Emmanouil Spanakis v Schillings International LLP

An estimate of legal costs is not automatically a cap on the solicitor’s recoverable fees. Its significance depends on the contract and on the assessment of what it is reasonable for the client to pay. A contractual promise to endeavour to notify the client if an estimate is likely to be exceeded does not, without express wording, make costs incurred beyond the estimate irrecoverable.

Where reliance on an estimate is relied upon in assessing reasonable remuneration, the court should determine whether and how the client relied on it, without an elaborate investigation. An appellate court should not interfere with factual or evaluative findings unless they cannot reasonably be explained or justified.

The appellant instructed the respondent solicitors in connection with intended defamation and confidentiality proceedings. Their retainer provided for hourly rates and estimated fees of up to £10,000 plus VAT for Phase One. The respondent later billed £15,000 plus VAT.

The appellant challenged the bill under section 70(2) of the Solicitors Act 1974. Costs Judge Whalan rejected the appellant’s arguments that the estimate limited his liability, that notification of likely excess costs was inadequate, and that reliance was unnecessary. The central issues on appeal concerned construction of the retainer, reliance on the estimate, and the proper scope of appellate review.

1. Appeal dismissed. The costs judge was entitled to find that the respondent’s bill should not be limited to the Phase One estimate and that the appellant had not relied on the estimate in the relevant sense.
2. The contractual terms described the estimate as indicative, non-binding and not an upper limit. Paragraph 8.3 required the respondent to endeavour to notify the client if the estimate was likely to be exceeded. It did not provide that failure to give advance notice rendered additional costs irrecoverable.
3. A substantially exceeded estimate is a matter to be taken into account when assessing reasonable remuneration. It is a useful yardstick, but may cease to be useful where there is a satisfactory explanation for the difference. Reliance is relevant, and the court must determine whether and how the client relied on the estimate, without an elaborate investigation.
4. The judge was entitled to find, on the documents, that the appellant continued to instruct the respondent after being told that costs were prima facie overrunning. His factual and evaluative findings were open to him and could not be disturbed on appeal.
5. Under CPR Part 52.21, an appeal lies where the decision was wrong or unjust because of serious procedural or other irregularity. The appeal was dismissed.

• High Court (King’s Bench Division): Appeal from the order of Costs Judge Whalan dated 29 August 2023 dismissed.