No Double Recovery | Represented Party Cannot Claim Both Solicitor Fees And Director’s Time

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The Senior Courts Costs Office’s decision in R (TM Eye) v Dean Hall and R (TM Eye) v Radu and Teodorescu [2026] EWHC 1193 (SCCO) concerned the costs of two conjoined appeals by a private prosecutor against hourly rates assessed by the Legal Aid Agency under section 17 of the Prosecution of Offences Act 1985.

Background

TM Eye Ltd is a private prosecution company that undertakes surveillance, investigative and test purchase operations in connection with the sale of counterfeit goods. As a private prosecutor, it is entitled to recover its costs from central funds under section 17 of the Prosecution of Offences Act 1985, with those costs assessed by the Legal Aid Agency (“LAA”). Two separate prosecutions had been brought by TM Eye Ltd, one against Dean Hall and one against Florentina Radu and Carmen Teodorescu. In both cases, costs orders under section 17 were made in TM Eye Ltd’s favour.

On assessment, the LAA’s Determining Officer awarded hourly rates of £89 per hour for surveillance, preparatory and investigative work and test purchases of counterfeit goods, and £32 per hour for travel. TM Eye Ltd appealed those rates to the Senior Courts Costs Office. In January 2026, Costs Judge Leonard gave judgment on the two appeals together, increasing the rates awarded. The Judge awarded £107 per hour for all work, save for supervision carried out by Mr McKelvey, the Appellant’s sole director, which was awarded at £142 per hour. The Judge found that the LAA had been paying the same hourly rates for years, based on historic Costs Judge decisions, and that those rates were not reasonably sufficient to compensate the Appellant in accordance with the relevant statutory provisions. In the absence of more helpful evidence from either party, the Judge applied a straightforward inflation-based adjustment using public records.

Following the substantive judgment, the question of the costs of the appeal fell to be determined. The Appellant produced a costs schedule in form N260 totalling approximately £45,052. It was also noted that some 28 further claims had been put on hold by agreement pending the outcome of the appeal, and that the benefit of the judgment to the Appellant across those claims was estimated at in excess of £200,000. The Judge noted however that he had no substantive evidence of that figure. The costs of the appeal were determined by Costs Judge Leonard on 18 May 2026.

Costs Issues Before the Court

The jurisdiction to award costs of the appeal arose under regulation 10(14) of the Costs in Criminal Cases (General) Regulations 1986, which permits the court to award to a successful appellant “a sum in respect of part or all of any reasonable costs (including any fee payable in respect of an appeal) incurred by him in connection with the appeal“. The Judge noted at the outset that this discretion is materially different from the costs regime under CPR 44. There is, for example, no general rule that a successful appellant will be awarded its costs; it is a matter for the court.

The Respondent, represented by Richard Clarke for the Lord Chancellor, did not contest the principle that some costs should be awarded to the Appellant. The dispute centred on the amount. The Respondent argued that the Appellant had failed on so many of its arguments, and had achieved an outcome so far short of what it had sought, that recovery should be limited to 33% of its costs. Alternatively, the Respondent proposed an issue-based approach under which several categories of costs should be disallowed entirely. The amount of time claimed was also challenged.

The specific items in dispute within the costs schedule included: the hourly rate claimed for Mr McKelvey’s time (claimed at £330 per hour, being the rate sought on the substantive appeal rather than the rate actually awarded); the time claimed for Mr McKelvey’s witness statement and exhibits; the time claimed for bundle preparation; and the time claimed for client attendances. A professional fee of £3,000 claimed for Mr Conway, the Appellant’s accountant and unofficial financial director, was also in issue.

A more fundamental objection also arose in relation to Mr McKelvey’s time. The Appellant had been represented throughout the appeal by Mr Strickland of Thomas Legal Costs Ltd, a fully qualified Costs Lawyer with the right to conduct litigation and to undertake advocacy on costs issues. Thomas Legal Costs Ltd was on the court record for the Appellant. The costs schedule had been drawn up so as to include both Mr Strickland’s time and Mr McKelvey’s time, as if both were legal representatives. The question arose whether it was permissible for the Appellant to claim both the costs of its legal representative and the time spent by its own employee on the litigation.

The Parties’ Positions

The Appellant contended that it had achieved significant success, both in the two cases under appeal and more broadly, given the knock-on effect on the 28 further claims that had been stayed pending the outcome. It submitted that the benefit of the appeal to the Appellant was estimated at in excess of £200,000 across those claims alone, and that it had had no realistic alternative but to pursue the appeals in order to establish its entitlement to be compensated at appropriate hourly rates. On that basis, the Appellant argued for recovery of its costs in full or close to full, relying in part on CPR 44 criteria and associated legal authority.

The Respondent’s position was that the Appellant’s success was substantially qualified. The Appellant’s primary case, that it should be paid for all work and all travel time at fixed rates far in excess of those actually awarded, had always been unsustainable in principle and had failed. The evidence produced in support of the claimed figures had been found to be inadequate. The Appellant’s case that recoveries under section 17 orders had caused its business to move from profit to loss had also failed, with the key evidence from Mr Conway found to be contradicted by evidence given by Mr McKelvey and Mr Hobbs in an earlier case, R (TM Eye Ltd) v Abdullah. The Respondent submitted that a 33% recovery was appropriate, or alternatively that an issue-based approach should be adopted with several categories disallowed entirely. The Respondent also challenged the inclusion of Mr McKelvey’s time in the schedule and the rate at which it had been claimed.

The Court’s Decision

Costs Judge Leonard began by addressing the legal framework. The award was made under regulation 10(14) of the Costs in Criminal Cases (General) Regulations 1986, not under CPR 44. The Judge noted that the Appellant’s submissions had referred to CPR 44 criteria and related authority, but made clear that the discretion under regulation 10(14) operates differently. There is no general rule that a successful appellant recovers its costs.

The Judge rejected the Respondent’s submission that the Appellant had wrongly based its case on a right to profit from private prosecutions and had lost that argument. The Judge accepted that the relevant statutory provisions confer a right to compensation for expenses incurred, not a right to profit. However, applying Re Eastwood [1975] Ch 112, “profit” in this context meant no more than the Appellant’s capacity to remunerate Mr McKelvey appropriately as its sole director. The Respondent’s point was therefore more hypothetical than real, and in practical terms the Appellant had the better of that argument.

The Judge acknowledged that the Appellant’s stated grounds had largely failed. The primary case, that all work and travel time should be paid at fixed rates far in excess of those awarded, was described as always having been unsustainable in principle. The evidence in support was inadequate. The case based on the business moving from profit to loss also failed, with Mr Conway’s evidence found to be contradicted by earlier evidence from Mr McKelvey and Mr Hobbs in R (TM Eye Ltd) v Abdullah, the discrepancies being sufficiently stark to cast doubt on the credibility of the Appellant’s evidence generally. The comparable market rate evidence offered by both parties was found to be one-sided and entirely unhelpful. The Judge observed that relevant market evidence did exist and might ideally have been addressed in an independent expert’s report, but no such report had been produced. The result was that the Judge had fallen back on a simple inflation-based adjustment using public records.

Turning to the costs schedule itself, the Judge addressed the inclusion of Mr McKelvey’s time. The Appellant had been represented by Mr Strickland of Thomas Legal Costs Ltd, a fully qualified Costs Lawyer with the right to conduct litigation and advocacy on costs issues. The Appellant was therefore not a litigant in person, and the principles applicable to litigants in person did not apply. Applying the principle in Richards v Wellington (Plant Hire) Ltd v Monk and Co (1984) Costs LR Core Vol 79, Bingham J at page 83 (citation as given in the judgment), the Appellant could recover only legal costs, not the cost of being a litigant. It was not open to the Appellant to claim both the costs of its legal representative and the cost of the time spent on the litigation by its own employees. Mr McKelvey did not fall within any of the limited exceptions to that rule as he was not legally qualified, nor was he an expert witness.

The Judge found that the Appellant’s costs schedule was incorrectly drawn up in that it incorporated both Mr Strickland’s time and Mr McKelvey’s time as if they were both legal representatives. For example, under “attendances on client” it was not permissible to claim both 7.4 hours of Mr Strickland’s time as the legal representative and 7.4 hours of Mr McKelvey’s time as, in effect, the client upon whom Mr Strickland was attending. Only Mr Strickland’s time was recoverable. Mr McKelvey’s time was disallowed in its entirety.

The Judge also declined to allow the fee of £3,000 claimed for the professional fees of Mr Conway, given the concerns about his evidence. The time claimed for the preparation of bundles was also found to be excessive. The bundle itself was relatively straightforward. The Judge was unable to understand why, in addition to some 9 hours claimed by Mr Strickland for working on it, an additional 17 hours was claimed for a paralegal. Given the amount of time spent by Mr Strickland on the bundle, the paralegal’s role must have been purely administrative. It was disallowed in its entirety.

The Judge marked as disallowed or reduced time which was considered to be irrecoverable, excessive or, in one instance, incorrectly calculated. This brought the total down from £45,052 to just over £22,000, reflecting Mr Strickland’s reasonable time and a small amount of recoverable disbursements. The Judge bore in mind however that some of that time, albeit reasonable in amount, would have been spent upon evidence which had been found to be unreliable or unhelpful, and so would have been unreasonably incurred. The amount payable by the Respondent for the Appellant’s costs of the appeal was accordingly reduced further, and was assessed at a total of £15,000 inclusive of disbursements.

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Conditional Value Reservation Does Not Prevent Rendering Of Interim Statute Bills Where No Uplift Agreed

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The High Court’s decision in Mehta v Howard Kennedy LLP [2026] EWHC 968 (KB) confirms that a reservation in standard terms of business permitting a value or importance element to be charged in a concluding bill does not prevent earlier invoices from constituting interim statute bills where the retainer contains no success-related, conditional, or contingent fee arrangement.

Background

Vishal Mehta was subject to a worldwide freezing order and instructed Howard Kennedy LLP to act for him in that litigation. In related civil proceedings, a fraud of US$1 billion was alleged. Over the period from 22 June 2022 to 5 May 2023, Howard Kennedy delivered 24 invoices to Mr Mehta with a total value of £3,124,674.04, many of which had been paid.

