Blue Manchester Limited v Howard Kennedy LLP

An invoice does not become an interim statute bill merely because it is labelled as one or bears the usual formal features. The retainer and the bill must clearly establish that the charge is complete and final for the work covered, with no later adjustment.

Where a discounted conditional fee arrangement permits a further charge depending on the outcome, the client must not face different statutory assessment deadlines depending on whether the case succeeds or fails. Absent clear agreement to that effect, the interim invoices cannot be interim statute bills. Significant billing errors and serious uncertainty about revised cost estimates may also constitute special circumstances justifying assessment under Solicitors Act 1974.

The claimant instructed the defendant solicitors in connection with an ICC arbitration. The retainer included discounted monthly charges, with the possibility of charging higher rates if the arbitration were won. The defendant issued bills 1 to 15 between January 2021 and June 2022, describing them as interim statute bills.

The claimant applied under section 70 of the Solicitors Act 1974 for assessment. The bills had been delivered more than 12 months before the application. The central issues were whether the contractual documents authorised interim statute bills, whether the bills were in fact final and complete, and whether special circumstances justified assessment despite the delay.

1. Contractual entitlement. The letter of 7 May 2021, the terms of business and the conditional fee agreement, read together, created a right to raise interim statute bills. That right was not expressed with sufficient clarity. The conditional fee agreement took precedence where it differed from the other contractual documents.
2. Finality of the bills. The bills bore the formal features of statute bills, but labels and presentation were insufficient. The documents also contemplated further charges for the same work if the arbitration succeeded. The claimant could therefore understand that the ultimate charge might not be known until the arbitration ended.
3. Assessment rights. It would create an unacceptable two-tier system if the time for challenging the same work began on one date after an unsuccessful case but on a later date after a successful case. The court applied the reasoning concerning completeness and finality discussed in Sprey v Rawlinson Butler LLP [2018] 2 Costs LO 197 and Ivanishvili v Signature Litigation LLP [2023] EWHC 2189 (SCCO). Absent an explicit agreement permitting that arrangement, bills 1 to 15 could not be interim statute bills.
4. Special circumstances. Even if the bills had been interim statute bills, special circumstances existed. The defendant had admitted an overcharge on four earlier bills and credited it against later invoices. There was also substantial uncertainty about the revised cost estimates. The key March 2021 communication was an internal shorthand email, was not formally confirmed to the claimant, and did not adequately explain the revised figures or their scope.
5. Order. An assessment under the Solicitors Act 1974 was ordered for bills 1 to 15. The parties were invited to make written submissions on the costs of that assessment.

First-instance decision. No prior appellate decision is stated in the judgment.