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	England and Wales Court of Appeal (Civil Division) Decisions
You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> Tallington Lakes Ltd & Ors v Larking Gowen [2014] EWCA Civ 959 (09 July 2014) URL: http://www.bailii.org/ew/cases/EWCA/Civ/2014/959.html Cite as: [2014] EWCA Civ 959

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IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM MAYOR'S AND CITY OF LONDON COUNTY COURT
HIS HONOUR JUDGE BIRTLES
0NR10433

		Royal Courts of Justice Strand, London, WC2A 2LL
		9th July 2014

Lord Justice Briggs :

Introduction

1. This is an appeal from the order of HHJ Birtles made on 24^th September 2013 in the Mayor's & City of London County Court. He gave judgment for the claimant firm Larking Gowen in a contractual claim for the unpaid balance of the amount due for accountancy services rendered to the appellant Tallington Lakes Limited ("TLL") in the sum of £11,920.93 plus interest and costs to be assessed. The defence, which the judge rejected, was in outline that the services had been performed pursuant to a fixed price contract, for a fee of £3,950 plus VAT, that the services had not been performed in full so that nothing was due, and that in any event TLL was only liable for its share of the work done, under a contract for the provision of services both to TLL and to two of its associated companies, Tallington Holdings Limited ("THL") and Tallington Lakes Leisure Park Limited ("TLLPL"), which TLL had already paid in full. The judge found that the contract in issue had been made partly in correspondence, partly orally at a meeting, and that (save where they were necessarily disapplied) it incorporated Larking Gowen's standard terms and conditions.
2. The main issue at the trial (in which, as in this court, TLL and its two associated companies appeared by their principal shareholder Mr. Neil Morgan) was whether the agreed fixed price had been conditional upon the three companies having their accounting records in good order, and reconciling with the supporting documents and control accounts. The judge held that the agreement to perform the services for a fixed price was conditional in that respect, that the condition was far from being satisfied, so that the firm was entitled to be paid for the much larger volume of work done (compared with the work which would have been required if the condition had been satisfied), on a basis derived from the evidence proffered by the firm as to the time spent, and its standard charging rates. The full amount which the judge found was chargeable was £14,220.93, i.e. more than three times the amount of the conditionally agreed fixed price.
3. A secondary (but unpleaded) issue, pursued vigorously by TLL on appeal, was whether an acknowledgement in an email from TLL to the claimant firm that the firm might in certain circumstances charge "a bit more" than the quoted amount contractually limited what the claimant could charge even if the condition as to the quality of its accounting records was not satisfied, so that the £14,000-odd actually charged was unwarranted. The judge held that all the correspondence about what the claimant might charge was subject to the condition about the companies' accounting records being in good order. If, as he concluded, that condition was not satisfied, then the only contractual control on what the claimant might charge was that the amount should be a reasonable charge for the work done, which the judge held that it was.

