Judgment was handed down this morning by the Supreme Court in Menzies v Oakwood Solicitors Ltd. This case will be of importance to solicitors who deduct payment from a client’s recovered damages and costs.
The Court of Appeal had held that where this happened there need be no ‘settlement of account’ and all that was required was that the client had agreed generally that a solicitor could deduct its payment from sums recovered, following by the rendering of a statutory bill.
The Court of Appeal held that this was sufficient to trigger ‘payment’ under s.70 Solicitors Act 1974 such that the client’s rights for seeking an assessment were more limited and would cease entirely 12 months after delivery of the bill (which completed the ‘payment’). The client’s ‘consent’ to the amount of the bill was not required. All that was required was that the client had given prior consent to the ‘transfer of money’ and not to the specific amount demanded in the bill.
The Supreme Court has unanimously allowed the client’s appeal. The leading judgment is that of Lord Hamblen. The judgment conclusively holds that in order for there to be payment of a solicitor’s bill for the purposes of s.70 Solicitors Act 1974 the client must have received a statutory bill and must have provided agreement to the specific amount of payment sought in the bill. An earlier and general agreement to the solicitor being able to deduct the amount of its bill from damages received does not suffice.
There must be ‘an agreement to the sum taken or to be taken by way of payment of the bill of costs’. There must be a ‘settlement of account’.
The judgment emphasises the need for solicitor to obtain their client’s agreement to the amount of a delivered statutory bill if the solicitor wishes to rely on payment of the bill limiting the client’s ability to challenge the bill at a later date. It further illustrates the importance of solicitors understanding the need for proper billing practices at the conclusion of a case, even where the firm has been able to take payment from recovered damages or costs.
Roger Mallalieu KC, with Gemma McGungle (18 St. John Street), acted for the successful appellant.
Read the full judgment here.
Read Law360’s article here.
