ASSESSMENT OF A SOLICITOR AND OWN CLIENT BILL OF COSTS: THREE IMPORTANT POINTS CONSIDERED: CLAIMANT’S CLAIM AGAINST SOLICITOR STRUCK OUT
In Sweeney v Wise Solicitors Ltd  EWHC 2314 (SCCO) Costs Judge Rowley struck out a claimant’s application for an an assessment of costs against their former solicitor. The action seeking an assessment of costs was issued out of time and there were no “special circumstances” that justified issuing the proceedings late and allowing the action to continue.
“If, as the claimant says in his statement, he did not understand what taxation meant, then it was incumbent upon him to ask for information. However, the client did not do so and has then not commenced proceedings within the relevant time. There is nothing to which he can now point to cause the court to exercise its discretion in holding that any special circumstances exist.”
The claimant instructed the defendant firm of solicitors in a personal injury action. In that action he received £3,000 by way of interim payment. This was sent to him, together with a note that any deductions would be made at the end of the case. The claimant then received a further £10,000. The defendant deducted 25% of the total damages by way of fees (that is 25% of £13,000). The claimant took umbrage, stating that he expected the deduction to be 25% of the £10,000.
The claimant told the solicitors that he would bring an action to recover the 25%. He stated that he signed the consent form allowing them to do this, under sufferance, because he needed the money.
The claimant issued Part 8 proceedings seeking an assessment of the costs.
The defendant solicitors sought to strike out the action on two, different grounds. Firstly that the bills could not be assessed because the formalities had not been completed. Alternatively, if the bills had been delivered, the assessment could only continue if the claimant could show circumstances.
THE FIRST POINT: HAD STATUTE BILLS BEEN DELIVERED?
The judge found that final statute bills had been delivered.
29. Where, as here, the client is in possession of invoices which are ostensibly suitable for assessment under the Act, the absence of a signature by the solicitors seems to me to be of no consequence. As was expressed by the Court of Appeal in Ex Parte d’ Aragon  3 TLR 815, and referred to in Parvez, relying on a lack of signature is not an attractive device for a solicitor to seek to avoid the scrutiny of his bill by the court when requested in time by the client to do so.
30. In these circumstances there is no need for me to reach any conclusion as to whether not an email which enclosed invoices together with a signed letter which dealt with the question of fees but did not refer to the invoices amounts to a signed bill for the purposes of s69. It seems to me that the ‘angels dancing on the head of a pin’ quality of this point, if anything, simply points towards it not being the appropriate test for whether a bill ought to be assessed.
31. S70 requires the bill to be delivered but is not prescriptive as to how that delivery is undertaken. Consequently, there is also no need for me to consider the question of whether a bill can be delivered electronically without the consent of the recipient. The case of Potts was an unusual one and I think that it ought to be confined to its own facts as befits a judgment at first instance.
32. The defendant’s argument about delivery is as valid under s70 as it is under s69. It says that the bill has not been delivered because it was not intended by Mr Wise to be delivered as a statute bill. It was merely produced and provided in order to aid clarification of the fees to which the solicitors were entitled. But that description highlights the difficulty of the defendant’s position in my view. Unlike the circumstances in Parvez, the solicitors here intended the client to receive the documents as drafted. There is no question of a draft document simply being on the file which was copied to the client.
33. What then was the purpose of providing those invoices? It was to demonstrate how much the solicitors were entitled to under the terms of the agreement, at least in the solicitors’ view. It seems to me to be plain that provision of those invoices was, at the very least, part of a demand for payment when combined with the explanatory letter (referred to in one of the invoices). The ultimate aim was to have the client sign an authority for the deduction to take place to pay his solicitors’ fees.
34. Although each invoice was described as a “tax invoice”, there was no suggestion that the format of the invoices did not amount to a statute bill. The defendant’s only objection to the court concluding that the invoices had been delivered is the final paragraph of Mr Wise’s statement where he simply states that it was not his intention for the invoices to be regarded as final statute bills and that they were provided “to allow the claimant to better understand the position on the deductions, as they related to the interim payments already received.”
35. The covering email describes the invoices as being the ones “raised in this matter”. Whilst one invoice records the sums received from the opponent’s insurers, the other directly (and solely) relates to the deduction of £3,250 and shows the split between the VAT and non-VAT elements. This is the sum at the heart of the client’s challenge and the “better understanding” which the solicitor hoped his client would have is based on that invoice and the letter which accompanied it. Once the client understood the figures, the expectation was clearly that the money held on client account could be transferred to pay the invoice already raised in this matter. I consider it to be unarguable that the tax invoice can be described as anything other than a demand for payment in the form of a final bill.