The scope of this appeal

4. TLL advanced no less than sixteen grounds of appeal, in a fifteen-page document prepared by Mr. Morgan, running to some 109 paragraphs. In giving permission to appeal on TLL's written application, Vos LJ identified three matters warranting permission. The first was the allegation that the judge pre-judged the outcome, and that there was personal animosity between the judge and Mr. Morgan. The second was that the "a bit more" contractual qualification to the amount chargeable was, although unpleaded, sufficient to raise a real prospect of success. The third was that there was a real prospect of success in the argument that a fair fee for the extra work should have been judged by reference to the fee quoted for the whole task, and therefore not have been a significant multiple of it. Vos LJ warned TLL not to expect this court to permit the facts to be re-investigated, and that if it was shown that the trial had proceeded on a legal misapprehension, or an unfair basis, a re-trial would be the only likely outcome.
5. Although Vos LJ identified those three points in his reasons for giving permission to appeal rather than, in terms, as limitations upon the permission granted, my reading of his grant of permission, taken as a whole, is that he did intend that the appeal should be limited to those three points, and that it certainly should not be extended to permit a re-investigation of the facts found by the judge. When we put this interpretation to Mr. Morgan at the beginning of the hearing, he readily agreed with the last part of it. But he interpreted Vos LJ's reference to the trial proceeding "on a legal misapprehension" as permitting him in addition to advance any submission about legal misapprehension fairly to be found within his original grounds. The result was that, no doubt with considerable hard work and commendable focus, Mr. Morgan re-cast his original grounds into some fifteen alleged legal misapprehensions, together with the separate ground based upon pre-judgment and personal animosity. The only link between those two parts of the appeal suggested by Mr. Morgan in his carefully prepared and articulate oral submissions was that the sheer number of legal errors in the judge's judgment of itself suggested that he was seeking to fit a pre-conceived decision into uncongenial facts, regardless of any liberties with the law necessitated by that task.
6. Although the result was that, in my view, Mr. Morgan then developed TLL's appeal by reference to a number of matters which went beyond the three grounds identified by Vos LJ, we did not prohibit or even dissuade him from doing so. On the contrary, it provided a useful spur to an evidently highly organised litigant in person to focus his appeal on supposed errors of law rather than upon his no doubt strongly held views about the factual mistakes made by the judge. The result is that I will address Mr. Morgan's fifteen suggested legal misapprehensions broadly in the order in which he presented them, before dealing with his ground based on pre-judgment and personal animosity. But first I must set out those of the judge's findings of fact which are essential to the determination of this appeal.

The facts

7. Mr. Morgan sought to engage Larking Gowen in March 2009 to provide year-end statutory accounts and taxation computations for TLL, THL and TLLPL, in substitution for another firm of accountants with whose services he had become dissatisfied. A Mr. Fitch of Larking Gowen dealt with the negotiation of the terms of that engagement on its behalf.
8. By the email to Mr. Morgan on 26^th March 2009, Mr. Fitch proposed a fixed fee of £4,400, stating that:

"This fee is subject to the accounting records being in good order with all of the necessary supporting documents and control accounts reconciling. …

If any special work is required, or ad hoc projects this as discussed would be additional work and as such we would prepare a separate quote if required, prior to starting that work."

9. On 1^st April 2009 Mr. Fitch met Mr. Morgan and the TLL company secretary and general manager Mrs. Jones to discuss the engagement. The judge found that Mr. Fitch was indeed told that the company's accounting records were in good order. Mr. Morgan repeated that assertion in an email on 3^rd April to Mr. Fitch, and continued:

"Could we split the difference between £3,000 and £4,400 i.e. £3,700 as a fixed price with the proviso that you can come and moan and possibly charge a bit more if it takes you far longer than you think? …"

By return email later that day, Mr. Fitch stated:

"…I am prepared to go for £3,950 plus VAT – and perhaps moan a bit less!"

Mr. Morgan replied by email:

"OK – we will agree at £3,950.
I will sign and return your forms today. …"

10. Mr. Morgan did indeed sign and return what he called "your forms" to Mr. Fitch. They consisted of separate engagement letters, each dated 1^st April 2009, and addressed to the directors of each of the three companies. Nothing turns on the detailed terms of those letters, which Mr. Morgan signed on 3^rd April 2009, save that paragraph 6.1 stated:

"Forming part of this letter are our general terms of engagement which accompany it."

Those general terms of engagement included, at clause 14:

"FEES
Our fees are computed on the basis of the time spent on your affairs by the partners and our staff and on the levels of skill and responsibility involved at the charging rates appropriate at the time the work is carried out. …"

