Harrison v Eversheds LLP [2017] EWHC 2594 (QB)
Background
The underlying claim giving rise to the above appeal related to a solicitor client detailed assessment, the Claimant appealed a decision from Master Rowley. The Claimant had instructed the Defendant in proceedings against Lord Laidlaw arising from a property dispute. The Claimant was contending that the costs payable by him to the Defendant should be limited on the basis of estimates of costs given to him. Unsurprisingly the estimates were considerably lower than the fees invoiced.
The total costs invoiced by the Defendant solicitors were by then £1,602,436.66 net of VAT and comprised £863,283.72 profit costs and £739,152.94 disbursements. The costs claimed were approximately 4.8 times an estimate net of VAT of £162,711 profit costs plus £139,138 disbursements given by the Defendant to the Claimant on 2 October 2012 (‘the First estimate’). The First estimate accounted for the unbilled costs to that date but not billed costs. Thus the overall First estimate was actually £333,102.30.
On 7 February 2013 the Defendant’s anticipated total costs on their allocation questionnaire were £548,054.13 comprising £336,811.80 profit costs and £211,242.33 disbursements (‘the Second estimate’). The actual costs invoiced were approximately 2.9 times the Second estimate.
Solicitor Client Detailed Assessment
In a reserved decision on 11 November 2016, Master Rowley made the following Order:
“(1) The Defendant’s profit costs (at normal hourly rates) are limited to a maximum of £650,000 plus VAT.
(2) The disbursements, including counsel’s fees, are not limited by this decision.”
On 7 March 2017 Mr Justice Langstaff gave permission to appeal on the following grounds:
“(1) The costs judge erred in taking the Second estimate as the starting point for what costs could be recovered;
(2) Having taken the Second estimate as his starting point the costs judge erred in holding that it was reasonable for the Defendant to recover profit costs of up to double the amount stated in that estimate (subject to the impact of the CFA); and
(3) The costs judge should have limited the recovery of disbursements with reference to the first alternatively the second estimate, as well as profit costs.”
Appeal
At the hearing in question, Mrs Justice Slade allowed the Claimant’s appeal in part.
The first ground was rejected:
“Mr Williams QC contended that the conclusion of Master Rowley that reliance upon the First estimate was superseded by the actions of the Claimant and the Defendant entering the CFA after receipt of the Second estimate was unassailable. I agree. In my judgment Master Rowley did not err in taking the Second estimate as the starting point for the assessment of fees which could be recovered.”
The second ground succeeded:
"Master Rowley reached a conclusion on the profit costs which it was reasonable for the Claimant to pay that was not supported by his findings of fact, was based on a mistake on the figures and erred in principle in relying on profit costs charged to Lord Laidlaw in departing so substantially from the Second estimate. Master Rowley therefore exceeded the broad measure of his discretion in considering a reasonable upper limit on profit costs as high as twice that in the Second estimate.”
Mrs Justice Slade reached this decision with regard to the third ground:
"Whilst the additional work referred to by Master Rowley in paragraph 128 of the judgement and the increased length of the trial from four or five days to ten days warranted an increase in counsels’ fees from £170,500 in the Second estimate, in my judgment in the absence of additional reasons being found by him to justify the increase to £476,576.48 it was not open to Master Rowley to assess counsel’s fees in that sum. His decision to assess counsel’s fees in the sum of £476,576.48 is set aside.”
The third ground of appeal therefore succeeded in respect of counsel's fees. Ultimately necessitating that a detailed assessment of the Defendant’s profit costs and counsel’s fees be remitted to Master Rowley for determination.
It seems apparent therefore that those ignoring the importance of providing clients with accurate and up to date estimates could face significant financial and reputational repercussions.
In the current tide of increased solicitor client disputes and a crack down by the courts on spiralling and disproportionate costs, it is only sensible to keep abreast of the costs being incurred and passing on that information to clients. This is of course beneficial to solicitors who may be able to claim those costs from the other side or to avoid a potentially costly solicitor client detailed assessment.
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