Kerry Underwood

Archive for June 2018

FIXED COSTS TRUMP CONSENT ORDER

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In Bratek v Clark-Drain Ltd – Case No B31YM002 – Cambridge County Court, 30 April 2018

Cambridge County Court, on appeal from a District Judge, was considering the interpretation of a consent order in relation to costs in a personal injury claim subject to fixed recoverable costs.

The matter had been in the EL/PL portal but had come out because liability was not admitted and was then set down for a fast track trial and was settled the day before the claim was due to be heard.

The consent order provided that the defendant do pay the claimant £10,000 in full and final settlement with the defendant to pay the claimant’s solicitor’s costs, on the standard basis, to be assessed if not agreed.

The claimant argued that this meant that this agreement took the matter outside the fixed costs regime, whereas the defendant said that that order left the matter subject to fixed recoverable costs.

The claimant’s argument was that the agreement should be construed on the basis that the parties had agreed that the fixed costs regime would not apply.

Here neither party had addressed themselves to the issue of whether there were exceptional circumstances for escaping fixed costs as set out in CPR 45.29J, and thus that was not an issue.

Here the judge held that the provisions of CPR 45.29D are mandatory and it is not possible for the parties to contract out of those provisions, and consequently unless CPR 45.29J, in relation to exceptional circumstances, applied, then in a fixed recoverable costs case the recoverable costs are indeed fixed.

Thus a consent order providing for costs to be assessed on the standard basis if not agreed, makes no difference at all.

Comment

A correct decision.

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Written by kerryunderwood

June 20, 2018 at 12:12 pm

Posted in Uncategorized

THE BILL TO THE CLIENT AND CALCULATING THE AMOUNT DUE FROM THE CLIENT

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In relation to costs recovered from the other side, a bill must be delivered to the client and will normally be along the lines of:

“To Mr & Mrs Jones (payable by Dennis the Defendant)”

If the recovered costs are fixed, then there is no need to provide any further details in the bill, beyond saying that the costs are fixed in accordance with the Fixed Costs Scheme, or whatever.

In non-fixed costs cases there should have been correspondence with the client as to whether or not the sum proposed by the paying party is acceptable, and there should be wording along the lines of:

“As advised to you in correspondence, and full details of which are available on request.”

If you are limiting the total charge to the client by reference to a percentage of damages, then it is unlikely that the amount recovered from the other side will affect the actual charge to the client.

However, what it will do is to alter the figure which is unrecovered solicitor and own client costs and that element, if any, which is the success fee.

The charge to the client can be done in two separate bills, one setting out the balance of unrecovered solicitor and own client costs and the other one setting out the amount of the success fee, if any.

The reason for that is that it will generally show a low, or indeed non-existent, success fee as most of the charge, if not all, will be solicitor and own client unrecovered costs.

Solicitor and own client basic costs are far harder to attack, as compared with a success fee, especially if the Conditional Fee Agreement is a Contentious Business Agreement.

As we know the level of success fee is now under attack, and thus the lower it turns out to be, the better.

The invoice to the client in relation to unrecovered solicitor and own client costs should be a full narrative bill with the full charge but then stating:

“Less recovered costs as per separate invoice number …”

Often, due to the total charged to the client being capped by reference to damages, you will not be charging the full gap between solicitor and own client costs and recovered costs, in which case the following wording can be added:

“But capped at £X being X% of damages as per our agreement.”

If you are charging a success fee and if the balance between solicitor and own client costs and recovered costs does not hit the cap, then the balance is indeed a success fee and the narrative in the invoice should read:

“Success fee being the difference between unrecovered solicitor and own client costs as per invoice… and the agreed maximum charge to you of X% of damages – £X  -which amounts to a success fee of X%.”

The success fee is calculated on the full base rate, not the recovered element.

Thus if the rate is £400.00 per hour and the total solicitor and own client costs, whether recovered or not, are £10,000.00 and after charging the client the unrecovered element, the balance due by way of a success fee is £1,000.00, then that is a success fee of 10%.

Written by kerryunderwood

June 19, 2018 at 10:42 am

Posted in Uncategorized

COURT REFUSES TO GRANT SOLICITOR LIEN FOR COSTS

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In Bott & Co Solicitors Ltd v Ryanair DAC [2018] EWHC 534 (Ch)

the High Court refused to grant Bott & Co Solicitors equitable relief to protect its lien for costs in relation to flight delay compensation obtained from Ryanair.

