Costs Estimates And The Relevance Of A Costs Budget As Between Solicitor And Client

GUEST SUPPLIES INTERNATIONAL LTD V INCE GORDON DADDS LLP (COSTS ESTIMATES) | FULL SUMMARY AND DECISION

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This was a detailed assessment of a series of 12 bills delivered by the Defendant solicitors to the Claimant between February and October 2020, when the Defendant represented the Claimant in pursuing a claim for breach of contract against South Place Hotels Limited (“SPH”).

The purpose of this judgment was to address preliminary points 1 and 2 in the Points of Dispute served by the Claimant upon the Defendant in response to the Claimant’s detailed breakdown of its bills.

The Points of Dispute and Replies: Preliminary Point 1

Claimant’s Position

At preliminary point 1 the Claimant asserted that

• the costs recoverable by the Defendant should be limited, inclusive of counsel’s fees and disbursements, to £40-£50,000 plus VAT. That is the amount of an estimate allegedly given by the Defendant to the Claimant, at an initial meeting on 21 November 2019, to take the litigation to a Costs and Case Management Conference (“CCMC”).
• alternatively, by reference to Wong v Vizards [1997] 2 Costs LR 46, the Claimant said that the Defendant’s fees should be limited to a margin of 15% over that figure because the Claimant was not provided by the Defendant (in accordance with its professional duties and the terms of retainer) with the best information in order to make an informed decision on the costs that have been billed by the Defendant.

The Claimant also referred at preliminary point 1 to a costs budget in Precedent H format prepared by the Defendant for a CCMC initially listed for May 2020 (but subsequently adjourned). The Claimant said that:

• the budget showed costs to 30 May 2020 of £125,354 (just over £150,000 with VAT) whereas bills rendered to the end of May 2020 totalled £174,711.40. Furthermore,
  • projected profit costs to the end of the trial, according to the budget, were £118,650 whereas billed post-budget profit costs were £113,311.50.
  • the relevant phases of work had not been completed when the retainer between the Claimant and the Defendant was terminated;
  • witness statements had not been exchanged;
  • there were no settlement discussions, nor the 6-day trial provided for in the budget.
• Nonetheless, billed profit costs and disbursements claimed exceeded the budget by some margin.

The Claimant’s Points of Dispute did not say that this comparison between budgeted and billed figures justified any alternative limit, beyond the £50,000 plus VAT proposed by the Claimant, upon the amount of costs and disbursements recoverable by the Defendant from the Claimant.

Defendant’s Position

In the Replies to the Claimant’s Points of Dispute, this Defendant said about estimates:

• The first meeting between the Claimant and the Defendant on 21 November 2019 was a “beauty parade”. At that stage the Defendant had been provided with very limited documentation by the Claimant’s Accountant, who was at the meeting to brief the Defendant. With no knowledge of the specific facts the Defendant was asked if a fee of about £45,000 to get a case to the first CCMC was reasonable and the Defendant said that it sounded about right.
• Subsequently the Defendant had to amend Particulars as the Claimant had pleaded the case incorrectly. The matter subsequently developed far beyond what they had been told before the Defendant was instructed.
• The Claimant was kept regularly informed of the costs by way of interim bills delivered on a monthly basis. As matters developed and the Claimant fell behind with payments for bills delivered, the Defendant made clear the costs going forward and the Claimant was aware of the budget approved at the CCMC.
• The Claimant is an experienced businessman and worked closely with both of the main fee earners throughout the matter, often attending conferences with counsel and communicating on a regular basis (this appeared to to be a reference not to the Claimant but to Mr Aristos Aristodemou, the managing director of the Claimant company who in that capacity managed the litigation on the Claimant’s behalf and who appeared, on the evidence, to have been in effective control of both the Claimant and of the litigation).

With regard to the budget, the Defendant said that:

• the total of £125,354 to which the Claimant referred was not the total to the end of May 2020. The CCMC was originally listed for 5 May 2020 and the budget was served and filed in accordance with the relevant rules in April 2020;
• with VAT, the total incurred costs in the budget amount to £150,424.80. Bills to the end of April 2020 amounted to £142,910.20 including VAT.
• further, as the Claimant was advised at the time the budget was drafted, the costs of amending the Particulars of Claim were not included.
• the budget figures offered a fair and accurate reflection of the actual costs incurred.
• as for anticipated costs, the Defendant had made the Claimant aware that the budget would require updating, not least in respect of disclosure, and had the Claimant not changed Solicitors an appropriate application would have been made. Further, SPH had proposed that its budget should be increased by consent but the Claimant would not agree to that.

The Points of Dispute and Replies: Preliminary Point 2

At preliminary point 2 the Claimant maintained that throughout the period of the retainer, the Defendant did not provide the Claimant with details of the disbursements likely to be incurred before they were incurred, which were in consequence not agreed or approved, expressly or impliedly, by the Claimant and that no invoices or fee notes of disbursements had been provided.

With regard to counsel’s fees, the claimant referred to the judgement of Lavender J in Belsner v Cam Legal Services Ltd [2020] EWHC 2755 (QB) which, said the Claimant, establishes a need not only for a written agreement between the Claimant and the Defendant but also for the Claimant as client to have given informed consent to that agreement. In this case there was “nothing to suggest” that the Claimant gave informed consent to the Defendant’s costs or the level of counsel’s fees. The Claimant has not approved the fees and disbursements set out in the disputed bills and in consequence they were unreasonable in amount and unreasonably incurred. As a fiduciary, a solicitor may not receive a profit from his client without his client’s fully informed consent.

