Leel v FBC Manby Bowdler LLP [2011] EWHC 90200 (Costs)

Case No 10.P8.3451

IN THE HIGH COURT OF JUSTICE

SENIOR COURTS COSTS OFFICE

Venue Clifford’s Inn, Fetter Lane

Date 21st January 2011

London, EC4A 1DQ

Before

Master Haworth, Costs Judge

Between

Mr Raj LeelClaimant

FBC Manby Bowdler LLPDefendant

Mr Crow of Counsel (instructed by Messrs Silks, Solicitors) for Claimant

Mr Stacey of Counsel (instructed by FBC Manby Bowdler) for Defendant

Hearing Hearing date: 4 November 2010

Judgment

Master Haworth, Costs Judge:

[1]On 9 June 2010, the parties agreed to a determination of the following preliminary issues: a) Are the bills rendered by the Defendant to the Claimant interim statute bills or requests for payment on account? b) Was there an express or implied agreement that interim statute bills could be served by the Defendant? c) If the answer to both issues is affirmative, despite the fact that more than twelve months has elapsed since delivery of the bills, are there special circumstances which mean that the Claimant is entitled to an assessment of the rendered bills?

[2]In support of the application, the Claimant served two witness statements dated 18 May 2010, and 28 July 2010. Ms Thomson, a partner in the defendant firm, served a witness statement dated 7 June 2010. I was also assisted by skeleton argument from Counsel for both the Claimant and the Defendant.

FACTS

[3]On 18 May 2010, the Claimant issued a Part 8 application seeking an order that: i) Within 21 days the Defendant must deliver to the Claimant or to his solicitor a final statute bill of costs in all cases and matters in which the Claimant is concerned, and give credit for all money received for or on account of the Claimant. ii) There be a detailed assessment of the final statute bill or all interim bills delivered to the Claimant by the Defendant. iii) On making an order for detailed assessment, the Court must also assess the costs of these proceedings and certify what is due to or from either party in respect of the bill and the costs of these proceedings. iv) Until these proceedings are concluded, the Defendant must not commence or continue any proceedings against the Claimant in respect of the bill mentioned above.

[4]The Claimant retained the Defendant in the autumn of 2007 to act on his behalf in the course of proceedings relating to his divorce. The Claimant instructed the Defendant, after having previously instructed a number of other local solicitors, to act on his behalf. On each occasion he was unhappy with the advice received and the amount he was paying for that advice.

[5]The Defendant wrote to the Claimant on 19 October 2007. That letter set out the terms of the Defendant’s instructions to act on the Claimant’s behalf. In relation to the Claimant’s former solicitors, the letter said this:

“I understand that you were intending to take issue with his solicitor’s bill. The difficulty in us dealing with your case is that we need a file of papers in order to represent you. Solomon’s [the Claimant’s former solicitors] were indicating that they would not release the file of papers until you paid their outstanding costs. We suggested that you write to the solicitors, setting out your specific complaints regarding the bill, and that you also pursue a complaint to the Legal Complaints Service. In addition to the file of papers, we also indicated that we would need a sum of £7,500 on account of costs to be able to represent you.”

[6]The letter dealt with costs in the following way:

“Please be aware that we charge on a time costing basis. Therefore the more time I spend and the longer your matter takes to resolve, the more expensive it will be. You will see that the enclosed terms and conditions of business include an estimate of your costs.”

[7]The letter then went on to set out certain matters specific to the Claimant’s case which the Defendant had considered when arriving at their initial cost estimate.

[8]A second letter dated 19 October 2007 headed “Children at Proceedings” was sent by the Defendant to the Claimant on 19 October 2007. That letter set out how the Defendant’s charges were to be calculated by reference to the time spent in dealing with the matter based on charging rates dependent on the level of grade of fee earner. The letter also went on to state:

“The firm normally submits its accounts to you towards the conclusion of the matter, but in longer and more complex matters, the right is reserved to submit interim accounts. We may cease acting for you in the event of non-payment (accounts should be settled within 30 days). You may be asked to provide monies on account of future costs and disbursements and I note that you have provided me with the sum of £7,500 on account of costs.”

[9]Both the letters of 19 October 2007 contained the Defendant’s standard terms and conditions of business. In relation to payment arrangements, the terms and conditions of business stated:

“Other cases or transactions: It is normal practice to ask clients to pay sums of money from time to time on account of the charges and expenses which are expected in the following weeks or months. We find that this helps clients in budgeting the costs, as well as keeping them informed of the legal expenses which are being incurred. If such requests are not met with prompt payment, delay in the progress of the case may result. In the unlikely event of any bill or request for payment not being met, this firm must reserve the right to stop acting for you further. We reserve the right to deliver regular interim bills, either after a fixed period of time or when the value of time reaches a certain figure. Payment is due to us within 30 days of our sending you a bill. Interest will be due at the rate applicable to judgment debts (currently 8% per annum) on the unpaid amount of the bill, from the date of the bill in cases where payment is not made within 30 days of delivery by us of the bill.”

