Duffy v Stripes Solicitors (a firm) [2011] EWHC B17 (QB) (10 May 2011)

Neutral Citation Number: [2011] EWHC B17 (QB) Case No: 8MA08094 IN THE HIGH COURT OF JUSTICE QUEEN'S BENCH DIVISION LEEDS DISTRICT REGISTRY MERCANTILE LIST 10 May 2011 B e f o r e : HIS HONOUR JUDGE LANGAN QC ____________________ ANTHONY FRANCIS DUFFY Claimant and STRIPES SOLICITORS (a firm) Defendant ____________________ Peter Foster (instructed by TPF Law Solicitors) appeared on behalf of the Claimant. Brad Pomfret (instructed by Stripes Solicitors Limited) appeared on behalf of the Defendant. ____________________ HTML VERSION OF JUDGMENT ____________________ Crown Copyright © TABLE OF CONTENTS Introduction [ ]-[3] The background [ ]-[18] An overview of the issues [ ]-[27] Issue (1): construction of the contract Discussion [ ]-[40] A note on credibility [ ]-[43] Issue (2): disputes as to profit costs The relevant files [ ]-[49] Gregg, Humphrey, McInnes, Naisbitt [ ]-[65] Lamb, Hoggarth [ ]-[73] Harris [ ]-[76] Peters, Roberts [ ]-[81] Cain [ ]-[87] Conclusion on profit costs [88] Issue (3): VAT The claim in general [ ]-[93] Interest [ ]-[95] Issue (4): tax and National Insurance The claim in general [ ]-[100] Interest [ ]-[103] Issue (5): severance pay [ ]-[114] Issue (6): Schedule A – Veras claims Preliminary [ ]-[116] The Veras scheme [ ]-[123] Mr Duffy's obligations [ ]-[136] Breach of duty and damages [137]-[140] Issue (7): the Impact litigation Preliminary [141] The course of the litigation [ ]-[145] The claim for costs [ ]-[154] Issue (8): Schedule B – non-Veras claims [ ]-[160] Issue (9): Schedule C – UK Industrial Claims [ ]-[165] Issue (10): Schedule D – specialist reports [ ]-[170] Issue (11): Schedule E – referral fees [ ]-[176] Issue (12): Ndikumande and Mussa [ ]-[187] Issue (13): Miscellaneous cases [188] Issue (14): Capacity to counterclaim [189-[191] Conclusion [ ]-[193] Appendix I: Schedule B claims Corroll (File J84) [ ]-[196] Fletcher (J25) [ ]-[199] Forde (J86) [ ]-[201] Forrest (J26) [ ]-[205] Goodman (J87) [ ]-[209] Hughes (J88) [ ]-[213] Mintram (J89) [ ]-[216] Papacharalambos (J90) [ ]-[220] Appendix II: Miscellaneous cases Doward (File K18) [ ]-[223] Goodall (K18) [ ]-[226] Underdown (J77 and K18) [ ]-[230] Tidbury (J73) [ ]-[234] _____________________________________________________________________ Judge Langan: Introduction The claimant ('Mr Duffy') is a solicitor who has specialised in cases involving industrial diseases. 'Stripes Solicitors', against whom the action is brought, was, at the time of the events with which I am concerned, the style under which Richard Andrew Stripe ('Mr Stripe'), who is a commercial lawyer, carried on the practice of a solicitor as sole principal. For the purposes of this judgment it will sometimes be convenient to refer to Mr Stripe as though he were in name, as well as in effect, the defendant. At other times it will be easier to refer to 'Stripes', the business entity owned and controlled by Mr Stripe. I do not think that these changes in nomenclature will give rise to any confusion. Mr Duffy was employed by Mr Stripe as head of the industrial disease department of Stripes between January 2005 and March 2007. They parted company on bad terms. In due course Mr Duffy commenced this action, and Mr Stripe in turn raised a counterclaim. I think that it is recognised on both sides that no significant economic benefit can be derived by either party from the litigation. The claim is a small one when compared with the time spent at trial (three weeks) and with the enormous volume of written material which is before the court. It seems unlikely that either party would be able to meet an order that he should pay the other's costs of the litigation, or that Mr Duffy has the resources to satisfy any substantial judgment on the counterclaim. The case is one in which bankruptcy may well stare the loser in the face. Nevertheless, both Mr Duffy and Mr Stripe are determined on a forensic fight to the death, and it is not for the court to stand in their way. Given the fraught relationship between the protagonists, it is only right that I should record that their respective cases have been advanced with good sense and moderation by their counsel, Mr Foster who appeared for Mr Duffy and Mr Pomfret who represented Mr Stripe. I am grateful to them both. I should in particular record my appreciation of the extremely helpful written submissions which each filed a few days before the commencement of the hearing, and again a few days before they made their closing speeches. The background In this section of the judgment, I shall try to confine myself to matters which are not in dispute. Between 1982 and 1984 Mr Duffy trained as a solicitor with Thompsons in that firm's Cardiff office. Thereafter he worked for a number of other firms, and developed a particular expertise in clinical negligence and industrial disease litigation. He was with Lawfords as a salaried partner from 1997 to the end of February 2004, and then with Hugh Potter & Co (a firm which is now called, and to which I shall refer as, Potter Rees) from March to December 2004. Lawfords was a firm which was heavily dependent both on work from trade unions and on union funding. The firm had borrowed £2,000,000 from one of its union clients and began to get into financial difficulties when the client called in the loan. In October 2004 Mr Duffy decided to leave Lawfords, but he was required to work out his notice, which he did until his departure on 28 February 2004. The Lawfords partnership was dissolved in July 2005. Mr Duffy went to Potter Rees with a view to establishing an industrial disease practice: while at Lawfords he had developed the asbestos side of the practice and had dealt with a significant number of mesothelioma cases. On leaving Lawfords, Mr Duffy had written to a number of existing clients to inform them that he was moving to Potter Rees and some of those clients transferred their cases from Lawfords to the latter firm. Things then went wrong for Mr Duffy. First, while, on his account of the matter, he believed that he had acted entirely properly and in accordance with the Law Society's guidelines in taking cases to Potter Rees, Lawfords took a dim view of what he had done. They maintained that Mr Duffy was in breach of contractual and fiduciary obligations which he owed them. Lawfords commenced proceedings against Mr Duffy, he filed a defence, and in due course a trial date was fixed for July 2005. Secondly, while Mr Duffy had the Lawfords action hanging over his head, he was not managing to build up the practice at Potter Rees as he had hoped. This lack of success flowed both from his own inability to find work for the practice, and from the unwillingness of the senior partner, Mr Hugh Potter, and the other partners to pay referral fees for the introduction of work. Inevitably, there was quite soon a parting of the ways between Mr Duffy and Potter Rees, and it was decided that he would leave the firm at the end of December 2004. Mr Stripe is a commercial lawyer. He had within his firm a personal injuries department, and also a fee-earner, Cheryl Williams, who undertook non-contentious industrial disease work under the Coal Mining Scheme. In the latter part of 2004 that work was coming to an end, and Mr Stripe decided that he would like to establish an industrial disease department which would undertake contentious work. He was put in touch with Mr Duffy through a recruitment consultant and, after discussions between Mr Stripe and Mr Duffy, they agreed that Mr Duffy should join Stripes at the beginning of January 2005. The terms of Mr Duffy's employment were contained in an offer letter written to him by Mr Stripe on 4 November 2004. These are the first four paragraphs of that letter: Further to our discussions, I write to confirm that I am pleased to offer you the position as a fee earner in our Industrial Diseases Department. Your starting salary will be £55,000. I confirm you will receive a bonus based upon an option of your choice. This is either 15% of profit fees paid in excess of £220,000 per annum, but payable quarterly this would be based upon paid fees over £55,000. The other alternative is for 10% of fees of over £165,000 (£41,250 per quarter). Essentially, the first option is based upon a four times multiplier and the second is based upon a three times multiplier which may be lower. In addition, as these bonus provisions were not attached to your previous offer, then I discussed a further option with Ian Graves [the recruitment consultant] which I understand is acceptable to you. This is based upon the fact that you are optimistic that you will be able to bring the work which you currently have with you without necessarily making payment although this still needs to be resolved with Hugh Potter. However, I would be prepared for you to take 50% of the bills relating to that work as and when paid. In accordance with our discussions we do not currently have a guaranteed provider of Industrial Disease work, but I note that you are optimistic that you will be able to bring two providers upon board. We have identified at least one potential provider which appears to have acceptable terms, although we still need to have a meeting with them. In addition, I would be happy to consider support for further marketing proposals which you may have. Mr Duffy started work at Stripes on 5 January 2005. He brought with him certain files which had originally been Lawfords files and upon which he had continued to work while at Potter Rees. These files were taken with the consent of Mr Potter, subject to a lien which Potter Rees had given to Lawfords in respect of work in progress which had been done there, and subject also to a lien imposed by Mr Potter in respect of work in progress which had been done at Potter Rees. At the end of February 2005 there was a mediation between Lawfords and Mr Duffy. The mediation was successful: Lawfords' action against Mr Duffy was settled on a 'drop hands' basis. As part of the compromise, or concurrently with the compromise (I am not sure which it was), Mr Duffy and Mr Stripe purchased for £11,000 Lawfords' work in progress on the files which had been taken by Mr Duffy to Potter Rees and thence to Stripes. It is common ground that Mr Stripe and Mr Duffy each contributed £5,500 to the purchase of the work in progress and that they agreed that this should belong to them in equal shares. Mr Stripe says, and Mr Duffy disputes, that Mr Stripe lent Mr Duffy the £5,500 contributed by Mr Duffy. Curiously, given the determination of these two gentlemen to litigate whatever can be litigated, this controversy has not raised its head as a formal issue in this action. Mr Duffy remained at Stripes for two and a quarter years. There was undoubtedly a progressive deterioration in the relationships between Mr Duffy on the one hand and Mr Stripe and other employees of Mr Stripe on the other hand. There was a certain amount of evidence on this subject, but it does not seem to me that an examination of that evidence would throw any light on the issues which I have to decide. There are just two matters on which I should say something at this stage. These are the Veras scheme and payments received on the Lawfords/Potter Rees files. Mr Duffy was responsible for the conduct of industrial disease (primarily deafness) cases and for some personal injury litigation. This was all claimants' work which was undertaken on the basis of conditional fee agreements ('CFAs'). Much of the work consisted of referrals to Stripes under the so-called Veras scheme. 'Veras' is shorthand for two companies called Veras Plc and Veras Funding Solutions Limited which were, in effect, funders of claims which came through referral agencies. Under the scheme, Veras made a loan to the client for the purpose of paying disbursements. The solicitors entered into a CFA with the client, and gave Veras an indemnity in respect of the loan. This indemnity would clearly bite if a claim were to fail, so that the client was unable to recover his disbursements from his opponent. The solicitors had a grace period of (usually) 120 days from the making of the loan, during which they could effectively avoid liability (apart from a modest administration fee) by returning to the referrer cases which did not appear to have a good prospect of success. The Veras scheme was put in place at Stripes in August 2005. This enabled Stripes, through Mr Duffy, to take on a considerable volume of occupational deafness claims under CFAs. Some years later the assignee of Veras brought proceedings against Mr Stripe for moneys due under the indemnity ('the Impact litigation'). The Impact litigation was eventually settled. The Lawfords/Potter Rees files which were taken over by Stripes were worked upon by Mr Duffy, the cases were brought to a conclusion, and costs were recovered from the respective defendants. These costs were apportioned within Stripes, and payments were made to Mr Duffy. Putting matters broadly for the moment, the payments which were made to Mr Duffy comprised 50 per cent of the value of the work in progress which had been purchased from Lawfords (it is common ground that he was entitled to this) and 50 per cent of the profit costs earned at Stripes (his entitlement to this being now in dispute). The tensions between Mr Duffy and other employees of Mr Stripe came to a head on 15 March 2007. On that day, Mr Duffy and another solicitor were involved in a fight outside a bar in Manchester. The police and an ambulance were called to the scene but, so far as I know, no criminal proceedings followed. There was, however, a disciplinary hearing within Stripes and, on 23 March 2007, during an adjournment of the hearing, Mr Duffy resigned from his post. This action was commenced on 24 April 2008. An overview of the issues The issues in the case fall into two broad categories which I can label, just for the purposes of this section of the judgment, 'termination issues' and 'breach of duty issues.' For the purposes of this summary, I will use round, rather than precise, figures. The termination issues have to do with questions of a 'who owes what?' nature following the end of Mr Duffy's employment. They arise both on the claim and on the counterclaim. As I have stated, Mr Duffy brought certain files with him when he came to work at Stripes. His case is that he was engaged on terms that he would be entitled to a share of Stripes' profit costs ultimately recovered on those files. Whether there was such a contractual term; to which files any such term applied; and the amount of any profit costs to which Mr Duffy is entitled, are matters in dispute. By the close of the case, the claim was for sums amounting to some £29,700. There is a separate claim for a severance payment of £3,000. Liability on the claim in respect of the files is admitted to the extent of just under £1,200. Liability for the severance payment is denied. Further, Mr Stripe seeks to set off against such liability as he may have to Mr Duffy the amount of his counterclaim. Under that part of the counterclaim which relates to termination issues, Mr Stripe seeks to recover sums which are said to have been paid to Mr Duffy by mistake. This comprises what are alleged to be overpayments on five files amounting to £37,000, and all payments made on three files (which are said to be files not covered by the agreement of 4 November 2004), amounting to £9,700. As an alternative to the claim for £37,000, and in the event that the court finds in favour of Mr Duffy on the question of profit costs, Mr Stripe says that Mr Duffy was overpaid by £7,000, resulting from errors in the calculation of VAT, and by a further £22,500 resulting from the non-deduction of PAYE income tax and National Insurance contributions. The breach