The Court of Appeal has confirmed a High Court decision that agreements between two direct access barristers and their client, which included a non-refundable advance fee, were unfair under the Consumer Rights Act 2015 (CRA 2015). 

The two barristers (the claimants) and a former client (the defendant) were in dispute over payment of outstanding fees under the terms of a written agreement entered into between the claimants and the defendant under the Public Access Scheme. The case was appealed and cross-appealed from a county court decision in December 2022.

The key term in the dispute was:

“For the avoidance of doubt, the fee covers the above-mentioned work and therefore if the hearing concludes early or is adjourned to another date or does not go ahead for any reason beyond our control, then the full fee is still payable and another fee will be payable for any adjourned hearing.”

The hearing was adjourned and the client dis-instructed counsel and refused to pay any more fees. The barristers then sued the client for non-payment. In return, the client argued that the term was unfair because, if a trial did not go ahead, the barristers could potentially claim a lot of money for doing not very much. 

The first instance court had held that CRA 2015 did indeed prevent the claimants from relying on the contractual term relating to payment but that the defendant should nevertheless pay 70% of what would otherwise be the contractual sum due by way of quantum meruit (which means “as much as one has earned”).

This case then went to the High Court, which ruled that the payment term requiring advance payment agreement was unfair under the CRA 2015 and that no fees were recoverable on a quantum meruit basis. 

The case was then appealed again to the Court of Appeal, which has now confirmed the decisions of the lower courts that the payment term was unfair and unenforceable under the CRA 2015.

The Court of Appeal also found that the third and fourth instalments of fees were not due to the barristers. Departing from the High Court decision, it was held that this was because their contracts with Mrs Atay became frustrated when the final hearing was adjourned, which occurred before such payments fell due.

As we commented when the High Court ruled in this case, consumer law cases are pretty rare, so this is really interesting. Helpfully, the decisions chime with the CMA's Unfair Terms Guidance, which sets out that traders may not use terms that place all the risk of a transaction not proceeding on consumers and non-refundable advance fees are likely to be unfair. The CMA guidance says that a term which makes any substantial prepayment entirely non-refundable, whatever the circumstances, potentially allows the trader to make an unjustified windfall gain and also makes clear that requirements which can operate so as to force consumers to pay for services they have not received can also be unfair.