[10]In relation to termination, the terms and conditions stated:

“If we decide to stop acting for you, for example if you do not pay an interim bill or comply with the request for a payment on account, we will tell you the reason and give you notice in writing.”

[11]The terms and conditions provided the Claimant with an estimate for costs in dealing with the matter ranging from £20,000 to £50,000, together with VAT and disbursements. The terms and conditions were signed by the Claimant on 24 October 2007.

[12]On 18 December 2007 the Defendants wrote to the Claimant regarding costs. In the letter they said this:

“I further enclose an invoice for the work done by me to date. I feel that it is necessary to render invoices at this early stage in view of how quickly costs have and will certainly mount over the next few months. It is important that you keep on top of payments of your costs and I propose rendering invoices on a monthly basis to assist in this. You will recall you have paid the sum of £7,500 on account. In addition interest has been earned totalling £32.85. I look forward to receiving your remittance for the sum of £2,054.71 in settlement of the balance outstanding.”

[13]Accompanying that letter were two documents headed “Invoice/Statement”. The first invoice detailed work carried out by the Defendant on behalf of the Claimant in connection with proceedings for ancillary relief. The invoice totals, including disbursements and VAT, £6,667.01. The second document referred to the provision of legal services with regard to matrimonial matters, particularly in relation to ongoing Children’s Act and ancillary relief proceedings. The second invoice/statement totals £2,920.55, including disbursements and VAT. Both documents, at the conclusion of the narrative of work carried out by the Defendants, contained the following wording:

“Solicitors Act 1974: Sections 70, 71 and 72. If this bill relates to contentious or non-contentious business and you are not satisfied with the amount of our fees, you are entitled to have our charges reviewed by the Court. This review is called “assessment” when the Court will decide whether our charges are reasonable. Solicitors (Non-Contentious Business) Remuneration Order 1994: If this bill……………. We will charge interest at the rate applicable to Judgment debts (currently 8% per annum) on the unpaid amount of the bill from one month after the date of the bill until payment.”

[14]On 3 January 2008 the Defendants wrote to the Claimant with a detailed breakdown of the two invoices/statements sent on 18 December 2007.

[15]On 11 February 2008 the Defendants wrote to the Claimant regarding the ancillary relief proceedings which had recently taken place at the Wolverhampton County Court. In that letter, the Defendants revised their cost estimate, previously given by them to the Claimant as follows:

“I would advise that continuing preparation attendance at the finding of fact hearing (if it concludes on 13/14 February 2008 are likely to be between £12,000 to £18,000, plus VAT.”

[16]The following day, on 12 February 2008 the Defendants wrote to the Claimant regarding the costs incurred in relation to the ongoing Children’s Act proceedings in the following terms:

“We would stress that these costs are estimated and they are subject to final calculation at the end of the case. Our fees, based on the time spent on the case including VAT: £19,380.45 Other payments made on your behalf by way of disbursements: £8,387.52 Total: £27,767.97. Our best estimate of the likely costs of your case based on the information currently in our possession is between £36,000 and £50,000. We must stress this estimate is only in relation to the Children’s Act proceedings. We shall write to you separately with regards to likely costs to be incurred in the pending financial proceedings. In view of the considerable mounting costs, it our intention to forward to you shortly a note of the further charges incurred.”

Our fees, based on the time spent on the case including VAT: £19,380.45

Other payments made on your behalf by way of disbursements: £8,387.52

[17]On 21 February 2008 a further “invoice/statement” was sent by the Defendant to the Claimant. The document provided a narrative of the legal services that the Defendant had provided to the Claimant throughout the period 19 December 2007 to date, in the total sum of £14,000, plus VAT and disbursements. The document referred to the Solicitors Act 1974 in similar terms to the description in paragraph 13. The invoice/statement was accompanied by a breakdown of the charges.

[18]A further estimate of the ancillary relief proceedings was provided by the Defendant to the Claimant on 3 April 2008 indicating that based on the information currently in their possession the likely costs would be between £50,000 and £85,000.00. A further estimate of the legal costs in relation to the Children’s Act proceedings was provided by the Defendant to the Claimant on 15 July 2008 based on the information currently in their possession; the Defendants estimated the costs to be between £39,000 and £55,000. On that date two further invoices/statements were sent to the Claimant in relation to the ongoing ancillary relief proceedings and the ongoing Children’s Act proceedings. Both invoice/statements contain a narrative of the work carried out by the Defendants on the Claimant’s behalf in respect of the ancillary relief proceedings from 19 December 2007 to the 15th July 2008, and in respect of the ongoing Children’s Act proceedings from 22 February 2008 to the 15th July 2008. Each invoice/statement was accompanied by an “invoice breakdown” showing the costs calculated for each invoice by reference to the fee earner and work done. Both invoice/statement makes reference to the Solicitors Act 1974 in similar terms to that in paragraph 13 above.

