Background

Oakwood Solicitors had acted for the claimant in a personal injury case under the terms of a Conditional Fee Agreement.  The matter settled. Oakwood retained some of the damages to pay their costs and then sent an account to the claimant together with the balance of the damages.  The claimant later sought an assessment of the costs. 

The Issues

Section 70 of the Solicitors Act 1974 governs the right to challenge a solicitor’s bill. For one month after delivery of the bill, the client has an unconditional right to ask the solicitor to have the bill assessed, even if it has been paid. After one month, some time limits run from delivery of the bill, and some limits run from payment:

Between one month and 12 months after delivery the court can allow an assessment, if necessary on terms. After 12 months there must be “special circumstances”.

If there has been “payment” of the bill, then after one month there must be “special circumstances” for an assessment, and after 12 months, assessment is barred.

The client applied for assessment 2 years after the bill was delivered. There were no special circumstances. Was deducting costs from the damages a “payment” under the Solicitors Act? If not, assessment was barred.

Held

The Supreme Court overturned the Court of Appeal’s decision and found against the solicitors.  Their press summary stated:

“The court concluded that the authorities show a long established understanding as to what payment by deduction or retention requires in this context both generally and with specific reference to section 70 and its statutory predecessors. The need for a settlement of account has been consistently stated in cases from In re Bignold in 1845 to Harrison v Tew in 1987. This requires an agreement to the sum taken or to be taken by way of payment of the bill of costs. Such an agreement may in an appropriate case be inferred from the parties’ conduct and in particular from the client’s acceptance of the balance claimed in the delivered bill. 

Comment

This decision means that the solicitor must show that the client agreed to the sum taken or to be taken by way of payment of the bill and not merely the fact of deduction.  A general authority to deduct costs was insufficient, the client had to consent to the actual amount being deducted.

See a copy of the judgment here:

https://www.supremecourt.uk/cases/docs/uksc-2023-0115-judgment.pdf

See a copy of the Press Summary here:

https://www.supremecourt.uk/cases/docs/uksc-2023-0115-press-summary.pdf

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