CourtService This was an appeal against the decision of a Costs Judge given on 31 August 2000 on a preliminary issue raised in the course of a detailed assessment of the Claimant Solicitors’ bills delivered to the Defendants. The background to the matter is that the Claimant firm had been endeavouring to recover outstanding legal fees from the Defendants for whom the firm had acted in a substantial commercial dispute. The trial in the Queen’s Bench Division had been expected to last 10 days. On 20 October 1998 the Claimant entered into a Contentious Business Agreement (‘CBA’) with the two corporate Defendants and two of the individual Defendants (D4 and D5).
The CBA provided for payment of agreed fees by agreed instalments. The trial lasted 5 weeks. The Defendants succeeded in their defence and were awarded their costs on the indemnity basis but little if anything has been recovered from the Plaintiffs. The Defendants paid some but by no means all of the agreed costs to the Claimant firm. The Claimant pressed for payment. They served statutory demands and applied for a freezing order. In an affidavit sworn by D4 in July 1999 in support of an application to get aside the statutory demands D4 said that the CBA was unenforceable because it had been signed under pressure from the Claimant and that D4 and D5 were ‘putting in hand an application for the CBA to be set aside and for there to be a detailed assessment of the bills delivered’.
In the event, the parties entered into a Consent Order in Tomlin form made by Steel J on 2 August 1999 under which the Claimant was to submit new bills and to withdraw the statutory demands. The Claimant was, under the Order, to submit the new bills for detailed assessment and the Defendants were to pay the assessed costs within 14 days of the completion of the assessment (less all sums previously paid – any dispute as to what those sums were was to be resolved by arbitration). The Claimant also agreed, in the Schedule, not to rely upon the CBA dated 20 October 1998 or any other CBA. As part of the Order D4 gave undertakings not to sell or lease certain property until after the completion of the detailed assessment or further order.
The Claimant served new bills on 6 August 1999 (‘the new bills’) which totalled about andpound;444,000 whereas the old bills had totalled about andpound;364,000.
On 28 September 1999 Steel J made another Consent Order which varied the undertakings given by D4 in the order of 2 August 1999 so as to add further properties to the security provided and which also amended that Order to include an order for the detailed assessment of the new bills and lay down a procedural timetable for that detailed assessment. On 30 November 1999 the Claimant served a breakdown of the new bills and on 28 February 2000 the Defendants served Points of Dispute in which it was contended that the new bills should be subject to a ‘cap’ being the sum the Defendants had agreed to pay under the CBA.
At the hearing on 31 August 2000, D4 (who was by this time acting in person) asked the Costs judge (through the Costs draftsman who had been permitted to speak on her behalf) to make a declaration that the Claimant was bound by the CBA whereas the Defendants were not because the Defendants had not agreed not to rely on the CBA and it had not been expressly set aside. The Costs judge held that the Defendants were unable to rely on the CBA and that accordingly the detailed assessment must proceed. When the detailed assessment had been completed the new bills had been reduced from about andpound;444,000 to about andpound;423,000. It had been established (in arbitration proceedings pursuant to the Order of 2 August 1999) that the Defendants had paid nearly andpound;200,000 and so some andpound;223,000 (plus some further sums) remained payable to the Claimant.
D4 and D5 lodged Notice of Appeal against the decision of the Costs judge that the Defendants were not entitled to invoke the CBA. Permission was given for the appeal by Eady J on 21 February 2001. The Notice of Appeal says that the Costs judge was wrong to hold that the Appellants could not rely on the CBA and that he ought to have held that the Order of Steel J only prevented the Claimant from relying on it.
By the time the appeal came on for hearing on 12 October 2001, D4 had been adjudged bankrupt and so the only remaining Appellant was D5. Mr Fortune, Counsel for D5, submitted that the Orders of Steel J had to be construed objectively and he drew attention to the Schedule to the Order of 2 August 1999 where the Claimant agreed that the CBA would not be relied on whereas the Defendants did not and there was no Order setting the CBA aside. He submitted that it was accordingly open to the Defendants to fall back on the CBA which contained a ‘capping’ arrangement.
Mr Farber, the Claimant’s Counsel, submitted that one had to have regard to the factual matrix – including the affidavit sworn by D4 in July 1999 where she contended that the CBA should be set aside. It was plain, he submitted, that the intention of the parties was that the CBA should be set aside and that there should be a detailed assessment. Indeed he contended that there could not be an Order for a detailed assessment if the CBA was not set aside.
Referring to Sections 59-63 of the Solicitors Act 1974, the learned judge said that the overall scheme of the legislation was, in the ordinary way, to remove costs which were subject to a contentious business agreement from the process of detailed assessment, but in so doing to enable justice to be done. On the facts of this case it was plain that both sides were abandoning the CBA and had decided to go down the detailed assessment route. Indeed, the Order of 2 August 1999 provided for the preparation of new bills and for them to be paid within 14 days of assessment. That was reinforced by the fact that the Solicitors served new bills and there was an order (i.e. the Order of 28 September 1999) for the detailed assessment of those bills. It was difficult to see how Steel J could have made that Order if there was still a live CBA. The Defendants were not entitled to blow hot and cold. In any event (even if he was wrong about that) he would hold (agreeing with Mr Farber’s submission) that the Defendants were estopped from raising the point or were deemed to have waived it in view of the large sums of money which the Claimant had already expended in the detailed assessment before the Defendants first raised it in their Points of Dispute. The costs judge had been right.
The appeal was dismissed and the 5th Defendant was ordered to pay the Claimant’s Costs which the judge summarily assessed.
Mr Justice Davis sitting with Assessors
 EW Costs 10
England and Wales
Updated: 29 April 2022; Ref: scu.185950