Richard Slade And Company Solicitors v Boodia & Anor [2017] EWHC 2699 (QB)

[2017] EWHC 2699 (QB)Case No QB/2017/0126Case No JJ1606313IN THE HIGH COURT OF JUSTICEQUEEN'S BENCH DIVISIONON APPEAL FROMTHE SENIOR COURTS COSTS OFFICEMaster JamesVenue Royal Courts of Justice, Strand, London, WC2A 2LLDate 31/10/2017
Before
MRS JUSTICE SLADE DBE
Between
RICHARD SLADE AND COMPANY SOLICITORSAppellant/DefendantMR JUGMOHAN BOODIARespondents/ClaimantsMRS DEORANEE BOODIARespondent
Mr Bacon QC (instructed by Richard Slade and Company Solicitors) for Appellant/DefendantMr Dunne (instructed by W Davies Solicitors) for Respondents/ClaimantsHearing Hearing date: 11 th July 2017
Judgment ApprovedMRS JUSTICE SLADE :
[1]Richard Slade and Company Solicitors (‘the Defendant’) appeals from the decision of Master James dated 17 March 2017 on a preliminary issue in a claim by Mr and Mrs Boodia (‘the Claimants’) for assessment of invoices submitted by their solicitor, the Defendant. By a retainer entered into on 30 January 2013 the Claimants engaged the Defendant to act for them in litigation concerning a right of way. The Defendant submitted 61 bills to the Claimants; 43 for solicitor’s fees only and 18 for disbursements only. The Claimants terminated the retainer with the Defendant and instructed other solicitors in November 2016. The Claimants failed to pay the Defendant’s final four invoices in the sum of £26,041.38. By a claim form dated 17 November 2016 the Claimants sought assessment of all 61 invoices pursuant to Solicitors Act 1974 (‘the Act’) Section 70(1). The Defendant contended that those invoices which were rendered more than one year before 17 November 2016 could not be assessed pursuant to Section 70 of the Act as each such invoice was a statute bill and the time for the Claimant to make an application in respect of each such bill ran from the date of the bill and had expired.[2]Master James ordered that there be a hearing to determine whether:
“by virtue of them being final for the period covered by them only insofar as they relate to profit costs, the bills raised by the Defendant to the Claimants as set out in the claim form constitute interim statute bills under Part III of the Solicitors Act 1974, and if they are not such interim statute bills whether they are capable of being treated as a series of on account bills culminating in a statute bill, dated as per the last in the series.”
[3]The question of whether the retainer permitted the rendering of interim statute bills was an issue before Master James. By paragraph 2 of her judgment, the Master recognised that the agreement in the retainer was ‘somewhat ambiguous between payments on account monthly and [statute] bills monthly’. She noted that the retainer referred to a Solicitors Act assessment and a complaints procedure. Master James held that she ‘would be reluctant to make a finding of a fatal flaw in the retainer’. The Master held ‘it does seem to me that the retainer does what it needs to do or has potential to do what it needs to do’. The Claimants’ point had been that the retainer did not provide for interim statute bills. This argument was rejected. The Master went on to observe at paragraph 3 ‘The Claimants’ second point, however, is a much stronger point…’.[4]The second point raised by the Claimants was that the 61 invoices were not interim statute bills. None of them included both a charge for profit costs and for disbursements. Master James observed that in this case the Defendant was raising what he thought were interim statute bills with separate bills at later dates for disbursements. The Claimants contended that a bill which does not include all liabilities for the period it covers is not a final bill for that period. The bills rendered by the Defendant were not final bills for the period which they covered because not all costs were included in them.[5]Master James held that ‘costs’ which are the subject of interim statutory bills include fees, disbursements and expenses. In so concluding the Master referred to the definition of ‘costs’ in the CPR but observed ‘a lot of concepts have been codified into the White Book but they existed for years before that.’ The Master accepted the contention on behalf of the Claimants that to be a bill of costs within the meaning of the Solicitors Act 1974 Section 70, the bill must include both profit costs and disbursements for the period covered by the bill. As the individual 61 bills did not contain both profit costs and disbursements for the period they covered, Master James held that they were not interim statute bills.[6]As a fall back position both parties invited Master James to find that there was a Chamberlain Bill (Chamberlain v Boodle King [1982] 3 AER 188). The Master accepted the submission of the Claimants that the bills were delivered as part of a running account in respect of one piece of work and that the time for the clients to request assessment ran from the date of delivery of the final bill. The Master agreed with the Claimants’ position that finding a series of interim statute bills at the points at which the disbursements were final was too difficult. The amount of costs due in respect of a particular period would be too difficult to calculate.

