Mental Health Issues Don’t Equal Legal Incapacity | Court Criticises Ombudsman’s Conflation But Upholds Decision On Poor Costs Communication

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Background

The case of Aina Khan Law Ltd v The Legal Ombudsman & Anr [2025] EWHC 1319 (Admin) concerned a judicial review challenge by the claimant law firm against a decision of the Legal Ombudsman dated 12 February 2024. The Ombudsman had upheld aspects of a complaint made by the Interested Party (IP), requiring the claimant to repay £51,192.60. The central issue was whether the claimant had adequately assessed the IP’s capacity when taking instructions and conducting litigation on her behalf in family proceedings.

The IP had instructed the claimant in September 2020 following the breakdown of her marriage and allegations of child abuse against her husband. The claimant’s attendance notes recorded the IP’s mental health history, including a diagnosis of ADHD and prescribed amphetamines, as well as her distress and allegations of coercive control. Over time, concerns grew about the IP’s capacity, culminating in a psychiatric report by Dr Isaacs in December 2020 confirming she lacked litigation capacity due to a paranoid psychosis. The Ombudsman’s decision criticised the claimant for failing to assess capacity adequately from the outset and for excessive costs.

Costs Issues Before the Court

The court was required to determine whether the Ombudsman’s decision on costs was rational and lawful. The key costs-related issues were:

  1. Whether the claimant’s failure to assess the IP’s capacity properly rendered the retainer invalid, affecting the recoverability of fees.
  2. Whether the claimant provided adequate and timely costs updates to the IP, particularly after exceeding initial estimates.
  3. Whether the Ombudsman’s award of £51,192.60 (comprising a £35,500 refund for poor costs communication and a 20% reduction for the invalid retainer) was disproportionate or irrational.

The Parties’ Positions

Claimant’s Submissions:
The claimant argued that the Ombudsman’s decision was irrational, particularly in conflating mental health issues with a lack of capacity. It contended that the Ombudsman misconstrued Dr Isaacs’ capacity certificate, which did not conclusively state the IP lacked capacity from August 2020. The claimant also challenged the finding that costs updates were inadequate, asserting that informal updates were provided. It further argued the award was disproportionate to the firm’s turnover.

Defendant’s Submissions:
The Ombudsman maintained that its decision was rational and within its broad discretion under the Legal Services Act 2007. It emphasised that the claimant should have conducted a more thorough capacity assessment given the IP’s vulnerabilities. On costs, it defended the finding that the claimant failed to provide timely updates when estimates were exceeded, justifying the £35,500 refund. The 20% reduction was separately justified by the failure to assess capacity properly.

The Court’s Decision

The court held that the Ombudsman’s decision was irrational in part. Key findings included:

  1. Capacity Assessment: The Ombudsman erred by conflating mental health issues with a lack of capacity and failing to consider the nuanced context of the IP’s instructions. The claimant’s consultations with counsel and the IP’s psychiatrist were reasonable steps to assess capacity. The Ombudsman’s reliance on hindsight (Dr Isaacs’ December 2020 certificate) was flawed.
  2. Costs Updates: The Ombudsman’s finding that the claimant provided inadequate costs updates was not irrational. The claimant had failed to inform the IP promptly when costs exceeded initial estimates (£43,500 and £75,000).
  3. Remedy: The court quashed the £15,692.60 award (20% reduction) linked to the flawed capacity finding but upheld the £35,500 refund for poor costs communication.
  4. Costs of the Claim: The claimant was awarded 40% of its costs (£19,036), reflecting partial success and criticism of its late evidence filing.

The court refused permission to appeal, concluding the Ombudsman’s decision was irrational only in its approach to capacity, not in its broader reasoning on costs.

CFAs Enforceable With 25% Damages Cap But Success Fees And Hourly Rates Reduced For Lack Of Informed Consent

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Background

The case of Richardson & Others v Slater & Gordon UK Limited [2025] EWHC 1220 (SCCO) involved a group litigation claim by 224 claimants against their former solicitors, Slater & Gordon UK Limited, concerning the enforceability and fairness of Conditional Fee Agreements (CFAs) entered into for personal injury claims. The claims arose from road traffic accidents and workplace injuries occurring between 2016 and 2020. The claimants alleged that the defendant’s retainers were unenforceable as Damages Based Agreements (DBAs), failed to comply with consumer contract regulations, and contained unfair terms. The court was tasked with determining nine preliminary issues, primarily focusing on costs-related matters, including the validity of the CFAs, the adequacy of information provided to clients, and the reasonableness of success fees and hourly rates.

Costs Issues Before the Court

The court was required to determine the following key costs issues:

  1. Whether the CFAs were unenforceable as DBAs under s58AA of the Courts and Legal Services Act 1990.
  2. Compliance with the Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013 (CC(ICAC)R).
  3. Whether the defendant adequately informed claimants about potential liability for costs exceeding recoverable sums from opponents.
  4. Whether claimants gave informed consent to terms permitting recovery of costs exceeding sums recoverable from opponents.
  5. The fairness of terms under the Consumer Rights Act 2015.
  6. The reasonableness of success fees and hourly rates charged.