of duty issues arise only on the counterclaim and are not so easily summarised. What follows is very much a thumbnail sketch and should not be treated as being in the nature of a definition of the issues to be tried. There are two distinct aspects to that part of the counterclaim which relates to Veras. First, there are what have been called the Schedule A cases. These are cases which came to Stripes through Veras. The allegation is that Mr Duffy failed within the grace period properly to vet these cases; that, if he had done so, the cases would have been returned to the referrers with only nominal loss to Stripes; but that, by his decision to carry on with the cases, Stripes lost profit costs and incurred wasted disbursements. The amount claimed here is £54,700. Secondly, there is a claim in respect of the costs of the Impact litigation. Mr Stripe's case is that the body of poor cases allowed by Mr Duffy to proceed beyond the grace period was so substantial that it led inexorably to the Impact litigation. The amount claimed in respect of disbursements in the Impact litigation is £80,000, and an assessment is sought in respect of the profit costs of Mr Stripe's solicitors. There are other, less important heads of counterclaim. These encompass the following allegations against Mr Duffy: failing properly to vet claims falling outside the Veras scheme (these are the Schedule B cases); accepting cases from one referrer contrary to the Solicitors' Introduction and Referral Code 1990 and in breach of Mr Stripe's specific instructions (the Schedule C cases); paying for specialist reports where no reports were in fact obtained (Schedule D); funding referral fees out of the Veras disbursement loans (Schedule E); mishandling the claims of litigants named Ndikumande and Mussa; and delay in dealing with the claims of certain other litigants. The aggregate amount which is sought under these parts of the counterclaim comes to some £33,800. It may now be of assistance to the reader if I list the fourteen headings under which I intend to examine the matters in controversy between the parties. Termination issues (1) The true construction of the contract in so far as it relates to profit costs. (2) Consideration of the claims and counterclaims in respect of profit costs on certain files. (3) The alternative counterclaim in respect of VAT. (4) The alternative counterclaim in respect of income tax and National Insurance. (5) The claim for a severance payment. Breach of duty issues (6) Veras - the Schedule A cases. (7) Veras - the Impact litigation. (8) Schedule B - non-Veras claims. (9) Schedule C - UK Industrial Claims referrals.. (10) Schedule D - specialist reports. (11) Schedule E - funding of referral fees. (12) Ndikumande and Mussa. (13) Miscellaneous cases. General (14) Stripes' capacity to counterclaim (Mr Duffy has asserted that Mr Stripe has assigned his right of action to a limited company). Issue (1): construction of the contract Discussion Seven litigation files, on which Mr Duffy had originally worked at Lawfords and thereafter at Potter Rees, were transferred to Stripes when Mr Duffy commenced employment at Stripes. When bills would ultimately be sent out on these files, the profit costs element of the bills would relate to (1) work done at Lawfords, (2) work done at Potter Rees, and (3) work done at Stripes. There is no dispute as to (1) and (2). As to (1), it is common ground that Mr Duffy and Mr Stripe would each be entitled to one-half of the value of the Lawfords work in progress by virtue of the agreement made at the end of February 2005. As to (2), it is common ground that, as Mr Potter turned out to be unwilling to release the files except on terms that his firm retained a lien for the profit costs earned there, neither Mr Duffy nor Mr Stripe had any claim on those costs. Entitlement to (3), the profit costs billed for work done at Stripes, is in dispute and is the subject of this first issue. Mr Duffy's case is that he is entitled to half of Stripes' profit costs on the relevant files by virtue of these words in the letter of 4 November 2004: [Y]ou are optimistic that you will be able to bring the work which you currently have with you without necessarily making payment, although this still needs to be resolved with Hugh Potter. However, I would be agreeable for you to take 50% of the bills relating to that work as and when paid. As Mr Duffy accepted in cross-examination, his pleaded case as to his claimed contractual entitlement has altered and has at times been muddled. In the heel of the hunt, however, that case was presented as a simple one. It is that the bills to which reference is made in the letter relates to bills for work which would be done on the seven files after they were transferred to Stripes. Mr Stripe's primary case, on which he has been consistent since the start of the action, is that the letter refers to work in progress which might have been (but in the event was not) released by Potter Rees to Stripes without payment. Alternatively, it is suggested that the words which I have quoted from the letter may be unenforceable for lack of certainty and, as such, can be severed from what can without them constitute a complete contract. I have no hesitation in rejecting the alternative submission. It is, I think, only in a rare case that the court may properly reject as devoid of ascertainable meaning a term which formed part of a written contract negotiated by two persons experienced in business. The words under consideration here are not so unreceptive to the ordinary process of construction as to drive me to that extreme conclusion. Mr Pomfret neatly encapsulated the difference between the two sides in his closing written submissions. On Mr Duffy's part, the word 'work' which occurs twice in the relevant passage from the letter refers to the transferred files themselves. On Mr Stripe's part, the word refers to the work in progress accrued by Potter Rees on those files. The principles according to which the letter has to be construed are the well-known ones enunciated by Lord Hoffmann in Investors Compensation Scheme Ltd v West Bromwich Building Society [1998] 1 WLR 896 at 912, 913. In construing a contract, the court must have regard to the factual matrix within which it was made. There must, however, be excluded from consideration matters which relate to the subjective intentions of the parties, evidence of negotiations, and statements by the parties of their respective views of the meaning of what they agreed months or years after the contract was signed. If one bears in mind what I have said in the preceding paragraph, it seems to me that most of the points (and there were a great many of them) which were pressed on me by both counsel in the course of submissions have to be excluded from consideration. Mr Duffy says that he regarded getting a half share in Stripes' profit costs on the files as necessary to compensate him for the heavy costs which he was incurring in the litigation with Lawfords. Mr Stripe says that, in agreeing a salary for Mr Duffy, he went far beyond the figure for which he had been budgeting. Mr Foster presents Mr Duffy as having been in a relatively strong bargaining position, in which he could exact a term of the kind for which he is contending. Mr Pomfret represents Mr Duffy as having been without any great choice of remunerative employment and as someone emphatically not in a situation to insist on over-generous terms. Mr Duffy relies upon, and both sides have embarked on an analysis of, e-mails which were exchanged in August and September 2006. None of these matters appears to me to fall within the ambit of what can properly be employed as signposts in the process of interpretation. What is, in my judgment, admissible as part of the background against which the contract has to be construed is that Stripes was a firm which had an established bonus structure for staff. It is clear from the evidence that bonus was the subject of discussion between Mr Duffy and Mr Stripe and, as appears from the letter of 4 November 2004, that Mr Duffy was offered a choice of two methods of calculating his bonus. It is, in my judgment, essential to bear in mind when considering that letter that the claim advanced by Mr Duffy relates to work which he would be carrying out at Stripes, whilst employed by Mr Stripe at a salary and whilst participating in Stripes' bonus scheme . There are, in my judgment, two powerful reasons which support the view that the construction of the letter of 4 November 2004 which is advanced by Mr Duffy is erroneous. First, it appears to me improbable that Mr Stripe would have entered into an arrangement with Mr Duffy which would, in terms of generosity, have been far outwith the settled bonus scheme. Further, Mr Duffy would have been getting half of Stripes' profit costs on the transferred files irrespective of the extent to which he had been the fee-earner on the files. To adopt such a system of rewarding Mr Duffy would have been liable to upset employees who were not being so favourably treated, who would have been at Stripes for longer, perhaps considerably longer, than he had been, and who might themselves have worked extensively on the files. Second, the construction would have been commercially absurd from the point of view of Stripes. On completion of work on a transferred file, all the overheads incurred at Stripes would have to be set against that moiety of the profit costs which was Stripes', as distinct from Mr Duffy's, share; while Mr Duffy would take his moiety free of any such notional deductions. In other words, he would get his half share gross, whilst Stripes' one-half would be received net. Mr Stripe's evidence demonstrates that this would have resulted in an overall loss, and not a small one, for Stripes on the transferred files. On the other hand, to construe the letter in the narrower sense which is advanced on behalf of Mr Stripe does not offend commercial good sense. The degree of likelihood (or unlikelihood) that Mr Potter would be prepared to release these files without insisting on payment or a lien was disputed in the evidence. That controversy seems to me to be unimportant. What matters is that Mr Duffy and Mr Stripe recognised that it was possible that there might be such a release. If there were, then 50 per cent of the profit costs accrued at Potter Rees could be regarded as fair recompense for Mr Duffy's bringing work to the new industrial disease department. This would not upset the bonus scheme at Stripes. And, what is most significant in my opinion, the work to which the 50 per cent related would have been done wholly outside Stripes, and Stripes would have incurred neither general overheads nor expenditure specifically related to that work. Accordingly, I determine this first issue in favour of Stripes. A note on credibility The credibility of witnesses can play little part in the construction of a written agreement. In relation to the circumstances surrounding the agreement contained in the letter of 4 November 2004 there was one issue which was hotly disputed by Mr Duffy and Mr Stripe. This was whether Mr Duffy told Mr Stripe before the letter was written that he (Mr Duffy) was in dispute with Lawfords and the nature of the dispute. Mr Duffy maintained that he had done so. Mr Stripe said that he had not. As to credibility in general, a score or so of points was advanced by each counsel with a view to showing that his client was worthy of belief and that the opposing party had given unreliable, and on occasions dishonest, evidence. I do not propose to rehearse the detail of these submissions here or elsewhere in this judgment. It is sufficient to say that much of what was advanced by each counsel about his opponent's client could not, in my judgment, be gainsaid. The blind commitment of each of the protagonists to his own cause would make it unsafe to look on his evidence as being on the whole more likely to be right than the testimony of the other party. Where there is a difference between them, it has to be resolved issue by issue without any predilection in favour of either. On the particular dispute under consideration, I prefer the evidence of Mr Stripe. He is a commercial lawyer. If he had been told about the Lawfords dispute, he would have been alive to the possibility that Lawfords might raise a claim against Stripes in relation to the value of Lawfords' work in progress on the basis of knowing receipt of the files. Mr Stripe might still have been prepared to employ Mr Duffy notwithstanding the Lawfords claim: but it is not credible that he would have failed to make some provision in the contractual arrangements (for example, an indemnity from Mr Duffy) which would safeguard the position of his own firm. That having been said, the outcome of this dispute as to fact would not, however it is to be resolved, affect my opinion as to the interpretation of the letter of 4 November 2004. Issue (2): disputes as to profit costs The relevant files The ten files with which I have to deal can be identified by the names of the respective clients. I have divided them into categories. Gregg, Humphrey, McInnes, Naisbitt . These are files which had been worked on both at Lawfords and Potter Rees. Mr Duffy says that he has been fully paid and makes no claim. Mr Stripe has counterclaims for alleged overpayments. Hoggarth, Lamb. These are also Lawford/Potter Rees files, but they are ones on which Mr Duffy has been paid nothing and on which he is entitled to payment. The issue on each file is the amount due. Harris . This too is a Lawford/Potter Rees file, and is something of a hybrid. A payment was made to Mr Duffy. At the close of the evidence Mr Duffy's case was that he had been significantly underpaid, which was disputed by Mr Stripe, who said that there had been an overpayment. As will appear shortly, matters altered significantly by the beginning of closing speeches. Peters, Roberts. These two files came to Stripes direct from Lawfords some months after Mr Duffy had started work at Stripes. Mr Duffy was paid on them. Mr Stripe says that the payment was made by mistake and seeks the return of his money. Mr Duffy says that he was entitled to payment pursuant to an oral agreement made with Mr Stripe. Cain . This was never a Lawfords file. Mr Duffy says that he first took instructions on the case when he was at Potter Rees and that, by a combination of this fact and of the letter of 4 November 2004, he became entitled to a share of Stripes' profit costs. Mr Stripe disputes this and claims the return of a payment made to Mr Duffy in respect of the file. Gregg, Humphrey, McInnes, Naisbitt These are files on which payment was made to Mr Duffy on the basis that he was entitled to half the profit costs earned at Stripes. The questions which arise are ones of principle and of accounting. As to the principle, I have determined under issue (1) that Mr Duffy was not entitled to anything in respect of the Stripes profit costs. His entitlement was therefore limited to one half of the Lawfords profit costs. Mr Stripe's counterclaim will be for the amount actually paid to Mr Duffy on each file less the amount of that Lawfords entitlement. The accounting question has been the subject of elaborate evidence on behalf of Mr Stripe and an equally elaborate critique in the closing written submissions of Mr Foster. The witness for Mr Stripe was a costs draftsperson, Ms Victoria Morrison-Hughes. Her evidence has been heavily criticised, very fairly so, because she has provided a succession of witness statements and calculations in which many internal inconsistencies can be discerned. The best I can do is to take what I would describe as her final effort, which is her fourth witness statement, explain her workings, and set them against Mr