PI Brief Update

‘Payment of the Bill’ Under the Solicitors Act 1974: Menzies v Oakwood Solicitors Ltd [2023] EWCA Civ 844 - Sebastian Bates, Temple Garden Chambers

31/07/23. In this case, the Court of Appeal analysed s 70 of the Solicitors Act 1974.

As explained at [1], s 70 ‘entitles a client to apply to the court for an assessment of a solicitor's bill’, although ‘the power to order assessment is not “exercisable on an application made by the party chargeable with the bill after the expiration of 12 months from the payment of the bill”’.

Against this background, the question for the Court was: ‘[W]hat amounts to payment of the bill’?

Summary

As set out at [2] and [7]–[17], ‘[t]hat question ar[ose] in the context of a [c]onditional [f]ee [a]greement agreed in writing [. . .] between the [c]lient and the [s]olicitors some years before settlement of the [c]lient’s claim’. It ‘included terms by which the [c]lient agreed in advance to the deduction of the [s]olicitors’ fees’. ‘When the claim was settled in 2019, the [s]olicitors deducted the fees shown in their final statutory bill from the settlement monies they held in their client account, before sending the balance to the [c]lient.’

The solicitors contended that this‘deduction constituted “payment” for the purposes of the provisions in [s] 70 restricting the time within which there can be a court assessment of their bill’ and so the client ‘was barred by [s] 70(4), when he started proceedings in 2021, from seeking an assessment of the [s]olicitors’ bill’. Costs Judge Rowley had indeed held at first instance ‘that the application for an assessment was barred by [s] 70(4)’: see [23].

Conversely, as summarised at [3], the client’s submission was ‘that “payment” of the [s]olicitors’ costs for the purposes of [s] 70(4) can only take place when there has been “a settlement of account between the parties”’—in effect, ‘that solicitors must get their clients’ express consent to the precise amount of the bill they seek to deduct before that deduction will amount to “payment” so as to start time running for an assessment application under [s] 70’. Bourne J, ‘sitting with Master Brown as an assessor’, had allowed the client’s appeal against Costs Judge Rowley’s decision on this basis: see [24].

Conclusion and Comment

The Court of Appeal allowed the appeal from Bourne J’s decision and restored Costs Judge Rowley’s decision: see [46]. This was because the Court was ‘content to adopt’, at [41], ‘the meaning proposed [in an earlier case], namely that payment for the purposes of [s] 70 is a transfer of money (or its equivalent) in satisfaction of a bill with the knowledge and consent of the payer’. As the Court explained at [42], ‘[w]hat the client needs to consent to, in order for payment to take place, is “the transfer of money”, not necessarily the precise amount to be transferred’.

It is noteworthy that, in so concluding, the Court felt it necessary to reiterate that the legislation ‘is in need of reconsideration’: see [5] and [47].

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