An agreement between a solicitor and their former client cannot be set aside in costs proceedings on the grounds of illegitimate pressure or economic duress, the High Court has ruled.

Nothing in section 70 of the Solicitors Act 1974 ‘permits the court to embark on what is in effect a freestanding enquiry into the question of whether [an] agreement should be set aside on grounds of undue influence,’ Mr Justice Johnson held in Lisa Jones v Richard Slade And Company. ‘That involves the exercise of a distinct equitable jurisdiction which forms no part of an assessment of costs.’

London firm Richard Slade and Company appealed to the High Court after Costs Judge Jason Rowley ruled that former client Lisa Jones could seek to set aside an agreement with the firm in detailed assessment proceedings following a successfully-mediated claim against her late father’s estate.

Jones sought an assessment of bills delivered in the sum of £22,090.01 under section 70 of the 1974 Act, arguing that she was ‘induced to compromise’ her claim because, if she did not do so, she would be ‘exposed to a rather greater costs liability’ from the firm.

Richard Slade applied to strike out that part of the claim, submitting that setting aside the compromise agreement was not a remedy ‘which is available in statutory detailed assessment proceedings’. Rowley refused Richard Slade’s application but the firm took the case to the High Court, which ruled in its favour yesterday.

Johnson accepted that ‘the contours of permissible enquiry under section 70 are not sharply defined’, but added: ‘There is, though, a limit. The difficulty is locating where, precisely, it lies.’

The judge said that ‘a discrete and contained allegation of negligence … may be relevant to the question of whether particular items of costs were reasonably incurred’, as might allegations of ‘breach of fiduciary duty, or inappropriate pressure, or economic duress’. ‘There is no good reason why they should be treated in a qualitatively different way from allegations of professional negligence,’ Johnson added.

However, he ruled: ‘I do not consider that there is anything within section 70 that permits the court to embark on what is in effect a freestanding enquiry into the question of whether the agreement should be set aside on grounds of undue influence. That involves the exercise of a distinct equitable jurisdiction which forms no part of an assessment of costs.’

Johnson said that Rowley ‘put the matter the other way round and said that there was nothing in section 70 that excluded a power to do what Ms Jones asked’. He said that section 70 ‘does not explicitly say that a court assessing costs may not set aside a prior agreement between solicitor and client’, but added: ‘The fact that something is not positively excluded does not mean that it is, by omission, permitted.’

The judge concluded that Jones was effectively ‘asking the court to grant an equitable remedy’ and, therefore, ‘asking the court to exercise a jurisdiction that it does not have’.

 

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