COSTS JUDGE LEONARD:

The Principles

106. Before explaining my conclusions in relation to preliminary points 1 and 2, I should refer first to the relevant principles and then to the effect, if any, of the Acknowledgement of Debt signed by Mr Aristodemou on behalf of the Claimant in June 2020.

107. I have been referred in submissions to two of my own judgments: Dunbar v Virgo Consulting Services Ltd [2019] EWHC B12 (Costs) and Newman v Gordon Dadds LLP [2020] EWHC B23 (Costs). The latter is I believe the judgment sent to Mr Cohen by Mr Aristodemou in June 2020. In both those judgments I attempted to summarise the principles applicable in cases where either no cost estimate has been given by a solicitor or a client seeks [to] limit the costs recoverable by a solicitor by reference to an estimate given. For ease of reference I will reprise that summary here (with a few changes to reflect the facts of, and the submissions made, in this case).

108. I should mention that my summary refers to the Solicitors’ Code of Conduct 2011, which was superseded by the current code on 25 November 2019. Arguably, the terms of the Defendant’s Client Care Letter of 22 November 2019 were flexible enough to hold the Defendant to the provisions of whatever code was current at the pertinent time, rather than specifically to the 2011 code. It has not however been suggested that for present purposes the updates to the code make any material difference, and I do not think that they do.

109. Costs as between solicitor and client, by virtue of the Civil Procedure Rules, specifically CPR 46.9, are assessed on the indemnity basis. The test is whether costs have been reasonably incurred and are reasonable in amount. A number of rebuttable presumptions apply, as set out at CPR 46.9(3):

(3) Subject to paragraph (2), costs are to be assessed on the indemnity basis but are to be presumed –

(a) to have been reasonably incurred if they were incurred with the express or implied approval of the client;

(b) to be reasonable in amount if their amount was expressly or impliedly approved by the client;

(c) to have been unreasonably incurred if –

(i) they are of an unusual nature or amount; and

the (ii) the solicitor did not tell the client that as a result the costs might not be recovered from the other party.”

110. To address some of the Claimant’s submissions I need also to refer to CPR 46.9(2):

“Section 74(3) of the Solicitors Act 1974 applies unless the solicitor and client have entered into a written agreement which expressly permits payment to the solicitor of an amount of costs greater than that which the client could have recovered from another party to the proceedings”.

111. Section 74(3) provides that, in county court litigation, the amount allowed on a solicitor and client assessment cannot exceed what the court would have allowed as between party and party.

112. A solicitor undertaking work for a client has a professional obligation to provide the client with an estimate of costs and to keep that estimate of costs up to date. That obligation was incorporated in the SRA Code of Conduct 2011, as in effect at the relevant time. The opening words of chapter 1 were:

“This chapter is about providing a proper standard of service, which takes into account the individual needs and circumstances of each client. This includes providing clients with the information they need to make informed decisions about the services they need, how these will be delivered and how much they will cost.”

113. This general requirement was reflected in required outcome 1.12:

“clients are in a position to make informed decisions about the services they need, how their matter will be handled and the options available to them…”

and 1.13:

“clients receive the best possible information, both at the time of engagement and when appropriate as their matter progresses, about the likely overall cost of their matter…”

114. The general requirement was also reflected in “indicative behaviours” 1.14, which required a solicitor clearly to explain to the client the solicitor’s fees and if and when they were likely to change, and 1.16, which required a solicitor to discuss how the client will pay, including possible sources of funding.

115.

The authorities show that failure by a solicitor to provide a client with adequate costs information in accordance with the Code of Conduct may reduce the amount payable to the solicitor by the client, as well as the amount recoverable between opposing parties in litigation. The issue turns upon the solicitor’s professional, rather than contractual obligations.

116. The effect upon recoverable costs of a failure by a solicitor to keep a client adequately informed in relation to those costs was considered by the Court of Appeal in Garbutt v Edwards [2005] EWCA Civ 1206. In that case, the defendants had been ordered to pay the costs of the claimants. The defendants argued that the contract of retainer between the claimants and their solicitor was unenforceable because the solicitor had not given an estimate of costs in accordance with the professional obligations imposed by the then current conduct rules, the Solicitors’ Practice Rules 1990.

117. The defendants raised that argument because, in accordance with the indemnity principle, the order for costs required them only to indemnify the claimants for those legal costs that the claimants themselves were liable to pay. It followed that had the defendants’ argument succeeded, they could have escaped any actual liability to pay, on the basis that there was nothing to indemnify.

118. The court found that failure by a solicitor to give an estimate did not in itself render a contract of retainer between a solicitor and a client unenforceable. It did however have an effect on recoverable costs. At paragraph 49 of a judgment with which Tuckey and Brooke LLJ agreed, Arden LJ set out these principles:

“Where there is simply no estimate at all for the costs in dispute, then the guidance that I would give is that… the costs judge should consider whether and if so to what extent the costs claimed would have been significantly lower if there had been an estimate given at the time when it should have been given. If the situation is that an estimate was given, but not updated, the first part of the guidance given in Leigh v Michelin Tyre plc [2004] 1 WLR 846 can be applied here. The guidance was as follows, at para 26:

‘First, the estimates made by solicitors of the overall likely costs of the litigation should usually provide a useful yardstick by which the reasonableness of the costs finally claimed may be measured. If there is a substantial difference between the estimated costs and the costs claimed, that difference calls for an explanation. In the absence of a satisfactory explanation, the court may conclude that the difference itself is evidence from which it can conclude that the costs claimed are unreasonable.’

However, the above guidance is at a very general level. Like the court in the Leigh case, I would stress that the guidance given above is not exhaustive since it is impossible to foresee all the differing circumstances that might arise in any individual assessment.”