Mr Mehta subsequently issued Part 8 proceedings under the Solicitors Act 1974, seeking an assessment of the costs billed by Howard Kennedy. The central question was whether the 24 invoices constituted interim statute bills — each final and complete in respect of the period they covered — or whether they formed a series of interim invoices comprising a so-called “Chamberlain” bill, which would only become final upon delivery of the last invoice in May 2023. The distinction was critical: if the invoices were interim statute bills, the time limits under s. 70 of the 1974 Act would apply, and Mr Mehta would be debarred from seeking assessment of those bills in respect of which the relevant time limits had expired.

On 25 April 2025, Costs Judge Whalan handed down judgment on three preliminary issues: Mehta v Howard Kennedy LLP [2025] EWHC 1008 (SCCO). He found against Mr Mehta on all three issues, holding that the invoices were interim statute bills, that the retainer was not a Contentious Business Agreement (“CBA”) within the meaning of ss. 59 to 63 of the 1974 Act, and that there were no special circumstances justifying assessment under s. 70(3).

Mr Mehta appealed to the High Court. The appeal was heard by Mr Justice Kimblin, sitting with Costs Judge Nagalingam as an assessor, on 17 April 2026, with judgment handed down on 24 April 2026. Robin Dunne of counsel appeared for Mr Mehta, instructed by JG Solicitors. Dan Stacey and Chris Cooke appeared for Howard Kennedy, instructed by the firm itself.

Costs Issues Before the Court

Three preliminary issues fell to be determined, each arising from the application of the 1974 Act to the retainer between Mr Mehta and Howard Kennedy.

The first issue was whether the 24 invoices delivered by Howard Kennedy were interim statute bills — each final and complete in respect of the period covered — or whether they were interim invoices forming part of a composite “Chamberlain” bill, which would only crystallise as a statute bill upon delivery of the final invoice. This distinction is of considerable practical importance. Under s. 70 of the 1974 Act, a client has an absolute right to seek assessment within one month of delivery of a statute bill. Between one and twelve months after delivery, assessment remains available but is at the court’s discretion. After twelve months from delivery, assessment requires the demonstration of special circumstances and, critically, is entirely barred twelve months after payment. If the invoices were statute bills, Mr Mehta’s right to seek assessment of the earlier invoices was either time-barred or subject to the special circumstances threshold.

The second issue was whether the retainer constituted a CBA within the meaning of ss. 59 to 63 of the 1974 Act. A CBA is not subject to the time limits in s. 70, and a finding that the retainer was a CBA would therefore have opened the door to assessment regardless of when the invoices were delivered or paid. The court stayed determination of this issue pending the Court of Appeal’s forthcoming judgment in Barnes v BDB Pitmans (CA-2025-000773), listed for hearing on 13 May 2026, which was said to raise strongly overlapping issues.

The third issue comprised two distinct sub-questions. The first was whether certain invoices had been “paid” within the meaning of s. 70(4) of the 1974 Act, given that some had been discharged not by Mr Mehta personally but by third party companies and by Hogan Lovells in respect of an adverse costs order. The second was whether, even if the invoices were statute bills and had been paid, special circumstances existed under s. 70(3) sufficient to justify an order for assessment notwithstanding the time limits.

The Parties’ Positions

Issue 1 — Statute Bills

For Mr Mehta, it was submitted that the invoices were not interim statute bills because the retainer reserved to Howard Kennedy the right to revisit charges in a concluding bill by reference to the “value” or “importance” of the matter. Reliance was placed on paragraph 5(2) of the Terms of Business, which provided that if the value or importance element was achieved only as a result of the completion or final settlement of the case, and had not been taken into account in earlier bills, Howard Kennedy reserved the right to take it into account in the concluding bill. It was argued that this reservation qualified the finality and completeness of the earlier bills, such that they could not be interim statute bills, applying the principles in Ivanishvili v Signature Litigation LLP [2024] EWCA Civ 901. The argument proceeded on the basis that this reservation applied to all retainers entered into on Howard Kennedy’s standard Terms of Business.

For Howard Kennedy, it was submitted that the Terms of Business were clear: paragraph 5(2) stated in terms that “each bill issued to you is a final bill covering the total charge for the work carried out within the stated period” and that “each bill has the status of a statute bill”. The value and importance reservation was conditional in nature and had no application to this retainer, which was not concerned with any particular outcome amounting to success and contained no conditional or contingent fee arrangement. There was no agreed uplift and no conditional fee, distinguishing the position from Ivanishvili. The invoices themselves contained the necessary features of a statute bill, being detailed and setting out the client’s rights under the 1974 Act.

Issue 3(a) — Payment

For Mr Mehta, it was submitted that payments made by third party companies and by Hogan Lovells did not constitute payment by Mr Mehta for the purposes of s. 70(4). It was argued that only Mr Mehta, as the signatory to the retainer and the party chargeable, could make a payment capable of triggering the absolute bar under s. 70(4). Reference was also made to Bill 445657, in respect of which a payment of £80,000 was said to have been made on the same day as the bill was raised, which it was submitted could not satisfy the requirements identified by the Supreme Court in Oakwood Solicitors Ltd v Menzies [2024] UKSC 34.

For Howard Kennedy, it was submitted that the payments made by third parties were made with Mr Mehta’s knowledge and consent, as established by witness statement evidence. Reliance was placed on Re Jackson [1915] 1 KB 371, cited in Menzies, for the proposition that payment by a third party at the direction of or with the knowledge of the client constitutes payment for the purposes of s. 70. The Costs Judge had found nothing irregular or ineffective in such payments, and those findings of fact were said to be unimpeachable.

Issue 3(b) — Special Circumstances

For Mr Mehta, three special circumstances were advanced: first, that Howard Kennedy had failed to provide adequate estimates of future costs; second, that the size of the bills was itself a special circumstance; and third, that the fact of rendering interim statute bills was itself capable of constituting a special circumstance. It was submitted that the Costs Judge had failed to address the second and third of these matters adequately.

For Howard Kennedy, it was submitted that Mr Mehta had received regular, itemised invoices with detailed accounts of the work done, had paid approximately 80% of the invoices, and had received appropriate estimates of future costs throughout the retainer. The Costs Judge’s evaluative judgment that no special circumstances existed was said to be correct and not susceptible to challenge on appeal.

The Court’s Decision

Issue 1: Statute Bills

Kimblin J dismissed the appeal on the first issue. Applying the principles of contractual interpretation in Investors Compensation Scheme Ltd v West Bromwich Building Society [1998] 1 WLR 896, he held that the meaning of the retainer documents was that which a reasonable reader would understand, having all of the background knowledge of the parties at the time the retainer was entered into on 1 June 2022.

The judge agreed with the Costs Judge’s analysis. The Terms of Business stated clearly that “each bill issued to you is a final bill covering the total charge for the work carried out within the stated period” and that “each bill has the status of a statute bill”, unless otherwise stated. The Terms of Business also referred to the solicitor’s right to sue.

The reservation at paragraph 5(2) concerning value or importance was conditional in nature and had no application to this retainer. The retainer was not concerned with a particular outcome which would amount to ‘success’, nor were there any conditional or contingent fees or payments. The value and importance term within paragraph 5(2) was conditional on two matters. First, it was conditional on ‘value’ or ‘importance’ being achieved only as a result of the completion or final settlement of the case. This was a term of the contract which may or may not apply, depending on the type of work being undertaken and the way in which the fee structure was agreed. Second, it was conditional on the ‘value’ or ‘importance’ not being taken into account in earlier bills. Per paragraph 1 of the Terms of Business, the level of fees was explained as reflecting a number of factors, including value and importance. An hourly rate may be set having regard to these factors and so be included in monthly bills.

The judge added that Section 8 of the retainer letter concerned “Payments on account”, requesting £40,000 and making clear that further payments would be requested. It warned Mr Mehta that “We are bound to apply funds received from you on account to settle any bills we may render to you.” It was therefore clear that funds on account would be used to pay bills which would be delivered, usually monthly.

The judge also noted that Part 30 of the Terms of Business stated that the retainer letter prevails in the event of conflict. While there was no conflict, this served to emphasise the point that the retainer letter did not suggest any conditionality in the fee agreement.

The General Notes, though not forming part of the contract, were relevant to its interpretation because they comprised material on which Mr Mehta elected to sign the retainer and enter the contract. The Notes confirmed that the additional fee reservation was only applicable if it was discussed in advance or referred to in the engagement letter. Insofar as no such discussions took place with the solicitor, it did not apply.

The judge rejected the submission that the retainer was ambiguous by reason of the statement that each bill was a statutory bill but was not necessarily a final bill in the matter. This term was simply a consequence of billing every month. It explained that the bill was final for the month but not for the case. Another way of putting it would be that it was not necessarily the last bill in the matter.

The invoices themselves contained the necessary features of a statute bill, being both detailed and stating the rights available under the 1974 Act. Taken together, the terms and the facts of the case established that the invoices were statute bills.

Kimblin J acknowledged the policy concerns identified by the Court of Appeal in Ivanishvili and other cases regarding the scheme of s. 70, which is problematic from the point of view of a client who must either challenge the very solicitor representing him in hard fought litigation or change solicitor with the disruption to his case which that entails. However, those policy issues were not for the Costs Judge to resolve, nor did they form part of the court’s role on appeal.

Issue 2: Contentious Business Agreement

The Costs Judge had held that the retainer was not a Contentious Business Agreement under s. 59 of the 1974 Act, to which the time limits under s. 70 do not apply. Kimblin J stayed consideration of this issue pending the Court of Appeal’s decision in Barnes v BDB Pitmans (CA-2025-000773), listed for hearing on 13 May 2026, which was said to raise issues which at least strongly overlap with the issues in this appeal. The judge did not see any impediment to informing the parties of his decision on the first and third issues and should not delay communication of those decisions without good reason. Ground 2 therefore remains undetermined.

Issue 3(a): Payment

Kimblin J dismissed the appeal on the payment issue. The Supreme Court in Oakwood Solicitors Ltd v Menzies [2024] UKSC 34 held at [71] that payment by deduction or retention requires a settlement of account, which in turn 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. A payment by a third party at the direction of or with the knowledge of the client can be payment for the purpose of s. 70: Re Jackson [1915] 1 KB 371, cited in Menzies.

