The Court of Appeal has held that an upfront advance payment termination of an agreement between a barrister and their former client was unfair and unenforceable under the Consumer Rights Act 2015 (CRA).
The client instructed barristers on a public access basis. The payment term provided that the advance fee for a hearing was still payable in full “if the hearing concludes early or is adjourned … or does not go ahead for any reason beyond our control”. When the defendant’s trial was adjourned, she terminated the barristers’ instructions and refused to pay the outstanding fees.
That’s pretty common with Barristers and used to incense me when I was practising litigation. You see, the Court frequently adjourns hearings at the last minute or, sometimes, the case settles in the days up to trial. Barristers typically agree a ‘brief fee’ for the matter (which is a fixed fee for the preparation and day in court). Additional days are call refreshers. We would frequently get Counsel seeking to charge the full brief fee where the day in court was adjourned; their argument was always that they had blocked that day out of the diary and thus couldn’t take on any new work. The reality is, they would always have ample work to do, or they get a day off. I always resisted them seeking the full brief fee – in effect, we were owed a day in Court and should have that credited against the fee.
Clients, of course, and particularly direct access clients, are not as sophisticated. So she just refused to pay.
The Barristers took her to court and lost, and appealed the decision. The Court of Appeal held:
- Although the CRA does not permit the adequacy of the contractual price to be assessed for fairness, the exemption is a narrow one. The payment term did not express the substance of the bargain but was rather an incidental term and so could be assessed.
- The payment term fell within the grey list of potentially unfair terms in the CRA. It had “the … effect of requiring that, where the consumer decides not to conclude or perform the contract, the consumer must pay the trader a disproportionately high sum … for services which have not been supplied”. Not only high, but the FULL fee.
- For the purposes of the fairness test, the payment term created a significant imbalance in the parties’ rights and obligations because it would oblige the client to pay in full regardless of how far in advance it became clear that the hearing would not go ahead and even if this was not the client’s fault. There was an absence of good faith (as required for a finding of unfairness) because the payment term was not one a consumer would have agreed to in negotiations. That she had read the contract and agreed to it was insufficient.
So what can we learn from this case, as a small business owner?
Firstly, when taking payment on account or upfront, there must be fairness. You will not be able to take and charge the full fee for services if only partial services are provided. However, you would be able to have a clause that permitted the recovery of actual losses and set that off against the fee. My suggestion therefore, would be to ratchet down a refund – the more services provided, the less of the fee refund.
Interestingly from a legal perspective, the Court of Appeal also rejected arguments relating to quantum merit (one should be fairly rewarded for work done) and unjust enrichment (the client unjust benefitted) – this is because having assessed the clause was void, it gets removed from the contract so that no payment can be made to the Barristers.
Glaser and another v Atay [2024] EWCA Civ 1111 (3 October 2024)