119. Although the Court of Appeal was addressing the amount recoverable between opponents in litigation,the underlying point is that if the amount payable by the receiving party to his or her own solicitor would have been lower had adequate costs advice been given, costs unreasonably incurred as a result will be irrecoverable from an opponent. The same, of necessity, applies as between the solicitor and the client.

A solicitor will not, on assessment, recover costs that have been unreasonably incurred as a result of failure by the solicitor to provide adequate costs advice.

120. The principles identified in Garbutt v Edwards have been considered and developed in a number of detailed assessments between solicitor and client.

121. In Mastercigars Direct Ltd v Withers LLP [2007] EWHC 2733 (Ch) (“Mastercigars No 1”) and Mastercigars Direct Ltd v Withers LLP [2009] EWHC 651 (Ch) (“Mastercigars No 2”) Morgan J considered the importance of any estimate of costs given by a solicitor to a client, and considered the extent to which that estimate might limit the amount that the client should pay the solicitor.

122. In Mastercigars No 1 he considered, at paragraphs 68 and 110, the consequences of a solicitor’s failure to meet a contractual obligation to keep estimates updated:

“What remedy would Mastercigars have if the promise to update the estimates was not complied with? The obvious remedy would be a claim to damages. Such a claim would require the client to prove on the balance of probabilities that it would have been in a better position if an estimate had been provided. That would be quite a difficult thing for a client to prove. The promise to update estimates was not, in my judgment, a condition precedent to Withers recovering any sum in addition to the sums set out in the estimates which had been provided.”

123. Morgan J made similar observations at paragraph 110.

124. At paragraph 92 he addressed the appropriate application of the principles identified in Garbutt v Edwards and Leigh v Michelin Tyre plc:

“In a case where a solicitor does not give his client an estimate, the result will not generally follow that the solicitor is unable to recover any costs from his client. In a case where a solicitor does give his client an estimate but the costs subsequently claimed exceed the estimate, it will not follow in every case that the solicitor will be restricted to recovering the sum in the estimate. What these two decisions of the Court of Appeal repeatedly state is that the court may “have regard to” the estimate or may “take into account” the estimate and the estimate is a “factor” in assessing reasonableness. For the reasons given by Arden LJ in Garbutt’s case at para 50, these two cases do not themselves provide very much detailed guidance as to how one should react on the facts of a particular case because it was felt by the Court of Appeal it was impossible to foresee all the differing circumstances that might arise in any individual assessment”.

125. He added, at paragraphs 98 and 102:

“Solicitors are entitled to reasonable remuneration for their services: see s 15 of the Supply of Goods and Services Act 1982. In considering what is reasonable remuneration, the court will want to know why particular items of work were carried out and ask whether it was reasonable for the solicitors to do that work and for the client to be expected to pay for it…

… (Wong v Vizards [1997] 2 Costs LR 46) …is an authority at first instance, prior to Leigh v Michelin Tyre plc, of a case where there was reliance by a client on his own solicitor’s estimate. The judge in that case… indicated that ‘regard should be had’ to the level of costs the client had been led to believe he would have to pay. The question was then expressed as to whether it was reasonable for the client to pay much more than the estimated costs. In my judgment, the proper response to this decision is to hold that the court in that case was finding that, for the purpose of assessing reasonable remuneration payable to the solicitor, it is relevant as a matter of law to ask: ‘what in all the circumstances it is reasonable for the client to be expected to pay?’ Thus, even if the solicitor has spent a reasonable time on reasonable items of work and the charging rate is reasonable, the resulting figure may exceed what it is reasonable in all the circumstances to expect the client to pay, and to the extent that the figure does exceed what is reasonable to expect the client to pay, the excess is not recoverable.”

126. At paragraph 112 he addressed submissions on the relationship between estimates and obligations under the contract of retainer between solicitor and client:

“The first aspect is the contention that Withers were retained to do the work in the estimate and no other work. If Withers did other work then it was outside the retainer and they were not entitled to be paid for it. A second aspect is the contention that the client only agreed to pay the costs in the estimate and was not liable to pay anything beyond the estimate unless it was asked to, and expressly agreed, to do so. I reject both these contentions. As to the second, it is clear from Withers’ standard terms of business that the estimate was not placing an upper limit on costs and much less was it placing a definition on the work required of Withers. As regards the first contention, I hold that the estimate did not define the extent of the work to be done. Withers were instructed to do what was reasonably necessary on behalf of the client in the litigation as it evolved…”

127. In Mastercigars No 2 Morgan J (at paragraphs 47 and 54) considered the burden upon a client to demonstrate that a solicitor’s failure to provide adequate costs information had had adverse consequences:

“…my formulation of what is required does not go so far as to require the client to prove on the balance of probabilities that he would have acted differently…the way in which the estimate should be reflected on the costs concerned was left to the good sense of the court… it is not necessary for the client to prove detriment in the sense of showing on the balance of probabilities that it would have acted in a different way, which would have turned out more advantageous to the client. In a case where the client satisfies the court that the inaccurate estimate deprived the client of an opportunity of acting differently, that is a relevant matter which can be assessed by the court when determining the regard which should be had to the estimate when assessing costs. Of course, if a client does prove the fact of detriment, and in particular substantial detriment, that will weigh more heavily with the court as compared with the case where the client contends that the inaccurate estimate deprived the client of an opportunity to act differently and where the matter is wholly speculative as to how the client might have acted…

…The court should consider the deductions which are needed in order to do justice between the parties. It is not the proper function of the court to punish the solicitor for providing a wrong estimate or for failing to keep it up to date as events unfolded. In terms of the sequence of the decisions to be made by the court, it has been suggested that the court should determine whether, and if so how, it will reflect the estimate in the detailed assessment before carrying out the detailed assessment. The suggestion as to the sequence of decision making may not always be appropriate. The suggestion is put forward as practical guidance rather than as a legal imperative. The ultimate question is as to the sum which it is reasonable for the client to pay, having regard to the estimate and any other relevant matter.”