The Costs Judge had held that all payments were made in accordance with the court’s provision and scrutiny in the worldwide freezing order. He found nothing irregular or ineffective in payments from a third or non-chargeable party, so long as these payments were made with the knowledge and consent of the client. The witness statement adduced in support of Howard Kennedy’s position established these payments were made with Mr Mehta’s knowledge and consent.

A further issue arose in relation to Bill 445657, which was said to be paid in full yet payment of £80,000 was said to have been made on the same day as the bill being raised. The judge noted that this could not satisfy the Menzies criteria, and that it was not explained how or why the bill was part paid from client account and part paid from office and which entity paid which elements. This issue was not considered at all by the Costs Judge.

Kimblin J nonetheless had no good reason to interfere with the Costs Judge’s findings of fact, nor his application of the law. Moreover, they were correct. Mr Dunne’s argument was artificial and unsupported by any factual context which suggested anything other than Mr Mehta causing his liabilities to be discharged from the variety of sources at his disposal. It would produce counter-intuitive results, contrary to the scheme of s. 70. If the argument were correct, it would create an easy mechanism to avoid the terms of the agreement which the client had entered into, namely to ensure that payments were made by some legal entity other than the person signing the retainer. That would have a large impact on the scheme of s. 70.

Issue 3(b): Special Circumstances

Kimblin J dismissed the appeal on the special circumstances issue. Whether special circumstances exist is essentially a value judgement, comparing the particular case with the run of the mill case in order to decide whether a detailed assessment in the particular case is justified, despite the restrictions contained in s. 70(2): Falmouth House Freehold Co. Ltd v Morgan Walker LLP [2010] EWHC 3092. Special circumstances do not have to be exceptional circumstances but can be established by something out of the ordinary course, sufficient to justify departure from the general position under s. 70 of the 1974 Act.

The Costs Judge did not find that special circumstances existed because Mr Mehta received regular, itemised invoices with detailed accounts of the work done and so understood his ongoing liability. He paid almost 80% of the invoices.

Kimblin J was not persuaded that the Costs Judge failed to consider whether the fact of rendering interim statute bills was itself a special circumstance. The Costs Judge stated that Mr Mehta was neither unaware nor disadvantaged by the size of the payments demanded by Howard Kennedy, as invoices were delivered on a regular, monthly basis. Those were sufficient reasons to address the point raised.

Further, Mr Mehta did receive appropriate estimates of future costs. On 30 June 2022 the partner with care and conduct sent an email to estimate costs and to highlight how high they were: £11,000 plus VAT per day plus counsel’s fees. On 26 January 2023, in response to a request for a projection of costs, a summary estimate was provided in a total sum of £486,983 excluding VAT. There were other similar types of estimate such as that of 24 March 2023. In the light of these materials, the submission that there was a special circumstance which derived from the lack of estimates was not sustainable.

Whether or not there are special circumstances is an evaluative judgement. It was for the appellant to show that the Costs Judge was wrong, and that had not been shown.

Conclusion

Grounds 1, 3, and 4 of the appeal were dismissed. The court invited the parties to seek to agree draft directions or an order within 14 days of judgment in Barnes v BDB Pitmans in respect of the outstanding CBA issue.

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Engagement Letter Not A CBA Where Hourly Rate Increases Entirely At Solicitor’s Discretion

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The Senior Courts Costs Office’s decision in Safra v Wilmer Cutler Pickering Hale and Dorr LLP [2026] EWHC 703 (SCCO) addresses fundamental questions about the requirements for contentious business agreements and interim statutory bills in the context of a high-value international arbitration retainer.

Background

The claimant retained the defendant solicitors in September 2022 to represent him in five consolidated LCIA arbitrations and related proceedings concerning disputes within his family over his late father’s US $23 billion estate. The engagement letter provided for remuneration by reference to specified hourly rates, with provision for the defendant to review and revise billing rates periodically, notifying the client of changes as and when they occurred.

Between December 2022 and September 2024, the defendant rendered invoices totalling over US $35 million. The claimant made payments totalling approximately US $16.4 million but disputed the balance. In December 2024, the claimant applied for assessment of the defendant’s bills under Part III of the Solicitors Act 1974.

The parties agreed that a number of preliminary issues should be determined before any assessment proceeded, including whether the engagement letter constituted a contentious business agreement (CBA), whether the defendant’s invoices were interim statutory bills, when any statutory bills were delivered, and whether the court should order assessment.

Was the Engagement Letter a CBA?

Costs Judge Leonard held that the engagement letter was not a CBA within the meaning of section 59 of the Solicitors Act 1974. While the letter provided for remuneration by reference to hourly rates (a permissible basis for a CBA following the 1990 amendment to section 59), it lacked the requisite certainty.

The critical defect was the engagement letter’s provision for hourly rate reviews. The letter stated that rates would be reviewed periodically and could be revised, with changes notified to the client as and when they occurred. Crucially, the timing and amount of any increases were entirely at the defendant’s discretion, with no fixing mechanism.

The judge distinguished cases such as Acupay System LLC v Stephenson Harwood LLP [2021] EWHC B11 (Costs), where a CFA provided for annual increases at a fixed rate of 3%. Here, the defendant’s right to increase rates was “entirely open-ended” as to both timing and amount. The defendant’s only obligation was to notify the client when increases took effect; there was no requirement for prior consultation or agreement.

Applying Wilson v The Specter Partnership [2007] 6 Costs LR 802, the judge held that “the purpose of a CBA is to fix the fees, or provide a fixing mechanism, so that the parties (and in particular the client) know where they stand.” The engagement letter’s unilateral, open-ended review provisions created “a significant element of uncertainty” inconsistent with CBA status.

The judge also noted that the engagement letter’s reference to the client’s right to apply for assessment under Part III of the Solicitors Act 1974 was inconsistent with it being a CBA, which would have restricted that right under sections 60 and 61.

Would the CBA Have Been Unreasonable?

Although unnecessary given the finding that the engagement letter was not a CBA, the judge considered whether it would have been unreasonable under section 61(2)(b) if it had been a CBA.

The judge found that the negotiation process was fair. The hourly rates were individually negotiated with experienced lawyers acting for a sophisticated businessman, and were set by reference to comparable rates charged by other advisers. The defendant was under no obligation to explain the distinction between CBA and non-CBA retainers.

However, the judge would have found the agreement unreasonable. A retainer providing for entirely open-ended hourly rate increases, while simultaneously removing the client’s rights under section 70 to challenge those rates on assessment, would have been unreasonable. Had the engagement letter been a CBA, it would have been set aside and the defendant’s costs assessed in their entirety.

Did the Engagement Letter Permit Interim Statutory Bills?

The judge held that the engagement letter did contractually permit the delivery of interim statutory bills. The letter provided for “monthly statements for work performed and expenses recorded on our books during the previous month,” stated that such statements were “due and payable upon receipt,” and required the client to raise any queries “in a timely fashion.”

While the word “ordinarily” qualified the timing of monthly statements, the engagement letter clearly indicated that each statement would cover all work performed during the previous month. The reference to expenses “recorded on our books” did not prevent the statements from being interim statutory bills, given the principle in Slade v Boodia [2018] EWCA Civ 2667 that separate bills may be rendered for profit costs and disbursements.

Were the Invoices Actually Interim Statutory Bills?

Despite the contractual right to deliver interim statutory bills, the judge held that the defendant’s invoices were not in fact interim statutory bills because they lacked the essential characteristic of finality.

Each invoice (whether draft or finalised) contained the wording: “Includes only Services and disbursements posted to date.” The judge held that the clear meaning of this phrase was that some work performed during the period covered by each invoice might not have been recorded at the time of delivery and might have to be included in a subsequent invoice. The invoices were therefore expressly not final for the periods they covered.

The defendant’s attempt to interpret this phrase as merely indicating that further charges might be rendered for subsequent periods was rejected as not viable. There would be no reason for an invoice covering a specified period to include a redundant warning about charges for future periods.

The judge also noted discrepancies between draft and finalised invoices. For example, the figure for legal fees in the March 2023 invoice changed from US $967,337 in the May 2023 draft to US $1,011,675 in the September 2023 draft to US $1,017,435 in the September 2024 final version. This supported the conclusion that it could take months for the defendant’s fees for a given month to be finalised, consistent with the warning that invoices might not comprise all fees for the period covered.

The Chamberlain Bill

Since the individual invoices were not statutory bills, the judge held that the complete series of invoices together comprised a single “Chamberlain bill” (following Chamberlain v Boodle & King and Bari v Rosen [2012] 5 Costs LR 851). This bill was delivered on 17 September 2024, when the defendant sent the claimant a comprehensive set of finalised invoices.

The claimant’s application for assessment was made on 17 December 2024, within three months of delivery. The Chamberlain bill was part-paid. Accordingly, the court had jurisdiction under section 70(2) to order assessment without the need to establish special circumstances under section 70(3).

Allocation of Payments

Although unnecessary given the Chamberlain bill analysis, the judge addressed how the claimant’s payments should have been allocated had the invoices been interim statutory bills.

The defendant contended that payments should be allocated to the oldest outstanding invoices first (following the rule in Clayton’s case and minimising interest). The claimant argued that monthly payments of US $400,000 (later US $600,000) were intended to be allocated to the corresponding monthly invoices.

The judge preferred the defendant’s analysis. Under Simson v Ingham (1823) 2 B&C 70, it was incumbent on the claimant to specify how payments should be allocated; failing that, allocation was for the defendant. The only evidence of specific instructions was the claimant’s witness evidence given under cross-examination, which the judge found unreliable. The defendant had clearly explained in October 2023 how it was applying payments, and the claimant had not objected at the time.

Special Circumstances

Again addressing the position had the invoices been interim statutory bills, the judge considered whether special circumstances justified assessment of bills falling within section 70(3).

The judge held that special circumstances did exist, primarily relating to the provision of costs information. The defendant had failed to comply with its obligation under paragraph 8.7 of the SRA Code of Conduct to ensure the client received the best possible information about costs as the matter progressed.

