Eurasian Natural Resources Corporation Ltd v Dechert LLP

JurisdictionEngland & Wales
CourtSenior Court Costs Office
JudgeMaster Rowley
Judgment Date27 January 2017
Neutral Citation[2017] EWHC B4 (Costs)
Docket NumberCase No: JR 1305434

[2017] EWHC B4 (Costs)




Thomas More Building

Royal Courts of Justice

London, WC2A 2LL


Master Rowley

Case No: JR 1305434

Eurasian Natural Resources Corporation Limited
Dechert LLP

Benjamin Williams QC and Saaman Pourghadiri (instructed by Signature Litigation LLP) for the Claimant

Simon Browne QC and Mersedeh Safa (instructed by Clyde & Co LLP) for the Defendant

Hearing dates: 2 and 3 November 2016

Judgment Approved

Master Rowley

In accordance with the Court of Appeal's decision in this matter [2016] EWCA Civ 375 upholding Roth J's Order, these proceedings are held in private. However, and also in accordance with the Court of Appeal's decision, this is a public judgment and, as can be seen from the final paragraph of it, the parties have been given an opportunity to comment upon it in draft before it has been formally handed down. As a result, there have been some redactions to the draft.


Non-parties may not inspect or obtain any document from the court file without the permission of the court and this restriction extends to documents to which I have referred to in this judgment. The fact that this is a public judgment does not alter that position. Should any non-party wish to inspect any document, the parties will be given an opportunity to be heard on any such application.


The claimant company has applied for the detailed assessment of fifteen invoices rendered to it by the defendant during a period of approximately six months in 2012. The defendant was instructed by the claimant following the claimant's receipt of a whistleblower's report in relation to a subsidiary company in Kazakhstan. The defendant was instructed to investigate matters in Kazakhstan and to produce a report for the purpose of "self-reporting" to the Serious Fraud Office. The effect of that self-reporting would, depending upon the contents of the report, potentially save the claimant from a criminal prosecution. The work undertaken by the defendant expanded to include the claimant's activities in parts of Africa. A formal report was produced in relation to Kazakhstan but no similar report was produced in relation to the African activities before the defendant's retainer with the claimant was ended orally on 27 March 2013 and in writing on 1 April 2013.


The claimant had originally instructed DLA Piper to act on its behalf but changed its instructions to the defendant as a result of the solicitor principally involved, David Neil Gerrard, having transferred to the defendant. The fees incurred by DLA Piper were paid by the claimant in full. Following the instruction of the defendant, it rendered bills regularly on either a fortnightly or a monthly basis whilst instructed by the claimant. After the retainer ended, the claimant brought this application under Section 70(3) Solicitors Act 1974 seeking to have the costs claimed in those invoices assessed by the court.


Since all of the defendant's invoices have been paid in full, the claimant could only seek an assessment as of right in respect of any invoice that had been rendered less than a month before the application was made. In practice the last six invoices have been treated in this category inasmuch as there is an agreement between the claimant and the defendant that the claimant can have those invoices assessed. They amount to £5.5 million in round terms net of VAT.


Invoices rendered and paid more than twelve months before the claimant's application cannot be assessed because the court has no jurisdiction to do so. Invoices in this category amounted to approximately £3.9 million.


For bills rendered between one and twelve months before the application, the claimant has to show that "special circumstances" apply in order to have the relevant invoices assessed. The fifteen invoices mentioned at the outset of this judgment fall within this category and they amount to £4.2 million. They are the invoices at the heart of this application.


In support of the claimant's application, its general counsel Mr Beat Ehrensberger produced an 18 page witness statement together with exhibits. In response the defendant produced four witness statements running to 220 pages and supported by no fewer than 13 lever arch files of documentation. The claimant served a second witness statement from Mr Ehrensberger running to 50 pages and a statement from the claimant's costs lawyer. The defendant subsequently served a statement from its own costs lawyer in response to the claimant's.


The parties both instructed leading counsel to make their submissions as to whether special circumstances exist and those submissions were made over the course of the two-day hearing. This judgment deals with the matters raised by counsel in the light of the witnesses' evidence and the relevant case law.


The first three subsections of Section 70(3) Solicitors Act 1974 are as follows:

(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.


Similar formulations of these subsections go back through various iterations of the Solicitors Act and, as with much of the law relating to solicitor and client assessments, there are 19 th century cases which are referred to in the commentaries as well as more recent case law. The most recent consideration of this area occurred in the Court of Appeal decision in Bentine v Bentine [2016] EWCA Civ 1168 albeit that it involved considering special circumstances in the context of the incidence of costs at the end of a Solicitors Act assessment under sections 70(9) and (10). Nevertheless, the court concluded that it was essentially the same test as is applied under s70(3) and the court endorsed a passage from the case of Falmouth House Freehold Co Ltd v Morgan Walker LLP [2011] 2 Costs LR 292 where Lewison J said at paragraph 13:

"Whether special circumstances exist is essentially a value judgment. It depends on comparing the particular case with the run of the mill case, in order to decide whether a detailed assessment in the particular case is justified despite the restrictions contained in s 70(3)."


Where an invoice has not been paid, the client's time for bringing an application for detailed assessment is longer than where the invoice has been paid. It is only if the invoice has not been paid for more than twelve months that special circumstances are required. Until that point, a client can be confident that the assessment will be allowed, even outside the original one month period, albeit on the likelihood of some payment on account of the costs that are be are to be assessed in most cases. The implication of the more generous timescale is that an invoice which has not been paid is more likely to be the subject of dispute than one that has been settled by the client.


Ben Williams QC, leading counsel for the claimant, put forward the proposition that there was a qualitative difference between the settlement of interim bills and final bills which was not reflected as yet by the terms of the Solicitors Act. In his submission, it was rare when the Act came into being for interim bills to be rendered and so the client would not be required to pay his solicitor's fees until the end of the case under the concept of the retainer being an "entire contract." If at that point the client decided to settle the bill, it would rightly suggest that he was satisfied with the charge that had been rendered. If he subsequently changed his mind, it was not surprising that the Act required the client to show some specific or "special" circumstance which justified that change of mind.


More recently however, said Mr Williams, interim bills have become much more common. Interim bills, which are no more than a request for a payment on account, cause no difficulty with the concept of a final bill being paid. However where, as here, interim statute bills are rendered, the client's time for challenging bills that have been paid whilst the matter progresses is brought forward. The client would need to commence proceedings on a monthly or fortnightly basis to preserve its right to have an assessment of the costs. That was not a realistic approach and so the rendering of monthly statute bills has the effect of causing the client not to challenge invoices so promptly and therefore subsequently needing to demonstrate special circumstances. This point is developed further later but I raise it here simply to say that whilst I tend to agree with Mr Williams' analysis of the change...

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  • Raydens Ltd v Ms Julie Cole
    • United Kingdom
    • Senior Court Costs Office
    • 30 July 2021
    ...of emphasis. By reference to the judgment of Costs Judge Rowley in Eurasian Natural Resources Corporation Limited v Dechert LLP [2017] EWHC B4 (Costs) at paragraphs 15 and 56, the Claimant submits that the test of special circumstances is a three-stage test, as follows. Was there a special......

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