International firm Charles Russell Speechlys faces a retrial over a £50,000 bill to a client after the High Court ruled that it failed to properly plead the existence of an implied retainer.
The firm claimed £49,179.60 plus interest at 8% from Beneficial House (Birmingham) Regeneration LLP, which acted as a vehicle for members to fund the development of a property in Birmingham whilst benefiting from a tax relief scheme.
A judge at Manchester County Court found that there was an implied contractual retainer in place and entered judgment for Charles Russell Speechlys for a sum to be determined at a detailed assessment.
However, the High Court this month allowed Beneficial House’s appeal on the grounds that the judge below erred in finding that the LLP was bound by an implied contract because ‘the existence of an implied contract was not pleaded or canvassed before the court’.
Mr Justice Cotter said: ‘It has long been a fundamental rule of litigation that a claimant’s statement of case must include all relevant facts.’ He found Charles Russell Speechlys’ pleading ‘failed to comply’ with paragraph 7.5 of Practice Direction 16 and ‘did not mention an implied retainer at all’. ‘Pleadings are meant to set matters out clearly,’ Cotter said. ‘They should not contain hidden arguments within generalised averments.’
The judge added that it was clear and ‘entirely understandable’ that the solicitor member of Beneficial House who represented the LLP before the county court ‘did not arrive at the hearing anticipating that he would face an alternative argument of an implied retainer’.
‘That is because the pleading gave him no adequate notice,’ Cotter said. ‘He was caught by surprise and was unprepared for the alternative case. That simply should not have happened.’ This meant that the judge below ‘fell into error by proceeding on the basis that the pleading adequately raised the issue of an implied retainer’, Cotter found.
He declined to enter judgment for the appellant and held that ‘the proper course is to remit this matter for a re-trial before a different judge’.