The relevant statutory provisions

[7]Solicitors Act 1974: “67. Inclusion of disbursements in bill of costs. A solicitor's bill of costs may include costs payable in discharge of a liability properly incurred by him on behalf of the party to be charged with the bill (including counsel's fees) notwithstanding that those costs have not been paid before the delivery of the bill to that party; but those costs—(a) shall be described in the bill as not then paid; and(b) if the bill is [assessed], shall not be allowed by the [costs officer] unless they are paid before the [assessment] is completed.” “69.— Action to recover solicitor's costs. (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 [assessed]. (2) The requirements referred to in subsection (1) are that the bill must be– … (2F) A bill which is delivered as mentioned in subsection (2C)(c) is to be treated as having been delivered on the first working day after the day on which it was sent (unless the contrary is proved).” “70.— [Assessment] 1 on application of party chargeable or solicitor. (1) Where before the expiration of one month from the delivery of a solicitor's bill an application is made by the party chargeable with the bill, the High Court shall, without requiring any sum to be paid into court, order that the bill be [assessed] and that no action be commenced on the bill until the [assessment] is completed. (2) Where no such application is made before the expiration of the period mentioned in subsection (1), then, on an application being made by the solicitor or, subject to subsections (3) and (4), by the party chargeable with the bill, the court may on such terms, if any, as it thinks fit (not being terms as to the costs of the [assessment]), order— (a) that the bill be [assessed]; and (b) that no action be commenced on the bill, and that any action already commenced be stayed, until the [assessment] is completed. (3) Where an application under subsection (2) is made by the party chargeable with the bill— (a) after the expiration of 12 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 12 months from 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 regards the costs of the [assessment] as the court may think fit. (4) The power to order [assessment] conferred by subsection (2) shall not be exercisable on an application made by the party chargeable with the bill after the expiration of 12 months from the payment of the bill. (5) An order for the [assessment] of a bill made on an application under this section by the party chargeable with the bill shall, if he so requests, be an order for the [assessment] of the profit costs covered by the bill. (6) Subject to subsection (5), the court may under this section order the [assessment] of all the costs, or of the profit costs, or of the costs other than profit costs and, where part of the costs is not to be [assessed], may allow an action to be commenced or to be continued for that part of the costs. … (12) In this section “profit costs” means costs other than counsel's fees or costs paid or payable in the discharge of a liability incurred by the solicitor on behalf of the party chargeable, and the reference in subsection (9) to the fraction of the amount [of the reduction in the bill] shall be taken, where the [assessment] concerns only part of the costs covered by the bill, as a reference to that fraction of the amount of those costs which is being [assessed].” (a) that the bill be [assessed]; and (b) that no action be commenced on the bill, and that any action already commenced be stayed, until the [assessment] is completed. (a) after the expiration of 12 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 12 months from the payment of the bill, The Grounds of Appeal Ground 1

The Grounds of Appeal

[8]By Ground 1 it was contended that:
“The Master wrongly held that the terms of retainer were ‘somewhat ambiguous’ and that there was no entitlement on the part of the Appellant to render interim statute bills. The terms of the retainer were clear; there was an express agreed term permitting the Appellant to deliver interim statute bills whether or not disbursements were incurred were capable of being billed at that point or not.”
[9]The retainer signed on 30 January 2013 contained the following provision:
“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.”