Costs information was provided sporadically. For example, no information was given for the period December 2023 to July 2024 (when bills totalling over US $14 million were incurred) until after termination of the retainer in September 2024. The defendant offered costs information on three occasions but should not have waited to be asked; it was obliged to provide such information proactively and regularly.

The judge also attached weight to the defendant’s response to concerns raised in December 2022. The claimant’s representative had explained that the claimant could not afford fees at the level of the first three months and asked whether fees could be managed at around US $400,000 per month. The defendant’s partner responded: “We’ll find a way to make that or something else he wants work.” This assurance was comparable to a costs estimate and relevant to assessment of reasonableness, following Mastercigars Direct Ltd v Withers LLP [2009] 1 WLR 881. In the event, fees averaged about US $1.5 million per month.

The judge rejected arguments based on the size of individual time charges or expenses, finding these generally explicable given the scale and complexity of the arbitrations. However, the failure to provide adequate costs information as fees accrued to levels far beyond what the client had indicated he could afford constituted special circumstances justifying assessment.

Conditions of Assessment

The judge declined to impose any conditions on the order for assessment. While the claimant was based outside the jurisdiction and was understood to be extremely wealthy, he had already paid almost 50% of the claimed fees. The defendant had been aware from the outset that the claimant was based abroad and could have taken steps to protect its position. The current situation was “at least as much the responsibility of the defendant as the claimant,” particularly given the inadequate provision of costs information.

 

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An Agreement To Pay A Fixed Sum In Relation To Work Already Done Was Not A Contentious Business Agreement

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Interim Statute Bills And Special Circumstances Under s70(3) Solicitors Act 1974

A Solicitors Act Compliant Statute Bill Must Contain All Disbursements Incurred During The Period To Which It Relates

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Contractual Terms Permitting Interim Statute Bills Upheld Where Unambiguous

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The Senior Courts Costs Office’s decision in Hammond v Herrington Carmichael LLP [2026] EWHC 701 (SCCO) concerned whether 29 invoices totalling approximately £174,183.36 delivered during family finance remedy proceedings constituted interim statute bills or a series of interim payments forming a single Chamberlain bill, the resolution of which determined the applicable time limits under section 70 of the Solicitors Act 1974.

Background

The Defendant had been instructed by the Claimant from 10 August 2023 to 26 June 2025 (with an effective hiatus between January and March 2025) in family finance remedy proceedings. The litigation was protracted and comparatively complex. Over the course of the retainer, the parties concluded four separate but continuous retainers. The Defendant delivered 29 invoices between 25 August 2023 and 7 August 2025, covering costs, disbursements and VAT in the total sum of approximately £174,183.36. It was common ground that many of those invoices had been paid or part-paid by the Claimant.

The Claimant applied for a detailed assessment of all 29 invoices pursuant to s.70 SA 1974. It was agreed by both parties that two invoices—225141 (dated 27 June 2025) and 226664 (dated 7 August 2025)—could properly be the subject of such an assessment. The Defendant challenged the Claimant’s entitlement to assessment in respect of the remaining 27 invoices.

The Part 8 claim was issued by the Claimant on 14 August 2025. The matter came before Costs Judge Whalan in the Senior Courts Costs Office, with the hearing taking place on 23 February 2026. Judgment was handed down on 24 March 2026.

The Claimant appeared in person. Ms Aldred appeared on behalf of the Defendant, instructed by Herrington Carmichael LLP.

One notable feature of the underlying litigation was that the Claimant’s legal costs had been substantially funded by his brother-in-law, Mr Garry Moore. After the Claimant had paid the first nine invoices himself (totalling approximately £39,461), he effectively ran out of funds. Thereafter, invoices were settled from monies drawn down from an escrow account funded by Mr Moore, who deposited a total of £120,000 into that account. It was conceded by the Claimant that the monies drawn down from the escrow account constituted “payments” for the purposes of the SA 1974.

The substantive family proceedings had attracted judicial comment regarding the level of costs incurred. On 26 June 2025, HHJ Farquhar observed that the combined costs of both parties amounted to approximately £366,000, representing 73% of the sole non-pension asset, a property valued at £500,000. The judge described the costs as “frankly ludicrous” and referred to “litigation misconduct” on the part of the parties. These observations formed part of the backdrop to the Claimant’s application.

Costs Issues Before the Court

The judgment addressed two principal issues. The first was whether the 29 invoices delivered by the Defendant constituted interim statute bills or whether they formed part of a series of interim invoices delivered on account, which together comprised a single Chamberlain bill that became final only upon delivery of the last invoice in August 2025. The resolution of this question was determinative of the Claimant’s right to seek assessment under the SA 1974, given the time limits imposed by that Act.

The second issue, which arose in the alternative, was whether the Claimant could demonstrate “special circumstances” pursuant to s.70(3) SA 1974, sufficient to justify the court ordering a detailed assessment of those invoices in respect of which the primary time limits had expired or in respect of which the court’s discretion would otherwise need to be exercised.

The practical significance of the interim statute bill/Chamberlain bill distinction is well established. Where invoices are properly characterised as interim statute bills, each bill is treated as a self-contained, final bill for the period it covers. The time limits in s.70 SA 1974 run from the delivery and payment of each individual interim statute bill. By contrast, where invoices are merely interim requests for payment forming part of a Chamberlain bill, the entire series is treated as a single bill, and the s.70 time limits run only from delivery of the final invoice. The Claimant’s case depended on establishing the latter characterisation, which would have brought all 29 invoices within the scope of a single assessment application.

The s.70 SA 1974 framework provides that under s.70(1), where an application for assessment is made within one month of delivery of a bill, the court must order assessment without requiring payment into court. Under s.70(2), where the application is made after that one-month period, the court has a discretion to order assessment on such terms as it thinks fit. Under s.70(3), where the application is made after the expiration of 12 months from delivery of the bill, after judgment has been obtained, or after the bill has been paid (but within 12 months of payment), no order for assessment shall be made except in special circumstances. Under s.70(4), the court has no power to order assessment on the application of the paying party after the expiration of 12 months from payment of the bill.

Applying those provisions to the facts, the court identified three distinct categories of invoices. First, nine invoices delivered and paid more than 12 months before the issue of the Part 8 claim on 14 August 2025 fell entirely outside the court’s jurisdiction under s.70(4). Second, three invoices (211203, 211953 and 211946) could only be assessed if special circumstances were demonstrated under s.70(3). Third, the remaining 15 disputed invoices (dated between 27 August 2024 and 29 May 2025) were subject to the court’s general discretion under s.70(2).

The Parties’ Positions

Interim Statute Bills or Chamberlain Bill

The Claimant submitted that the invoices delivered by the Defendant did not constitute interim statute bills but rather formed part of a single, entire Chamberlain bill. He argued that the Defendant had acted under a single continuous retainer (matter reference HAM540) throughout the relevant period, that the invoices were sequential and related to the same litigation, and that work was ongoing and carried forward between invoices. In oral submissions, the Claimant emphasised that the invoices comprised “very much a running account”, notwithstanding his concession that each invoice covered a defined period. His position was that he had been discharging his fees by instalments as the case progressed, in circumstances where the account, like the litigation, comprised a continuous process.

The Defendant submitted that the invoices were interim statute bills. It was argued that the Client Care Letters, Terms of Business Letters and, in particular, the Standard Terms of Engagement, contained a clear and unambiguous contractual right to render statute bills as final bills for each relevant period. The Defendant relied on three authorities: Richard Slade & Company plc v Erlam [2022] EWHC 325 (QB); Abedi v Penningtons [2000] 2 Costs L.L. 205; and Boodia v Richard Slade & Company [2024] Costs L.L. 753. From those authorities, three general propositions were drawn: the burden of proving that the retainer provides for interim statute bills falls on the receiving party; the retainer must be construed as a whole; and any fundamental ambiguity should be resolved against a construction that permits interim statute bills. The Defendant submitted that, on the proper construction of the retainer documents, there was no such ambiguity. The Standard Terms of Engagement expressly stated that any reference to “an interim invoice” meant an interim statute bill, and each invoice was a complete and final account for the relevant period, with no accumulation of charges between invoices.

The Court’s Analysis

Contractual Construction

Costs Judge Whalan accepted the three general propositions derived from the authorities cited by the Defendant. The burden of proving that the retainer provides for the delivery of interim statute bills, in contrast to requests for interim payments generally, falls on the receiving party. When construing the retainer, it is necessary to refer to the relevant contractual provisions as a whole. In determining whether a retainer does allow the solicitor to render interim statute bills, the court should resolve any fundamental ambiguity against that construction.

The parties had effectively agreed four separate retainers within the relevant period. Each contractual agreement comprised a Client Care Letter (sometimes supplemented by a Terms of Business Letter) and annexed Standard Terms of Engagement. The Standard Terms of Engagement were revised by the Defendant on several occasions during the relevant period, but the following provisions were cited in each version or iteration of the Terms:

Invoicing

In many cases, we will normally render our invoice at or towards the end of your matter (a Final Bill). However, if your matter becomes protracted or we have notified you that Interim Statutory Bills (ISBs) will be issued regularly as the case progresses, we will deliver an ISB to you from time to time. An ISB is an invoice covering the work carried out up to the date of the ISB or a specified earlier date, and issued before the matter ends. This will help you to budget for costs. Also, we may ask you for further payments to settle disbursements that are in excess of the initial payment on account. The initial sum paid on account will not be accounted for in an ISB but will be shown as a credit in the Final Bill. Any reference in correspondence or on invoices to “an interim invoice” means an ISB.

The invoices delivered by the Defendant to the Claimant followed a common format, insofar as they comprised the Invoice, a breakdown or Billing Guide and a Covering Letter. Each invoice set out the costs, expenses and disbursements incurred for the relevant period and provided a payment due date. The invoice was signed and included a note that the Claimant may be entitled to have his charges reviewed by the Court under sections 70, 71 and 72 of the Solicitors Act 1974. The Billing Guide outlined a very detailed breakdown (by date, time and fee earner, with an accompanying narrative) of all the costs and charges incurred during the relevant period. The Covering Letter referred to the invoice and summarised sums due from the Claimant.

