Vishal Mehta v Howard Kennedy LLP

Solicitors’ invoices may constitute interim statute bills where the retainer, construed as a whole, provides that each bill is final for the relevant period and confers the statutory rights associated with a statute bill. Contractual reservations about later charges do not prevent that conclusion where they are inapplicable or sufficiently explained by the retainer documents.

The Solicitors Act 1974 establishes mutually exclusive regimes under sections 59–63 and sections 69–71. A client cannot invoke the fair-and-reasonable jurisdiction under sections 59–63 merely because the section 70 time limit has expired. Payment for section 70 purposes may be made by a third party with the client’s knowledge and consent. Special circumstances require something out of the ordinary which calls for explanation or further scrutiny.

The claimant retained the defendant solicitors in June 2022 in connection with complex international fraud litigation and related applications concerning a worldwide freezing order. The retainer ended in May 2023. The defendant delivered 24 invoices exceeding £3.1 million, some of which were said to have been paid.

In this Part 8 claim under the Solicitors Act 1974, the court considered whether the invoices were interim statute bills or components of a single Chamberlain bill; whether the retainer was a contentious business agreement; whether particular invoices had been paid; and whether special circumstances justified assessment of invoices delivered or paid outside the statutory time limits.

1. Interim statute bills. The retainer was construed as a whole. Its Terms of Business stated that each bill was final for the work carried out in the stated period, had the status of a statute bill, and carried the associated rights of solicitor and client. The reservation permitting later charges was neither relevant nor applicable to this retainer. The General Notes were not contractual terms, but were relevant to interpretation and explained the scope of the reservation. The 24 invoices were therefore interim statute bills, not instalments of a Chamberlain bill.
2. Contentious business agreement. Sections 59–63 and sections 69–71 of the Solicitors Act 1974 provide mutually exclusive regimes. The question is which regime the parties adopted, determined from the retainer’s terms. The retainer clearly adopted the section 69–71 assessment regime. The claimant therefore had no entitlement under sections 59–63, and it was unnecessary to decide whether the agreement was fair and reasonable. The court agreed with the reasoning in Acupay System LLC v Stephenson Harwood LLP [2021] EWHC B11, although that decision was not binding.
3. Payment. Applying the guidance in Oakwood Solicitors Ltd v Menzies [2024] UKSC 34, payment requires the client’s knowledge and consent to the sum taken or to be taken in settlement of the bill. Payment by a third party is effective where made with that knowledge and consent. The evidence established that the relevant payments were authorised or made with the claimant’s knowledge and consent. The court could not order assessment of bills paid more than 12 months before the proceedings.
4. Special circumstances. Whether special circumstances exist is a value judgment comparing the case with the run of the mill case. They need not be exceptional, but must involve something out of the ordinary which calls for explanation or further scrutiny. The estimate, the size of the bills and the regular delivery of interim statute bills did not satisfy that test. The invoices were detailed, regularly delivered, and the claimant knew of his accumulating liability.
5. The claim succeeded only in relation to invoice 460369, dated or delivered on 25 May 2023, which remained assessable under the order of 30 July 2024. The other invoices were not assessable.