Foster's criticisms. I will take the first file, that of Gregg, as an example. The total of the bills rendered in the case of Gregg came to £27,590.02. Ms Morrison-Hughes gives the following breakdown: Firm Part of bill Less disbursements as claimed Profit costs % of total Lawfords 5,910.19 1,304.19 3,920.00 18.84 Potter Rees 8,735.64 490.08 7,017.50 33.72 Stripes 12,944.19 1,346.00 9,870.80 47.44 In fact the case of Gregg was settled, as regards costs, for a payment of £16,000 net of VAT. Ms Morrison-Hughes' next step is to carry out an apportionment of the settlement figure according to the percentages just calculated: Firm % Apportionment Less disbursements as claimed Gross profit costs Net costs profit Lawfords 18.84 3,014.18 1,304.19 1,709.99 1,455.31 Potter Rees 33.72 5,395.92 490.08 4,905.84 4,175.19 Stripes 47.44 7,589.90 1,346.00 6,243.90 5,313.95 The third step is to calculate Mr Duffy's bonus (the word is being used loosely). Ms Morrison-Hughes takes that as being one-half of her figure for the Lawfords net profit costs. That gives £727.66. The fourth and last step is to look at what Mr Duffy in fact received in respect of the Gregg file, which was £3,976.35 and to deduct from that the calculated entitlement of £727.66. This produces the figure of £3,248.69, which is the amount for which Mr Stripe counterclaims on the Gregg file. I have considered Mr Foster's criticisms of this calculation and I find that many of them are justified. First, the amount of money credited to Lawfords disbursements is palpably wrong. Across five transferred files, that is, the four under consideration at present and Harris, the total so credited is £9,298.14, which is more than twice the amount paid by Mr Duffy and Mr Stripe to Lawfords in respect of accrued disbursements on acquiring the files. Secondly, the accounting justification for deduction of disbursements is lamentable: there is insufficient description of what the disbursements are, there has been failure to make disclosure of invoices, and there is an assumption "that disbursements as claimed have been paid in full" (Ms Morrison-Hughes' words) which "creates a fiction in the calculation which is unsustainable" (Mr Foster's response). Thirdly, all this raises the spectre of possible gross inflation of the figures given in respect of disbursements with a corresponding diminution of Mr Duffy's entitlement. Mr Foster also criticises Ms Morrison-Hughes' assumption that recovered costs were split between the three firms (Stripes will, of course, have taken Lawfords' share as well as it own) in proportion to the claims for costs, and he shows that in relation to one of the bills (in the Harris case) the assumption has been falsified. It seems to me, however, that, whilst the division of the settlement figure in this way may not always produce a precisely accurate result, it provides a fair, if rough and ready, way of doing justice between the parties. I am not prepared to act simply in accordance with Ms Morrison-Hughes' formula. To do so would, in my judgment, run the risk that Mr Stripe would be heavily over-compensated. On the other hand, if my decision on the question of principle is correct, Mr Duffy has received considerably more than the amount of his entitlement. It is, however, for a party making a claim to prove his case to the requisite standard, and Mr Stripe seems to me to have failed this test in respect of disbursements. That omission is something for which he should bear the consequences, even if the consequences are that he will recover somewhat less than he would have obtained on a more efficient presentation of his claim. In the calculation which follows, I simply make no deductions for disbursements, so that the whole of the amount to be divided is assumed to be profit costs. This will, in my judgment, give a fair result. The amount of costs actually recovered in the case of Gregg was £16,000. I apply to this sum the proportion which the Lawfords part of the bill rendered bears to the total bill, which is 5,910 : 27,590. This gives £3,427.32. 50 per cent of this is £1,713.66. The amount received by Mr Duffy was £3,976.35. The overpayment is therefore £2,262.69 (as compared with the £3,248.69 claimed by Mr Stripe at the commencement of the trial). I can go through the same exercise with the other three files in this category. The costs recovered in the case of Humphrey were £20,000. The proportion to be applied to obtain a Lawfords figure is 5,833 : 40,363, which gives £2,890.27. 50 per cent of this is £1,445.14. The amount received by Mr Duffy was £5,403.80. The difference, recoverable by Mr Stripe, is £3,958.66 (as compared with £4,387.57 claimed). The costs recovered on the McInnes file were £24,000. The applicable proportion is 7,509 : 38,684, which gives a Lawfords figure of £4,658.67. One half of this is £2,329.34. Mr Duffy received £7,724.83. The overpayment was £5,395.49 (£6,505.01 has been claimed). Lastly, the costs recovered in the Naisbitt case were £39,320. I obtain the Lawfords share by applying the proportion 9,573 : 54,895. This gives £6,845.69, of which 50 per cent is £3,422.85. Mr Duffy was paid £12,948.67, which was too much by £9,525.82 (the claim is for £10,978.63). The total amount recoverable by Mr Stripe on these first four files is therefore £21,142.66. Lamb, Hoggarth The question of principle which arises on these two files, which both came from Lawfords by way of Potter Rees, is the same as that which determined the outcome on the first group. There are, however, important factual differences. The files had not been closed by the time Mr Duffy left Stripes and, presumably because they had come from Lawfords in the early stages of the litigation concerned, relatively little work had been done at that firm. Further, no payments have been made to Mr Duffy. Mr Duffy has a substantial claim on each file, but it is a claim based on his preferred construction of the contract, that is, it includes a claim to half of Stripes' profit costs. Mr Stripe accepts liability for one half of the Lawfords profit costs only. As a result of my decision on issue (1), the accounting exercise must proceed on the basis of Mr Stripe's approach. It is at this point that difficulties begin. No doubt because of the relative amounts at stake, there is a good deal of material in the written and oral evidence of Ms Morrison-Hughes, and in the submissions of both counsel, about the extent of Mr Duffy's entitlement on his contractual approach, but little about a valuation on the contrary or Stripes' approach. There is a calculation in Mr Pomfret's closing submissions, which accepts liability for £332.90 on the case of Lamb and £838.08 on the Hoggarth file. I do not recall a competing calculation from Mr Foster. Mr Pomfret's approach takes, in each case, the profit costs recovered on the relevant file after deduction of disbursements and VAT. He applies to those profit costs percentages, 2 per cent in the case of Lamb and 8.37 per cent in the case of Hoggarth. From the percentages one obtains a Lawfords apportionment, which is then halved to produce Mr Duffy's share. The percentages come from an apportionment of profit costs claimed in the relevant bill of costs, which was carried out by Ms Morrison-Hughes. The calculation is annexed to her second witness statement, and I can see no reason why I should not adopt it. The analysis carried out to produce a figure for the amount of profit costs less disbursements is contained in spreadsheets which were handed in by Ms Morrison-Hughes when giving oral evidence. That analysis is something which I am reluctant to accept. It seems to me that the same problems as to amount and proof of disbursements which infected the calculations on the first four files must be present here also: indeed, the spreadsheet relating to Lamb says unashamedly that "no disbursement vouchers are available." Further, I do not agree that the Potter Rees costs should be taken off before calculating the Lawfords share, because Ms Morrison-Hughes' percentage figures related to the costs accrued at all three firms. The costs received on the Lamb file were £64,350. If one looks at the spreadsheet, one can work out that there was a VAT deduction of £6,372.57. This gives a net figure of £57,977.43. 2 per cent of that is £1,159.54. One half of the last figure is £579.77. The corresponding figures on the Hoggarth file are: costs received, £42,092.76; VAT deduction apparent from the spreadsheet, £4,043.15; net figure, £38,049.61; 8.37 per cent thereof, £3,184.75; one half of the last figure, £1,592.38. The amount due to Mr Duffy in respect of these two files would therefore be £2,172.15, compared with the £1,170.98 admitted. The figure may be too high, particularly if there were deductions for VAT which are not apparent on the spreadsheets, but it is the best which I can do with the material available. Harris This was yet another file which originated with Lawfords and came to Stripes after it had passed through Potter Rees. The question of principle has been determined under issue (1): Mr Duffy's entitlement is to one-half of the Lawfords profit costs, and he has no claim on Stripes' own profit costs. As to accounting, I described this case earlier as a hybrid one: there are, or at least were, significant monetary claims in both directions. At the beginning of the trial Mr Duffy obtained leave to add the Harris claim by amendment. His figures were: profit share entitlement, £19.244.99; received, £12,965.06; shortfall, £6,279.93. Mr Stripe's response was that, even on Mr Duffy's construction of the contract, Mr Duffy had been fully paid in respect of Harris. Mr Stripe was able to produce a cheque stub, marked "26/09/05 LAWO4 AFD £6,091.25" and an entry from the firm's bank statement showing that this cheque had been paid on 6 October 2005. In his oral evidence, Mr Duffy was adamant that he had been "short changed by about £6,000" and said that he would obtain his bank statement, that is, to show that this sum had never gone into his account. Notwithstanding reminders from me later in the trial, no bank statement was produced, nor was any explanation offered as to the non-production. In Mr Foster's closing submissions, the receipt of a cheque in the sum of £6,091.25 was acknowledged and the claim was withdrawn. By way of mitigation, it was said that the matter had become confused because of Mr Stripe's late allegation of the making of a payment. This is, in my judgment, no excuse at all: Mr Stripe produced his answer to a claim which was itself made late. The best that can be said for Mr Duffy is that he must have been reckless, or close to reckless, in the instructions which he gave to his lawyers. This little saga reflects on him very badly indeed. This leaves the counterclaim for overpayment. I propose to adopt the same approach as with the first four files. The amount of costs recovered on the Harris file was £75,000. The Lawfords share is ascertained by applying the proportion 31,045 : 118,732. This gives a Lawfords share of £19,610.03. One-half of this, which is Mr Duffy's entitlement, is £9,805.02. In fact he received £19,056.31. The overpayment is therefore £9,251.29 (compared with the amount sought by the counterclaim, which is £12,003.88). Peters, Roberts These two files have a markedly different history from the seven files which I have considered so far. They were in their origin Lawfords files. They were opened at Lawfords in Mr Duffy's name but, because they were cases of severe personal injuries arising from a road traffic accident (as distinct from industrial disease cases) the day-to-day work was carried out by Marianne Marshall, a legal executive. The files were not taken by Mr Duffy with him to Potter Rees and they were not included in the purchase by Mr Duffy and Mr Stripe of work in progress from Lawfords. Then, when the Lawfords partnership was being dissolved in the summer of 2005, Ms Marshall, with the agreement of the clients, transferred the files to Mr Duffy at Stripes. The cases were concluded at Stripes and on 28 October 2006 Stripes paid Mr Duffy £2,432.12 (£4,000 less tax and National Insurance) in respect of them. Mr Stripe maintains that his firm acted under the mistaken impression that Mr Duffy was entitled to a payment in respect of these files and counterclaims for the return of the sum of £2,432.12. Mr Duffy's case on the Peters and Roberts files has not been consistent. It is clear from e-mails which were passing between him, Mr Stripe, and Mr Simon Greenhalgh who was responsible for authorising the payments at Stripes, that in August 2006 Mr Duffy was resting his claim to a payment on the letter of 4 November 2004. As he now accepts, that cannot be right, because on no one's case does that letter extend to files which had never been at Potter Rees. In his third witness statement which was signed on 14 October 2010, Mr Duffy puts his case on the basis of a separate agreement made with Mr Stripe in 2006, when Mr Stripe, in order to put pressure on Mr Duffy to sign a formal contract of employment, agreed to allow him to take half the profit costs on three files, Peters, Roberts and Cain. Then in his fourth witness statement which was signed on 21 December 2010, Mr Duffy relies on an agreement made with Mr Stripe in the summer of 2005, when the files came in to Stripes: "we agreed that as these were files introduced via Lawfords… I would be entitled to retain 50% of the net profits on both cases." Mr Duffy adhered to this last version of events in his oral evidence. Mr Stripe says that neither of these separate agreements was ever made. It is common ground that any entitlement which Mr Duffy may have in respect of these files must rest on some agreement other than those which he made with Mr Stripe in November 2004 and which he and Mr Stripe made with Lawfords in February 2005. Mr Duffy now relies on an agreement said to have been made in the summer of 2005. I find that no such agreement was made. Whatever difficulties may attach to other parts of this case, I have no hesitation in rejecting as incredible Mr Duffy's story. It has surfaced late. It is inconsistent with his previous conduct and evidence. It is astonishing that the tale was not told when he first sought payment. In any case, the alleged agreement has about it an inherent improbability. Mr Duffy would be receiving a substantial extra sum of money from work which he was in any event obliged to do under his contract of employment (this raises an additional legal difficulty, that of consideration) and which would be subject to the Stripes bonus scheme. Finally, for reasons discussed when I was considering issue (1), the alleged agreement would have been a loss-maker from the point of view of Stripes. It follows that this part of the counterclaim has been made good, to the full amount of £2,432.12. Cain Amanda Cain was severely injured in a road traffic accident on 21 November 2004. On 5 January 2005, which was Mr Duffy's first day of work at Stripes, he had a lengthy telephone conference with Ms Cain's father. He wrote a client care letter to Ms Cain on the same day, and had a consultation with her at her home on 13 January 2005. All this is fully documented. A claim was launched on behalf of Ms Cain and was successfully concluded. In January 2007, Mr Duffy received from Stripes £5,743.25 (£9,735 less tax and National Insurance) in respect of the profit costs on the case. Mr Stripe says that Mr Duffy was not entitled to anything in respect of the Cain file and seeks repayment of the sum of £5,743.25 as money paid by mistake. Mr Duffy's case on the Cain file has shifted in much the same manner as his case on the Peters and Roberts files. In his oral evidence, he rested his entitlement on a combination of two elements: the letter of 4 November 2004 