Costs Judge Whalan was satisfied, on the proper contractual interpretation of the retainers, that the invoices delivered by the Defendant to the Claimant were interim statute bills, and not just a series of interim invoices delivered as part of a Chamberlain bill. The Terms of Engagement were unequivocally clear. They provided for the delivery of interim invoices and stated that they had the status of interim statute bills. Indeed, the ‘Invoicing’ provision provided for no real alternative characterisation, given that: “Any reference in correspondence or on invoices to ‘an interim invoice’ means an ISB”. Invoices delivered by the Defendant to the Claimant exhibited all the relevant requirements of interim statute bills. They were drafted with considerable detail, meaning that the Claimant was provided with a clear breakdown of the costs, expenses and disbursements. They were signed, provided a payment due date and displayed clearly his right of assessment under the SA 1974.

The court found accordingly that the 29 invoices delivered by the Defendant to the Claimant between 25 August 2023 and 7 August 2025 were interim statute bills within the meaning of the 1974 Act.

Application of Section 70

The effect of this finding, in combination with the fact that various monies had been transferred from (or on behalf of) the Claimant to the Defendant constituting payment within the meaning of the 1974 Act (as confirmed in Oakwood Solicitors v Menzies [2024] UKSC 34), was that some of the invoices delivered by the Defendant to the Claimant could not be the subject of a SA 1974 assessment. Specifically, the court could not order an assessment of the nine invoices delivered and paid more than 12 months before the Claimant issued his Part 8 claim on 14 August 2025. They were: 200405 (25 August 2023), 201690 (29 September 2023), 202391 (27 October 2023), 204546 (21 December 2023), 205426 (30 January 2024), 206520 (28 February 2024), 207616 (28 March 2024), 208840 (2 May 2024) and 210651 (27 June 2024). These fell outside the court’s jurisdiction under s.70(4).

Insofar as the remaining 18 disputed invoices delivered (and paid/part-paid) between 18 July 2024 and 29 May 2025 were concerned, an assessment of 3 invoices—211203 (18 July 2024), 211953 and 211946 (31 July 2024)—could only be ordered at the discretion of the court and subject to the finding of “special circumstances”, pursuant to s.70(3) of the 1974 Act. The other 15 disputed invoices (dated between 27 August 2024 and 29 May 2025) were subject simply to the discretionary power of the court under s.70(2).

Special Circumstances

In Falmouth House Freehold Co Ltd v Morgan Walker LLP [2010] EWHC 3092 (Ch), Lewison J, having reviewed the case law relevant to special circumstances, stated that whether special circumstances exist is essentially a value judgement. It depends on comparing the particular case with the run of the mill case in order to decide whether a detailed assessment in the particular case is justified, despite the restrictions contained in section 70(2). Special circumstances do not have to be exceptional circumstances. As Costs Judge Rowley confirmed in Masters v Charles Fussell & Co LLP [2021] EWHC B1 (Costs), they can be established by something out of the ordinary course, sufficient to justify departure from the general position under s.70 of the 1974 Act.

In Raydens Ltd v Cole [2021] 7 WLUK 539, Costs Judge Leonard, in citing with approval the guidance of Lewison J in Falmouth, added that a helpful test is to consider whether there is something in the fees claimed by the invoices, or in the circumstances in which they were charged, which “call for an explanation”. If they do call for an explanation or further scrutiny, that is a strong indication that there should be an assessment. This is not the time for the explanation to be given and evaluated in detail. That is the purpose of the assessment procedure and the scrutiny it provides.

The Claimant cited four potential special circumstances: (i) judicial findings on costs, proportionality and litigation conduct; (ii) pension disclosure issue; (iii) representation and escalation of costs; and (iv) assertions concerning third parties (Garry Moore).

The Claimant’s core assertion was that the Defendant allowed his litigation costs to increase exponentially to a point where they were unreasonable and disproportionate. He cited specifically the comment made on 26 June 2025 by HHJ Farquhar during the substantive proceedings, who stated that the costs were “frankly ludicrous” and that the total costs between the two parties were £366,000, representing 73% of the sole non-pension asset. The judge went on to refer to “litigation misconduct” and stated: “I simply look at the costs and accept there is litigation misconduct”. The third issue, representation and escalation of costs, was an essentially amplified repetition of this central submission.

During the interlocutory process of the financial proceedings litigation, an issue arose as to the valuation of the Claimant’s pension. Papers disclosed by or on behalf of the Claimant failed (at least initially) to include a Cash Equivalent Value, and it seems that the submission contributed to some confusion or protraction of the proceedings. The Claimant cited a paragraph from the Respondent’s s.25 statement suggesting that had a CEV been provided earlier, it may not have been necessary to pursue whether it was possible to serve a pension order in Ireland. It was submitted that the omission was an error and that this mistake, in turn, contributed to the unreasonable inflation of costs.

The Claimant submitted that the arrangement whereby his legal costs were largely paid or indemnified by Mr Garry Moore, his brother-in-law, contrasted with the run of the mill case and justified a detailed assessment.

The Defendant submitted that the Claimant’s special circumstances submissions “do not bear scrutiny”. The fees, expenses and disbursements were incurred on the instruction of the Claimant who, like his ex-wife, was determined to pursue the litigation “to the bitter end”. At all times the Claimant knew about the costs that he was incurring, as he was being billed monthly (or at least very regularly), and he latterly had regular conversations with the firm about costs. The fact that the costs incurred may be held to be disproportionate on an inter partes evaluation is of little or no relevance to a Solicitors Act detailed assessment, as the bill is assessed on the indemnity basis. The Claimant made no contemporary criticism of his legal representation by the Defendant. His subsequent allegations were unpersuasive, as demonstrated by the fact that he was willing to enter (or re-engage) in four retainers, culminating in an agreement dated 24 March 2025. There was no evidence at all to suggest that the Defendant’s work for the Claimant was inadequate and that this led to the unreasonable inflation of his costs liability. Insofar as the pension issue was concerned, the error was essentially that of the Respondent, for failing to acknowledge or accept that a foreign (Irish) pension could never have been made subject to a pension sharing order by an English court. The escrow account was a necessary security against non-payment by the Claimant, in circumstances where the Defendant would not have continued to act without such a guarantee of reasonably prompt payment. The arrangement was endorsed enthusiastically by the parties—the Claimant, Mr Moore and the Defendant—and it was conceded that monies drawn down on this account constituted “payments” for the purposes of the SA 1974. There was no credible or sustainable suggestion that these payments were in any way unauthorised.

The Defendant further submitted that a number of additional points militated against the court exercising the discretion in favour of the Claimant. Throughout the period of his representation, the Claimant gave repeated assurances to the Defendant that his costs would be paid, assurances which encouraged the Defendant to continue to act on his behalf, particularly after January-March 2025, when the firm had come off the court record. The Claimant was a capable litigant in person who exhibited a clear understanding of time limits; he started the Part 8 claim himself. The fact that his substantive costs were underwritten by Mr Moore suggested that he may ultimately struggle to satisfy any order for costs made following ongoing assessment proceedings.

Decision on Special Circumstances

Costs Judge Whalan was not satisfied that the Claimant had demonstrated the existence of special circumstances. There was nothing, in the court’s conclusion, that “calls for an explanation” or the scrutiny of the court. Pursuant to the retainers, the Defendant delivered regular, itemised invoices that exhibited very detailed breakdowns of the profit costs, expenses and disbursements that the Claimant had incurred during each relevant period. These costs were incurred pursuant to his instruction and he was aware of his ongoing, accumulating liability. Most of the invoices delivered by the Defendant were paid, within the meaning of the SA 1974.

Although the substantive parties’ costs may well have been incurred (individually and collectively) to a level that was disproportionate inter partes, that was of no general relevance to a solicitor/client assessment, which proceeds on the indemnity basis. This distinction between inter partes proportionality and indemnity basis assessment was the key reason why the judge found the judicial criticism of costs levels irrelevant to the special circumstances analysis. It was hard to foresee that the presumption of reasonableness would be dislodged on the particular facts of this case. No identifiable or sustainable criticism was made of the Defendant during the period(s) of representation, and the fact that the Claimant was content to be represented by the firm was illustrated by his willingness to re-engage the Defendant after March 2025. This absence of contemporary criticism and the Claimant’s voluntary re-engagement directly undermined his retrospective complaints about representation quality and cost escalation.

Insofar as special circumstances were not demonstrated, it followed that the court could not exercise its discretion to order the detailed assessment of the 3 invoices 211203 (18 July 2024), 211953 and 211946 (31 July 2024). Insofar as the remaining 15 disputed invoices were concerned, it was not appropriate, having regard to the matters set out in paragraphs 29 and 30 of the judgment (including the Claimant’s repeated assurances of payment, his sophistication as a litigant in person, and the potential difficulty in satisfying any costs order), for the court to exercise discretion to order a detailed assessment.

Conclusion

The court concluded that the retainers concluded by the Claimant and the Defendant provided for the delivery of interim statute bills. The invoices delivered by the Defendant to the Claimant between 25 August 2023 and 7 August 2025 were interim statute bills. The Claimant was not entitled to an assessment of the invoices that were delivered and paid between 25 August 2023 and 27 June 2024. The Claimant was not entitled to an assessment of the invoices delivered and paid/part-paid dated between 18 July 2024 and 29 May 2025. There were no special circumstances arising in this case and, at the discretion of the court, a detailed assessment was refused. The Claimant was—by concession and agreement—entitled to a detailed assessment of two invoices, 225141 (27 June 2025) and 226664 (7 August 2025), should he wish to pursue this.

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s71(3) | Beneficiaries Who Pursued Unreasonable Solicitors Act Assessments Bear the Costs Personally

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The Senior Courts Costs Office’s decision in Tucker & Anor v Howe [2026] EWHC 208 (SCCO) addresses two consequential issues arising from a nine-day detailed assessment of the costs of an estate administrator appointed under probate proceedings.

Background

The matter concerned the detailed assessment of costs under section 71(3) of the Solicitors Act 1974. The costs were those of Mr Mark Keeley, a solicitor and partner at Freeths LLP, who had been appointed as administrator pending suit of the estate of the late Mr Steven Howe. The appointment was made by order of HHJ Pearce on 16 October 2020 within probate proceedings brought by the executrices (the Claimants) to propound Mr Howe’s will against his daughter, the Defendant. Mr Keeley’s appointment authorised him to charge reasonable professional fees and terminated upon the final order in the probate claim.

