Ambiguity in the retainer will be resolved in favour of the client
Stella v Hodge Jones & Allan LLP [2024] EWHC 1704 (SCCO) and whether bills are interim or statute.
Background
The Claimant retained the Defendant in September 2017 to assist with a property dispute. The dispute initially concerned unpaid service charges by the Claimant’s landlord but expanded to include a claim for disrepair, allegations of harassment and a disagreement with a neighbour about overhanging trees.
34 invoices were delivered to the Claimant between 12 October 2017 and 18 November 2021; totalling £225,697.60, of which £198,635 was paid.
On 29 April 2022, the Claimant issues Part 8 proceedings against the Defendant seeking a SA 1974 detailed assessment of 8 invoices delivered between 30th April and 18th November 2021, for a sum of £85,140.70. It was agreed in a consent order that those invoices should be subject to the assessment.
On 21 May 2023, the Claimant issued an application for the detailed assessment of the remaining 26 invoices delivered between 12 October 2017 and 31 Match 2021 in the sum of £140,492.20. The application also sought to consolidate this claim with the earlier Part 8 claim.
Considerations of the Court
Among other things, the application required the court to consider whether the invoices delivered to the Claimant were interim statute bills or a series of interim invoices delivered as part of a chamberlain bill.
When considering this, it was agreed that the burden of proving that the retainer provides for the delivery of interim statute bills falls on the receiving party. It was also agreed that contractual provisions as a whole should be referred to when construing the retainer and when determining whether a retainer allows the solicitor to render interim statute bills, the court should resolve any fundamental ambiguity against that construction.
Position of the Defendant
The Defendant submitted that the contractual retainer preserves expressly an entitlement for the Defendant to render interim statute bills. It was argued that the retainer draws a distinction between interim bills and requests for money on account.
The Defendant further submitted that the retainer should be construed as an implied agreement that the Defendant could render interim statute bills. Six of the invoices were sent with covering letters that commenced with the words “we enclose our interim statute bill for work done on your case for the [relevant period]”. This made it clear that the Claimant was fully aware that the invoices sent to him were interim statute bills and this was repeated in correspondence since 2018.
It was also demonstrated that the bills met the statutory requirements of interim statue bills as they had been signed, set out sufficient detail and were self-contained and complete demands for payment for the relevant period.
Position of the Claimant
The Claimant submitted that on an ordinary construction of the retainer, the wording entitles the solicitor to claim interim payments on account prior to delivery of a final statute bill. It was highlighted that billing arrangements under the retainer references further money on account of costs comes immediately after the provision for delivery of interim bills militates against the conclusion that the bills are interim statute bills. The mention of the solicitor sending a final bill endorses the conclusion that the retainer anticipated for periodic payments on account prior to the delivery of a final statute bill.
The Claimant took issue with the argument that an implied entitlement to deliver interim statute bills was conferred in the retainer as such a conclusion would not be consistent with the contractual interpretation that upheld an express agreement for the delivery of interim payments on account followed by a final statute bill.
In response to the 6 invoices that mentioned that they were interim statute invoices, the Claimant highlighted that the majority made no reference and the letters accompanying the other invoices were referred to as “interim bills” in the context that the sum being requested on account was greater than the invoice. The Claimant also made repeated requests for an account statement, which supported the view that there was an understanding that a final bill would be delivered.
Court’s position
Costs Judge Whelan considered an uncomplicated construction of the retainer and found that the invoices delivered were interim bills on account and not statute bills. Accordingly, the time for applying for a detailed assessment did not commence until delivery of the final bill.
While it was considered that the retainer was ambiguous, such ambiguity must be resolved in favour of the paying party. The submission that there was an implied agreement to render interim statute bills, it was found that such an interpretation could not co-exist with an express provision for the delivery of interim payments on account followed by a final statute bill. The evidence submitted by the Defendant in relation to the headings of the invoices on 6 matters supported the Defendant as it demonstrated that the wording was missing from the remaining invoices.
Finally, the Defendant could not rely on the fact the Claimant made regular payments on account for inferring an agreement of the delivery of interim statute bills. As the retainer did not provide for periodic invoices to be interim statute bills, Costs Judge Whelan could not infer any agreement to the contrary.
Costs Judge Whelan explained that he did not consider that this type of dispute should come before the court. The solicitor could have prevented this dispute by use of straightforward legal drafting to include an unequivocal provision to this effect within the retainer.
Analysis
This matter shows that in order for an invoice to be considered an interim statute bill rather than a payment on account, the construction of the retainer will be considered in order to determine the intention of the parties. The Court have shown they are not prepared to infer an agreement when evidence exists in the contrary.
More importantly, it highlights the importance of correct drafting in the first instance, as the correct and comprehensive drafting of the retainer will prevent any ambiguity and will prevent any dispute from arising in the first place.
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