11. Neither the engagement letters nor the general terms of engagement which each letter describes as accompanying it were included within the appeal bundles, although they were in the trial bundles before the judge, and exhibited to a witness statement made by Mr Fitch. He made specific reference to the content of clause 14 of the general terms in that statement, at paragraph 9. We directed that copies of the engagement letters and general terms be provided to us on the day following the hearing. The judge found that Mr. Morgan had signed the claimant's standard terms (including clause 14) on 3^rd April 2009 (JGT71). The copies sent to us showed Mr. Morgan's signature on each of the engagement letters but not, separately, on the accompanying general terms of engagement.
12. In a written submission which accompanied Mr. Morgan's copies of the engagement letters, he vigorously denied having signed, or ever seen, the general terms of engagement, or clause 14 in particular. In my view the judge's finding in paragraph 71 of his judgment must be understood as meaning that, by signing each of the engagement letters, which had been accompanied by the general terms of engagement, Mr. Morgan was to be taken to have signed up to those general terms as well, as terms incorporated by reference into the engagement letters.
13. The judge found (at JGT43) that it was part of the agreement made between Mr. Fitch and Mr. Morgan that TLL, his main trading company, should be responsible for the claimant's charges for work done in respect of all three companies' accounts. He said that this reflected and continued a practice adopted by Mr. Morgan with the accounting firms previously instructed. The judge does not spell out precisely how this was agreed. It does not appear in the exchange of emails and I infer that the judge's conclusion was that it had been agreed orally at the meeting on 1^st April. Again this is a purely factual finding which cannot now be challenged.
14. Thereafter the claimant's engagement proceeded. The judge found that the company's accounting records were by no means in good order, that a substantial amount of extra work had to be done by the claimant as a result and that, in addition, the firm carried out substantial pieces of additional work, beyond that comprised within the fixed price quotation, for which the firm was entitled to charge as additional work. The details of the extra work attributable to the poor state of the company's records, and the additional work carried out upon request do not matter. They are all purely factual findings beyond challenge on this appeal.
15. The judge rejected the companies' assertion that the claimant through Mr. Fitch knew all about the state of their accounting records before embarking upon the engagement. Further, he rejected the defence that the firm had refused to complete the work. Again, these are all unchallengeable factual conclusions, the detail of which does not matter for present purposes, however strongly Mr. Morgan may disagree with those findings.
16. TLL received invoices from the claimant in June, July, September and October 2009 for an aggregate of £14,220.93, and paid the first invoice of £2,300.00 in full. The claimant therefore sued for the balance.

The proceedings

17. The Particulars of Claim issued on 6^th May 2010 pleaded a simple claim for the outstanding balance, for services rendered, of £11,920.93, specifying the four invoices and giving credit for the amount paid. The claim was made against TLL only.
18. TLL's defence, dated 2^nd June 2010, pleaded a fixed price contract, denied that the agreement for a fixed price was conditional upon the satisfactory state of the company's records, denied liability to pay for the work done for TLL's two associated companies, and asserted that the work had not been completed. The £2,300 paid by TLL was alleged fully to discharge any liability of TLL to the claimant.
19. At what became a CMC about a year before the trial, the claimant notified TLL that it would rely upon a fee entitlement based on quantum meruit, and that it would seek to join THL and TLLPL as additional defendants, as a belt and braces alternative to its claim that TLL was liable for the whole of its fees.
20. The trial of this low -value dispute had originally been estimated for one day. In the event it took three days, with an adjournment between days one and two on 4^th-5^th March 2013 and the third day on 30^th April 2013. Even then, there proved to be no time for oral closing submissions, and they were delivered in writing, in May and June 2013.
21. Notwithstanding the numerous criticisms of the conduct of the judge, and of counsel for the claimant, which Mr. Morgan has sought to pursue as part of his appeal based on pre-judgment and personal animosity, no transcript of the proceedings was either sought or, if available, obtained. I will return to the unsatisfactory consequences of that omission in due course.
22. The claimant obtained permission to join THL and TLLPL at the beginning of the trial. The judge directed that, if so advised, the newly-joined companies could rely on TLL's defence as their own, but gave permission for them to serve separate defences if they wished. In the event they did not.
23. Mr. Morgan conducted a lengthy cross-examination of Mr. Fitch before the closing of the claimant's case on 5^th March. Thereafter the claimant disclosed to the defendants (and lodged with the court) their full time records for the conduct of the engagement, and the judge relied on them as evidence of the time actually spent by the claimant. Mr. Fitch was recalled for further cross-examination about the time records, on 30^th April, and it does not appear that Mr Morgan advanced any specific challenge to the accuracy of the timekeeping records, or to the reasonableness (in general terms) of the charging rates upon which the claimant's invoices had been based. In his closing written submissions, Mr. Morgan's case remained, as it always had been, that TLL was being grossly overcharged for a fixed price contract which the claimant had failed to complete.
24. Mr. Morgan did seek to bolster the defendants' case about the gross overcharging by reference to the evidence of a chartered accountant named Jeffrey Sloneem. It was in small part factual, but mainly opinion evidence. The judge admitted it as to its factual content, but not as expert evidence because the conditions for admitting it as such in the Civil Procedure Rules had not been complied with.