The Submissions of the parties

[10]Mr Bacon QC for the Defendant drew attention to the statement at the foot of the invoices for profit costs:
“Assessment: The Client may be entitled to have the charges on this bill assessed by the Court in accordance with the provisions set out in Sections 70, 71 and 72 of the Solicitors Act 1974.”
[11]Both Mr Bacon QC and Mr Dunne for the Claimants relied upon the judgment of Spencer J in Bari v Rosen (t/a RA Rosen and Co Solicitors) [2012] 5 Costs LR 851. Mr Bacon QC submitted that the contract in the retainer was clear. The Defendant was entitled to issue interim statue bills. They did so. Time to request assessment by the Court ran from the delivery of each of the bills of profit costs and separately from delivery of each of the disbursement bills. In paragraph 16 of Bari Spencer J held that interim statute bills issued during the currency of a retainer can arise in only two ways: by agreement or by natural break. Mr Bacon QC contended that in this case there was a clear contractual entitlement to issue interim statute bills. The Defendant informed the Claimants that they had a right to ask the Court for an assessment of the bills under the Solicitors Act 1974.[12]Mr Bacon QC contended that the bills rendered by the Defendant were statute bills as the Solicitors Act 1974 does not require that such bills include both profit and costs and disbursements. A bill for profit costs or disbursements alone can each be bills of those costs within Section 69. Counsel relied upon Section 67 which provides that a solicitor’s bill of costs ‘may include costs payable in discharge of a liability properly incurred… notwithstanding that those costs have not been paid before delivery of the bill…’, to submit that the Act regards a bill which does not include disbursements for the period as a bill falling within the provisions of Sections 69 and 70.[13]Counsel drew attention to the judgment of the Court of Appeal in Ralph Hume Gary v Gwillim [2002] EWCA Civ 1500 in which the firm’s terms of business provided that bills were to be submitted on a monthly basis as in this case, and would take the form of a final account for all work done during the relevant period. Mr Bacon QC also drew attention to paragraph 7 of Gwillim in which it was stated that the last two bills were for disbursements only. Mr Bacon QC acknowledged that Gwillim was decided not on the basis that monthly bills or disbursement bills could not be interim statute bills but on whether there was sufficient narrative on the bills to comply with the requirements of the Act.[14]Mr Bacon QC submitted that the retainer in this case provided for the submission of monthly interim statute bills and that there is no statutory requirement that such bills include both disbursements and profit costs. It was said that Master James erred in failing to hold that the bills rendered were in compliance with the agreement and were interim statute bills.[15]Mr Dunne for the Claimants pointed out that Master James did not find that there was no entitlement in the retainer for the Defendant to render interim statute bills. I agree. The Master rejected the Claimants’ argument that the retainer did not provide for the rendering of interim statute bills. The Master considered whether the bills rendered were bills within the scope of the Solicitors Act 1974 Sections 69 and 70 and so within the terms of the agreement between the parties.[16]Mr Dunne pointed out that there was nothing in the disbursements bills to show what time period they covered. In accordance with the judgment of Spencer J in Bari v Rosen at paragraph 2, bills issued pursuant to an agreement for interim statute bills must be ‘complete self-contained bills of costs to date’ to be regarded as statute bills. The schedule of invoices produced by the Defendant shows invoices for profit costs produced monthly but invoices for counsel’s fees and disbursements produced sporadically with no indication of the period of time to which they relate. Further, for example, a bill for disbursements in March 2013 was only rendered in November 2013. The March profit costs bill could not be said to be a complete and self-contained bill for costs to date. Accordingly it was submitted that the bills rendered were not complete self-contained bills of costs to date. They were therefore not statute bills and the time for applying for assessment by the Court did not start to run until the rendering of the final bill.[17]Mr Dunne submitted that a key feature of a statute bill is that once it is rendered it cannot be altered. Finality is one of the requirements of a statute bill. It must be complete and self-contained. Fulford J (as he then was) held in Adams v Al Malik [2014] 6 Costs LR 985 paragraph 48 that the client must know what rights are being negotiated and dispensed with and that to be a statute bill it must be a complete self-contained bill of costs to date. Fulford J referenced the judgment of Roskill LJ in Davidsons v Jones-Fenleigh [1980] 124 SJ 204. This requirement was repeated by Walker J in paragraph 11 of Dr Zoe Vlamaki v Sookias & Sookias [2015] EWHC 3334. This is as much a requirement for interim statute bills as it is for final statute bills.[18]Mr Dunne submitted that the reason for the requirement that a final or interim bill sets out the entirety of the costs for the period covered by the bill was referred to by Master Gordon-Saker in Dr Rahimian and another v Allan Janes LLP [2016] EWHC B18 (Costs). The Master said at paragraph 30 that the bill must contain sufficient information to enable the client to obtain advice as to the detailed assessment. Counsel posed the question:
‘Can a client look at the bill and know whether to challenge it?’
. It was submitted that it was not possible to do so when the bill is a partial bill. Mr Dunne gave the example of a bill setting out solicitor’s charges for pleadings. The client pays the bill. One year later a bill is submitted containing counsel’s fees for the drafting. The only power to open up the first bill after a lapse of twelve months, would be if special circumstances were established.[19]Mr Dunne did not agree with the submission of Mr Bacon QC that it may not be possible to submit a bill for disbursements for the same period and included in a bill with profit costs. Counsel submitted that Mr Bacon QC’s reliance on Section 67 was misplaced. Section 67 does not state that a solicitor’s bill of costs need not include disbursements. The section provides that where a liability for disbursements has been incurred but they have not yet been paid, the costs properly incurred may be included in the solicitor’s bill of costs as long as the costs are described in the bill as not then paid.

