In Ivanishvili v Signature Litigation LLP [2023] EWHC 2189 (SCCO) Costs, Master Leonard found that the bills raised to the client were interim, not statutory bills and so all could be open to assessment.
The matter was funded by way of CFA and so the invoices raised only represented part of the fees which were due to be paid. One of the key principles of a statutory invoice is that it must be a complete and final bill for the period in question and this was not possible where, under the CFA, a further invoice would be raised for that period at a later date.
A contract between solicitor and client is a complete contract and thus the solicitor is liable to render a statutory bill only at the conclusion of the litigation or completion of the transaction. There are of course exceptions to this rule and it is possible for the solicitor and client to contractually agree that the solicitor may render interim bills. However that agreement must be clear, and those bills must be complete and final bills for the work that they cover. Whilst these bills are interim bills, they are also final bills and complete self-contained bills of the costs that they cover and cannot subsequently be adjusted in light of the outcome of the work which the contract covers (see Bari v Rosen [2012] EWHC 1782 (QB); [2012] 5 Costs LR 851).
The bills in question were significant, totalling £12,781,354.66; if the claimant was successful then all of these invoices could be subject to a solicitor and own client assessment. The bills were raised between March 2016 and October 2022 and had all been paid by the claimant.
The claimant made a part 8 application to preserve his right to have all of the bills assessed and his primary position was that, as the retainer included a CFA, the invoices only represented part of the fees due and so were not complete and final bills. Accordingly his position was that the time for assessment did not run until the delivery of a final bill.
The defendant’s position was that, at the time of delivery, all invoices but for the final bill raised in October 2022, were complete and final bills and thus the timescales in section 70 applied and the court could only order their assessment if special circumstances applied and they were paid less than 12 months ago. In the case where they were paid more than 12 month ago, the court would have no power to order an assessment at all. The defendant’s alternative position was that the bills were a series of bills in line with Chamberlain v Boodle and King and that they became a complete final bill when the defendant terminated the retainer in September 2022.
The claimant’s further argument was that they had not provided informed consent that the invoices would be considered interim statutory bills as the consequences of such agreement had not been made clear to the claimant. Costs Judge Leonard found in this sense, that informed consent did not have a bearing in this case and that the retainer allowed for statutory bills is sufficient.
As to the reconciliation between statutory bills and CFAs, or DCFAs, Master Leonard referred to the decision of Sprey v Rawlison Butler LLP [2018] EWHC 354 (QB) which concerned a DCFA. In Sprey Nicklin J highlighted the difficulties in reconciling the completeness and finality of an interim statutory bill with the fact that, where there is a CFA, the solicitors charges are not finalised until the conclusion of the matter. In that case, Nicklin J found that the higher hourly rate which would be charged at the conclusion of a matter funded by way of a DCFA was inconsistent with the fact that a statute bill cannot subsequently be amended. Master Leonard did note that it may be possible for interim statute bills to be raised for any unconditional elements of a CFA, however this would need to specified in the retainer, which it was not.
The defendant was dealt another blow, as Costs Judge Leonard in fact found that the retainer did not allow any contractual right to render interim statutory invoices. It did provide for the defendant to raise regular invoices and stated that any further invoices for the same period would be based on the same work; what it did not say was that those invoices would be final. Further, the retainer provided that a final invoice would be sent when the work covered by the retainer had been or was about to be completed. The defendant suggested that the fact that the invoices were paid inferred an agreement to provision of interim statutory bills, but there was found to be no proper basis for this inference given the terms of the retainer.
There was no basis for concluding that on the termination of the retainer in September 2022, there was any intention by either party that the invoices would be finalised into a Chamberlain bill. Not least because that would have required the defendant to abandon any further claim for payment for the same work, and this was not their position.
Costs Judge Leonard therefore concluded that the invoices were not statutory bills and there was no reason to suggest that the parties were treating them as such, nor did they become statutory bills on termination of the retainer, in line with the Chamberlain or natural break principles.
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