Contractual Terms Permitting Interim Statute Bills Upheld Where Unambiguous

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

Background

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

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

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

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

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

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

Costs Issues Before the Court

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

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

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

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

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

The Parties’ Positions

Interim Statute Bills or Chamberlain Bill

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

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

The Court’s Analysis

Contractual Construction

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

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

Invoicing

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

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

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

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

Application of Section 70

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

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

Special Circumstances

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

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

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

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

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

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

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

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

Decision on Special Circumstances

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

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

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

Conclusion

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

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