and the fact that (as he says) instructions were first taken on Ms Cain's case while he was still at Potter Rees. The last point raises a question of fact. In his oral evidence Mr Duffy said that he accepted instructions in a telephone conversation with Ms Cain's father while he was at Potter Rees. He told Mr Cain that he would be moving to a new practice in January 2005, and "as soon as I arrived at Stripes I made arrangements to see the client." A great many question-marks hang over this account of matters, and they were enumerated by Mr Pomfret in his closing written submissions. In particular, the full notes taken by Mr Duffy on 5 January 2005 have the hallmark of initial instructions; and in his third witness statement Mr Duffy referred to his having brought seven cases from Potter Rees, which could not have included Cain (the seven would have been Gregg, Humphrey, McInnes, Naisbitt, Lamb, Hoggarth and Harris). Nevertheless, there are signposts which point, albeit faintly, to Mr Duffy's account being correct. The front of the Cain file at Stripes has, in Mr Duffy's handwriting, the name of "Hugh Potter – Potter Rees" as the source of the work. There is evidence from Richard Corran, a Manchester solicitor who was acquainted both with Mr Cain and Mr Duffy, which supports the view that the first contact between Mr Duffy and Mr Cain took place before Mr Duffy moved to Stripes. Further, by contrast with the position on the Peters and Roberts files, there is nothing inherently improbable about the way in which he now puts his case on the Cain file. Indeed, given the date and the seriousness of the accident in which Ms Cain was involved (there was one passenger fatality), I would have expected her father to get on with finding a solicitor before Christmas. Accordingly I am, although with a degree of hesitation, prepared to accept that the balance of probabilities on the factual question comes down in favour of Mr Duffy. That conclusion does not, however, carry Mr Duffy to success. I come back yet again to my finding on issue (1) which was that, on the true construction of the letter of 4 November 2004, it did not give Mr Duffy the right to share in Stripes' profit costs on Lawfords/Potter Rees files. Nor, by parity of reasoning, would the letter give him a share of Stripes' profit costs on a Potter Rees (non-Lawfords) file. For the avoidance of doubt, I should say that I did not understand Mr Duffy to be saying that the mere fact that instructions had been taken at Potter Rees was the source of his entitlement. If I am mistaken, and he did wish to pitch his case in that manner, it would likewise fail. The work done on the Cain file at Stripes was done by Mr Duffy as an employee of Mr Stripe and solely for the remuneration due under his contract of employment. Accordingly Mr Stripe is entitled to the sum of £5,743.25 under this part of the counterclaim. Conclusion on profit costs I have now considered the ten relevant files. In respect of two files, Mr Duffy is entitled to payments amounting to £2,172.15. In respect of the other eight files, Mr Stripe is entitled to payments which come to £38,569.37. Issue (3): VAT The claim in general This claim arises on the files of Gregg, Humphrey, McInnes, Naisbitt and Harris, and falls into two parts. One common feature of these files is that Mr Duffy received his payments gross, that is, without deduction either of VAT or of tax and National Insurance contributions. By contrast, the payments made in respect of Peters, Roberts and Lamb were made through the payroll system, with deduction of tax and National Insurance but not of VAT. Mr Stripe's case is that, as the supplier of the relevant taxable services, he is the person liable to account for and to pay the VAT chargeable on the share of Stripes' profit costs which was mistakenly (on his case) paid to Mr Duffy. The claim is, however, raised by him only in the alternative. His primary case is, of course, that Mr Duffy never was entitled to a share of Stripes' costs; and, to the extent that the primary case succeeds, as it has succeeded, the VAT element will be included in the amount ordered to be repaid on each file. If, however, Mr Duffy's construction of the letter of 4 November 2004 were to prevail, then the alternative claim would become relevant and Mr Stripe would be entitled to recover the VAT which, on the calculations presented to the court on his behalf, comes to £7,287.96. I can in the circumstances deal quite shortly with this subject. As Mr Stripe has succeeded on the more important question which arose under issue (1), the claim for reimbursement of VAT does not arise. If it had arisen, so that Mr Duffy was keeping the non-VAT part of each relevant payment, I would have held in principle that he should not be entitled to keep the VAT. I would not, however, have made an order for payment of a specific sum in circumstances in which I had not seen either that Mr Stripe had reached the point of accounting to the Revenue for the VAT or that the Revenue had agreed his figures. I would, rather, have made a declaration that Mr Duffy was bound to indemnify Mr Stripe against any liability for VAT on the Stripes profit costs paid to Mr Duffy. There is a great deal of material which could be analysed with a view to deciding whether the figure of £7,287.96 is correct. Given the outcome of this part of the case, and on the interest question to which I am about to turn, it would be disproportionate if I were to spend some hours on an examination of the material with a view to reaching a conclusion as to the correctness of that amount. Interest The Revenue charges, pursuant to statute, interest at the rate of 8.5 per cent per annum on late payments of VAT. It has been argued on behalf of Stripes that Mr Duffy should pay interest so calculated to Mr Stripe. This is not an alternative, but an 'in any event' claim, which is made irrespective of whether Mr Stripe recovers the whole of the profit share from Mr Duffy or only the VAT element. The basis of the claim is that interest is due to the Revenue only by reason of Mr Duffy causing Mr Stripe to underpay the VAT in the first place. I am not disposed to award interest on the basis claimed. I am not convinced that it was wholly or primarily Mr Duffy's fault that he was paid money which should have been accounted for as VAT to the Revenue; and, if there was any fault, it is outweighed by Stripes' corresponding failure to do its own accounts efficiently. Issue (4): income tax and National Insurance contributions The claim in general This claim arises on the same five files. I have already stated that the payments to Mr Duffy were made gross. This was clearly wrong as regards the Stripes profit costs because Mr Duffy was receiving these, if his interpretation of the letter of 4 November 2004 were correct, as part of his remuneration under his contract of employment. Income tax under the PAYE system and employee's National Insurance contributions should have been deducted. By contrast, the payments in respect of the Lawfords profit costs were correctly made gross, because Mr Duffy was simply receiving an asset, the value of work in progress, which he had purchased. Mr Stripe's case is that, as Mr Duffy's employer, he is the person liable to account for and pay the tax and National Insurance contributions. As with the matter of VAT, the claim is raised only in the alternative, in the event of Mr Duffy being successful on issue (1). On the calculations presented to the court, the claim amounts to £15,279.32. I treat this precisely as I treated the claim in respect of VAT. As Mr Stripe has succeeded on issue (1), the claim in respect of tax and National Insurance contributions does not arise. If it had arisen, I would have held in principle that Mr Duffy should not be entitled to keep these elements of the payments received by him, but I would have dealt with the matter by making an order for an indemnity rather than entering judgment for a specified amount. As with the VAT claim, I do not propose to make a finding as to the accuracy of the figure which has been placed before the court. Interest The Revenue charges interest, pursuant to statute, on late payments of PAYE tax and National Insurance contributions at the rate of 8.5 per cent per annum. Stripes raises an 'in any event' claim to payment of interest. I regard this claim as much more soundly based than the corresponding claim for interest on VAT. The payments were plainly taxable. Mr Duffy accepts that tax has not been paid, although the payments were made several years ago. They went into the client account maintained at Stripes in respect of an action to recover unpaid bonus which Mr Duffy was bringing against Lawfords (these proceedings were distinct from the litigation to which I have referred earlier). Mr Greenhalgh says, and Mr Duffy denies, that this was done at Mr Duffy's request. I accept Mr Greenhalgh's evidence. I cannot see how he could have chosen this indirect method of payment unless he was asked to do so. At one time, Mr Duffy justified the non-payment of tax on the Lawfords part of the payments on the basis that such part could be treated as damages, or compensation for loss of office. In his oral evidence, he said that he might have been naïve. That seems to me to be too benevolent a piece of self-justification. The evidence as a whole has convinced me that Mr Duffy never intended to pay tax on his profit shares, and was hoping to get away without having to do so. If it turns out that Mr Stripe now has to account for tax on the Stripes part of the profit shares, for which he will be entitled to reimbursement from Mr Duffy, then Mr Stripe should be able to claim from Mr Duffy in addition any interest which he (Mr Stripe) has to pay to the Revenue. I do not, however, think that there is any justification for an immediate order for payment because it is not yet certain whether Mr Stripe will have to pay interest, and if so how much, to the Revenue. Mr Duffy's liability for interest can be dealt with by an appropriate declaration and order for an indemnity. Issue (5): severance pay This is a claim by Mr Duffy for £3,000, as a severance payment upon the termination of his employment. The claim is disputed by Mr Stripe. I will begin by setting out matters which are not in issue. Following the fight in which Mr Duffy was involved, he was made subject to a disciplinary hearing at Stripes. The hearing was conducted by Mr Stripe at the offices of the firm on 22 and 23 March 2007. On the second day, Mr Duffy was accompanied by his union representative, Mr O'Regan of Amicus. Mr Stephen Jarman, who was then a salaried partner in Stripes, was present in order to take notes. Just before 1150, it appeared that it might be possible to settle matters, whereupon Mr O'Regan said (according to the Jarman notes) that he had an appointment elsewhere and need not be present for a detailed discussion as to terms, and he left. Just before 1353, in what was effectively a period during which the formal hearing stood adjourned for negotiations, Mr Duffy said that he would resign from Stripes and Mr Stripe accepted his resignation. On the following day, 24 March 2007, which was a Saturday, Mr Duffy came into the offices and worked on some files. He does not appear to have done any further work for Stripes. Subsequently, the draft of a formal document entitled 'Compromise Agreement' was prepared at Stripes. This was sent by Mr Stripe to Mr Duffy on 25 April 2007. It was never signed, for reasons which are disputed: the significance of the draft from the point of view of Mr Duffy is that it provided for the making of a termination payment, although the amount was not quantified in the document. Mr Duffy says that one of the terms of the agreement for his resignation which was made during the adjournment to which I have referred was that he should be paid one month's net salary on leaving Stripes. For the purposes of the claim, he quantifies this at £3,000. Mr Stripe says that no such term was ever discussed, much less agreed. In my judgment, this claim is not well-founded. First of all, there are, yet again, inconsistencies in Mr Duffy's account of the matter. His second witness statement conveys, at any rate to me, the impression that the agreement relied upon was made in a Costa coffee shop. His third witness statement very definitely conveys the impression that the agreement was negotiated by, or with the assistance of, Mr O'Regan. Mr Duffy accepted in cross-examination that his witness statement was 'wrong' in this respect. These uncertainties as to the place where the agreement was made, and the persons who were there, does not give me confidence in Mr Duffy's final version. Secondly, Mr Jarman made extensive, contemporaneous handwritten notes, which were afterwards converted into a typewritten record. Mr Jarman accepted that he had made one error in the typed version, namely, as to the purpose for which he left the room shortly before the end of the meeting. According to the typed notes, he did so in order to enable Mr Duffy and Mr Stripe to continue their negotiations. He now says that he left the room only for a minute or two in order to fetch another member of staff to be present to witness the fact that Mr Duffy was resigning. He also says that at no time when he was present did he hear any agreement being made as to payment of a month's salary. I have no reason to doubt Mr Jarman's evidence. The error in the notes seem to me to be immaterial. The notes are very full, and I am sure that, if the term alleged had been agreed, Mr Jarman would have both heard and recorded it. Thirdly, on 26 March 2007, Mr Stripe wrote to Mr Duffy a letter in which he said: I confirm that I may be prepared (without prejudice) to enter into a Compromise Agreement. I note that you consider that your resignation resulted in your inability to earn an income over the next month. Therefore, I may be prepared [italics supplied] to agree to make payment of a sum to cover your salary for that period. This would be subject to the following conditions…. This letter is plainly inconsistent with an agreement as to payment having been made three days earlier. Relations between Mr Duffy and Mr Stripe were so fraught that, if a firm agreement had been made as is now alleged, Mr Duffy would at once have made an appropriate reply. He said in evidence that he could not recall having done so. In my opinion, there was no reply, and the reason was that, while the possibility of paying a month's salary may well have been touched upon in discussions on 23 March 2007, there never had been an agreement for such payment. Accordingly, this part of the claim fails. Issue (6): Schedule A – Veras claims Preliminary Before starting to write this judgment, I expected this to be by far the heaviest of the issues thrown up by the case. The expectation has been fulfilled. I propose to begin by outlining the Veras scheme. I will then consider the scope of Mr Duffy's duties in relation to cases which came to Stripes through the scheme. The next step, but one which (for reasons which I will explain below) I am deferring must be to look at individual cases in order to decide whether, in relation to any, Mr Duffy was in breach of his obligations to Mr Stripe. Finally, if I find that Mr Duffy is liable in any particular cases, I will have to assess the damages recoverable by Stripes. The Veras scheme The Veras scheme related primarily to cases of noise-induced hearing loss, often shortly referred to as industrial deafness. As anyone with experience of such cases knows, these are usually relatively low-value claims. Unless the degree of hearing impairment is fairly severe, general damages rarely stretch into five figures, and special damages are often limited to the cost of a hearing