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Glaser & Anor v Atay
Factual and Procedural Background
This second appeal concerns contracts between counsel instructed under the Public Access scheme and their lay client, specifically regarding whether the contract terms are unfair under Part 2 of the Consumer Rights Act 2015. The Defendant directly instructed two counsel to represent her in financial remedy proceedings against her former spouse, including a 10-day hearing. The contracts provided for fixed fees payable even if the hearing was adjourned. The hearing was adjourned, the Defendant disinstructed counsel, and refused further payment. Both counsel sued for unpaid fees.
The trial judge held the payment term requiring fees even if the hearing was adjourned was unfair but awarded counsel 70% of the outstanding fees on a quantum meruit basis. The Defendant appealed to the High Court, and counsel cross-appealed. The High Court judge agreed the term was unfair but held counsel had no contractual right to the fees or quantum meruit payment. Counsel now appeal to the Court of Appeal, which dismisses the appeal.
Legal Issues Presented
- Whether the terms of the contracts between counsel and their lay client are unfair under Part 2 of the Consumer Rights Act 2015.
- If the terms are unfair, what the legal consequences are, including entitlement to fees on a quantum meruit basis.
- Whether the payment term falls within the safe harbour provision of s. 64(1)(b) of the Act.
- Whether the payment term falls within paragraph 5 of the grey list in Schedule 2 of the Act.
- Whether the contracts contain entire obligations requiring full completion before payment.
Arguments of the Parties
The opinion does not contain a detailed account of the parties' legal arguments.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Director-General of Fair Trading v First National Bank plc [2001] UKHL 52 | Interpretation of regulations excluding assessment of fairness for terms concerning the adequacy of price or remuneration. | The court applied this precedent to hold that the payment term was outside the safe harbour provision because it concerned consequences of non-performance rather than adequacy of remuneration. |
| Commission of the European Communities v Sweden (Case C-478/99) [2002] ECR I-4147 | Indicative nature of the grey list of potentially unfair terms and the requirement to assess fairness on all circumstances. | The court relied on this to confirm that being on the grey list does not automatically render a term unfair but indicates potential unfairness requiring assessment. |
| ParkingEye Ltd v Beavis [2015] UKSC 67 | Definition and assessment of unfair terms under the 1999 Regulations and the Directive. | The court used this case to explain the test of significant imbalance and good faith in assessing unfair terms under consumer law. |
| Aziz v Caixa d'Estalvis de Catalunya, Tarragona y Manresa (Catalunyacaixa) (Case C-415/11) [2013] All ER (EC) 770 | European Court of Justice guidance on the assessment of unfair contractual terms, good faith, and significant imbalance. | Referenced to clarify the objective test for good faith and the need to consider whether a consumer would reasonably agree to the term in individual negotiations. |
| Barton v Morris [2023] UKSC 3 | Clarification of the concept of quantum meruit in contract and unjust enrichment contexts. | The court referred to this authority to distinguish contractual quantum meruit claims from restitutionary claims and to analyze entitlement to reasonable remuneration. |
| Clark & Co Ltd v Lloyd Brazile [1908] 1 KB 968 | Entitlement to payment where contract does not make performance a condition precedent to payment. | Applied to support the proposition that prepayments may be recoverable even if the work is not completed, depending on contract terms. |
| Griffon Shipping LLC v Firodi Shipping Ltd (The Griffon) [2013] EWHC 593 (Comm) | Legal principles on deposits and prepayments in contracts and their forfeiture upon breach. | Used to distinguish between deposits and prepayments and their treatment upon contract discharge. |
| Dies v British and International Mining and Finance Corporation [1939] 1 KB 724 | Recovery of prepayments where goods or services are not delivered due to contract discharge. | Referenced to illustrate that prepayments may be recoverable if the contract is discharged and the goods/services are not supplied. |
| Hyundai Heavy Industries Co Ltd v Papadopoulos [1980] 1 WLR 1129 | Liability for instalments that have fallen due before contract cancellation. | The court applied this to analyze whether counsel were entitled to instalments due before contract discharge. |
| Cadogan Holdings Ltd v Global Process Systems LLC [2013] EWHC 214 (Comm) | Analysis of instalments, deposits, and payments before completion of contract. | Used to support the legal analysis of when payments remain due after contract discharge. |
Court's Reasoning and Analysis
The court began by confirming that the contracts between counsel and the lay client were consumer contracts within the meaning of the Consumer Rights Act 2015, with counsel as traders and the client as consumer. The key contractual provision at issue was the "Payment Term," which required full payment of fees even if the hearing was adjourned or did not proceed for reasons beyond counsel's control.
The court examined whether the Payment Term fell within the safe harbour provision of s. 64(1)(b), which excludes from fairness assessment terms concerning the appropriateness of the price payable. The court held that the Payment Term did not fall within this safe harbour as it concerned the consequences of non-performance rather than the adequacy of the price.
The court then considered whether the Payment Term fell within paragraph 5 of the grey list in Schedule 2, which covers terms requiring the consumer to pay disproportionately high sums for services not supplied if the consumer decides not to conclude or perform the contract. The court agreed with lower courts that the Payment Term fell within this provision because it required full payment despite the client not receiving the bulk of the contracted services.
On the question of unfairness, the court applied the twin statutory requirements of significant imbalance and good faith. Both lower courts had found that the Payment Term caused a significant imbalance by placing the entire financial risk of an ineffective hearing on the client, while counsel bore no corresponding risk and could seek other remunerative work. The court found no error in this evaluative judgment.
Regarding good faith, the court rejected the argument that the term was fair because the client had an opportunity to read and accept the contracts. It held that the statutory good faith requirement is an objective test that considers factors such as the imbalance of bargaining power, the absence of individual negotiation, the vulnerability of the consumer, and whether such terms are common in commercial contracts. The court agreed with the lower courts that the Payment Term failed this test.
Turning to consequences, the court held that under ss. 62(1) and 67 of the Act, an unfair term is not binding on the consumer and must be removed in its entirety without substitution or amendment. The rest of the contract continues if practicable.
The court analyzed the contracts' other terms, which provided for payment by instalments and required payment in advance of counsel's attendance. It concluded that the unfair Payment Term was distinct from the instalment payment terms, which remained valid.
The court rejected the High Court's view that removal of the Payment Term entitled counsel to recover fees on a quantum meruit basis for partial performance. It held the contracts were contracts of entire obligation, not divisible, so counsel could not recover any part of the agreed fee without full performance.
The court further considered whether instalments that had fallen due before contract discharge were payable. It found the contracts had been frustrated when the hearing was adjourned, rendering performance impossible before the third instalment fell due. Consequently, counsel was not entitled to that instalment. The court distinguished between deposits and prepayments and noted no instalments were expressed as deposits.
Finally, the court rejected any entitlement to payment on a quantum meruit basis for unjust enrichment, concluding that the consumer had received benefits (representation at the pre-trial review and some consultations) exceeding the instalments paid and that the doctrine did not apply to recover unpaid fees after contract frustration.
Holding and Implications
The court's final decision is to DISMISS THE APPEAL.
This means that the payment term requiring full fees despite adjournment is unfair and unenforceable under the Consumer Rights Act 2015. Counsel are not entitled to recover fees on a quantum meruit basis once this term is removed, and the contracts are treated as frustrated when the hearing was adjourned. Instalments not yet due at frustration are not payable. The decision does not set new precedent for all counsel contracts but highlights the need for fair contractual terms balancing counsel's interests with consumer protection in direct access arrangements.
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