The probate claim was compromised by a consent order in December 2021. Disputed matters of administration were later resolved by a further consent order made by District Judge Woodward on 21 February 2023. That order provided for the determination of the Administrator’s costs by way of a third-party detailed assessment pursuant to section 71(3) of the 1974 Act, setting out a timetable for the service of a bill, points of dispute, and the commencement of assessment proceedings in the Senior Courts Costs Office if agreement was not reached. The bill for assessment, served pursuant to that order, was drawn in the total sum of £147,436.33 across twelve parts, covering both contentious and non-contentious work under two separate contracts of retainer, together with Mr Keeley’s own professional time costs and counsel’s fees.

The assessment hearing took nine days of court time over three separate periods between April 2024 and February 2025. That duration was largely the result of 67 pages of Points of Dispute which employed the word “staggering” or “staggeringly” 54 times and the word “astonishing” 17 times. The court found none of that hyperbole justified. The bill was assessed at £129,686.76, just below 88% of the amount claimed. The court found the Claimants’ conduct to have been unreasonable to a high degree and ordered them to pay the costs of the assessment on the indemnity basis, summarily assessed at £132,400 exclusive of VAT.

The parties were unable to agree the terms of a final order, leading to a further hearing on two unresolved issues: whether the Claimants or the estate should bear the costs of the assessment, and the recoverability of VAT on those assessment costs. The question of costs liability had taken on particular significance because the estate of Mr Howe was insolvent, an Insolvency Administration Order having been made on 23 July 2025.

Costs Issues Before the Court

Two discrete costs issues required determination. The first was the identity of the party liable to pay the costs of the detailed assessment proceedings. The Claimants argued the burden should fall on the insolvent estate, while Mr Keeley contended the Claimants were personally liable in their capacity as beneficiaries who had applied for the assessment. The second issue was whether Value Added Tax was properly recoverable on the costs of the assessment, with the Claimants arguing that the work constituted a non-taxable self-supply by Freeths.

The Parties’ Positions

On the burden of costs, Professor Watson-Gandy submitted for the Claimants that the central consideration in a section 71(3) assessment was the protection of the estate’s interests, relying on Kenig v Thomson Snell & Passmore LLP [2024] EWCA Civ 15. He argued that the Claimants had participated in their capacity as executrices fulfilling a fiduciary duty to the beneficiaries. He submitted that DJ Woodward’s consent order made no provision for personal liability and that CPR 46.2, which governs costs orders against non-parties, would have been required if such liability was intended.

Mr Latham argued for Mr Keeley that the Claimants had clearly applied for and pursued the assessment in their capacity as beneficiaries, a point reinforced by their own pre-action correspondence and by the legal arguments they had advanced to broaden the scope of the assessment. The Claimants’ representative, Mr Valls, had consistently corresponded on behalf of all the beneficiaries and demanded a detailed assessment in that capacity. The court retained an absolute discretion under section 51 of the Senior Courts Act 1981 and section 71(3)(b) of the 1974 Act. Given the court’s findings on the Claimants’ unreasonable conduct — conduct not attributable to the estate or the beneficiaries as a whole — it was appropriate to order the Claimants to pay the costs personally.

On VAT, Professor Watson-Gandy argued that where solicitors act for themselves in contentious business matters, the supply is not a taxable supply, citing the VAT tribunal decisions in Ralph Arthur Archer v The Commissioners and D A Walker v The Commissioners. It was submitted that Freeths’ bills were addressed to Mr Keeley at Freeths, and that estate accounts bore Freeths’ business address, indicating a self-supply. Mr Latham submitted that the point had not been raised in the Points of Dispute against the main bill and should not be permitted to be raised after the assessment had concluded. On the merits, he argued that Mr Keeley and Freeths were separate legal entities capable of entering into a retainer and that VAT was properly chargeable on Freeths’ supply of services to him.

The Court’s Decision

Burden of the Costs of Assessment

Costs Judge Leonard held that the Claimants were personally liable for the assessment costs in their capacity as beneficiaries. The court rejected the argument that they had acted as executrices, for several reasons. The Claimants had made it clear from the outset that they were acting as beneficiaries. They had relied extensively upon their position as beneficiaries to broaden the scope of their challenges to Mr Keeley’s costs. And the statutory jurisdiction under section 71(3) does not empower the court to order an assessment on the application of a trustee, executor or administrator; it empowers the court to do so on the application of any person interested in the relevant property — in this case, the beneficiaries of Mr Howe’s will.

The description of the Claimants as executrices in the heading of the proceedings and other procedural documents reflected the proper title of the probate proceedings in which the consent order was made. It had no bearing on the substance of the order or the capacity in which the assessment was pursued. The court held that CPR 46.2 had no application because the Claimants were already parties to the assessment proceedings, not non-parties. DJ Woodward’s order made no provision for the costs of the assessment because orders for assessment do not make such provision; the award and quantification of those costs was a matter for the assessing judge.

Even if the court was wrong on any of those points, it accepted Mr Latham’s submissions on the appropriate exercise of discretion. The Claimants had, without ever themselves making any attempt at negotiation, rejected three attempts by Mr Keeley to settle the costs dispute upon receipt of a smaller sum than he was ultimately found to be due on assessment. Had they engaged with those settlement attempts, it would have been possible to avoid the necessity for the court to spend nine days reducing the bill by less than £18,000 inclusive of VAT. It would be unfair for the estate, and potentially for Mr Ross Tucker and Mr Jamie Tucker (who did not participate in the assessment), to bear any part of the burden of the unnecessary costs incurred through the Claimants’ actions.

Recoverability of VAT

The court first held that the Claimants were barred from raising a VAT challenge to the main bill itself, having failed to raise the point in their Points of Dispute. CPR 47.14(6) provides that only items specified in the points of dispute may be raised at the hearing unless the court gives permission, and no such permission had been sought or granted.

On the substantive question of VAT on the costs of the assessment, the court found no basis for the self-supply argument. Mr Keeley and Freeths LLP are separate entities capable of entering into a contract of retainer. Freeths had provided services to Mr Keeley under two contracts of retainer, and VAT was payable on their charges in the usual way. The termination of Mr Keeley’s appointment as administrator did not affect this analysis. On Mr Keeley’s own time costs (Part 10 of the bill), the court held there was no question of self-supply because his services as administrator were supplied to the estate, not to himself. As for the costs of the assessment, Mr Keeley had been represented by counsel instructed by Freeths; he was not representing himself. He had a liability to Freeths for the attendant costs, and they had an obligation to add VAT to their fees and disbursements. The inclusion of Freeths’ address on bills or estate accounts was not to the point.

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Part 36 Offers Cannot Displace The Solicitors Act One-Fifth Costs Rule

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The Senior Courts Costs Office’s decision in Griffin v Kleyman & Co Solicitors Ltd [2026] EWHC 257 (SCCO) clarifies that a settlement offer which attempts to reverse the statutory one-fifth rule through CPR Part 36 mechanics will not constitute a “special circumstance” under section 70(10) of the Solicitors Act 1974.

Background

The case concerned an assessment, under section 70 of the Solicitors Act 1974, of bills totalling £181,954.64 (including VAT and disbursements) rendered by the defendant firm, Kleyman & Co Solicitors Ltd, to its former client, Clare Griffin [§1]. The bills related to work undertaken between 30 March 2020 and 28 May 2021 [§1]. The assessment was ordered by consent on 13 May 2022 following a Part 8 application made by Ms Griffin on 30 July 2021 [§1]. That Part 8 application had initially been opposed, with a one-day hearing listed on 18 May 2022 to determine whether an order should be made, but that hearing was rendered unnecessary by the consent order agreed five days earlier [§2].

The consent order incorporated, at paragraph 2, the standard provision taken from Precedent L to Practice Direction 47 requiring the court to assess both the bills and the costs of the Part 8 proceedings, reserving the award and quantification of costs to the conclusion of the assessment process [§3–4]. The detailed assessment was a lengthy process. The claimant’s case on estimates was heard as a preliminary issue but did not succeed; Costs Judge Leonard found that whilst the defendant had failed to advise adequately on estimates, the claimant’s own refusal to conduct herself in a reasonable, realistic and cost-effective fashion made it impossible to set a limit upon the defendant’s recoverable costs [§12]. A final figure for the assessed bill was not established until 7 July 2025, with the process hampered by errors and misunderstandings on both sides [§13].

The bills, originally totalling £181,954.64, were assessed at £154,039.94, a reduction of £27,914.70 (15.34%) [§5]. As Ms Griffin had already paid £174,309.82, a refund of £20,269.88 was due to her [§5]. Importantly, it was established during the assessment that the defendant had incorrectly included in its bills disbursements to the value of £4,334.10, meaning the bills should have totalled £177,620.54 rather than £181,954.64 [§24]. Even without any other deduction, the defendant could never have claimed more than £3,310.72 as an outstanding balance, and the sum of £10,452.82 it had asserted as owing was substantially overstated [§24].

Costs Issues Before the Court

The primary issue was the award of costs for the solicitor-client assessment. The statutory framework in section 70(9) of the Solicitors Act 1974 prescribes that, unless the order for assessment provides otherwise, costs follow the “event” based on a one-fifth rule: if the bill is reduced by one-fifth or more, the solicitor pays the costs; if the reduction is less than one-fifth, the client pays [§7]. As the reduction was 15.34%, section 70(9) dictated that the defendant should receive its assessment costs unless special circumstances under section 70(10) justified a different order [§8].

This presumption could be displaced by section 70(10), which empowers the costs officer to certify special circumstances and the court to make such order as to costs as it sees fit [§7]. The claimant argued that a settlement offer she made constituted such a special circumstance. A secondary issue was the award of costs for the separate Part 8 application, the costs of which were reserved by the consent order and fell to be determined under the court’s general costs discretion in CPR 44.2 [§30].

