The Costs Judge delivers…
In the matter of Haskell Elias – v- Wallace LLP
In the HIGH COURT OF JUSTICE SENIOR COURTS COSTS OFFICE
Before – SENIOR COSTS JUDGE GORDON-SAKER (Judge).
Date: 12/10/2022
Neutral Citation Number [2022] EWHC 2574 (SCCO) – Case No: SC-2022-APP-000546
At the hearing of this claim on 26th August 2022, the Judge had indicated that he would order that the claim be dismissed and that the Claimant should pay the costs of the Defendant, which were assessed summarily in the sum of £15,159.25.
The claim was for the delivery of a bill under s.68 Solicitors Act 1974. The Judge explained that, in his view, the Defendant had already delivered a final bill to the Claimant, but that he would set out the reasons for his decision in writing. The hearing had been listed for 2 hours and, given that the claim raised a number of novel issues, there was insufficient time to give judgment ex tempore.
These are a brief summary of the reasons for the Judge’s decision.
The Defendant was a firm of solicitors who, between July and October 2020, had been retained by the Claimant to act on his behalf in proceedings in the Business and Property Courts.
Over that period, the Defendant issued 6 invoices:
i) 19th August 2020 for profit costs in the sum of £38,017 and disbursements of £800.50 (excluding value added tax). The bill was expressed as “To our interim professional charges in connection with the above matter for the period 27 July to 17 August 2020”.
ii) 19th August 2020 for counsel’s fees of £4,599 plus value added tax.
iii) 28th August 2020 for profit costs in the sum of £10,817.50 and disbursements of £20 (excluding value added tax). The bill was expressed as “To our interim professional charges in connection with the above matter for the period 18 to 27 August 2020”.
iv) 28th August 2020 for counsel’s fees of £2,875 plus value added tax.
v) 30th September 2020 for profit costs in the sum of £7,758.50 (excluding value added tax). The bill was expressed as “To our interim professional charges in connection with the above matter for the period 1 to 30 September 2020”.
vi) 15th October 2020 for profit costs in the sum of £1,903 and disbursements of £150 (excluding value added tax). The bill was expressed as:
“For the period from 1 October 2020 to date
To our professional charges in relation to advising regarding strategy and prospective application for an unless order, corresponding with Shepherd Wedderburn regarding further request for extension of time for service of defence and DM’s ongoing breaches of injunction order, advising and reporting to your [sic] throughout.”
The Claimant paid a sum on account of costs and £30,000 was received from the Claimant’s opponent under an interlocutory costs order. The total of the invoices is £80,168, of which £27,168 remained outstanding.
In January 2022 Defendant sent a letter before claim in respect of the outstanding balance.
On 11th July 2022, the Claimant commenced this claim.
The Claimant’s case was that the invoices were (i) not statute bills, either interim or final, (ii) that they were not signed, (iii) that the emails which accompanied them were not letters for the purposes of the 1974 Act and (iv) that the invoices were not delivered to the Claimant.
The Defendant’s case was that the invoices formed a Chamberlain bill, that they were signed, that the emails which accompanied them were letters for the purposes of the Act and that delivery of the invoices by email was effective.
- The Judge needed to consider – Are the invoices statute bills?
A solicitor’s retainer is an entire contract and, save in two circumstances, solicitors are not entitled to payment on an 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.
The Judge considered that the Claimant’s case as to why the invoices were not statute bills to be “not entirely clear”. The claim form described them as:
“a series of invoices rendered by the Defendant law firm that contain fees which are of an interim and on account nature (i.e. NOT interim statute in nature) due to their: parsity [sic] of information; being unsigned; and being delivered by e-mail only with no express confirmation provided by the Claimant for such an approach to constitute valid service”.
At the original hearing – In paragraph 14 of his skeleton argument, Mr Kendall indicated that the Claimant did not accept that sufficient information had been provided in the invoices. However, in his oral submissions, he did not develop that but addressed the Defendant’s contention that the invoices formed a Chamberlain bill. He pointed out that the last bill did not say that it was a final bill, there was no indication that it was a final bill, and that the series of invoices were not identified as a Chamberlain bill.
As the Judge observed, In the present case, the last invoice was not marked as “final”. However, unlike the earlier invoices for profit costs, it did not refer to “interim professional charges”. More significantly, in my view, the email dated 16th October 2020 from the Defendant to the Claimant, and to which the invoice was an attachment, referred to it as the “final invoice” and requested payment of the balance due so that the papers could be released to the Claimant’s new solicitors. The invoice covered the period “from 1 October 2020 to date”. It seems to me that this was clearly the final invoice. Vlamaki can be distinguished because, in the present case, the email enclosing the letter made it clear that this was the final invoice of a series as well as that the Claimant would receive no further bills from the Defendant.
The Judge observed, 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 and accepted that 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.
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
His review of the legislation and the case law led the Judge 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.
The Judge added a postscript for the profession’s consideration in the hope that such challenges did not arise in the future:
Surely in 2002[sic] every second of time spent, certainly on contentious business, is recorded on the account department’s computer with a description of the fee-earner, the rate of charging and some description of the work done. A copy of the printout, adjusted as may be necessary to remove items recorded for administrative purposes but not chargeable to the client, could so easily be rendered and all the problems that have arisen here would be avoided. In these days where there seems to be a need for transparency in all things, is a printout not the least a client is entitled to expect?
