View source for ICLR (2015) WLR(D) 31

''SOLICITOR — Retainer — Termination — Client losing mental capacity after entering into conditional fee agreement with solicitors— — Whether client’s supervening mental incapacity automatically terminating solicitors’ retainer by operation of law or frustration

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Blankley v Central Manchester and Manchester Children’s University Hospitals NHS Trust''

[2015] EWCA Civ 18

CA

27 January 2015

Richards, McCombe, Sharp LJJ
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The inability of a client to give instructions personally to her solicitor by reason of the client’s supervening mental incapacity did not mean that the client’s contract of retainer with her solicitor was automatically frustrated.

The Court of Appeal, Civil Division so held when giving reasons for having, on 11 November 2014, dismissed an appeal by the defendant, Central Manchester and Manchester Children’s University Hospitals NHS Trust, against the decision made by Phillips J, sitting with assessors in the Queen’s Bench Division, on 5 February 2014 [2014] 1 WLR 2683, allowing an appeal by the claimant, Diann Blankley, by her litigation friend Andrew M G Cusworth, against the decision of Judge Harris, sitting in the Manchester District Registry on 8 August 2011, in which he held that as a matter of law, the claimant’s supervening mental incapacity automatically frustrated and terminated a contract of retainer she had entered into with her solicitors; and struck out those parts of the claimant’s costs bill relating to work undertaken by the solicitors after 6 March 2007 in relation to her claim against the defendant.

The claimant suffered brain damage at the defendant’s hospital and, in 2002, brought a claim for damages alleging negligence by the defendant. She was found to lack capacity and in consequence her father was appointed as her litigation friend. In 2005 judgment was entered for the claimant with damages to be assessed. In 2005 she regained mental capacity and continued the proceedings without a litigation friend, entering into a conditional fee agreement (“CFA”) with her solicitors. In 2007 the Court of Protection determined that the claimant no longer had the mental capacity to conduct her own affairs or to provide instructions and a receiver was appointed, later becoming a Court of Protection deputy. When the proceedings were concluded the solicitors submitted a costs bill on behalf of the claimant. The defendant contended that the costs relating to work carried out after the appointment of the receiver were not recoverable, asserting that as a result of the claimant’s mental incapacity the CFA had automatically terminated. On a preliminary issue a costs judge agreed with the defendant’s contention but Phillips J allowed the claimant’s appeal.

RICHARDS LJ, giving reasons for dismissing the appeal, said that Phillips J had been correct to find that the claimant’s supervening incapacity did not cause the CFA to be terminated by frustration. The defendant’s case was that (i) the supervening incapacity of a principal terminated the authority of an agent to act on the principal’s behalf, so that the solicitors were acting without authority; and that (ii) a contract of retainer was personal in nature and depended on the ability of the client to personally give instructions to the solicitor if the authority to act on behalf of the client was lost, and those instructions could not be given on her behalf by a receiver/deputy subsequently appointed to act for her. It was argued that the claimant’s supervening incapacity created a situation in which she was unable to give such instructions, which meant that the contract became incapable of performance and was therefore frustrated, and although in a case of fleeting incapacity the contract would still have been capable of performance, the claimant’s medical assessment in February 2007 that she no longer had capacity had not been time limited.

His Lordship said that whilst a solicitor’s retainer was in one sense a personal contract, it was doubtful whether it required instructions to be given by the client personally even in the general run of cases. It was commonplace for instructions to be given through an agent, such as an accountant or managing agent or a spouse. Whatever the general position, the parties must have contemplated in the particular circumstances of the case that the claimant might suffer from a further period of incapacity in which she would be unable to give instructions personally but they could be given by a litigation friend or a receiver/deputy or on her behalf. The fact that supervening incapacity prevented the claimant from giving instructions personally did not render the contract of retainer impossible of performance; it simply gave rise to a short period of delay pending appointment of a receiver/deputy who could continue the conduct of the proceedings on the claimant’s behalf and give instructions to the solicitors for that purpose. Even if the claimant had been under an obligation to give instructions personally and was unable to comply with that obligation by reason of her supervening incapacity, the situation was covered by the express terms of the CFA, which entitled the solicitors in that event to end the contract and to require payment of their basic charges and disbursements. The contract therefore catered expressly for the consequences of the claimant being unable to give instructions personally and it could not possibly be said that this was a fundamentally different situation from anything contemplated by the contract. The reasons given by the judge for concluding that the CFA was not frustrated were correct.

MCCOMBE and SHARP LJJ agreed.

Richard Spearman QC and Vikram Sachdeva (instructed by Linder Myers LLP ) for the claimant; Alexander Hutton QC and Matthew Smith (instructed by Clyde & Co LLP ) for the defendant.

<p align="right">Sharene Dewan-Leeson, Barrister.</p>