Master Rowley:
1. In accordance with the Court of Appeal's decision in this matter [2016] EWCA Civ 375 upholding Roth J's Order, these proceedings are held in private. However, and also in accordance with the Court of Appeal's decision, this is a public judgment and, as can be seen from the final paragraph of it, the parties have been given an opportunity to comment upon it in draft before it has been formally handed down. As a result, there have been some redactions to the draft.
2. Non-parties may not inspect or obtain any document from the court file without the permission of the court and this restriction extends to documents to which I have referred to in this judgment. The fact that this is a public judgment does not alter that position. Should any non-party wish to inspect any document, the parties will be given an opportunity to be heard on any such application.
3. The claimant company has applied for the detailed assessment of fifteen invoices rendered to it by the defendant during a period of approximately six months in 2012. The defendant was instructed by the claimant following the claimant's receipt of a whistleblower's report in relation to a subsidiary company in Kazakhstan. The defendant was instructed to investigate matters in Kazakhstan and to produce a report for the purpose of "self-reporting" to the Serious Fraud Office. The effect of that self-reporting would, depending upon the contents of the report, potentially save the claimant from a criminal prosecution. The work undertaken by the defendant expanded to include the claimant's activities in parts of Africa. A formal report was produced in relation to Kazakhstan but no similar report was produced in relation to the African activities before the defendant's retainer with the claimant was ended orally on 27 March 2013 and in writing on 1 April 2013.
4. The claimant had originally instructed DLA Piper to act on its behalf but changed its instructions to the defendant as a result of the solicitor principally involved, David Neil Gerrard, having transferred to the defendant. The fees incurred by DLA Piper were paid by the claimant in full. Following the instruction of the defendant, it rendered bills regularly on either a fortnightly or a monthly basis whilst instructed by the claimant. After the retainer ended, the claimant brought this application under Section 70(3) Solicitors Act 1974 seeking to have the costs claimed in those invoices assessed by the court.
5. Since all of the defendant's invoices have been paid in full, the claimant could only seek an assessment as of right in respect of any invoice that had been rendered less than a month before the application was made. In practice the last six invoices have been treated in this category inasmuch as there is an agreement between the claimant and the defendant that the claimant can have those invoices assessed. They amount to £5.5 million in round terms net of VAT.
6. Invoices rendered and paid more than twelve months before the claimant's application cannot be assessed because the court has no jurisdiction to do so. Invoices in this category amounted to approximately £3.9 million.
7. For bills rendered between one and twelve months before the application, the claimant has to show that "special circumstances" apply in order to have the relevant invoices assessed. The fifteen invoices mentioned at the outset of this judgment fall within this category and they amount to £4.2 million. They are the invoices at the heart of this application.
8. In support of the claimant's application, its general counsel Mr Beat Ehrensberger produced an 18 page witness statement together with exhibits. In response the defendant produced four witness statements running to 220 pages and supported by no fewer than 13 lever arch files of documentation. The claimant served a second witness statement from Mr Ehrensberger running to 50 pages and a statement from the claimant's costs lawyer. The defendant subsequently served a statement from its own costs lawyer in response to the claimant's.
9. The parties both instructed leading counsel to make their submissions as to whether special circumstances exist and those submissions were made over the course of the two-day hearing. This judgment deals with the matters raised by counsel in the light of the witnesses' evidence and the relevant case law.
10. The first three subsections of Section 70(3) Solicitors Act 1974 are as follows:
(1) Where before the expiration of one month from the delivery of a solicitor's bill an application is made by the party chargeable with the bill, the High Court shall, without requiring any sum to be paid into court, order that the bill be assessed and that no action be commenced on the bill until the assessment is completed.
(2) Where no such application is made before the expiration of the period mentioned in subsection (1), then, on an application being made by the solicitor or, subject to subsections (3) and (4), by the party chargeable with the bill, the court may on such terms, if any, as it thinks fit (not being terms as to the costs of the assessment ), order—
(a) that the bill be assessed ; and
(b) that no action be commenced on the bill, and that any action already commenced be stayed, until the assessment is completed.
(3) Where an application under subsection (2) is made by the party chargeable with the bill—
(a) after the expiration of 12 months from the delivery of the bill, or
(b) after a judgment has been obtained for the recovery of the costs covered by the bill, or
(c) after the bill has been paid, but before the expiration of 12 months from the payment of the bill.
no order shall be made except in special circumstances and, if an order is made, it may contain such terms as regards the costs of the assessment as the court may think fit.
11. Similar formulations of these subsections go back through various iterations of the Solicitors Act and, as with much of the law relating to solicitor and client assessments, there are 19 th century cases which are referred to in the commentaries as well as more recent case law. The most recent consideration of this area occurred in the Court of Appeal decision in Bentine v Bentine [2016] EWCA Civ 1168 albeit that it involved considering special circumstances in the context of the incidence of costs at the end of a Solicitors Act assessment under sections 70(9) and (10). Nevertheless, the court concluded that it was essentially the same test as is applied under s70(3) and the court endorsed a passage from the case of Falmouth House Freehold Co Ltd v Morgan Walker LLP [2011] 2 Costs LR 292 where Lewison J said at paragraph 13:
"Whether special circumstances exist is essentially a value judgment. 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)."
12. Where an invoice has not been paid, the client's time for bringing an application for detailed assessment is longer than where the invoice has been paid. It is only if the invoice has not been paid for more than twelve months that special circumstances are required. Until that point, a client can be confident that the assessment will be allowed, even outside the original one month period, albeit on the likelihood of some payment on account of the costs that are be are to be assessed in most cases. The implication of the more generous timescale is that an invoice which has not been paid is more likely to be the subject of dispute than one that has been settled by the client.
13. Ben Williams QC, leading counsel for the claimant, put forward the proposition that there was a qualitative difference between the settlement of interim bills and final bills which was not reflected as yet by the terms of the Solicitors Act. In his submission, it was rare when the Act came into being for interim bills to be rendered and so the client would not be required to pay his solicitor's fees until the end of the case under the concept of the retainer being an "entire contract." If at that point the client decided to settle the bill, it would rightly suggest that he was satisfied with the charge that had been rendered. If he subsequently changed his mind, it was not surprising that the Act required the client to show some specific or "special" circumstance which justified that change of mind.
