Anonymized Summary of Court of Appeal Opinion

Factual and Procedural Background

In 2009 the Appellant was retained by the Respondent in relation to long-running proceedings against an individual ("Individual A"). The parties entered three successive conditional fee agreements (the last, "CFA-3", dated 6 March 2013). By a letter dated 24 February 2016 the Appellant terminated CFA-3 alleging repudiatory breach and claimed various sums (the "Termination Letter"). The Appellant thereafter commenced a separate action in the Chancery Division (stayed).

On 31 March 2016 the Respondent commenced proceedings for detailed assessment of three bills under s.70 Solicitors Act 1974, disputing liability and/or quantum. A costs judge (Judge James) directed two preliminary issues in 2016 (validity of the CFAs; entitlement to determine the retainer). There were pleadings, cross-examination and a multi-day hearing; Judge James gave judgment in August 2020 holding the CFAs unenforceable and that the Appellant had wrongfully terminated earlier CFAs.

On appeal Judge Trower allowed the appeal in part (December 2021), holding the CFAs not unenforceable and that the Appellant had been entitled to treat certain acts as repudiatory. The matter was remitted to the Senior Costs Judge. In May 2022 the Respondent raised a further defence ("Objection 1") that termination occurred before the conditions to entitlement had arisen. The Appellant sought to strike out Objection 1 as an abuse of process. Judge Gordon-Saker refused strike out and assessed the bills at nil. The Appellant appealed to Judge Marcus Smith; there are two separate judgments below: the "Abuse of Process Decision" and the "Merits Decision" (both dismissed). The Court of Appeal heard applications and appeals in 2026.

Legal Issues Presented

1. Whether the Respondent's late raising of "Objection 1" amounted to an abuse of process such that it should have been struck out.
2. Whether, on the merits, the Appellant could recover remuneration by way of unjust enrichment (quantum meruit) following termination for repudiatory breach, given the express terms of CFA-3 (notably clause 14.3) and the allocation of risk in that agreement.

Arguments of the Parties

Appellant's Arguments

• The judge erred in finding a "major procedural error" in the making of the 2016 Order and in concluding that it was improper to have raised the additional defence earlier; Objection 1 should have been dealt with in 2016.
• On the merits, CFA-3 was an entire contract; termination prevented the Appellant from completing performance and earning the Success Fee, producing a failure of basis entitling the Appellant to restitution/quantum meruit.
• Clause 14.3 did not address repudiatory termination or exclude common law damages or a restitutionary remedy; there is a category difference between discharged contracts and subsisting contracts for unjust enrichment purposes and authorities such as Planche, Lusty and Mann support recovery on quantum meruit after wrongful termination.
• The judge failed to identify or address authorities relied on for a failure-of-basis restitutionary claim.

Respondent's Arguments

• The 2016 Order and the procedural history show there was no intention to have a preliminary determination of all liability issues; it was open to the Respondent to raise Objection 1 later.
• Even if there were procedural shortcomings, the appropriate sanction would be a costs order rather than striking out; striking out would be disproportionate.
• On the merits, CFA-3 expressly allocated risks and addressed termination consequences in clause 14 (notably 14.3); established unjust enrichment principles (the "Obligation Rule") prevent substituting restitution where the contract governs the allocation of risk.

Table of Precedents Cited

Court's Reasoning and Analysis

The Court analysed two discrete issues: (A) abuse of process; and (B) merits of the alleged restitutionary claim.

(A) Abuse of process

• The Court reviewed the 2016 Order, witness statements and skeletons and found Master Judge James had not ordered that all liability issues be determined at that hearing. The recital and materials showed no agreement that every conceivable liability point had been finally reserved for that preliminary hearing.
• The Court applied the principles in Johnson v Gore Wood and related interlocutory authorities (Koza; Orji) and emphasised that Henderson-type abuse requires a prior adjudication or clear requirement that the point be raised earlier; absent that, raising a new defence later is not necessarily abusive.
• The Court accepted that pleadings and case management could have been different but concluded that the Respondent's conduct in raising Objection 1 following the appellate decision was explainable and not deserving of strike out as abuse; deference was paid to the evaluative judgment of the Senior Costs Judge but the Court found no real prospect of success on appeal.

(B) Merits — unjust enrichment / quantum meruit

• The Court framed the legal question as whether restitution for failure of basis could displace the contractually agreed regime in CFA-3, given clause 14 and the overall allocation of risk.
• The Court summarised CFA-3 (clauses 4–7, 13–14, 17): it is an entire, sophisticated conditional fee agreement allocating outcomes (Advance Fee, Success Fee, consequences if client wins/loses) and containing clause 14.3 directly addressing termination where the client fails to meet responsibilities.
• Relying on authorities (Dargamo; Barton; Fairfield Sentry; DD Growth Premium; Pan Ocean; MacDonald Dickens; Bank of Cyprus and related authorities), the Court applied the Obligation Rule: where a valid contract expressly allocates risks and consequences, restitutionary claims are generally excluded unless recognised exceptions apply.
• The Court held that CFA-3 expressly contemplated the situation that arose (clause 14.3), so there was no proper basis to imply an alternative foundational basis for performance that had then failed. The Appellant's choice to accept repudiation rather than invoke clause 14.3 did not create a failure of basis permitting restitution; allowing restitution would upset the risk allocation in CFA-3.
• The Court rejected the submission that there is a categorical distinction favouring restitution where a contract has been repudiated; each case depends on its terms and facts. Authorities allowing quantum meruit after termination did not assist because CFA-3 was inconsistent with the implied basis relied on by the Appellant.

Holding and Implications

APPEALS DISMISSED

Holding: The Court refused permission to appeal in relation to the Abuse of Process Decision (no real prospect of success and no compelling reason) and dismissed the Merits appeal; the Appellant's restitutionary/quantum meruit claim was rejected because CFA-3 (notably clause 14.3) precluded such a claim on these facts.

Implications: The direct effect is that the Senior Costs Judge's assessment (bills at nil and refusal to strike out Objection 1) stands and the Appellant's restitutionary claim fails on the merits. The judgment applies established principles on abuse of process and the interaction between contract and unjust enrichment; no novel legal principle or higher-court departure was established by this decision.