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Summer insights: plenty of hot air over skeleton arguments and broken assurances

Posted: 01/09/2017

As we write, summer is well and truly here. Maybe the temperature has gone to our heads, but the balmy conditions have infused our column. We hope this sun-drenched offering puts a little sunshine into your day. It’s probably raining again by now…

Reining in skeletons and bundles

In Icap Management Services Ltd v Berry [2017] the parties felt the heat when Garnham J expressed his displeasure at the length of the skeleton arguments and volume of other documents. The hearing substantively concerned whether the court should continue an interim injunction against the first defendant employee until the end of his contractual garden leave, a relatively short period of under three months.

Noting that the claimant’s skeleton argument equated to 151 pages with a further 35 pages of appendices, the first defendant’s 158 pages plus eight pages of appendices, and the second defendant’s 51 pages plus six pages of appendices, the judge lambasted the parties for failing to heed the requirement of the overriding objective that cases be dealt with “justly and at proportionate cost” which included allotting to the case “an appropriate share of the court’s resources”.

He commented: “The skill in drafting a skeleton argument lies in the production of a concise outline of the essential elements of the argument which is to be developed orally by the court. It is evident that the authors of the skeletons in the present case were proceeding on the assumption that they could demand of the court such judicial time as they thought necessary. In that they were mistaken” (paragraphs 9 and 10). The length and complexity of the skeletons in fact obfuscated the real issues in the case.

Temperatures rose further over the “grossly excessive” documentation put before the court.  The court bundle ran to 13 lever arch files, plus six bundles of authorities, and 44 lever arch files of alleged confidential information. Out of 14,000 pages in those 44 files, the judge was referred to fewer than 100. This was described as “absurd” for a four day trial and betrayed a failure by the parties’ representatives to adopt a sensible and constructive approach. 

Consequently, Garnham J declined to consider all of the arguments advanced in the skeletons, otherwise the judgment would have run to hundreds of pages and not been delivered until after the period for which permanent injunctions were sought, rendering the exercise pointless. He also indicated that a large part of the costs involved in agreeing or producing the vast quantity of material should be disallowed.

Icap serves as a warning to litigators not to throw in everything but the kitchen sink, and to abide by the guidelines set out in specialist court guides such as (in this case) the Queen’s Bench Guide. Although it can be tempting to cover every possible line of argument, practitioners must have an eye firmly on that hot topic, proportionality, or face the consequences, particularly on costs.

Getting the retainer right

In Spencer-White v Harding Evans LLP [2017], the appellant was no doubt not in the sunniest of moods when his appeal against a judgment holding him liable for unpaid solicitors’ fees was unanimously dismissed.

The appellant was a longstanding client of Harding Evans LLP, which had acted for him on numerous matters, sometimes jointly with his then wife. Following a disagreement regarding what instructions he had given for a deed of variation, the appellant terminated the relationship. At that time, the respondent had unbilled time and disbursements relating to an aborted property transaction. The respondent raised an invoice, the appellant refused to pay, and the respondent issued proceedings claiming payment while exercising a lien over the files.

The first instance judge found in favour of the respondent on its claim and found in favour of the appellant for the return of monies held in the respondent’s client account, but directed that those client account monies should be set off against the sums owed to the respondent.

The appellant appealed to the Court of Appeal on a plethora of grounds. Permission was given for two arguments to proceed:

  • that the respondent was not entitled to recover the sums claimed regarding the property sale because (i) it was an entire contract and the sale had not completed, and (ii) the respondent had acted in breach of an assurance not to act for the appellant’s ex-wife;
  • that the respondent was not entitled to exercise a lien over the files.

On the “entire contract” argument Sharp LJ noted that the respondent’s terms of business provided that “our charges are based on the time we spend on your matter” and accordingly all work completed prior to the termination of the retainer was properly payable. Payment was not contingent upon the sale being completed because the terms also specifically stated that upon termination, the appellant would be required to pay the respondent’s “charges and expenses incurred to the date of termination”. The respondent was therefore contractually entitled to the sums payable.

It was common ground that the assurance raised a collateral contract, but the appellant conceded that he could not establish any provable loss in damages flowing from the breaches complained of. Sharp LJ also disagreed that the collateral contract was “imported” into the retainer and that the assurance became a term of the retainer. Any breach of the collateral contract would give rise to a claim in damages, not allow the appellant to repudiate the main contract. The appellant’s argument that the assurance amounted to an actionable misrepresentation also failed, as did his submission that the respondent’s conduct damaged a supposed implied term of “trust and confidence”.

The court additionally rejected the appellant’s argument that the respondent was not entitled to a lien over the remaining files it held. The terms said: “You are entitled to terminate this Agreement at any time. Upon termination, we are entitled to retain all your papers and documents, until such time as all money owing to us for our charges and expenses has been paid…” Sharp LJ agreed with the first instance judge that the appellant’s construction was inconsistent with the express words used.

This decision underlines the (factor 50) protection offered by meticulously worded client care letters and terms of business. Here, the references to the respondent being entitled to retain all papers and documents, and to fees being charged on a “time spent” basis with all monies owed being paid on termination, enabled the respondent to succeed on its claim and resist the appeal. Otherwise, it could have found itself (sun)burned. 

This article was published in Commercial Litigation Journal in July 2017.

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