Costs News

08 November 2017
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Interim statute bills “must include” both costs and disbursements, says High Court

Bills need to include both profit costs and disbursements to be considered interim statute bills, the High Court has ruled in upholding a decision by Master James.

In Richard Slade And Company Solicitors v Boodia and Anor [2017] EWHC 2699 (QB), the appellant law firm appealed from a decision of Master James on a preliminary issue in a claim by Mr and Mrs Boodia for assessment of 61 bills – 43 for its fees only and 18 for disbursements only.

The firm contended that the invoices rendered more than one year before the retainer was terminated could not be assessed because they were statute bills.

Master James held that the retainer – though “somewhat ambiguous between payments on account monthly and [statute] bills monthly” – did allow for interim statute bills, but found that, to be a bill of costs within the meaning of section 70 of the Solicitors Act 1974, the bill must include both profit costs and disbursements for the period covered by the bill. As the individual 61 bills did not, they were not interim statute bills.

Mrs Justice Slade dismissed the appeal. She said: “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' [per Spencer J in Bari v Rosen (t/a RA Rosen and Co Solicitors) [2012] 5 Costs LR 851].

“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.

“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 [counsel for the respondents] 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.

“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.”

Slade J said Master James had not failed to consider the practical difficulties of her decision. “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 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.”

The judge also rejected the argument that Master James erred in rejecting the firm’s alternative argument that a series of interim bills had been served, each one at points when disbursements and fee invoices coincided.

“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 [for the law firm] 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.”

Nick Bacon QC represented the appellant solicitors, and Robin Dunne of 218 Strand, instructed by W Davies Solicitors, acted for the respondents/claimants.

 

Comments

Dragon 2   09/11/2017 at 12:20

On the face of it, this decision, like most, seems very case-specific, not least due to the terms of the retainer, although some will doubtless seek to rely on it regardless of the background. So often retainers will say that the Client will be required to pay "disbursements" or the like as the case progresses "and these will be invoiced separately". That appears not to have been the case here.

Dragon   09/11/2017 at 14:13

How much court and parties' time is wasted in establishing whether invoices are statute ? Dragon 2 - who are you?!

Dragon 2   10/11/2017 at 11:12

Just an interested participant in the wonderful world of costs :-)

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