Stick or twist when terminating a contract – the difference between repudiatory breach and contractual rights

The Court of Appeal has handed down its decision in The Winros Partnership v Global Energy Horizons Corporation [2026] EWCA Civ 654. The appeal concerned the circumstances in which a contracting party who has terminated a contract for repudiatory breach, rather than pursuant to a contractual right of termination, can claim restitutionary damages on the basis of unjust enrichment. 

While the subject matter of the dispute (solicitors fee agreements) may be esoteric, the legal issues at play frequently arise when any type of contract is being terminated for breach.  And the judgment is a timely reminder that there are fundamental differences between terminating a contract for material breach (pursuant to a contractual right) and terminating at common law for repudiatory breach.  As a result, contracting parties need to think carefully about which right of termination they wish to use, to ensure they get the right consequences. 

In the present case, the Winros Partnership, having chosen to terminate the contract at common law for repudiatory breach only, could not seek payment for work done prior to the termination.  It could only claim damages for ‘loss of bargain’, being the value it would have obtained if the contract had been fulfilled.  On the facts of this case, that measure of damages was uncertain and potentially zero.  Whereas, if Winros had terminated for material breach using its contractual rights, it would have had a more certain claim for potentially £millions. 

Background

The Winros Partnership (formerly known as Rosenblatt Solicitors) (“Rosenblatt”) was instructed by Global Energy Horizons Corporation (“Global Energy”) in litigation against a third party. Rosenblatt and Global Energy entered into three successive Conditional Fee Agreements (“CFA”) in relation to Rosenblatt’s fees in those proceedings. 

Under the CFA, Rosenblatt would be entitled to its full fees and a 100% success fee if Global Energy was successful in the litigation. Clause 14 of the CFA set out the circumstances in which Rosenblatt could terminate the CFA and the fees it would be entitled to in each circumstance. In particular, clause 14.3 provided that Rosenblatt could terminate the CFA if Global Energy failed to meet its responsibilities; in this circumstance, Rosenblatt would be entitled to its basic fees for work done up to the termination date and for disbursements incurred. The CFA did not exclude the ability to terminate for repudiation and to claim damages. 

Termination of the CFA

In February 2016, Rosenblatt terminated the CFA alleging repudiatory breach by Global Energy on the basis that Global Energy had instructed another law firm and was refusing to pay disbursements. However, rather than exercising its contractual termination right under clause 14.3 of the CFA, Rosenblatt opted to terminate by accepting the alleged repudiatory breach and claiming damages. In an earlier hearing in proceedings, Trower J held (amongst other things) that Global Energy had indeed committed a repudiatory breach. 

Despite accepting the repudiatory breach and claiming damages in relation to lost fees, Rosenblatt also sought to bill Global Energy for the work it had done prior to termination and appropriated the funds which it held belonging to Global Energy in excess of £5 million. 

Global Energy applied for a detailed assessment of Rosenblatt’s bills pursuant to s.70 Solicitors Act 1974, disputing liability to pay the bills. Global Energy claimed that when the CFA was terminated, no ‘win’ had been achieved under the CFA so no contractual entitlement to payment had arisen. 

At first instance, Senior Costs Judge Gordon-Saker noted that, at the point of termination, the solicitors had a choice: “They could “stick” and elect for their basic fees and disbursements under clause 14.3 (but lose the success fee) or they could “twist” and claim damages for their loss of basic fees and success fees.” The court held that Rosenblatt had no contractual entitlement to the money and its only remedy was to claim damages. Rosenblatt’s bills were assessed at nil.

Rosenblatt appealed, claiming that it had provided its services under the CFA on the implied basis that it would not be deprived of the chance to complete performance and earn its success fee. It argued that Global Energy’s repudiatory breach constituted a “failure of basis”, and Global Energy had been unjustly enriched to the value of Rosenblatt’s work.

The Appeal

The High Court held that clause 14.3 left “no room” for a claim in unjust enrichment as it made provision for the specific circumstances that arose; the existence of an alternative method for Rosenblatt to end the CFA could not be used to override the contractual provision in circumstances where the CFA had articulated what should happen in this situation. Rosenblatt appealed again. 

The Court of Appeal rejected the appeal, reaffirming the principle that the law of unjust enrichment cannot be used to subvert the express risk allocation freely negotiated by parties to a valid contract. 

The Court noted that the CFA was a “sophisticated and highly calibrated conditional fee agreement which allocates risk between the parties and addressed numerous situations”. Clause 14.3 expressly covered the circumstances which had arisen in this case and set out the consequences if Rosenblatt was prevented from completing performance by Global Energy failing to meet its responsibilities. Rosenblatt could have invoked clause 14.3 when it sent the termination letter, but had chosen not to.

The Court held that where the CFA explicitly provided a remedy for the consequences of a party’s breach, it was not possible to imply a different basis for the parties’ relationship, particularly one that was in direct conflict with those agreed terms. Lady Justice Asplin noted that to imply a different basis in such circumstances “would upset the considered exercise of risk allocation expressly contained in CFA-3 and be contrary to clause 14.3 which dealt precisely with the circumstances which arose.” 

The Court of Appeal concluded that, by choosing not to rely upon clause 14.3 to terminate the CFA, Rosenblatt had not created a “failure of basis” – it had made a tactical decision not to exercise the contractual remedy provided for and to instead pursue common law damages. 

Takeaways

This decision is a significant reminder of the principle of contractual autonomy, confirming that where commercial parties expressly identify the financial consequences of a breach, they will be held to that risk allocation by the court. It will not be possible for a non-defaulting party to circumvent its contractual bargain or the limitations of the agreed remedies by choosing to accept a repudiatory breach and claim damages on a restitutionary basis instead. 

The key practical takeaway from this decision is that, where a party thinks a contract may have been breached, they should first consider:

1. What are their options for terminating the contract flowing from the breach?
2. What remedies are available for each termination option?
3. What are the flow-on consequences for each termination option?

Where there is a contractual provision which specifies the remedy for breach of contract, it is important to carefully consider whether the party will be put in a better position by accepting a repudiatory breach and claiming damages at common law, or by exercising its contractual termination right and receiving the contractual remedy.

This also has a bearing on drafting termination notices: parties should state clearly on what basis they are terminating and the consequences that follow (as appropriate). 

This article was written by Charlotte Bainbridge & Matthew Kaltsas-Walker