Eurasian Natural Resources Corporation Limited v Dechert LLP [2017] EWHC B4 (Costs), Judgment 27 January 2017

The solicitor’s failure to provide adequate estimates and failure to provide satisfactory explanation for exceeding estimates amounted to ‘special circumstances’ within the meaning of Section 70 (3) Solicitors Act 1974, thus entitling the client to assessment out of time. Master Rowley also said – obiter – that specific billing issues may amount to special circumstances, likewise the fact that the claimant could not realistically challenge regular interim statute bills within a month of delivery given the need to keep the solicitors on board.

This was a dispute about fees, in which the claimant sought leave to assess a number of interim statute (self-contained, final) invoices.  The claimant was entitled to assessment as of right of the last six in a series of invoices, as the application for assessment was made within one month of their delivery.  These invoices totalled about £5.5 million net.  The claimant needed to show ‘special circumstances’ within the meaning of Section 70 (3) Solicitors Act 1974 in order to obtain leave for assessment of the previous 15 invoices – those that had been delivered and paid between one and 12 months before the application for assessment.  These invoices totalled about £3.9 million.

Master Rowley acknowledged the endorsement given by the Court of Appeal in Bentine v Bentine [2016] EWCA Civ 1168 of the general approach expressed by Lewison J in Falmouth House Freehold Co Ltd v Morgan Walker:

Whether special circumstances exist is essentially a value judgement. It depends on comparing the particular case with the run-of-the-mill case, in order to decide whether a detailed assessment in the particular case is justified despite the restrictions contained in s 70 (3).

The claimant sought to rely on seven separate factors which it said gave rise to special circumstances. The case was decided on just one, the claimant’s case on estimates. Master Rowley agreed that in this case the defendant’s estimates were deficient and did  ‘not come close to mirroring the actuality’ of how the project was unfolding. The estimates were consistently below the costs that were being incurred at the time and were often badly wrong. Whilst the defendant asserted that the amount of work ultimately carried out could be justified by reference to various documents exhibited to the witness statements, the judge said that that approach was aiming at the wrong target. The question, at this stage, is whether the discrepancy between the estimates and the amount billed calls for an explanation. The defendant’s attempts to provide that explanation were wholly inadequate and thus leave for assessment was granted. Further, the judge observed that it must be arguable that the claimant can demonstrate reliance upon the estimates such that the court may on assessment consider reducing the overall amount payable.

During the currency of the retainer the defendant delivered interim bills on a regular basis. Although not central to the judge’s decision, Master Rowley went on to observe that as the claimant needed to keep the defendant on side the fact that it could not realistically challenge invoices as and when they were delivered, would also amount to a special circumstance.

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