[19]The Defendants wrote to the Claimant on 4 November 2008 providing a further estimate of the likely costs in respect of matrimonial matters. On the information in their possession the Defendants estimated the costs to be between £72,000 and £85,000. On 20 November 2008 two breakdowns detailing all costs incurred in connection with both the ancillary and Children’s proceedings were provided by the Defendant to the Claimant detailing the amounts paid by the Claimant on account of costs incurred.

[20]Further invoice/statements were rendered by the Defendant to the Claimant in connection with the ongoing ancillary relief proceedings and the Children’s Act proceedings on 1 December 2008 and 29 April 2009. In each case, at the conclusion of the narrative of work done, references made to the particular period of charge. A breakdown of the costs claimed was provided by the Defendants to the Claimant and the reference to the Solicitor’s Act 1974 referred to in paragraph 13 was set out at the conclusion of each document.

[21]On 30 December 2009 the Claimant emailed the Defendant in the following terms:

“I will phone you after 4 January 2010 and I will explain everything to you about how and when I will be in a position to clear your bill. I have applied for a mortgage which will pay your bill. It will take about three to four weeks. Perhaps it will good if we meet up for a chat, I esure that I will soon pay your bill because I need closure on all of this too,”

[22]On 19 April 2010 the Defendants commenced proceedings in the Wolverhampton County Court against the Claimant, in the sum of £74,463.12, together with interest and costs for services rendered. These proceedings were defended by the Defendant and have been stayed pending determination of these issues.

[23]At paragraph 4 of his first witness statement, the Claimant said:

“I never regarded the invoices as being anything other than interim statements of account. I had been verbally assured by Ann Thomson, who is a partner in the Respondent Firm, that we would negotiate and agree a figure for costs at the end of all my matters.”

[24]At paragraph 7 of his witness statement, the Claimant went on to say:

“I certainly did not directly pay any invoices in full and final satisfaction and I was never formally expressing my consent to the sums that I was being charged by virtue of my payments on account. To the contrary, I was expecting to negotiate the costs and agree a figure at the conclusion of the litigation as I had agreed verbally with Ann Thomson. Applying hindsight I appreciate that I should have asked Ann Thomson to record our agreement in writing but in fairness I never expected the Respondent to claim that I would not be entitled to challenge the invoices/statements that were being sent to me periodically at the conclusion of the case.”

[25]In paragraph 28 of her witness statement for the Defendant, Ann Thomson says this:

“The information contained within paragraph 4 is entirely denied. I had …. However, I am compelled to respond to the accusation that I verbally confirmed to the Applicant that I would negotiate and agree a figure of costs the end of all the matters. If that was the case then there would have been very little point in me rendering interim statute bills whilst the matter was ongoing. What is correct is that on a number of occasions I confirmed to the Applicant that both myself and the Respondent would be prepared to discuss a method of payment of the outstanding costs having provided him with ample opportunity to facilitate the same … The version of events stated by the Applicant is simply untrue.”

[26]A statement of account was supplied by the Defendants to the Claimant’s present solicitors in correspondence passing between them in March 2010. Pages 85 and 86 of the exhibit AET1 to the first witness statement of Ann Elizabeth Thomson shows a balance owing to the Defendants of £54,888.37, taking into account that payments were made by the Claimant to the Defendant in respect of the invoices/statements rendered in respect of the ancillary relief matters. Page 86 of exhibit AET1 shows that in relation to the Children’s Act matters, the balance due to the Defendants from the Claimant, after taking into account that payments made by him in respect of all bills invoiced to him, amounts to £19,605.50.

[27]On 29 April 2009 the Defendants provided the Claimant with confirmation in writing as to the current position regarding costs, enclosing further invoices up to that date. They advised that the outstanding amounts required to clear all invoices amounted to £78,091.83.

CLAIMANT’S SUBMISSIONS

[28]Mr Crow for the Claimant submitted that the invoices/statements sent to the Claimant were merely applications for payment on account. They were not interim statute bills. He argued that there were two reasons why the Defendant cannot enforce their invoices/statements submitted to the Claimant: a) There was no agreement to allow the Defendant to issue interim bills. b) The interim bills did not contain sufficient material to allow the Claimant to determine whether or not the bills should be assessed.

[29]It was argued that the terms and conditions and letters of retainer never contained agreement to deliver interim statute bills. The retainer letters were silent on the subject, and the only mention of payment is contained in the terms and conditions, which merely states that it is normal to ask for sums of money from time to time on account of charges and expenses.

