High Court: Agreement extinguished bills
The High Court has rejected the appeal of a former client of a leading City law firm against a decision that he has to pay its outstanding fees of £417,000.
Mr Justice Freedman held that Wahid Samady had provided HFW with an indemnity, and not just a guarantee, to pay the money.
Further, the compromise agreement they reached extinguished the outstanding bills and meant that Mr Samady could not seek a Solicitors Act assessment.
HFW acted for Mr Samady and various companies he controlled between 2018 and 2020 on a series of matters, including litigation.
In July 2020, after Mr Samady decided to transfer his work to Howard Kennedy, HFW sent him a letter setting out 11 matters for which invoices totalling nearly £600,000 were outstanding.
A payment plan for a discounted £442,000 was agreed and, subject to payment on time and in full, there would be a further £50,000 discount on the final payment. But if any payment were missed, the full outstanding sum would become immediate due.
The letter said: “In consideration of our agreeing the payment plan set out below for our outstanding fees you agree and confirm that you are personally liable for and guarantee to HFW all of the payments set out in this letter.”
In agreeing to it, Mr Samady also “jointly and severally” guaranteed the payments due from the companies he owned.
A payment was soon missed and none has been made since. HFW obtained summary judgment for £417,000 plus interest from Master Cook in the King’s Bench Division.
On appeal, Mr Samady argued that the letter was a guarantee – opening up possible defences – rather than an indemnity.
Freedman J disagreed, given the context of the letter. A key question was whether Mr Samady was a guarantor of the invoices directed to his companies and vice versa.
“The difficulty then would be to ascertain to what extent the liabilities taken on would be their own or those of another,” the judge said.
“The effect of the July letter was to replace the old invoices with a payment plan which was not referable to specific invoices. At the core of the new arrangement was a contract which replaced the old invoices.
“There was a benefit to the paying parties in that there was a significant reduction in what would be payable. There was a benefit to the receiving party or parties in that there was not a series of promises from single entities, but the total sum payable would be the subject of joint and several liabilities of each of the [companies] and Mr Samady.”
Had the old obligations remained, they could be the subject of guarantees, Freedman J went on. “However, they did not remain. The payment plan was not by reference to the invoices. Once created, the original invoices had been subsumed and extinguished by the contract comprised in the July letter.”
For the same reason, it did not matter whether the invoices were compliant with the Solicitors Act 1974 – the claim was made under a contract of compromise rather than a bill.
The judge rejected Mr Samady’s argument that he had no alternative to enter into the agreement, saying it was a genuine agreement and there was no duress.
“Mr Samady was in such a substantial way a businessman that one of his companies had a £40m claim in the Commercial Court. He entered into the agreement of his own free will.”
In any event, Freedman J held that the invoices were compliant with the Act.
The judge also dismissed Mr Samady’s argument of a discharge for repudiatory breach.
“In all the circumstances, the master was correct to find that there was no real prospect of a defence and no other compelling reason to give permission to defend.”
Leave a Comment