14. More recently however, said Mr Williams, interim bills have become much more common. Interim bills, which are no more than a request for a payment on account, cause no difficulty with the concept of a final bill being paid. However where, as here, interim statute bills are rendered, the client's time for challenging bills that have been paid whilst the matter progresses is brought forward. The client would need to commence proceedings on a monthly or fortnightly basis to preserve its right to have an assessment of the costs. That was not a realistic approach and so the rendering of monthly statute bills has the effect of causing the client not to challenge invoices so promptly and therefore subsequently needing to demonstrate special circumstances. This point is developed further later but I raise it here simply to say that whilst I tend to agree with Mr Williams' analysis of the change in solicitors' practice, the Act does not make any distinction between interim statute bills and final bills and so the test that I need to apply is the same here as it would be if the claimant had only received one bill (for the relevant period) and decided to challenge it having paid it in full.
15. Both Mr Williams and Simon Browne QC, leading counsel for the defendant, asserted that the test to be followed is that described by Lewison J in the Falmouth House case. Mr Williams described the phrase "value judgement" as being akin simply to the court exercising its discretion and that when comparing this case with the "run of the mill" case, I should be looking for something outside the norm of the ordinary case. Mr Browne described the test as having three steps. First, I had to consider whether there was some special feature or circumstance in the case. Secondly, whether such circumstance called for an explanation and thirdly I should apply a value judgment which essentially seemed to mean considering whether it was reasonable to proceed to a detailed assessment given the nature of the particular circumstance that called for an explanation. As Mr Williams pointed out, the only circumstance which might not reasonably be proceeded with to a detailed assessment was where the matter in issue was of a very limited amount. Mr Williams did not accept Mr Browne's deconstructed formulation of the value judgment test.
16. The phrase "calling for an explanation" appears in the context of estimates referred to on detailed assessment. In the Court of Appeal's decision in Leigh v Michelin Tyre Plc [2003] EWCA Civ 1766, at paragraph 26, the Court of Appeal said when discussing the relevance of estimates:
"If there is a substantial difference between the estimated costs and the costs claimed, that difference calls for an explanation. In the absence of a satisfactory explanation, the court may conclude that the difference itself is evidence from which it can conclude that the costs claimed are unreasonable."
17. Similarly in Mastercigars v Withers (No. 1) [2009] 1 WLR 881 Morgan J , when referring to the case of Leigh (and Garbutt v Edwards [2006] 1 WLR 2907) on the issue of estimates said:
"The estimate is a useful yardstick by which the reasonableness of the costs may be measured. If there is a modest difference between the estimate and the final bill, because an estimate is not a fixed price for the work, one may be very little surprised by the modest difference. The greater the difference, the more it calls for an explanation. If there is a satisfactory explanation for the difference then the estimate may cease to be useful as a yardstick with which to measure reasonableness. Conversely if there is no satisfactory explanation the estimate may remain a very useful yardstick with which to measure reasonableness."
18. Whilst these two examples only referred to the question of estimates, both Mr Williams and Mr Browne sought to address the question of whether each aspect of the case could be considered a special circumstance in part by asking whether that circumstance called for an explanation at a detailed assessment.
Submissions
19. Mr Williams sought to rely on no fewer than seven separate factors which in his submission justified a detailed assessment. I have used the headings as summarised in paragraph 26 of Mr William's skeleton as a useful framework for this decision. I have rearranged the order of the factors which are now as follows:
(1) The defendant's failure to give an initial costs estimate and its subsequent failure to give adequate costs estimates
(2) The size of the bills
(3) The fact that there is to be a detailed assessment of a substantial part of the defendant's charges in any event
(4) The impossibility of the claimant challenging the defendant's bills during the currency of the retainer
(5) The defendant's approach to billing queries during its retainer
(6) Specific billing irregularities
(7) The defendant's attempts to avoid scrutiny of its charges
(1) The defendant's failure to give an initial costs estimate and its subsequent failure to give adequate costs estimates
20. The first estimate that Mr Gerrard gave to the claimant was whilst he was a partner at DLA Piper. The original whistleblower's report was received by the claimant on 20 December 2010 and by 24 December Mr Gerrard had sent a client care letter including terms and conditions by way of a contract of retainer. At that time, the scope of the investigation to be carried out by DLA Piper related solely to Kazakhstan. Under the heading "cost estimate - DLA Piper" Mr Gerrard stated that:
"An accurate estimate at this stage is notoriously difficult as we have no idea as to the number of documents to be reviewed, relevant accounting records to be considered or number of interviews to prepare for and or consideration of what is said from the interviews."
21. Based on that rather uncertain description, Mr Gerrard then set out his estimated total fees to complete the work. According to Mr Gerrard's witness statement, at this stage it was envisaged that a final report would be prepared in the week commencing 31 January 2011 with the assistance of the claimant's Internal Audit department. However, Mr Gerrard says that DLA encountered difficulties with the limited resources of the claimant's Internal Audit department and the claimant's delay in providing instructions. Consequently, Mr Gerrard set out in a letter dated 29 March 2011 an investigation plan which again included a costs estimate. In the letter Mr Gerrard said as follows:
"We recognise that internal investigations are by their nature expensive but the benefits of getting this right are significant, given the consequences are set out above.
We will seek to investigate the allegations in the most efficient way possible and only after careful consideration and intelligent targeting of time and resources. We will keep you informed of the likely costs as the matter progresses."
22. The costs estimate then goes on to say that the costs will depend upon the amount of time required to be spent and that would be influenced by the amount of material which needed to be reviewed et cetera. Mr Gerrard then went on to state:
"You have asked for an estimate of costs for the work contained in the investigation plan. It is very difficult to give an accurate estimate because we do not know how much electronic data will be recovered in Kazakhstan, nor do we know the volume of hardcopy documents or the number of potential witnesses which will be identified as relevant. We have therefore done our best to provide a rough estimate based on the following assumptions:
(1) Full cooperation of ENRC plc and SSGPO is given to the efforts to collect and review electronic and hardcopy documents and to interview witnesses;
(2) The electronic and hardcopy documents can be collected by Internal Audit and Bridge2 Limited without undue difficulty;
(3) A large part of the electronic and hardcopy documents collected will be reviewed by Internal Audit, with only those key and relevant documents translated into English for review and analysis by DLA Piper;
(4) No more than 5 witnesses of fact are to be interviewed, and all such interviews will take place in London..."
23. On the basis of those assumptions DLA estimated the investigation would cost £350,000-£400,000 plus VAT and disbursements.
24. Mr Williams did not make a great deal of the ultimate inaccuracy of these figures because the assumptions on which they were based were falsified by events. Mr Browne, at least in Mr Williams' view, took some pains to go through the letter of retainer and the scope of investigations; the assumptions and a work plan example. In addition, he referred to the weekly meetings or telephone calls to provide updates which are described in Mr Gerrard's witness statement and which were in addition to formal, minuted meetings.