[30]Mr Crow submitted that, it was agreed that the payments would be made on account, and this was supported by the conduct of the parties in the course of the retainer. Specifically: a) The Defendant did not seek to enforce the sums set out in the invoices, but was content to accept payment on account of fees. b) The Deed of Assignment entered into between the parties securing the sums due and owing to the Defendant did not set out a quantified sum due and owing to the Defendant. If the bills had been interim statute bills, the past indebtedness would have been quantified. c) The letter dated 4 November 2008 stated that the sum of £10,312.30 had been paid on account of costs to date. Had the payment been in satisfaction of an interim statute bill, it would not have been a payment on account. d) There was no reference in correspondence to interim statute bills until a letter was received from the Defendants to the Claimant’s present solicitors in March 2010. e) There was no reference in any correspondence from the Defendant or in the terms and conditions of business to any time limits for the Claimant to seek an assessment of costs. f) There was no business necessity for interim statute bills to be issued. The retainer between the Defendant and Claimant could have terminated for non-payment on a payment on account pursuant to Section 65(2) of the Solicitors Act 1974. g) Neither party would have wanted to challenge on a regular basis interim statute bills which would have been a distraction during the course of litigation.

[31]Mr Crow also argued that there was insufficient information in the invoices/statements from the Defendants for the Claimant to decide whether or not to seek assessment. Specifically there was no reference to the time limits imposed for assessment by the Solicitors Act 1974. There was no reference to the invoice/statement being a statute bill nor was there a period of charge referred to. He urged me to give weight to the Claimant’s reaction to the invoices/statements. He did not pay the totality of any invoice or statement received by him. Likewise, the Defendant’s reaction to the Claimant’s non-payment was not to enforce the bills that they now say that they could sue upon after a month. The Defendants chose not to act and this, they argued, was in line with the invoices/statements simply being applications for payment on account.

[32]In relation to the third preliminary issue, namely “special circumstances”, Mr Crow, for the Claimant, argued that there was prima facie evidence of overcharging. The only estimate of costs that was provided at the outset of the retainer. This was not updated at six monthly intervals, as expressly stated, in the terms of business of the Defendant. As such, the Claimant was entitled to assume that the original estimate was accurate. Any revisions to the estimate only took place at the eleventh hour when the Claimant had no option but to proceed. In any event, the actual costs charged are substantially in excess of the revised estimate which was woefully inadequate. He further argued that there were discrepancies within the bills meriting further investigation and that the Claimant had been unable to scrutinise the bills in detail as no detailed breakdown had been given. Neither did the Claimant know that the sums he had paid had been accurately accounted for or credited by the Defendants and was entitled to a cash account.

RESPONDENT’S SUBMISSIONS

[33]Mr Stacey for the Defendant argued that the requirements of an interim statute bill were made out in this case. The necessary formalities of the bill had been complied with and that all the invoices/statements were complete in themselves and contained sufficient information to enable a client to obtain advice as to their assessment and for a Costs Judge to assess them.

[34]He also argued that the invoices/statements were not on account payments in view of the fact that they were: a) References to the Solicitors Act 1974 and the right to challenge the bill. b) The fact that each of the bills was accompanied by information about the right to ask the firm to obtain a remuneration certificate which is inconsistent with them being simply requests for payment on account. c) The bills were for specific hours of work carried out over specific periods. d) They were not round figures, which may be expected with an application for payment on account.

[35]It was argued that the Claimant had expressly agreed to the regular submission of interim bills in that the terms of business of the Defendant expressly state that they reserve the right to deliver interim bills, either after a fixed period of time or when the value of time reaches a certain figure. Mr Stacey submitted that the words “interim bills” must mean interim statute bills for the following reasons: a) The language of the agreement contemplates bills rather than requests for an on account payment. b) Interest is payable on the unpaid amount of the bill. c) The provision that the firm can withdraw from its retainer if the Claimant did not pay an interim bill, or comply with a request for a payment on account. There is a clear distinction being drawn between an interim bill on the one hand and a payment on account on the other.

[36]In the alternative Mr Stacey submitted that the Claimant impliedly agreed that the Defendant could submit such bills. Specifically: a) The Claimant did not protest at the type of bills being proposed. b) Whilst he did not pay any one of the bills in full, he has not disputed his liability, agreeing as he did to the proposed reduction in fees charged on 21 February 2008, and by constantly requesting breakdowns of the rendered bills, none of which he actually contested, rather than disputing the entitlement to payment.

[37]Mr Stacey submitted that there were no special circumstances entitling the Claimant to challenge the bill. He argued that in this case, the Claimant received updated costs estimates on several occasions, on 12 February 2008, when a further estimate was provided for the Children’s Act proceedings alone. On 3 April 2008, the estimate for the ancillary proceedings was updated. On 15 July 2008, a further estimate was provided for the Children’s Act proceedings and on 4 November 2008, a revised estimate for the ancillary relief proceedings was given. He argued that the court should take into account a) the apparent acceptance of the Respondent’s right to payment over a long period. b) the fact that that Claimant referred in emails to the fact that he was doing all he good to ensure that the Defendant would be paid.