The judgment helpfully distils numerous authorities considering the circumstances in which the court will intervene on equitable grounds to protect a solicitor’s lien.

Notably, the court distinguished this case from

Gavin Edmondson Solicitors Ltd v Haven Insurance Company Ltd [2015] EWCA Civ 1230

  which is under appeal to the Supreme Court.

Ryanair had started to settle pre-action flight delay compensation claims directly with Bott & Co’s clients.

Bott & Co therefore lost the opportunity to deduct its fees from the clients’ compensation.

Bott & Co requested that Ryanair undertake to preserve Bott & Co’s lien over any claim proceeds in accordance with

Khans Solicitors v Chifuntwe [2013] EWCA Civ 481

which held that equity will intervene to protect a solicitor’s claim on funds recovered or due to be recovered by a client or former client, where the paying party has notice of the receiving party’s solicitor’s claim.

When Ryanair refused to do so, the claimant issued proceedings for relief, including an indemnity in respect of fees where Bott & Co S had submitted a compensation claim to Ryanair on behalf of a client, and where Ryanair had paid the client directly, and the client had not settled Bott & Co’s fees.

Having reviewed the authorities pre-dating Gavin Edmondson, the court held that, in order for a solicitor to have an equitable lien in relation to property recovered or preserved, the following criteria must be fulfilled:

“(i) There must be a fund in sight;

(ii) recovered, preserved or established by the solicitor’s efforts or activity;

(iii) as a result of litigation or arbitration, including a compromise resulting from the pressure of litigation or arbitration between the solicitor’s client and the other party,

(iv) in which the solicitor has an interest that equity can protect and which is deserving of protection.”

A question arose as to the extent to which Gavin Edmondson had extended the third criterion.

The court observed that the justification for extending the Khans principle to Gavin Edmondson appeared to be that Edmondson’s clients, through its efforts, had participated in a voluntary but formalised scheme under the RTA Protocol, sanctioned by the judiciary, for the early resolution of claims involving personal injury, which, once the defendant insurers engaged with the relevant claims, gave rise to an entitlement to fixed costs under CPR 45.

The present case was “quite different” as there was no such scheme for the early resolution of flight delay compensation claims, much less one giving Bott & Co Solicitors an entitlement to costs under the CPR.

Consequently, there was “no principled basis” for extending to this case the protective principle exemplified in Khans and Gavin Edmondson.

Comment

This case has major implications for those solicitors faced with correspondence from the likes of JG and Checkmylegalfees.

If solicitors feel that there may potentially be small sums due to the lay client, then they can send that small sum to the lay client without any lien based liability for the new solicitors’ cost.

Any such costs would then be a matter between those new solicitors and the lay client.

Such cases clearly fall on the Bott & Co side of the line, and not the Gavin Edmondson side of the line.

Written by kerryunderwood

June 18, 2018 at 12:00 pm

Posted in Uncategorized

CLIENT’S LIABILITY FOR BILLS

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In Brookes (t/a Brookes & Co) v Atlantic Marine & Aviation LLP [2018] EWHC 1168 (Comm) (28 February 2018)

the Commercial Court held that a solicitor could bill her client, and the client was liable for the relevant fees, even though the solicitor had not provided any fee estimate before the work commenced, here.

The solicitor had acted for the client in a number of matters, and at the beginning of their relationship, the client had emailed the solicitor stating that, unless it was necessary to deal with the matter urgently, the client required a purchase order with a fee estimate before any work was commenced.

The footer to the client’s email stated that it did not constitute any offer, acceptance or contract and that no contract would be binding and no order placed or accepted without a signature on behalf of the client.

The solicitor replied stating that it was difficult to see how using purchase orders could work in practice and that it was difficult to give a firm estimate without more information about the claim.

The solicitor sent the client a Letter of Engagement and standard terms of business and the client gave instructions for work to be carried out and the solicitors delivered bills for that work.

The client then failed to pay the last bill and argued that a purchase order and estimate were conditions precedent to any liability for fees.

The court held that the footer on the client’s email deprived it of any contractual effect and that it needed to look at subsequent events.

The court noted that the client had not responded to the solicitor’s query about how the purchase order system could work in practice and had instructed the solicitor to do work without further mention of purchase orders.

