Solicitors Act Assessments – The New Costs War
In this weeks article Rob Street takes a look at the case Richard Slade And Company Plc v Erlam [2022] EWHC 325 (QB) (16 February 2022).
The respondent and others brought an election petition in the Election Court to challenge the election of Mr Lutfur Rahman as Mayor of Tower Hamlets. They were successful and were awarded costs. The appellant was then instructed to attempt to assess and enforce the costs. An estimate of costs of between £50,000 and £80,000 was provided but matters proved to be considerably more complex than originally envisaged. Indeed, instructions were provided by the respondent and his fellow clients to the appellant to act in five separate strands of work resulting ultimately in eighteen bills being rendered totalling £236,607.83. No revised estimate was provided although estimates were provided for discreet pieces of work.
The requisite retainers were originally a written retainer and subsequently a retrospective conditional fee agreement.
The retainer(s) was terminated in June 2016 and the litigation continued with new solicitors.
Part 8 proceedings were launched in February 2018 by the respondent seeking an order for the assessment of the various bills rendered by the appellant. District Judge Bellamy held that the bill could not be assessed because it contained invoices which could not be construed as being “interim statute bills” as profit costs and disbursements had been included in separate invoices, a decision which was set aside following Richard Slade and Company v Boodia [2018] EWCA Civ 2667. Thereafter, District Judge Batchelor held substantially in favour of the respondent, inter alia, neither retainer entitled interim invoices to be rendered, no bill had, in fact, been rendered thus one was required in which case the respondent had an automatic entitlement to an assessment. As an aside, special circumstances existed under s.70(3) of the Act (unpaid bills).
The appellant appealed…….
His Honour Judge Goswell adjudicated in this respect in February 2022, over four years after the original part 8 proceedings were incepted.
The rationale behind the respondent’s stance is there for all to see – if the appellant was not entitled to render interim invoices under the retainers and no bona fide statute act invoice(s) had been rendered, then the Solicitors Act time limits to challenge the charges had not begun to run. Consequently, the respondent’s entitlement to do so would be unfettered after a compliant bill was to hand. This was obviously the effect of District Judge Batchelor’s order, the subject of the appeal.
Historically, the number of cases before the courts dealing with the distinction between bona fide bills and non-compliant bills were extremely limited; however, this discreet area of costs law can now best be described as a growth industry following LASPO, when any success fee in most personal injury cases became payable from the client’s damages and not as an item of costs between the parties. Whilst not relevant here, many of the same arguments apply.
The following issues fell to be decided: –
- Did the original retainer authorise the delivery of interim statute bills?
- Did the CFA authorise the delivery of interim statute bills?
- If interim statute bills were delivered was there bona fide compliance with the Solicitors Act?
- Was there a Chamberlain bill or bills?
- Did special circumstances exist?
An interesting feature of the appeal was that both parties argued cases that were different to their skeleton arguments. Also, both advocates accused the other of raising issues that had not been raised before the District Judge. Given the absence of documentation pertaining to the hearing before the District Judge, HHJ Gosnell simply expressed his displeasure and got on with the business at hand.
As regards 1. the retainer contained “Bills are rendered monthly in arrears. Our bills are detailed bills and are final in respect of the period to which they relate, save that disbursements (costs and expenses which we incur on your behalf) are normally billed separately and later than the bill for our fees in respect of the same period”.
District Judge Batchelor concluded that this explanation did not constitute authority to render interim statute bills. HHJ Gosnell did not agree and found that the wording was clear and unambiguous. This constituted sufficient explanation to justify the delivery of an interim statute bill.
This clause, however, was not carried forward into the CFA and accordingly HHJ Gosnell held there was no written contract to enable an interim statute bill to be rendered. Consequently, any invoices rendered after the CFA was incepted and before it was terminated would be requests for payments on account and not bona fide bills.
The parties enjoyed mixed results in connection with compliance; here, the eighteen bills were split into 3 categories namely disbursement bills, fixed fee bills and detailed bills. Dealing firstly with the disbursement bills, HHJ Gosnell was in no doubt that the bills in conjunction with attached documentation clearly contained sufficient information to enable the respondent to decide whether to challenge them.
The fixed fee bills were, however, held to be capped bills and should be treated as payments on account.
Finally, any issue regarding the remaining category of detailed bills which were all rendered during the currency of the CFA or after it was terminated fell away given the earlier ruling regarding any entitlement to render interim bills during the CFA.
In relation to the Chamberlain issue (Chamberlain v Boodle and King (a firm) [1982] 3 All ER 188)
HHJ Gosnell did not agree with the District Judge and found that the District Judge should have found that the series of bills rendered taken together with the final bill should be treated as a Chamberlain bill dated on the same date as the final bill.
Finally, special circumstances – despite concluding that the respondent’s case here was weak, HHJ Gosnell concluded that the threshold test was not particularly high, and the decision of the District Judge was “well within the generous ambit within which a reasonable disagreement is possible”.
Accordingly, whilst the appellant carried the day (on points) it appears as if any invoice rendered thus far will be the subject of a Statute Act assessment in any event.
Partners In Costs is a national firm with a wealth of experience in this esoteric area of costs law.
Rob Street, Costs Lawyer
05.05.22