THE LAW

[38]The relevant law is: 39. Section 69 of Solicitors Act 1974 “69.(1) Subject to the provisions of this Act, no action shall be brought to recover any costs due to a solicitor before the expiration of one month from the date on which a bill of those costs is delivered in accordance with the requirements mentioned in subsection (2); but if there is probable cause for believing that the party chargeable with the costs – (a) is about to quit England and Wales, to become bankrupt or to compound with his creditors, or (b) is about to do any other act which would tend to prevent or delay the solicitor obtaining payment, the High Court may, notwithstanding that one month has not expired from the delivery of the bill, order that the solicitor be at liberty to commence an action to recover his costs and may order that those costs be taxed.

(2) The requirements referred to in subsection (1) are that the bill – (a) must be signed by the solicitor, or if the costs are due to a firm, by one of the partners of that firm, either in his own name or in the name of the firm, or be enclosed in, or accompanied by, a letter which is so signed and refers to the bill; and (b) must be delivered to the party to be charged with the bill, either personally or by being sent to him by post to, or left to him at, his place of business, dwelling house, or last known place of abode; and, where a bill is proved to have been delivered in compliance with those requirements, it shall not be necessary in the first place for the solicitor to prove the contents of the bill and it shall be presumed, until the contrary is shown, to be a bill bona fide complying with this Act.” 40. Section 70 of Solicitors Act 1974 “(3) Where an application under subsection (2) is made by the party chargeable with the bill. (a) at the expiration of twelve months from the delivery of the bill or (b) after a judgment has been obtained for the recovery of the costs covered by the bill or (c) after the bill has been paid but before the expiration of twelve months before the payment of the bill No order shall be made except in special circumstances and, if an order is made, it may contain such terms as regard the costs of the assessment as the court may think fit.”

DISCUSSION AND CONCLUSIONS

[39]In terms of the issues to be decided by me, it seems convenient to determine the issue of whether there was an express or implied agreement that interim statute bills could be served by the Defendant first.

[40]The terms and conditions of business refer to payment arrangements in the following terms; “It is normal practice to ask clients to pay sums of money from time to time on account of the charges and expenses which are expected in the following weeks and months … In the unlikely event of any bill or request for payment not being met; this firm must reserve the right to stop acting for you further. We reserve the right to deliver regular interim bills after a fixed period of time, or when the value of time reaches a certain figure … Payment is due to us within 30 days of our sending you a bill. Termination … If we decide to stop acting for you, for example, if you do not pay an interim bill or comply with the request for a payment on account, we would tell you the reason and give you notice in writing ...”

[41]I prefer the submissions of the Defendant to those of the Claimant in relation to whether there was an express agreement for the submission of interim statute bills by the Defendant to the Claimant. In my judgment, the terms of business state expressly that the Defendant reserves the right to deliver interim bills, either after a fixed period of time, or when the value of time reaches a certain figure. The reference in the terms and conditions to “interim bills” must, in my judgment, mean interim statute bills, for the following reasons. The language of the terms and conditions of business, which were signed by the Claimant, contemplates the word “bill” rather than an request for an on account payment. Secondly, interest can be charged upon the unpaid amount of the bill which, in my judgment, contemplates an interim statute bill. Interest can hardly be charged on a request for payment on account. Thirdly, the terms and conditions contemplate the provision that the Defendant can withdraw from its retainer if the Claimant did not “pay an interim bill or comply with a request for a payment on account”. A clear distinction is drawn between an interim bill on the one hand and a payment on account on the other. This was the conclusion reached by Mr Justice Keith in the case of R (on the application of Scott Halborg trading under the style of Halborg & Co Solicitors) –v- The Law Society

[2010] EWHC 38 (Admin)

at paragraph 23 where he said:

“On the other hand the right at which the firm reserved to charge interest on “interim invoices” as well as “final” accounts suggests that any “interim invoices” were intending to be interim statute bills, because interest can hardly be charged on requests for payment made on account. And particularly telling is the fact that the company also agreed that the firm could withdraw from its retainer if the company did not pay “a final interim bill or comply with [the firm’s] request for a payment on account”

. In this passage a distinction is being drawn between an “interim bill” and the “request for a payment on account”. The firm was reserving to itself the right to treat a failure to pay either type of bill as entitling it to treat its retainer as withdrawn. The reference in this context to an “interim bill” could only have been a reference to an interim statute bill, and the firm could only reserve the right to treat the failure to pay such a bill as entitling it to treat its retainer as withdrawn if the company had agreed to the firm submitting interim statute bills in the first place. That is why the company’s reservation of “the right to issue interim invoices” has to be construed as a right to issue interim statute bills.”