The Parties’ Positions

Claimants’ Submissions: The claimants argued that the CFAs were effectively DBAs but did not comply with DBA regulations, rendering them unenforceable. They contended that the defendant failed to provide clear and prominent information about costs, particularly the 25% cap on damages deductions, ATE premiums, and the potential for costs to exceed recoverable sums from opponents. The claimants also alleged that the success fees and hourly rates were unreasonable and lacked informed consent.

Defendant’s Submissions: The defendant maintained that the CFAs were compliant with the CFA Regulations 2013 and were not DBAs. They argued that the information provided to claimants was clear and comprehensive, both orally and in written documentation. The defendant asserted that the success fees were justified by risk assessments and that the hourly rates were standard and agreed upon in the retainer documents.

The Court’s Decision

1. Enforceability as DBAs: The court rejected the claimants’ argument that the CFAs were unenforceable DBAs. It held that the agreements complied with CFA regulations and did not meet the definition of DBAs under s58AA of the Courts and Legal Services Act 1990. The 25% cap on damages deductions was a statutory feature of CFAs, not a DBA mechanism.

2. Compliance with Consumer Contract Regulations: The court found that the defendant had provided sufficient information in a clear and prominent manner, as required by the CC(ICAC)R. The oral explanations and written documentation adequately covered the key terms of the retainer, including the 25% cap and potential liability for unrecovered costs.

3. Informed Consent and Reasonableness of Success Fees: The court held that the claimants had agreed to the terms of the CFA, including the potential for costs to exceed recoverable sums from opponents. However, it found that the success fees required reassessment due to a lack of detailed explanation of their calculation. The court reduced the success fees to 10% for passenger claims, 15% for straightforward driver claims, and upheld the 100% fee for cases proceeding to trial.

4. Hourly Rates: The court ruled that the defendant’s uniform hourly rate of £217 for all fee earners was unusual and lacked justification. It applied the Guideline Hourly Rates (GHR) for National Band 1, allowing differentiated rates based on fee earner seniority.

5. Fairness of Terms: The court concluded that the terms of the CFA were fair and transparent under the Consumer Rights Act 2015. The key terms, including the 25% cap, were prominently displayed and explained in plain language.

In summary, the court upheld the validity of the CFAs but adjusted the success fees and hourly rates to reflect reasonableness and fairness. The judgment provides clarity on the standards for informing clients about costs in CFAs and the importance of transparency in solicitor-client agreements.

Section 74(3) Solicitors Act 1974 Does Not Apply To Family Court Proceedings

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Background

The case of Gorenstein v Sears Tooth Solicitors concerned a detailed assessment of costs under the Solicitors Act 1974. The claimant, Ms Elinor Gorenstein, sought an assessment of costs billed by her former solicitors, Sears Tooth, in relation to family proceedings involving financial remedy and children matters. The assessment was heard before Costs Judge Nagalingam in the Senior Courts Costs Office (SCCO). The parties had exchanged points of dispute and replies, with key issues centring on the applicability of section 74(3) of the Solicitors Act 1974, the adequacy of costs estimates provided, and the reasonableness of certain categories of costs claimed.

Costs Issues Before the Court

The court was required to determine several preliminary costs issues, including:

  1. Whether section 74(3) of the Solicitors Act 1974 applied to the assessment, given that the underlying proceedings were in the Family Court rather than the County Court.
  2. Whether the retainer agreement complied with CPR 46.9(2), particularly regarding informed consent for costs exceeding what might be recoverable inter partes.
  3. The adequacy of costs estimates provided by the defendant and whether the claimant should be bound by them.
  4. The treatment of estimated time entries in the bill of costs.
  5. The categorisation of fee earners described as “Managing Clerks” and the appropriate charging rates.

The Parties’ Positions

Claimant’s Submissions:
The claimant argued that section 74(3) of the Solicitors Act 1974 applied, limiting recoverable costs to what could have been allowed on an inter partes basis. Relying on Oakwood Solicitors v Menzies [2024] UKSC 34 and PACCAR Inc v Competition Appeal Tribunal [2023] UKSC 28, the claimant contended that the statutory construction should protect clients from excessive costs. The claimant further submitted that the retainer failed to provide “full and fair” disclosure of costs risks, citing Macdougall v Boote Edgar Esterkin [2001] 1 Costs LR 118 and Herbert v HH Law [2019] EWCA Civ 527. Additionally, the claimant challenged the adequacy of costs estimates and the inclusion of estimated time entries.

Defendant’s Submissions:
The defendant argued that section 74(3) did not apply, as the proceedings were in the Family Court, not the County Court. Relying on Belsner v CAM Legal Services Ltd [2022] EWCA Civ 1387, the defendant submitted that CPR 46.9 provided sufficient consumer protections. The defendant maintained that the retainer adequately explained costs liabilities and that post-retainer communications reinforced this understanding. On estimates, the defendant cited Guest Supplies International Ltd v Ince Gordon Dadds LLP [2022] EWHC 2652 (SCCO), arguing that estimates were not binding caps and that the claimant had not demonstrated reliance on them to her detriment.