Settlement Offers

Both parties accepted, for the purposes of this decision, that CPR Part 36 has no application to an assessment under section 70 of the 1974 Act. Costs Judge Leonard had previously given his reasons for reaching that conclusion in Zuhri v Vardags Ltd [2023] EWHC 3050 (SCCO), and neither party wished to reopen that point [§18]. The key part of the rationale behind that earlier decision was that the costs provisions of CPR Part 36 (as secondary legislation) are inconsistent with the costs provisions of subsections (9) and (10) of section 70 (as primary legislation) [§19]. There was, however, no obstacle to an offer not carrying Part 36 consequences being accepted so as to create a binding contract of settlement [§20].

On 23 May 2022, ten days after the assessment order, the claimant sent an offer headed “Part 36 Offer To Settle” proposing that the defendant’s bills be reduced by £28,000 in full and final settlement [§22]. The offer expressly stated it was intended to have Part 36 consequences and that, if accepted, the defendant would be liable for the claimant’s costs under CPR 36.13 [§22]. After deducting the £10,452.82 the defendant claimed as outstanding, the payment to the claimant would have been £17,547.18 [§22].

The defendant responded on 6 June 2022, questioning why the offer was “plus costs” given that a £28,000 reduction was less than the 20% needed to trigger the one-fifth rule in the claimant’s favour [§23]. The defendant offered instead to settle on a “drop hands” basis with no order as to costs, the outstanding balance of £10,452.82 to be written off [§23].

The Court’s Decision on Special Circumstances

Costs Judge Leonard found that the claimant’s 23 May 2022 offer was not sufficient to establish special circumstances displacing the one-fifth rule [§48]. The court accepted that, on the authority of Angel Airlines SA v Dean & Dean [2008] EWHC 1513 (QB), a clear without prejudice offer made in proper time and in proper form can constitute a special circumstance capable of reversing the statutory presumption in section 70(9) [§15, §32]. The judge accepted that the general principle from Wills v Crown Estate Commissioners [2003] 4 Costs LR 581 — that paying parties should make realistic settlement offers at the beginning of assessment proceedings and not at the end — was of general application to solicitor-client assessments as well as inter-party assessments, as recognised in Angel Airlines [§16–17].

However, the judge found the claimant’s offer was not in “proper form” [§35]. The offer provided for a reduction of less than one-fifth of the bills, yet required that, on acceptance, the defendant would lose its section 70(9) right to recover its assessment costs and would instead pay the claimant’s costs by reference to CPR 36.13(1) [§36]. In short, the offer represented a misconceived attempt to reverse the effect of section 70(9) through the operation of CPR Part 36, which was not possible [§37]. The judge found it unsurprising that the defendant was unwilling to accept it, and regarded the defendant’s “drop hands” offer as a more sensible proposition [§38].

The court also rejected the argument that accepting the offer would have left the defendant in a better position. While the billing refund under the offer (£17,547.18) was £2,722.70 less than the eventual refund of £20,269.88, acceptance would have required the defendant to pay the claimant’s costs — estimated at least £10,400 based on document time alone — and to forfeit its right to its own costs under the one-fifth rule [§27, §42–43]. The judge observed that the great majority of solicitors’ bills are reduced at least to some extent on a section 70 assessment, particularly in lengthy retainers involving hard-fought contentious matters, and that a solicitor whose costs are reduced by less than one-fifth may nonetheless regard the outcome as a success if it retains the right to assessment costs [§40]. The preservation of those rights, even subject to an element of uncertainty, outweighed the reduction of the billing refund by £2,722.70, or was at least sufficient to prevent the claimant from relying on the offer as establishing special circumstances [§47].

The judge added that even had he reached a different conclusion on special circumstances, it was unlikely that the claimant could have been awarded the costs of the estimates issue. The claimant’s case on estimates had been overstated and had involved unfounded and unfair allegations of impropriety against the defendant’s principal, Ms Kleyman, which the judge described as “regrettable”. Even after the estimates issue had been determined, the unfounded attacks on Ms Kleyman remained a feature of the proceedings [§49–50].

Conduct and the Award of Assessment Costs

The court awarded the defendant its costs of the assessment under the one-fifth rule, but reduced those costs to 80% to reflect the defendant’s conduct [§57].

The principal factor was the defendant’s negligent overbilling by £4,334.10, which should never have occurred [§53]. The claimant also identified a wider pattern of poor financial management: the defendant failed to produce a cash account as required by the assessment order in May 2022, failed again when ordered on 11 December 2024, and did not finalise a cash account until June 2025, even with some assistance from the claimant’s costs draftsman [§54]. The court found this poor record-keeping had impeded the clarification and resolution of the assessment, and that it should never have been necessary for the claimant to engage in a detailed assessment to discover that she had been overbilled [§55–56].

The Part 8 Costs

The Part 8 application and the assessment costs are distinct: section 70(9) governs only the costs of assessment, while the Part 8 costs fall to be determined under CPR 44.2 [§30]. However, there was logic in the parties’ mutual assumption that the Part 8 costs would follow the assessment costs, since the Part 8 claim was part and parcel of the claimant’s attempt to reduce the defendant’s bills [§31, §58].

The claimant argued she should receive the Part 8 costs on the basis that the defendant had initially opposed her application and only conceded shortly before the hearing. The court did not characterise the consent order as a capitulation, finding instead that it was a sensible compromise to have all disputes resolved within the assessment process [§59–60]. Nevertheless, the defendant could have recognised this at the outset rather than waiting until shortly before the hearing. In the exercise of discretion, the court ordered the claimant to pay 50% of the defendant’s Part 8 costs [§61].

Key Takeaway

This decision reinforces that settlement offers in Solicitors Act assessments must be crafted within the statutory framework, not around it. An offer which attempts to import CPR Part 36 consequences into a section 70 assessment — and which seeks to reverse the one-fifth rule through the backdoor — will fail the “proper form” test from Angel Airlines and will not constitute a special circumstance under section 70(10). Practitioners making settlement offers in solicitor-client assessments should ensure they do not attempt to reverse statutory costs entitlements, should make offers early and in realistic terms, and should be aware that a “drop hands” offer may carry more weight than an ambitious offer encumbered by misconceived Part 36 conditions. Separately, solicitors face tangible costs penalties for overbilling and poor record-keeping even where they prevail on the one-fifth rule.

Inadequate Estimate Fails To Establish Special Circumstances Under s70(3) Where Client Would Have Made The Same Choices

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The Senior Courts Costs Office’s decision in Biggar v Howard Kennedy LLP [2026] EWHC 132 (SCCO) confirms that deviation from a preliminary estimate will not establish special circumstances where the client’s conduct demonstrates they would have made the same choices regardless.

Background

Mr Alan Biggar made an application under section 70 of the Solicitors Act 1974 for the detailed assessment of 19 bills of costs delivered to him by his former solicitors, Howard Kennedy LLP [§1]. The bills, rendered between 29 June 2020 and 28 July 2023, totalled £195,954.60 [§1]. The Defendant’s records indicated that the first three bills, up to 26 August 2020, had been paid in full [§1]. The remaining bills were wholly or partly unpaid.

The Defendant had acted for the Claimant between June 2020 and June 2023 in connection with serious charges of fraudulent trading brought by the Financial Conduct Authority (FCA) relating to Worthington Group plc, a company listed on the London Stock Exchange [§5–6]. A restraint order, made on 13 April 2018 by HHJ Taylor at Southwark Crown Court, prevented the Claimant and his wife from dealing with their assets and did not contain an exception for legal fees [§10]. The retainer was governed by an engagement letter dated 12 June 2020 and the firm’s standard terms of business [§7]. The letter included a preliminary estimate of £10,000–£15,000 plus VAT for initial work (reviewing papers, liaising with the FCA, and providing initial advice), stating that further estimates would be provided as the matter progressed [§8–9].

The Claimant faced significant difficulties in funding his defence. An initial third-party funder, Mr Stephen Dando, withdrew in May 2021 [§19]. The Claimant’s estranged wife contributed £10,000 in October 2021 but was unable to provide further funding [§20]. Subsequent promises of funding from Anglo Swiss Advisory Ltd, outlined in a letter dated 14 October 2022, failed to materialise [§24–25]. That letter contemplated funding of at least €1,320,000 [§24]. Despite mounting unpaid fees, the Defendant continued to act. In July 2023, the parties entered a written agreement in which the Claimant acknowledged a debt of £101,137.42 and agreed to a repayment plan [§33]. The plan was not honoured [§34].

On 22 May 2024, the Defendant issued County Court proceedings for unpaid fees totalling £102,109.40 plus interest [§35]. The Claimant filed a defence challenging the reasonableness of the fees and sought an order for detailed assessment [§35]. Shortly thereafter, on 9 January 2025, he issued a Part 8 application in the Senior Courts Costs Office [§36]. On 15 January 2025, HHJ Evans-Gordon stayed the County Court proceedings pending the conclusion of the assessment claim [§36].

Costs Issues Before the Court

The court was required to determine two principal issues [§4]. First, whether the Defendant’s first three bills had been “paid” for the purposes of section 70 of the Solicitors Act 1974. If they were paid more than 12 months before the application, the court had no jurisdiction to order their assessment under section 70(4) [§3]. Second, whether “special circumstances” existed to justify an order for the assessment of the remaining unpaid bills. As the application was made more than 12 months after the delivery of those bills, the Claimant needed to demonstrate special circumstances to overcome the statutory restriction in section 70(3) [§3].

The Parties’ Positions

The Claimant’s Position: The Claimant argued that special circumstances existed. He contended that the existence of the restraint order was itself a special circumstance sufficient to justify assessment [§48]. He relied heavily on the Defendant’s initial cost estimate of £10,000–£15,000, arguing that the eventual fees of nearly £200,000 represented such a significant deviation as to call for an explanation [§51]. He stated he had relied on this estimate and was vulnerable when instructing the Defendant [§37, §51]. He also cited his involvement in a lengthy criminal trial as a factor explaining his delay in challenging the bills [§52]. Regarding payment, he submitted that, applying Menzies v Oakwood [2024] UKSC 34, he had not agreed to the allocation of specific payments to specific bills, and therefore the first three bills could not be considered “paid” [§53].