25. Mr Williams described this approach as Mr Browne setting up an Aunt Sally to knock down on the basis that the claimant had never placed any store in that particular estimate. Nevertheless, it proved instructive in my view in two respects. The first was Mr Gerrard's comment regarding the importance of being efficient in targeting time and resources given that such investigations are by their nature expensive. The second is the rather striking nature of the assumptions made. It seems to me they were wholly unrealistic in respect of investigating wrongdoing by the employees of a subsidiary. Why they would expect full cooperation, for example, was not explained by Mr Browne even though Mr Williams pointed out the inherent unlikelihood of that occurring.
26. When Mr Gerrard moved to Dechert in April 2011 he produced a further retainer letter setting out the general terms and conditions. On 26 July 2011 Mr Gerrard sent an email to Mr Ehrensberger following a recent conversation between the two and in which Mr Gerrard set out his estimate for the fees for the next phase of the investigation. His email states that "it is difficult to provide an accurate estimate because we do not yet have the results of the data search terms. However, I understand that the amount of data collected in Kazakhstan is significant." He then set out his "best rough estimate" of Dechert's fees for the following two to three months. That estimate amounted to £160-£200,000 per month plus VAT and disbursements.
27. Mr Gerrard's evidence split up the work involved during the retainer with the claimant into three sections. This middle section ran from April 2011 until January 2012. Thereafter, everything began to be invoiced together even though there were numerous strands of work regarding the Kazakhstan investigation and further strands of work in relation to the African investigation. Consequently, on 17 January 2012, Mr Gerrard sent a further retainer letter to the claimant and which was signed by Mr Ehrensberger at the end of that month.
28. Mr Browne suggested to me that there was now a much wider scope of investigation and it had become a vast operation. As such, it was not surprising given the seriousness of the work and the possible ramifications to the company that Mr Gerrard's hourly rate had increased from £570 per hour to £660 per hour. It seemed to me that the strength of that argument was rather vitiated by the statement in the letter itself which said that "our fees will be based on our normal hourly charging rates for work of this kind." In any event, as Mr Williams pointed out, solicitors are normally under pressure to provide a discount for additional work rather than increasing the rates.
29. [This paragraph has been redacted in its entirety.]
30. The next estimate of costs occurred on Saturday 8 September 2012 following an email being sent from the Claimant to Mr Gerrard at Mr Ehrenberger's request in the following terms:
"On Friday Beat asked me to look at preparing responses to internal budget requests - for 2013 and an "end of Q3" update of forecast on Q4 expenditure.
The annual budget information for 2013 I will deal with next week but the deadline for the Q3 Forecast for October, November and December is due on Monday (internal deadline was brought forward). The instructions indicate that in addition to anticipated "ordinary course" expenditure, all project costs must also be included in the forecast update.
I know this is short notice as it is due at the end of Monday but could I ask you to arrange on Monday for me to receive a brief breakdown of projected or anticipated costs for each of the next 3 months including both day-today costs based on previous months expenditure and any expectations on each project you have running for ENRC (broken down by project)?"
31. In response to that email, Leann Adams, Mr Gerrard's assistant, sent an email on Monday, 10 September 2012 stating "I confirm the costs per month from September through to December to be between approximately £530,000-£560,000."
32. Mr Browne pointed out that none of the estimates covered so far are even referred to in Mr Ehrensberger's witness statement and as such he could clearly have placed no reliance upon those estimates. The first estimate referred to by Mr Ehrensberger comes from an email dated 30 March 2012 sent by Leann Adams in the following terms:
"Dear Ciara
It is not easy to give an accurate figure for each month as there will obviously be some months that require more work than others depending on what is happening in the investigation.
I can give an estimated monthly run rate of approximately £350,000-£400,000 which would mean approximately £3,600,000 (based on £400,000 each month) for the remainder of the year. However, Neil feels that the investigation should not go on as long as December and therefore this will mean that the total fees will not reach the estimated amount above."
33. The second estimate referred to by Mr Ehrensberger in his witness statement, and the final estimate given during the life of the retainer, was set out in a spreadsheet attached to an email dated 18 January 2013 by Duncan Wiggetts, a partner at the defendant. The spreadsheet sets out the number of hours expected to be worked by four different levels of fee earner. At this point the Kazakhstan investigation was expected to conclude within the costs estimate provided of £204,275. The majority of the work estimated (£3,592,541) related to the African investigation.
34. On the first morning of the hearing, Mr Williams produced a bar chart headed "Profit Costs" which set out the months January 2012 to March 2013 along the X axis and profit costs in increments of £50,000 along the Y axis. Across the monthly bars are red lines demonstrating the estimated costs for the relevant months. In effect, the period of January 2012 to March 2013 is divided into 4 periods in which different estimates were provided. These are as follows:
|
Period |
Date of Estimate |
Estimated costs (month) |
|
1. - Jan to March 2012 |
26 July 2011 |
£160-£200,000 |
|
2. - April to August 2012 |
30 March 2012 |
£350-£400,000 |
|
3. - Sept to Dec 2012 |
10 Sept 2012 |
£530-£560,000 |
|
4. - Jan to March 2013 |
18 Jan 2013 |
£949,204
(£3,796,816÷4) |
35. Mr Williams readily accepted that, unlike the first three estimates, the fourth estimate is artificial in the sense that it takes the expected work done to be over a four month period and then divides it by by four to reach an assumed monthly figure. As the defendant did not do any work in the final month, Mr Williams argued that the simple calculation used aptly demonstrated the expected spend per month.
36. Not all of the periods represented by the bar chart relate to the invoices which are the subject of this application. The relevant months are contained within the second and third periods as is set out in the following table.
|
Period |
Estimated costs
per month |
Actual costs by month
(net of VAT) |
|
2. - April 2012 to August 2012 |
£350-£400,000 |
May |
£696,437.30 |
|
June |
492,857.35 |
|
July |
596,803.25 |
|
August |
622,119.35 |
|
3. - Sept 2012 to December 2012 |
£530-£560,000 |
September |
784,064.20 |
|
October |
1,358,960.70 |
|
November |
1,144,218.80 |
37. Having provided me with the bar chart, Mr Williams submitted that it demonstrated that the bills were above the estimates in every single month from January 2012 to March 2013. This was so, notwithstanding the sums used were only the profit costs and did not include either VAT or disbursements. As such, the figures were at their lowest and therefore at their most favourable to the defendant.
38. Mr Williams accepted that the early estimates were overtaken by events but said they were relevant in the sense that they demonstrated that the estimates were only revised when prompted by the claimant. By contrast, even when there was a new retainer letter, there was no revision of the previous estimate initiated by the defendant. The estimates were entirely unsatisfactory and were based on predictions which were of a lower monthly spend for the future than had been billed in the previous months. That could only be an accurate estimate if the work was decreasing but it was clear from the defendant's case that the work was in fact increasing markedly. Mr Williams therefore queried what sort of effort had been put into the estimates?
