Court Orders Inspection In s70 Solicitors Act Assessment Post Service Of Points Of Dispute In The Absence Of Informative Replies

DIAGNOSTICS.AI LIMITED v DENTONS UK & MIDDLE EAST LLP [2025] EWHC 2071 (SCCO)

In Diagnostics.AI Limited v Dentons UK & Middle East LLP [2025] EWHC 2071 (SCCO), the court considered whether inspection of a solicitor’s files could be ordered during solicitor-client assessment proceedings under Section 70 of the Solicitors Act 1974, where the parties had bypassed the usual inspection stage before service of points of dispute. The Claimant sought inspection to break a negotiation deadlock after the Defendant provided only minimal replies to its 72-page points of dispute, while the Defendant argued the court lacked jurisdiction and that inspection would be unduly burdensome (estimating preparation costs at £15,000–£25,000). Costs Judge Nagalingam held that jurisdiction existed under CPR Part 31, the court’s inherent jurisdiction in solicitor-client assessments (following Edwards v Slater & Gordon [2022] EWHC 1091 (QB) and Hanley v JC&A), and CPR 3.1(2)(p)’s general case management powers. The judge rejected the Defendant’s objections as obstructive, noting inspection would streamline the assessment and that preparation costs would largely be incurred anyway. Inspection was ordered limited to documents relating to work in the bills, with the Claimant bearing costs for isolating duplicates and the Defendant paying the application costs (summarily assessed if not agreed). The ruling emphasised proportionality and the overriding objective, with inspection costs to be costs in the assessment.

Leading counsel quite rightly observed that replies are optional, and that where a response was not forthcoming it is taken to mean no concession is accepted. However, a refusal to agree to inspection in combination with a refusal to provide any response to the item by item objections does not serve the overriding objective and in my view makes the requirement for a very lengthy detailed assessment hearing inevitable. In other words, I consider the Defendant's stance and conduct to be somewhat obstructive whilst claiming in correspondence a desire to compromise.... I doubt very much the Claimant, whomever they instructed, could have anticipated such brief replies. Indeed, whether an inter partes or solicitor and client assessment, a four page response to 72 pages of objections (relating to fees in excess of £2,000,000) is highly unusual.

Citations

Hanley v JC&A Solicitors [2022] EWHC 1370 (QB) The court retained jurisdiction under the Solicitors Act 1974 to order inspection of documents held by solicitors during a section 70 costs assessment, even where such documents did not belong to the client, as part of managing the case fairly and promoting transparency. Edwards v Slater & Gordon UK Ltd [2022] EWHC 1091 (QB) Courts had authority under CPR Part 31 to order disclosure or inspection in solicitor-client assessments commenced by Part 8 claims, even after a Solicitors Act assessment order had been made.

Track allocation housing disrepair CPR 46.13 settlement sum costs restriction SCCO

MRO fee markup cap 25% detailed assessment personal injury Senior Courts Costs Office

Security for costs refused CPR 25.27 very high probability success excessive estimate King's Bench

IPEC scale costs transfer Patents Court PD 30 para 9.2 costs caps Court of Appeal

Costs budget variation CPR 3.15A promptness significant development unfair prejudice Chancery Division

Costs budgeting inter partes proportionality high hourly rates AI disclosure Patents Court CPR 3E

Beneficiary personal liability section 71(3) Solicitors Act 1974 indemnity costs VAT self-supply SCCO

Summary assessment indemnity costs unless order payment on account disclosure default Chancery Division

Provisional assessment set aside CPR 3.1(7) points of dispute filing duty PD 47 para 14.3 SCCO

Fixed recoverable costs police claims CPR 26.9(10)(e) intentional tort exemption

Key Points

The court retained discretion under CPR 31 and its inherent case management powers to order inspection of solicitors’ files in solicitor-own client assessments under the Solicitors Act 1974, even where inspection had not been previously directed or consented to.
An application for inspection limited to work described in the solicitors’ bills did not require express reference to CPR 31 to be valid, provided it was sufficiently clear in scope and purpose.
The court was entitled to order inspection of documents described in solicitors’ bills to advance the overriding objective by facilitating settlement negotiations or narrowing issues for detailed assessment.
Inspection in Solicitors Act assessments extends to documents relating to charged work (whether client or solicitor property), provided: (a) fees are paid/held for the work; (b) no lien is asserted; and (c) confidentiality/privilege protections are maintained.
The costs of preparing for inspection were generally held to be costs in the assessment, while the costs of the application for inspection could be summarily assessed in favour of the successful applicant if not agreed.

"...I do not share the Defendant's optimistically held view that were I to direct a preliminary issues hearing at this stage that it would lead to the compromise of the dispute. The parties have been in negotiations for years at this stage, and if anything it is the Claimant's application which presents a realistic way forward. Inspection may either demonstrate to the Claimant that their prospects of achieving reductions are low, or cause the Defendant to reflect on the extent to which their work can be demonstrated at all."