128.

In Mastercigars Direct Ltd v Withers LLP [2009] EWCA Civ 1526, in which the Court of Appeal refused permission to appeal from the judgment of Morgan J, Lord Neuberger observed that if one simply holds a solicitor to the amount of an estimate as if it were a binding quotation, that may produce a windfall for a client who may not have relied upon it or who would (given a more accurate estimate) have taken the same course of action, but with other solicitors.

129. In my view those authorities, and Civil Procedure Rules support the following conclusions.

130. If a solicitor is contractually obliged to provide a client with estimates of future costs, it does not follow that costs not anticipated by estimates will, on assessment between the solicitor and the client, be irrecoverable.

131. If however on the assessment of costs between a solicitor and a client, it is found (a) that the solicitor has never provided the client with an estimate of the costs and disbursements that the client was likely to pay, or that an estimate given was inadequate, and (b) that if a proper estimate had been given, the client would have paid less than the solicitor is claiming, it may be appropriate to limit the amount payable by the client to the solicitor to an amount that it is reasonable, in all the circumstances, to expect the client to pay. That may be less than would otherwise be payable for work reasonably done by the solicitor at a reasonable rate.

132. In order to demonstrate that it is right to limit the solicitor’s recoverable costs in that way, it is not necessary for the client to prove on the balance of probabilities that they would, if adequately advised, have acted in a different way which would have turned out more advantageous for the client. It may be sufficient that the failure to provide adequate advice deprived the client of an opportunity of acting differently, though that is likely to carry less weight, particularly where it is not possible to do more than speculate as to the way in which the client might have acted, if properly advised.

133. The ultimate aim will always be to identify the sum that, in all the circumstances, it is reasonable for the client to pay.

134. The Claimant’s points of dispute refer to Reynolds v Stone Rowe Brewer (A Firm) [2008] EWHC 497 (QB), which (whilst it applies the principles to which I shall refer) has to my mind a limited bearing on the facts of this case.

135. I should also say that

at paragraphs 117 and 118 of his judgment in Mastercigars No 1 Morgan J made it clear that Wong v Vizards (which was decided before Garbutt v Edwards) did not establish a general principle to the effect that a solicitor’s costs, where restricted by reference to an estimate, should be capped at the amount of the estimate plus a margin. To take that as a starting point would be wrong in principle. The approach to be taken depends upon the facts of the case.

136. As for Belsner v Cam Legal Services Ltd, I read the Points of Dispute as relying upon that authority in support of the contention that solicitors’ costs or counsel’s fees not incorporated within an estimate, and for which the client has not given specific advance authority, are irrecoverable for lack of informed consent.

137. That proposition, in my view, muddles different Civil Procedure Rules and different principles, with the result that it runs directly contrary to the authorities and the rules to which I have just referred.

138. Belsner v Cam concerns the application of CPR 46.9(2). In that case a solicitor had entered into a conditional fee agreement (“CFA”) with a litigation client without explaining adequately that the costs payable to the solicitor by the client under the CFA would very substantially exceed those recoverable from the client’s opponent under the fixed costs regime. The solicitor could not rely upon a written agreement with the client to recover the difference, because the client had not given informed consent to that agreement.

139.

CPR 46.9(2), Belsner v Cam, and the Claimant’s brief reference in the Points of Dispute to fiduciary duty, have no bearing on this case. One must look to the other provisions of CPR 46.9, in particular CPR 46.9(3). The question is whether costs and disbursements have been reasonably incurred by the solicitor acting in accordance with the terms of the solicitor’s retainer. If they have, then they will be recoverable. If the client has expressly or impliedly approved those costs or disbursements, then a lack of informed consent may rebut the presumption at CPR 46.9(3)(a) to the effect that those costs have been reasonably incurred. That is the only context in which informed consent has any application to this case, and even then the relevant items will not automatically be disallowed.

…..

The Figure Discussed on 21 November 2019: the Evidence

149. Before expressing my conclusions on the discussions of 21 November 2019, I need to make some observations on the evidence.

150. My starting point is the contemporaneous documentary evidence. Mr Churchill reminds me, by reference to Gestmin SGPS S.A. v Credit Suisse (UK) Limited [2013] EWHC 3560 (Comm), of the importance of attaching due weight to documentary evidence as opposed to fallible human memory.

151. The correspondence between the parties (most of which has been selected and produced by the Claimant) says a great deal. The attendance notes relied upon by the Defendant are also of great evidential value. I have no good reason to, and I do not, doubt their accuracy.

152. I have already said first that the evidence of Mr Georgiou, chartered accountant, (untested in cross-examination) adds little of value and second that I accept the evidence of Mr Georgiou, solicitor, which is particularly helpful in relation to the figure of £40-£50,000 discussed on 21 November 2019.

153. I also accept, for the most part, the evidence of Mr Cohen. I have my doubts about the accuracy of some of his evidence not because I believe that there was any intention on his part to be less than frank, but because I suspect that he has inadvertently allowed a certain amount of indignation at the Claimant’s conduct (as he sees it) to colour some of what he intended to be frank and reasonably objective evidence.

154. By way of example, I understood Mr Cohen, on cross-examination, to say that he did not anticipate at the outset the difficulties created by the Claimant’s former reliance upon the purported written 5-year contract, whereas it seems to me that the attendance note of 21 November 2019 indicates that he was aware of the problem.

