BILLING YOUR OWN CLIENT: FIVE IMPORTANT LESSONS FROM THE HIGH COURT

There are number of important lessons to be drawn from the judgment yesterday of Master Gordon-Saker in Rahimian -v- Allan Janes LLP [2016] EWHC B18 (Costs).

THE CASE

The claimant sought an order that the defendant firm of solicitors deliver up a final statute bill in relation to work done in litigation.

  • An estimate of costs was given that was in the region of £15,000 – £25,000.
  • A number of bills were rendered, the total came to £76,153.14. All of these were paid.
  • Only three of the (twenty two) invoices contained a detailed description of the work.
  • The final invoice was marked “final” rather than interim.
  • The final bill was rendered on the 23rd July 2014. On the 23rd July 2015 the claimant issued Part 8 proceedings against the solicitor seeking a detailed assessment of the bills of costs.
  • The new solicitor did not serve those proceedings within 4 months.  They were discontinued before a hearing.
  • The current proceedings seeking an order for the delivery of a final bill were issued on the 12th February 2016.
  • Since the proceedings were issued more than 12 months after payment of the final invoices the court did not have power to order assessment of those invoices.
  • The claimant had to establish that the invoices rendered were not “bills” for the purpose of the Solicitors Act 1974.
  • The Master held that the “final” bill did not, on its own, or together with the other 21 bills, contain sufficient narrative to explain what work had been done.  The bill could not be regarded as a “final” bill under the Act and the defendant was ordered to deliver a final bill.
  • This meant that the claimant could then seek an assessment of those costs.

POINTS TO NOTE

1. Another case where “evidence” was “largely submissions”

This was another case where the litigants did not appreciate the difference between “evidence” and “submissions”.

  1. In the present proceedings witness statements were served by both parties. The Claimants served statements of Dr Rahimian, Mr Carlisle and Ms Moore. ..
  1. Mr Carlisle and Ms Moore are respectively a Costs Draftsman and a Costs Lawyer and their statements consist largely of submissions.
  2. The Defendants served a statement of Mr Harriman, in which he submitted that the bills should be treated as a series comprising a single bill delivered at the date of the last.
  3. The Defendants required Dr Rahimian to attend the hearing for cross-examination. Nothing much emerged from that. Dr Rahimian told me that he found the billing confusing. He reiterated that the only thing that he was interested in was obtaining his papers. Insofar as it may turn out to be relevant, I was given no cause at all to disbelieve anything in Dr Rahimian’s oral evidence and I accept that evidence completely.”

2. A solicitor’s bill must contain sufficient detail to allow the client to understand the work that has been done

  1. A bill must contain sufficient information to enable the client to obtain advice as to its detailed assessment. In Ralph Hume Garry v Gwillim [2003] 1WLR 510, the Court of Appeal considered whether a series of bills submitted by the claimants to the defendant complied with section 69 of the Solicitors Act 1974. Ward LJ summarised the authorities:
63 I accept the principle expressed in Lord Campbell CJ’s judgment in Cook v Gillard 1 E & B 26 , 36–37 that:

the defendant who undertakes to prove that the bill is not a bona fide compliance with the Act cannot found an objection upon want of information in the bill, if it appears that he is already in possession of that information … a client has no ground of objection to a bill who is in possession of all the information that can be reasonably wanted for the consulting on taxation.

In Eversheds v Osman [2000] 1 Costs LR 54 , 61–63 Nourse LJ posed this test in not dissimilar terms, viz: is the client unable to judge as to the justice of the amount of the fees which are charged?
64 Thus I would accept the proper principle to be that there must be something in the written bill to indicate the ambit of the work but that inadequacies of description of the work done may be redressed by accompanying documents (as in Eversheds v Osman where it was doubtful whether the bill on the face of it would have been sufficient) or by other information already in the possession of the client. That, it seems to me, would serve the purpose of the Act to give the client the knowledge he reasonably needs in order to decide whether to insist on taxation. If the solicitor satisfies that then the bill is one bone fide complying with the Act.
70 This review of the legislation and the case law leads me to conclude that the burden on the client under section 69(2) of the Solicitors Act 1974 to establish that a bill for a gross sum in contentious business will not be a bill “bona fide complying with this Act” is satisfied if the client shows: (i) that there is no sufficient narrative in the bill to identify what it is he is being charged for, and (ii) that he does not have sufficient knowledge from other documents in his possession or from what he has been told reasonably to take advice whether or not to apply for that bill to be taxed. The sufficiency of the narrative and the sufficiency of his knowledge will vary from case to case, and the more he knows, the less the bill may need to spell it out for him. The interests of justice require that the balance be struck between protection of the client’s right to seek taxation and of the solicitor’s right to recover not being defeated by opportunistic resort to technicality.
  1. Of the 22 invoices delivered in the present case, only the last 3 contained any information about the work that had been done. The last 3 invoices did not contain any details of the work done in the periods covered by the first 19 invoices.
  2. If one were to view the 22 invoices as constituting one final bill delivered on 22nd July 2014 , in my view, without more, that bill did not contain sufficient information, or indeed any information, of the work done between 8th September 2011 and 28th February 2014 so as to constitute a bill complying with the 1974 Act.”