39. He submitted that the bills rendered during between April and September 2012 were between 25% and 95% above the estimate that covered that particular month. Things became worse in October when the increase was 141% and in November it was 105%. Even in the three-week working month of December, the bills exceeded the estimate by 35% and then went back to being considerably more in the early part of 2013.
40. By the time the estimates for the later periods were produced, the defendant knew the shape of the case very well. Indeed, it was the defendant who was best placed to know how much cloth needed to be cut in terms of the expense of the investigation and the claimant was reliant upon the defendant in this respect. What had begun as being an investigation into a single subsidiary company had widened in scope to include potential criminal sanctions and reputational damage.
41. Mr Williams said that the claimant was not running an estoppel type argument in relation to reliance upon the estimates. This was not a case where, if accurate estimates had been provided, the claimant could have chosen a different course of action. It was not like a piece of litigation which could be settled if the costs became too high. But estoppel, according to Masterscigars, is the high water mark of reliance, in Mr Williams' submission, and it is not necessary to prove reliance to that level for the estimates to be relevant. It was clear that the claimant wanted estimates regularly in order to budget on its expenditure. Even though the company might be described as a "sophisticated client" in being used to instructing solicitors for transactional work or commercial litigation, this was rather different from a regulatory investigation. As such, even sophisticated business clients were not able to take a view about how much money they ought to be spending on this sort of matter.
42. In Mr Williams' submission, there was a lack of detail in the invoices, even allowing for the sensitive nature of the descriptions; a failure of the defendant to update estimates or to break down those that were provided; and an uncertainty as to whether disbursements et cetera were included. It was of profound significance that solicitors apparently expert in their field, got the estimates so wrong. This was a pointer to a lack of justification of the excess over the estimates and clearly called for an explanation. As such this was a special circumstance.
43. Mr Browne was scathing as to the relevance of the bar chart that been provided by the claimant. He described it as being so devoid of detail that it was embarrassing. It was as if the witness statements had not been read in his submission. It was only once the witness statements had been read that it was possible to see what had been going on. For example, during the currency of the retainer, there were three further whistleblower reports at the end of 2012 and beginning of 2013 but there was no reflection of this in the simple bar chart produced. As far as Mr Browne was concerned, the bar chart simply demonstrated the dramatic upturn in work in Autumn 2012 that could be seen from the unchallenged documents. The marking of the estimates on the bar chart demonstrated in any event that the estimates were in line with the recent previous months' billings.
44. Mr Browne described the claimant's argument regarding estimates as being as vague as could be since there was no reliance suggested by the claimant on any of the estimates. Mr Williams had only been able to say that the estimates might be an indicator as to what a reasonable sum would be. Mr Ehrensberger only appeared to be aware of two of the estimates that he had been given which demonstrated that he could not have been relying upon them.
45. Regulatory investigation was, according to Mr Browne, not at all similar to commercial litigation. In the latter, predictions could be made as to the pre-action phase and pleadings, with thereafter a defined range of issues and case management leading to resolution. None of this is guaranteed in a regulatory investigation. It is always uncertain and those uncertainties may be far reaching. For example, there may be co-operation with the investigation or deliberate obfuscation by those being interviewed and the defendant would not know which to expect when giving the estimate.
46. Mr Browne produced his own document for the hearing and which was described as a chronology of events from January 2012 to January 2013. As would be expected from its heading, the document set out a table of events which Mr Browne used to support his main argument that the work done could easily be justified by the exhibits to the defendant's witness statements. That work had been discussed regularly at various committee meetings and presentations. It had been approved by the claimant and then had been reported upon by the defendant to the claimant thereafter. Having carried out the work as instructed and approved, it had been billed to the claimant who had paid it without question. To the extent that anything I might consider called for an explanation in terms of the work involved, then the exhibits provided that explanation. Mr Browne took me to a number of example documents regarding the work plans and agreed next steps for the investigations as well as minutes and briefings of the various committees that were created to provide direction to the investigations.
47. Mr Williams in reply suggested that Mr Browne had not really answered the points he had made regarding the billing being above the estimates. He accepted that the work was different from commercial work in its broadest sense. However, he did not accept that it was any more difficult to budget as a result. The defendant was the "foreman of the project" and in some ways therefore it ought to have been easier to estimate the work required because the defendant was unusually well placed to determine how much work was involved. Having created the detailed work plans, it should have been quite possible to budget appropriately. Indeed, Mr Williams went so far as to say that if the work plans had been costed with estimates, it would have gone a long way to meeting the claimant's case on this point. But there had been no cross-referencing of the work required to the estimates whatsoever.
48. Mr Williams also contested Mr Browne's suggestion that the documents exhibited to the witness statements demonstrated the work that had been carried out. The fact that it had been done was no more than any solicitor who says that they have carried out work "on instruction." It did not mean that the work might not call for an explanation and it was often the case on a Solicitors Act assessment that the work was within the scope of the client's instructions.
49. Furthermore, Mr Williams did not accept that the three further whistleblowers' reports identified by Mr Browne were relevant to the question of estimates. One was not mentioned on the SFO report and the other two did not surface until February or March 2013 and as such were after even the last estimate.
50. It seems to me that the bar chart was a clear graphical representation of the estimates provided by the defendant compared with the amount of costs that had been incurred. It is clear from the beginning of the retainer through to the end that the estimates were consistently below the costs that were being incurred at the time. As Mr Williams said, the estimates were often badly wrong for the month in which they were given let alone future months.
51. Mr Gerrard's view that the work was difficult to predict is prevalent in every estimate that he has given. But any such difficulty is in my view wholly insufficient to cover the gap between the estimates and the reality. Mr Gerrard's phrasing is redolent of costs estimates from ten or more years ago where a solicitor would routinely say that the costs to be incurred were impossible to predict. As recorded above, Mr Gerrard referred in his first estimate to the need for efficiency, careful consideration and intelligent targeting of time and resources. He indicated that the claimant would be kept informed of the likely costs as the matter progressed. The discrepancy between that approach and the reality of brief estimates only produced reactively, and which were invariably underestimates, is vast.
52. The work carried out in this case straddles the period of the review of Lord Justice Jackson. The need to improve the prospective understanding of costs through budgeting was writ large within that report and given prominent publicity. In that environment, it is simply not sufficient for a solicitor to provide an early estimate which is then not updated for a considerable period. I have already commented that the original estimate made seemingly unrealistic assumptions on the work that would be required and in my view it was almost inevitable that it would be exceeded once the investigations had begun.
