Laurence Sprey v Rawlison Butler LLP
| Jurisdiction | England & Wales |
| Judge | The Honourable,Mr Justice Nicklin |
| Judgment Date | 26 February 2018 |
| Neutral Citation | [2018] EWHC 354 (QB) |
| Court | Queen's Bench Division |
| Docket Number | Case No: JR 1505832 |
| Date | 26 February 2018 |
[2018] EWHC 354 (QB)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
ON APPEAL FROM THE SENIOR COURTS COSTS OFFICE
(Master Rowley)
Royal Courts of Justice
Strand, London, WC2A 2LL
THE HONOURABLE Mr Justice Nicklin
(sitting with SENIOR COSTS JUDGE Gordon-Saker)
Case No: JR 1505832
Jamie Carpenter (instructed by Mayo Wynne Baxter) for the Appellant
Robert Marven (instructed by DMH Stallard) for the Respondent
Hearing date: 16 January 2018
The principal issue in this appeal is whether the monthly bills delivered by a solicitor to his client under a discounted conditional fee agreement are ‘statute bills’ and therefore capable of detailed assessment under s.70 Solicitors Act 1974.
On 13 September 2017, Master Rowley decided that the relevant monthly bills served by the Respondent solicitors in this case were ‘statute bills’ and, in consequence of the passage of time since their original service, the Appellant had lost the right to seek a detailed assessment of some of those bills. With the permission of the Master, the Appellant seeks to appeal that decision.
Solicitor and client
A solicitor's retainer is an entire contract and, in the ordinary way, the solicitor is entitled to be paid by the client only at the end of the retainer (whether the completion of the transaction or the conclusion of the litigation). There are two exceptions: (1) where the solicitor and client have agreed that the solicitor may render interim bills; and (2) at a natural break in lengthy litigation: In re Romer & Haslam [1893] 2 QB 286. Agreement may be inferred from conduct, such as where the solicitor renders interim bills which the client accepts and pays: Abedi v Penningtons [2000] 2 Costs LR 205.
A bill rendered by a solicitor to his client may be one of 3 things:
(1) A “statute bill” (or, if the solicitor is entitled to render interim bills, an “interim statute bill”), that is a final bill for the period that it covers, which complies with the requirements of the Solicitors Act 1974, which can be sued on by the solicitor (under s.69) and which is capable of detailed assessment under s.70.
(2) A request for payment of a sum on account.
(3) A “ Chamberlain bill”, that is a series of bills which become a statute bill only upon delivery of the last (after Chamberlain v Boodle & King [1982] 1 WLR 1443).
A statute bill cannot subsequently be amended without the consent of the parties or an order of the court, which will be granted only in exceptional circumstances: Polak v Marchioness of Winchester [1956] 1 WLR 819. Statute bills are final bills in respect of the work that they cover, in that there can be no subsequent adjustment “ in light of the outcome of the business”. They are complete self-contained bills of costs to date: Bari v Rosen [2012] EWHC 1782 (QB); [2012] 5 Costs LR 851 [15].
Applications by a former client for an order for detailed assessment of the solicitor's bill under s.70 Solicitors Act 1974 are subject to time limits. If the application is made more than 12 months after the client has paid the bill, no order can be made: s.70(4). If the application is made more than 12 months after the bill is delivered, or after the bill has been paid (but within 12 months of payment), the client must show special circumstances: s.70(3). If the application is made within 12 months of delivery of the bill, the court may impose terms when making an order for assessment, unless the application was made within 1 month of delivery, when it may not: s.70(2).
The costs proceedings
The Respondent firm of solicitors acted for the Appellant in a claim for damages for professional negligence. From January 2012 to March 2013 they acted under a conventional retainer. From March 2013 to September 2015 they acted under a discounted conditional fee agreement (“CFA”). The Appellant and the Respondent parted company and the Appellant instructed new solicitors. The Appellant's claim was ultimately settled in October 2015 for £525,000 inclusive of costs.
The CFA provided that the Appellant would be liable to pay the Respondent at discounted rates (40% of the normal rates) if he lost the claim. If he won, he was liable to pay the Respondent at their normal rates plus a success fee of 50%.