The Court’s Decision

Section 74(3) Solicitors Act 1974:
The court held that section 74(3) did not apply, as the proceedings were in the Family Court, not the County Court. The Crime and Courts Act 2013 had clarified the distinction between these jurisdictions, and there was no evidence Parliament intended to extend section 74(3) to Family Court matters. The court rejected the claimant’s argument that this created an “absurd result,” noting that pre-2013, similar proceedings would have been in the High Court, where section 74(3) also did not apply.

Retainer and CPR 46.9:
The court found the retainer complied with CPR 46.9(2). The retainer explicitly stated that the claimant would be responsible for her own costs, with limited exceptions where costs might be recovered from the opponent. This constituted an agreement permitting the solicitor to recover more than might be allowed inter partes. The court also rejected the claimant’s argument that certain costs (incoming letters, overheads, dual attendances) were “unusually incurred,” as the retainer had clearly provided for these charges.

Costs Estimates:
The court declined to cap costs at the estimated figures but agreed they should be considered in assessing reasonableness. Following Guest Supplies, the court held that estimates were not binding unless relied upon to the client’s detriment. The defendant had provided regular updates and explanations for exceeding estimates, and the claimant had not shown she would have acted differently had more accurate estimates been given.

Estimated Time:
The court rejected the claimant’s argument that all estimated time should be disallowed. Instead, it directed that such entries be assessed on a line-by-line basis, taking into account the work actually done and the claimant’s knowledge of the same.

Managing Clerks:
The court encouraged the parties to resolve this issue between themselves, failing which further submissions would be required.

Next Steps:
The matter was adjourned for a line-by-line assessment of the remaining disputed costs, with the parties directed to provide available dates for the continuation hearing.

CPR 46.4 | Protected Parties | Court Rejects ‘Light Touch’ Approach To Assessement Of Solicitor-Client Costs Shortfall

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Background

In CFB v AXA Insurance UK PLC the Claimant, CFB, a protected party represented by a litigation friend due to a severe brain injury sustained from a fall at a construction site on 12 March 2019, succeeded in obtaining a £1 million settlement from AXA Insurance under the Third Party (Rights against Insurers) Act 2010.

During the proceedings, complex issues arose, including the denial of employment by the employer and AXA’s attempt to avoid the insurance cover based on non-disclosure of the Claimant’s immigration status.

The settlement precipitated two claims for costs: one inter partes claim (the Claimant’s costs against the Defendant) and one solicitor-client claim for costs (Prince Evans Solicitors LLP’s costs against the Claimant). The hearing for the costs determination took place over multiple dates: 7 August 2024, 12 December 2024, and 24 January 2025.

The settlement of inter partes costs stood at £378,000 (inclusive of interest and assessment costs) against a claim of £439,167.62. The solicitor-client costs included additional liabilities such as a success fee of £31,413.80 and an ATE premium of £1,680, along with a shortfall in costs recovered from the Defendant and a separate sum for “pure” solicitor-client costs amounting to over £23,000.

Costs Issues Before the Court

The costs issues before the court involved two primary claims. The inter partes claim needed approval for the settlement reached, involving a recovery percentage of approximately 85%. The more contentious issue was the solicitor-client claim.

Prince Evans Solicitors LLP (PE) sought recovery for additional liabilities, a shortfall in costs not recovered from AXA, and separate “pure” solicitor-client costs. These claims encompassed work related to the solicitor-client relationship beyond the settlement proceedings, specifically covering issues such as immigration advice and costs related to the Claimant’s appointment of a deputy under the Court of Protection.

The Parties’ Positions

Regarding the inter partes costs, the parties agreed on a settlement of £378,000 against a claim of £439,167.62. The negotiations for settlement appeared to have considered various vulnerabilities and potential deductions on assessment.

In addressing the solicitor-client costs, Prince Evans Solicitors LLP, through Mr. Roy KC, advocated for the court to take a “light touch” approach to approval, heavily relying on counsel’s advice. The solicitors argued that the current procedure for determining these claims was flawed, suggesting that a more lenient process aligned with the treatment of damages claims be adopted. They highlighted potential conflicts of interest given the litigation friend’s dual role as the solicitor’s spouse and the solicitor’s preference for a senior fee earner allaying concerns on the firm’s behalf.

The Court’s Decision

Costs Judge Brown scrutinised both the procedural aspects and the substantive costs claims put forward by Prince Evans Solicitors LLP.

In his decision, Costs Judge Brown addressed several criticisms raised by Mr Roy KC and Mr Smith, particularly regarding the scrutiny of solicitor-client cost claims. The Judge rejected the notion of a heavy presumption against approving settlements and underscored the necessity of detailed scrutiny in such cost matters given the potential conflicts of interest and the need to protect the interests of the protected party.

The court dismissed the suggested “light touch” approach, explaining that the existing rules mandated a meticulous examination of the costs claimed to ensure they were reasonable and in the interest of the protected party. Key to the judgment was the necessity to consider the merits of the costs claimed, not merely rely on the advice of learned counsel without further interrogation.

Concerns were raised over the high hourly rates charged, the substantial reliance on counsel, and the lack of delegation, which all contributed to an inflated costs claim. Furthermore, the claims for “pure” solicitor-client costs, including immigration advice and the appointment of a deputy, were considered highly unusual and possibly outside the scope of what could reasonably be charged under the CFA.

