Court of Appeal
Civil Appeal Nos. 8 and 8A of 1991
7th February, 1992
K.C. HENRY, P.
DR. NICHOLAS J.O. LIVERPOOL, J.A.
SIR JAMES SMITH, J.A.

Mr. Dean Barrow, S.C. for Plaintiff
Mr. Wilfred Elrington and Mr. Waite for Defendant

Contract - Contract for Attorney's professional services in collecting tax arrears on a contingency fee of 10% of the amount collected - Contract terminated by Defendant before Plaintiff could take steps to collect - Whether Defendant entitled to take advantage of own wrong - Whether contract substantially performed - Whether contingency fee reasonable.

J U D G M E N T

HENRY, P.

The Plaintiff in the action from which these appeals arise claimed "the sum of $92,611.44 for work done, services rendered and monies paid by the Plaintiff as Attorney for and on behalf of the Chief Collector of Income Tax and the Government of Belize at the request of the Defendant."

At the trial of the action the Plaintiff was the only witness. His evidence is to the effect that, partly by oral agreement and partly by an exchange of letters, his services were engaged with a view to the collection of alleged arrears of taxes amounting to $926,114.40 from a taxpayer. His professional fees were agreed at $5,000 by way of a retainer and "a contingency fee of 10% of any amount collected from the taxpayer, the understanding being that, having appeared in the Magistrate's court on behalf of the Government he would also represent the Government "in the appeal to the Supreme Court (and in the highly likely appeals to the Court of Appeal and perhaps the privy Council." He in fact represented the Government in the Supreme Court and in the Court of Appeal and at the conclusion of the latter proceedings on June 2, 1989 the taxpayer remained liable to pay $926,114.40, recovery to be as provided by section 72 of Ch. 46. Before the reasons for the Court of Appeal decision were handed down three documents each dated June 15, 1989 were sent to him by the taxpayer's attorneys: a notice of motion to the Court of Appeal for leave to appeal out of time and to stay execution, a notice of appeal to the Court of Appeal, and a motion to the Court of Appeal for leave to appeal to the Privy Council and to stay execution. No date for the hearing of these applications was inserted in any of them. He wrote to the Registrar in an effort to bring the applications before the Court of Appeal, but at about the same time the Solicitor General terminated his services. The three applications have not in the meanwhile been pursued, and no further steps have apparently been taken to recover the amount due from taxpayer.

At the conclusion of the trial the learned trial judge found that the Plaintiff had substantially performed his contract and was entitled to payment on a quantum meruit basis which he assessed at $69,458,58, being 75% of the fees claimed.

The Plaintiff appealed on the single ground that the learned trial judge erred in law in confusing the doctrine and consequencies of part performance with the doctrine and consequencies of substantial performance. In the result, it was argued, the learned trial judge wrongly held that even-though the Plaintiff had proven substantial performance rather than part performance he was only entitled to a quantum meruit payment for part performance as opposed to full payment for substantial performance.

The Defendant appealed on four grounds, the following three of which were argued:

"1. The decision was based upon a wrong principle or was such that the learned trial judge viewing the circumstances reasonably could properly have decided that the [Plaintiff] was entitled to be paid 75% of the fee mentioned in the contract held to have been entered into with the [Defendant] notwithstanding the term of contract that the [Plaintiff] would be entitled to be paid upon the contingency that certain monies would be collected from the taxpayer while in fact no monies were collected from the taxpayer.

2. That the learned trial judge erred in law or acted upon a wrong principle in holding that the question of the time spent in court and an hourly rate in respect thereof are irrelevant in computing any amounts payable to the [Plaintiff] upon a quantum meruit.

3. The learned trial judge erred in law or acted upon a wrong principle in failing to consider whether the amount payable to the [Plaintiff] for his fees was unfair and unconscionable."

In support of these grounds it was submitted firstly that the contract was so worded that the contingency fee was not payable until the amount due was collected from the taxpayer; secondly that, having regard to the unperformed or potentially unperformed duties of the Plaintiff, he could not be said to have substantially performed his contract; thirdly that upon a quantum meruit the assessment ought to be made on the basis of hourly fees rather than a contingency fee, and further that in the circumstances a contingency fee of 10% of the amount collected was unfair and unconscionable.

In so far as the Defendant's appeal is concerned it seems to me that although under the terms of the contract the contingency fee was payable from "any amount collected from the taxpayer" the Defendant could not rely on this provision by way of defence to the Plaintiff's claim in circumstances in which the failure to collect from the taxpayer was attributable to the Defendant's action in terminating the contract prematurely. The taxpayer's liability to pay $926,114.40 was established as a consequence of the Plaintiff's efforts. That liability remains. No appeal has been pursued, nor has any stay been granted. If the Defendant by terminating the contract has prevented the Plaintiff from taking the necessary steps to collect the outstanding amount, it seems to me that this must be treated as a breach of a primary obligation under the contract. In Cheall v Association of Professional Executive Clerical and Computer Staff (1983) 1 All E.R. 1130 at 1134 Lord Diplock, referring to the speeches in New Zealand Shipping Co. v Societe des Ateliers et Chantiers de France (1918-19) All E.R. 552, said:

"In the course of the speeches, which are not entirely consistent with one another, reference was made by all their Lordships to the well-known rule of construction that, except in the unlikely case that the contract contains clear express provisions to the contrary, it is to be presumed that it was not the intention of the parties that either party should be entitled to rely on his own breaches of his primary obligations as bringing the contract to an end, i.e. as terminating any further primary obligations on his part then remaining unperformed. This rule of construction, which is paralleled by the rule of law that a contracting party cannot rely on an event brought about by his own breach of contract as having terminated a contract by frustration, is often expressed in broad language as 'A man cannot be permitted to take advantage of his own wrong'."

In my view these principles ought to apply not only to liabilities which have crystalised, but in the circumstances of the present case to those liabilities which would have arisen but for the untimely termination of the contract.

I do not accept the submission that the Plaintiff could not be said to have substantially performed his contract. He has in fact done all that he contracted and was permitted to do. His further appearances in the Court of Appeal and the Privy Council clearly were dependent on there being appeal proceedings to those tribunals requiring his services. Those appeals have not materialized. At the time his services were terminated the Plaintiff was in the process of having the pending applications in that regard disposed of so that he could proceed with the recovery proceedings under section 72 of Ch. 46. There is no evidence to indicate that the taxpayer did not have the means to pay the amount due. The Plaintiff's efforts were frustrated by the termination of his services, but since that termination was not occasioned by any breach on his part the Defendant ought not to be permitted to benefit from it by way of restricting the Plaintiff's claim to a quantum meruit basis. I would dismiss the Defendant's appeal.

It follows also that in my view the Plaintiff's appeal ought to be allowed. A contingency of fee of 10% is not in my view inherently excessive. In view of the status of the parties to the contract it cannot be said that the Defendant was at a disadvantage in negotiating the terms of the contract. The Attorney General at the time the contract was negotiated was the Plaintiff's brother, but there is no suggestion that this relationship in any way affected the terms of the contract. I would allow the Plaintiff's appeal and vary the judgment of the trial judge by substituting for the sum awarded the sum of $92,611.44.

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