The Respondent billed the Appellant monthly, at the full rate during the conventional retainer, and at the 40% discounted rate during the period covered by the CFA (“the 40% invoices”). In October 2015, the Respondent billed the Appellant for the balance between the normal rate and the discounted rate (“the balancing invoice”) and, in January 2016, for the success fee. The Appellant paid all of the bills apart from (a) the last four of the 40% invoices, (b) the balancing invoice and (c) the success fee.
The Appellant applied for an order for assessment of all of the bills, but later withdrew his claim for assessment of the 13 bills that had been delivered under the conventional retainer. In relation to the 40% invoices, Master Rowley concluded that they were interim statute bills. On that basis, those rendered between March 2013 and September 2014, which had been paid more than 12 months before the application was issued (13 November 2015), were out of time and no order could be made for their assessment. The Master ordered that the bills dated from September 2014 should be the subject of assessment. He found special circumstances for the assessment of the 9 bills delivered more than 12 months before the application was issued (but paid within that 12 months) and directed that a further £10,000 be paid by the Appellant on account of the 3 unpaid discounted bills delivered less than 12 months but more than one month before the issue of the application. In respect of the balancing invoice he directed that, for the period covered by the time-barred bills, the assessment would be limited to the reasonableness of the hourly rate (and not the reasonableness of the time/work done).
The Appeal
The Appellant challenges the Master's decision on three grounds. He contends that the Master was wrong to find:
i) that the 40% invoices were interim statute bills because such invoices “ were not intended to be and could not have been final bills in respect of the work covered by them”;
ii) that the Respondent firm had the right to deliver interim statute bills under the CFA; and
iii) that the balancing invoice could not be assessed by reference to the reasonableness of the work done where that work was covered by earlier (time-barred) invoices.
The third ground only arises if the Appellant fails with the first two grounds.
Did the agreement allow the solicitors to render interim statute bills under the CFA?
Logically this issue comes first. If the agreement between the parties did not permit the rendering of interim statute bills, then that would be the end of the matter.
The ‘client care’ or as it was called ‘engagement’ letter, sent by the Respondent firm to the Appellant on 23 January 2012 (“the Client Care Letter”), so far as material, provided:
“ Billing and Credit Control
… We operate a strict credit control policy and if invoices are not settled, or payments on account are not made when required we will cease acting for you. In addition, we may set limits on accrued work in progress and disbursements and/or ask you for payments on account.”
Included with that letter were the Respondent firm's standard terms of business. In the section ‘Fees’, it included:
“ Payment: unless we agree otherwise, we will invoice you monthly. Invoices are payable on delivery. Accounts unpaid for more than 28 days will accrue interest at the rate payable on Judgment Debts…
Payment on Account: we may … ask for money on account of fees and disbursements. If so, we will not do any work or incur disbursements until we have received that sum on account. If you fail to make a payment on account or pay our invoices we will stop acting for you. We undertake further work only on the strict condition that you agree to pay our outstanding invoices, thereby constituting a binding agreement between us that our outstanding invoices be treated as liquidated debts…”
The CFA was agreed on 22 March 2013. I have been referred to the following parts of the CFA:
i) Under the section “ Fees and Disbursements”:
4.1 The provisions of the engagement letter dated 23 January 2012 between the Client and Rawlison Butler LLP in respect of the Claim (“the Engagement Letter”) will continue to apply, save as varied by the terms of this Agreement from the date stated at the beginning of this Agreement 1 … In the event of any inconsistency between the Engagement Letter and this Agreement, the terms of this Agreement shall prevail.
4.2 Under this Agreement, Rawlison Butler LLP's fees are calculated by reference to the hourly rates set out below. These hourly rates will be reviewed periodically to reflect increases in overhead costs and inflation. Normally the rates are reviewed annually with effect from 1 April each year. Rawlison Butler LLP will inform the Client in advance of any increase in the rates.
Normal Rates
Discounted Rates
Partners
£325.00 per hour
£130.00 per hour
Associates/Senior Associates
£250.00 per hour
£100.00 per hour
Assistant Solicitors
£215.00 per hour
£86.00 per hour
Trainee Solicitors
£120.00 per hour
£48.00 per hour
4.3 Rawlison Butler LLP will bill the Client at the Discounted Rates on a regular (usually monthly) basis, together with any Disbursements as and when incurred. All such invoices are payable by the Client upon delivery. The amounts billed in this way will be payable by the Client regardless of the outcome of the Claim.
ii) “ Rawlison Butler LLP's fees” are defined...
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