Furthermore the solicitor’s Letter of Engagement made it clear that the solicitor’s terms and conditions of business applied.

It provided that if they were not signed and returned, then they were deemed to have been accepted.

Consequently there was no condition of precedent to the client’s liability for the bills and nor was there any implied retainer.

The solicitor’s terms governed the relationship and the solicitor was only obliged to use best endeavours to provide a costs estimate.

The appropriate way to resolve any dispute about the quantum of the outstanding bill was to send it for detailed assessment.

Written by kerryunderwood

June 15, 2018 at 10:05 am

Posted in Uncategorized

SOLICITORS’ BILLS: NO CLIENT RIGHT OF ASSESSMENT OF A BILL NOT FORMALLY DELIVERED

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In Parvez v Mooney Everett Solicitors Ltd [2018] EWHC 62 (QB)

the Queen’s Bench Division of the High Court upheld a District Judge’s decision dismissing a claim by Parvez against her former solicitors  Mooney Everett for assessment under section 70 of the Solicitors Act 1974.

On 11 May 2018 a Single Judge of the Court of Appeal refused the lay client permission to appeal to the Court of Appeal here.

The document in question, which the client maintained was a bill, as it was headed “bill of costs” had been included in a file of papers sent to her new solicitors JG.

It had not previously been provided to her or referred to in correspondence and, applying

Kingstons Solicitors v. Reiss Solicitors [2014] EWCA Civ 172

the District Judge held that it was not a statute bill, as it had not been delivered, and, therefore, could not be the subject of assessment.

It was an internal document placed on the file, but never intended to be sent to the client.

 

On appeal the client argued that:

  • once delivered, the bill was a statute bill;

 

  • under the Solicitors Account Rules, the solicitors should have delivered it; and

 

  • where the solicitor had failed to do so, and the bill had otherwise come into the client’s possession, the client could elect to treat it as delivered.

 

Mr. Justice Soole, a full High Court Judge whose ruling is binding on all County Courts and the Senior Court Costs Office, rejected those arguments.

A client was not entitled to treat the bill as having been delivered, and it did not constitute a bill of costs.

 

Kingstons Solicitors v. Reiss Solicitors established that a document will be not be a bill of costs unless sent by the solicitor as a demand or claim of the sum therein stated to be due. Only the solicitor, and not the client or court, can determine the terms and content of the solicitor’s demand or claim for payment.

The court’s power under section 68 of the Solicitors Act 1974 to order a solicitor to deliver a bill of costs does not entitle the court to order, nor the client to seek, delivery of a specific identified document and thus to determine the terms and content of the solicitor’s claim for payment.

Even a breach of the Solicitors Accounts Rules would not entitle a client to treat an undelivered bill of costs as though it had been delivered, as that would enable the client to determine the terms and content of the claim for payment.

 

In refusing permission to appeal to the Court of Appeal the Single Judge gave the following reasons:

 

  1. The judge was right to hold that in order to be a “bill” the document in question must be sent as a demand for payment. A “bill” must have the same meaning in both s 69 and s 70. In addition the natural inference to be drawn from s 70 is that it permits challenges to bills that have been delivered in accordance with s 69.

 

  1. Whether or not the “August bill” was a bill, does not alter the fact that the “June bill” was not for the reasons given by the judge in relation to ground 1. The judge was right in his application of Kingstons Solicitors v. Reiss.

 

  1. The Defendants were not benefitting from their own wrong (as the judge correctly held at [60] last sentence). In those circumstances he was not bound to decide whether or not there was a breach of rule 17.2 (and I note that in any event whether there was a breach is disputed). Even if there had been such a breach, that does not turn an undelivered bill into a delivered one.

 

  1. The solicitors did determine the contents of the bill: it was the “August bill”. The Act does not permit the client to select a different document as amounting to the statute bill.

 

  1. An appeal would have no real prospect of success.

Written by kerryunderwood

June 14, 2018 at 10:47 am

Posted in Uncategorized

SOLICITORS’ BILLS, LIMITATION ACT AND ACKNOWLEDGEMENTS

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I deal with this in my book  Personal Injury Small Claims, Portals and Fixed Costs, which runs to three volumes and over 1,300 pages and available from Amazon here, or me here for £50.00

 

In Phillips and Co (a firm) v Bath Housing Co-Operative Ltd [2012] EWCA Civ 1591

the Court of Appeal held that a solicitor’s claim for costs, billed but not yet fixed by assessment or agreement, fell within the definition of “debt or other liquidated pecuniary claim” in section 29(5)(a) of the Limitation Act 1980, and thus was capable of acknowledgment, causing the six year limitation period to start running again.