155. I am also slightly baffled by the apparent discrepancies between Mr Cohen’s evidence and the Defendant’s position as expressed in its Replies to the Claimant’s Points of Dispute. It is difficult to understand why, if Mr Cohen referred in the meeting of 21 November 2019 only to the costs of SPH to the CCMC, the Points of Dispute indicate otherwise. Similarly, one might have expected the person who approved the Defendant’s replies to have been aware that the need to amend the Claimant’s Particulars of Claim in the litigation against SPH was already known to Mr Cohen on 21 November 2019.

156. Mr Cohen said on cross-examination that he played no part in the preparation of the Defendant’s Replies. That is in itself surprising, bearing in mind that he was the partner responsible for the litigation. He suggested that the Replies might have been prepared by reference to the Defendant’s file record, but it would appear that the Defendant’s file record makes no reference to an estimate of costs to the CCMC. All things considered, the source of the information upon which the Defendant’s replies on some key points is based, is remarkably obscure.

157. My reservations about Mr Cohen’s evidence (such as they are) do not however extend to his account of the events of 17 April 2020. It was put to him on cross-examination that if he had not, on 21 November 2019, provided a £40-50,000 estimate of the Defendant’s costs to CCMC, he would have said so when Mr Aristodemou purported to remind him of it on 17 April 2020. His answer was simply that there was no need to be confrontational about the point. He had no recollection of saying any such thing, but in any event matters had moved on. That would have been a perfectly realistic and sensible response. Obviously solicitors avoid arguing with their clients, if they can.

158. I have much greater reservations about the evidence of Mr Aristodemou. He is evidently a man of strong feelings, and I have concluded that his evidence is partisan, and driven by the desire to win, to the extent that he recalls events as he wants to recall them, rather than as they were. This is illustrated by the fact that under cross-examination he attempted to justify inconsistencies between his witness evidence and undisputed documentary evidence by reference to his subjective perception, rather than admit that his written evidence might not be entirely factually accurate. He appears to me to have prioritised supporting the Claimant’s case to the extent that his evidence is unreliable. For that reason, where Mr Aristodemou’s evidence conflicts with that of either Mr Cohen or the solicitor Mr Georgiou (not to mention the documentary record) I prefer their evidence to his. I will explain this by reference to some examples.

159. I start with the clear impression given by Mr Aristodemou’s written evidence that he ceased to instruct the Defendant for, among other reasons, overcharging. In fact, as Mr Cohen pointed out on cross-examination, it was the Defendant that refused to act further for the Claimant once certain matters had come to light in the course of preparing for disclosure in the SPH litigation.

160. Further detail is furnished by the narrative that accompanies the Defendant’s invoice 171789 of 30 September 2020, appended to Mr Aristodemou’s witness statement of 2 July 2021. For the sake of the Claimant and Mr Aristodemou himself I will not repeat the detailed content here, other than to say that according to the narrative Mr Cohen advised Mr Aristodemou, in September 2020, that in the light of what had emerged the action should be settled urgently; that Mr Aristodemou was unwilling to take that advice; that the Defendant, refusing to act further, subsequently supplied the Claimant with a notice of change; and that when Mr Aristodemou delayed signing the notice, the Defendant warned that it would if necessary apply to be removed from the court record.

161. There is then Mr Aristodemou’s evidence to the effect that he did not understand the Claimant’s invoices and their supporting narratives. I do not find that assertion (presumably made in order to forestall the obvious conclusion that he was at least kept informed of costs as they accrued, mostly on a monthly basis) to be credible. Both the bills and the narratives are perfectly clear and informative, as illustrated by the passages from the September 2020 narrative to which I just referred. I also find quite incredible Mr Aristodemou’s assertion that he was under the impression that the Defendant was rendering bills to the Claimant for any other purpose than to secure payment for its services.

162. I am equally sceptical about Mr Aristodemou’s claimed inability to understand the costs budgets prepared on behalf of the Claimant and Defendant, his attempts to distance themselves from those costs budgets and his attempts to treat them as irrelevant to his complaints about lack of estimates.

163. The first page of Precedent H on its own offers an admirably clear summary of past and estimated future costs: I cannot believe that Mr Aristodemou would have been incapable of understanding terms such as “incurred” and “estimated”.

164. That aside, Mr Aristodemou was reminded in the meeting of 17 April 2020 that he could use the draft precedent H that had been sent to him on that date as a reference point for considering future costs, and it would appear that he was going to consider it with his forensic accountant, Mr Georgiou. A few days later, Mr Savani followed that up with a letter reminding Mr Aristodemou that more information was needed to update the draft budget.

165. For those reasons

I am unable to accept Mr Aristodemou’s assertion that he was not properly advised in relation to budgeting, and that he did not approve the budget. I would add that the narrative to the Defendant’s bill number 167158 of 29 May 2020, as appended to Mr Aristodemou’s witness statement of 2 July 2021, appears to record the Claimant’s approval of the budget on 18 May 2020, two days before it was filed.

166. This takes me to the meeting of 21 November 2019. Mr Aristodemou says in his witness statement of 2 July 2021 that it was a condition of instructing the Defendant that he obtain an agreeable estimate of the Defendant’s costs to the CCMC. Under cross-examination he was entirely unable to point to any evidence to the effect that any such condition had been communicated to the Defendant.

167. Any such precondition would be wholly inconsistent with Mr Cohen’s clear written explanation, in the Client Care Letter of 22 November 2019 (which Mr Aristodemou accepted, on cross-examination, having read) that Mr Cohen could not at that stage give an estimate of costs. Further, if an estimate of costs to the CCMC had been essential to the instruction of the Defendant by the Claimant Mr Aristodemou would no doubt have expressed dissatisfaction at what the Client Care Letter said, and he did not.