53. Thereafter, the only estimates provided until Mr Wiggetts became involved, were reactive estimates provided upon the claimant's requests for information for budgeting purposes. Those estimates were wholly insufficient to provide any detail to the claimant and the exchange between the claimant and Ms Adams between 8 - 10 September 2012 (see paragraphs 28 and 29 above) is but the most glaring example. Detailed information as to future spending was requested and the barest response was provided. If the responses had proved to be reasonably accurate, then there may have been less to be concerned about, but it is clear that the estimates were considerably awry on every occasion.
54. I do not have to consider the question of reliance as such in this decision. But the exchange to which I have just referred and the email from Ms Coleman requesting a meeting of herself and Mr Ehrensberger with the defendant to discuss billing (see paragraph 83 below) make it clear that the claimant did have concerns about the extent of the costs being incurred.
55. Mr Browne did not tackle the figures directly in relation to the discrepancy between the estimates and the actual costs billed. In my view that was simply because he could not do so. The only position the defendant could take was to say that the amount of the work done was demonstrated in the many documents exhibited to the witness statements. But that, it seems to me, is aiming at the wrong target. It may be that at the detailed assessment hearing all of the work claimed can be justified as being reasonable. But it cannot be an answer to the question of whether the discrepancy calls for an explanation simply to demonstrate that a lot of work has been carried out. There is no way to compare the amount of work carried out with the estimates because, as Mr Williams pointed out, there has been no attempt to cost the various work plans. The defendant's attempt to provide an explanation in this manner so as to avoid the court concluding that the discrepancy calls for an explanation is an impossible one to achieve in a case of this size. If there was a small bill for which the defendant could demonstrate simply why the extra costs had been incurred, it might be possible to take the approach that the defendant has here. But in bills of this magnitude, it cannot in my judgment be done.
56. I therefore consider that the claimant has demonstrated that a special circumstance exists in the discrepancy between the estimates provided and the costs actually billed. Despite the estimates being updated periodically, they have not come close to mirroring the actuality and they are deficient in themselves. It must be arguable that the claimant can demonstrate some reliance upon the estimates such that the court may consider reducing the overall sums billed on the basis that it would be unreasonable for the client to pay the full amount in accordance with the decision in Mastercigars.
57. Strictly speaking, I do not need to deal with the remainder of Mr Williams' arguments regarding special circumstances having found that they exist in respect of the estimates. But in deference to the parties' submissions, and in case this decision is appealed, I will also deal with the other matters raised by the claimant.
(2) The size of the bills
58. As I set out at the beginning of this decision, the sums paid by the claimant to the defendant are significant. The bills at the heart of this application alone amount to £4.2 million.
59. Both parties referred me to the following passage in the decision of Lewison J in Falmouth House:
"Morgan Walker argue that the fact that there are large sums involved is not a special circumstance and rely for that proposition on the decision of Mr John Martin QC in Winchester Commodities Group Ltd v RD Black and Co [2000] BCC 310. However, in that case Mr Martin held that the stark level of the fees in issue was "at first sight a good point"; but that for seven particular reasons on the facts of that case the point turned out to be of little substance. That case is not authority for the proposition that the amount of fees in issue is irrelevant to the question whether there are special circumstances. In Re Robinson (1867 - 68) LR 3 Ex 4 the Court of Exchequer held that a large charge calling for explanation was a special circumstance. In my judgment Master Simons was entitled to take it into account."
60. There was very little difference between the submissions of Mr Williams and Mr Browne on that passage. The size of the bills rendered could not amount to a special circumstance in itself, but it was something that was a relevant factor for the costs judge to consider.
61. Mr Williams said that his client accepted this was always going to be high cost litigation. Nevertheless, even for the heaviest commercial litigation the "run rate" of £800,000 per month on average was exceptional. Mr Browne's argument was that the extent of the work and therefore the extent of the invoices was clearly justified by the work plans et cetera that had been exhibited. Therefore whilst he accepted that the invoices were for significant sums, they merely reflected the work that had to be carried out and which expanded as time went by as the scope of the investigation increased.
62. The fees in dispute in the Falmouth House case were £201,417.07. In the Winchester Commodities case there was, like here, a spread of invoices which were caught by the various provisions of s70. The equivalent invoices were for roughly £430,000 as can be seen by the following passage recorded by the judge:
"Another of Miss Hilliard's submissions had far more substance. It was based upon the proposition that total charges of £340,243 for profit costs and £91,300 for counsels' fees in an action which had not progressed beyond close of pleadings cried out for explanation."
63. The sums in those two cases are therefore roughly 5% and 10% respectively of the relevant invoices in this case. Or to put this another way, are equivalent to a week or a fortnight's work in this case at the average monthly spend. There is an order of magnitude of the costs involved in this case which it seems to me is impossible to ignore. I accept that it cannot be the case that bills of a certain amount automatically achieve the threshold of a special circumstance. But it seems to me inevitable that bills of this sort of size inevitably weigh heavily in the balance of factors to be considered. Where, for example, specific challenges to items contained within the invoices are considered, fairly modest items such as an additional fee earner or fee earners at meetings are much more likely to amount to a special circumstance because of the number of such meetings that will have occurred given the costs involved overall.
64. Both counsel's submissions regarding "value judgments" concentrated on small items potentially not justifying an assessment. But it seems to me that small items that are likely to be repeated within bills of this size tend to favour a finding of special circumstances rather than the opposite.
65. Similarly, the disbursements claimed in the relevant invoices amount to £331,301.99. The disbursements allegedly either unevidenced or not broken down are said to be £177,576.34. This is a sum that is not far off the entirety of the Falmouth House invoices. In that case, both Master Simons and Lewison J considered the figures at stake to be sufficient to contemplate whether the size of the bill in itself was a special circumstance. Here the disbursements are one of the lesser items.
66. Therefore whilst I do not say that the size of the bills is in itself a special circumstance it magnifies the effect of any other matters which might be considered a special circumstance.
(3) The fact that there is to be a detailed assessment of a substantial part of the defendant's charges in any event
67. As I have set out above, there are bills amounting to £5.5 million which are going to detailed assessment regardless of the decision that I have made in relation to the invoices in this judgment. Mr Williams suggested that this circumstance reinforced his arguments generally that there were special circumstances to be found. The same arguments regarding matters such as hourly rates and the personnel involved would be taken at the detailed assessment of the "uncontested bills" (by which Mr Williams meant that the entitlement to a detailed assessment was uncontested). Consequently there would be less prejudice to the defendant in these circumstances than there would be where a defendant potentially had no detailed assessment in prospect if it successfully opposed a special circumstances hearing. The final detailed assessment would be lengthened by the additional costs to be reviewed but in practice assessments involving either £5 million or £10 million were unlikely to reach the end of the assessment since the parties invariably would reach an agreement based on decisions made on the first £1 million or £2 million assessed.
