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Wider discretion given to costs judges when assessing solicitors’ costs

Court of Appeal considers 'special circumstances' when departing from one fifth rule for first time

23 November 2015

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Costs judges have a wider discretion when assessing solicitors' costs under the Solicitors Act, the Court of Appeal has confirmed.

Just Costs successfully overturned an appeal concerning section 70 (10) of the Solicitors Act 1974, as the Court of Appeal considered 'special circumstances' for the first time and departed from the default costs of assessment position of the one-fifth rule.

Stone Rowe Brewer solicitors (SRB) instructed Just Costs to recover its legal fees in a number of civil claims.

Just Costs v Stone Rowe Brewer involved the assessment of 15 bills totalling approximately £33,000, with SRB disputing five of the invoices totalling £20,000, citing a repudiatory breach of contract.

However, on the morning of the detailed assessment, SRB withdrew its breach argument. The parties subsequently agreed the total sum of the invoices to the sum of £23,700, a recovery of around 70 per cent.

Despite agreeing the total sum, the parties could not agree the order for the costs assessment and sought a determination from costs judge Master O'Hare.

Section 70 (9) of the Solicitors Act 1974 states a client will pay the costs of an assessment unless the bill is reduced by at least a fifth, in which case the solicitor pays it.

However, section 70 (10) says the costs officer may take into account 'any special circumstances relating to the assessment of a bill, and the court may make such order as respects the costs of the assessment as it may think fit'.

Master O'Hare found that most of the costs had arisen from the repudiatory breach issue, an argument which SRB withdrew. The costs judge awarded Just Costs 70 per cent of its costs of assessment, which reflected reductions concerning smaller aspects of the assessment it did not succeed on.

SRB appealed to the High Court. Allowing the appeal, Mrs Justice Andrews held the master was mistaken in looking at the successes and failures of individual issues when considering who was liable for the costs.

Andrews J adopted a narrower interpretation, stating that the recovery of costs should have been looked at against the aggregate of the invoices. Master O'Hare's decision was overturned and SRB were awarded all of their costs of assessment.

The Court of Appeal, however, held that Andrews J had applied a far too narrow interpretation of 'special circumstances'. Allowing Just Costs's appeal, the court reinstated Master O'Hare's order and awarded Just Costs the costs of both appeals.

In his lead judgment, Lord Justice Sales said: 'The sort of value judgment which is called for in the context of section 70(10) is one which a costs judge as experienced as Master O'Hare is well placed to make.

'When deciding whether "special circumstances" existed, I can see no reason in principle why [Master O'Hare] should not have had regard to the way in which particular issues arose in the proceedings and the outcome achieved in relation to them… The High Court erred in criticising and displacing the evaluative judgment which he made.'

Nick McDonnell, costs lawyer and director at Just Costs, who conducted the case for the firm, said: 'The court has provided guidance that "special circumstances" should not be interpreted narrowly but can be considered as part of the very wide discretion that a judge has when considering what order to make about costs, to include consideration of issues arising from individual invoices on assessment.

'This decision constitutes a resounding success for Just Costs Solicitors in an area that is rapidly gathering momentum in the legal costs arena.'

Matthew Rogers is an editorial assistant at Solicitors Journal matthew.rogers@solicitorsjournal.co.uk

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