Legal misapprehensions

Misrepresentation

25. Mr. Morgan's first point (repeated in his twelfth point) was that the judge had wrongly allowed the claimant to advance, and then upheld, a case that TLL had misrepresented that the companies' accounting records were in good order, when this had neither been pleaded nor asserted by Mr. Fitch when Mr. Morgan asked him about it in cross-examination.
26. In my judgment this point reveals a legal misapprehension by Mr. Morgan, rather than by the judge. TLL's pleaded case was that the company's accounting records were in good order (paragraph 9 of the Defence). There was an implied joinder of issue on that question in the absence of a pleaded Reply. The judge found, as he was entitled to, that the company's accounting records were by no means in good order.
27. None of this amounted to the advancing of a claim based on misrepresentation. Rather it was the claimant's means of showing that the condition for the applicability of the fixed price had not been satisfied.

Joinder, and separate liability, of THL and TLLPL

28. Mr. Morgan complained that the judge permitted the joinder of the two additional companies at the start of the trial, without allowing an adjournment to enable them to consider their position, plead defences or adduce evidence. He then stoutly maintained nonetheless that those two companies were each separately liable to pay for the work done in relation to their accounts and tax computations. Pointing to paragraph 44 of the judgment, he asked how clause 6.1 of the appointment letter dated 1^st April 2009 (in which THL had agreed to be responsible for fees for services provided to its subsidiaries in the event of non-payment by them), could justify a conclusion that TLL was responsible for the cost of services to its associated and parent company, when no such provision appeared in the appointment letter relating to TLL itself.
29. Taking those points separately, the decision to permit joinder of THL and TLLPL as defendants (on an application made at trial, but notified long previously) involved no error of law, nor did it give rise to any prejudice to TLL, or to either of those other two companies. In the event the judge found that TLL was liable for all the services provided, so that the joinder proved, with the benefit of hindsight, to be an unnecessary belt and braces exercise.
30. If paragraph 44 constituted the judge's sole reason for finding TLL liable for the whole of the fees, there might be something in Mr. Morgan's point. But as I have said, paragraph 43 of the judgment contains a finding that TLL's liability for the whole of the fees was expressly agreed during the oral negotiation of the agreement. All that the judge was doing in paragraph 44 was responding negatively to Mr. Morgan's general point that his three companies all had separate liability.

State of companies' accounting records not a condition to the fixed price

31. Mr. Morgan's fifth and sixth points, taken together, were in substance that the condition set out in Mr. Fitch's email of 26^th March was merely an opening gambit that was superseded in the later negotiations. Alternatively, he submitted that even if it was incorporated as a term, it sounded only in damages for breach, rather than as the basis for disregarding the agreed fixed price. In my view the judge's contrary analysis, namely that the state of the companies' accounting records remained a condition of the agreed fixed price, from start to finish in the negotiations, cannot be faulted. It was in part a finding of fact, since the negotiation of the engagement was partly written and partly oral. Otherwise it was a matter of interpretation of the string of emails, which I consider led the judge to the correct outcome.

