Marc Banyard explains the rationale behind the appellate Court’s recent decision in Richard John Slade (t/a Richard Slade and Company) v Boodia & Anor [2018] EWCA Civ 2667.
Whilst, on first blush, this has all the appearance of the sort of nit-picking pedantry that appeals solely to costs practitioners and has no enormous relevance to the day-to-day life of the practising Solicitor, the potential ramifications of this decision are significant.
If a bill of costs is not ‘final’ in accordance with the Act then it is nothing more than a request for monies on account and none of the time limits set out in s.70 of the Solicitors Act apply (as the same only start running once a valid bill of costs has been delivered to one’s client). If it were to be found that an ostensible ‘bill’ which had been sent (maybe even paid) many moons ago was not in actual fact a ‘final’ bill complying with the Act because it did not detail all disbursements for that period, the costs detailed therein could be re-opened and subject to the scrutiny of detailed assessment however much you had considered the same consigned to history and however long those monies had been nestling happily in your office account.
Given that, from the writer’s personal experience, it is very common practice for solicitors to raise interim invoices which cover just the profit costs for the period stipulated (with a ‘disbursement only’ invoice often being raised some way down the line when invoices from experts or Counsel or whomever have actually been received) the decision by the Court of Appeal had the distinct possibility of re-opening vast swathes of bills in respect of which any right to seek detailed assessment appeared to have been extinguished long ago.
The question had initially come before Master James in the SCCO in March of 2017. The background was relatively straightforward. The claimants (the respondents in the appeal) had instructed the defendant firm in January of 2013 in respect of litigation relating to a right of way. The defendant had raised 61 bills to the claimants over the course of the matter: 43 relating to profit costs and 18 relating to disbursements. When the claimants terminated the retainer and transferred to another firm in November of 2016, the final four invoices remained outstanding.
In November of 2016, the claimants had commenced proceedings seeking detailed assessment of all 61 invoices. The defendant firm submitted that any invoice raised more than one year prior to the date proceedings were commenced could not be the subject of the assessment in accordance with s.70 of the Act (it isn’t clear from either the Court of Appeal or High Court judgment whether all such invoices had been paid more than a year before the claim was stated, so that there existed an absolute bar on assessment – one assumes so reading between the lines).
Master James ordered the hearing of a preliminary issue as to whether the bills raised were final or should instead be treated as ‘on account’ requests for payment (so as to render the entirety of the costs charged open to the scrutiny of detailed assessment). The Master decided that the bills could not be held to be final given that each bill did not contain the entirety of the costs for the period covered (e.g. the invoices for profit costs did not contain the disbursements and vice versa).
Whilst the Master acknowledged the practical difficulties of ensuring that, for example, counsels’ and experts’ fees were received so as to coincide with the raising of a solicitor’s invoice, it was suggested that this difficulty could be overcome by raising requests for payment on account. Furthermore, the Master felt that these concerns were outweighed by countervailing concerns as to the difficulties a client would face in knowing whether to exercise their rights under the 1974 Act and seek detailed assessment where the information provided to them was only partial for the period in question.
The defendant firm appealed (quite understandably) but was met with equally little joy before Slade J as a result of which they appealed further to the Court of Appeal. Newey LJ, giving the lead judgment, found that the approach adopted by both Slade J and Master James was unsatisfactory in that a solicitor would not be able to raise a binding bill until he himself had received details of all disbursements from third parties and so would be entirely reliant on the at the cooperation of those third parties in order to bring proceedings to recover his own fees.
Furthermore, Newey LJ found, quite contrary to the decisions of Slade J and Master James, that “the 1974 Act nowhere states that a statute bill must encompass both profit costs and disbursements, and I can see no justification for such a rule in the case law either”, it being noted that “separate billing for profit costs and disbursements is common with modern, digital billing, and I do not accept that that need gives rise to problems.”
Dr Friston for the Respondents did put forward a ‘fall-back’ position that, for a bill to be bona fide, it ought to include all disbursements in respect of those invoices which had been received by the solicitors during the period covered although this had not been foreshadowed in any Respondents’ Notice (understandably as Dr Friston was a last-minute replacement for the Respondents’ previous Counsel who was unable to attend the hearing due to illness). In any event, Newey LJ found the submission to be “no more supported by the terms of the 1974 Act or the authorities than Slade J’s approach.”
So, the profession can draw a sigh of relief as this rather worrying litigation comes to a satisfactory close. It is perhaps surprising that it took the Court of Appeal to realise the practical impossibilities of the approach which both Master James and Slade J had concluded was mandated by the Act (as well as pointing out that the Act itself required no such thing). Had Slade J’s judgment been upheld, the vast majority of bills which had been raised as final and been treated as such would have retrospectively been reclassified as nothing more than requests for monies on account and the profession would have encountered significant issues going forward in raising enforceable invoices during the currency of a case.
Please contact Marc Banyard to discuss any query relating to this article. Marc is based at our Cardiff office and can be contacted on 029 2039 4043.
Find your nearest office
Login