[42]If I am wrong in this regard, in my judgment the Claimant impliedly agreed that the Defendant could submit interim statute bills. Lord Esher MR in Romer –v- Haslam HE 93 CA 286 said:

“A great fact in the case for our consideration is the nature of the bill sent in and the way in which they were treated by the parties.”

In Davidsons –v- Jones –v- Fenleigh [1918] (124 Sol Jo 204 (CA)) Roskill LJ said:

“But before he is entitled to require that that bill to be treated as a complete self contained bill of costs to date, he must make it plain for the client, either expressly or by necessary implication, that that is his purpose for sending in that bill for that amount at that time. Then of course, one looks to see what the client’s reaction is.”

[43]Whilst the Claimant did not pay any one bill from the Defendant in full, he did not dispute his liability. Neither did he object to the type of bill that he was sent by the Defendant. When he was written to by the Defendants on 18 December 2007, he did not object to the proposal by Ms Thomson to render invoices to him on a monthly basis. In my judgment, this is consistent with the Defendant’s terms and conditions of business which entitled them to elect either to render an interim bill or to request a payment on account. Accordingly, for the reasons set out above, I am satisfied that there was either an express or implied agreement that interim statute bills could be served by the Defendant.

[44]Are the “invoices/statements” rendered by the Defendant to the Claimant interim statute bills or requests for payment on account? First it is necessary to show that the formalities of a bill have been complied with pursuant to Section 69 of the Solicitors Act 1974. It was not disputed by the Claimant that the requirements referred to in subsection (2) of Section 69 of the Solicitors Act 1974 were complied with in this case. Whilst there is no statutory definition of what an interim statute bill must contain, Chief Master Hurst in Civil Costs at paragraph 8-002 states that a bill:

“must be complete in itself and contain sufficient information to enable the client to obtain advice as to its assessment and for the Costs Judge to assess it.”

In Ralph Hume Garry (a firm) –v- Gwillim

[2002] EWCA Civ 1500

, Ward LJ at paragraph 70 said this: “This review of the legislation and the case law leads me to conclude that the burden on the client under Section 69(2) of the Solicitors Act 1974 to establish that a bill for a gross sum in contentious business will not be a bill (bona fide complying with this Act) is satisfied if the client shows: (i) that there is no sufficient narrative in the bill to identify what it is he is being charged for, and (ii) that he does not have sufficient knowledge from other documents in his possession or for what he is being told reasonably to take advice whether or not to apply for that bill to be taxed. The sufficiency of the narrative and the sufficiency of his knowledge will vary from case to case, and the more he knows, the less the bill may need to spell it out for him. The interest of justice required that the balance is struck between the protection of a client’s right to seek taxation and of the solicitor’s right to recover not being defeated by opportunistic resort to technicality.” (i) that there is no sufficient narrative in the bill to identify what it is he is being charged for, and (ii) that he does not have sufficient knowledge from other documents in his possession or for what he is being told reasonably to take advice whether or not to apply for that bill to be taxed.

[45]At paragraph 73 he said this:

“I add this postscript for the profession’s consideration so that an unseemly dispute of this kind does not happen again. Surely in 2002 every second of time spent, certainly on contentious business is recorded on the accounts department’s computer with the description of the fee earner, the rate of charging and some description of the work done. A copy of the print-out, adjusted as maybe necessary to remove items recorded for administrative purposes, but not chargeable to the client, could so easily be rendered and all the problems that have arisen here would be avoided. In these days where there seems to be a need for transparency in all things, is a print-out not the least a client is entitled to expect?”

[46]In relation to the formalities of the invoices/statements rendered by the Defendant to the Claimant are concerned, I prefer the submissions of the Defendant to those of the Claimant. In my judgment, the necessary formalities have been made out in relation to each and every Invoice/Statement rendered by the Defendants to the Claimant. They demonstrate that these were no mere requests for payment on account but were meant as interim statute bills. All the invoices/statements submitted by the Defendant to the Claimant make it clear in the form of a detailed narrative what work was done and for what the Claimant was being charged. More importantly in my judgment, the bills were for specific hours of work carried out over specific periods. In some cases, at the request of the Claimant, and in other cases of the Defendant’s own volition, the invoices/statements were provided with a detailed breakdown of the time spent split into different categories of fee earner, the number of letters written and telephone calls made, together with the time spent on documents and the appropriate rate of charge for the work that was carried out. Looking at the invoices/statements delivered by the Defendant to the Claimant, I have no hesitation in concluding that the twofold test in Ralph Hume Garry –v- Gwillim has been satisfied in this case.

