Costs Not Capped At Estimates Where Client Consented To Further Work

EVANS v ACUITY LAW LIMITED [2025] EWHC 1661 (SCCO)

In Evans v Acuity Law Limited [2025] EWHC 1661 (SCCO), the court addressed four key costs issues arising from a solicitor-client assessment concerning legal services provided across two matters. The Claimant challenged six invoices totalling approximately £11,200 plus VAT, arguing that costs should be capped at initial estimates, deemed “unusual” under CPR 46.9(3)(c), or disallowed due to unreasonable termination. Costs Judge Nagalingam rejected the Claimant’s argument that Matter 2 costs (£5,600 plus VAT) should be limited to the initial £900-£3,600 estimate, finding the retainer permitted “further work” and the Claimant had consented to scope expansion. On Matter 3, the court held costs were not “unusual” under CPR 46.9(3)(c), as the Claimant had driven the litigation strategy despite warnings about the oral review’s low prospects. The termination argument failed, as non-payment justified withdrawal and the Claimant had already secured alternative representation. However, the court criticised the Defendant’s defective disclosure—corrupted dates and duplication—and ordered resubmission before supplementary points of dispute could be filed. The judgment left open challenges to reasonableness of costs but upheld their recoverability, noting the Claimant’s informed consent throughout.

I do not consider the Claimant has made out a sufficient argument for me to conclude that the Matter 3 costs in parts 5 and 6 of the bill were sufficiently unusual in nature to lead to a conclusion that such costs were unreasonably incurred. I also conclude that the Claimant was heavily involved, kept well informed and consistently provided both explicit and implied consent for the steps taken on his behalf... However, it remains open for the Claimant to raise arguments as to whether those costs were reasonable in amount.

Citations

Herbert v HH Law Ltd [2019] EWCA Civ 527 A solicitor must obtain informed consent from a client to exceed estimated costs or to charge for work giving rise to unusual costs, with the burden on the solicitor to show that such consent was properly obtained. Newman v Dadds LLP [2020] EWHC B23 (Costs) An estimate given by a solicitor may be limited in scope if the litigation substantially develops beyond what was contemplated when the estimate was provided. St. James v Wilkin Chapman LLP [2024] EWHC 1716 (KB) The absence of a witness statement from a client does not preclude a finding that an estimate was relied upon, as estimates by their nature must be of practical utility in assessing likely costs. Gill v Heer Manak Solicitors [2018] EWHC 2881 (QB) A solicitor who terminates a retainer close to a critical hearing without reasonable notice generally cannot recover remuneration unless the notice given is reasonable or a natural break in the case has occurred. Underwood, Son & Piper v Lewis [1894] 2 QB 306 A solicitor may only terminate a retainer at the last moment where good cause exists and reasonable notice is provided; otherwise, they are barred from recovering fees for incomplete work under an entire obligations retainer. Vlamaki v Sookias and Sookias [2015] EWHC 3334 (QB) A solicitor’s retainer involving litigation imposes an entire obligation, meaning the solicitor is only entitled to be paid upon completion of all agreed work unless contractually agreed otherwise or discharged by a natural break.

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

Where a solicitor’s retainer expressly distinguishes between initial scope estimates and provision for “further work” at hourly rates, costs beyond the estimate may still be reasonably incurred with the client’s implied or express authority. [134, 144, 147]
For the purposes of CPR 46.9(3)(c), costs may only be disallowed for unreasonableness if they are unusual in nature or amount and the client did not knowingly approve them; reasonableness is preserved where the client was well-informed and actively involved. [149, 150, 152–153]
A costs estimate provided to a client does not operate as a cap unless expressly stated; in the absence of such language and where further work is authorised, charges exceeding the estimate can be recoverable. [138, 139, 142, 144]
Termination of a retainer shortly before a hearing will not automatically disentitle solicitors from recovering costs if termination followed non-payment and the client had adequate opportunity to make alternative representation arrangements. [164, 165]
In solicitor/client assessments, costs are presumptively reasonable and recoverable where incurred within the retainer’s scope and supported by the client’s express or implied consent; this includes circumstances where the client initiates or insists upon specific litigation steps. [139, 147, 152–153]

"Payment of bills, discharging payments on account, or making payments to discharge disbursements are all common features of retainers and non-payment is also a common clause leading to termination in the form of ceasing to act."

