Costs News

03 December 2015
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High Court overturns master’s ruling on status of interim bills

A costs judge was right to hold that a law firm’s retainer did not allow it to deliver interim statute bills, but was then wrong to allow an application for a Solicitors Act assessment to go ahead, the High Court has ruled.

In Vlamaki v Sookias & Sookias [2015] EWHC 3334 (QB), Mr Justice Walker – sitting with Master Haworth as his assessor – was ruling on a retainer which provided that the firm would send a bill for “our charges and expenses at the end of each month while the work is in progress”, and that it would send the client “a final bill after completion of the work”. It did this and then, on 4 October 2013, sent a letter stating that, even if there was unbilled time, “we are not proposing to invoice this and therefore there are no further sums due”.

Master Campbell rejected the firm’s contention that the interim bills were statute bills and so some of them were time-barred under section 70 of the Solicitors Act 1974. However, he concluded that the bills collectively, together with the October letter, could be regarded as a single statute bill with an effective date of 4 October.

Walker J dismissed the firm’s appeal against the first finding. He agreed with Master Campbell that the provisions of the retainer were ambiguous, and said the retainer did not contain any express statement that each interim bill would be a final bill for the period that it covered.

He said: “I do not underestimate the force of the argument that they must be statute bills because of what is said in the retainer as to payment being due and as to interest. That argument, however, assumes knowledge of the 1974 Act and procedures under it: but… in the ordinary course a lay client cannot be assumed to have such knowledge.”

Walker J then overturned the master’s ruling that the October letter effectively crystallised the previous bills as statute bills. “Nothing in the October letter said that, if the interim bills were not statute bills, then the letter was intended to change their status. It said that there was no proposal to invoice further amounts. It added that, in the absence of an application for assessment, proceedings for the amounts already invoiced would be brought. In these circumstances, the mere fact that the letter informed Dr Vlamaki of these matters does not change the nature of the earlier bills.”

As a result, the judge concluded, the application for assessment was premature.

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