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Escalate Law Ltd (1) and Bermans (2012) Ltd (2) v Michael Kennedy (1) and Vanessa Dawn Kennedy (2)  EWHC 2232 (Ch)
When a law firm and litigation funder were entitled to end their retainers due to breaches in contract.
Background – This was a trial regarding the contractual arrangements between the Claimants and the Defendants over a professional negligence claim to be advanced by the Defendants against a firm of solicitors, Peter W Marsh & Co.
The Defendants had purchased a plot of land from the Leicester Diocesan Board of Finance (the Diocese) which was subject to an overage agreement. The Defendants had instructed solicitors (Peter W Marsh & Co) around March 2013, to act for them in relation to the purchase of that land.
Concerns came to light that there were at least two serious flaws in the overage agreement, as to which the solicitors, Peter W Marsh & Co, had allegedly failed to advise upon. Consequently, the Defendants engaged solicitors, Bermans, in February 2018 to pursue a professional negligence claim against Peter W Marsh & Co. Bermans Solicitors were retained under a Conditional Fee Agreement (CFA), with Bermans arranging funding through Escalate Law.
A letter of claim dated 9th July 2018 was served on Peter W Marsh & Co, and in January 2019 parties engaged in mediation, which proved to be unsuccessful.
On 4th May 2020, the Claimants served a termination notice of the CFA on the Defendants, on the grounds of various alleged breaches made by the Defendants to the CFA. The Claimants sought payment of their fees and disbursements in the sum of £75,148.02, or alternatively for damages to be assessed, which was defended by the Defendants and a counterclaim brought.
The CFA that had been agreed required the Defendants to provide clear instructions to allow the Claimants to do their work properly. However, the Claimants claimed that the Defendants had not satisfied these requirements and alleged that the Defendants had (i) failed to provide clear instructions whether the planning permission had been preserved; (ii) had failed to provide clear instructions as to whether they were able to pay the sum due under the overage agreement; (iii) had deliberately misled the Claimants as to whether they would have built 5 houses on the land but for the solicitors negligence, or had the means to do so; (iv) had sought to have the Claimants work in an inappropriate or unreasonable way.
The Court was therefore asked to determine whether the Claimants were entitled to terminate their contractual arrangements with the Defendants, on the basis that the Defendants were in breach of contract.
The Defendants denied that there had been any breach of contract which allowed the termination of the CFA and counter-claimed for damages. The Defendants counter-claimed on the basis that Bermans Solicitors had allowed a limitation period to lapse and failed to advise them to accept an offer made at mediation. The Claimants denied any negligence.
The Claimants were entitled to terminate the contract due to breaches and thereby were entitled to payment of their fees, disbursements and interest.
The Defendants Set Off and Counterclaim, submitted on the basis that the Claimants breached their contractual and tortious duties to the Defendants by failure to advise the Defendants to accept an offer made at mediation, was dismissed. HHJ Cadwallder also rejected the claim that the Claimants work for the Defendants was worthless.
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Published 30 September 2021
Author – Kellie Barnes
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