Key Findings In The Case

The court found that the Claimant expressly or impliedly approved the Defendant’s work and costs in Matter 2, including additional steps outside the initial scope such as the Rolex watch dispute, and that the estimate did not operate as a cap on fees; the work was therefore reasonably incurred under the retainer’s provision for “further work” [134–139].
In respect of Matter 3, the Defendant’s costs, including those associated with the instruction of leading counsel, were found to have been incurred with the Claimant’s informed consent and active involvement; the client was warned about the risks and cost-benefit implications, and the engagement of senior counsel was initiated by the Claimant against advice [145–147, 149, 153–155].
The court held that the Claimant had not demonstrated that any of the disputed costs were “unusual” under CPR 46.9(3)(c) such that they could be disallowed as unreasonably incurred; all material steps taken by the Defendant were within the scope of their instructions and with client knowledge and participation [150–152, 159].
The judge found no basis to treat the Matter 3 estimate of £3,000 plus VAT as a fixed cap on recoverable fees, noting that the estimate related only to the “Initial Stage”, and that subsequent steps fell under the express provision for further work at hourly rates [142–147].
The termination of the Defendant’s retainer shortly before the 12 January 2023 hearing was found to be justified due to the Claimant’s non-payment and failure to settle accounts; the Claimant was already in discussions with alternative representation and was not left without recourse [164–165].

"Perhaps most persuasive of all though is that at the time of the 12 January 2023 relisted oral review, the Claimant had demonstrably been in contact with Kain Knight and was already in the process of instructing / re-instructing them. The Claimant had also been engaging counsel directly and but for counsel not accepting direct access engagements, the Claimant would not have even needed the Defendant to confirm the instruction of counsel."

Background

The case concerned a solicitor-client assessment brought by Mr Paul Evans against his former solicitors, Acuity Law Limited. The dispute arose from legal services provided between August 2022 and January 2023 across three distinct matters. Matter 1, which had been resolved between the parties, was not in issue. Matter 2 involved a family dispute concerning ownership of a vintage motorbike and a Rolex watch, whilst Matter 3 related to costs proceedings in which the Defendant had represented the Claimant.

The Defendant had rendered six invoices totalling approximately £11,200 plus VAT. The Claimant challenged these costs on multiple grounds, prompting the Defendant to request a detailed assessment hearing. The matter came before Costs Judge Nagalingam on 5 March 2025 as a preliminary issues hearing, with the court required to determine several fundamental questions before any line-by-line assessment could proceed.

A significant procedural issue had arisen concerning the manner of electronic disclosure. The Defendant had provided voluminous electronic files containing extensive duplication, with entire email chains repeated multiple times. Additionally, the original disclosure had suffered corruption, with all emails showing the disclosure date rather than their original dates. This had prevented the Claimant from preparing detailed points of dispute addressing individual items of work.

Costs Issues Before the Court

The court was required to determine four principal costs issues. First, whether the Defendant’s costs should be limited to the estimates provided at the outset of each matter. For Matter 2, an initial estimate of £900 plus VAT had been given, later revised to £3,600 plus VAT. For Matter 3, an estimate of £3,000 plus VAT had been provided for the “Initial Stage” of work.

Second, whether costs incurred in Matter 3 should be reduced to nil under CPR 46.9(3)(c) as “unusual” costs. The Claimant argued that pursuing an oral review of a provisional assessment with leading counsel, when success was virtually impossible, rendered all associated costs unusual and therefore irrecoverable.

