Costs News

25 June 2020
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Solicitors must be clear to clients if they want to deliver interim statute bills

Solicitors who want to deliver interim statute bills, rather than requests for payment on account, must spell out their right clearly in their retainer, the Senior Costs Judge has stressed.

Master Gordon-Saker (pictured) issued the warning after finding that the client-care letter and standard terms of Kent firm Ratcliffes were not sufficiently clear and so the 14 bills it delivered should be treated as one.

The claimant in Iwuanyawu v Ratcliffes Solicitors [2020] EWHC B25 (Costs) was seeking detailed assessment of 13 out of 14 bills for her matrimonial proceedings (the other was just for the court fee for the divorce petition). The last eight had all been delivered less than 12 months before issue and there was no reason to refuse a detailed assessment.

However, on the other six, the firm said the first two had been paid more than 12 months before issue, while the latter four bills had been paid and the claimant needed to show special circumstances.

The client-care letter said the firm would invoice her for charges and disbursements every month, payable within 30 days. Though the terms of business said she could challenge or complain about bills, they did not refer to the right to seek assessment by the court.

Citing the High Court authority of Vlamaki v Sookias and Sookias [2015] 6 Costs LR 827, the master said there was no agreement that Ratcliffes’ invoices “should be self-contained bills which were final for the periods that they covered and that any challenge would therefore be subject to the technical rules and time limits of section 70”.

He continued: “As did the defendants’ counsel in Vlamaki v Sookias and Sookias, Mr Davis [counsel for the firm] sought to rely on the standard terms as to payment and interest as being an indication that the monthly invoices were interim statute bills. However, there is no evidence that Mrs Iwuanyawu had any better knowledge of the law concerning solicitors’ bills than did Dr Vlamaki.

“The confusion is not helped by the client care letter referring to monthly invoices, but the defendants’ standard terms referring to bills. The provisions as to the entitlement to interest and the possibility of proceedings is raised in relation to ‘bills’ in the standard terms which then go on to refer in the next paragraph to ‘interim bills’ and ‘requests for a payment on account’ without reference to interest or the possibility of proceedings.

“Rather, the terms provided that failure to pay an interim bill or request for payment on account may entitle the defendants to cease to act.

“It seems to me, following Vlamaki v Sookias and Sookias, that if a solicitor wishes to reserve a right to deliver interim statute bills which are intended to be final for the periods that they cover, as opposed to requests for payment on account, that right must be spelled out clearly in the contract with the client. In this case, it was not.”

That they were not interim statute bills did not mean the claimant had no right to assessment, Master Gordon-Saker continued, saying they created a Chamberlain bill.

He said: “A client receiving monthly invoices may well have no idea whether she will wish to challenge them until either she has received sufficient to be caused concern or has reached the end of the matter and can consider the total, perhaps against any estimate that may have been given. In most cases, it will be unrealistic to expect a client to be able to challenge her own solicitors’ bills in the middle of matrimonial proceedings.

“Accordingly, in my judgment, the 14 bills delivered by the defendants were not interim statute bills, but were part of a running account which should be regarded as one bill delivered on the date of the last, namely 18 October 2019 when the defendants’ retainer was determined. That bill has not been paid and is dated within 12 months of the issue of proceedings.”

He ordered a detailed assessment of the whole bill, adding that even if he was wrong on this, he would have concluded there were special circumstances to justify an assessment of the third to sixth bills. He said the firm should explain why the bills were greater than the estimate the firm gave.

“A second potential special circumstance is that the bills, at least as presented in the hearing bundle, did not contain the usual information about the client’s right to seek an assessment by the court under the Solicitors Act.

“In my experience, it is the invariable practice of solicitors still to provide that information. Yet here it was not apparently included on the bills nor was it mentioned in the client-care letter.”

Asad Maqsood (instructed by Julia and Rana) for the claimant, and Samuel Davis (instructed by Ratcliffes) for the defendant.

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