Success in the Supreme Court in highly important costs case: 18 St John Street’s Gemma McGungle, instructed by JG Solicitors Ltd, is successful in the Supreme Court, alongside Roger Mallalieu KC (4 New Square Chambers), in the case of Oakwood Solicitors Ltd (Respondent) v Menzies (Appellant) [2024] UKSC 34.
On behalf of Mr Menzies, the Appellants appealed against the Order of the Court of Appeal ([2023] EWCA Civ 844), Sir Geoffrey Vos, Master of the Rolls, Lord Justice Lewison and Lady Justice Simler, who determined at paragraph 41 of their judgment that:
“payment of the bill”…ought to be no different to the action of payment of any other bill. We are content to adopt the meaning proposed by Aldous LJ in Gough, namely that payment for the purposes of section 70 is a transfer of money (or its equivalent) in satisfaction of a bill with the knowledge and consent of the payer.”
The Respondent solicitors had appealed to the Court of Appeal against the order made by Bourne J (sitting with Costs Judge Brown as Assessor), dated 14 December 2022, ([2022] EWHC 3199 (KB)) allowing the Claimant’s appeal from a decision of Costs Judge Rowley.
The issue between the parties was when payment of a solicitors’ bill by deduction from monies received from the paying party amounted to “payment” for the purposes of s.70 Solicitors Act 1974.
Costs Judge Rowley ruled that Mr Menzies’ application for detailed assessment of costs was time-barred by virtue of s.70(4) of the 1974 Act, because it was made more than one year after the solicitors’ costs had been paid.
Bourne J, sitting with Assessor Costs Judge Brown, on first appeal, found that the law required that there be a “settlement of account” between the solicitor and client, rather than a mere statement of account.
On appeal to the Court of Appeal, the Respondent argued that the deduction between solicitor and client is provided for by the retainer, which is subsequently ratified following a statutory bill being delivered; amounting to “payment” within the s.70 Solicitors Act 1974.
The Supreme Court disagreed with the Court of Appeal.
- “In summary, the authorities show a long established understanding as to what payment by deduction or retention requires in this context both generally and with specific reference to section 70 and its statutory predecessors. The need for a settlement of account has been consistently stated in cases from In re Bignold in 1845 to Harrison v Tew in 1987. This requires an agreement to the sum taken or to be taken by way of payment of the bill of costs. Such an agreement may in an appropriate case be inferred from the parties’ conduct and in particular from the client’s acceptance of the balance claimed in the delivered bill. The authorities therefore provide strong support for the Client’s case of the need for an agreement as to the amount to be paid in respect of the bill of costs and that mere delivery of the bill does not suffice.
- The Court of Appeal distinguished a number of the older authorities on the grounds that they appeared to involve no written retainer whereby the solicitors were entitled to recoup fees from a fund received on their client’s behalf. There was, however, an assumption that there was such an agreement in Re Ingle and in Re Foss there had been a payment on account of costs to the solicitors. In any event, the settlement of an account connotes agreement to the amount of the retention or deduction, not merely as to the fact of retention or deduction.
- The Court of Appeal also stressed that the phrase settlement of account is not used in section 70(4) and said that it should no longer be used in this context. It nevertheless informs what is meant by “payment” in this context. It may equally be said that section 70(4) does not refer to knowledge of the bill of costs and consent to the transfer of money, which is what the Court of Appeal held “payment” to mean.”
Full details of the case including the Issues, Facts and how to watch the recording of the Supreme Court hearing on 3rd July 2024 can be accessed on the Supreme Court website. The full Judgment can be found here.
Gemma McGungle is a Costs and Clinical Negligence Barrister recognised by L500 and Chambers UK Bar. For further details please contact her Chambers Director James Parks or Senior Clerk, Katie Brown – costs@18sjs.com or 0161 278 1800.
Further press releases:
The Law Gazette published this article following the original Court of Appeal Decision along with further commentary following handing down of the Supreme Court Judgment here: https://www.lawgazette.co.uk/news/supreme-court-rules-pi-clients-must-agree-to-deductions/5121282.article