Ultimately, while the court approved the inter partes costs settlement, it refused to approve the solicitor-client cost deductions without a detailed assessment. The judgment emphasised that proper scrutiny and assessment were indispensable to safeguarding the interests of vulnerable parties and ensuring fair and reasonable solicitor remuneration.`

Interim Statute Bills Upheld | Court Rejects CBA Challenge And Confirms Valid Payments Under Solicitors Act 1974.

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Update, 12 September 2026: this decision was appealed and upheld. In Mehta v Howard Kennedy LLP [2026] EWHC 968 (KB) the appeal was dismissed, the court finding that “the Costs Judge was right to conclude that the retainer was not a CBA”. The position below stands.

Background

The case at hand involves Mr Vishal Mehta, the Claimant, who retained Howard Kennedy LLP, the Defendant, in June 2022 to assist with litigation concerning an alleged US$1 billion fraud against the Mehta family. The Defendant was instructed in response to a worldwide freezing order (WFO) against the Claimant and his family. The litigation covered various stages, including applications to list and appeal the WFO and orders for the Claimant to surrender his passport and provide asset details. The Defendant provided their services from 22nd June 2022 until the retainer was terminated on 5th May 2023.

During this period, the Defendant issued 24 invoices to the Claimant, totalling £3,124,674.04, including VAT and disbursements. The Defendant contended that 13 invoices had been paid more than 12 months before the commencement of the action, thus exempting them from assessment under the Solicitors Act 1974 (‘SA 1974’). This claim of ‘payment’ was disputed by the Claimant. The Defendant asserted that the remaining invoices were unpaid, except for one on 25th May 2023. As these invoices were delivered over 12 months before the application issue, any assessment under SA 1974 required demonstration of ‘special circumstances’. The unpaid invoices totalled £697,583.05, including VAT and disbursements.

Costs Issues Before the Court

The court was tasked with addressing several crucial costs-related issues:
(i) Whether the invoices delivered by the Defendant were interim statute bills or a series of interim invoices making up a ‘Chamberlain’ bill, which became ‘final’ upon the last invoice dated 25th May 2023.
(ii) Whether the retainer constituted a Contentious Business Agreement (‘CBA’) within the meaning of ss59 to 63 of the SA 1974, and if so, whether it was a ‘fair and reasonable agreement’.
(iii) Whether certain invoices were ‘paid’ within the meaning of SA 1974 and if the Claimant could demonstrate ‘special circumstances’ under s70(3) of the SA 1974 to justify an assessment.

The Parties’ Positions

The Claimant contended that the invoices were part of an entire ‘Chamberlain’ bill finalised with the last invoice dated 25th May 2023. The Claimant referenced Ralph Hume Garry v. Gwillim, Vlamaki v. Sookias & Sookias, and Boodia v. Richard Slade & Co. Solicitors, to support the contention that the burden of proving interim statute bills lies with the receiving party. Further, the contractual provisions and any ambiguities should be resolved against the solicitor.

Conversely, the Defendant argued that the invoices were indeed interim statute bills as per the clear wording in the Retainer Letter and Terms of Business. The details in the bills aligned with the statutory requirements, and the reservation concerning ‘value’ and ‘importance’ elements was irrelevant as it was not applicable in this case.

Regarding whether the retainer was a CBA, the Claimant argued that the retainer met the definition under s.59 of the SA 1974 due to its specific terms related to contentious business and hourly rates, thus invoking the statutory protections available under ss59-63. The Defendant contended that the agreement was not a CBA, asserting that the intention was for the retainer to fall under the separate statutory regime under ss.69-71. This was substantiated by the terms within the retainer that encapsulated the assessment rights under these provisions.

Concerning payment, the Claimant argued that none of the bills were ‘paid’ within the meaning of the SA 1974. The Defendant, however, provided detailed evidence showing payments made from various sources, including companies related to the Claimant and other solicitors, all authorised under the WFO.

The Court’s Decision

The court determined that the invoices delivered were interim statute bills, given the clear terms outlined in the Retainer Letter and the Terms of Business, which specified that each bill was a final bill for the work carried out within the stated period. These invoices included detailed breakdowns and met the statutory definition of interim statute bills.

On the issue of whether the retainer constituted a CBA, the court concluded that the 1974 Act allows for two separate and mutually exclusive regimes. The nature of the retainer, including the specific terms referencing the delivery of statute bills and rights under ss.69-71, indicated that the agreement did not invoke the protections under ss.59-63. Consequently, the court was not required to determine whether the agreement was ‘fair and reasonable’.

Regarding payments, the court found that the receipts identified by the Defendant were legitimate payments within the meaning of s.70(4) of the 1974 Act. These payments were authorised under the WFO and made with the knowledge and consent of the Claimant. Therefore, the court ruled that it could not order an assessment of any paid invoices delivered before 23rd May 2023, nor could it order an assessment of unpaid invoices, as no ‘special circumstances’ were demonstrated.

In summary, the Claimant was found not entitled to:

(i) Assessment of the invoices paid before 23rd May 2024.
(ii) Assessment of the unpaid invoices, as no special circumstances existed.

However, the Claimant was entitled to an assessment of the invoice delivered on 25th May 2023, as specified in a previous order dated 30 July 2024.