Discussion and Conclusion

[20]None of the bills put before the Master included charges both for profit costs and disbursements. The retainer expressly provides that the bills for the solicitor’s work are rendered monthly in arrears. The schedule of bills reflects this agreement. Bills for the Defendant’s profit costs were rendered monthly. The retainer expressly provided that disbursements are billed separately and later than the bill for the Defendant’s fees in respect of the same period. The agreement drafted by the Defendant therefore provides that the monthly bills for their profit costs will not contain all the charges the Claimants will be asked to pay for the same period.[21]The success of Ground 1 of the appeal depends upon whether Master James erred in deciding that to constitute a bill of costs within Solicitors Act 1974 the bill must include both profit costs and disbursements in respect of the period which it covers.[22]A solicitor may render a bill and the client may pay that bill without it constituting a statute bill. A bill falling within the Solicitors Act 1974 has a particular meaning and consequences. Pursuant to Section 69, subject to the provisions of the Act, no action can be brought to recover any costs due to a solicitor before the expiry of one month of the date on which a bill of those costs is delivered. Section 64 provides that a bill of costs for contentions business must either contain detailed items or if it does not a solicitor must specify those items. The issue before the Court in Gwillim was whether the bills in that case complied with Section 64. Lord Justice Ward explained at paragraph 4 that Mr Gwillim, the client, contended that the solicitor was not entitled to sue on the fee notes rendered because they failed to comply with strict requirements of the Solicitors Act. Mr Gwillim contended that the bills were defective because they failed to give an adequate description of the work done to justify the fees charged. The Court of Appeal held that the bills were compliant with Section 64 and therefore the solicitor was entitled by reason of Section 69 to take proceedings against the client to recover his costs.[23]It is the bill of costs which satisfies section 64 and which is delivered in accordance with Section 69 which the client may apply for assessment by the Court under Section 70. Time for applying for assessment by the Court expires one month after the date of delivery of the solicitor’s bill.[24]The issue rightly addressed by counsel in considering Ground 1 of the appeal as well as Ground 2 was whether in order to qualify as bills within the meaning of Section 70 of the Solicitors Act 1974 they must include both profit costs and, where paid or payable, expenses and disbursements in respect of the period to which the bill relates.[25]Both counsel referred to the substantial body of authority which establishes that in order to be a statute bill, whether interim or final, it must be complete, self-contained and final in relation to costs to date.[26]The concept of a ‘statute bill’ refers to a bill prepared in accordance with Section 64, delivered in accordance with Section 69 in respect of which there is a statutory entitlement of the client to seek assessment by the Court under Section 70. Whether a bill is a ‘statute bill’ must therefore be determined in accordance with the relevant statutory provisions, explained by authority where relevant.[27]Mr Bacon QC contended that a statute bill did not have to contain disbursements; Mr Dunne, that it did.[28]The following statutory provisions are relevant to the determination of whether a statutory bill of costs must include disbursements where incurred. Section 67 permits the inclusion of liability for disbursements in a statute bill even though these have not been paid. I do not accept Mr Bacon QC’s construction of that provision. It does not state that disbursements are not costs or that they need not be included in a statute bill. On the contrary, such payments, including counsel’s fees are described as ‘those costs’. The section clearly indicates that disbursements are regarded as costs for the purposes of statute bills. Further, Section 67 does not render inclusion of disbursements in a statute bill optional. It provides that liability for those costs which have not yet been paid by the solicitor but incurred by him may be included in a statute bill.