[47]However, that is not the end of the matter. Although the invoices/statements in this case rendered by the Defendants to the Claimant comply with the formalities of an interim statute bill, in determining whether those invoices/statements amount to interim statute bills or request for payment on account, it must not be forgotten that the onus of showing that they are interim statute bills lies on the solicitor. In Winchester Commodities Group Ltd –v- R D Black & Co

[2000] BCC page 310

, John Martin QC (sitting as a Deputy

Judge of the High Court) said this:

“I have two points to make on the passages I have cited. Firstly, the requirement that the solicitor make it plain to the client that he intends the interim bill to be a statute bill and the imposition on him of the burden of proving that the client agreed to treat it as such, reflect what is in reality a presumption that interim bills are merely bills on account. There is good reason why that should be so. Both solicitor and client should be concentrating on the litigation which the solicitor has retained to conduct. Whilst both might well expect the solicitor to be entitled to payment from time to time while the work proceeded, it is unlikely that either of them will have intended that they should be constantly distracted and their relationship disrupted by the necessity to go to assessment on each disputed bill. On the fact of it, questions of what is properly due is to be expected to be left until the work is concluded.”

[48]I have not had the benefit of hearing oral evidence from the witnesses in this case and I have to decide any disputed issues of fact on the basis of the witness evidence of both the Claimant and Defendant.

[49]In paragraph 4 of his first witness statement, the Claimant makes it clear that he never regarded the invoices/statements as being anything other than interim statements of account. He had verbally been assured by Ms Thomson of the Defendant firm that “we would negotiate and agree a figure for costs at the end of my matters”. This contention is repeated by him in paragraph 7 of his first witness statement, where he states:

“I was never formally expressing my consent to the sums that I was being charged by virtue of my payments on account. To the contrary, I was expected to negotiate the costs and agree a figure at the conclusion of the litigation as I had agreed verbally with Ann Thomson. Applying hindsight, I appreciate that I should have asked Ann Thomson to record our agreement in writing, but in fairness I never expected the Respondent to claim that I would not be entitled to challenge the invoices/statements that were being sent to me periodically at the conclusion of the case.”

[50]That evidence is directly challenged by Ms Thomson in paragraph 28 of her witness statement where she points out that if the Claimant’s position was correct, there would have been little point in her rendering interim statute bills whilst the matter was ongoing. However, she was prepared to discuss the method of payment of the outstanding costs and to provide the Claimant with ample opportunity to facilitate payment. She simply does not accept the version stated by the Claimant to be true.

[51]The Claimant is not an inexperienced litigant. It is clear from the letter of 19 October 2007 that the Claimant has previously instructed a number of solicitors to deal with the matters for which he instructed the Defendants. He had disputed the costs of his previous solicitors and was therefore, in my judgment, keenly aware of cost issues that arose in the course of litigation.

[52]In Davidsons –v- Jones –v- Fenleigh [1981] (134 Sol Jo 204 CA) Roskill LJ said this:

“There is now no doubt, I venture to think, of what the law is. In a case such as the present. A solicitor is entitled to select a point of time which he regards as an appropriate point of time at which to send in a bill. But before he is entitled to require that bill to be treated as a completed self-contained bill of costs to date, he must make it plain to the client, either expressly or by necessary implication, that that is his purpose of sending in that bill for that amount at that time. Then, of course, one looks to see what the client’s reaction is.”

[53]On the facts of this case, the following matters are in my judgment are of significance. i) The letter of 18 December 2007 makes it plain that the Defendants are enclosing an invoice for the work done to date, and propose to render invoices on a monthly basis in the future. There is no suggestion that these are merely payments on account. ii) The bills of cost themselves, in addition to containing a detailed narrative, make specific reference to the Solicitors Act 1974 Section 70-72 in the event that the Claimant was dissatisfied that the charges rendered by the Defendant to him. iii) All the invoices/statements refer to interest being charged on any unpaid amount of the bill for one month after the date of the bill until payment. iv) There is no reference in the invoice/statements to a “payment on account” nor save for one invoice for which there was an agreed reduction were they in round figures, which might be expected in an on-account request for payment. v) The Claimants specifically agreed to the proposed reduction in the fees charged on 21 February 2008. vi) The Claimant requested detailed breakdowns of the invoices/statements which were supplied. He did not contest the breakdowns or dispute an entitlement to payment. vii) On 25 November 2009 the Claimant wrote to the Respondent stating that he “hoped that I can now apply for mortgages to let and clear all your bills, as well as my other debts”. viii) On 23 December 2009 the Claimant, in an email to the Defendant, accepted the figure of £70,000 requested, stating that “if it makes you feel better, I will bring the money to you in cash coins and we can both count the 700,000 pennies together”. ix) On 30 December 2009 the Claimant stated in an email to the Respondent that “perhaps it would be good if we meet up for a chat, I eshure [sic] you that I will soon pay your bill, because I need closure of all this too”.

