PI Brief Update

Oakwood Solicitors Ltd v Menzies [2024] UKSC 34 - Andrew Ratomski, Temple Garden Chambers

22/11/24. Date of judgment: 23 October 2024

This significant costs judgment concerned when a client can apply to have their solicitor’s bill of costs assessed under section 70 of the Solicitors Act 1974 (“the 1974 Act”). The Supreme Court was asked to construe the meaning of “payment” under subsection 70(4) which sets a 12-month time limit following a “payment” within which a client must apply for such an assessment.

Facts

Mr Menzies was unfortunately involved in a road traffic accident and suffered serious injuries. Oakwood Solicitors were instructed to pursue his claim for damages under a Conditional Fee Arrangement (“the CFA”). The CFA provided that the solicitors would receive basic charges, a success fee, an insurance premium, disbursements incurred and VAT all from any damages received subject to a cap of 25%. Mr Menzies later settled his claim for the sum of £275,000 and on 11 July 2019 received a “final statute bill” from his solicitor in the sum of £73,711.20 (to be deducted from his damages). On 1 April 2021 Mr Menzies applied to have the bill assessed and was initially barred from doing so as a result of subsection 70(4) of the 1974 Act.

The Decision

The Supreme Court over-turned the Court of Appeal who had allowed the solicitor’s appeal on the basis that the client had agreed to the CFA permitting the deduction of monies and had been sent a Final Statute Bill. The Court of Appeal held that retention of the monies by the solicitors amounted to payment for subsection 70(4).

The Supreme Court’s reasons for doing so can be summarised as follows.

“Payment” was construed in its context and the purpose of the statutory provisions in which it was used; it was held not to be a legal term of art. The relevant statutory context included that section 70 was concerned with a client’s right to assess a bill of costs; that the delivery of a bill compliant with the statute was integral to the statutory scheme; and section 70 envisaged payment after delivery of the bill and not by virtue of delivery of the bill (where a client then also has a right not to pay the bill until assessment is completed). The court also observed that the statutory requirements were concerned with the protection of a (consumer) client’s interests and to ensure excessive costs are not claimed.

Finally, in respect of the strict time limit under subsection 70(4) following payment, the court highlighted that payment of a bill by a client is taken to represent acceptance and agreement to the sums claimed and where there is acceptance, it is right to restrict challenge. In the present appeal the solicitors sought to argue that “payment” would occur, and time start running, without such an opportunity to consider the bill let alone accept it, an argument that was rejected by the Supreme Court.

The court considered the authorities lent further support to its construction of “payment” and showed a “long established understanding” as to what payment by deduction or retention required generally and by reference to section 70 of the 1974 Act. Further objections about the practical consequences of the Supreme Court’s construction of “payment” were rejected.

Discussion

The effects of this decision are being felt immediately and both the practical consequences of the judgment and the Supreme Court’s reasoning merit careful review from all practitioners engaged in injury work on CFA terms. The decision is also likely to cast a long shadow on future solicitor-client disputes arising from CFA agreements.

https://www.supremecourt.uk/cases/docs/uksc-2023-0115-judgment.pdf

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