Case overview

The case of Oakwood Solicitors Ltd v Menzies [2024] UKSC 34 explores a client’s right to request an assessment of legal fees, focusing on the interpretation of “payment” in Section 70(4) of the Solicitors Act 1974. The Supreme Court ultimately ruled in favour of the client, reinforcing protections that allow clients to review and negotiate billed costs.

Initial Proceedings

The Respondent, Oakwood Solicitors, were instructed by the Appellant, Menzies, following his involvement in a Road Traffic Accident, under a Conditional Fee Agreement.

The claim settled for £275,000, after which the Respondent issued a ‘Final Statute Bill’ outlining the fees incurred throughout the case, totalling £73,711.20. The Respondent deducted from the damages an amount to cover the shortfall in costs after deducting costs recovered from the Defendant, as agreed in the CFA.

On 1 April 2021, the Appellant initiated proceedings to request an assessment of the final bill. To determine whether the Appellant could bring these proceedings, the Costs Judge assessed the date on which payment of the bill was made. The Costs Judge decided that payment had occurred over 12 months before the assessment (apparently taking the date as being when the Final Statute Bill was delivered).

Legal Issue

Section 70(4) of the 1974 Solicitors Act states:

‘The power to order assessment conferred by subsection (2) shall not be exercisable on an application made by the party chargeable with the bill after the expiration of 12 months from the payment of the bill.’

Applying this rule, as the payment of the bill occurred over 12 months prior to the assessment application, the Appellant was barred from seeking an assessment.

Appeal to the High Court

The Appellant appealed to the High Court, which allowed the appeal on the grounds that there had been “no sufficient settlement of account” to warrant treating the deduction as payment under Section 70(4).

Appeal to the Court of Appeal

The Respondent then appealed to the Court of Appeal, which found that, because the Appellant had agreed in the CFA to the deduction of monies and had been sent a Final Statute Bill no further agreement on the bill amount was necessary. The Court of Appeal allowed the appeal.

The Appellant subsequently appealed to the Supreme Court.

Supreme Court Decision and Reasoning

Lord Hamblen delivered judgment on the matter, considering several key points to reach a conclusion. Section 70 was concerned with the right to assess solicitors’ bills of costs with a focus on the proper amount to be charged, having regard to whether costs have been reasonably incurred and are reasonable in amount.  The client needed an opportunity to consider the bill and decide to what extent it should be paid. Section 70 envisages payment after the delivery of the bill and rather than by delivery of the bill.

 

The right to have the bill assessed is intended to protect the client’s interests, which are compromised if the client is not given the opportunity to consider the bill of costs.  Consideration of the meaning of ‘payment’ in Section 70(4) and previous authorities supported the Appellant’s case.

In considering the requirement for a settlement of account, the cases of Re Bignold (1845) and Harrion v Tew (1987) were referenced, both of which were found to support the Appellant’s position that an agreement to the bill is necessary. Lord Hamblen said, “the authorities show a long established understanding as to what payment by deduction or retention requires…both generally and with specific reference to section 70…The need for a settlement of account has been consistently stated…This requires an agreement to the sum taken or to be taken by way of payment of the bill of costs.” Therefore, there needed to be agreement as to the amount to be paid in respect of the bill of costs and mere delivery of the bill was not sufficient.

 

Lord Hamblen felt that the Respondent’s submissions as to practical implications of this conclusion were overstated, in any event these could not dictate the correct interpretation of ‘payment’ in the legislation, and the need for agreement by way of a settlement of account was long established.

Consequently, the appeal was allowed which restored Bourne J’s order for assessment.

 

Katie Spencer is a Paralegal in the Costs and Litigation Funding Department at Clarion Solicitors. You can contact the team at civilandcommercialcosts@clarionsolicitors.com