Failure to treat the "charge a bit more" provision as a contractual term

32. Mr. Morgan fairly submitted that the emails passing to and fro on 3^rd April did appear to display a common understanding that, if extra work needed to be done by the claimant beyond that contemplated, they could ask TLL for "a bit more" by way of fees. But the judge's conclusion was that even this provision was subject to the condition as to the state of the companies' accounting records, being a rider to the fixed price agreement which was itself never more than conditional. Again, I do not consider that the judge can be faulted on this analysis, either as a finding of fact about a partly oral contract, or as a matter of interpretation of the emails. It is one thing to agree an informal means for seeking a higher fee where, despite the companies' records being in good order, extra work is required, and another where the sub-stratum for a fixed fee agreement is undermined by the seriously non-compliant state of the companies' accounting records as the judge found them to have been.

Illegitimate jump to quantum meruit, and failure to apply judgment to the amount reasonably payable

33. This formed the subject matter of Mr. Morgan's eighth, ninth, tenth, thirteenth and fourteenth legal misapprehensions, and addressed what seemed to me, at least initially, to be his best point on appeal. The judge's approach was as follows. Having concluded that the condition for the applicability of the fixed price agreement was not complied with, he said that the claimant was "entitled to a reasonable fee" both by the application of the common law relating to a quantum meruit for services rendered, or alternatively under Section 15 of the Supply of Goods and Services Act 1982. Then, having resolved the issue as to the claimant's alleged knowledge of the state of the companies' accounting records, and alleged refusal to complete the work, he simply concluded, without any further judgmental analysis, that invoices based upon the claimant's timekeeping records and standard charging rates were payable in full.
34. But in apparent contrast, at JGT71, he said that:

"In my judgment once it is accepted that the state of the records overtakes the fixed price, then Clause 14 of the Claimant's standard terms is engaged, which states how its fees are calculated. Mr. Morgan signed these on 3^rd April 2009."

That analysis would not lead to the assessment of a reasonable fee on a contractual quantum meruit basis at all. It would simply require the fee to be calculated by reference to a formula in the claimant's general terms of engagement, applicable if the condition for the fixed fee was not met. It would simply be a default contractual provision as to fees, and would displace both the common law as to quantum meruit and section 15 the Act.

35. It is difficult to reconcile those two alternatives as coherent parts of a single analysis. I think that the reconciliation must lie in the judge's unquestioning assumption that the contractual quantum meruit process (or its statutory equivalent) called for no more than analysis of time worked and standard charging rates, so that it made no difference whether the outcome flowed from clause 14 of the general terms, or from a quantum meruit analysis.
36. In my judgment that approach to the application of the contractual quantum meruit principle is wrong. Although in Benedetti v Sawiris [2013] UKSC 50, the Supreme Court emphasised the objective nature of a quantum meruit assessment in a claim based on restitution, they were careful to treat as calling for separate consideration the related and perhaps mis-named quantum meruit process, where engaged for the purpose of working out the amount payable under a contract with no expressly agreed price or price formula. At paragraph 9 Lord Clarke of Stone-cum-Ebony said this:

"It is common ground that the correct approach to the amount to be paid by way of a quantum meruit where there is no valid and subsisting contract between the parties is to ask whether the defendant has been unjustly enriched and, if so, to what extent. The position is different if there is a contract between the parties. Thus, if A consults, say, a private doctor or a lawyer for advice there will ordinarily be a contract between them. Often the amount of his or her remuneration is not spelled out. In those circumstances, assuming there is a contract at all, the law will normally imply a term into the agreement that the remuneration will be reasonable in all the circumstances. A claim for such remuneration has sometimes been referred to as a claim for a quantum meruit. In such a case, while it is no doubt relevant to have regard to the benefit to the defendant, the focus is not on the benefit to the defendant in the way in which it is where there is no such contract. In the contractual claim the focus would in principle be on the intentions of the parties (objectively ascertained)."