No Deviation From ‘Costs Follow The Event’ Following s68(1) Application Where Solicitor Failed To Respond To Multiple Requests For Final Statute Bill

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Background

On 15 November 2018, the claimant, Mr Jonathan Franklin, sustained personal injuries at work and subsequently instructed the defendant, Your Lawyers Limited, to act on his behalf. The claim was successfully settled on 14 December 2020. However, the defendant did not provide a final invoice regarding the costs incurred in bringing the claim. Consequently, the claimant sought legal advice from Mr James Green of JG Solicitors to review the sums charged by the defendant.

On 14 August 2024, Mr Green requested a Final Statute Bill from the defendant, providing an authority document with an electronic signature. The defendant, represented by senior manager Mr Matthew Plemper, requested a handwritten signature. This revised authority was signed and sent by the claimant on 10 September 2024. Despite this, there was no response from the defendant, prompting Mr Green to send a follow-up letter on 15 October 2024. This letter indicated that if the bill was not delivered by 22 October 2024, a Part 8 application pursuant to s68(1) of the Solicitors Act 1974 would be made.

With no response received, the claimant initiated the Part 8 application on 30 October 2024. The Final Statute Bill was eventually delivered by the defendant on 10 December 2024.

The case was initially listed for a directions hearing on 6 January 2025, which was subsequently relisted to 4 February 2025 and then to 20 March 2025, where counsel took over two hours for their submissions, necessitating a reserved judgment.

Costs Issues Before the Court

The court under CPR 44.2 was required to exercise its discretion regarding the award of costs. According to the general rule, “costs follow the event,” implying that the unsuccessful party pays the successful party’s costs. However, the court could make a different order based on the conduct of the parties. The claimant argued for costs to follow the event, whilst the defendant contended for a different order due to purported conduct issues by the claimant.

The Parties’ Positions

Mr Mason, representing the defendant, argued that the claimant’s conduct, prior to and post-commencement of proceedings, warranted a deviation from the general rule. He divided his submissions into three categories:

Pre-Action Conduct:
Mr Mason contended the claimant failed to comply with the Practice Direction – Pre-Action Conduct and Protocols, suggesting the claimant did not indicate that litigation would ensue if requests were ignored.

Commencement of Proceedings:
The defendant claimed that proceedings were initiated as a first resort, contrasting with the solicitation for a “wet ink” signature taking more than a week after signature to be dispatched.

Pursuit of Costs:
Mr Mason suggested that the claimant aimed to pursue costs through litigation rather than genuinely seeking a final statute bill.

Mr Simpson, for the claimant, countered by highlighting that the delays and lack of responses from the defendant justified the commencement of proceedings. He argued the claimant’s attempts to communicate efficiently, and the rational deadlines imposed were in line with typical expectations.

The Court’s Decision

Acting Senior Costs Judge Rowley ruled that the claimant’s conduct was reasonable and did not warrant any deviation from the standard rule that costs follow the event. Judge Rowley pointed out significant points:

Pre-Action Protocol Compliance:
The judge noted that the claimant’s polite and structured correspondence, including the seven-day warning, was sufficient and justified given the defendant’s lack of response. The absence of substantive replies from the defendant did not negate the potential for litigation.

Response Timeliness:
Based on prior evidence from the defendant’s similar case history, it was reasonable to expect that a final statute bill should have been produced within a short timeframe, not the 77 days it eventually took.

Post-Commencement Conduct:
The judge observed that the defendant’s failure to provide clarification during the proceedings, coupled with an uncommunicative approach, did not justify a conduct-based cost order against the claimant.

Given these findings, Acting Senior Costs Judge Rowley concluded that the claimant’s conduct, both before and after the commencement of proceedings, was reasonable and did not exhibit any behaviour warranting a costs penalty. Consequently, he awarded the costs to the claimant, assessing them on the standard basis.

“Endeavour’ To Notify” ≠ Duty To Halt | Court Upholds Solicitors’ Fees Above Initial Estimate

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Background

The case concerned an appeal brought by Mr Emmanouil Spanakis against an order of Costs Judge Whalan dated 29 August 2023, following a solicitor-client assessment under section 70(2) of the Solicitors Act 1974. Mr Spanakis had instructed Schillings International LLP in relation to a defamation and breach of confidence matter. The parties entered into a retainer agreement on 9 February 2022, which included an estimate for the first phase of work (“Phase One”) of up to £10,000 plus VAT.

An invoice for £15,000 plus VAT was rendered by Schillings on 6 April 2022, covering work carried out between 29 November 2021 and 31 March 2022. Mr Spanakis disputed the invoice on the grounds that it exceeded the initial estimate, that the work was substandard, and that no adequate warning had been given before costs escalated. The matter proceeded to a detailed assessment before the Costs Judge, who allowed the bill at £19,141.80 (including VAT). Mr Spanakis appealed.

Issues on Appeal

The key issues on appeal concerned whether the costs should have been limited to the initial estimate, and more broadly, how solicitor-client cost estimates should be treated when costs exceed them. The appeal required analysis of:

  • Whether Schillings had breached its contractual obligation to inform the client if costs would exceed the estimate;
  • Whether reliance on the estimate was a necessary condition to limiting the recoverable costs;
  • Whether Mr Spanakis had in fact relied on the estimate when instructing the firm;
  • Whether the court should have exercised discretion to limit recovery due to the excessiveness of the charges or the timing of notification.

