Costs News

24 January 2019
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Court can order interim costs in detailed assessment between solicitor and client

Section 70(1) of the Solicitors Act 1974 allows the issue of an interim costs certificate in detailed assessment proceedings between a solicitor and a client, a costs judge has ruled.

Warren v Hill Dickinson LLP [2019] EWHC B1 (Costs) is the latest stage of what is becoming long-running litigation over four bills, totalling nearly £1m, arising from two cases where Mr Warren instructed his longstanding solicitor Hanna Basha, who was originally at Carter-Ruck, then at PSB Law and, from September 2013 to January 2016, at Hill Dickinson.

The cases were against boxer Ricky Burns for breach of contract and against Mr Burns’ manager, Alex Morrison, for defamation. Both started when Ms Basha was with PSB, under CFAs that obliged Mr Warren to pay the firm’s fees in the event of success.

Mr Warren was awarded damages and obtained default costs certificates in both cases. However, he has not recovered anything from either due to the defendants’ bankruptcies.

Though the outcomes met the definition of ‘win’ in the CFAs, Mr Warren claimed that there was an agreement that Ms Basha would only recover fees from Mr Warren in the event there was a ‘net gain’ to him. Mr Warren argued that, not having recovered any money, he had not made a net gain, meaning he should not have to pay anything.

In the first decision last March, Master Leonard found no evidence to support this. The contractual documentation was “littered with clear references to and warnings to Mr Warren about his liability to pay his solicitors’ costs, whether recovered from an opponent or not”.

Mr Warren also argued that the CFAs had not been validly assigned to BLM after PSB closed. Master Leonard, applying the Court of Appeal’s ruling on assignment, Budana, dismissed this, and the High Court refused permission to appeal in November.

The detailed assessment process has now continued with the defendant’s application under CPR 47.16 for an interim costs certificate of £636,583. The claimant argued that the court had no jurisdiction to order one.

However, while acknowledging that the different parts of the CPR relating to this issue were “on the face of it, not always easy to reconcile”, Master Leonard concluded at length that it did.

Key to part of his reasoning was this: “Section 70(1) ensures that a client who makes a timely application for the detailed assessment of a solicitor’s bill will obtain an unconditional order to that effect. As [Nick Bacon QC, for the defendant] points out, it says nothing about the quite separate procedure to be followed after the required order for assessment is made. For that, one must look to the Civil Procedure Rules.

“On the interpretation urged on me by [Patrick Lawrence QC, for the claimant], section 70(1) would operate to prevent a solicitor, in the course of a lengthy detailed assessment, obtaining an order for the interim payment of (for example) an amount that is not actually in dispute but which the client refuses to pay. That, to my mind, would import into section 70(1) an additional provision with a potentially unjust effect.

“If one looks at section 70 as a whole, it seems to me right to conclude that section 70(1)’s prohibition upon the commencement of any action by the solicitor for recovery of fees does not point to any particular intention as far as interim payment is concerned.

“I say that because section 70(2) empowers the court to combine that prohibition with the imposition of conditions, which might well include a requirement for interim payment. It is in fact standard for any order for assessment to contain such a prohibition, which is incorporated in Precedent L.

“The real intention seems to me to be not to prevent a solicitor receiving what is clearly due, but to ensure that the same bill is not the subject of proceedings before two courts exercising different jurisdictions.”

Master Leonard also found that CPR 47.16 was not inconsistent with CPR 46 or Practice Direction 46: “On the rules as worded, I have concluded that if the receiving party in a solicitor/client assessment can be identified, and if that receiving party has filed a request for a detailed assessment hearing under CPR 46.10(5), then that receiving party can apply for an interim costs certificate under CPR 47.16.”

The master went on to find that it would be appropriate to order an interim costs certificate. Though the claimant continued to argue about the charging arrangements and the parties’ understanding of them, he said he had already ruled on these. The only live issue was the defendant’s alleged failure to provide adequate information on costs, which he said was “a matter eminently suitable for determination in the course of a solicitor/client assessment and not in itself an obstacle to an interim costs certificate in a sum which takes adequate account of the issue”.

The final stage was the amount to order. Master Leonard concluded: “On the limited information I have to date, it seems to me right to order the issue of an interim costs certificate in the sum of £350,000. It seems to me highly unlikely that the amount ultimately due to the defendant would be any less than that.”

 

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