Mr Alastair Dobbie v Paula Felton t/a Feltons Solicitors
Dobbie v Paula Felton t/a Felton’s Solicitors [2025] EAT 71
Facts
Mr. Alastair Dobbie (the Claimant/Appellant) was engaged by Paula Felton t/a Feltons Solicitors (the Respondent), a firm of solicitors, under a written consultancy agreement dated 6 March 2014 (the "Consultancy Agreement"). Under this agreement, he performed duties as a consultant and was entitled to a consultancy fee of 40% of the fees billed, paid, and received by the firm. The Consultancy Agreement included an "entire agreement" clause and specified that it could only be varied by a written agreement signed by the parties.
The central dispute concerned the fees payable to Mr. Dobbie for work done for a specific client, referred to as "client A". Mr. Dobbie claimed that he was entitled to 40% of all fees billed and paid by client A, including work done by other fee earners, which would amount to £10,000 a month. He also alternatively contended that there was a separate oral agreement made in January 2016 entitling him to a fixed fee of £10,000 per month for client A work.
The case had a complex procedural history involving several Employment Tribunal (ET) judgments:
Employment Judge (EJ) Spencer determined that Mr. Dobbie was a worker, not an employee, and found that the "accepted practice" under the Consultancy Agreement was payment of a percentage of fees only for work he personally undertook.
A subsequent tribunal before EJ Gordon made findings that Mr. Dobbie was being paid 40% of fees based on 50 hours per month for client A.
EJ Elliott, in an earlier judgment (7 December 2020), found that there was a "separate arrangement" for client A work, initially agreeing to pay Mr. Dobbie £5,000 per month for 50 hours of work, and rejected his claim of a £10,000 oral agreement.
The EJ Goodman tribunal found that a client care letter for client A indicated a retainer of £25,000 per month for 100 hours of work, split evenly between Mr. Dobbie's 50 hours and 50 hours for other team members.
The judgment subject to this appeal was EJ Elliott's reconsideration decision (4 October 2023). She again rejected the £10,000 oral agreement and reiterated her finding of a "separate agreement" for £5,000 per month for client A. Crucially, she also considered Mr. Dobbie's alternative argument based on the interpretation of the written Consultancy Agreement. She concluded that, under the written agreement, Mr. Dobbie was only entitled to 40% of the fees for his personal work on client A, not for work done by other fee earners. As client A's total bill was £25,000 for 100 hours (50 by Mr. Dobbie), his share was 40% of £12,500 (his 50 hours), which amounted to £5,000. Thus, both the "separate oral agreement" and the interpretation of the written agreement led to an entitlement of £5,000 per month.
Held
The Employment Appeal Tribunal (EAT), presided over by Michael Ford KC, Deputy Judge of the High Court, dismissed Mr. Dobbie's appeal and made the following key rulings:
Interpretation of the Consultancy Agreement (Ground 3): The EAT upheld EJ Elliott's interpretation of clause 3 of the Consultancy Agreement. It agreed that, when properly interpreted using common law principles (such as those from Arnold v Britton and Wood v Capita Insurance Services Ltd, Mr. Dobbie was only entitled to 40% of the fees billed and paid in respect of his personal work for client A, not for work performed by other fee earners. The EAT found that clause 3 was ambiguous on its natural meaning, and that commercial common sense, the requirement for an "appropriate invoice" from the consultant, and other provisions of the agreement supported the interpretation that remuneration was for personal services. The EAT concluded that EJ Elliott was engaged in contractual interpretation, not implying a term.
Separate Oral Agreement (Ground 1): The EAT found that EJ Elliott had erred in law by finding that there could be a "separate oral agreement" governing the work for client A. This error was due to the presence of an "entire agreement" and "no oral variations" clause (clause 14) in the Consultancy Agreement, which, as established in MWB Business Exchange Centres Ltd v Rock Advertising, generally renders oral variations invalid for want of writing or signature.
Immateriality of Error: Despite the error regarding the oral agreement, the EAT concluded that this error was "academic and immaterial" to the outcome. This was because the correct interpretation of the written Consultancy Agreement (as determined under Ground 3) led to the exact same entitlement for Mr. Dobbie: £5,000 per month for his work on client A.
Unlawful Deduction from Wages (Ground 2): This ground of appeal failed because the EAT had already upheld that the amount "properly payable" to Mr. Dobbie under the Consultancy Agreement was £5,000 per month. Since he was paid this amount, there was no "deduction from wages" as defined by section 13 of the Employment Rights Act.
Comment
This case provides a valuable illustration of the principles of contractual interpretation, particularly in the context of "entire agreement" and "no oral variation" clauses.
Contractual Interpretation: The judgment reinforces the importance of interpreting contracts by referring to "what a reasonable person having all the background knowledge which would have been available to the parties would have understood them to be using the language in the contract to mean". It demonstrates the application of the principles set out in Arnold v Britton and Wood v Capita Insurance Services Ltd, emphasizing a balance between textual analysis and factual/commercial context. The EAT's detailed reasoning for interpreting "fees billed" in clause 3 to mean fees for the consultant's personal work, rather than the firm's total fees for a client, is particularly insightful. It highlights how commercial common sense, the practicalities of invoicing, and other clauses within the agreement can inform the interpretation of ambiguous wording to avoid "ludicrous" or "extravagant results".
"No Oral Variation" Clauses: The case firmly reiterates the Supreme Court's ruling in MWB Business Exchange Centres Ltd v Rock Advertising, confirming that "no oral modification" clauses are generally effective and that oral variations will be invalid if they contradict such clauses. This serves as a strong reminder for parties to ensure that any agreed changes to a written contract with such a clause are documented in writing.
Academic Error Principle: A significant practical takeaway is the EAT's application of the principle that an error of law by a lower tribunal may be "academic and immaterial" if, despite the error, the correct legal analysis on another point leads to the same overall conclusion. This means that a successful appeal cannot be based solely on an error if the outcome would have been the same had the error not occurred. In Dobbie, while the ET erred in accepting a "separate oral agreement" that breached the written contract's non-oral variation clause, the fact that the properly interpreted written contract yielded the identical financial entitlement rendered that error inconsequential to the final judgment.
