Guest Supplies International Ltd v Ince Gordon Dadds LLP

On a solicitor-and-client detailed assessment, a costs estimate is an important factor but is not ordinarily a binding quotation or automatic cap. If the solicitor failed to provide an adequate estimate, the court may limit recovery to the sum it is reasonable for the client to pay in all the circumstances, having regard to any lost opportunity to act differently.

A client need not prove that it would probably have acted differently. However, the absence of adequate costs information does not justify a blanket reduction or disallowance. Costs and disbursements, including counsel’s fees, must generally be assessed item by item for reasonable incurrence and amount. Informed consent is relevant only within the statutory presumptions governing approval and reasonable incurrence.

The defendant solicitors acted for the claimant in litigation against South Place Hotels Limited. The claimant challenged 12 bills totalling approximately £332,000 and sought, as preliminary issues, to limit recovery by reference to an alleged estimate of £40,000–£50,000 plus VAT to the first costs and case management conference, and to disallow disbursements, including counsel’s fees, because they had not been expressly approved in advance.

The court considered the effect of the solicitor’s professional and contractual duties to provide costs information, a draft costs budget supplied during the retainer, and an acknowledgement of debt signed by the claimant’s managing director. The central issues were whether the alleged estimate or later budget imposed a cap, and whether the alleged absence of informed consent justified wholesale disallowance.

1. Preliminary points dismissed. The claimant was not entitled to cap the defendant’s recoverable costs at £50,000 plus VAT, or to obtain a wholesale disallowance of post-budget costs or disbursements.
2. Under CPR 46.9, solicitor-and-client costs are assessed on the indemnity basis. The questions are whether the costs were reasonably incurred and reasonable in amount, subject to the statutory presumptions concerning express or implied client approval. The absence of informed consent does not automatically make costs irrecoverable.
3. A solicitor has professional and, where applicable, contractual duties to provide the client with adequate and updated costs information. If no adequate estimate was supplied, and a proper estimate would have led the client to pay less, the court may limit recovery to what it is reasonable for the client to pay in all the circumstances. The client need not prove that it would probably have acted differently, although a demonstrated lost opportunity or detriment may carry greater weight.
4. An estimate is a yardstick or factor in assessing reasonableness, not normally a binding quotation or automatic ceiling. The alleged November 2019 figure was heavily qualified and could not justify a cap. The draft costs budget supplied on 17 April 2020 functioned as an estimate of future costs, and the claimant continued to instruct the defendant despite knowing the likely overall scale of expenditure.
5. The acknowledgement of debt did not waive statutory rights or prevent challenges to the bills. Its wording preserved the claimant’s appropriate statutory rights. It could potentially bear on what was reasonable to pay, but did not determine the assessment.
6. There was no general requirement for advance approval of every disbursement. Counsel’s fees fell within the retainer’s disbursement provisions. Their recoverability, like that of other disbursements, had to be determined individually by reference to whether they were reasonably incurred.