aid. The claimants, who will usually have been employed in manual occupations, are rarely well off, and litigation has to be undertaken pursuant to CFAs. The Veras scheme involved several participants: the claims management companies, or referral agencies, who introduced the work; the Veras companies through whom the work was passed to solicitors, and who funded the disbursements which the latter would have to pay out; an insurance company which provided an after the event policy; and the solicitors, in this case Stripes. There were also audiologists who carried out hearing tests, and ear, nose and throat consultants, who provided experts' reports. Given how small the pie was, the number of persons who had fingers in it is remarkable. Many surprising (some might say shocking) elements of the scheme emerged in evidence: for example of the premium of £1,470 which was commonly paid for after the event insurance, £780 was knocked back to the introducer as commission; and medical consultants were engaged for a round sum to conduct hearing clinics, but their resulting reports on claimants seen at the clinics were charged out at fees which would produce a tidy profit for others. Notwithstanding the many volumes of documents with which I am dealing, there does not seem to be anywhere a comprehensive collection of all relevant executed agreements. So far as I can tell, there was what might be called a master agreement between Veras and Stripes, which was signed on 8 August 2005; there were separate agreements between Veras and Stripes which defined the standard terms on which work coming from particular referral agencies would be accepted; and there were loan agreements made between Veras and individual claimants. There were other agreements, for example, between Veras, Stripes and the insurers, but I can pass over these. I shall, however, say a little about each of the three kinds of agreement which I have just mentioned. The main agreement envisaged that Veras would enter into loan agreements with clients of Stripes, for the purpose of paying disbursements made by Stripes in the course of providing legal services to the clients. Upon the execution of a loan agreement by Veras, Veras would pay the amount of the loan to Stripes, less any payments which Stripes had instructed Veras to pay direct to third parties. Clause 5.1 of the main agreement provided that in the event of any breach of the loan agreement by the client, or in the event of the unenforceability of the loan agreement by Veras against the client, Stripes would pay to Veras upon demand the amount of the balance outstanding at the date of breach or unenforceability, together with any accrued interest or unpaid charges. There was no obligation on Veras to exhaust its remedies against the client before having recourse to Stripes under this indemnity clause. I can take as an example of an agreement relating to a particular referral agency that made between Veras and Stripes relating to claims coming through an introducer called CA2 Limited. The agreement contains two matters of particular significance. First, it defines the sums for "agreed disbursements" in relation to cases coming through the agency. These come to £3,200, plus (where appropriate) VAT and insurance premium tax. Some of the individual items have somewhat opaque descriptions: for example, case preparation fee of £395, sign up fee of £185, and KYC (whatever that may be) of £60. Second, the agreement contains 'unwind' provisions, which enable Stripes to reject cases at its discretion "due to changes of fact, non-cooperative clients, inability to determine/find claimant's employer, inability to establish employer's insurer during the [industrial disease] period, etc." If Stripes decided that it could not get all the required information on a case within 120 days from the drawdown of the loan, then it could have the case unwound: that is, the case would not be proceeded with, Stripes would be provided with a replacement case, and (in effect, although it is not put like this in the agreement) the loan would be applied to the new case, apart from the 'administration fee.' This was the sum of £80, which was listed as one of the agreed disbursements, and which would have retained by Veras out of the loan for disbursements. A fresh administration fee would have to be paid for the new case. The grace period of 120 days for unwinding cases could, at the request of Stripes and at the discretion of Veras, be extended. I have looked at agreements relating to other referral agencies. They can vary from the agreement which I have just described, for example, in the detail of the agreed disbursements and in the length of the grace period, but the overall structure is the same. Strangely, no full copy of a loan agreement seems to have been the subject of disclosure, but one was provided at the trial. The copy supplied (which is unexecuted and undated) was made between Veras and a claimant called Robert Evans. The amount of the loan is shown at £3,200. The interest charge over two years is £1,173, which is interest at a fixed rate per annum of 18.3 per cent and an APR of 16.9 per cent. The total amount of £4,373 "is payable 24 months after the Date of the Agreement or on settlement or conclusion of the Claim, whichever shall be the earlier." Mr Duffy's obligations Getting on board ship with Veras was something initiated by Mr Duffy. From e-mail traffic which I have seen, the first contact between Stripes and Veras appears to have taken place between Mr Duffy and Bill Riordan of Veras by telephone on or about 10 May 2005. Shortly thereafter there was a meeting with Veras, at which Mr Duffy and Mr Stripe were both present and, after some weeks of negotiation, the formal agreement between Stripes and Veras was executed on 5 August 2005. It is now time to set out the cases of the parties as to the criteria according to which it was incumbent on Mr Duffy to accept or reject cases which were introduced under the Veras scheme. Mr Duffy's case is that he was not subject to any obligation specifically imposed by Mr Stripe. He was, of course, bound to carry out his work carefully and competently. He summarised the relevant criteria during his oral evidence as "diagnosis; a solvent employer or an insurer; and a confirmed date of knowledge." By 'diagnosis' in this context is meant a report from an audiologist which demonstrates that there has been hearing loss, and an opinion from an ear, nose and throat consultant to the effect that the hearing loss is work-related. Mr Duffy would, I am sure, accept that the information-gathering which would be required in order to assess the merits of a claim would include: obtaining and reviewing the client's GP and (if there were any) hospital records; obtaining and reviewing occupational health records; and obtaining from the Revenue a list of all the client's employers. I do not think it necessary to expand on the significance of any of this information, which will be obvious to anyone with experience of personal injury practice. Mr Duffy would also accept that, if he were without any of this information at the end of the grace period, he should (unless the case were such that it was by then clear that it should be unwound) seek an extension of time so that he could complete his investigation. Mr Stripe's case is that his clear instructions to Mr Duffy were that, unless at the end of the grace period a case could be characterised as one that was "almost certain to succeed", Mr Duffy should reject the case and have the Veras loan unwound. I have to say that, if such an instruction were given, I should not be surprised to find that Mr Duffy had blatantly disregarded it. It became all too clear during the course of his oral evidence that he had a cavalier attitude to his employer's instructions, for example, in accepting work from referral agencies without having a formal referral agreement in place. I am sure that, although responsibility for entering into a relationship with Veras rests ultimately with Mr Stripe, all the enthusiasm came from Mr Duffy. He was, in my opinion, apprehensive that, without Veras, there would be insufficient work to justify his continuing employment at Stripes. Notes made by Mr Stripe at the time disclose considerable anxiety on his part about the proposed Veras connection. Mr Duffy, with commendable frankness, said in cross-examination, that Mr Stripe "would not have entered into the funding agreement with all the reservations he had if he had not been reassured by me." None of this, however, touches directly on the central question: was the "almost certain to succeed" criterion laid down by Mr Stripe? As he is the party who is asserting the existence of the equivalent of a contractual term, the burden of establishing that which he asserts rests on him. Mr Stripe does not, of course, have to discharge the burden by any standard higher than the balance of probabilities. After considerable hesitation, I have concluded that he has not made good his case on this point. There are three principal reasons for this. First, there seems to me to be an inherent improbability about the alleged requirement. It sets an almost impossibly high standard. Mr Stripe himself accepted in evidence that he will "very rarely advise someone that his claim is almost certain to succeed. It would open the door to a claim in negligence." The requirement is also inconsistent with the basis on which litigation is taken on under CFAs: the success fees on the cases which are won fund the outlay (in time and in disbursements) on those which are lost. It can, of course, fairly be said that Veras-funded cases are rather different from the ordinary run of CFAs, because in the generality of cases the solicitor does not provide a funder with an indemnity against a loan to his client. But, even taking this into account, I still find the requirement something so far out of the ordinary as to call for more than Mr Stripe's word on which to rest an affirmative finding. Secondly, there is the evidence of Cheryl Williams and David Coulthard. I will deal with them separately. Ms Williams (or Hoy: she is now married) was at the date of her witness statement, 18 November 2008, a senior paralegal at Stripes. She started work at Stripes in June 2002, and was for her first few years at the firm principally concerned with compensation claims for industrial diseases by former coal miners and their families. I do not recall whether Ms Williams said that she still works at Stripes. That does not matter very much. What is significant is that she shared an office with Mr Duffy; he passed over to her a number of Veras files; and, for reasons on which she enlarged at considerable length in her oral evidence, she was highly critical both of the quality of the work which was funded through Veras and of Mr Duffy's conduct of some of these cases. In reply to me at the end of her evidence, she said: I discussed every file with Mr Duffy. The criterion for taking on claims was over 55 per cent [prospects of success]. That was the same for all claims. Mr Duffy made me aware of that - no one else did. Mr Coulthard is also a paralegal with many years' experience of conducting personal injury work as a fee earner. He joined Stripes on 5 March 2007, only a couple of weeks before Mr Duffy's departure. His eventual job title was Director of Industrial Disease. In July 2010 he left the firm in order to take time out from the law. A major part of his time during his first few months at Stripes was taken up with reviewing files for which Mr Duffy had been responsible. Like Ms Williams, but from a different perspective, he was disparaging about Mr Duffy's competence. But, in common with Ms Williams, he too appeared to know nothing about an "almost certain to succeed" criterion. Towards the end of his evidence, he referred to a 51 per cent test, although "you would have to advise the client on a cost-benefit analysis, particularly if it was a small claim." If there were an "almost certain to succeed" criterion in place in relation to Veras claims, it would, in my judgment, be quite extraordinary for neither of these people to have heard about it. It is true that Ms Williams' source of information was Mr Duffy himself, and that Mr Coulthard came on the scene roughly contemporaneously with Mr Duffy's departure: but, if the alleged requirement had been made and carried the importance which Mr Stripe now says that it bore, it is incredible that not a whisper of it appears to have percolated into the relevant office. Thirdly, there is nothing in writing from Mr Stripe himself to support his case. With some litigants this might be unsurprising: but Mr Stripe was a prolific compiler of memoranda; and on other matters of significance, for example that work should not be taken from referral agencies without having a formal agreement in place, written instructions were given to Mr Duffy. My conclusion therefore is that Mr Duffy owed Mr Stripe, as his employer, no more than a general duty of care. The scope of the duty must, of course, depend on the particular characteristic of the Veras claims, which is the arrangement for funding disbursements. In view of the potential liability of Mr Stripe under the funding agreement (which Mr Duffy acknowledged when giving evidence), it was important that cases which looked doubtful should be returned at the end of the grace period or any extension which might be obtained. Put another way, although the criterion for proceeding was no more than a 51 or 55 per cent prospect of success, the assessment of cases at the end of the grace period should have been carried out in a very thorough manner. Breach of duty and damages The essence of the complaint against Mr Duffy is that he failed by the end of the relevant grace periods adequately to vet cases, which are listed in Schedule A to the amended defence and counterclaim. The contention that he failed to vet them to the "almost certain to succeed" standard cannot, for the reasons which I have just given, be maintained. But it remains open to Mr Pomfret to contend that, on the material before the court, Mr Duffy failed to vet cases to the 51 or 55 per cent benchmark, and that he kept in play after the grace period cases which should have been rejected according to that criterion. It is said in Mr Foster's closing written submissions that this claim must fail for want of evidence. The suggestion is that, on Bolam principles (the reference is to Bolam v Friern Hospital Management Committee [1957] WLR 582). Mr Stripe "must bring forth evidence that there is not a reasonable body of disease lawyers who would act in the way Duffy did on each file that is in issue." I do not agree. In my judgment, where negligence is alleged against a lawyer who is practising in a field with which the court is familiar, it is permissible for the judge to assess that lawyer's conduct of his client's affairs without the assistance of expert evidence: see Midland Bank Trust Co Ltd v Hett, Stubbs & Kemp [1979] Ch 384 at 402 (Oliver J). As I have considerable experience of personal injury litigation, I believe that I can properly adopt that course. As I have already mentioned, Ms Williams and Mr Coulthard were not slow in castigating Mr Duffy for his management of a number of cases. I wish to state that I do not in the course of this judgment, and will not in the course of further analysis of the Schedule A files, rely upon, or attach weight to, their opinions. They are not expert witnesses. Through no fault of their own, neither can be regarded as independent in this case. Some of their evidence was helpful in drawing attention to aspects of particular files, for which I am grateful: but there the value of their evidence will end so far as the breach of duty issue is concerned. On