[29]The provisions of Section 70 show that costs which are the subject of a statute bill include both profit costs and, where incurred, disbursements. Section 70(6) provides for an assessment of all the costs, or of the profit costs or of the costs other than profit costs. Both profit costs and costs other than profit costs which include disbursements are therefore included in costs for the purpose of Section 70.[30]Whilst I bear in mind the authorities referred to by counsel in their submissions, both oral and in their skeleton arguments, in my judgment the principles relevant to determining whether the invoices rendered by the Defendant are statute bills are clearly summarised by Spencer J in Bari. I adopt them with gratitude. Those principles are that:
“15. …a solicitor may contract with his client for the right to issue statute bills from time to time during the currency of the retainer. Such bills are known as “interim statute bills”
. They are nevertheless final bills in respect of the work they cover, in that there can be no subsequent adjustment in the light of the outcome of the business. They are complete self-contained bills of costs to date.” “17. Even if there was a contractual right to issue interim statute bills, it would be a question of fact whether any individual bill issued to the client was a statute bill. If there was no contractual entitlement to issue an interim statute bill, any interim bill issued could be no more than a request for payment on account.”[31]In its terms the agreement between the parties expressly provides that the monthly bills of the solicitor’s profit costs are final in respect of the period to which they relate but they do not contain all charges the client will have to pay. A separate bill will be rendered later for disbursements in respect of the same period.[32]In my judgment Master James could have but did not find that the retainer did not provide for delivery of interim statute bills. The bills, the subject of agreement between the parties were not to be ‘complete self-contained bills of costs to date’. There were to be separate bills rendered at different times for profit costs and disbursements. There can be no subsequent adjustment of costs claimed in a statute bill in respect of the period to which they relate. The finality referred to in the agreement relates only to the solicitor’s profit costs not to the totality of the costs incurred or payable in respect of the period of the bill.[33]The period within which a client can seek an assessment of costs runs from delivery of the bill. On the facts of this case none of the bills contained both profit costs and disbursements. On the Defendant’s argument time for applying for an assessment of the bills runs from the date of delivery of each monthly profit costs bill. The Court would be asked to make an assessment without knowing what disbursements had been paid or were liable to be paid by the solicitor in respect of the same period. In my judgment such an exercise would be contrary to the provisions of Section 70 which by Section 70(5) give the Court not the parties a discretion to order separate assessments of profit costs or other costs within a bill. Further, as Mr Dunne submitted, to undertake an assessment of profit costs without knowing what disbursements were for the same period may deprive the client the information on which to decide whether to challenge the profit costs bill for, for example, duplication of work by solicitor and counsel.[34]Master James did not hold that the terms of the retainer did not entitle the Defendant to render interim statute bills as asserted in Appeal Ground 1. The Master did not err in holding that the bills rendered by the Defendant were not statute bills.[35]Appeal Ground 1 is dismissed.