Appellant’s Arguments

Mr Spanakis advanced five grounds of appeal. Central to his case was that the initial estimate created a legitimate expectation or implied cap, and that the respondent failed to comply with its obligation to notify him if the estimate was likely to be exceeded. He submitted that the court below had:

  1. Failed to consider his position as a consumer and apply the Consumer Rights Act 2015.
  2. Misinterpreted clause 8.3 of the retainer, which he argued imposed a firm duty to provide notice before costs could be increased.
  3. Wrongly concluded that an email of 28 March 2022 constituted sufficient notice.
  4. Erred in law by treating reliance as a requirement for challenging costs above the estimate.
  5. Exercised discretion improperly by failing to account for relevant facts.

Respondent’s Arguments

Schillings contended that the initial estimate was expressly non-binding and subject to assumptions. Clause 8.3 only required the firm to “endeavour” to provide notice. The 28 March 2022 email, sent when just over half the estimate had been used, was said to amount to fair warning that costs would be exceeded.

Schillings further submitted that the estimate could not reasonably have been viewed as a cap, and that the client continued to instruct the firm even after that update, demonstrating both acquiescence and an absence of reliance. The fees claimed were reasonable in light of the additional work, urgency, and complexity that arose during the instruction.

Judgment

Mrs Justice Tipples dismissed the appeal in its entirety. She found that the retainer did not impose a strict duty to provide advance notification before exceeding the estimate. The obligation in clause 8.3 was limited to an obligation to “endeavour” to provide notice. While earlier notification might have been better practice, a failure to notify sooner did not render subsequent costs unrecoverable.

The judge held that reliance on the estimate was necessary to support an argument that the fees should be limited. Mr Spanakis had not shown that he would have acted differently had he been given a more accurate forecast earlier. Rather, after receiving the 28 March 2022 email, he had urged the firm to continue with urgency. This undermined any suggestion of reliance.

At paragraph 94 of the judgment, the court expressly found that Spanakis was aware of the growing costs and continued to instruct the firm. There was no evidence of any detrimental reliance on the original estimate. The judge concluded that the work done and charges claimed were reasonable in all the circumstances, including the scope of work ultimately performed and the evolving instructions given by the appellant.

Analysis and Commentary

This judgment provides a significant clarification of how estimates in solicitor-client relationships are treated in detailed assessment proceedings. The High Court reaffirmed that:

  • An estimate is not a cap unless expressly stated to be such. The use of caveats or terms such as “we will endeavour to inform you” do not give rise to absolute obligations or hard ceilings on costs.
  • A client’s ability to resist paying costs in excess of an estimate depends not only on the size of the overrun but on the reasonableness of the solicitor’s actions and the presence (or absence) of reliance.
  • Reliance must be demonstrated with evidence of a change in position or lost opportunity. Mere expectation that costs would remain within the estimate is insufficient.

The decision is particularly valuable for legal practitioners in the way it distinguishes between best practice and enforceable obligation. It recognises that while good client care requires timely and accurate cost updates, the absence of such updates does not automatically disentitle solicitors to recover reasonable fees.

From a costs law perspective, this case reaffirms the importance of clear, well-drafted engagement letters. The inclusion of explicit language confirming that estimates are not binding and may be revised offers protection against challenges where final costs significantly exceed early forecasts. Conversely, it places an evidential burden on clients seeking to rely on estimates as a basis to resist payment.

The involvement of a specialist costs judge at first instance and the appellate endorsement by the High Court makes this a strong authority on the principles governing solicitor-client assessments. It is likely to be cited in future disputes over fees where the scope of a solicitor’s duty to warn of cost increases is in question.

Conclusion

The High Court’s dismissal of Mr Spanakis’s appeal confirmed that the cost estimate given by Schillings was not a binding limit and that the firm had not breached its contractual obligations. The ruling affirmed that reliance is a crucial component in any argument seeking to restrict recovery of fees beyond an initial estimate. This judgment provides clear, authoritative guidance for costs practitioners and solicitors alike, reinforcing the position that a properly drafted retainer and demonstrable reasonableness in billing will withstand scrutiny, even where costs exceed early projections.

Solicitors Act Assessment Claim Dismissed Due To Delay And Concurrent Part 7 Proceedings

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The case involved proceedings initiated by Captivatiun Limited (“the Claimant”) against Orr Litchfield Solicitors Limited (“the Defendant”). Initially, the Defendant was instructed by the Claimant to assist with litigation involving Unlockd Marketing Ltd. The Claimant made an initial payment on account of £900 plus VAT. Disputes soon arose concerning the fees charged by the Defendant.

On 30 May 2022, the Defendant issued an invoice for £4,500 plus VAT. The Claimant sought to discuss the invoice, but by 16 June 2022, the Defendant indicated they could not undertake further work until the invoice was settled. This led to the Claimant concluding that their relationship with the Defendant had ended. Subsequently, on 6 September 2022, a second invoice for £9,018 plus VAT was generated.

The Defendant commenced Part 7 proceedings on 19 December 2023, seeking recovery of unpaid fees totaling £13,338. In response, on 12 April 2024, the Claimant notified the Defendant of their intention to issue a Part 8 claim for an order and directions for a Solicitors Act assessment of the invoices.