168. On cross-examination Mr Aristodemou continued to insist that an estimate of costs to the CCMC was essential to the instruction of the Defendant by the Claimant and (although, on the evidence, he would not have been in a position to know) that Mr Cohen had everything he needed to give such an estimate at the meeting of 21 November 2019. Ultimately however he admitted that he had been aware that, at least for a period, Mr Cohen was unable to give such an estimate.

Whether an Estimate was Given on 21 November 2019

169. As to exactly what was said about costs on 21 November 2019, these are my conclusions. Gestmin SGPS S.A. v Credit Suisse (UK) Limited notwithstanding, it would not be right to conclude that no estimate was given simply because the attendance note of that date does not refer to it. The one point upon which all the witness evidence agrees is that a figure of around £50,000 was discussed, and the attendance note does not address that at all. One has to look to the witness evidence.

170. Bearing that evidence in mind, it is to my mind more likely than not that Mr Cohen communicated to Mr Aristodemou (whether he meant to or not) that an estimate of up to £50,000 plus VAT for the Defendant’s costs sounded like a realistic “ballpark” figure. That figure was however so heavily qualified as to be effectively meaningless, and it may well be that it was not mentioned in the attendance note of 21 November for that reason. Mr Cohen had already emphasised more than once that he was not in a position to give a reliable estimate of costs and he only did so on Mr Aristodemou’s assurance that he would not hold him to it. Mr Cohen put much more emphasis upon the likelihood that the litigation overall would probably cost hundreds of thousands of pounds.

171. The above conclusions are consistent both with the evidence of the solicitor Mr Georgiou, which as I have already said I accept; with Mr Cohen’s clear statement in the Client Care Letter, one day later, that he could not give an estimate of costs at that stage; with Mr Aristodemou’s evident acceptance of that statement; and with Mr Aristodemou’s eventual acceptance, under cross-examination, that he knew that Mr Cohen could not at that stage provide him with an estimate upon which he could rely.

The Effect of an Estimate of Costs to the CCMC

172. Mr Aristodemou also says that he should at some point have been given an estimate of costs to the CCMC, and that if he had been given an estimate in excess of £50,000 he would have acted differently.

173. Leaving aside my concerns about Mr Aristodemou’s evidence, the Claimant’s case in this respect is in itself not particularly credible. I have seen nothing to explain the proposition that a figure for costs to the CCMC was or should have been of crucial importance to the Claimant. There was no suggestion, for example, that the litigation against SPH would not proceed beyond the CCMC. On the contrary, Mr Cohen warned Mr Aristodemou when they first met that the overall cost of the litigation could run into hundreds of thousands of pounds.

174. That was a much more pertinent figure, and one which did not seem to trouble Mr Aristodemou at all, notwithstanding his potential personal exposure to costs at that level. Under cross-examination he indicated that at the relevant time he regarded the Defendant as one of the best, or at least one of the most established, litigation solicitors and it would seem that (his priority being to win the case) he was willing to incur the additional cost attendant on instructing such a solicitor.

What Estimate Should Have Been Given, When, and the Likely Effect

175. Mr Cohen accepts that an estimate should have been given before 17 April 2020, but argues that the draft cost budget sent to Mr Aristodemou on 17 April 2020 incorporated, for all intents and purposes, an estimate of costs from that date. I agree, not least because Mr Aristodemou was specifically advised that he could treat it as such.

176. Evidently an estimate could and should have been given before 17 April 2020 but as I have already indicated I see no reason to suppose that it would or should have been confined to costs to the CCMC. An estimate of costs of the litigation overall would have in line with the Defendant’s professional and contractual obligations, not to say more to the point.

177. Depending upon timing, the likelihood is that any such estimate would have been broadly consistent with Mr Cohen’s tentative figure, as given on 21 November 2019, of hundreds of thousands of pounds, or with figures put before Mr Aristodemou on 17 April 2020. Neither of those changed either Mr Aristodemou’s approach to the litigation or his choice of solicitor, and there is no reason to suppose that an earlier estimate would have done so either.

178. On 17 April 2020, knowing that costs billed to that point were in the region of £100,000, Mr Aristodemou evidently did mention the purported estimate of 21 November 2019. Given the evidence to which I have referred, the only conclusion I can draw from that is that having agreed in November 2019 not to hold Mr Cohen to that figure, he attempted on 17 April 2020 to do so anyway (as he is doing now).

179. In any event Mr Aristodemou raised no complaint but promised to raise further funds and expressed a desire to find a way of moving forward to the satisfaction of both parties. His main preoccupation (understandably) seems to have been with the inevitable drying-up of the Claimant’s income stream following the events of March 2020, but significantly, he did not then see that as a long-term problem.

180. As time went on it would seem that the Claimant became trapped in a situation where it did not have the means either to pay the Defendant’s fees or to instruct alternative solicitors, but evidently Mr Aristodemou did not anticipate that in April 2020. If he had any reservations about the Claimant’s ability to meet the future estimated costs referred to in the budget, he did not mention them. His view seems to have been, as it had been in November 2019, that the Claimant could if necessary fund litigation to the extent of hundreds of thousands of pounds.

181.

I do not suggest that Mr Aristodemou was not concerned about costs at all. Clearly he was, but it was only one of the considerations, and his motivation for the pursuit of his litigation against SPH seems to have been based more on personal than purely commercial considerations. Hence his determination to pursue a risky claim that could cost him personally hundreds of thousands of pounds with a substantial risk of non-payment in even the event of success. The documentary evidence shows that he was convinced that there had been a conspiracy to cheat his business out of a contract, and he was evidently strongly driven by a desire for compensation, if not retribution against the alleged conspirators. His animosity extended even to SPH’s solicitor, Mr Emmerson. Mr Aristodemou’s priority, as he said more than once to Mr Cohen, was upon winning, and that evidently applied as much to costs risks as to anything else.