Ground 2

[36]By Ground 2 it was contended that:
“The Master wrongly concluded that the definition of ‘costs’ at CPR Rule 44.1 was of assistance in construing the scope of an ‘interim statute bill’.”

The submissions of the parties

[37]Mr Bacon QC contended in his skeleton argument that Master James erred in relying on CPR 44 to construe ‘costs’ for the purposes of determining what costs were to be included in an interim statute bill under the Solicitors Act 1974. He submitted that the CPR is a self-contained statutory code and the definitions are not intended to have a wider application. Counsel pointed out that the concept of interim statute bills was recognised as far back as Re Romer & Haslam [1893] 2 QB 286 decided well before the CPR. Counsel drew attention to the transcript of the proceedings before Master James in which at page 33 line 7 Mr West, acting for the Defendant, made a similar submission. Further it was submitted by Mr Bacon QC that in this case the retainer provided for separate fee and disbursement invoices. Accordingly only one or other of those would be regarded as costs for a particular bill.[38]Mr Dunne submitted that Master James was entitled to consider what the definition of ‘costs’ in CPR 44.1 included. It was a factor which the Master took into account but she did not treat it as determinative.

Discussion and conclusion

[39]Master James observed in paragraph 5 of her judgment that the issue of what costs are to be included to constitute a statutory bill had not arisen in previous authorities. She observed that there was no case directly in point. The Master referred to the CPR definition of costs however she did not treat it as determinative. Further, for reasons set out in considering Ground 1, in my judgment the Master did not err in concluding that costs for the purposes of a statutory bill of costs in the Solicitors Act 1974 included disbursements where they are incurred.[40]Appeal Ground 2 is dismissed.

Ground 3

[41]By Ground 3 it is contended:
“The Master gave insufficient weight to the decision of Costs Master Brown in Irvine v Slade & Colman Coyle, a previous authority on the interpretation of the Appellant’s retainer.”

The submissions of the Defendant and conclusion

[42]Mr Bacon QC sensibly recognised that Ground 3 was not his strongest ground of appeal.[43]The issue before Master Brown in Irvine was whether the Claimant’s claims in respect of bills had been compromised in a Deed of Settlement. Master Brown held at paragraph 51 that they had been compromised. The observations of Master Brown at paragraph 52 that if it had been necessary to do so he would have held the invoices rendered to be statute bills and that the retainer in that case plainly provided for the delivery of interim statute bills were obiter. They were not binding on Master James. The Master considered the evidence before her and the relevant issues in this case.[44]Ground 3 is dismissed.

Ground 4

[45]By Ground 4 it is contended that:
“The Master wrongly gave no weight (or, alternatively insufficient weight) to the Appellant’s submissions as to the effect of her decision.”

Submissions of the parties

[46]Mr Bacon QC contended that the decision of the Master not to treat the interim profit costs bills as statute bills disregarded current practice. Further it was submitted that there is no requirement for a solicitor to include disbursements which have not yet been billed in a statute bill. The underlying contention was that whereas the solicitor’s profit costs could be billed at regular intervals relating to that period, counsel’s fees may be incurred for work in a certain period but not billed until after that period. Such fees would not fall within Section 67 before counsel’s invoice had been rendered. Mr Bacon QC advanced a similar argument in relation to expert witnesses. Experts may be instructed to carry out work in a certain period but not render their invoices until after that period.[47]It was submitted on behalf of the Defendant that it would be confusing for a client to be sent a bill which included both profit costs for a period up to the date of the bill and disbursements for work carried out in an earlier period. Mr Bacon QC submitted that it would be clearer for the client if they were sent two sets of bills, one for profit costs and one for disbursements when paid or billed.[48]Mr Bacon QC pointed out that the Defendant rendered bills in accordance with the agreement between the parties. Bills for profit costs were rendered monthly in arrears and disbursements billed separately and later than the bills in respect of the same period. The Claimant was informed that the bills were final in respect of the period to which they relate. Mr Bacon QC contended that no unfairness would result from allowing separate interim statute bills for fee and disbursements. The client would know in relation to each that they were final and could be challenged. There was no requirement that the bill for fees should be in the same document as the bill for disbursements.[49]Counsel submitted that the answer given by the Master to the concern of the Defendant, which she acknowledged as legitimate, that a solicitor cannot take proceedings on non-statute bills, was unrealistic. It was not realistic to comment that the Defendant could instruct counsel and experts on condition that they render invoices at the start of their instruction. Further, it was submitted that a retainer providing for interim bills described as final in respect of the period to which they relate and then for a bill when work had been completed, as illustrated by the decision of Mr Justice Walker in Dr Vlamaki v Sookias & Sookias [2015] EWHC 3334, carried the risk that the interim bills would not be held to be interim statute bills.[50]Mr Bacon QC submitted that no unfairness to the Claimant would result from allowing separate interim bills for fees and disbursements. Whilst the apparent reasonableness of work done by the Defendant may be affected by a later disbursement, this could also be true of a further interim bill for profit costs for work done in the next month.[51]Accordingly, it was submitted on behalf of the Defendant that the answers given by Master James in paragraph 7 of the judgment to the practical difficulties of holding that the bills rendered were not interim statute bills gave the arguments advanced inadequate consideration.[52]Mr Dunne did not agree with Mr Bacon QC that it was impossible to provide a bill for disbursements at the same time as a bill for profit costs. Payments on account can deal with cash flow. Interim statute bills can be raised at convenient agreed intervals. The only potentially practical difficulty would be in a CFA case. Until the outcome of the case was known the client’s liability for costs could not be determined. However, where a decision was to be made between an interpretation that caused inconvenience to a solicitor and one which caused prejudice to a client, the client’s interests prevail.