37. There is, to my mind, surprisingly little authority about the process by which, in the absence of any express terms, the contracting parties' implied agreement that the services should be performed for a reasonable charge or fee is to be worked out in practice. There will no doubt be many cases, particularly in contracts for professional services, where the combination of reliable evidence as to the time spent and a reasonable hourly rate for that work will enable the court (in the event of dispute) to determine the amount of the reasonable fee. But there will be other cases where, for example, additional work is done in addition to that contracted for at a fixed price, where the fixed price itself will be powerful evidence which assists in the identification of a reasonable fee for the additional work. This may, for example, be achieved by deriving an hourly rate for the work done for the fixed fee, and then applying it to the additional work.
38. The present case is something of a hybrid in which, on the judge's findings of fact, the work originally contracted for took much longer than anticipated, because of the poor state of the company's accounting records, and substantial additional work was done at the company's request, beyond that for which the conditional fixed fee was agreed to be payable. Furthermore, the very fact that the fixed fee was conditional, and that condition not satisfied, may be a powerful reason for treating the fixed fee as a poor guide to the identification of a reasonable fee for the totality of the work.
39. Leaving aside clause 14 of the general terms of engagement, which do not appear to have been relied upon in argument by the claimant until its written closing submission, the trouble with the judge's analysis is that he moved straight from his determination of the issue about the claimant's entitlement to a reasonable fee, to a conclusion that the invoices were payable in full, without any apparent exercise of judgment as to whether a simple application of time records and the claimant's ordinary charging rates was an appropriate yardstick. The result was a fee more than three times the quoted fee, but there is no sign in the judgment that the judge attempted, even on a broad brush basis, to ascertain whether the combination of the poor state of the accounting records and the requests for additional work really did involve the claimant spending three times or more as much on the work as would have been required if the accounting records had complied with the stipulated condition, and no additional work been requested.
40. I have considerable sympathy with the judge for having, as it seems to me, omitted this analysis. The parties had apparently come to court to litigate at great length about the issues with which he dealt fully in his judgment. They do not appear to have addressed the question whether, on an assumption that a reasonable free was payable, the claimant's time records and ordinary charging rates provided an appropriate yardstick, beyond the claimant's bare assertion that they did, and Mr. Morgan's often-repeated assertion that the outcome was grossly excessive. Mr. Morgan did seek to introduce comparables, both by reference to what predecessors of the claimant as the company's accountants had charged in earlier years, and by his unsuccessful attempt to deploy Mr. Sloneem as an expert witness. The judge appears to have taken no account of the first, and (correctly in my judgment) ruled the second as inadmissible. Finally, the case had, by the time when the judge came to consider his conclusion, run for an altogether disproportionate length of time, having regard to the modest amount at stake.
41. But the unfortunate fact remains that, in my view, the judge did omit this necessary stage in the analysis, assuming that clause 14 did not afford a self-standing express contractual route to the same conclusion.
42. I have anxiously considered whether (ignoring clause 14 for the moment) this is a lacuna which this court can properly fill. We invited the parties at the end of the hearing to indicate whether, against the possibility that it might not be, they would be prepared to consent to this court determining the amount of the reasonable fee, necessarily on a broad brush and imperfect basis, in order to prevent a yet further and even more disproportionate expenditure of time and costs on this small claim. This did not commend itself to the parties.
