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Legal Practitioners-Agreement as to Percentage of Amount Recovered -Champerty-Illegality not Pleaded-Effect.

An agreement between a solicitor and his client that the former is to be paid 10 per cent of amounts actually recovered in litigation is champertous and illegal, and the solicitor cannot retain money due under such an agreement.

Where the illegal agreement was set up by the solicitor as the basis of his defence. the fact that no point as its illegality was taken in the Court below cannot prevent the Court of Appeal from taking cognizanc of it and refusing to enforce it.

T. E. Nelson-Williams for the Defendant-Respondent. The following judgments were delivered :-

In this case Appellant, who was Plaintiff in the Court below, sued the Respondent to recover the sum of £1,156 balance of monies received for the use of the Appellant by the Respondent. The receipt of the money was not denied, but Respondent set up a right to retain it in payment of sums due to him under an agreement made between himself as solicitor and the Appellant.

The agreement which was in writing had been lost, and secondary evidence was admitted as to its contents. The Respondent states that it was agreed that for the professional services to be rendered by him he was to be paid 21/2 per cent of the sums claimed in certain litigious matters, plus 10 per cent of the amounts actually recovered on such litigation. There were also subsidiary provisions as to travelling and board and lodging about which no question arises, and about which we need not concern ourselves further.

The Appellant admitted that part of the agreement which provided for a payment of 2! per cent, but denied that he had agreed with Respondent that the latter should be paid 10 per cent on the amounts recovered in consequence of the litigation. The learned trial Judge believed Respondent's version of the agreement.

It may be of interest to remark that the Respondent has received from the Appellant £887 .10s. which of itself more than covers his claim for the 2l per cent commission on the claims filed by him plus his claim for travelling expenses, and that the Appellant has not claimed repayment of this sum of £887 10s. Thus in the claim to be repaid the sum of £1,156 the £887 10s. is not taken into account in any way. so that in effect the Respondent must look to the monies accruing to him under that clause of the agreement which provides for a payment of 10 per cent on the amounts recovered in the litigation to provide any set-off to the sum claimed by Appellant.

lNow it is clear law that when any person who is a stranger to the transaction enters into an agreement with another to sustain him in litigation on the terms that he should have part of the proceed~ of that litigation, if successful, as remuneration for his services, that is a champertous agreement to which the Courts will not give effect. "Champerty," says Lord Atkin in Wild v. Simpson reported in (1919) 2 K.B. at page 562, "is iJIegal and an indictable offence-It is a form of maintenance. Champerty is but a species of maintenance, which is the genus. An action for maintenance did lie at the common law and if maintenance in genere was against the common law, a fortiori was champerty, for that of all maintenance is the worst: 2 Co. lnst. page 208. 1he definition by Coke is ' to maintain to have part of the land, or anything out of the land, or part of the debt or other thing in plea or suit, and this is called cambi partia, champertie.' Co. Litt. 368 (b). It is maintenance aggravated by an agreement to have a part of the thing in dispute-Maintenance is the unlawful intermeddling with litigation in which one has no concern-Per Lord Findlay in Neville v. London' Express' Newspaper Ld. (1919) A.C. 368. I think the reason for the rule which is clearly in existence, that an agreement by a solicitor to purchase part of the proceeds of the suit in which he is acting as a solicitor is void for Champerty, is based upon the consideration of the above definitions. Obviously no one intermeddles more with litigation than the solicitor for one of the parties. As long as he confines himself to lawful terms of remuneration he has a lawful concern in the litigation. If, however, he is acting not on ordinary professional terms but has a direct interest to receive part of the proceeds of the litigation, he has altered his position and is deemed to be an unlawful intermeddle. The cases of champertous agreements by solicitors are often regarded merely as concerning the immediate client ..

"Advantage may be taken of him and oppressive terms exacted by a legal adviser who is in a commanding position by Ieason of his special knowledge. But the offence of maintenance apart from the interest of the public generally, is directed primarily not at the client maintained, but at the other party to the litigation. He has the right to be free from litigation conducted with the assistance of persons working for their own interests, and not in order to give lawful professional aid to the opening litigant. A champertous agreement between solicitor and client is void, therefore, not merely because of an abuse of the confidential relationship between solicitor and client but because the agreement involves a continuing wrong, namely the maintenance of the. litigation against the opposing party. If this view is correct it appears by the pleadings or the points for proof recorded by the Court that it could be properly entered. into. They will observe however in passing, that although it may be admitted that the Court would have the right, perhaps even lay under an obligation to take cognisance proprio motu of any objection manifestly apparent on the face of the proceeding, which showed that it was against morality and public policy, yet where, as here, that was only to be collected from the evidence by inference and was capable of explanation or answer by counter-evidence it is highly inconvenient as well as contrary to the Ordinance which regulates the practice of the Court, and may lead to the most direct injustice to enter into the enquiry if the issue has not been presented by the pleadings or the points recorded for proof." But in this case every circumstance is present so as to lay an obligation on this Court to act proprio motu even although the point was never raised in the pleadings or before the trial Judge. The agreement which is champertous on the face of it is set up by the Respondent himself, and is the very basis of his case; no question could therefore possibly arise of his being able to bring evidence to displace the inference of champerty on his part which arises from it, and no explanation of it has been or could be advanced so as to give a different complexion to it ; and to' argue that the Court cannot now take cognisance of it is tantamount to a contention that this Court is bound with its eyes open to enforce an agreement of the illegality of which there is no possible doubt-a proposition which is manifestly untenable.

In my opinion the Respondent's claim to retain money under the agreement which he sets up cannot be entertained, and the appeal therefore must be allowed and judgment entered for the Plaintiff on the claim for £1,156 with costs in this Court. With regard to the costs in the Court below, we think that as the point that the agreement was champertous was not taken in the Court below, there should be no order as to the costs in that Court.