Discussion and conclusion

[53]The question of whether the 61 bills rendered by the Defendant are interim statute bills depends upon the application of the Solicitors Act 1974 as explained in any relevant authorities to the facts of the case. The law has developed since the decision in the Court of Appeal in Haslam in 1893 in which it was held that statute bills can be rendered at the conclusion of stages in proceedings. Now it is accepted that if there is a contractual right to render interim statute bills they can be produced at agreed intervals of time which do not necessarily correspond with the conclusion of stages in proceedings. Both counsel agree that the observation of Spencer J in Bari at paragraph 15 that interim statute bills are ‘complete self-contained bills of costs to date’ is to be applied. For the reasons explained in dealing with Ground 1 of the Appeal, in context the term ‘bill’ in Section 70 includes disbursements. The application of the principle explained in Bari leads to a requirement that to constitute a statute bill it must contain all costs relating to a defined period.[54]Master James recognised in paragraph 7 of her judgment the practical difficulties of obtaining and including disbursements such as fees for counsel and experts to coincide with the period in time to which a solicitor’s fees relate. The Master recognised that her answer that interim non-statute bills could be rendered carried the disadvantage that by reason of Section 69 their payment cannot be enforced by taking proceedings.[55]As Mr Dunne submitted the practical difficulty which may have arisen in this case in producing bills which contain both profit costs and disbursements in respect of the same period may be overcome by rendering bills at greater intervals than monthly. As for concerns about cash flow in meeting disbursements, Section 67 provides that a statutory bill may include disbursement bills rendered to the solicitor but not yet paid.[56]Master James did not fail to consider the submissions advanced on behalf of the Defendant as to the effect of deciding that a statute bill must include all costs including disbursements for a defined period. The Master was bound by statute as explained in authority to hold that an interim statute bill must contain a bill of all costs including profit costs and disbursements in respect of agreed periods of time. Any practical difficulties which this requirement may cause to the solicitor are outweighed by the certainty given to the client, safeguarded by statute and authority, of knowing the total amount of costs they are being asked to pay. The client needs to know the total costs incurred over a certain period to enable them to form an evidenced based view of whether to exercise their right under Section 70 to challenge the bill. The right of a client to apply for assessment under Section 70 is time limited. After expiry of the specified time limit that right is lost as is asserted by the Defendant in respect of the majority of bills in this case. The treatment of incomplete bills of costs as statutory bills could lead to a multiplicity of applications under Section 70 merely to preserve the client’s right to apply for assessment. Although this may be unlikely in continuing litigation where client and solicitor are enjoying good relations, it may be otherwise when those relations have become less amicable.[57]The Master did not err in failing to hold that any practical difficulties caused by holding that an interim bill which did not include all costs to date was not an interim statute bill outweighed the requirements of the statute and authority.[58]Ground 4 is dismissed.

Ground 5

[59]By Ground 5 it is contended that:
“The Master wrongly rejected the Appellant’s alternative argument that finding a series of interim statute bills at the points at which the disbursement and fee invoices coincided would have been ‘too difficult’. This is not a valid legal basis for refusing to accede to this argument.”