43. In the absence of that consent, I do not consider that it is possible for this Court to take that step, rather than remit the issue for a re-hearing. Not only is there no transcript of the proceedings which would enable this Court to review the evidence given orally about these matters. The relevant time records are not in the appeal bundle and, as it seems to me, there is simply not available to this Court the material with which to form a just view about the extent to which, if at all, the conditionally agreed fee should carry weight in determining the reasonable fee.
44. The result is that this throws into sharp focus the question whether it was permissible for the judge to rely on clause 14 as affording a contractually agreed short-cut to the use of time records and the claimant's hourly rates as the basis for determining the quantum of the fee payable. Clause 14 was neither pleaded as a basis for justifying the invoices nor, having initially been referred to by Mr Fitch in his witness statement, was it relied upon for that purpose at any later stage in the proceedings, until the claimant's written closing submissions. Rather, the claim was said to lie in quantum meruit, and the time records and charging rates used to make good a quantum meruit claim. Clause 14 was also relied upon for the purpose of justifying the interest rate charged but again, only in a written submission lodged (and I assume exchanged) after the conclusion of the three-day hearing. The result was that the only warning TLL was given that clause 14 might justify the claimant's charges was in Mr Fitch's witness statement in 2011.
45. Mr. Morgan has complained, in written submissions after the hearing in the Court of Appeal, that he was given no opportunity to challenge the finding by the judge, implicit in paragraph 71 of the judgment, that the general terms of engagement were in fact sent with the engagement letters which he then signed, as those letters suggest that they were, and as had been confirmed by Mr Fitch's witness statement.
46. In my judgment it is necessary to distinguish between two questions. The first is whether TLL was unfairly denied the opportunity to deal with the purely factual question whether the general terms of engagement did accompany the engagement letters when sent by the claimant to Mr Morgan for signature on behalf of each of his three companies. The second is a legal question namely, if the general terms did accompany the engagement letters, whether clause 14 formed part of the parties' bargain, in the event that the condition for the fixed fee was not met, and whether TLL has had a fair opportunity to address this issue.
47. As to the first, there was in my view a sufficiently clear assertion and proof in evidence that the general terms did accompany the engagement letters, well before the start of the trial, for TLL to have had fair opportunity to challenge that at trial. The general terms, and the content of clause 14 in particular, were sufficiently flagged up by Mr Fitch's witness statement, and the three copies of the general terms included in the appropriate place in the trial bundle, immediately after each of the signed engagement letters. Mr Morgan has fully demonstrated that he is both a very intelligent and an industrious litigant, well able to take any forensic point presented to him.
48. As to the second, this is essentially a question of law, on the interpretation of documents, there being no suggestion that clause 14 was specifically addressed in oral negotiation. The judge specifically relied on clause 14 as a binding contractual provision as to fees, and Mr Morgan could have, but did not, treat this as a legal misapprehension in his carefully prepared submissions for the appeal. The possible legal consequences of clause 14 were nonetheless debated during the hearing of the appeal. In my view TLL has not been unfairly deprived of the opportunity to make submissions about them.
49. I consider that the judge's analysis, at paragraph 71 of his judgment, is correct. Paragraph 6 of the TLL engagement letter describes the general terms, therefore including clause 14, as "forming part of this letter". Plainly the fixed fee would have prevailed over clause 14 if the condition for its application had been satisfied. But since the condition was not satisfied, the provisions of clause 14 are applicable as a fall-back, rather than the implied term of a reasonable fee.

