PPI: Firm acted in landmark cases
A law firm which failed to uphold its side of a deal when taking on another practice’s Plevin cases has been ordered to pay it £105,000.
The award was a mix of money due for completed claims and damages for Manchester firm MDMKJB’s failure to pursue a large number of cases handed over by Sale firm Audley Clarke.
His Honour Judge Malek in Manchester County Court heard that Audley Clarke specialised in Plevin claims – concerning undisclosed commissions in the sale of payment protection insurance – but assigned its caseload to MDMKJB in September 2019 after deciding to close.
MDMKJB, which itself closed earlier this year, took on 707 cases, made up of 212 litigated cases and 495 pre-litigation claims, with payment due on the successful conclusion of a case.
Director Michael Muldoon told the court that MDMKJB found it difficult to progress the claims after defendants changed their litigation tactics in 2020 and started defending Plevin claims vigorously. Many were allocated to the small claims track, resulting in limited recoverable costs and thus making them uncommercial to run.
The agreement required MDMKJB to use “reasonable endeavours” to process and conclude the claims. HHJ Malek rejected its argument that there was an implied term that it would only do so if there was sufficient profit to pay Audley Clarke.
The agreement, he said, was “negotiated between commercial parties and is detailed and comprehensive” – indeed, it specifically stated that the terms applied to the exclusion of any other terms the parties sought to impose or incorporate.
The evidence of Audley Clarke director Mandi McLoughlin – which the judge called “compelling on this point” – was also that the firm “would be unlikely to have agreed to a term which would mean that payment was conditional upon some level of profit being generated by the defendant”.
HHJ Malek also dismissed the argument that MDMKJB was not required to sacrifice its own commercial interest.
“The evidence shows that the defendant knew or should have known, at the time of entering the agreement, that the Plevin cases were of low value, would require work and that some would require the payment of disbursements by the defendant, that some would need to be issued at court and would generally be allocated to the small claims track, and that these latter cases would, given the limited costs recoverable by legal representatives, likely be unprofitable.
“In simple terms, the defendant assumed the commercial risk of both the agreement and the running of these unprofitable cases – no doubt in the hope (nay expectation) that any unprofitable cases would be sufficiently small in number so as to render the overall ‘deal’ profitable.
“Alas that was not to be… However, this does not mean that the defendant is not bound by the bargain (bad as it now would appear to be for the defendant) that it voluntarily struck.”
The judge rejected MDMKJB’s argument based on unjust enrichment as well: “The claimant provided valuable consideration by transferring the claims. The defendant’s obligation to pay fees was clearly set out in the agreement. The enrichment was not unjust; it was the result of a commercial bargain.”
HHJ Malek said Audley Clarke was entitled to the £19,500 it had invoiced for 102 cases that were settled, as well as £21,400 for 110 cases that were litigated and not concluded – or failed – and £64,100 for 495 cases that were not issued, allowing for 30% not succeeding.
An unspecified amount of interest was to be added to this total of £105,000.
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