The Queen on the Application of Joseph -v- Manches & Co

Where solicitors sue a client for unpaid fees and the reasonableness of the charges is genuinely challenged, the court should not simply award the billed amount. Subject to any express agreement, the sum properly payable should be determined by a judicial assessment by a costs judge.

The expiry of the statutory procedure under the Solicitor's Act 1974 does not remove the client's common-law defence that the solicitor's charges are unreasonable. An agreed hourly rate does not, without more, establish that the hours claimed were reasonable.

Allegations of negligent litigation conduct must be judged without hindsight. A solicitor does not act negligently merely by advising a speculative procedural application, where the risks are explained cautiously and the client authorises it.

Manches & Co had acted for Mr Joseph and his company in libel proceedings. It sued for unpaid bills. Mr Joseph denied liability and counterclaimed, alleging that the solicitors had conducted the litigation negligently, including by pursuing an abortive strike-out application and by failing adequately to advise him about costs.

Eady J gave judgment for the solicitors for the unpaid bills, interest and costs. Mr Joseph applied for permission to appeal out of time and sought a stay. The central issues were whether his negligence complaints had a real prospect of success and whether the unpaid bills should have been referred to a costs judge for assessment.

1. Lord Justice Mance granted permission to appeal in part. Time was extended by three days to validate the application. Permission was refused on the allegations that the solicitors had negligently conducted the libel litigation, but was granted on the limited issue whether the unpaid fees should have been assessed by a costs judge.

2. Eady J had applied the appropriate professional-negligence standard, namely whether the solicitors had acted as no reasonable solicitor would or should have acted: Bolam v Friern Hospital Management Committee [1957] 1 WLR 582. His observations about the conceptual formulation of Mr Joseph's claim did not determine the result. He had considered the substantive complaints and had rejected them because no breach of duty was proved.

3. The proposed Grovit v Doctor application was speculative, but Mr Joseph had been cautioned about its prospects and had agreed to pursue it. Its potential to end the litigation quickly, the surrounding evidence, and the Master’s initial cross-examination order meant that there was no real prospect of overturning the finding that advising or continuing the application was not negligent. The solicitors were not liable merely because a court order later proved inappropriate. Nor did the evidence show that any inadequate warning about costs caused recoverable loss.

4. The costs ground had a real prospect of success. The authorities cited showed that a solicitor suing for disputed fees must establish that the amount claimed is reasonable, notwithstanding the restrictions on statutory assessment after payment under the Solicitor's Act 1974. Although the hourly rates were agreed and the time spent was not challenged as a fact, Mr Joseph disputed whether the hours were reasonably incurred. He had not known that he could seek assessment, and the judge had not considered it. Permission was therefore granted to challenge the award of the unpaid capital sums by seeking assessment.

5. Permission consequentially extended to interest, including enhanced interest, and to the indemnity-cost consequences of the Part 36 offer insofar as a successful assessment could affect those orders. The request to reopen the bills already paid was stood over for a written decision after consideration of the authorities.

• Court of Appeal (Civil Division): Permission to appeal was granted only on the costs-assessment issue. Permission was refused on the professional-negligence grounds. Consequential permission covered interest and costs consequences under Part 36.
• High Court, Queen's Bench Division (Eady J): Judgment was entered for the solicitors for unpaid fees, enhanced interest and costs. The client’s allegations of negligent conduct were rejected.