3. A bill does not become a final bill just by calling itself one

The fact that the bill called itself a “final” bill did not mean that it was.  The Master found that it contained insufficient information to be a final statute bill.

4. There is no implied right for a solicitor to deliver interim bills

This is an important point.   If a solicitor wants to deliver interim bills in litigation there has to be an express agreement.

  1. A solicitor’s retainer is an entire contract and, save in two circumstances, solicitors are not entitled to payment on account other than for disbursements. The exceptions are, first, where there is a natural break in protracted litigation and, secondly, where there is an agreement that the solicitor can submit interim statute bills.
  2. It is not suggested by the Defendants in the present case that there was an agreement, either expressly or by conduct, that they could deliver interim statute bills. Nor is it contended that there were natural breaks. Rather they contend that the invoices that they delivered were chapters culminating in a final bill.
  3. Mr Cropp on behalf of the Defendants relied on the decision of the Court of Appeal in Chamberlain v Boodle & King [1982] 1 WLR 1443. In that case the terms of the Defendants’ retainer did not allow for self-contained interim bills, but did allow for regular “statements”. The retainer lasted for 6 months over the course of which they delivered 4 bills to the Claimant. The court concluded that there had been no natural breaks, but that the bills “should be regarded as one bill in respect of one complete piece of work, although divided into parts”. As the Claimant had demanded taxation of the last within one month, he was entitled to have the whole of it taxed.
  4. In Bari v Rosen [2012] 5 Costs LR 851, the Defendant submitted 12 bills to his client over a period of 10 months, all of which were paid promptly. On an application for an order for assessment the Master concluded that the Defendant had no contractual right to issue interim statute bills. It was not suggested that the bills had been issued at natural breaks and so the bills should properly be treated as a series comprising a single bill, delivered at the date of the last in the series. That decision was upheld on appeal.
  5. In Vlamaki v Sookias & Sookias [2015] 6 Costs LR 827 the Master concluded that a series of bills rendered by the Defendants should be regarded as a single bill delivered on the date of the last. On appeal Walker J decided that there had been no final bill. A letter from the Defendants to the effect that they would not render any further invoices did not change the nature of the bills. Accordingly the application for an order for detailed assessment was premature.”

5. This is another example of problems being caused because a claimant failed to serve a claim form within four months

This argument was necessary because proceedings issued within 12 months of the “final bill”  were served outside the four month period.  However the evidence here is curious. The claim form was served “a few days late”.  However the defendant filed a “Defence”.  It does not appear that the defendant made any application under Part 11 to dispute jurisdiction.  Further the filing of a defence most probably represented acceptance of the jurisdiction.  The defendant had probably disabled itself from taking any point in relation to late service.

On the face of this (limited) evidence it is surprising that the initial action was discontinued.

THE JUDGMENT ON THE SERVICE POINT

The Master is discussing the fate of the first (within time) action.

  1. Unfortunately the Claimants’ new solicitors requested the Court not to serve the claim form, indicating that they would effect service themselves. They failed to do so within 4 months of issue. It was served a few days late.
  2. The hearing of that claim had been listed for 25th January 2016, following the service of a “Defence” on 8th December 2015. In a witness statement dated 11th January 2016 Mr Carlisle, on behalf of the Claimants, sought to extricate them from their procedural difficulty. He explained that proceedings had been issued before the judgment of Walker J. in Vlamaki v Sookias & Sookias [2015] EWHC 2224 (QB). As a result of that decision it was thought that the court might conclude that no final bill had been delivered and that there was nothing capable of a detailed assessment. Accordingly “to the extent that it is necessary” the Claimants sought permission to amend the claim form or to issue a new claim form seeking either an order for delivery of a final statute bill pursuant to s.68 or an order for assessment, should the court find that a final statute bill had been delivered.
  3. In the event, not surprisingly, those proceedings were discontinued before the hearing.

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