182. I have not lost sight of the fact that it is not necessary for the Claimant to prove, on the balance of probabilities, that if it had received an estimate before 17 April 2020 it would have acted differently, for example by instructing cheaper solicitors. All the reliable evidence however points to the conclusion that the Claimant would not have acted differently, and there is no evidence to suggest what the alternative would have cost even if the Claimant had acted differently.

183. In her submissions Ms Aldred for the Claimant suggested that as an alternative to limiting the Defendant’s costs to £50,000 plus VAT would be to limit them to 50% of what was actually charged. I understand that suggestion to be based upon Mr Cohen’s evidence (as supported by the attendance note of 21 November 2019) to the effect that on 21 November 2019, Mr Aristodemou confirmed that Mr Cohen’s hourly rate was exactly twice that of his previous solicitor at Fahri LLP.

184. There are to my mind a number of obvious difficulties with that proposition. It is not, for example, the Claimant’s case as set out in the Points of Dispute, and so is not a case that the Defendant has had any proper opportunity to meet. It is also inconsistent with Mr Aristodemou’s denial, under cross-examination, that he had been told that Mr Cohen’s hourly rate was twice that of his previous solicitor. There is then the fact that the Defendant’s charges are not based exclusively upon Mr Cohen’s hourly rate, so that capping the Defendant’s costs at 50% would be entirely arbitrary.

185. The fundamental problem is however that the submission is based upon the proposition that the Claimant was, by being given an inaccurate estimate on 21 November 2019, denied the opportunity to instruct cheaper solicitors, and for the reasons I have given I do not accept that that (or the fact that no other estimate was given before 17 April 2020) offers any sound ground for limiting the costs recoverable by the Defendant.

Post-Budget Costs

186. I have mentioned that Mr Aristodemou’s witness evidence incorporates an alternative case for the Defendant to the effect that (costs of the CCMC being limited to £50,000 plus VAT) costs recoverable by the Defendant after the Claimant’s cost budget was approved, should likewise be limited by reference to a lack of written estimates and unspecified “professional negligence” considerations.

187. It is inappropriate to attempt to amend Points of Dispute in witness evidence, and the point as put is too vague to be of much value. In submissions Ms Aldred, for the Claimant, attempted to put the Claimant’s case on budgeted costs into better order by advancing the primary submission that (for want of estimates) the Defendant should not recover any costs at all for the period after the CCMC and as an alternative that the Defendant’s post-budget costs should be limited to a proportion of budgeted costs, depending upon the extent to which work under the relevant phase was completed.

188. Leaving aside the procedural objections to the Claimant’s attempts to amend its case in evidence and submissions I am unable to accept either proposition, for these reasons.

189. It seems to me that the significant date, when it comes to considering budgeted costs, was 17 April 2020, not the dates of filing or approval of the Claimant’s costs budget. That was the date upon which the Claimant was first given estimated future costs and disbursements to trial in the form of a draft budget.

190.

The proposition that the Defendant should recover no costs or disbursements at all, for any period after 17 April 2020, is insupportable. The Claimant had before him what amounted to an estimate, and he knew that it amounted to an estimate. He admitted on cross-examination that he had not have expected the Defendant or counsel, post-CCMC, to work for nothing. Nor would any reasonable person.

191. As for limiting costs by reference to the budgeted figures, that would not be appropriate or fair. I accept Mr Cohen’s witness evidence (which is supported by the documentary evidence) to the effect that the work undertaken by the Defendant on Mr Aristodemou’s instructions went well beyond the budgeted parameters of the SPH litigation.

192. I also accept Mr Cohen’s evidence to the effect that Mr Aristodemou’s conduct undermined the Defendant’s attempts to manage and budget the SPH litigation. A solicitor’s budget will of necessity be based upon the assumption that the client will (for the most part, at least) accept the solicitor’s advice on the management of the litigation and the solicitor’s advice generally. Mr Aristodemou did neither. One cannot budget for the costs of constantly arguing with a client.

193. The same applies to costs unnecessarily incurred by Mr Aristodemou’s apparent inability to accommodate any procedural request made by SPH’s legal representatives.

194. There can in any event be no good reason to limit the Defendant’s recoverable costs by reference to a budget which needed to be increased. That might well have been done by agreement, had Mr Aristodemou not refused to allow the Defendant to accommodate SPH’s request for increase in its own budget.

195. There is then the point made by Mr Churchill to the effect that Mr Aristodemou claims not even to have understood the Claimant’s costs budget, much less approved or relied upon it. Notwithstanding my scepticism about that claim, what Mr Aristodemou says is inconsistent with any case for limiting the costs recoverable by the Defendant by reference to budgeted figures.

Conclusions on Preliminary Point 2

196. I have already referred to the authorities and the Civil Procedure Rules that make it clear that there is no general principle to the effect that a client must specifically approve in advance any disbursements incurred by a solicitor, if they are to be recoverable from the client, and why recovery of costs and disbursements does not turn only upon whether they have been incurred with the client’s “informed consent”.

197. Apart from that, even if a given item of cost, or a given disbursement, does not fall within an estimate already given or has not been expressly authorised in advance, it simply does not follow that informed consent to the expenditure has not been given. By reference to the terms of the Defendant’s retainer, as in Mastercigars No 1, the Defendant must be taken to have been instructed to do whatever was reasonably necessary to manage the Claimant’s litigation.

