Falmouth House Freehold Company Ltd & Anor v Morgan Walker LLP

Whether “special circumstances” justify assessment of a solicitor’s bill under section 70(3) of the Solicitors Act 1974 is an evaluative judgment. The court compares the particular case with the ordinary case and asks whether assessment is justified despite the statutory restrictions.

The amount charged may be relevant, particularly where a large charge requires explanation. A lack of adequate detail or inability to reconcile the invoices may also support assessment. An appellate court should interfere with the evaluative decision of a first-instance judge only in a strong case. Particular restraint is appropriate where the decision was made by a specialist costs judge.

The defendant solicitors had acted for two related companies whose former directors were later removed at disputed extraordinary general meetings. The solicitors subsequently supported winding-up petitions against the companies as creditors for substantial unpaid legal fees.

The companies sought detailed assessment of three bills. Master Simons ordered assessment of bills dated 11 November 2008, 20 November 2008 and 9 February 2009. Permission to appeal was limited to whether the “special circumstances” required by section 70(3) of the Solicitors Act 1974 existed.

The central issues were which bills were subject to that requirement and whether the Master was entitled to find special circumstances in relation to the bill dated 11 November 2008.

1. Appeal dismissed. No special circumstances were required for the bills dated 9 February 2009 and 20 November 2008. The proceedings were commenced within 12 months of those bills, and the latter bill had not been paid. The refusal of permission to dispute whether the 20 November document was the final bill implicitly established that it was the bill which the client was entitled to have assessed.

2. The special-circumstances issue therefore concerned only the bill dated 11 November 2008. Counsel’s response before Master Simons appeared to concede that special circumstances existed. In the relatively informal dialogue of a costs hearing, the absence of a separately formulated set of reasons was understandable.

3. The Master was entitled to consider the dispute between the former and replacement boards. Approval by the former board did not make this a straightforward case of an unquestioned client approval. He could also consider the large amount charged. Winchester Commodities Group Ltd v RD Black & Co [2000] BCC 310 did not establish that the amount of a bill was irrelevant. Its conclusion depended on seven features of that particular case. Re Robinson (1867-68) LR 3 Ex 4 established that a large charge calling for explanation could amount to a special circumstance.

4. The Master was also entitled to take account of his inability to reconcile the invoices, the absence of the underlying papers and the lack of a detailed breakdown. A bill which calls for explanation is a legitimate consideration when deciding whether special circumstances exist.

5. The existence of special circumstances is essentially a value judgment. The court compares the particular case with the ordinary case and decides whether detailed assessment is justified despite section 70(3) of the Solicitors Act 1974. Following Re Cheeseman [1891] 2 Ch 289, an appellate court should interfere only in a strong case. That restraint carries particular force where a specialist costs judge made the assessment. Morgan Walker had not shown that the Master’s conclusion was wrong.

1. High Court (Chancery Division): The appeal was dismissed. The court upheld Master Simons’s finding that special circumstances justified detailed assessment of the bill dated 11 November 2008.

2. High Court: Mann J granted permission to appeal, limited to the issue of special circumstances. Permission was refused on the question whether the document dated 20 November 2008 was an invoice.

3. Costs Office: Master Simons ordered detailed assessment of the bills dated 11 November 2008, 20 November 2008 and 9 February 2009.