68. Mr Williams submitted that the court would be troubled by an outcome which involved refusing to allow the contested bills to be heard at a detailed assessment and then potentially finding considerable sums need to be reduced on the uncontested bills. The net effect of this would of course be that the solicitor had received payment for bills rendered which ought to have been considerably reduced.
69. Mr Browne did not accept that the fact other bills being assessed could be a special circumstance. Mr Williams categorised Mr Browne's submission on this point as being no more than simply an assertion without making that assertion good. There is some force in Mr Williams' characterisation of Mr Browne's submission which clearly was that it was self evident that the existence of other invoices could not be a special circumstance. Whilst Mr Browne's submission was undoubtedly succinct, it is one which I accept. It is far from uncommon for a range of invoices to be challenged by a client and at the initial directions hearing, those invoices are separated out into ones which will definitely be assessed; those which might be assessed subject to special circumstances; and those which are too late to be assessed (see, for example, Winchester Commodities). The fact that some invoices fall into the first category has never before in my experience led to the suggestion that the invoices caught by s70(3) should also go to assessment simply because of the existence of invoices within s70(1) or s70(2). I do not consider the fact that there is a range of invoices in this case to be a special circumstance.
(4) The impossibility of the claimant challenging the defendant's bills during the currency of the retainer and (5) the defendant's approach to billing queries during its retainer
70. At the outset of this decision, I referred to Mr Williams' argument that the use of interim statute bills by the defendant has made the claimant's position more difficult. In essence, the claimant would not wish to be issuing court proceedings on a monthly or fortnightly basis in order to protect its position in seeking to challenge the defendant's bills. As I have said above, I tend to agree with Mr Williams' description of the increased use of interim statute bills but that does not alter the need for the client to demonstrate special circumstances. Furthermore, in my view, it is not an unusual circumstance for a client to receive such invoices, particularly in large-scale matters such as this. It cannot amount to a special circumstance in itself.
71. Mr Williams' argument regarding the difficulty his client was placed in regarding challenging the defendant's bills went beyond the generality of the point that I have just described. In the particular circumstances of this case, the claimant, according to Mr Williams, needed to maintain its relationship with the defendant in a way that would not normally be the case. If this matter has involved a large scale piece of litigation, the claimant could have expressed its dissatisfaction with the defendant by ending the retainer, paying the bills and accepting the need to meet its new solicitors' charges for reading into the file before proceeding with it. However, in this case the claimant could not take that approach.
72. It was the claimant's case, according to Mr Ehrensberger's evidence, that they had instructed Mr Gerrard (and then followed him from DLA Piper to the defendant) because of his particular expertise in investigations carried out by the Serious Fraud Office. It was his relationship with the SFO that the claimant prized. If there had been a falling out with Mr Gerrard, then not only would they lose his expertise, but they would undermine the SFO's confidence in the investigation that the claimant was carrying out into its own activities. For this reason, the claimant did not dare risk its relationship with Mr Gerrard or the defendant generally. Whilst the legal fees were significant, they were still subordinate to the risk of a potential criminal investigation.
73. When the secondees from Addleshaw Goddard had arrived at the claimant's legal department, they had queried some of the invoices raised by the defendant. But in Mr Williams' submission, there was an obvious difference between asking for some time to be written off (as Addleshaw Goddard had requested) and the bringing of formal Solicitors Act proceedings. In any event, the reaction of the defendant to the modest queries raised by Addleshaw Goddard showed how unreal the concept of challenging the bills formally would have been during the course of the defendant's retainer. By way of example, Mr Williams referred to paragraph 171 of Mr Gerrard's witness statement in which he referred to his frustration with the queries raised by the Addleshaw Goddard people. His witness statement states that the defendant had committed significant resources in order to meet those concerns and which was "time which could have been better served dealing with the salient issues arising out of the Kazakhstan Investigation and the Africa Investigation."
74. Mr Williams also referred me to two email exchanges involving Clarissa Coleman of Addleshaw Goddard and Mr Gerrard between October 2012 and January 2013. The first exchange occurred where Mr Gerrard was chasing bills which it would appear had been outstanding for three months at that point. Mr Williams accepted that Mr Gerrard was entitled to chase the payment, but not in such aggressive terms. He referred, in particular, to Ms Coleman's email dated 18 October 2012 in which she stated that:
"I think we need to take the temperature down. As you know I've been in this role for 3 weeks and do not know how things work. I have prior commitments today and won't be at enrc until 3pm. I will deal with this as a priority then."
75. Mr Williams also relied on internal emails between Ms Coleman and Louisa Caswell of ENRC on 20 November 2012 which stated:
"Re dechert - I have raised the issues you pointed out with Dechert. They will input all the changes next time but can't do it today. Can you prepare a summary of the comments which we can send them for the future bills.
Leann emailed all the outstanding invoices - can we approve them on the basis that future invoices have that information. I'm not sure we can stomach another fight at this time. Louisa - perhaps you can do this and get beat to sign them."
76. Following receipt of the defendant's invoice on 7 December 2012, Ms Coleman clearly took exception to Mr Gerrard's email correspondence and telephone calls at the time. It would appear that Ms Coleman interpreted Mr Gerrard's responses as implying that the claimant was being obstructive and that the defendant was being accused of fraud or padding its fees. This allegation was denied by Ms Coleman (a point relied upon by the defendant as discussed below). She made reference to Mr Gerrard's "very aggressive manner" on the telephone to what she appeared to consider to be routine enquiries about items in the invoice breakdown.
77. Mr Williams also referred to Mr Ehrensberger's evidence here about the jeopardy in which the claimant would place itself if it did not pay its bills promptly. He accepted that Mr Gerrard said that there was no such jeopardy and that there are no contemporaneous documents to assist me. Since neither party gave evidence other than in witness statements, it was not a matter that I could decide unless I concluded that the evidence was incredible. In Mr Williams' submission I should simply note that there was a dispute and that, once I accepted that special circumstances existed and so the claimant had crossed the threshold it needed to pass, there should be a final hearing at which such evidence could be tested. Mr Browne's position on this point was that he was quite happy for me to take the view that I could not decide any factual disputes based on the evidence. This was founded on the basis that his case relied upon the contemporaneous documents that had been exhibited to the witness statements and which were not challenged by the claimant.
78. On a number of occasions both counsel requested me to take a "worldly view" or to consider how things are in the "real world". On this point, Mr Williams said that solicitors appreciate that it is likely that there will be an overall reconciliation of the fees charged on a particular matter in order to keep clients happy. As such the defendant should not have been so prickly in respect of the queries raised as the matter proceeded. The contemporaneous emails from October 2012 and January 2013 referred to above supported Mr Ehrensberger's evidence about the existence of a dispute regarding fees and his understanding of what was likely to happen if those fees were formally challenged. Mr Williams also pointed out that once the defendant ceased to act, there was an immediate response from the SFO by its demands for documents from the defendant.
