Asplin: Fixed fee was a debt
The Court of Appeal has upheld an award of £300,000 to a small central London law firm owed under a retainer which the client had claimed was not payable as the transaction it advised on did not go ahead.
Lady Justice Asplin described it as “an unusual and difficult case” but held that multiple challenges to the decision failed.
In late 2016, BlackLion Law began working under a general retainer for Amira Nature Foods, which at the time was listed on the New York Stock Exchange.
Soon after, it began managing the issue of high-yield bonds in Amira, known as Project Avatar. It was agreed that there would be a separate retainer for this work – a fixed fee of £300,000, to be payable in cash or shares at Amira’s discretion, “subject to the completion of the matter by 31 May 2017”.
The bond issue did not happen and the question for His Honour Judge Paul Matthews, sitting as a High Court judge, was the construction of the qualification in the retainer.
He held a year ago that it was unlikely a small practice like BlackLion Law would be prepared “to tie up a huge proportion of its available human resources on a project to be paid only if it was successful”.
But even if managing partner Negar Yazdani was in effect prepared to “bet the firm”, he said that, at the time the retainer was signed, it would have made “no commercial sense” for her to agree to a contingent fee arrangement.
The Court of Appeal rejected five grounds of appeal, including that the fixed fee was due as a debt payable to BlackLion. “The Avatar retainer provided for two alternative means by which the fixed fee might be met. Neither means was utilised,” said Asplin LJ.
“The fixed fee was neither paid in cash nor in shares which were saleable freely on the open market. Such a sale was expressly envisaged in the Avatar retainer and an essential part of the mechanism to pay by way of a share issue.
“Accordingly… [the conclusion] that the fixed fee of £300,000 is due as a debt, is not in error.”
As a result, the argument that BlackLion’s only remedy was in damages also failed.
The “more difficult” ground of appeal was whether Amira chairman Karan Chanana was liable in tort for procuring a breach of the Avatar retainer, with his counsel submitting that there was no properly constituted pleading of the cause of action against him.
However, the point only came up during closing submissions after a full trial.
This made it an “unusual and difficult” case, said Asplin LJ. “It does not fall neatly into the authorities which have considered the test to be applied where new matters are raised on appeal.”
She took account of the fact that the point “would have affected the way in which the trial was conducted and the evidence which was before the judge”, but also “the importance of the finality of litigation”.
“It is also relevant that this is the kind of case in which were we were to allow the new point to be taken, it would be necessary to remit the matter.”
The judge concluded: “Overall, given the nature of this case and having taken all relevant factors into consideration, it seems to me that it is too late to raise a matter in relation to which no point was taken at any stage and which was aired, albeit obliquely, in closing submissions.”
Lady Justice Falk and Lord Justice Moylan agreed.
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