Section 70 of The Solicitors Act is clear about the timescales in which a statute invoice can be disputed by a client. Once one year has passed from the delivery of the bill the court will only make an order for assessment if there are special circumstances. Where one year has passed from the payment of a bill, the court has no power to order assessment of the bill of costs. This can cause issues for clients who are being invoiced, and are paying their bills, monthly and so do not have a full overview of the total costs until the conclusion of the matter.
In those circumstances there is an alternative option available to clients, they can wait until they are sued for non-payment, and dispute the bill on the basis that the costs are unreasonable. The courts may then order a common law (or non-statutory) assessment of the costs. This approach would not displace the time limits provided in The Solicitors Act but it does allow the court to consider bills outside of the one year limit. (See Turner and Co v O Palomo Sa: CA 28 Jul 1999 and Harrison v Tew 1990 2 AC 523).
This issue has been considered more recently in Blacklion Law LLP v Amira Nature Foods Ltd & Anor [2021] EWHC B22 (Costs) (11 November 2021). Here the solicitor (claimant) issued proceedings in relation to unpaid invoices raised under two retainers. The proceedings related only to the invoices raised under the general retainer which covered a number of matters, and of which there was an unpaid balance of £118,510.81.
The defence submitted that the lack of particularity in the invoices in relation to the services rendered meant that the bills were not statute bills and therefore had no legal force.
In February 2021, the claimant obtained an order from Deputy Master Nurse for summary judgment for the sum found due in respect of the general retainer. Deputy Master Nurse also ordered an inquiry and assessment into five of the invoices and made directions for the next steps.
Following the preparation and service of points of dispute and replies, but before a hearing was made for the inquiry and assessment, the defendant proposed that the directions should incorporate provision for a bill of costs in respect of every invoice raised. The claimant disagreed, on the basis that the assessment was a common law, not statutory, assessment. The defendant filed an application for an order that the claimant provide a final bill in the form of a chronological spreadsheet in two parts. One part would cover earlier invoices (not covered in the order of Deputy Master Nurse), and the other to cover those invoices ordered to be assessed by Deputy Master Nurse. The order also sought inspection of the claimant’s files for the purposes of further points of dispute and replies.
On the hearing of the application, the defendant submitted that the retainer did not provide for interim bills to be considered statute bills and that he was not informed that they should be treated as such. He was therefore not aware that the time limits in the Solicitors Act would be running and expected that any issues as to the costs would have been resolved later, once a final bill had been issued. It was the defendant’s position that the order of Deputy Master Nurse did not dispose of the question of whether the claimant had delivered statute bills. As the claimant had not, in the defendant’s opinion, done so they should be ordered to do so in order that the assessment could proceed on all of the information.
The claimant’s response was that the defendants did not have the right to require the delivery of a statute bill, and that this was not justified on the facts of this case. Further, the claimant stated that the defendant had the opportunity to have the invoices considered by an experienced costs lawyer before they filed their points of dispute. As this assessment was a non-statutory assessment, the court did not have the power to order a breakdown and should assess the costs by reference to the bills as they were rendered.
The court’s response was that, even had no statutory invoices been raised, they would not have been able to make an order for their assessment at this stage. The court also said that the only a solicitor can decide the content and terms of their claim for payment and the court did not have the power to order that it be provided in a particular format.
The court accepted that, in a common law assessment, it had inherent jurisdiction to order the breakdown of the bill and make any order it saw fit to achieve the overriding objective. However the defendants had some three years after the termination of the retainer but before the proceedings were commenced, to take the position that they wanted all of the invoices to be subject to the assessment but did not do so. Costs Judge Leonard noted that even if the bills were not statutory bills, it would not be appropriate to go behind Deputy Master Nurse’s order, purely because the defendants had now changed their case. Costs Judge Leonard went on to say that he did not believe that he was able to order a statute bill to be delivered in a certain way; referring to Parvez v Mooney Everett Solicitors Ltd [2018] EWHC 62 (QB) which stated that only a solicitor can determine the content and terms of their claim for payment.
As to whether the bills were statute bills, the conduct of the parties throughout the dispute was such that the defendant had accepted that the bills were final statute bills. If the bills were to be considered a Chamberlain series of bills, the final invoice would have been dated December 2017 and there would have been no special circumstances under section 70(3) of the Solicitors Act 1974 to order those costs to be assessed.
Moving forwards, Costs Judge Leonard held that he would not restart the process of assessing the five bills by making an order for inspection of the files. However he would consider all of the information in the bills, and the defendants disputes, and decide whether any further directions were needed. These could include a requirement that the claimant provide more information, but the judge would be reluctant to do anything which wasted the costs of the work done to this point.
Practical pointers for common law assessments:
- Solicitors may not bring a claim for their costs before the expiry of one (calendar) month from the date on which the statute-compliant bill was delivered (SA 1974, s 69(1)) unless there is probable cause to believe that the party chargeable is about to quit England and Wales, become bankrupt or commit an act which prevent or delay payment being made to the solicitor.
- If the client has made an application for detailed assessment of costs, or obtained an order for the costs to be assessed, the solicitor cannot being a claim for payment of those fees.
- The correct process is to issue a Part 7 claim
- In cases where the gross sum bill is sufficiently detailed, there would be need for challenges to specific items for a summary judgment application on the part of the solicitor, to fail.
- If there is no breakdown of the bill, the client cannot challenge the detail and must therefore challenge the reasonableness of the sums claimed. In these cases, the court may order an assessment of the entire bill.
- Precedent P in the practice direction to Part 47 provides a suggested format for any such breakdowns. It largely follows the same format as the ‘old’ version of the inter-partes bill of costs.
- Where a breakdown has been provided, but the party payable with the bill does not take specific points in relation to the costs claimed, any application for summary judgment will be successful (Devonshires Solicitors LLP v Elbishlawi [2021] EWHC 173 (Comm)).
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