Costs News

29 November 2018
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Court of Appeal: Statute bills do not have to include profit costs and disbursements

A statute bill does not have to include both profit costs and disbursements, the Court of Appeal has ruled.

Lord Justice Newey said separate billing for profit costs and disbursements was common nowadays and did not give rise to problems.

He was giving the judgment of the court in Slade (t/a Richard Slade And Company) v Boodia and Anor [2018] EWCA Civ 2667.

Solicitor Richard Slade had been acting for Mr and Mrs Boodia in a rights of way dispute between 2013 and 2016. His retainer provided for bills to be sent out monthly in arrears, with disbursements normally billed for separately.

By October 2016, when the Boodias instructed alternative solicitors, Mr Slade had delivered 61 invoices – 43 of which were devoted exclusively to profit costs and the other 18 to disbursements.

The Boodias were billed £141,300 plus VAT for profit costs and £31,700 plus VAT for counsel’s fees and other disbursements. They issued a claim form in November 2016, asking for all their bills to be assessed under section 70 of the Solicitors Act 1974.

Newey LJ said the question was whether Mr Slade’s bills were all statute bills or whether, as claimed by the Boodias, they were “a series of on account bills culminating in a final statute bill”. 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 found they were not because they failed to include both profit costs and disbursements, a decision upheld by Mrs Justice Slade.

Newey LJ said that sections 67, 70 and 87 of the Solicitors Act 1974 did not assist in determining the issue.

Slade J had ruled that the client needed to know the total costs incurred over a certain period to enable them to form an evidence-based view of whether to exercise their right to challenge the bill. She said: “The treatment of incomplete bills of costs as statute bills could lead to a multiplicity of applications under section 70 merely to preserve the client's right to apply for assessment.”

Newey LJ said the approach adopted by Slade J and Master James would itself have “unsatisfactory implications”. He explained: “A solicitor could not, it seems, raise a statute bill until he had himself been invoiced for all disbursements incurred during the relevant period, leaving the solicitor dependent on the cooperation of third parties.

“The difficulties would be greater if work were being undertaken (say, by counsel or an expert) at the end of a solicitor's billing period. The solicitor would, presumably, be unable to render a statute bill until he knew the cost of work done up to midnight on the final day and, where work continued into the next billing period, an apportionment might be required.”

Barrister Mark Friston, representing the Boodias at the hearing in place of Robin Dunne who was ill, argued that the solicitor could ask for payments on account instead of raising interim statute bills (relying, if necessary, on section 65(2) of the 1974 Act). Newey LJ said: “But that would deny both solicitor and client finality and would also mean that the solicitor would be unable to bring proceedings to recover his fees. That would be the case, moreover, even in circumstances such as are mentioned in section 69(1)(a) and (b).

“In any case, the 1974 Act nowhere states that a statute bill must encompass both profit costs and disbursements, and I can see no justification for such a rule in the case law either.”

Though the judge said he would not wish to exclude the possibility of a bill restricted to either profit costs or disbursements failing to provide sufficient information that the client could not decide whether to exercise his right to challenge the bill, “that, however, would be the exception rather than the rule”.

Newey LJ continued: “I do not think it can be inferred that a statute bill must always, or even usually, include both profit costs and disbursements. Separate billing for profit costs and disbursements is common with modern digital billing, and I do not accept that that need give rise to problems.”

Simon Browne QC (instructed by Richard Slade and Company) for the appellant; Mark Friston (instructed by W Davies Solicitors) for the respondents.

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