CourtService In this case Mr MacInnes, who was the Second Defendant, was ordered to pay the costs of proceedings for possession brought by Mr Adams. Although the case commenced as a straightforward possession action it developed into a far more complex piece of litigation. The inter partes bill was brought in at andpound;194,139 after detailed assessment was reduced somewhat, particularly because the Master reduced the claim for uplift of 80% to 65%.
The Defendant appealed, claiming a breach of the indemnity principle and a champertous agreement between the Claimant and his solicitors. He sought to have the whole of the inter partes bill set aside on the basis that the agreement between the Claimant and his solicitors was unlawful and unenforceable.
The evidence was that in 1990 the solicitors had sent a client care letter to the Claimant setting out their terms of business and asking him to sign and return a copy of the letter. No copy of that letter survives, although there was evidence which proved conclusively that it had been sent and that the Claimant had received it. There was however no evidence that he agreed to the terms of the letter. The solicitors delivered to the Claimant periodic bills setting out the work they had done during the preceding period. The Claimant paid those bills. In August 1994 the solicitors sent a further client care letter, a copy of which was produced, setting out their terms of business and stating in terms that they would apply an uplift for care and conduct but probably not until the end of the action when they could decide what mark-up was merited. The solicitors continued to send periodic bills but it was not until May 1996 that the bills changed in format and bore a prominent message to the effect that that the bill was an interim bill. The defendants case was that the 1994 letter was evidence of a sham agreement between the Claimant solicitors and the Claimant and that had the Claimant lost he would have been charged the basic rate without uplift but that when he won the solicitors applied the maximum uplift they thought they could recover.
There was evidence that the Claimant had paid all the bills totalling andpound;196,725. The bills which had been delivered to the Claimant until May 1996 were drawn in a way which made them look like final bills. They set out exactly what work had been done, the rate being charged and the period covered by the bill and each carried a notice informing the client of his rights to detailed assessment under the Solicitors Act.
At the hearing it became apparent that the Defendant had not seen the client care letter or any of the interim bills. Mr Hutton who appeared for the Claimant asserted that they were privileged and that whilst the Claimant had no objection to producing the documents to the court they should not be disclosed to the Defendant. Mr Justice Gray indicated that he thought this was most unsatisfactory and could constitute a breach of Article 6 ECHR and offended against the principle of equality of arms. Having taken instructions Mr Hutton accepted that the Defendant should have sight of the documents in issue. When giving judgment Mr Justice Gray indicated that he thought it should be standard practice where a client care letter was affirmatively relied on that it was produced to the paying party. He felt this should become standard practice.
On the facts of the case the Judge found that notwithstanding an affidavit by the solicitor setting out their practice in 1990 (which was not challenged on cross examination) the bills delivered by the solicitors were in such form as to raise serious doubts as to the accuracy of the solicitors’ assertion. In those circumstances the Judge found that the Master was wrong to accept the solicitors evidence and amended the Master’s certificate to disallow all care and conduct until August 1994.
The Defendant was allowed one quarter of his costs of appeal on the basis that although he had succeeded on the uplift point he had failed on his main thrust of champerty and illegality and had also failed in respect of the bills delivered after August 1994.
Judges:
Mr Justice Gray sitting with Assessors
Citations:
[2001] EW Costs 13, [2001] EWHC 9014 (Costs)
Links:
Jurisdiction:
England and Wales
Costs
Updated: 08 June 2022; Ref: scu.185953