The Defendant’s Position: The Defendant submitted that the application was a tactical manoeuvre to delay payment [§54]. It argued that the first three bills had been paid by agreement, which could be inferred from the Claimant’s conduct in making payments against the outstanding balance over a prolonged period [§55–58]. On special circumstances, the Defendant contended the preliminary estimate was just that — preliminary — and was quickly superseded by events [§61]. It highlighted that the Claimant had later sought to raise over €1.3 million in funding, demonstrating his understanding of the true potential cost [§61]. The Defendant pointed out that the Claimant had repeatedly affirmed the debt, including in the July 2023 agreement, and had never queried the bills until faced with enforcement [§59–60]. It argued there was nothing out of the ordinary in a complex fraud case with a restraint order [§62].

The Court’s Decision

On Payment of Bills: Costs Judge Leonard found that the first three bills had been paid [§67]. Applying the principles from Menzies v Oakwood, the judge held that payment requires an agreement to the sum taken, which can be inferred from conduct [§63]. The Claimant had received the bills and subsequently arranged for payments to be made against the outstanding balance. This constituted an agreement to pay [§67]. The judge rejected the argument that agreement required specificity in allocating payments to particular bills, finding that standard to be artificial and impracticable [§66]. Consequently, the court had no jurisdiction to order assessment of those bills under section 70(4).

On Special Circumstances: The court dismissed the application, finding no special circumstances [§89].

The judge rejected the argument based on the initial estimate [§69]. The estimate was expressly preliminary and related only to initial work: reviewing papers, contacting the FCA and previous solicitors, and providing advice [§69]. The Claimant’s comparison of this figure to the total three-year costs was “artificial” [§69]. The judge noted that by October 2022, the Claimant was seeking to raise over €1.3 million, showing his understanding of the potential scale of costs [§77]. Furthermore, the evidence demonstrated that even with full knowledge of accruing costs, the Claimant wished to continue instructing the Defendant rather than seek cheaper alternatives. In March 2023, having already received bills exceeding £170,000, he emailed: “I’d rather of course stay where we are. I value your guidance and as we’ve said before when liberty is at stake its not a time to go for the cheapest” [§29, §73]. Accordingly, any failure to provide updated estimates had not caused the Claimant to lose an opportunity to make different choices [§76].

The court also rejected the other proposed special circumstances. The restraint order was not unusual for a substantial fraud prosecution [§80, §83]. The Defendant’s subsequent enforcement action was a reasonable consequence of unpaid fees and broken promises [§84]. The Claimant’s ongoing criminal trial did not adequately explain a 17-month delay in applying for assessment, especially as the trial did not begin until September 2024 — well after most of the delay had elapsed [§81]. The judge also found that the Defendant had complied with its retainer terms regarding notification of rate increases by detailing them on each invoice [§86]. In any event, such a discrete point would not justify a full assessment [§88].

In concluding, Costs Judge Leonard accepted the Defendant’s submissions as to the merits and motivation behind the application [§68]. The Claimant had been advised from the outset of his right to challenge bills and the applicable time limits, was reminded of this with every bill, and never expressed dissatisfaction until faced with enforcement [§79]. The Part 8 application was dismissed [§89].

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CFA Termination | Why Accepting Repudiation Instead Of Using Contractual Rights Left Solicitor With Nothing

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The High Court’s decision in The Winros Partnership v Global Energy Horizons Corporation [2025] EWHC 3362 (Ch) confirms that contractual risk allocation in a CFA precludes unjust enrichment claims where the agreement already provides for the consequences of termination.

Background

The case concerned an appeal by The Winros Partnership (formerly Rosenblatt Solicitors) against a decision of Senior Costs Judge Gordon-Saker in the Senior Courts Costs Office. This was the second appeal in the long-running costs dispute between these parties; the procedural history and the abuse of process challenge to late-raised objections was considered in the First Judgment, covered in our earlier post.

The underlying dispute arose from a series of conditional fee agreements (CFAs) between Rosenblatt and its client, Global Energy Horizons Corporation, for litigation services. Three CFAs were entered: CFA-1, CFA-2, and CFA-3. The relationship deteriorated, leading Rosenblatt to terminate CFA-3 by accepting Global Energy’s repudiatory breach in a letter dated 24 February 2016. This termination was subsequently held to be valid by Trower J in earlier proceedings [§7].

In April 2016, Global Energy commenced proceedings under the Solicitors Act 1974 seeking detailed assessment of four bills rendered by Rosenblatt [§9]. The key bills were a 2012 bill (for work under CFA-2) and a 2016 bill (for work under CFA-3). Trower J had already determined that the 2012 bill was not a statute bill and conferred no immediate right to payment [§11]. The appeal focused on the 2016 bill, delivered shortly after termination, which Rosenblatt sought to have assessed. Rosenblatt had also commenced separate Chancery proceedings for damages arising from the termination, which were stayed pending the outcome of the costs assessment [§12, §37].

At the detailed assessment hearing, Global Energy raised “Objection 1”, contending that Rosenblatt was not entitled to payment of its fees for work done up to the termination date where no “win” had been achieved under the CFA [§4, §13]. The Senior Costs Judge framed the issue as: where a CFA retainer is terminated following the client’s repudiation, is the solicitor entitled to payment of fees if no success fee had been achieved? He concluded that Rosenblatt was not entitled to deliver the 2016 bill, that Global Energy was not liable to pay it, and therefore the bill must be assessed at nil [§65–66]. It was against this decision that Rosenblatt appealed.

Costs Issues Before the Court

The core costs issue was the entitlement of a solicitor to payment of fees under a conditional fee agreement terminated due to the client’s repudiatory breach, where the condition for payment of the success fee (a “win”) had not been met. The appeal required the court to determine:

      1. Whether the Senior Costs Judge erred in law in concluding that a solicitor could not recover fees (absent a success fee) following termination for repudiation, distinguishing the position from termination of an “ordinary” retainer for good cause.
      2. Whether Rosenblatt had an alternative claim in unjust enrichment (a quantum meruit) for a total failure of basis, which could found an entitlement to payment, and if so, whether such a claim could properly be determined within a detailed assessment proceeding under the Solicitors Act 1974.

The appeal proceeded on the agreed basis that CFA-3 was an entire contract and had completely replaced CFA-2 [§20, §23].

The Parties’ Positions

Rosenblatt’s Position: Rosenblatt contended the Senior Costs Judge erred. It argued that the long-established common law rule, as stated obiter in Richard Buxton (a firm) v Mills-Owens [2010] EWCA Civ 122, entitled a solicitor terminating an entire contract for good cause to be paid for work done [§27–28]. It submitted this principle should apply equally to CFAs. Crucially, Rosenblatt argued that its primary case on appeal was now a claim in unjust enrichment [§38, §57]. It contended that the basis for its work under CFA-3—performance leading to a “win” or, if not, termination under the agreement’s specific clauses—had totally failed when Global Energy’s repudiatory breach forced termination outside the contractual framework. Rosenblatt submitted that this created a vacuum allowing a restitutionary quantum meruit for the value of services rendered. It argued this claim could and should be determined within the detailed assessment.

Global Energy’s Position: Global Energy supported the Senior Costs Judge’s reasoning. It argued that CFA-3’s express terms, particularly clause 14.3, constituted a detailed contractual scheme allocating risk for termination due to the client’s failure to meet responsibilities, while leaving the common law damages remedy intact. Clause 14.3 provided [§14]:

“Rosenblatt can end this agreement if it believes the Client does not meet its responsibilities. If this happens, the Client will have to pay Rosenblatt’s fees for the work done to the termination date and disbursements.”

By choosing to accept a repudiatory breach instead of invoking clause 14.3, Rosenblatt elected a different remedial path (a claim for damages) [§37]. The contract had anticipated and provided for the scenario, allocating the risk that Rosenblatt would recover no fees if it did not use the clause 14.3 mechanism. Consequently, there was no room for a claim in unjust enrichment, as to allow one would upset the parties’ contractual risk allocation [§47–48]. Global Energy also argued that a freestanding unjust enrichment claim was not a matter for determination on a Solicitors Act assessment.

The Court’s Decision

Mr Justice Marcus Smith dismissed the appeal, upholding the Senior Costs Judge’s decision that the 2016 bill should be assessed at nil [§56]. The court’s analysis focused on two key areas: the claim in unjust enrichment and the propriety of the detailed assessment forum.

On the unjust enrichment claim, the court held there had been no total failure of basis. Applying principles from Dargamo Holdings Ltd v Avonwick Holdings Ltd [2021] EWCA Civ 1149 and Barton v Morris [2023] UKSC 3, the court emphasised the “Obligation Rule” and the importance of respecting contractual risk allocation [§41–49]. CFA-3’s clause 14 was a detailed provision anticipating various contingencies, including client non-performance (clause 14.3). This clause expressly stipulated the financial consequence: payment of normal fees and disbursements, but no success fee [§53].

The court found that while the common law remedy for repudiatory breach co-existed with these contractual terms, its existence did not create a vacuum allowing a restitutionary remedy that duplicated or circumvented the specific risk allocation in clause 14.3 [§54–55]. The parties had expressly agreed what would happen if Rosenblatt ended the agreement because Global Energy did not meet its responsibilities. To permit a quantum meruit claim in these circumstances would unjustly redistribute the risks expressly allocated by the contract. The court concluded that the common law remedy was a “last resort”, really intended for those cases not anticipated in clause 14 [§55]—and since clause 14.3 specifically addressed this scenario, there was no gap for restitution to fill. For substantially the same reasons as the Senior Costs Judge, Rosenblatt’s restitutionary claim failed [§56].

Obiter, the court also addressed the appropriateness of determining such a claim within a detailed assessment [§57–64]. Relying on Jones v Richard Slade and Co Ltd [2022] EWHC 1968 (QB), it held that the Solicitors Act assessment process is a regulatory review of a bill’s reasonableness, not a vehicle for enforcing debts or determining generalised claims such as unjust enrichment [§60–61]. While the court had jurisdiction to decide the point, it was not the appropriate forum [§63]. Such claims, if genuinely arguable, should be pursued in separate High Court proceedings, with the assessment potentially stayed. The effective dismissal of the claim within the assessment was therefore correct [§64].

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