Mr Bidzina Ivanishvili v Signature Litigation LLP
| Jurisdiction | England & Wales |
| Judge | Leonard |
| Judgment Date | 23 August 2023 |
| Neutral Citation | [2023] EWHC 2189 (SCCO) |
| Court | Senior Courts |
| Docket Number | Case No: SC-2022-APP-001077 |
[2023] EWHC 2189 (SCCO)
COSTS JUDGE Leonard
Case No: SC-2022-APP-001077
IN THE HIGH COURT OF JUSTICE
SENIOR COURTS COSTS OFFICE
Thomas More Building
Royal Courts of Justice
Strand, London WC2A 2LL
Roger Mallalieu KC (instructed by Blake Morgan LLP) for the Claimant
Ben Williams KC (instructed by Signature Litigation LLP) for the Defendant
Hearing date: 16 May 2023
Approved Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
COSTS JUDGE Leonard
On 25 November 2022, the Claimant filed an application under CPR Part 8 seeking a declaration that a series of invoices delivered by the Defendant, in the course of a retainer that started in January 2016 and ended on 23 September 2022, were not “statutory bills” by reference to the Solicitors Act 1974. In the alternative, the Claimant seeks an order under section 70 of the 1974 Act for assessment.
Statutory Bills and Assessment
Section 70 of the 1974 Act sets out the statutory regime for the assessment of the amount due under a bill delivered by a solicitor to a client. It reads, at subsections (1) to (4):
“(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.”
To be assessed under section 70 a solicitor's bill must be what is referred to as a “statute” or “statutory” bill. That is a bill compliant with the requirements of section 69 of the 1974 Act for signature and delivery, and which meets additional criteria established by case law. Otherwise, in law, no bill has been delivered. The solicitor (by virtue of section 69(1)) cannot sue for fees and there is nothing for the court to assess.
I am very grateful to both Mr Mallalieu KC for the Claimant and Mr Williams KC from the Defendant, for their comprehensive and detailed exposition of the authorities in relation to statutory bills. Those authorities include In re Romer & Haslam [1893] 2 QB 286, Chamberlain v Boodle and King [1982] 1 WLR 1443; Boodia and another v Richard Slade and Co Solicitors [2018] EWCA Civ 2667, Bari v Rosen [2012] 5 Costs LR 851, The Winros Partnership v Global Energy Horizons Corporation [2021] EWHC 3410 (Ch), Sprey v Rawlison Butler LLP [2018] 2 Costs LO 197, Richard Slade & Co v Boodia [2018] EWCA Civ 2667, Abedi v Penningtons [2000] EWCA Civ 85, Davidsons v Jones-Fenleigh [1980] 124 SJ 204 and Richard Slade & Co v Erlam [2022] EWHC 325 (QB). I must also mention Adams v Al Malik [2014] 6 Costs LR 985, a decision on permission to appeal and therefore persuasive rather than directly authoritative, but extensively referred to.
I shall set out in broad terms some of the principles that bear upon the issues I have to determine.
The Burden of Proof
Section 69 of the 1974 Act, at subsection (2E), provides that where a bill meets the requirements of that section for signature and delivery it is to be presumed, until the contrary is shown, to be a statutory bill. Before me it was common ground that the initial burden of demonstrating that the invoices rendered by the Defendants to the Claimant are statutory bills, falls upon the Defendant.
Both parties, in that context, referred me to Romer & Haslam. They do not seem to me however to be entirely in agreement as to exactly how the burden of proof works. Mr Williams argues that if the Defendant shows that the invoices meet the statutory criteria for signature and delivery (and it does not appear to be in issue that they do) then, by virtue of section 69, it is incumbent upon the Claimant to show that they are not statutory bills. Mr Mallalieu argues, by reference to Romer & Haslam (in particular the judgment of Bowen LJ at 298–299), that the burden of establishing that an interim invoice is in fact an interim statutory bill rests on the solicitor.
For the purposes of this judgment I have adopted the approach urged on me by Mr Williams, though none of my conclusions would have been different had I adopted Mr Mallalieu's approach.
Contracts of Retainer and Interim Billing
The default position for a contract between a solicitor and the client who retains that solicitor is that it is an “entire contract” (aptly compared by Mr Williams to a contract with a courier, who will not be paid for bringing a package halfway to its destination). In consequence the solicitor is entitled to render a statutory bill only at the end of the retainer, as on the completion of a transaction or the conclusion of litigation.
There are exceptions to this rule. Some contracts of retainer, such as for the management of complex, multi-party litigation, may not lend themselves readily to the “entire contract” model. In such cases, the solicitor may be able to rely upon Romer & Haslam and other authorities which establish that a solicitor may have the right to render a statutory bill at a “natural break”. It must be clear on the evidence that the parties understood and intended that the bill so rendered be treated as final (that being the context in which the burden of proof, in Romer & Haslam, was found to lie with the solicitor).
More generally, the “entire contract” principle is, as one would expect, subject to agreement to the contrary. The solicitor and client may agree that the solicitor may, during the currency of the contract of retainer, render interim bills. To qualify as interim statutory bills, they must however be complete and final for the work that they cover. As Spencer J put it in Bari v Rosen:
“… 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.”
Simon Brown LJ in Abedi v Penningtons (at page 207) quoted (evidently with approval) a similar definition of interim statutory bills from Cordery on Solicitors:
“Although they are interim bills they are also final bills in respect of the work covered by them. There can be no subsequent adjustment in the light of the outcome of the business.”
An agreement between a solicitor and a client to the effect that the solicitor may render an interim statutory bill or bills may be inferred from conduct.
The necessity of completeness and finality as characteristics of a statutory bill was considered by the Court of Appeal in Richard Slade & Co v Boodia, in which the court found that there was nothing to prevent a solicitor rendering separate statutory bills, at different times, for profit costs and disbursements, but otherwise left the requirements of completeness and finality as I have described them.
The Issues
The Defendant rendered 79 invoices to the Claimant between 31 March 2016 and 26 October 2022. They come to £12,781,354.66. All have been paid.
The point of the Part 8 application made by the Claimant is to preserve such rights as he has to challenge the amount of the Defendant's billing through an assessment under section 70. His primary case is that none of the invoices rendered by the Defendant to date qualify as statutory bills. That is because the contract of retainer between the parties incorporated a Conditional Fee agreement (“CFA”) and those invoices represent only a part of the fees that may become due to the Defendant for the work undertaken under that contract. As a result, they were neither complete nor final. In consequence, he says, the time for him to make an application for assessment will not start to run until a final bill has been delivered.
The Defendant argues that the invoices rendered to the Claimant were, at the time of delivery, complete and final bills. For that reason, says the Defendant, only one of the bills rendered, dated 26 October 2022, is open to assessment (and the assessment of that bill is not contested). Otherwise, all of them having been paid, either they can only be assessed if special circumstances are established (section 70(3)(c)); or, as they were paid more than 12 months before the date of the application for assessment,...
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