Submissions of the parties

[60]Mr Bacon QC advanced an alternative argument that if the 61 bills were not individually interim statute bills they should be construed as a series of interim statute bills at the points when the disbursements and fee invoices coincided. As an example Mr Bacon QC referred to the Defendant’s first two fee invoices and first disbursement invoice which he submitted covered the same period. It was said that by analogy with the reasoning of Lord Denning MR in Chamberlain v Boodle & King [1982] 3 AER 188 it was open to Master James to find that these three invoices amounted to one statute bill divided into parts. It was said that the same exercise could have been carried out for other groups of invoices. This would have resulted in twelve Chamberlain style statute bills on the date of each of the disbursement invoices.[61]Counsel for the Defendant contended that by the date of receipt of the bill for disbursements the Claimant would know the totality of costs claimed up to that date. Applying the decision in Chamberlain this was one bill for that period.[62]Mr Bacon QC contended that Master James erred in holding in paragraph 8 that finding a series of interim statute bills at the points at which disbursements were final was too difficult. The Master was wrong to hold that the Claimant would find it hard to calculate the sum which was the subject of .the statute bill.[63]Mr Dunne submitted that Master James was right to reject the Defendant’s argument that groups of their bills could be regarded as interim Chamberlain bills. This was not a concept adopted in the Chamberlain judgment. The Master was right to hold that a lay client would be unable to determine when the interim statute bill had been delivered triggering the time within which an application for assessment of costs would have to be made.[64]Mr Dunne referred to the judgment of Fulford J (as he then was) in Adams v Al Malik [2014] 6 Costs LR 985 in which he held that the solicitor must make it plain to the client that a particular bill is to be treated as a complete self-contained bill of costs to date. Grouping bills in the way suggested by Mr Bacon QC did not respect this principle. Mr Dunne also referred to similar observations made by Walker J in Vlamaki at paragraph 11.[65]Mr Dunne submitted that the test to be applied is ‘Can a client look at a bill and decide whether to challenge it?’. It is impossible to do so when one has a partial bill. In this regard Mr Dunne submitted as he had in resisting other grounds of appeal, that if a solicitor charges for drafting pleadings and his bill is paid but one year later a bill for counsel’s fees for drafting the same pleadings is submitted, the client would not know whether and when to challenge the bills. Further, if the interim Chamberlain approach were adopted, the status of earlier bills would not be statutory until the disbursements bills were presented. The presentation of that bill would unravel the status of earlier bills. The approach advocated by Mr Bacon QC would render the status of the earlier profit costs bills uncertain. It is no answer to state on profit costs bills that the statute bill will include in addition future claims for disbursements.

Discussion and conclusion

[66]The approach in Haslam was that interim statute bills can be rendered at the conclusion of a definite and distinct part of legal proceedings. The issue before the Court of Appeal in Chamberlain was whether four bills were each to be treated separately, each relating to a natural break in the work done, or whether they should be regarded as part of the running account. The Court of Appeal agreed with the judge that the bills were to be regarded as one bill in respect of one complete piece of work. The statute bill was therefore complete when the last bill in the series was presented.[67]The bills in Chamberlain and Haslam are examples of interim statute bills at natural breaks in the work or proceedings. As explained in Bari, interim statute bills can also be rendered if the agreement between the parties provides for such bills. In this case the agreement between the parties sought to provide that the profit costs bills which were rendered monthly were final in respect of the period to which they relate save that disbursements are normally billed separately and later. The retainer does not evidence an agreement between the parties that monthly profit costs bills will become and be incorporated in a statute bill with and when a bill for disbursements is presented. The argument raised in Ground 5 of the appeal is based upon bills which are not presented at natural breaks in the work or proceedings, the Haslam and Chamberlain approach, or at intervals agreed between the parties.[68]The argument advanced on Ground 5 infringes the principle set out by Fulford J in Adams at paragraph 48 that:
“…the party must know what rights are being negotiated and dispensed with in the sense that the solicitor must make it plain to the client that the purpose of sending the bill at that time is that it is to be treated as a complete self-contained bill of costs to date (see the judgment of Roskill LJ in Davidson v Jones-Fenleigh [1980] 124 SJ 204).”
In this case, neither the agreement between the parties nor the disbursements bills informed the Claimant that those bills were to incorporate all or any previous profit costs bills and together with them were to be treated as interim statute bills. The Master was right to conclude that it would be extremely difficult for the Claimant to know what was and what was not included in an interim statute bill composed as the Defendant contended of some profit costs bills ending with a disbursement bill. The difficulty in applying such an approach is illustrated by the first three invoices relied upon by Mr Bacon QC as constituting a composite Chamberlain style interim statute bill. The two profit costs bills cover a period from 22 January to 21 February 2013. The third disbursements bill covers a different period. It is for services rendered on 19 March 2013.[69]Master James did not err in rejecting the Defendant’s alternative argument that a series of interim bills had been served each one at points when disbursements and fee invoices coincided.[70]Ground 5 is dismissed.

Disposal

[71]The appeal is dismissed.

Cited in 5 later judgments