Third, whether the Defendant’s termination of the retainer two days before the oral review hearing was unreasonable, such that no costs could be recovered under the principle of “entire contracts” established in cases such as Gill v Heer Manak Solicitors [2018] EWHC 2881 (QB).

Fourth, the court needed to address the procedural consequences of the defective disclosure and determine whether supplemental points of dispute would be required before any detailed assessment could proceed.

The Parties’ Positions

The Claimant, represented by Mr Mark Carlisle, argued that the Defendant had fundamentally failed in its duties by exceeding estimates without proper warning or obtaining informed consent. On Matter 2, Mr Carlisle submitted that the work never progressed beyond the “Initial Stage” as no injunction application was ever drafted, yet costs of £5,600 plus VAT had been charged against an estimate of £900-£3,600. He relied on the clear scope definition in the retainer and argued that work on the Rolex watch dispute fell outside this scope.

Regarding Matter 3, the Claimant’s primary position was that all costs should be disallowed due to unreasonable termination. The secondary position was that all costs were “unusual” under CPR 46.9(3)(c) because the Defendant had allowed the Claimant to pursue a hopeless oral review without proper advice about the irrecoverability of costs. Mr Carlisle emphasised that once the consumer regulations point had been conceded, achieving the necessary 20% reduction was impossible, particularly given the Part 36 offer of £47,000 against a provisionally assessed figure of £61,000.

The Defendant, represented by Mr Dean O’Connor, contended that Mr Evans was a sophisticated client who drove the litigation strategy and frequently rejected advice. On Matter 2, Mr O’Connor argued that the Claimant had expanded the scope by introducing the Rolex watch dispute and involving additional family members. He pointed to contemporaneous emails showing the Claimant’s active involvement and approval of the work undertaken.

On Matter 3, the Defendant maintained it had repeatedly warned the Claimant about costs risks and the difficulty of achieving sufficient reductions. Mr O’Connor cited extensive correspondence demonstrating warnings about the 20% threshold, the Part 36 offer implications, and recommendations to use junior rather than leading counsel. He argued that termination was justified by non-payment of fees and that the Claimant had already secured alternative representation through Kain Knight before the hearing.

The Court’s Decision

Costs Judge Nagalingam rejected the Claimant’s arguments on estimates, finding that neither Matter 2 nor Matter 3 costs should be capped at the estimated amounts. The court noted that both retainers clearly stated that “further work will be charged at our usual hourly rates” and found no evidence that the Claimant had treated the estimates as caps. For Matter 2, the court found that stage two work had been “substantially engaged” and that the Rolex watch dispute reasonably fell under “further work” with the Claimant’s clear knowledge and consent.

On the unusual costs argument under CPR 46.9(3)(c), the court found that the Claimant had not established that Matter 3 costs were sufficiently unusual to be deemed unreasonably incurred. The judge emphasised that the Claimant was “heavily involved, kept well informed and consistently provided both explicit and implied consent for the steps taken on his behalf.” Crucially, the court found that the Defendant had discouraged the use of leading counsel but the Claimant had insisted upon it.

Regarding termination, the court rejected the argument that the Claimant had been “thrown to the lions.” The judge found that the Claimant had already been in contact with Kain Knight and was in the process of instructing them at the time of termination. Non-payment of fees was recognised as a common and legitimate ground for termination.

However, the court accepted the Claimant’s criticisms regarding disclosure. The judge found that the corrupted and duplicative disclosure had prevented proper preparation of points of dispute and directed the Defendant to resubmit electronic disclosure in de-duplicated format with original dates preserved. The court ordered that supplementary points of dispute and replies be filed thereafter, with provision for a further hearing if required.

The judgment left open the possibility for the Claimant to challenge whether costs were reasonable in amount, whilst finding that the costs had been reasonably incurred with the client’s approval. The court declined to rule on the specific issue of whether Mr Marven KC’s £1,100 conference fee should have been included in the bill, leaving this for the parties to address in any subsequent proceedings.

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