Tim Martin Interiors Ltd. v Akin Gump Llp

On an assessment under section 71 of the Solicitors Act 1974, a third party liable to pay a solicitor’s bill stands in the shoes of the solicitor’s client. The court must assess the bill as between solicitor and client and may entertain only objections available to the client. An external contract determines which items may be passed on to the third party, but it does not authorise a less favourable assessment of the solicitor’s remuneration. Any separate dispute about the amount contractually recoverable by the third party must be determined between the contracting parties, under the appropriate procedure. A costs judge cannot order the solicitor to repay money to the third party merely because the third party’s liability under the external contract has been overstated.

Tim Martin Interiors Ltd had mortgaged property to the Bank of Ireland and was contractually liable for the Bank’s enforcement costs. The Bank instructed Akin Gump LLP and paid its bill in full. Tim Martin Interiors later applied under section 71 of the Solicitors Act 1974 for assessment of the bill as a person liable to pay it indirectly.

The Master reduced the bill substantially and ordered Akin Gump to pay the balance into court and then to Tim Martin Interiors. The appeal concerned the correct approach to assessing a solicitor’s bill at the instance of a third-party payer and the power to make a repayment order against the solicitor.

1. Appeal allowed. The Master’s assessment and order requiring Akin Gump to pay £82,768 to Tim Martin Interiors could not stand.

2. Section 71 of the Solicitors Act 1974 permits a person other than the client who has paid, or is liable to pay, the bill to seek assessment as if that person were the client. The third party therefore stands in the shoes of the client and may raise only objections which the client could have raised.

3. The external arrangement determines which items of the bill the third party is liable to pay. Items outside that arrangement are excluded from the third-party assessment, but remain payable by the client to the solicitor. Construction of the external contract is part of identifying the items within the third party’s liability.

4. That construction exercise cannot be used to impose a more restrictive assessment of the quantum of items properly within the third party’s liability. The assessment under section 71 is between solicitor and client. The indemnity-basis rules in CPR rules 44.4 and 44.5, together with the presumptions in rule 48.8, apply only to the extent that the client could have relied on them.

5. Two conceptually distinct assessments were required: first, the amount properly chargeable by Akin Gump to the Bank for work within the retainer; and secondly, the amount which the Bank could pass on to Tim Martin Interiors under the mortgage. The latter issue required an assessment under CPR rule 48.3 or an action for an account, with the relevant contracting parties before the court. The two assessments could proceed simultaneously if kept distinct.

6. Section 71 did not empower the Master to order Akin Gump to repay money to Tim Martin Interiors. Any possible equitable subrogation would depend on Tim Martin Interiors paying a liability primarily owed by the Bank and on a finding that Akin Gump had overcharged the Bank. No such overcharge had been found.

The judgment itself records that Master Campbell conducted the detailed assessment and that Arnold J granted permission to appeal. The High Court (Chancery Division) allowed Akin Gump’s appeal from the Master’s assessment and repayment order.