Jugmohan Boodia & Anor v Richard John Slade [2023] EWHC 2963 (KB) before Mr Justice Freedman
There is no requirement to have informed consent in the Solicitors Act or in the Solicitors Conduct Rules as a pre-condition of an interim bill.
However, permission was granted to appeal in respect of the issue of whether the Costs Judge was right to bar the consumer protection grounds on the res judicata grounds (issue estoppel, waiver and abuse of process).
Introduction
The matter arises in a dispute between solicitors and a former client and relates to detailed assessment proceedings under section 70 of the Solicitors Act 1974.
Readers may recall that there was a previous decision in 2019 which reached the Court of Appeal as to whether a statutory bill had to include disbursements. The Court of Appeal held that the fact that the disbursements were not billed with the profit costs did not prevent the bills from being statutory bills. The Supreme Court rejected permission to appeal that decision. This time there was an appeal against a judgment from Costs Judge James dated 15 June 2022. The Costs Judge rejected a contention of the Appellant that the bills of the Respondent were not statutory bills because of a lack of informed consent. This was also an application for permission to appeal a further judgment of the Costs Judge dated 18 May 2023 on the right to advance a consumer rights issue.
The Retainer
There was a term in the retainer letter which entitled the solicitor to serve bills each of which would be final for the period to which they related. That term stated:
“Bills are rendered monthly in arrears. Our bills are detailed bills and are final in respect of the period to which they relate, save that disbursements (costs and expenses which we incur on your behalf) are normally billed separately and later than the bill for our fees in respect of the same period.”
The standard terms of business contained a provision which stated:
“Entitlement to Assessment The client may be entitled to have RSC’s charges reviewed by the court in accordance with the provisions set out in the Solicitors Act 1974”.
Implied term as regards informed consent
The Appellants submitted that there was an implied term in the retainer that the requirements of the Solicitors Code of Conduct would be complied with. It was also submitted that all relevant regulations would be complied with including consumer protection regulations. The Appellants pointed out that compliance with the Code of Conduct was mandatory under s. 176(1) of the Legal Services Act 2007 which provides that:
“A person who is a regulated person in relation to an approved regulator has a duty to comply with the regulatory arrangements of the approved regulator as they apply to that person.”
The Appellants also relied upon the terms of the retainer which referred at standard condition 37 to the fact that the Respondent was regulated by the SRA and that “All solicitors are subject to the rules and principles of professional conduct.”.
The Respondent submitted in response that there was no scope for an implied term contended for.
The reasons for this were as follows:
(i) It does not follow that from the existence of statutory or regulatory obligations that they should give rise to coterminous contractual obligations. They were enforceable in different ways. This was recognised as regards fiduciary duties and professional duties by Sir Geoffrey Vos MR in Belsner at [80]. It is not necessary in order to make the solicitor subject to the requirements of the Code of Conduct.
(ii) It is not clear what are the consequences of such an implied term. It appears in effect to be said that any deviation from what is expected renders the solicitor unable to enforce the interim statute bill (to the extent that informed consent is required). This may go beyond what is necessary in order to give business efficacy to the contract.
(iii) Further, even if it were capable of application on the facts of the instant case, an implied term would potentially have unforeseen consequences in other cases which were unnecessary and went far beyond what was required in order to give business efficacy.
Decision on Informed Consent
There is no authority that requires that there should be an explanation of section 70 and how assessments work. The Solicitors Act 1974 does not provide any such express obligation, whilst being prescriptive as to what is to be part of a bill. There is likewise no express obligation to this effect in the Code of Conduct.
The reasoning that there is no requirement to have informed consent in the Solicitors Act or in the Solicitors Conduct Rules as a pre-condition of an interim bill is telling. The wording of the term is sufficiently clear to tell an informed observer that the solicitor has an entitlement to render monthly bills which are final for the particular stage of work. Whilst noting the points made about fighting the solicitor and the adversary at the same time, there are other points which reduce the impact of this, namely:
(i) if the interim bill is final, the solicitor does not have the opportunity to seek a higher remuneration at a later stage as a result of the bill being final and not just a request for money on account;
(ii) if the bill is to be challenged at the time, then the challenge will occur at a point in time when memories are much more fresh than if the dispute has to be dealt with potentially years later;
(iii) in considering fiduciary duties of solicitors, leaving aside professional and duties under the Code of Conduct which are different, Sir Geoffrey Vos MR stated that solicitors act for themselves in negotiating a new fee arrangement with a client and have the freedom to negotiate a new retainer in their own interests. Enhanced obligations such as informed consent arising from a fiduciary duty relationship do not apply where solicitors are stipulating the terms on which they will act. Where the retainer clearly stated that the parties had made a retainer on terms enabling a solicitor to issue interim final statutory bills, the Court ought to give effect to the contractually agreed retainer and to the entitlement of the Respondent to have negotiated such terms.
The Judge therefore concluded that the Costs Judge was entitled to determine the matter, as she did, namely that to find that (a) there was no requirement of informed consent, and (b) the Respondent was entitled to render interim final statutory bills. The Judge also considered the implied term contented for by the Appellants and the application of the law to the instant case. Ultimately the Appellants’ appeal was dismissed. The linked application for permission to appeal on consumer protection There was a linked appeal in which it was claimed that the term providing a right to the Respondent to issue final interim statutory bills was prohibited under consumer protection legislation. The Costs Judge said that in a case which had been running since 2016 the consumer protection issue was not set out as an issue until the statement of case whose statement of truth was dated 26 October 2022. The Costs Judge stated that those provisions were well established by 2016 and advice could have been taken long before October 2022 whether these provisions might assist them.
The Costs Judge found that this was not an argument about the bills per se. It was an argument about the retainer. That should have been made much earlier and had already been considered and decided by the court such that what she called “res judicata issue estoppel” applied. She then said that in moving on to the issue as to whether the bills were interim statute bills (rather than pursuing the question as to whether it was a part of the retainer to deliver interim statute bills), the Claimants waived the right to pursue a consumer argument. They were a part of what was the retainer and the retainer issue had been concluded years ago. The Costs Judge considered the issue an abuse of process.
Decision on the application for permission to appeal The way in which consumer protection had only been pleaded in October 2022 despite the action having been going from 2016 was most unsatisfactory. Further, the consumer protection, if it is an issue, is at least very closely connected to the contractual entitlement issue.
The reasoning of the Costs Judge, put broadly, was that any issue as to the validity of any term of the retainer should have been a part of the contractual entitlement issue. Thus, she held that the time to raise consumer protection was when the Court was deciding the contractual entitlement issue. It was therefore now too late to run consumer protection. There are questions as to whether the reasoning was correct, which would benefit from being more closely investigated.
There is a low threshold for giving permission to appeal and thus permission was granted in respect of the issue of whether the Costs Judge was right to bar the consumer protection grounds on the res judicata grounds (issue estoppel, waiver and abuse of process). The Court directed that what was now required was more focussed material for the further consideration of this linked appeal. Directions would be required and there would be a full day for an oral hearing.
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