialist litigation clerk between February 2002 and March 2004”; that he “was tasked by Peter Boddy to manage the smooth running of the Crown Court department which included any matter conducted in the Magistrates Court destined for the Crown Court”; and that Mr Boddy personally signed off all the bills.[50]Mr Metzger seeks permission to adduce further evidence on this appeal. His application is supported by a witness statement of Mr Khan dated 15 November 2009 and numerous exhibited documents. In the witness statement Mr Khan says that he initially requested Mr Boddy to pay him at an hourly rate as an approved Grade B fee earner; but, although Mr Boddy expressed himself content with such a level of remuneration, Mr Boddy was concerned that the billed hourly rate might not be allowed on taxation. It was for that reason that it was agreed Mr Khan should share the fee if and when paid to Mr Boddy by the LSC. Mr Khan also recounts in the witness statement that he worked from Mr Boddy’s offices, and he was provided by Mr Boddy with a desktop computer, a printer, a contract mobile phone, secretarial support, and in due course the use of a Mercedes motor car which was purchased on finance for which Mr Boddy paid. Mr Khan was given business cards in his own name, but identifying him as part of Peter Body Solicitors. He assisted Mr Boddy in finding stationary for the office. He says that Mr Boddy ordered law books and additional stationary. Mr Khan refers to an application for the Very High Costs Cases (“VHCC”) panel, in which Mr Boddy (presumably referring to Mr Khan) confirmed that he had recruited “a Crown Court clerk”. One of the reasons for the rejection of the VHCC application was that Mr Khan’s full experience, in particular his earlier work for another firm of solicitors, could not be taken into account. Mr Metzger referred to various documents supporting and evidencing those matters and other examples of expenses paid or reimbursed by Mr Boddy.[51]Mr Khan also describes in the witness statement how Mr Boddy made the final decision in practically all matters:
“[all] work was determined by [him]”; Mr Khan “worked under the supervision of”
Mr Boddy, who “would review [his] files when he was able to”; “all correspondence was checked by [Mr] Boddy”, and the “only time [Mr Khan] sent a letter out was when [Mr] Boddy had seen the letter or it had been read to him and he authorised the sending of the letter to the party concerned”; Mr Khan “would on a regular basis receive memos from [Mr] Boddy in respect of all aspects of issues in the Crown Court Cases”, and Mr Khan always endeavoured to carry out any request in any memo from Mr Boddy; Mr Khan sent regular notes to Mr Boddy by way of update on the Crown Court; he “worked at the firm as an employee and [Mr] Boddy treated [him] as an employee”; Mr Khan “referred all matters to [Mr Khan] whether they were trite or serious and all final decisions were made by [Mr Boddy”; and Mr Khan “did not influence any decisions in respect of the work being undertaken”.[52]Mr Metzger does not contend that any of that evidence in Mr Khan’s most recent witness statement and its exhibits is new evidence, in the sense that it is evidence which was not reasonably available at the date of the hearing before the Judge. On the contrary, his case is that the evidence was available and should have been presented on behalf of Mr Khan on the hearing of Mrs Boddy’s applications, and that Mr Khan should not be penalised because of a forensic failure to deploy it. The new evidence, Mr Metzger says, is explanatory in nature, clearing away any doubts and confusion that might exist without it.[53]Notwithstanding everything which Mr Metzger has said on this aspect of the appeal, and all the documents to which he has drawn our attention, I have no doubt that the Judge was both entitled, and right, to reject Mr Khan’s case that he fell within the exception in Rule 7(1)(c). Furthermore, I do not consider that the further evidence should be admitted on the appeal. Even if it were admitted, it is clear that it would not make Mr Khan’s case any stronger.[54]The arrangement between Mr Khan and Mr Boddy did not have the hallmarks of an employment contract. It was a profit sharing agreement between principals. It is clear from Mr Khan’s witness statements that he was engaged to bolster and run the Crown Court part of Mr Boddy’s practice. He was highly successful in doing so. He was expected to, and did, introduce new clients and serviced their work. He said in his witness statement of 28 July 2008:
“4. I can confirm that due to Peter Boddy’s health issues I was tasked by Peter Boddy to manage the smooth running of the Crown Court department which included any matter conducted in the Magistrates Court destined for the Crown Court. 5. I can confirm that sometime after I started with Peter Boddy I became concerned that I was having difficulty in managing the Crown Court department as it was becoming very successful. 6. I can confirm that I discussed this with Peter Boddy and Mr Boddy suggested we engage outside agents to undertake the work. 7. One of the agents engaged by Peter Boddy to undertake the work engaged Mr Verma trading as Westlaw with whom the arrangement was that that work done by Westlaw would be paid at the rate of 75% of the amount paid by the LSC for Westlaw’s work. 8. Peter Boddy expressed to me his satisfaction with this arrangement as the firm was making 25% on lengthy, complex and voluminous cases without incurring heavy outlay costs. 9. Under this agreement it was for me to continue to introduce further work to the firm knowing that there were sufficient resources in place to service the work accordingly. 10. On the basis of this arrangement with Westlaw I can confirm that Peter Boddy asked me to do whatever I could to further expand the Crown Court Department.”