36. For these reasons I find that the invoices have been delivered to the claimant and so he is entitled to bring s70 proceedings in principle based upon the two invoices delivered to him by the defendant.
THE SECOND POINT: HAD THE BILLS BEEN PAID?
Further the judge found that the bill had been paid when the moneys were deducted from damages and accounted for to the claimant.
39. Given that a solicitor’s deduction of its fees from monies received from elsewhere is a common occurrence, it might be thought that there would be helpful authority from the higher courts as to what actually constitutes payment of an invoice in the circumstances. However, there only appear to be a couple of Victorian cases (Re Ingle (1855) 52 ER 865 and Re West, King & Adams  2 QB 102) which bear on the matter and even then, they are of only limited assistance. Nevertheless, the essence of the guidance of the authorities is that the client needs to agree to monies being applied to pay the bills. “Mere acquiescence” is not sufficient and the existence of the retainer between solicitor and client is not sufficient in itself either.
40. In this case, Mr Griffiths was able to point to the signed authority which was emailed by the claimant to the defendant on 26 July 2021. That authority specifically stated that the claimant understood and consented to the two deductions and that he further understood that he was not liable for any other shortfall in the solicitors’ charges. The authority also confirmed that the balance of the damages was to be paid into the bank account whose details the claimant had previously provided to the defendant.
41. Faced with that document, Ms Mitchell was required to contend that the form of authority was not enforceable and not evidence of any agreement to pay the bills. She submitted that the defendant had applied illegitimate pressure by stating that the insurers had made the damages payment by BACS so that, as soon as the authority was signed, the defendant would be able to transfer funds to the claimant. On this point, Ms Mitchell also referred to the claimant’s email which I have set out at paragraph 12 of this judgment. In that email, there is what I can only describe as a threat to pursue the return of the 25% deduction if Mr Wise did not accept a reduction of the success fee to £2,500. Eight minutes later the formal authority was returned by the claimant.
42. Ms Mitchell also referred to the emails I have set out above regarding the claimant’s need to settle various debts and which was something of which the claimant said Mr Wise was well aware. According to the claimant, he faced severe pressure and stress in relation to his finances and was relying on the damages to assist him in improving his financial situation. (See, for example, paragraph 13 of his witness statement set out at paragraph 13 above).
43. In Ms Mitchell’s submission the claimant had no option but to sign the authority in order to release monies quickly. He was not advised to take independent legal advice and after entering the contract the claimant took steps to make the contract void by taking advice from the legal marketing company. Given these failures, it was the claimant’s argument that the agreement and authority form was void and so the bills have not been paid within the terms of s70 of the Act.
44. The test I need to apply is whether the claimant agreed to the deduction of money from the damages received in the expectation that it would be put towards payment of the bills rendered by the solicitors. In my judgment the answer to that question is clearly yes. The authority form signed by the claimant is perfectly clear and is obviously drafted for exactly this purpose.
45. What is also perfectly clear from the transcript is that the claimant hoped to reopen the bargain he had struck with Mr Wise at the outset of the claim by reducing the elements on which the 25% success fee would bite. Having failed in his argument that the success fee did not apply to the interim payments – clearly contradicted by the correspondence – the claimant sought to reduce the sum payable from £3,250 to £2,500 based on a barely veiled threat to bring a claim against the defendant for the return of the entirety of the deduction.
46. Having looked at Mr Wise’s email and its contents, the claimant plainly took the view that either his negotiation had failed and he was liable for the £3,250 or that he would pursue the matter via the company that had contacted him on that same day. Whatever is the case, there is nothing in my view in the contemporaneous transcript and emails to suggest that the authority was returned because of the pressure to pay debts straightaway. There is clearly a reference to monies needing to be repaid in the transcript. But the claimant’s concern relates to the amount of the money available to pay other people rather than the speed with which it was required. The overwhelming impression is that the claimant simply wanted to hold onto as much of his damages as possible because he was not satisfied with the end figure. That view might be entirely reasonable in itself but it does not support an argument that the claimant was pressured into authorising the solicitors to retain monies from the damages.
47. Consequently, I reject the argument that the authority signed by the claimant is void and instead find that the invoices were paid on 26 July 2021.
THE THIRD POINT: COULD THE CLAIMANT SHOW SPECIAL CIRCUMSTANCES TO ALLOW AN ASSESSMENT OUT OF TIME
The judge found that the bills had been paid on 26th July 2021. The claimant needed to issue proceedings on the 25th August 2021. Proceedings were, in fact, issued after one month and the claimant needed to show “special circumstances” in order to get the bill assessed. The judge found that there were no such special circumstances here.