Here, the work was completed in 2003 and as the solicitor’s fees had not been agreed, the solicitor was entitled to a reasonable amount under the quantum meruit rule.

On 10 September 2004 the solicitor claimant wrote to the client defendant stating the amount claimed.

On 20 September 2004 the client defendant replied, objecting to the amount.

On 8 September 2010 the solicitor sued and the client pleaded the lapse of time under the Limitation Act 1980, that is that more than six years had passed since the work was carried out.

The Court of Appeal held that the letter of 20 September 2004 was an acknowledgement under section 29(5) of the Limitation Act 1980 causing the six year period to start running again, and consequently the claim was in time and not statute-barred.

That left the issue of whether a claim for solicitor’s fees, absent a formal Contentious Business Agreement or Non-Contentious Business Agreement, was a claim in debt in the nature of a quantum meruit, as compared with a claim in damages.

It was, said the Court of Appeal. It was not relevant that it was not quantified unless and until it was either assessed by the court or agreed by the client or the subject of a judgment.

This was the first decision of the Court of Appeal on this point, even though the relevant provision had originally been in section 23(4) of the Limitation Act 1939.

The Limitation Act 1623 made no provision for time start again due to an acknowledgement or part payment but the courts got round this by treating an acknowledgement or part payment in the first six years as a promise to pay which revived the original action, described in Spencer v Hemmerde [1922] 1 AC 507 as “the task of decorously disregarding an Act of Parliament.”

Lord Tenterden’s Act of 1828 gave statutory effect to the policy of the courts.

In Thomas Watts and Co (a firm) v Smith [1998] 2 Costs LR 59

the court held that an unquantified debt due to a solicitor was analogous to a court case where judgment for damages to be assessed is given.

Here the Court of Appeal said:

“17. On the other hand, the liability of the client is clearly one in debt rather than in damages. A quantum meruit liability is in the nature of a debt, even if it has not yet been quantified in a binding manner between the parties.

  1. In Coburn v Colledge [1897] 1 QB 702 the solicitor’s cause of action was held to accrue as soon as the work is complete. The Court of Appeal said that a writ could have been issued at that time, though non-delivery of a bill might be a defence. It was not a necessary element of the cause of action for the solicitor to allege and prove that a bill had been delivered. Lopes LJ said at page 708 that “the solicitor would have sued in indebitatus assumpsit or on a common money count for work and labour”. Similarly, under section 69 of the 1974 Act, absent special circumstances mentioned in section 69(1), the solicitor cannot issue proceedings for recovery of the costs until the month has elapsed, but nevertheless the cause of action is complete before delivery of the bill.
  2. What I draw from these cases is that a solicitor’s claim for fees in circumstances such as this (leaving aside, therefore, cases of contentious or non-contentious business agreements) is a claim in debt (as opposed to damages) in the nature of a quantum meruit, but that it is not quantified unless and until it is either assessed by the court or agreed by the client or is the subject of a judgment (whether or not preceded by an assessment), and that the court’s task of assessment is to be carried out by a judicial process by reference to the relevant legislative provisions.”

 

A claim for damages for negligence or nuisance is not capable of acknowledgement under section 29(5)  – see

In Dwr Cymru v Carmarthenshire County Council [2004] EWHC 2991 (TCC)

 

Here, the Court of Appeal held that it did not need to decide whether a solicitor’s unquantified bill was a “debt” or an “other liquidated pecuniary claim.”

“One way or the other it is within the statutory phrase.” (Paragraph 48)

 

Acknowledgement

This will be a question of fact in each case and here the court noted that the client had expressed concern about the amount of the claim, but not about the fact of there being a claim at all.

The Court of Appeal said:

“If the letter had been entirely non-committal about the substance of the solicitors’ claim, then it may not have acknowledged anything, for example if the gist of it had been: we have received your letter, but we are under too much pressure to deal with it now, for reasons specified (or not), and we will come back to you when we have time.”