my count there are 38 files listed in Schedule A. Five were not pursued to the extent of being analysed in Mr Pomfret's closing written submissions. These are the files relating to the cases of Day, Ellis, Kelly, Lever and Morton. There remain for examination 33 files. In a Note to the parties, solicitors and counsel which accompanies this judgment, I have referred to the following matters: two weeks have been set aside for the preparation of this judgment; there are other demands on court time; the parties will want a result as soon as possible; files cannot be properly examined at a rate much exceeding 6 files per day; it has become apparent that Mr Stripe's real interest in the counterclaim lies in defeating the claim; and there may be doubts as to Mr Duffy's ability to satisfy a judgment. I have accordingly decided to reserve the questions of breach of duty and loss for a supplementary judgment, should the parties require an analysis of the Schedule A files. Issue (7): the Impact litigation Preliminary Under this issue Stripes seeks from Mr Duffy as damages the whole or part of Stripes' costs in defending the Impact litigation. The course of the litigation By an assignment executed on 6 February 2007 Impact Funding Solutions Limited ('Impact') acquired from Veras all disbursement loans which had been made by Veras to clients of Stripes. By a further assignment executed on 30 January 2008 Impact acquired from Veras all the rights of Veras under the agreement which had been made between Veras and Stripes on 5 August 2005. Impact commenced proceedings against Mr Stripe in or around March 2008. If one looked simply at the particulars of claim, the action would appear to be a straightforward one. Pursuant to the indemnity contained in the Veras agreement, Impact claimed the amount of principal and interest alleged to be due upon loans for disbursements which had been made to clients of Stripes. The particulars of claim were amended in October 2008 and the total amount which was said to be owing as at 17 October 2008 was £564,661.15. The pleadings which followed were elaborate, but it is sufficient for present purposes to say that the principal matter raised by way of defence was that the loans were unenforceable against the clients because there were breaches of the requirements of the Consumer Credit Act 1974, in that the loan agreements failed to include a term correctly stating the amount of the credit; the copies of the agreements given to the borrowers failed to use the prescribed wording in the notices of rights to cancel; and the agreements did not include a term correctly stating the amount to be repaid on early discharge of the loan. Impact (which was in administration and had been required to make a substantial payment into court as security for costs) and Mr Stripe agreed that the dispute between them should go to mediation. The mediation was successful, and a compromise agreement was signed on 17 December 2008. The compromise was itself a complex one, and differentiated between loans to clients whose claims had proceeded to a successful conclusion, those whose claims remained outstanding, and those whose claims had been (in effect) rejected as potential losers. The most significant of the terms of the compromise related to claims in the first category, in respect of which Mr Stripe agreed to pay to Impact £128,198.09, being an amount equivalent to the aggregate balance standing to the credit of the client accounts of these claimants at Stripes. Mr Stripe also agreed to pay an amount equivalent to the interest which would be due on those client account balances under the Solicitors' Accounts Rules. Impact and Mr Stripe agreed that each would bear its or his own costs of the Impact litigation. The claim for costs The claim now made by Stripes is (I quote from Mr Pomfret's closing written submissions) "for some or all of the costs of the Impact proceedings." The costs consist of disbursements and the profit costs of Stripes Solicitors Limited, which acted for Mr Stripe in the Impact litigation. Disbursements have been calculated at £69,996.43 net, or £80,412.78 inclusive of VAT. The claim for profit costs is as yet unquantified, and it is accepted that an assessment would be required in order to ascertain the sum for which any judgment should be entered. Mr Stripe was at one time maintaining that he had made it clear to Mr Duffy that, if Stripes were to enter into the Veras scheme, Mr Stripe would expect Mr Duffy to make good any liability which Stripes might incur to Veras. Such an arrangement between employer and employee would be improbable to a high degree. The point was not pursued in cross-examination of Mr Duffy. I am not surprised. The case as ultimately put (again the quotation is from Mr Pomfret's closing written submissions) is that "the loss was caused directly by [Mr Duffy's] negligence. Had it not been for the volume of failed cases, [Stripes] would not have been faced with the proceedings." Alternatively, the costs are claimed as a cost of mitigation "because otherwise [Stripes] would have been liable for the disbursements and interest on each of the loans in Schedule A." In addition to the volume of failed cases, reliance is placed on Mr Duffy's failure to report to Mr Stripe "his concerns about the standard of cases, difficulties with vetting or the Veras scheme generally." Strong views on this issue have been expressed on both sides. In particular, there has been a vigorous attack on the way in which Mr Stripe settled the Impact litigation, which (it is said) was detrimental to the interests of clients of the firm; it has been alleged that he has been involved in concocting documents; and he is said to have settled the Impact litigation in apparent disregard of the advice he had received from leading counsel. Correspondingly serious counter-allegations are made against Mr Duffy: thus much of his evidence about Veras was said by Mr Pomfret to be "incredible, unreliable and, at worst, lying." I have to say that none of this is particularly helpful. Of all the issues which I have to consider, issue (7) is the most nebulous. Putting matters graphically, there is something resembling a chasm between Mr Duffy's conduct of Veras claims and the Impact litigation; and, pursuing the analogy, I have difficulty in making the leap. The question is at its root, as Mr Foster correctly said, one of causation. It is, in my view, an over-simplification to say (as has been said) that the Impact litigation was provoked by nothing more than the refusal of Mr Stripe to meet his commercial obligations. One has to ask whether it was by reason of some breach of duty on the part of Mr Duffy that Mr Stripe found himself in a situation in which, rightly or wrongly, he took that stance. If one attempts to see matters in the round, one can identify two allegations of conduct on the part of Mr Duffy which might arguably constitute breaches of duty with the required causative effect. First, there is what is said to be the volume of poor quality cases coming through Veras. I am not convinced, on the evidence, that the volume was all that great. On the pleaded case, the court is left with the 33 surviving (in the sense that they were pursued in submissions) Schedule A files. These are, as yet, unexamined by the court: but, even if they turned out for the most part to be cases which should have been rejected by the end of the grace period, they would not constitute a high proportion of the Veras work. It is true that there may have been other Veras claims which were at first sight, or turned out to be, non-runners. But these could be dealt with by unwinds, and there is no pleaded allegation of failure to unwind specific Veras cases other than those in Schedule A. Secondly, there is what may be termed general non-reporting. I accept that Mr Duffy's evidence as to the way in which he managed the industrial disease department, and as to the degree of communication between him and Mr Stripe, was not all that it might have been. But Mr Stripe himself is an astute commercial lawyer who kept his finger very closely on the pulse of the Veras negotiations in the summer of 2005. I am unable to accept that thereafter he simply permitted Mr Duffy to run his own empire in a way which, whether by design on the part of Mr Duffy or otherwise, kept Mr Stripe in ignorance of information to which he was entitled. Mr Foster put his client's case robustly in his closing written submissions, when he said that Mr Stripe's "case on the issue of Impact makes no sense at all." That may be a shade harsh: but the evidence is, in my judgment, a long way distant from anything that would be sufficient to fix Mr Duffy with liability on this issue. Issue (8): Schedule B – non-Veras claims This is a group of eight cases, which have been loosely referred to as 'non-Veras claims'. Two were in fact Veras files but the description is immaterial because, as will appear in a moment, Stripes does not assert that the chances of success on the claims should have been assessed by reference to the standard which has been advanced on the Veras cases. It is common ground that these were claims for which Mr Duffy was responsible and there is no dispute as to his duty. He was bound, as an implied term of his contract of employment, in each case to examine the claimant's prospects of success; to keep those prospects under review; to advise that a claim should be discontinued if it appeared that those prospects were, or had fallen below, 50 per cent; and to be alert to, and take appropriate action regarding, the expiry of limitation periods. The questions which I have to consider relate to the alleged breach of duty on each file and the damages (if any) which flowed from those breaches. The material before the court consists of the files themselves; allegations and responses in the pleadings and counsel's written submissions; the written and oral evidence of Mr Coulthard; and the oral evidence of Mr Duffy. I have already made observations as to the way in which I approach the evidence of Mr Coulthard. I have reviewed the relevant material, and I set out my conclusion on each file in Appendix I to this judgment. For the reasons there stated, I regard Mr Duffy as having been in breach of duty in relation to five files, and free from blame in respect of the other three. There has been little or no debate as to the claim for damages under Schedule B. In the case of each file, Mr Pomfret starts with the date on which the case should have been dropped (or, as the case may be, not taken on at all). He then claims the irrecoverable profit costs accrued at Stripes, and the disbursements paid out, after that date. I see no conceptual difficulty attaching to the disbursements part of the claim. The problem with the profit costs part of the claim is that it assumes too readily that every moment of billable time lost on these files would have been made up by other, profitable work done by the relevant fee-earners. I see that one can say that, particularly when Veras and referral agents operating under the Veras scheme were on board, work would have flowed in: but to claim on the basis that it would have flooded in, so that all the lost time would have been filled up, seems to me to be unduly optimistic. Doing the best I can, I propose to award damages in respect of lost profit costs on the five relevant files at two-thirds of the amount claimed. This approach produces the following result File Profit costs x 2/3 Disbursements Total Corroll (J84) 886.66 1,105.00 1,991.66 Fletcher (J25) 1,066.33 1,066.33 Forrest (J26) 948.00 948.00 Hughes (J88) 167.00 167.00 Mintram (J89) 505.33 60.00 565.33 4,738.32 There will therefore be an award on this part of the counterclaim of £4,738.32 (for comparison the amount claimed by Stripes was £9,707). Issue (9): Schedule C – UK Industrial Claims This part of the counterclaim relates to eight cases which were accepted by Mr Duffy from a referral agency called UK Industrial Claims. The allegation against Mr Duffy is a twofold one. First, it is said that, in breach of the general duty of care which he owed to Stripes, he accepted these cases in breach of the provisions of the Solicitors' Introduction and Referral Code 1990, in that it was a condition laid down by UK Industrial Claims that there should be no direct contact between solicitor and client. In fact such contact would have been difficult in any event without the assistance of an interpreter, as the clients who were introduced by the agency spoke little or no English. Secondly, it is said that the cases were accepted contrary to express and specific instructions given by Mr Stripe to Mr Duffy. These were that cases should not be accepted from any referral agency unless there was in place a written agreement between Stripes and the agency. Although such agreements were made with all the other agencies through which cases came to Mr Duffy, none was made with UK Industrial Claims. It is not necessary to dwell at any length on the question of breach of duty. When one of the files (Hussain) was put to Mr Duffy in cross-examination, he said that he "accept[ed] that the instructions were in breach of the Referral Code and in breach of Mr Stripe's instructions that the Referral Code should be observed." What goes for this file appears to me to go for the other seven also. Although Mr Duffy did not make any admission on the second allegation of breach of duty, disregard of the requirement to have a written agreement in place, I accept Mr Stripe's evidence that he did insist on this. Indeed, there is in the evidence a written memorandum from Mr Duffy to Mr Stripe, which was dated 4 May 2005, in which this policy was plainly laid down. None of these cases proceeded to a successful conclusion, and the files were all closed after Mr Duffy's departure from Stripes. Mr Foster takes what is essentially a point on causation. There is no suggestion in any of the files that the reason for the failure of the cases lay in Mr Duffy's breaches of duty. Further, there are indications in some of the files that they were effectively abandoned for other reasons: for example, that the client was not cooperating (Hussain and Kumari), or no insurer could be traced (Raval), or there were problems about getting medical records (the second of the Singh cases). In my judgment, Mr Stripe provided the answer to this point when he was being cross-examined. The cases may ultimately have been rejected because they were poor cases, but they should never have been taken on in the first place in breach of the Referral Code and of Mr Stripe's own instructions. Damages are claimed on the same basis as under Schedule B, and I adopt the same approach in scaling down the claim. In cross-examination, Mr Stripe made concessions in relation to the case of Ali and to the first of the Singh cases, and these concessions are reflected in the table which follows. File Profit costs x 2/3 Disbursements Total Ali (ALI05) 25.33 25.33 Arif (ARI001) 116.00 2.00 118.00 Hussain (HUS065) 789.66 195.00 984.66 Kaur (KAU006) 890.00 890.00 Kumari (KUM004) 781.33 195.00 976,33 Raval (RAV005) 273.33 1,863.63 2,136.96 Singh (SIN017) 312.00 312.00 Singh (SIN019) 350.00 350.00 5,793.27 There will be an award on this part of the counterclaim for £5,793.27 (the amount originally claimed was £9,914.13). Issue (10): Schedule D – specialist reports This claim arises on six files and has undergone a series of modifications during the proceedings. The claim was originally formulated in this way. Each case was one of noise-induced hearing loss. Each came through Veras, and on each a specialist report was commissioned from an audiologist at a fee of £325. This would have been paid out of the Veras loan. All the claims were brought to successful conclusions. The