Alternative breach analysis

50. After reciting section 15 of the 1982 Act, the judge continued (Jgt62):

"If I am wrong about that then the defendants are in breach of the express terms contained in clause 1.3 of the Claimant's terms of engagement."

This was a reference not to the general terms of engagement but to the following paragraph in the engagement letters signed for each of the three companies:

"You are responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the financial position of the company and for ensuring that the financial statements comply with the Act."

51. Mr. Morgan submitted that this alternative analysis was wholly misconceived. I agree. Paragraph 1.3 of the engagement letters sensibly reminded each company that its directors, rather than the claimant firm, had the statutory responsibility for keeping proper accounting records, so that the claimant's engagement did not remove that continuing responsibility. But it was not in any sense a term of the contract of engagement, for breach of which the claimant could claim damages, or in any other way relevant to the amount of the fee payable. Nonetheless it provides no assistance to TLL on this appeal. It was only a tentative alternative analysis which could arise only if the judge was wrong both about clause 14, and the claimant's entitlement to a reasonable fee. I need therefore say no more about it.
52. Mr. Morgan's final supposed legal misapprehension turned out to consist of no more than a challenge to the judge's finding that the claimant did not fail to complete the work. That was a purely factual conclusion against which TLL does not have permission to appeal.

Pre-judgment and personal animosity

53. Mr. Morgan was eloquent in his expression of an opinion that, from start to finish, the judge appeared to have made up his mind in favour of the claimant. He complained both in his grounds of appeal and in his oral submissions that the judge had shouted at him when he tried to make what he regarded as a polite and sensible intervention during the claimant's counsel's opening submissions. He complained that there appeared to be a cosy relationship of good friends between the judge and counsel, which he suggested lent weight to his view that the case had been stitched up by the professionals (the claimant, its solicitors and counsel, together with the judge) before the trial even started, and that the reality of the process was that the judge was determined to enable all those professionals to recover their fees (including the legal costs of the litigation) from Mr. Morgan's modest-sized and struggling companies.
54. These are very serious allegations and that is, no doubt, why Vos LJ gave permission to appeal in relation to them. Following notification of that decision to the claimant, its solicitors pointed out to Mr. Morgan that he would need to obtain a transcript of the trial for inclusion in the appeal bundle. Mr. Morgan's initial response was that TLL's appeal did not depend in any way on what was said at the trial, and that he intended to rely upon the judgment. On second thoughts, he marked up the passages in his Grounds of Appeal upon which he intended to rely as true statements of what had occurred during the trial and invited the claimant via its solicitors to agree with them as true, or explain why they disagreed. The claimants' solicitors' response was to notify Mr. Morgan that those passages were not agreed. Some detail as to why not was later provided in the claimant's skeleton argument for the appeal.
55. Mr. Morgan then sought to have admitted, in evidence on the appeal, statements from himself and from Mrs. Jones seeking to prove the truth of those matters. We read those statements without prejudice to their being admitted, and stated that we would rule on their admissibility as part of our reserved judgments.
56. I have some sympathy for Mr. Morgan in relation to the provision of transcripts of the hearing. The correspondence which we have been shown suggests that he obtained quotes running to several thousand pounds, the pursuit of which would add to the already disproportionate costs of this litigation. But there is in my view no substitute for transcripts (if available) if reliance is going to be placed in an appeal alleging pre-judgment and personal animosity, upon things said by the judge during the hearing. Furthermore, it would probably have been practicable for Mr. Morgan greatly to reduce the cost of obtaining transcripts if he had sought a facility to listen to the tape recordings and then to bespeak only those parts of the transcript relevant to the conduct of the judge which he wished to prove. This cost-saving alternative was not pursued.
57. While I can imagine a case in which, because for some reason a transcript cannot be obtained, some alternative means of proving allegations of judicial misconduct might properly be deployed (such as bespeaking the judge's own notes or, as a very last resort, the admission of witness statements), I consider it wholly inappropriate for such processes to be undertaken in a case where no transcript has even been sought, in circumstances where it is reasonable to suppose that, if sought, it could have been obtained.
58. Nor do I criticise the claimant and its solicitors for not responding to Mr. Morgan's imaginative attempt to use parts of his Grounds of Appeal as a type of notice to admit facts. The claimant was, in my view, entitled to insist that Mr. Morgan obtained the best evidence (probative or otherwise) of the allegations about the judge's conduct which he sought to pursue, rather than to be drawn into a much less satisfactory alternative which would leave the best evidence unavailable to this Court.
59. I have, of course, carefully studied the judge's reserved judgment to see whether, as Mr. Morgan suggests, any trace of the pre-judgment and personal animosity which he alleges can be discerned within it. In my view it cannot. The judgment reads as a careful and (having regard to the small sum at stake) detailed analysis of the issues put before the court by the parties which betrays neither pre-judgment nor any disposition to dislike Mr. Morgan,
60. The result is that I regard this serious ground of appeal as wholly unproven, and would dismiss it for that reason.

Conclusion

61. I would therefore dismiss this appeal.

Lord Justice Tomlinson:

62. I agree.

Lord Justice Longmore:

63. I also agree.