79. [This paragraph has been redacted in its entirety.]
80. Mr Browne did not accept that the claimant was in in any difficulty challenging the fees as the case progressed. The terms of business clearly set out the complaints regime if the claimant had wished to use it. Bills were rendered regularly based on agreed work plans and streams of work. No challenge was made to the relatively limited descriptions of the work done until Ms Coleman and her colleagues became involved. Until that point, the sensitivity of the work and the possibility that invoices and their narratives might be seen by the SFO had militated against too much detail being in the invoices and that had been agreed with the claimant. When Ms Coleman requested further information, that was provided. Mr Browne did not accept that Mr Gerrard's approach was overly aggressive but in any event pointed out that "pressure" according to the case law was not sufficient to amount to a special circumstance in the absence of overcharging. In Mr Browne's submission there is no overcharging demonstrated in this case.
81. Indeed, Mr Browne prayed in aid the involvement of Ms Coleman and her colleagues which covered the entire period of the invoices in dispute. Her challenging of specific items which were responded to by Mr Gerrard and her specific denial that her challenges amounted to a suggestion of "padding" of fees bolstered the defendant's argument that the fees had been considered by the claimant at the time of paying them. In these circumstances, the challenge now being raised did not get off the ground in raising a special circumstance.
82. Mr Williams disputed that the role of Addleshaw Goddard precluded the claimant from arguing that the bills needed to be formally assessed. He told me that the secondees had been deployed generally to assist the claimant's legal department and had not been mandated simply to deal with the defendant's fees. They were just one of "multitudinous" responsibilities. As such, far from them providing an independent review, the contemporaneous documents only showed that they were focusing to any extent on the invoices for October and their bruising encounters in respect of those fees made them reluctant to challenge the invoices any further.
83. Whilst it must be right that I do not seek to prefer the evidence of Mr Ehrensberger or Mr Gerrard absent contemporaneous documents, I do think that the contemporaneous emails of Ms Coleman in particular are helpful on this part of the application. She had no obvious axe to grind and I have no reason to doubt that her emails reflected events as she saw them at the time.
84. On 18 October 2012, she picked up Mr Gerrard's chasing emails and, it would appear, complaints from a colleague about chasing messages from Mr Gerrard's personal assistant. Having emailed Mr Gerrard at 1:31pm to say that she would be at the claimant no earlier than 3pm, she then sent an email to Mr Gerrard at 4:54pm on the same day. That email begins by asking whether Mr Gerrard wished her to make further enquiries about assurances Mr Gerrard appears to have received regarding payment of his bills. If so, he was asked to provide more detail of that issue. She then stated that:
"In the short time available to me in the office (in Beat's absence), I have been unable to find out about what was said/done. However, I have made sure that you will be paid tomorrow in full."
85. She then sets out further information that she wants provided for the future and states that "Beat and I want to meet you to discuss billing in general including numbers of attendances at meetings, charging for taxis etc."
86. These emails support the claimant's position that it was concerned about specific billing matters at the time and that this is not simply something constructed after the end of the retainer by the claimant. More fundamentally in my view, it demonstrates that the challenge to the invoices by Addleshaw Goddard was in no way a forensic exercise. The email of 18 October 2012 is sent by Ms Coleman within an hour or so of being in any position to investigate. It is clearly no more than an administrative matter of making sure that a supplier's invoices had been paid. The tenor of the email is that Ms Coleman wished to get matters up-to-date and to improve the information provided on future invoices. I do not think that it is any answer to the claimant's queries to say that Addleshaw Goddard have provided some form of independent scrutiny over and above the sort of checking that might have been expected by the claimant's own legal department had it not been under resourced at the time.
87. Mr Browne contended on the issues of hourly rates and estimates that the regulatory investigation involved here bore no resemblance to ordinary commercial litigation. Indeed, he described it as a very specialist field in which Mr Gerrard made his mark and was much in demand. This line did not seem to help him, in my view, when it came to explaining why the peculiar position regarding the SFO and the self-investigation did not make it unusually difficult for the claimant to commence Solicitors Act proceedings. He referred to the fact that the claimant was at the time a FTSE 100 company [the remainder of this sentence has been redacted.] He said that they were used to dealing with City solicitors when striking bargains. Mr Browne also said that the risk of the defendant "walking off the job" did not seem to worry Mr Ehrensberger sufficiently to prevent him from leaving the defendant's bills unpaid for three months. Nor did it suggest that the claimant was concerned to keep the SFO happy when it sacked the defendant seven days before it was due to report formally to the SFO.
88. It does not seem to me that any of these points really answers the claimant's argument that the self-investigation potentially to avoid a criminal prosecution caused there to be a number of unusual features in the solicitor client relationship. The ease with which the claimant could contract with other City solicitors does not bear on the peculiarities of that relationship. The sums being invoiced to the claimant suggest to me that the defendant was unlikely to walk off the job, to use Mr Browne's phrase, unless there had been an extremely serious breakdown in the relationship. Put bluntly, even on the defendant's estimated monthly run rate, significant fees were being earned for a client of substance and whose work profile meant there was obvious potential for repeat business. The likelihood of Dechert walking away because of some delay in payment was an insignificant risk in my view.
89. The decision to end the retainer was of course a much more significant decision. It seems to me that once the client has decided to end the retainer, it has reached the point where it felt it had no other option and would have to run the risk of a disaffected SFO. Indeed if anything, it seems to me to indicate the extent of the concern of the claimant with the relationship with its solicitor. The claimant says that this was a result of the level of fees charged. The defendant says that this was caused by factors other than the extent of the fees.
90. I cannot decide the cause of the breakdown of the relationship without evidence being given but it seems to me that the need to keep the SFO onside regarding the self-investigation is not disputed. I accept that this state of affairs required the claimant to keep Dechert onboard, at least for the period of the relevant invoices. I consider this to be a special circumstance since that the claimant could not realistically challenge its solicitors' fees within the month required by the Solicitors Act to avoid needing subsequently to demonstrate special circumstances.
(6) Specific billing irregularities
91. The parties' costs lawyers have given witness statements in respect of aspects of the time claimed which are said to be excessive or unusual such that they ought to be assessed. In particular, the claimant challenges the hourly rates charged by the defendant, especially the increase in the rates initially charged. The claimant also challenges the number of attendees who came to various meetings and interviews as well as various challenges to the time spent by paralegals in document review and in quasi administrative or secretarial activities.