audiologist was paid her fees, but it was not apparent that any reports were obtained and so the fees were not recoverable from the clients or the respective defendants. Stripes bore the loss by repaying the amount of the fees to Impact. The claim was for £1,950, being six times £325, as wasted expenditure. The responsibility for the loss was that of Mr Duffy as the fee-earner responsible for each case. Research carried out by Mr Pomfret prior to his cross-examination of Mr Duffy disclosed that on one file (Bartram) no fee was charged and on another (Ruler) there was a reduced fee of £195. Research carried out by Mr Foster on a third file (Pye) prior to his preparing his closing written submissions disclosed that a report had in fact been received from the audiologist in that case. All this would have reduced the claim to £1,105. Finally, Mr Pomfret discovered (as he recounted in his closing written submissions) that Stripes had not in fact repaid these fees to Impact. This eliminated any claim in respect of the fees themselves, and it is now conceded that such a claim could not be sustained. Stripes, however, maintains that it can recover from Mr Duffy the interest incurred under the respective Veras loans which is attributable to the fees. I have gone through the four files which remain relevant (Brown, Clarke, Ruler and Ware). I have to say that a study of the files leaves the reader as much in the dark, if not more so, at the end as he was before he started. For any claim against Mr Duffy to get off the ground, the irreducible minimum which is needed as a starting-point is proof that the fees were in fact paid. I agree with Mr Foster that there is simply not enough material in any file to satisfy this essential requirement and, if that is right, this claim must fail. Issue (11): Schedule E – referral fees This is another area in which Stripes' counterclaim has been something of a moving target. It relates to the payment of referral fees to introducers of work on 45 claims (on my count) that came to Mr Duffy through Veras. The referral fees were either £390 or £645 per case and amounted in the aggregate to £21,275. The case as at first pleaded was that Mr Duffy had wrongly authorised the payment of referral fees. It then appeared, and this was hardly surprising, that, in common with many other firms which practise in the field of personal injuries, Stripes commonly paid fees for the introduction of work, and the original criticism of Mr Duffy was not pursued. A different point was then taken: the fees had been paid out of the Veras loans for disbursements which was, of course, wholly wrong, because referral fees are a practice expenses which are not properly chargeable to clients. The fees should have been paid out of Stripes' own funds, not out of clients' money. Schedule E to the re-amended defence and counterclaim purports to show that in due course £21,275 together with interest amounting to £9,189.89 was repaid to the clients, and in re-examination Mr Stripe confirmed that these payments had been made. The interest was that portion of the interest payable under the Veras loan which was attributable to the referral fees. The claim in its final form is put along the following lines. Mr Duffy was responsible for these files and for authorising disbursements made on them. It was quite wrong, and a breach of the Referral Code, for a client's own money to be used to pay a referral fee. Mr Stripe was not informed of what was being done. If he had been so informed, and had authorised payment of a referral fee (which he would have done), the payment would have been made from office account and funded from the firm's overdraft facility. The interest charged by Stripes' bank would have been significantly less than the 16.9 per cent APR chargeable, and in fact paid, on the Veras loan. The loss to Stripes is the difference between the interest which was paid and the interest which should have been paid. Interest under Schedules D and E has been calculated together at £5,791.50: but, given the relatively small principal sum involved under Schedule D, the greater part of this must relate to Schedule E. In my judgment, this claim is unanswerable in principle. Mr Duffy was indeed responsible for these files and it was up to him to make sure that no payments were improperly paid from clients' funds. It is, in my judgment, inconceivable that, if matters had been brought to the attention of Mr Stripe, he would have been content either with the referral fees being wrongly paid out of the claimants' money or that Stripes should ultimately be liable for interest at the Veras level. Mr Foster in his closing written submissions says that "there is a factual issue in relation to each file as to whether the alleged loss has in fact been sustained" and that "each file needs to be examined to see how referral fees were treated in relation to the defendant and each client." If by this it is meant that I should embark on an examination of these 45 files in order to follow whatever money trail each throws up, I do not agree. The evidential burden of proving loss has been discharged in the testimony of Mr Stripe and it is, in my judgment, for Mr Duffy to show specifically in relation to particular files that no loss was in fact suffered. In my judgment, he has failed to do so. Something should be deducted from the claim in order to discount the Schedule D element. I am also prepared to allow for the possibility that, on an exact scrutiny of the files, something might well be knocked off the total amount claimed by Stripes under this head. The adoption of such a broad approach is justifiable when one has regard to the amount involved and the time which would have to be spent in order to achieve a more exact result. Accordingly, I propose to assess the loss under this part of the counterclaim in the round sum of £4,500. Issue (12): Ndikumande and Mussa These two clients suffered injuries in a road traffic accident on 13 April 2003. Mr Ndikumande was the driver and Mr Mussa (whose name has frequently been spelt or misspelt 'Musa') was his passenger. They became clients of Stripes in July 2003. Liability was admitted by the insurers of the intended defendant in September 2003. Mr Duffy took over responsibility for the files in May 2005. Proceedings were issued in June 2005. They were settled in June 2006. The manner in which Mr Duffy conducted the cases is said to have caused loss to Stripes in the sum of £13,277.88. Much printer ink has been used, and many words have been spoken, about these cases. I have, for example, been provided with a chronology which runs to 12 typewritten pages. The cross-examination of Mr Duffy on these files lasted for more than a day. From the point of view of Stripes, these are paradigm examples of the slipshod manner in which Mr Duffy worked. From the point of view of Mr Duffy, Stripes has unfairly selected two peculiarly difficult files as a showcase in which Mr Duffy's competence can be viewed in the worst possible light. In my view, the obligation of the court to devote an appropriate share of its resources to a case, whilst taking into account the need to allot resources to other cases (see CPR 1.1(2)(e)) is relevant here. I have had two weeks set aside for the writing of this judgment. At the end of the hearing, Stripes pursued in relation to Ndikumande and Mussa a single allegation of negligence causing actual loss. If I were to review in detail these two files, and the whole of the evidence and submissions relating to them, I could easily add another day and a half to the ten days already allocated to the work in hand. That would not be justified. I will simply record that I accept that there were real problems in these cases, relating, in particular, to difficulties in communication with the clients (their English was poor and they were at times out of the country) and justifiable doubts as to their honesty. At the same time, Mr Duffy did make a series of errors, some of which he was prepared to acknowledge when he was giving evidence. With that introduction, I go straight to the limited amount of material which is relevant to the single material allegation of breach of duty. In Mr Ndikumande's case, on 14 September 2005 the defendant paid into court under CPR Part 36 £3,000 in respect of general damages only. On 29 September 2005 £2,000 was paid into court in Mr Mussa's case: this payment covered his claims for both general and special damages. The periods of 21 days for acceptance of these payments in with beneficial costs consequences for the claimants expired on 5 and 20 October respectively. On 26 October 2005, Mr Duffy advised Mr Mussa against acceptance of the payment in and to make a counter-offer of £3,000, and on 12 November 2006 Mr Mussa instructed Mr Duffy accordingly. On 11 November 2005, Mr Duffy wrote to Mr Ndikumande seeking information about his non-attendance for physiotherapy treatment, after which "I will then be able to advise you on whether or not I consider the payment into court to be reasonable." Ultimately, on 1 March 2006, Mr Duffy made on behalf of Mr Ndikumande, and with his authority, a Part 36 offer to take £4,500 inclusive of general and special damages and interest. Neither this, nor the counter-offer which had been made on behalf of Mr Mussa some months earlier, was acceptable to the defendant. On 26 May 2006 the defendant offered to allow the claimants to accept the payments in late upon terms "that each party bear its own costs completely in this case." On 9 June 2006 Mr Duffy wrote to each claimant, advising him strongly to accept this offer on the basis that counsel had advised that there were real risks that the court would award less than the amounts paid in. The letter to Mr Ndikumande contained this passage: The defendants have repeated their offer which is a payment into court of £3,000 to settle your claim which if you accept you will receive payment less £274.55 which is the order for costs against you for failing to provide a signed witness statement within the required period. The corresponding passage in the letter to Mr Mussa was: The defendants have repeated their offer of £2,250 as a payment into court which if you accept now they will not seek any costs from you save for the £274.55 which was ordered by the court for your failure to sign your witness statement on time. The defendant's offer was, on the instructions of each client, quickly accepted. There followed a misunderstanding between Mr Duffy and his opposite number at the defence solicitors, which was resolved by an agreement (seemingly different from that proposed in the letter of 26 May 2005) that the claimants should have their costs from the defendant up to the dates of payment in and that they should pay the defendant's costs thereafter. The advice given to the clients in the letters of 9 June 2006 was plainly wrong. The impression was given to each that he would receive his damages subject only to a deduction of £274.55. In fact, on the terms apparent on the face of the letter of 26 May 2006, he would have to bear his own costs from the commencement of the proceedings to their conclusion; and, on the terms as later clarified, he would have to bear his own and the defence costs after the date of payment in. The advice was rightly described by Mr Pomfret as being such as no reasonably competent solicitor would give. The position of Stripes as regards loss is that, because of the way in which the clients had been negligently advised, Stripes could not look to them for disbursements made and profit costs accrued after the expiry of the 21 day periods. Further, Stripes could not expect the clients to meet (and itself had to bear) the defence costs incurred after those dates. The calculation of loss is summarised in Mr Pomfret's closing written submissions and comes, as I have mentioned, to £13,277.88. I confess to having had one problem with this approach. The only relevant pleaded allegation of negligence relates to the letters of 9 June 2006. Notwithstanding the many bolts which were fired at him in cross-examination, I am bound to assume (somewhat reluctantly) in favour of Mr Duffy that there was nothing wrong about his failure to advise that the payments in should not be accepted in the autumn of 2005, but that by June 2006 the forensic prognosis had changed so as to make acceptance the prudent course. It may be the case that, even if the costs consequences of acceptance of late offers had been fully explained to the clients, they would still have accepted the offers so that, given the assumptions to which I have just referred, the failure to give correct advice would not have caused any loss. On reflection, I do not think that this is an answer to the claim. A wholly false impression having been given, albeit honestly, by Mr Duffy to the clients, Stripes was not in a position in which it could cast on to them any liability for the costs of either side. The sum of £13,277.88 has been broken down thus: Defence costs after Part 36 expiry dates 4,772.41 Stripes' disbursements thereafter 3,042.97 Profit costs thereafter on Ndikumande file 2,730.50 do. on Mussa file 2,732.00 There will have to be some scaling-down of the claim. Ms Morrison-Hughes' evidence is that the defence solicitors were looking for £4,772.41. They were not actually paid that sum. Ms Morrison-Hughes agreed on a "walk-away deal" under which Stripes' claim for profit costs prior to the Part 36 expiry dates and the defence solicitors' claim for profit costs thereafter were compromised by payment to Stripes of the net sum of £2,000. Mr Pomfret submitted that this sum should be credited against Stripes' costs and disbursements prior to the expiry dates. I am not sure that this meets the point that, if the defence costs had been subject to assessment, they would in all probability have been reduced. In my judgment, that likelihood should be reflected by reducing the claim for £4,772.41 to the round sum of £4,000. Further, Ms Morrison-Hughes found the files "in total disarray" with no trace of the CFAs into which the clients had apparently entered. This would have had a detrimental effect on the potential for recovery of Stripes' own disbursements and costs, and I take account of this by reducing the aggregate of the last three items in the table above to £5,000. The total award under this part of the counterclaim will therefore be £9,000. Issue (13): miscellaneous cases This was a group of five claims in which, on Stripes' case, loss was caused to the practice through delay amounting to breach of duty on the part of Mr Duffy. Mr Pomfret did not proceed with one case (Gosling) as the file was not available for examination in court. A short account of the other four cases, with the reasons for my conclusion on each, is in Appendix II. In summary, I have found that breach of duty has been made out in two of the four cases. The aggregate amount of the damages is £970.42. Issue (14): capacity to counterclaim On 31 August 2007 Mr Stripe, who was called 'the Proprietor' and described as "Trading as Stripes Solicitors ('the Business')", and Stripes Solicitors Limited, which was called 'the Company', entered into a Memorandum of Agreement for the transfer of 'the Business assets' (other than a specified motor vehicle) by the Proprietor to the Company on that date. It was submitted, although not (as it seemed to me) with any real devotion to the point, by Mr Foster that the causes of action which are pursued in the counterclaim are now vested in Stripes Solicitors Limited which should have been named as claimant in this litigation. I do not agree with this point. The Memorandum seems to me to constitute no more than an agreement to transfer assets. No doubt it could have been completed by a legal assignment of the assets of