Procedural complications followed. The Claimant filed the Part 8 costs-only proceedings on 18 April 2024 to secure detailed assessment of the invoices. This led to a directions hearing being scheduled by the Senior Courts Costs Office (SCCO) on 10 May 2024, which was later adjourned to 26 June 2024 due to service issues.

On 26 June 2024, the Claimant served the sealed Part 8 claim form on the Defendant, although a certificate of service was not filed until 15 November 2024. The Defendant disputed the court’s jurisdiction in their acknowledgement of service filed on 18 December 2024, and on 12 February 2025, the Claimant requested a breakdown of the disputed invoices.

The matter centred on whether the Part 8 claim was an abuse of process, given the concurrent existence of Part 7 proceedings. Further, the court needed to consider if “special circumstances” justified allowing the Part 8 claim despite the delays.

This case raises crucial issues on the intersection of procedural rules governing costs disputes under Part 7 and Part 8, especially when one party is out of time under the Solicitors Act 1974.

Costs Issues Before the Court

The primary costs issues the court had to determine included the timeliness and appropriateness of the Claimant’s Part 8 application under the Solicitors Act 1974. Specifically, the Claimant was out of time but sought to rely on Section 70(3)(c) of the Act, which allows a court to exercise discretion if “special circumstances” arise.

The court had to consider:
– Whether the Claimant’s delay in bringing Part 8 proceedings constituted an abuse of process considering the ongoing Part 7 proceedings.
– The Claimant’s eligibility to pursue a Part 8 claim when it had been significantly out of time.
– Evaluation of the procedural efficiency and merits of resolving the dispute under Part 8 versus continuing under the ongoing Part 7 proceedings.

These issues were framed within the context of competing procedural rules, the timeline of events, validity and proper service of proceedings, and the special circumstances argument posited by the Claimant.

The Parties’ Positions

The Claimant, represented by James Miller, argued that although out of time, there were special circumstances warranting a Part 8 detailed assessment. It cited the Defendant’s lack of transparency and failure to provide a breakdown of costs despite repeated requests. The Claimant asserted that invoking the Part 8 process was essential to investigate serious allegations regarding the Defendant’s fees, including accusations of fabricated charges.

On the other hand, the Defendant, represented by Francesca O’Neill, focused on the argument that the Claimant was out of time and that their Part 8 application constituted an abuse of process. The Defendant contended that the issues raised by the Claimant were already adequately addressed in the Part 7 proceedings, which were well advanced. They argued that the ongoing Part 7 litigation offered a more appropriate forum for resolving the disputes and insisted that the parallel Part 8 proceedings were unnecessary and vexatious.

The Court’s Decision

Costs Judge Nagalingam ruled against the Claimant’s Part 8 application. He clarified that, despite the Part 8 procedural framework usually being favoured for costs disputes, the concurrent existence of the advanced Part 7 proceedings and the considerable delay by the Claimant in initiating Part 8 procedures could not be ignored.

The court found that the special circumstances asserted by the Claimant, such as the Defendant’s refusal to provide cost breakdowns and allegations of fabricated charges, were equivalent to common themes in many solicitor-client disputes. These did not, in themselves, rise to the level of special circumstances required to justify a late Part 8 application.

Additionally, the court found that all procedural directions necessary for a detailed investigation into the Defendant’s fees had already been set in the ongoing Part 7 proceedings, including orders for disclosure, exchange of witness evidence, and provision for a trial. Considering these facts, the court saw no added value in permitting the Part 8 application to proceed.

The court dismissed the Claimant’s Part 8 claim and awarded costs to the Defendant. However, the court expressed concerns over the significant costs claimed by the Defendant in response to the Part 8 claim and suggested that both parties aim to agree on a sensible sum before any further costs assessments.

In conclusion, Judge Nagalingam determined that continuing with the Part 7 proceedings was the most efficient and just course of action, both procedurally and substantively.

Points of Dispute Struck Out Due To Wholesale Non-Compliance

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Background

This complex legal costs judgment stems from a multifaceted professional negligence dispute involving Niki Christodoulides and her former legal representatives, CP Christou LLP. The origins of the case can be traced back to four original claims between the claimant and her sister, two of which were ultimately decided against Christodoulides, with trial judges making uncompromising findings of dishonesty.

Following these initial proceedings, Christodoulides brought a professional negligence claim against CP Christou LLP and a second defendant (her former counsel). This claim was heard before Knowles J over two days in December 2022, resulting in a comprehensive 73-page, 250-paragraph judgment delivered on 13 June 2023.

Knowles J comprehensively dismissed the professional negligence claim on multiple grounds. Specifically, he found that the Particulars of Claim disclosed no reasonable grounds for bringing the claim, possessed no reasonable prospects of success, and constituted an abuse of process. The judge was particularly critical of the pleading, describing it as incoherent and impossible to follow.

The judgment highlighted several key procedural issues, including the claimant’s attempt to challenge the accuracy of trial transcripts from previous proceedings. Knowles J explicitly noted the confusion surrounding these transcripts and chose not to delve into their details, instead relying on the original trial judges’ findings.