[55]In his witness statement dated 14 October 2008 Mr Khan stated that he had worked for Mr Boddy “as an agent ... generating a considerable amount of fee monies on the criminal work” and that a letter dated 15 November 2005 confirmed that he “was entitled to a one half of the profit”. The fee arrangement was one under which Mr Khan was not paid a salary or a wage but he received a share of net profit, relevant expenses being deducted from the gross fee before division between himself and Mr Boddy. His share of the profit was related to the fee paid by the LSC for the case, regardless of the work Mr Khan had personally carried out on that case. Indeed, Mr Metzger frankly accepted, in the course of his oral submissions, that the arrangement was a profit sharing arrangement. There was no evidence, which could so easily have been adduced by Mr Khan, that he completed his tax returns on the basis that he was an employee or that PAYE or national insurance contributions were paid on the basis of Mr Khan’s employed status. Furthermore, the contractual arrangement pleaded in the amended Particulars of Claim required him to spend his own money on the expenses associated with the Crown Court work, with repayment only being made when the LSC fee was received in due course.[56]So far as concerns the application to introduce new evidence, an appeal is not a re-hearing. The Court has a discretion, however, under CPR 52.11(2) to admit new evidence in furtherance of the Overriding Objective in CPR Part 1 to deal with cases justly. The former strict grounds for the admission of new evidence on the principles of Ladd v Marshall [1954] 1 WLR 1489 no longer automatically apply, although those principles remain relevant considerations in the exercise of the Court’s discretion. Further, the decision of the Judge, from which this is an appeal, was not a decision following a full trial on the merits when the full rigour of the Ladd v Marshall principles is most apposite.[57]The factors which, to my mind, plainly weigh cumulatively against the exercise of the discretion to admit the further evidence are that Mr Khan was represented by leading counsel and solicitors before the Judge; the evidence now sought to be introduced was available to be used at that hearing and those representing Mr Khan were fully competent to make an informed decision whether or not to do so; and the new material does not in any event undermine the Judge’s conclusion that Mr Khan does not have a real prospect of success in arguing that he was an employee falling within the Rule 7(1)(c) exception.[58]As to the latter point, nothing in the further evidence seeks to undermine, or does in fact undermine or is inconsistent with, the profit sharing arrangement constituted by the agreement between Mr Khan and Mr Boddy. On the contrary, in his witness statement of 15 November 2009 Mr Khan confirms that at the time he thought he was a self-employed person (para 38); and, indeed, he says that Mr Boddy and he “had agreed that [he] was self employed” (paras 19 and 51). The further evidence does not, therefore, disturb the essential reality that Mr Khan was laying out his own money, and borrowing from others, to meet his ordinary living expenses (para 51) while building up the Crown Court work in anticipation of a share of the profit from his endeavours at a time when he and Mr Boddy regarded him as self-employed. It is not necessary to decide whether or not the relationship between Mr Boddy and Mr Khan was strictly that of a legal partnership within section 1 of the Partnership Act 1890. It is sufficient that, in the circumstances I have described, the relationship between them was plainly not that of an employer and employee, and an argument to the contrary has no real prospect of success.[59]Westlaw and Mr Khan put forward an alternative claim to be paid a reasonable sum for the services they performed. No such claim is contained in Westlaw’s statements of case. The Appellants’ Notice seeks permission to add such a claim. Mr Englehart submitted that such a claim is a contractual claim. I understand his submission, on this alternative basis, to be that there was an implied contract which was in all respects, other than the unlawful fee sharing, on the same terms as the express contract between Mr Verma and Mr Boddy. He relied, in support of that submission, on Way v Latilla [1937] 3 All ER 759 and Upton on Servern RDC v Powell [1942] 1 All ER 220. He submitted that this contractual claim was assigned to Westlaw by the Assignment.[60]Mohamed is clear and direct authority that a non-solicitor party to an unlawful and unenforceable agreement with a solicitor to share fees in breach of Rule 7(1) may nevertheless be able in principle to make a claim for reasonable remuneration for services rendered. This ground of appeal by Westlaw, nevertheless, faces a range of considerable difficulties. First, the point was never run before the Judge, to whom there was never any application to amend Westlaw’s statements of case. This ground of appeal is not based on any error on the part of the Judge on the material before him.