Keyser: No right to early termination fee
A law firm’s former clients have lost their appeal against a decision that they owe outstanding fees to the non-lawyer who took assignment of their retainers.
However, His Honour Judge Keyser KC, sitting in Cardiff, held that Christopher and Rachel Lucey did not owe Georgios Kounis as much as he sought, saying that one element of his claim was “a bit of a try-on”.
The decision will have a big knock-on effect as Mr Kounis has issued a “substantial number” of similar claims against other clients of former City firm Maxwell Alves.
“I have been told that there are moves afoot to transfer the other cases to a single hearing centre with a view to their being considered together; however, that has not happened yet,” the judge noted.
Mr Kounis has been at the forefront of long-running litigation over the alleged mis-selling of off-plan property in Cyprus.
The investors were hit by the collapse in the property market on the island in 2008, leaving them either exposed to claims by Cypriot banks when their properties were only half built, or with devalued properties.
In 2013, the Luceys instructed Maxwell Alves to act for them with a view to negotiating a settlement with the bank involved. The firm was already acting for “hundreds of clients in a similar position”, HHJ Keyser noted.
Mr Kounis was a consultant at Maxwell Alves and last year the two former partners of the firm were fined by the Solicitors Disciplinary Tribunal for allowing him to have sole and unsupervised control of the litigation.
After a rolled-up hearing, HHJ Keyser recounted how Mr Kounis’s relationship with the firm broke down in 2016 and they agreed to terminate it.
Clients were given the option of continuing to work with Mr Kounis and his team and told that Maxwell Alves had assigned all of its rights to fees, charges and disbursements to him.
Initially the work was going to be done through Irwin Mitchell; that fell through but Mr Kounis did go on to act for many of the clients through Click Law Partners.
This London law firm was set up in 2016, initially for the purpose of dealing with Cyprus property mis-selling, and its website says it has advised over 1,000 clients. It lists Mr Kounis first in the ‘Meet the team’ section, giving him the title of ‘Solution Provider’ and describing him as a non-solicitor consultant.
In 2020, a Cypriot law firm, LG Zambartas, successfully negotiated a settlement for Mr and Mrs Lucey on the basis that the property be given up to the bank, with no further financial obligation, and litigation in Cyprus and in England be discontinued.
Mr Kounis then sued the couple for the outstanding fees and disbursements due under their retainer with Maxwell Alves. At first instance, District Judge Vernon held that he was entitled to £5,910 as claimed, which included a £2,000 early termination fee.
HHJ Keyser upheld the decision that the retainer was validly assigned but not that the conditions for paying the early termination fee had been satisfied.
“To say that Mr and Mrs Lucey terminated the contract by instructing other lawyers, namely LG Zambartas LLC, seems to me, with respect, to miss the point,” he said.
“The firm [Maxwell Alves] told them it could not act and asked them to find other representation. Mr Kounis might have been able to act and to profit by doing so… He, however, had no contract with Mr and Mrs Lucey and they had no obligation to place their business with him or facilitate his personal remuneration.”
Further, Maxwell Alves had “expressly confirmed” that it would not claim early termination fees when informing clients of the assignment.
“I fear that I am inclined to regard Mr Kounis’s attempt to claim early termination fees from Mr and Mrs Lucey as something of a try-on,” the judge said.
HHJ Keyser also held that Mr Kounis could not recover disbursements billed after the assignment, as a statutory assignment could only be of a present debt.
“A purported assignment of a future debt (other than debts falling due periodically under an existing contract, such as rent or salary) takes effect as an agreement to assign and is valid in equity but not in law.”
An equitable assignee had to join the assignor as a party to the claim, which Mr Kounis had not done, and in any case the evidence did not support the existence of an equitable assignment.
The judge refused permission to appeal on the ground that Maxwell Alves was not entitled to any payment because it was in repudiatory breach of contract by failing adequately to supervise Mr Kounis. This was not a pleaded allegation and so had not been considered by the district judge.
HHJ Keyser allowed the appeal to the extent that he reduced the sum due to Mr Kounis to £3,240.
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