Gallantgreen Ltd v BDB Pitmans LLP

A solicitor’s estimate is not ordinarily a fixed fee or cap. It is, however, a relevant yardstick when assessing what it is reasonable for the client to pay. The greater the difference between the estimate and the final bill, the more explanation is required.

Where the solicitor changes the assumptions, scope or parameters of an estimate, the change should be communicated explicitly and unambiguously before further costs are incurred. A client’s reliance need not be proved on the balance of probabilities. It is sufficient to show that the client may have acted differently had an accurate estimate been provided.

This was a detailed assessment of BDB Pitmans LLP’s costs arising from its retainer to advise Gallantgreen Ltd on a company demerger. The parties disagreed about whether the original estimate of £7,500 to £10,000 plus VAT covered work relating to the transfer of land and other assets.

The claimant also challenged work said to be outside scope, rates, duplication and costs incurred before the retainer. It contended that the defendant’s estimate and subsequent communications had caused reliance and should affect the amount reasonably payable. The court considered the significance of the estimates, the parties’ conduct and the applicable hourly rates.

1. Misrepresentation. The court declined to determine allegations of reckless or negligent misrepresentation or grant rescission or damages. Such issues would require appropriate directions, witness evidence and cross-examination. The detailed assessment proceeded on the existing evidence and conduct issues.
2. Effect of the estimate. The estimate given by the defendant’s partner, together with the communications up to 21 December 2023, reasonably conveyed that the upper estimate covered the entirety of the instructions, including the asset-transfer step. The claimant had provided the information reasonably expected of it and had specifically sought confirmation that the estimate would not change. The estimate was not a fixed fee or cap, but it remained relevant to the assessment.
3. Changed scope and communication. If the defendant considered that the estimate needed revision, or that land-transfer work was excluded, it was required to communicate that change clearly and obtain the claimant’s express approval before undertaking further work on the altered basis. Sending the client care letter was insufficient where the claimant had not seen it and its wording did not unambiguously exclude land or property transfers.
4. Reliance. Applying the practical guidance in Mastercigars Direct Ltd v Withers LLP [2009] EWHC 1296 (Ch), the court considered whether the claimant relied on the estimate, how it relied on it and what reduction was required to do justice. The claimant showed that it might have acted differently if given an accurate estimate. The estimate could therefore be taken into account when assessing the costs. The court was not punishing the solicitor and did not impose an automatic cap.
5. Indicative assessment and rates. The court indicated that it was unlikely to allow more than a 20% margin above the upper estimate, namely £12,000 plus VAT, while making clear that this was guidance rather than the final assessment. For work up to and including 30 January 2024, guideline rates were only a starting point. The specialist nature of the work justified rates of £325 per hour for Kelly and Barnett, £225 for Houghton, £260 for Todd, £175 for L’Esperance and Champion, and £145 for other fee earners, subject to any lower rate actually charged.
6. The parties were invited to compromise. If they could not do so, the assessment could proceed at a further hearing or on the papers with both parties’ agreement.