92. Both counsel referred to the witness statements of their respective costs lawyers as well as submissions set out in their skeleton arguments rather than spending time going through the minutiae orally. In the event there is no need for me to consider these elements in any detail and they are really matters for a detailed assessment in any event. I have made the point regarding the size of certain discrete items challenged given the overall size of the bill earlier in this decision.
93. The only other point canvassed by the parties' counsel in any detail was the appropriateness of seeking to sample the billing entries available to both parties. The claimant says that it asked for information be provided on a spreadsheet so that the figures could be manipulated more easily. It points out that such information had previously been provided and therefore did not accept the defendant's refusal to provide any such spreadsheets was justified. The defendant challenged the alleged difficulty of manipulating the data already provided, particularly given the amount of time that this case has taken to get to this stage. If there were any points to be taken then there was plenty of time to have brought those forward.
94. It did not seem to me to be a particularly attractive argument for the defendant to say that exporting data to a spreadsheet would involve a disproportionate amount of time in dealing with write-offs et cetera in order to marry the information to the invoices actually rendered. To the extent that there is further time recorded on the sheets, it may well form part of the breakdowns provided in any event so that they may bolster the sums claimed in any event. It seems to me that the claimant could hardly complain if the time recording was simply downloaded onto a spreadsheet with the covering comment that no such tailoring had taken place given that the defendant was unlikely to recover any costs for so doing. In my experience both bespoke and generic case management software in solicitors' firms can easily export time recording information into a spreadsheet form.
95. I do not therefore criticise the claimant's sampling approach in respect of bills of this size. Nor do I think that it is inappropriate to choose examples from the so-called "uncontested" bills as demonstrating potential matters of concern in the contested bills. For the reasons I have given regarding the size of the bills generally, it seems to me to be a fairly low hurdle to demonstrate specific billing issues may amount to a special circumstance in this case.
(7) The defendant's sustained attempts to avoid scrutiny of their charges
96. This Solicitors Act application has already been to the Court of Appeal on the question of whether or not the proceedings should be held in private. The need for privacy is to prevent the witness statements (and the documents exhibited to them) being discussed in public where the SFO or any other interested body could hear the allegations made by the defendant against the claimant. The defendant says that it needs to rely upon such documentation to defend the allegations made by Mr Ehrensberger on behalf of the claimant in his first witness statement, particularly in the final paragraphs.
97. Mr Williams sought to distinguish between the penultimate and pre-penultimate paragraphs of Mr Ehrenberger's witness statement which seek to summarise why the claimant seeks permission for the assessment of the defendant's invoices. In his view, the pre-penultimate paragraph (number 82) was the sort of paragraph regularly seen in Solicitors Act assessments which alleges gross overcharging and costs that were otherwise unreasonably incurred. He accepted that the penultimate paragraph (number 83) went further than it needed to in relation to the Solicitors Act proceedings. The allegations made in that paragraph, together with various other references to matters involving the conduct of the defendant, were not being pursued in these proceedings. To the extent that they would be pursued, they were matters for hearing elsewhere.
98. Mr Browne indicated that he and his clients had come to this hearing in the expectation of having to meet the serious allegations made in paragraph 83 of Mr Ehrensberger's witness statement and indeed matters referred to elsewhere in his statement. Mr Williams' concession that those matters were not being pursued in these proceedings meant that much of the evidence on which the defendant relied was no longer required.
99. It is apparent from the witness statements and the fact that matters reached the Court of Appeal simply on the method of hearing the application that matters have become very heated. I do not think there is any benefit in me intervening at this juncture on the matters that have been raised at anything other than a high level. It seems to me in principle that the parties' conduct in Solicitors Act proceedings can be relevant. Regular examples given for special circumstances in the commentaries are that either the solicitor has agreed to a detailed assessment of his charges or conversely has put pressure on the client not to seek an assessment. In either case it is the solicitor's conduct that is said to amount to a special circumstance.
100. In my view, the defendant's conduct of these proceedings would amount to a special circumstance in that they call for an explanation. It is not unusual at all for the client to allege that there has been overcharging by its solicitors. Nor is it unusual for allegations of a quasi professional negligence nature to be raised. Whilst the allegations made in paragraph 83 appear to be drafted more in the terms of a litigant in person than a represented party, in my view they would not have come as any particular surprise to the experienced legal team representing the defendant. The allegations made against professional people are clearly serious ones but I do not see how they could possibly have been heard within the context of a Solicitors Act assessment and I would have expected that point to be clear to the defendant. Therefore, whilst Mr Browne may be right in that he and his clients attended the special circumstances hearing prepared to deal with such points, I do not think that they would have expected that to be likely to be necessary. In any event, the question of putting confidential information into the public domain in witness statements and their exhibits in circumstances where third parties were clearly interested in that information is, on the face of it, contrary to the case of Nationwide Building Society versus Various Solicitors [1999] PN LR 52 and as such would call for an explanation.
101. In my view, some of both counsel's submissions on this point were aimed as much at the costs of these proceedings themselves as to the substantive matter raised by Mr Williams of whether or not conduct in these proceedings could amount to a special circumstance. I presume that the costs of the first and second appeals have been dealt with separately, at least in terms of costs orders having been made. In the circumstances, I do not think that I need to consider this in any more detail, nor am I likely to be assisted by the parties continuing to place it at the front of the assessment. To the extent that it affects the costs of the detailed assessment proceedings themselves, then obviously the parties will need to address such matters at the relevant time.
102. I think it would be helpful to summarise my decisions regarding whether special circumstances exist in respect of factors two to seven in Mr Williams' list. The only one which does not amount to a special circumstance is the existence of other bills being assessed (factor 3). The peculiarities of the solicitor client relationship here making Solicitors Act applications unrealistic (4) combined with the defendant's response to any challenges (5) amounts to a special circumstance in my view. So too does the defendant's approach to these proceedings (7). The billing irregularities (6) would amount to a special circumstance when viewed through the magnifying prism of the size of the bills (2).
Next steps
103. Having found that special circumstances exist for the relevant bills to be assessed, a timetable of directions needs to be put in place both for these invoices and the uncontested invoices. If the parties are unable to agree those directions or an attendance is desired to deal with consequential matters then the parties should inform my clerk and provide a time estimate together with some agreed dates on which all relevant counsel can attend. There is no need to attend the handing down of this judgment and the time for any application for permission to appeal would extend to the separate hearing.
104. If there are any passages which the parties would wish to be redacted in any manner for the reasons canvassed at the hearing, these should be mentioned by counsel when providing a list of errata. It may be that an attendance would be required if there is any controversy in respect of any such redactions. If so, the handing down would be delayed until that attendance could be arranged.
