Garbutt & Anor v Edwards & Anor

A solicitor’s failure to give a client a costs estimate required by the Solicitors’ Costs Information and Client Care Code does not make the retainer unlawful or unenforceable. The regulatory scheme protects clients and the administration of justice; it does not relieve an opposing paying party from liability for costs properly incurred.

A costs judge may exceptionally investigate whether an estimate was given. The paying party must show a real, non-fanciful basis for the inquiry and that the absence or inadequacy of an estimate could have had a calculable and material effect on the costs claimed. If the receiving party cannot establish a proper estimate, that fact is relevant to reasonableness and proportionality on assessment. A hypothetical regulatory reduction or fixed tariff is not required by the indemnity principle.

The respondents settled a boundary dispute with the appellants on terms that the appellants would pay their costs. On a later summary assessment, District Judge Pelly rejected the appellants’ contention that no costs were payable because the respondents’ solicitors had not supplied an estimate of the likely costs. The judge reduced the sums claimed on other grounds.

His Honour Judge O’Brien, sitting in the Cambridge County Court, dismissed the appellants’ appeal. With permission, they appealed to the Court of Appeal. The central issue was whether a paying party’s liability for costs is discharged or reduced where the receiving party’s solicitor failed to comply with the Code’s requirements concerning costs estimates.

1. Appeal dismissed. Arden LJ, with whom Tuckey LJ and Brooke LJ agreed, held that a failure to give a costs estimate under Rule 15 and the Code did not render the solicitor-client retainer unlawful or unenforceable.
2. The statutory and regulatory scheme showed that the obligation exists to protect the client and the administration of justice. It provides disciplinary and client-facing remedies under the Solicitors Act 1974. It does not create a rule by which an opposing paying party is automatically relieved from paying costs reasonably and properly incurred.
3. The indemnity principle prevents recovery from the paying party of more than the receiving party is liable to pay. It does not permit a deduction based on a reduction that the client might hypothetically obtain through regulatory proceedings but has not obtained. Nor was a fixed tariff for failures to provide estimates justified.
4. The solicitor’s certificate of accuracy retains its special status. A costs judge should not require proof of an estimate merely because its absence is alleged. The paying party must show a real, rather than sham or fanciful, basis for the contention and show that the absence of a proper estimate could have had a calculable and material effect on the costs claimed. If the receiving party is then required, but fails, to establish a proper estimate, the failure must be considered under CPR 44.4 and CPR 44.5 when assessing reasonable and proportionate costs.
5. Where an estimate was given but not updated, the guidance in Leigh v Michelin [2004] 1 WLR 846 may assist. A substantial unexplained difference between estimate and claim may evidence unreasonableness. CPR 44.14 would generally be unnecessary because the ordinary assessment process supplies the appropriate remedy.
6. No reason had been advanced why an estimate would have changed the costs payable in this assessment. The order below was therefore correct.

• Court of Appeal (Civil Division) — dismissed the appellants’ appeal: [2005] EWCA Civ 1206.
• Cambridge County Court — on 25 October 2004, His Honour Judge O’Brien dismissed the appellants’ appeal from the summary assessment order.
• District Judge — on 12 May 2004, District Judge Pelly rejected the contention that the absence of a costs estimate eliminated liability, while reducing the sums summarily assessed.