 

 

 

 

Written by kerryunderwood

June 13, 2018 at 8:37 am

Posted in Uncategorized

SOLICITORS’ BILLS: SIGNATURE REQUIREMENTS

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For the rest of this month I will be posting a series of blogs relating to getting the Solicitor and own client retainer right.

I deal with this in my book  Personal Injury Small Claims, Portals and Fixed Costs, which runs to three volumes and over 1,300 pages and available from Amazon here, or me here for £50.00

The relevant legislation is Section 69 of the Solicitors Act 1974 and the signature requirements are dealt with in Section 69 (2A) which reads:

 

“(2A) a bill is signed in accordance with this subsection if it is –

 

(a) signed by the solicitor or on his behalf by an employee of the solicitor authorized by him to sign, or

 

(b) enclosed in, or accompanied by, a letter which is signed as mentioned in paragraph (a) and refers to the bill.”

 

 

 

There is no further reference to authorization and thus that is entirely an internal matter and, in my view, as a matter of common law and general construction that authorization could be retrospective.

 

Certainly the client does not need to be informed that that employee is authorized by the solicitor to sign bills.

 

Section 69 (2A)(b) goes further and states that the bill is signed in accordance with the subsection if the bill is enclosed in, or accompanied by, a letter which is signed by the solicitor or by an employee of the solicitor authorized by him to sign.

 

For all intents and purposes the bill can be signed by anyone.

 

Section 69(2)(b) also requires the bill to be delivered in accordance with Section 69(2)(C) and that section reads:

 

“(2C) a bill is delivered in accordance with this subsection –

 

(a) it is delivered to the party to be charged with the bill personally;

 

(b) it is delivered to that party by being sent to him by post to, or left for him at, his place of business, dwelling house or last known place of abode, or

 

(c) it is delivered to that party –

 

(i) by means of an electronic communications network, or

 

(ii) by other means but in a form nevertheless requires the use of apparatus by the recipient to render it intelligible,

 

and that party has indicated to the person making the delivery his willingness to accept delivery of a bill sent in the form and manner used.

 

 

That last part appears to me to apply to both Section 69(2C)(c) (i) and (ii) and thus there is a requirement that the recipient of the bill has indicated willingness to accept delivery by email or in any other non-personal or non-postal form.

 

Section 69(2D) then provides that any indication given under Section 69(2C)(c) must state the address to be used and must be accompanied by such other information that person requires for the making of the delivery and may be modified or withdrawn at any time by a notice given to that person.
Section 69(2E) creates a statutory presumption that where a bill is proved to have been delivered in compliance with the requirements of sub-sections (2A) and (2C), it is not necessary in the first instance for the solicitor to prove the contents of the bill and it is to be presumed, until the contrary is shown, to be a bill bona fide complying with the Act.

 

Overall that represents a major relaxation of the earlier law.

 

Section 69(5) provides that references to an electronic signature are to be read in accordance with Section 7(2) of the Electronic Communications Act 2000. Section 69(6) provides that “Electronic Communications Network” has the same meaning as in the Communications Act 2003.
Section 7 of the Electronic Communications Act 2000 reads as follows:

 

“7.          Electronic signatures and related certificates.

 

(1) In any legal proceedings—

 

(a)          an electronic signature incorporated into or logically associated with a particular electronic communication or particular electronic data, and

 

(b)          the certification by any person of such a signature, shall each be admissible in evidence in relation to any question as to the authenticity of the communication or data or as to the integrity of the communication or data.

 

(2) For the purposes of this section an electronic signature is so much of anything in electronic form as—

 

(a)          is incorporated into or otherwise logically associated with any electronic communication or electronic data; and

 

(b)          purports to be used by the individual creating it to sign.

 

(3) For the purposes of this section an electronic signature incorporated into or associated with a particular electronic communication or particular electronic data is certified by any person if that person (whether before or after the making of the communication) has made a statement confirming that—

 

(a)          the signature,

 

(b)          a means of producing, communicating or verifying the signature, or

 

(c)           a procedure applied to the signature, is (either alone or in combination with other factors) a valid means of signing.”

 

 

The Communications Act 2003 has no fewer than 411 Sections and 19 Schedules and, happily, I do not think it necessary to make any further reference to it in this piece.

Written by kerryunderwood

June 12, 2018 at 8:25 am

Posted in Uncategorized

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