When Christodoulides sought permission to appeal, Stuart-Smith LJ comprehensively rejected her arguments, particularly regarding the transcript allegations. The appeal judge emphasised that the claimant had failed to identify any material inaccuracies that could have influenced the original proceedings’ outcomes.

Costs Issues Before the Court

The primary costs issue before Deputy Costs Judge Roy was the assessment of CP Christou LLP’s costs bill, which totalled approximately £132,000. The central preliminary point concerned the compliance of the claimant’s Points of Dispute (PoDs), which the defendant argued were so defective that they should be struck out entirely.

The Parties’ Positions

The first defendant (CP Christou LLP) argued that the claimant’s Points of Dispute were fundamentally non-compliant with Practice Direction 47.8.2, which mandates that Points of Dispute must be short, focused, and clearly identify specific points of challenge. Counsel for CP Christou LLP submitted that the 32-page document was prolix, discursive, and failed to identify any specific bill items or provide comprehensible challenges to the costs claimed.

The claimant, acting in person, presented various allegations of misconduct, including claims about transcript inaccuracies and alleged breaches of legal privilege. However, she did not effectively address the core procedural issues regarding the Points of Dispute’s non-compliance.

The Court’s Decision

Deputy Costs Judge Roy KC comprehensively rejected the claimant’s approach. While acknowledging a few marginally compliant points, the judge found that the Points of Dispute were fundamentally non-compliant with legal requirements. Applying the principles established in Ainsworth v Stewarts Law LLP, the court held that the document was so defective that it prevented a fair and proportionate assessment of costs.

The judge was particularly critical of the claimant’s attempts to resurrect allegations already rejected in previous proceedings, describing her approach as an abuse of process. The misconduct allegations were dismissed as immaterial, imprecise, and incapable of meaningful investigation within the costs assessment framework.

Ultimately, the court struck out most of the Points of Dispute, leaving only a few minor points to be assessed. The judgment serves as a stark reminder of the importance of procedural compliance and the need for clear, focused challenges in costs proceedings.

Damages-Based Agreement Invalidated For Failure to Comply with Regulatory Requirements

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Background

The case of Reeves v Frain represents a complex and significant legal dispute involving probate proceedings and a detailed examination of Damages-Based Agreements (DBAs). The underlying dispute concerned the validity of a will dated 7 January 2014, made by Kevin Patrick Frain, which was challenged by his daughter, Louise Michelle Reeves. The Second and Fourth Defendants maintained that the 2014 will was invalid, alleging it was procured without the deceased’s consent.

On 31 January 2022, following an extensive trial, Green J delivered a judgment in favour of the Defendants, pronouncing probate of the deceased’s earlier will dated 18 April 2012 and declaring the 2014 will invalid. The court found that the Claimant had not proven that the deceased knew and approved the 2014 will. The estate in question was substantial, valued at approximately £100 million.

The Defendants funded their legal action through Damages-Based Agreements (DBAs) with The London Litigation Partnership Ltd (LLP). These agreements were structured to provide legal representation in exchange for a percentage of any financial recovery. The DBAs were entered into in late 2020 and early 2021, with the Second Defendant’s agreement dated 16 February 2021 and the Fourth Defendant’s dated 16 December 2020.

Costs Issues Before the Court

The primary legal issues centred on the enforceability of the Defendants’ DBAs and whether they complied with the statutory requirements outlined in the Courts and Legal Services Act 1990 and the Damages-Based Agreements Regulations 2013. Specifically, the court was required to determine four key issues:

1. Whether the DBAs provided for payment out of sums recovered, as mandated by the regulations
2. Whether counsel’s fees were improperly charged as expenses in addition to the primary payment
3. Whether the payment was properly ‘netted off’ against inter partes costs recovery
4. Whether the DBAs had been wrongfully terminated or repudiated by the solicitors

The Parties’ Positions

The Claimant argued that the DBAs were unenforceable due to multiple regulatory breaches. Her primary contentions were that:

– The DBAs did not provide for payment exclusively from sums recovered
– Counsel’s fees were improperly charged as additional expenses
– The agreements failed to properly net off inter partes costs recovery
– The solicitors had effectively repudiated the agreements through their correspondence of 16 February 2022

The Defendants contended that the DBAs were valid and enforceable, arguing that:

– The definition of ‘financial benefit’ in the Act was broad and should be interpreted purposively
– The agreements substantially complied with regulatory requirements
– Any departures were immaterial and should not invalidate the entire agreement
– The solicitors had not repudiated the DBAs and the agreements remained valid

The Court’s Decision

Costs Judge Brown comprehensively rejected the Defendants’ arguments, finding that the DBAs were unenforceable on multiple grounds. The key findings were:

1. The DBAs failed to comply with the requirement to provide payment from sums recovered, as the claim was for a declaration and did not involve a quantifiable monetary recovery
2. Counsel’s fees were improperly charged as expenses, in violation of the regulatory framework
3. The agreements could not be saved through severance due to public policy considerations
4. The solicitors’ attempts to create a new private retainer were ineffective and potentially void

The judgment represents a stringent interpretation of the DBA regulations, emphasising client protection and strict compliance with statutory requirements. The court’s approach underscores the continuing significance of public policy considerations in litigation funding arrangements.