In the matter before him each of the invoices, apart from those for counsel’s fees and the last invoice for profit costs, were accompanied by time records. They were sent as an attachment to an email which preceded that which attached the invoice. The time records described the work done in respect of each item, the time spent, the fee earner involved and the hourly rate applied. The Judge, therefore, considered that sufficient information had been provided to the client to enable him to form a view as to the reasonableness of the charges.
- The Judge then needed to consider – Were the invoices signed?
Each invoice bore the name “Wallace”, a “W” logo and the firm’s physical address, telephone number and website address.
In appearance, therefore, they were not dissimilar to a paper invoice printed on a firm’s pre-printed letterheaded stationery.
Counsel submitted that the printed name “Wallace” satisfied the definition of a signature in s.7(2), namely “anything in electronic form … incorporated into … any … electronic data … and [which] purports to be used by the individual creating it to sign”.
The Judge was not satisfied that the incorporation of “Wallace” into the electronic invoice meant that the individual person who created the invoice created it as a signature to the invoice it was rather just the firm’s letter heading rather than a signature and further, there was no evidence that the creator of the invoice was “the solicitor or … an employee of the solicitor authorised by him to sign” for the purposes of s.69(2A) of the 1974 Act
That said, however, the Judge reached a different conclusion in relation to the e mails which accompanied the invoices – each concluding:-
Best regards,
Alex
Alexander Weinberg
Partner
Finding that the electronic signatures on the emails were electronic signatures for the purposes of s.69(2B).
- The Judge then needed to consider – were the emails letters for the purposes of s.69(2A)(b)?
Again careful consideration was given by the Judge to the Solicitors Act 1974 when he came to the view that – the purpose of s.69(2A) is to convey to the client that the bill has been authorised by the solicitor. That can be done by either a signature on the bill or a signature on the communication that accompanies the bill. In my experience solicitors’ bills are sent to clients either by post, usually with an accompanying letter, or by email. Sometimes they are sent by both means. It would, as Mr Griffiths submits, be absurd if a solicitor, sending a bill by email, were required to send, as another attachment, a letter in pdf form which contained no more information than that contained in Mr Weinberg’s email.
Accordingly, in my judgment, applying an updating construction, an email is a letter for the purposes of s.69(2A)(b).
- The Judge then needed to consider – If the invoices had been delivered to the Claimant,
It was not in issue that the invoices were sent to the Claimant as attachments to emails only. In his skeleton argument and in his oral submissions Mr Kendall submitted that the Claimant’s consent to clause 24.3 of the Defendant’s terms of business was not informed consent and that the Claimant had not indicated his willingness to accept delivery by email.
Informed consent is an issue being considered in Cam Legal Services Ltd v Belsner, at the time of this summary of this case the decision of the COA is awaited however as summarised by the Judge, that case is whether informed consent is required in respect of an agreement which expressly permits payment to the solicitor of an amount of costs greater than that which the client could recover from the opponent. It has never been the case that a provision in a solicitor’s retainer as to the mode of service of documents requires the informed consent of the client. It is not in issue that the Claimant agreed to the Defendant’s terms of business.
The Judge stated – While, as Mr Kendall submitted, clause 24.3 does not specifically refer to bills or invoices, it does refer to “documents”. It seems to me that the clear intention is that the solicitor is permitted to send documents by email, including formal documents, and that must include invoices. It would be absurd if the solicitor were permitted to serve a claim form in respect of unpaid fees by email but not the bill on which the claim was based. Emphasis added.
The Judge found the Claimant had indicated his willingness to accept delivery of the bills by email and from the correspondence exhibited it was clear that the Claimant was willing to communicate and to receive communications by email at the address that he used.
At the outset of the retainer, the Claimant’s daughter provided his email address. It has not been suggested that she was not authorised to do so. The Claimant returned his acceptance of the Defendant’s terms by email. He responded by email to the emails sending him the invoices. By this course of conduct, including his acceptance of the first 5 invoices by email, the Claimant indicated his willingness to accept delivery of bills by email.
Accordingly, the Judge was satisfied that the invoices were delivered to the Claimant for the purposes of s.69(2C).
Mr Kendall for the Claimant had made it clear, both in his skeleton argument and his oral submissions, that the Claimant’s aim was to obtain a detailed assessment of the invoices. It followed from the Judge’s decision that he would need to show special circumstances… and Mr Kendall was keen to tell me what they might be. However as the relief sought is limited to the delivery of a bill, whether there should be an order for detailed assessment does not arise. As Mr Kendall pointed out, even if the court does not order detailed assessment, if the Defendant sues for the outstanding fees, the Claimant may well obtain an order for a quantum meruit assessment. At the risk of repeating what I said at the hearing, the parties would be well advised to talk to each other to try to reach an accommodation which would avoid further costs.
An interesting case but one, it would appear, that was doomed to fail from the outset. A case in which extremely useful guidance was provided to the Profession as to the information to be provided to a client in support of any invoices.
Gary Knight, Partner and Costs Lawyer.