Stripes to Stripes Solicitors Limited: but that appears not to have been done and it seems to me, on the basis of such material as I have seen, that this action is properly constituted. Conclusion In respect of those matters on which I have found that one party has a monetary liability to the other, the figures are as follows: Issue Due from Stripe to Duffy Due from Duffy to Stripe (2) Profit costs 2,172.15 38,569.37 (8) Schedule B – non-Veras claims 4,738.32 (9) Schedule C – UK Industrial Claims cases 5,793.27 (11) Schedule E – referral fees 4,500.00 (12) Ndikumande and Mussa 9,000.00 (13) Miscellaneous cases 970.42 2,172.15 63,571.38 The net balance due from Mr Duffy to Mr Stripe therefore £61,399.23. The formal order of the court will have to deal with the following matters: an order for payment of £61,399.23; an assessment of interest (if any) on that sum; an appropriate declaration and order for an indemnity, limited to interest, in relation to issue (4): income tax and National insurance contributions; adjournment of the making of an order as to breach of duty and loss under issue (6): Schedule A – Veras claims; and costs. Peter Langan Mercantile Judge, North Eastern Circuit 10 May 2011 APPENDIX I : SCHEDULE B CLAIMS Corroll (File J84) This was a clinical negligence case which arose from the claimant's attendance at a hospital accident and emergency department on 29 August 2002. Mr Duffy opened the file on 22 March 2005, and specified the limitation date on the front of the file as 28 August 2005. No proceedings were ever issued. There is an issue arising out of a letter of complaint which the claimant's husband wrote to the relevant NHS trust on 24 October 2002. There is a conflict between Mr Duffy and Mr Coulthard as to whether or not this latter was attached to the referral received by Mr Duffy prior to his opening of the file. Mr Duffy's denial was unconvincing, and I find that he had the letter when he opened the file and that it should not have come to him as a surprise when it was referred to by the NHS trust. He should have realised that the limitation period started, at latest, on 24 October 2002, being the last possible date of knowledge, and that there would be little possibility of obtaining a discretionary extension after 24 October 2005. My conclusion is that proceedings should have been issued prior to 24 October 2005 and, if they had not been issued by then, the file should have been closed. Fletcher (J25) This was a noise-induced hearing loss claim. Mr Duffy opened the file on 1 July 2005 and endorsed the cover with a limitation expiry date of 1 October 2007. No proceedings were issued. The fee-earner who was working on the file, subject to Mr Duffy's supervision, was Abigail Morrison. On 14 March 2006 she reviewed the client's GP records and found that a complaint of deafness had been made on 9 January 2003. This clearly raised the possibility, at least, that there was a date of knowledge more than three years previously. On 13 August 2007, counsel advised that the claim was out of time and that the court would be unlikely to extend the limitation period. Mr Duffy in evidence said that he regarded counsel's view as a conservative one. That may be right, but it does not seem to me to bear on the question of how the file should have been handled at Stripes. It may be that there was some delay in obtaining the GP notes and that they could have been examined within three years from 9 January 2003. At the very least, as soon as it became apparent in March 2007 that there might be a limitation problem, the problem should have been addressed by making the appropriate section 33 application. Absent such application, keeping the file open was a pointless exercise. Forde (J86) This was a clinical negligence case which arose out of major surgery carried out on the claimant in 2003 and 2004. Mr Duffy accepted instructions on 21 July 2005. By April 2006 Mr Duffy had received the medical records. They included a report from a consultant surgeon which referred to the complexity of the surgery carried out; the fact that the client had made an excellent recovery; and the client's contribution to the problems which he encountered after surgery (failure to attend reviews, and heavy drinking). The report was sent by Mr Duffy to the client for his comments on 10 April 2006. No comments were returned. On 17 September 2007 Mr Coulthard advised the client in writing that he did not have a good claim. Thereafter matters appear to have petered out. I see nothing in Mr Duffy's conduct of this file which deserves criticism. Several of the points which he made in his oral evidence were accepted as valid by Mr Coulthard when he was cross-examined. As the claim made in respect of the case is for only £53, I am not going to say any more about it. Forrest (J26) This was a vibration white finger claim. The file was opened on 9 August 2005, and 1 October 2007 was endorsed on it as the limitation expiry date. No proceedings were issued. In October 2006 Mr Duffy called for the occupational health records. He received them in November 2006. It became apparent from the records that on 3 June 2003, the client had a workplace examination on 3 June 2003, when hand-arm vibration syndrome was diagnosed and he was told that he was unfit for any work with vibrating tools. The date of knowledge was, as the client accepted, 3 June 2003. Although Mr Duffy saw the client in March 2007 and prepared a draft statement, nothing more of any relevance happened with regard to the claim. The criticism which is made here that, if the occupational health records had been called for earlier, which they should have been, they would have been received within the limitation period, and the claim would not have been (as it effectively was) lost. In my opinion, the criticism is entirely justified. Mr Duffy made no real attempt to advance reasons to the contrary when he was being cross-examined. Goodman (J87) This was a clinical negligence claim. The file was opened on 24 January 2006. No proceedings were issued. The client had cancer and underwent a colonoscopy, followed by an operation to reverse the colostomy. Subsequently he developed diverticular disease, and his complaint was that this should not have been allowed to develop following surgery. There was difficulty in obtaining instructions from the client, and the case, like that of Forde, appears simply to have petered out. The criticism which is made of Mr Duffy is that, as a lawyer practising in medical work, he should have known (and, in any event, could have found out from a number of websites) that diverticular disease is a common after-effect of surgery of the kind undergone by the client. He should at an early stage have informed the client of this and advised him that the claim was most unlikely to succeed. In my view, this criticism demands too much of a solicitor, and Mr Duffy properly proceeded with work on the file. The amount of material on the file was massive, and the time had not arrived (and it is not suggested that it had) at which Mr Duffy should have sent the papers to a consultant for an expert medical opinion. Hughes (J88) This was a case in which the client had developed non-Hodgkins lymphoma. He had worked in a bus depot and attributed the disease to exposure to diesel fumes. The file was opened at Stripes, after being transferred from Potter Rees, on 2 February 2005 and the cover was marked with a limitation expiry date of 31 May 2005. This may have been over-cautious, because a witness statement which had been taken from the client suggested that he had become aware of a possible link between cancer and diesel fumes on 28 November 2002. The file was carried on past 28 November 2005, no proceedings were issued, and no section 33 application was made. The criticism made of Mr Duffy in respect of this file is that work done after 28 November 2006 was a waste of time. It is common ground that causation was always going to be a difficulty in this case, because the link between diesel fumes and cancer was no more than a possibility, and had not been established in medical science. Mr Duffy says that his attempts to deal with the case were held up because the client could not, or would not, find the sum of £3,000 which would have to be paid for a report from a toxicologist. The files on this case are massive, and no one seems to be able to have found (and I confess that I have not searched through what must be close to a thousand pages) any reference to the need for a toxicology report. That, however, seems to me to be a point that can be left to one side because, report or no report, such claim as that may have been seems to have become statute-barred at the end of November 2007. The client should, in my opinion, have been advised that he was in danger of losing any claim by virtue of the Limitation Act, and proceedings could have been issued, or the file closed, before the expiry of the limitation period. Mr Duffy accepted in cross-examination that no such advice was given, because he thought that the limitation period was still current. I regard that advice as having been wrong. Mintram (J89) This was a case of repetitive strain injury. The file was opened on 22 March 2006 and was not marked with a limitation expiry date. No proceedings were ever issued. The client was unusually thorough and, when he instructed Stripes, he provided a detailed 'Case History'. In this he disclosed that in November 1999 he had a consultation with an occupational health nurse in which there was a full discussion both of his condition and of the fact that it appeared to be work-related. This was a case which was, in my opinion, very plainly statute-barred when it reached Mr Duffy's desk and no significant work should have been done on it. I do not regard Mr Duffy's explanations in evidence, that he "was keeping the case back, pending the outcome of other litigation" and that he "thought that, if breach of duty were established in that case, we might get through under section 33", as carrying any weight. Papacharalambos (J90) This was a vibration white finger claim. The file was opened on 29 August 2006. No proceedings were ever issued. The criticism here relates to the medical controversy about latency of hand-arm vibrating syndrome. As is well known, symptoms usually appear within two years of the last use of vibrating tools; but, so far as I know, later appearance of symptoms cannot be categorically excluded. In this case, the client had used pneumatic drills as part of a road gang between 1974 and 1990, but there had been no further exposure to vibration, and problems with his hands did not surface until (various dates are given in the file) between 2003 and 2005. It is said that, given this time gap, Mr Duffy should have rejected the case at an early stage, and not proceeded, as he did, to obtain medical opinions or spend money on a nerve conduction study. The case, it is said, should never have been taken on. In my opinion, Mr Duffy cannot be faulted on this file. A consultant rheumatologist saw the client on 28 November 2005, stated in his report that the use of pneumatic drills "may well be relevant", and recommended a nerve conduction study. It is true that the consultant later advised, on the basis of the lapse of time to which I have referred, that a claim was unlikely to succeed. I do not, however, think that responsibility for this revision of the consultant's position can be laid at Mr Duffy's door. The consultant justified himself by indicating that he had originally been unaware of the time gap: it was, in my view, up to him to find out about this by taking a full history at the initial consultation. APPENDIX II : MISCELLAENOUS CASES Doward (File K18) This was a case which was carried to a successful conclusion. After Mr Duffy had left Stripes, Mr Coulthard examined the file and concluded that, as a result of unjustifiable delay at Stripes, the client had suffered loss. Compensation of £600 was paid to the client. Mr Coulthard took the view that there had been 12 months of undue delay, of which he himself had been responsible for two months with the balance of 10 months attributable to Mr Duffy. Compensation is therefore sought in the sum of £500, being ten-twelfths of £600. I have looked at such material (there is not much) as is available. I am unable on the basis of that material to identify a culpable failure on Mr Duffy's part. Put another way, I cannot say that at a particular time he omitted to take a specific step which should then have been taken. Accordingly, I find that there is no liability on this case. Goodall (K18) This case was also carried to a successful conclusion. After Mr Duffy had left Stripes, the client complained about delay. Mr Coulthard calculated his loss at £400, and offered £200, which the client accepted. The whole of this £200 is claimed from Mr Duffy. I have looked at the available material and I cannot identify any culpable failure by Mr Duffy. It is apparent that some of the delay may well have been attributable (although I cannot be sure) to some months taken by the client to consider an offer of settlement. Again, I conclude that there is no liability. Underdown (J77 and K18) This was a hearing loss claim. The defendant offered £2,500 in settlement and on 17 July 2006 the client told Mr Duffy that he was happy with the offer. Nothing happened after that until 13 December 2006 when Mr Duffy told the client that he had "been attempting to negotiate a higher settlement." On the same day, Mr Duffy wrote to the defendant seeking an increased offer. This was refused, and the case was settled for £2,500. After Mr Duffy had left Stripes, the client complained about the delay. He accepted £459.29 in compensation, and Stripes now wishes to recover the whole of this sum from Mr Duffy. I see no answer to this claim. Mr Duffy said that he had been "trying to do the best [he] could". In fact, he did nothing for five months, at the beginning of which period he should simply have acted on his client's view that the defendant's offer was acceptable. The file on this case is a heavy one and I have been through it. I see nothing to justify the assertion that Mr Duffy had been attempting to obtain a higher offer and, although it is not germane to the claim which I am considering, I am bound to say that I take the view that the assertion is untrue. Accordingly, I award the full amount claimed, £459.29. Tidbury (J73) This was a fatal accident (mesothelioma) case. The death occurred on 8 February 2004, the file was opened by Mr Duffy on 17 January 2006, and the limitation expiry date was 8 February 2007. The latter date was allowed to pass and counsel was instructed to advise on the merits of a section 33 application. He was unwilling to do so on a CFA basis and a fee of £511.13 for his opinion was incurred by Stripes. The pleaded response of Mr Duffy is that, because of arguments which are specific to mesothelioma cases, the limitation period did not expire, or may not have expired, in February 2007; and that the claim eventually failed because the client could not establish causation. In my judgment, these are insufficient answers to the complaint which Stripes now make against Mr Duffy. Consideration of the question of limitation is central to any fatal accident claim and, once three years from the death had passed, no reasonable solicitor would have done anything other than take counsel's advice on the matter. Stripes would not have had to seek advice if proceedings had been issued, even on a protective basis, within the three years. That the claim might turn out to be a poor one for other reasons is not material. I therefore find that the claim for £511.13 is made out. BAILII: Copyright Policy | Disclaimers | Privacy Policy | Feedback | Donate to BAILII