[54]Taking into account all these factors, I prefer the evidence of Ms Thomson to that of the Claimant. I do not accept that there was ever an agreement between Ms Thomson and the Claimant that the Defendant firm would negotiate and agree a figure for costs at the end of the matter. In my judgment, the fact that the Claimant sought detailed breakdowns of a number of the invoices rendered to him, clearly demonstrates that he had read the invoices/statements, and he knew he had the right to have the costs assessed. In so far as there is an issue between the parties regarding the estimates of costs that were provided to the Claimant, I prefer the evidence of the Defendant to that of the Claimant. In my judgment on the basis of the detail contained in the invoices/statements supplied by the Defendant to the Claimant, little turns on the issue of the estimates of costs that were provided by the Defendant to the Claimant during the course of the litigation. In the circumstances, I am satisfied that the invoices/statements rendered by the Defendants to the Claimant were interim statute bills and not requests for payment on account.

[55]Having concluded that the invoices/statements rendered by the Defendant to the Claimant amount to interim statute bills, and that there was an express or implied agreement that interim statute bills could be served by the Defendant, the third preliminary issue to be determined is that despite the fact that more than twelve months has elapsed since the delivery of the bills, there are special circumstances which mean that the Claimant is entitled to assessment of the rendered bills.

[56]The law in this regard is clearly set out at Section 70(3) of the Solicitors Act 1974. There is no hard and fast rule as to what are special circumstances and each case must be considered on its own facts. Kennedy LJ in V Hirst & Cakes

[1908] 1 KB982

, at page 96 said this:

“It is now well settled that special circumstances are not confined to duress, pressure, overcharge, or fraud; and the discretion of a judge as to what facts constitute it its “special circumstances” ought not to be overruled accept where he has not exercised his discretion judicially.”

[57]It is common ground that all the invoices rendered by the Defendant to the Claimant which remain unpaid were over twelve months old when these proceedings were issued on 18 May 2010. In relation to the ancillary relief proceedings, the earliest invoice is dated 18 December 2007, the latest 29 April 2009. In respect of the Children’s Act proceedings, the earliest invoice is dated 18 December 2007, the latest 29 April 2009. Mr Michael Briggs QC, sitting as a Deputy Judge to the Chancery Division in the case of Arrowfield Services Ltd –v- B P Collins (a firm)

[2003] EWHC 830 (CH)

said this:

“It is also apparent from that authority and others, that the phrase “special circumstances” which Parliament has imposed as a condition at precedent to the power of the court order, a taxation or detailed assessment after twelve months had elapsed from delivery of the bill, it is not one at which the court should place any lost, or one which should be identified as lying within rigid categories. In this case the fact that there has been delay in commencing these proceedings is not a factor which I have greatly considered in relation to the question of special circumstance.”

[58]It was urged upon me on behalf of the Claimant that the failure to make clear the time limits permitted by Section 70 for assessment of a solicitor’s bill was in itself a special circumstance. I reject that argument on the basis that the Claimant did challenge some of the invoices/statements which were rendered to him. He sought breakdowns of those invoices/statements. In my judgment, he did not need to be advised. He had already read the invoice/statements and knew that he had a right to have the costs assessed. The fact that he chose not to query the detailed breakdowns as and when they were supplied to him does not in my judgment amount to a special circumstance in this case.

[59]In relation to the question of estimates, I prefer the evidence of Ms Thomson to that of the Claimant. I am satisfied that the Claimant received a number of updates of costs estimates in relation to both matters for which he had instructed the Defendants. In my judgment, the total of the invoices/statements rendered by the Defendant to the Claimant do not significantly differ from the estimates of cost with which he had been provided over a period of time by the Defendants in relation to these matters. Neither case was straightforward, and it could not have been contemplated by the Claimant that that the Defendants could possibly be held to their original estimate. I am satisfied that the facts of this case are distinguishable from those in the case of Nigel Adams –v- Ali Malick

[2003] EWHC 4

December 2003.

[60]In my judgment, the emails from the Claimant to which I was referred on 23 December 2009, 30 December 2009 and 14 January 2010, make it plain that the Claimant was doing all he could to ensure that the Defendant would be paid. The Claimant in this case took the opportunity to challenge the invoices/statements rendered by the Defendants. He did so by seeking a breakdown of those invoices/statements, and then did nothing further about the matter. Furthermore, I accept the evidence of the Defendant that that Claimant has been supplied with a cash account albeit shortly prior to the issue of these proceedings in March 2010. Looking at all the circumstances of this case, I prefer the submissions of the Defendant to those of the Claimant in regard to the issue of special circumstances. There are no special circumstances in this case.

[61]Accordingly, I dismiss the claim and order the Claimant to pay the Defendant’s costs to be assessed in the absence of agreement.

[62]In the event that costs cannot be agreed, I propose to summarily assess the costs in this claim and direct that the Defendant file and serve a schedule of their costs within 28 days of the handing down of this judgment. The Claimant shall within 14 days of service of the schedule, file and serve any Points of Dispute or Objections to the schedule. Either party shall have permission to seek an oral hearing in relation to the costs summarily assessed within 14 days of receipt of my order.