198. If (as in this case) a client is contractually bound to pay the disbursements incurred on the client’s behalf by a solicitor and if (as discussed below) the solicitor is under a contractual obligation to obtain a client’s advance authority before incurring disbursements, it does not follow that, if such authority is not obtained, those disbursements will be irrecoverable. On assessment the test will be whether the disbursements were reasonably incurred.

199. That could only be determined by reference specifically to the fees incurred from time to time and the circumstances under which they were incurred. The assessing judge will take into account the fact that they were not authorised in advance, but there is no basis for a blanket disallowance.

200. As to whether the Defendant was under any such contractual obligation, the Points of Dispute do not identify any basis for that conclusion. The Claimant’s case as put to Mr Cohen on cross-examination appeared to be based upon paragraph 3.7 of the Defendant’s terms of business.

201. As far as I can see, paragraph 3.7 of the Defendant’s terms of business is not even mentioned in the Points of Dispute. That aside, I do not believe that paragraph 3.7 extends to counsel’s fees. It concerns the instruction of third parties as agents for the Claimant. To the extent that this might apply to counsel (and the relevant principles of agency have not been discussed) it seems to me that Mr Churchill is right in saying that it would have to give way to the more specific and very clear provisions of paragraph 10 of the terms of business, which define counsel’s fees as a disbursement, give the Defendant the authority to incur such fees, and provide for the Claimant to pay them.

202. It is in any case evident from the documentation produced by the Claimant himself that he did authorise at least some of counsel’s fees in advance.

Summary of Conclusions

203. I accept that Mr Cohen of the Defendant firm, on 21 November 2019, communicated to Mr Aristodemou of the Claimant company a tentative figure of up to £50,000 plus VAT which was understood (at least by Mr Aristodemou) to represent the Defendant’s estimated costs to the CCMC in the litigation against SPH.

204. Given (a) that Mr Cohen only provided that figure on Mr Aristodemou’s express assurance that the Claimant would not hold him to it and (b) that Mr Cohen confirmed in writing the following day that he was not in a position to give an estimate, I do not accept that the Claimant was, or is, entitled to rely upon that figure as a basis for limiting the costs recoverable by the Defendant.

205. Nor am I able to accept that an estimate of costs to the CCMC was in itself of crucial significance to the Claimant. Mr Aristodemou was warned by Mr Cohen on 21 November 2019 that the litigation overall could cost hundreds of thousands of pounds, and that was a much more significant figure which did not appear to concern Mr Aristodemou.

206. I accept (a) that the Defendant was under a professional and contractual obligation to supply the Claimant with a reliable estimate as soon as it was able to do so; (b) that the Defendant could and should have done so before 17 April 2020, when the Defendant supplied the Claimant with a draft costs budget which included an estimate of future costs to trial, and (c) that the Defendant did not do so. Mr Cohen has admitted as much.

207. Had the Defendant done so, the Claimant would have been in a better position to make an informed decision about the future conduct of the proceedings, including if appropriate a change of solicitor. There is however no reason to assume that any such estimate would have been confined to the Defendant’s costs to the CCMC. It would have been consistent with the Defendant’s professional and contractual obligations to provide an estimate of costs to the conclusion of the litigation.

208. Any pre-17 April 2020 estimate, depending upon its timing, would have been likely to be consistent with the broad figure of hundreds of thousands of pounds offered by Mr Cohen on 21 November 2019, or the draft budget provided to the Claimant on 17 April 2020.

The best indication of what the Claimant is likely to have done, had an estimate been provided in good time, is what the Claimant did do on 17 April 2020, which was to continue to instruct the Defendant. Nor do I have any idea of what the Claimant’s costs, following a change of solicitor, might have been, so it is not possible to limit the cost recoverable by the Defendant to any such figure.

209. It follows that there is no sound basis for concluding that the amount reasonably payable by the Claimant to the Defendant for work performed to 17 April 2020 is less than the figure that will be identified, on detailed assessment, by reference to individual objections to items of cost as taken in the Points of Dispute.

210. The Claimant was expressly advised that [sic] the Defendant that the Draft budget sent to the Claimant on 17 April 2020 could be referred to as a guide to future costs. For all practical purposes that draft, and subsequent versions of the budget, stood as estimates of future costs. The fact that the Defendant (as Mr Cohen admits) did not provide formal estimates as a separate exercise is of no significance. It would have achieved nothing but the unnecessary duplication of the costs payable by the Claimant.

211. I do not accept that the Claimant did not understand that the budgeted figures for its future costs, as produced on 17 April 2020 and thereafter, could be treated as an estimate; that the Claimant did not understand the budgeted figures; that the Claimant did not approve the budget that was ultimately filed at court on 20 May 2020; or that the Claimant at the relevant times expected or needed anything further by way of an estimate.

212. When it comes to post-CCMC costs 17 April 2020 is a more significant date than the date of filing or approval of the Claimant’s costs budget, because that is when the Claimant first had an estimate of future costs.

213.

The suggestion that the Defendant should be debarred from recovering any costs or disbursements at all for any period after 17 April 2020 is insupportable. Nor should recoverable costs or disbursements be limited by reference to any version of the budget. The costs payable by the Claimant to the Defendant for costs after 17 April 2020 will (again) be no less than the figure that will be identified, on detailed assessment, by reference to individual objections to items of cost as taken in the Points of Dispute.

214. There is no legal or factual basis for a wholesale disallowance of the disbursements incurred by the Defendant on behalf of the Claimant. That includes counsel’s fees. Whether disbursements are recoverable must be determined on an item by item basis by reference to the detailed Points of Dispute.

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