Key Findings In The Case

The Defendant failed to provide any item-specific replies to the Claimant’s 72-page Points of Dispute concerning more than £2 million in billed costs, instead offering only general objections, which the court found unhelpful and obstructive to narrowing the issues for detailed assessment [4–8, 28–29, 62].
The Claimant’s application for inspection was limited in scope to documents relevant to the work described in the bills of costs and did not seek access to privileged, confidential or irrelevant material; the court accepted that this limitation was meaningful for determining which costs ought to be scrutinised [10–12, 20–24, 36].
The Defendant’s estimate of the cost and burden of preparing documents for inspection was found to be exaggerated and disproportionate, especially given their obligation to prepare the same material for the forthcoming detailed assessment in any event [19, 24–25, 73].
The judge held that the Claimant’s costs of preparing for inspection would be treated as costs in the assessment, except for any duplication of inspection of documents already in their possession, and that the costs of the application itself were to be borne by the Defendant, subject to summary assessment if not agreed [83–85].
Despite negotiations having previously occurred without inspection, the judge found that the refusal to permit inspection—particularly in the face of silence to specific objections—was impeding meaningful settlement, thereby justifying the inspection order as a proportionate and appropriate case management step to reduce future costs [26–27, 55, 67–68].

“"In any event, even if I were to accept the higher of the Defendant's estimated costs of inspection then I observe that those sums are dwarfed by the principal fees in dispute. I also observe that those same costs would by and large be incurred in preparing the file for detailed assessment. I also consider that the Defendant is either hugely pessimistic or otherwise adopts an entirely unrealistic stance as to their anticipated costs in providing facilities for inspection."”

In Diagnostics.AI Limited v Dentons UK & Middle East LLP [2025] EWHC 2071 (SCCO), Costs Judge Nagalingam addressed a critical procedural issue in solicitor-client assessments: can the court order inspection of a solicitor’s files after points of dispute have been served? The case involved disputed bills exceeding £2 million (even after a substantial credit note) and demonstrates the costs risks of adopting an “obstructive” stance in assessment proceedings.

The Costs Dispute | An Unusual Procedural Position

The assessment proceedings had taken an unusual procedural route. The parties had agreed by consent to dispense with the standard inspection stage before service of points of dispute under CPR 46.10. This collaborative approach initially appeared constructive, with multiple consent orders and stays for settlement negotiations.

However, the cooperation foundered when the claimant served comprehensive 72-page points of dispute raising detailed objections to the bills. The defendant’s response was limited to a four-page reply addressing only preliminary points, declining to engage with any item-by-item challenges. This minimal engagement prompted the claimant’s application for inspection to break the negotiation deadlock.

The Jurisdictional Challenge | Multiple Routes to Inspection

The defendant, represented by Jamie Carpenter KC, mounted what the judge described as an “all or nothing response”, arguing the court lacked jurisdiction to order inspection at this procedural stage. The defendant contended that:

- CPR 31.12(1) provided the only mechanism for ordering inspection
- The application was defectively drafted
- The request was “far too wide” and sought inspection of their “entire file”

Costs Judge Nagalingam rejected these arguments, finding multiple jurisdictional routes:

1. CPR Part 31: Following Edwards v Slater & Gordon UK Ltd [2022] EWHC 1091 (QB), the judge held that “there is no express rule set out in Part 8 dispensing with the disclosure provisions of CPR Part 31.”
2. Inherent jurisdiction: The court recognised the inherent jurisdiction to order inspection in solicitor-client assessments, citing the approach in Hanley v JC&A.
3. General case management powers: CPR 3.1(2)(p) provided sufficient authority to make the order as part of managing the case and furthering the overriding objective.

The Costs of Preparing for Inspection | A Pyrrhic Objection

The defendant estimated the costs of preparing files for inspection at between £15,000 and £25,000. The judge was notably unimpressed by these figures, observing that:

- These costs would “by and large be incurred in preparing the file for detailed assessment” anyway
- Documents should already be organised in a firm of the defendant’s stature
- Confidential materials subject to existing confidentiality orders ought to be kept in separate files
- The estimate was either “hugely pessimistic or otherwise adopts an entirely unrealistic stance”

The Discretionary Decision | Obstructive Conduct Has Costs Consequences

The judge’s criticism of the defendant’s stance was particularly pointed: “I consider the Defendant’s stance and conduct to be somewhat obstructive whilst claiming in correspondence a desire to compromise.”

The combination of refusing inspection whilst providing only minimal replies made “a very lengthy detailed assessment hearing inevitable” – contrary to the overriding objective. The judge noted that inspection might either demonstrate to the claimant that their prospects were low or “cause the Defendant to reflect on the extent to which their work can be demonstrated at all.”

The Costs Order | The Price of Obstruction

Most significantly for costs practitioners, the judge ordered that the costs of the claimant’s application be paid by the defendant, to be summarily assessed if not agreed. This adverse costs order reflected the court’s view that the defendant’s opposition to inspection was unreasonable in the circumstances.

The judge also directed that:

- The claimant should bear the cost of isolating documents already in their possession
- Otherwise, the costs of inspection would be costs in the assessment

Practical Implications for Solicitor-Client Assessments

This decision reinforces several important principles for costs practitioners:

1. Procedural flexibility exists: The court has multiple routes to order inspection in solicitor-client assessments, even after points of dispute have been served. Rigid adherence to one procedural interpretation will not prevent appropriate case management.
2. Minimal engagement carries risks: Providing only cursory replies to detailed points of dispute, particularly on substantial bills, may be viewed as obstructive conduct warranting adverse costs consequences.
3. Inspection costs arguments need substance: Generic objections about the burden of preparing files for inspection are unlikely to succeed, particularly where those costs would be incurred for detailed assessment preparation anyway.
4. The overriding objective applies: Conduct that makes lengthy detailed assessment hearings inevitable runs counter to the overriding objective and may attract costs sanctions.
5. Technical objections rarely succeed alone: Arguments based solely on alleged drafting defects or narrow procedural interpretations are unlikely to succeed where the substantive application has merit.

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