Case summary

This story began in the Senior Court Costs Office (SCCO) in December 2021 when costs Judge Rowley delivered his judgment in the case of Jones v Richard Slade and Co Ltd.

The underlying litigation was a family dispute about a will. The claim was successfully mediated with two of the siblings receiving money and a contribution towards their costs from the estate of their father. The costs invoiced to one of the siblings, Lisa Jones, ‘substantially exceeded’ the contribution towards her costs of £13,750.00. Her lawyers (Richard Slade and Co Limited) agreed to reduce their fees to £22,000.00 and, after an exchange of emails, and with her consent, they deducted the agreed fees from her settlement monies.

Lisa Jones (the Claimant) sought to challenge her former solicitors’ costs. Richard Slade and Co Ltd (the Defendant) did not oppose an assessment if the compromise agreement with the Claimant to reduce its fees was set aside. To do otherwise they said would be ‘the costs equivalent of having their cake and eating it.’

Part 8 proceedings seeking a Solicitors Act (SA) assessment were transferred to the SCCO. The parties had agreed that two preliminary issues should be dealt with, one of which was to consider the ‘legal status and effect of the agreement to reduce fees’.

The Claimant wanted the compromise agreement to be set aside on the grounds of undue influence or economic duress – ‘she accepted the agreement on the basis that, if she did not do so, she would be exposed to a rather greater costs liability’. Points of Claim and Points of Defence were served in relation to the preliminary issues. The Defendant then applied to strike out or stay the challenge to the compromise agreement on the grounds that the remedy sought by the Claimant was not available under a SA assessment.

At paragraph 14 of his judgment Master Rowley observed that ‘It is commonplace for challenges by clients to their former solicitors’ bills of costs to traverse a fine line between complaints about matters such as a failure to adhere to estimates on the one hand and being professionally negligent on the other.’

At paragraph 18 he added, ‘There are clearly boundaries beyond which costs proceedings will not be appropriate as a forum to deal with contractual and equitable remedies. As is often the case, the decision as to the suitability of the court and its procedure is very much fact dependent.’ Having considered the facts of this case, he refused to strike out any part of the Claimant’s Points of Claim.

The Defendant appealed and the matter came before Mr Justice Johnson on 20 July 2022. Click here. The question for him to decide was whether setting aside the compromise agreement came within the ambit of s70 of the SA. If it did not, then the Defendant’s appeal must succeed.

The Defendant argued that a solicitor client assessment pursuant to s.70 of the SA was a ‘... "highly abbreviated procedure to determine the reasonableness of charges contained within a solicitors' bill" and was not a forum for determining "other disputes between solicitors and their clients."’

The Claimant’s response was that Costs Judge Rowley was a ‘highly experienced costs judge who was exercising a specialist jurisdiction’ and the issues raised could be fairly and justly determined in costs proceedings.

Before deciding the appeal, Johnson J stressed the need for clarity when there is a trial of preliminary issues. They are ‘too often treacherous short cuts’, particularly when formal issues ‘are set in motion in a casual and unstructured way’. In the case in hand, the preliminary issues had been defined before either party had formally set out its case in writing.

Paragraph 41 illustrates the difficulty of his task – whilst ‘ “wholesale” allegations of professional negligence may not be determined when assessing costs’, an allegation of ‘localised’ negligence may be relevant to whether particular items of costs were reasonably incurred.

Paragraph 47 contains his decision:

‘I do not consider that there is anything within section 70 that permits the court to embark on what is in effect a freestanding enquiry into the question of whether the agreement should be set aside on grounds of undue influence. That involves the exercise of a distinct equitable jurisdiction which forms no part of an assessment of costs.’

Johnson J’s concluding remarks expand on his thinking – where a judge is exercising a wholly statutory jurisdiction, it is necessary to show what the statute positively permits. He also makes the point that the fact that Parliament included a power to set aside contentious and non-contentious business agreements under the SA is a strong indicator that section 70 of the SA was not intended to permit this kind of exercise.

Commentary by Andy Ellis

  1. SA assessments remain a technical and arcane corner of the costs jurisdiction. Points of Preliminary issues must be thought about carefully and it is not always the case that they speed up the procedure or reduce costs – quite the opposite on this occasion. The appeal decision serves in part as a warning against seeking a ‘nuclear’ option for the setting aside of a retainer in circumstances when there is a risk that the power to do so is not contained expressly in s70 of the Act.
  2. One has sympathy for Master Rowley who was right to say that, during many costs assessments, cost judges are called upon to determine the validity of retainers (with potentially dramatic consequences). It is also the case that ‘localised allegations of negligence’ (Ben Williams QC’s phrase) are often tried as issues within solicitor/client assessments.
  3. During the hearing, Ben Williams QC for the Defendant had described the Claimant’s case as ‘evolving significantly in response to the defendant’s application’. Having relied in the judgment on the scope of the Claimant’s arguments as put in the Points of Claim, Master Rowley ends his first instance judgment by making it clear that any material change would need the approval of the court. However, this kind of mischief making can be costly and time consuming for law firms to deal with. At the risk of mixing metaphors, kitchen sinks and moving targets (departing from pleaded cases without formal applications) are unlikely to help any party’s case.
  4. describes itself as ‘... the country's leading firm specialising in challenging the legal fees of other solicitors’. The same firm is also involved in the informed consent challenge in CAM Legal v Belsner which is listed to be heard in the Court of Appeal in October.
  5. The first instance judgment is proudly displayed on the checkmylegalfees website under the heading ‘Wins’. Not so the appeal judgment dated 27 July 2022.
  6. Although the amounts at stake this time were small, the smart money is on these kinds of challenges moving up the food chain.

Further Practico commentary on solicitor client assessments can be found here:

  1. George McDonald’s view is that The Solicitors Act is a strange beast and it generates lots of solicitor/client disputes. Click here to read our July 2022 Virtual Roundtable report.
  2. Significant money and effort is spent during solicitor/client assessments in arguing about whether solicitor bills trigger the Solicitors Act timetable and tests. Click here to read Judith Ayling QC’s thoughts in our August 2021 Costs Briefing.
  3. Nick Bacon QC’s view is that the Solicitors Act is a relic of the past and needs to be fundamentally overhauled. Click here to read more in our September 2020 Costs Briefing.

The contents of this article are for general information purposes only and do not constitute legal advice.  While we endeavour to ensure that the information in this document is correct, no warranty, express or implied, is given as to its accuracy and we do not accept any liability for error or omission.