[61]Secondly, it is not at all clear that such a claim would not equally fall foul of a public policy defence. In Mohamed Walker LJ envisaged that such a claim would be maintainable, on the facts of that case, for such services as interpreting and translating. In Westlaw’s case, however, the claim would be for legal work done by Mr Verma when he was not qualified as a solicitor and when he was not an employee of Mr Boddy. The fact that there is no evidence of any complaint about, or criticism of, the standard of work carried out by Mr Verma and Mr Khan and that the bills of costs were scrutinised by the LSC does not undermine the public policy issue that arises in the context of a quantum meruit claim. Furthermore, Mr Englehart’s submission is that the terms as to the time for payment under the implied contract remained the same as under the express contract; that is to say, there was no obligation to pay even a reasonable remuneration until the LSC paid the fee. If that is correct, then it is difficult to see why any such implied contract was not itself in substance a fee sharing arrangement within Rule 7(1).[62]Thirdly, there is considerable scope for argument as to whether the alternative claim for reasonable remuneration is a contractual one, as Mr Englehart contends, rather than a restitutionary claim, and as to whether the authorities relied upon by Mr Englehart can be distinguished. Unless the claim is advanced as a contractual claim on such terms as to the time of payment as Mr Englehart suggests, it would face obvious difficulties arising from the expiry of the 6 year limitation period since the date of Mr Boddy’s death. Mr Englehart submitted that, if it is not a contractual claim, then nevertheless there are documents acknowledging the claim within section 29 of the Limitation Act 1980 (“the 1980 Act”), and which therefore prevented the running of the limitation period. He submitted that it was irrelevant, for that purpose, that the acknowledgments were of sums due on the express contractual fee sharing arrangements rather than any entitlement merely to reasonable remuneration. No authority was cited by him on that point. Mr Englehart did not address the further difficulty as to whether the claim for reasonable remuneration is a claim for a “liquidated pecuniary sum” within section 29(5) of the 1980 Act.[63]Fourthly, Westlaw can only assert the alternative claim to reasonable remuneration if it was assigned pursuant to the Assignment. Mr Englehart submitted that it was so assigned. In my judgment, it plainly was not. That was an assignment by Mr Verma of all rights arising “in respect of my contract”: that contract was the fee-sharing contract expressly referred to and described in Westlaw’s Particulars of Claim dated 25 April 2008. Consequently, the claim for reasonable remuneration remains vested in Mr Verma and he would have to be joined to the action, after, on one view, the apparent expiry of the limitation period.[64]In the light of all those points, I do not consider it would be right for this Court to give permission to Westlaw to amend the Claim Form and further to amend the Particulars of Claim to raise this new point, which was never taken before the Judge. If Westlaw or Mr Verma wishes to pursue a claim for reasonable remuneration, they should do so by issuing fresh proceedings.[65]In Mr Khan’s case, paragraph 7 of his original Particulars of Claim dated 1 May 2008 did raise an express alternative quantum meruit claim. That claim was not, however, carried forward into the amended Particulars of Claim, settled by Mr Myerson, when the two sets of proceedings were consolidated.That does not appear to be an oversight because Mr Myerson expressly acknowledged to the Judge that no alternative quantum meruit claim was being advanced on behalf of Mr Khan. Mr Myerson is recorded as having said to the Judge: “We do not regard this as a quantum meruit issue” (transcript p. 35 lines 18 to 25). In effect, Mr Khan’s quantum meruit claim was abandoned before the Judge. The Judge, therefore, heard no argument about the point and did not deal with it in his judgment. No criticism can be or has been made of the Judge’s conduct and decision in that respect; but permission is now sought on this appeal further to amend the Particulars of Claim to restore a quantm meruit claim. In all the circumstances, including bearing in mind the public policy issues that would arise on any such claim, I do not consider it right, more particularly I do not consider it would be in accordance with the Overriding Objective in CPR Part 1, to grant permission to amend or otherwise to allow the appeal on this ground because of a change of heart about the forensic decision taken below by Mr Khan and those acting on his behalf.

Conclusion

[66]For those reasons, I would dismiss these appeals. LORD JUSTICE GROSS[67]I agree. LORD JUSTICE RIX[68]I also agree.

Cited in 1 later judgment