The Supreme Court decided when a solicitor’s bill has been “paid” for the time limits in section 70 of the Solicitors Act 1974. Keeping money from a client’s compensation is not payment merely because the client earlier agreed that fees could be deducted and the solicitor later delivered a bill. Payment requires agreement to the particular sum taken for that bill. The Court allowed Mr Menzies’s appeal and restored an order that the bill be assessed.
Mr Menzies retained Oakwood under a conditional fee agreement after a road accident. The agreement permitted the firm to deduct charges from his damages and capped his liability. It did not fix the amount of any eventual bill.
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He accepted a settlement of £275,000, subject to recovery of state benefits, plus reasonable costs. The solicitors held part of the damages pending agreement on the costs payable by the other side.
The firm rendered an interim bill, settled the costs payable by the other side, and delivered its final bill in July 2019. It treated a deduction from the money it held as payment. Mr Menzies had not agreed the amount of that final bill.
The assessment time limits
Section 70 of the Solicitors Act 1974 lets the person charged with a solicitor’s bill ask the court to assess it. Assessment means deciding whether the costs were reasonably incurred and reasonable in amount. For one month after delivery there is an unconditional right to assessment, and no action can be started on the bill until it is completed. After that, and until 12 months from delivery, the court may order assessment on such terms as it thinks fit. After 12 months from delivery, an order requires “special circumstances”.
Payment changes the timetable. If the bill has been paid, an application made after the first month but within 12 months of payment also requires special circumstances. Once 12 months have passed from payment, section 70(4) prevents any assessment. The appeal concerned only what counts as that payment.
How the lower courts decided the point
Mr Menzies applied for assessment on 1 April 2021. If the bill had been paid in July 2019, section 70(4) barred the application. The Costs Judge accepted the solicitors’ argument that it had been paid.
Bourne J ordered an assessment. The Court of Appeal reversed him because the retainer already authorised deduction and a final bill had been delivered. The Supreme Court had to decide whether advance authority to make a deduction also established agreement to the amount subsequently charged.
What the Supreme Court required for payment
Lord Hamblen, with whom Lord Briggs, Lord Sales, Lord Leggatt and Lord Richards agreed, preferred the client’s interpretation. “Payment” is not a legal term of art, and its meaning depends on context. This was not an agreed price, fixed fee or formula fixing the amount. The only formula was a cap. The sum was one set out in a delivered bill whose reasonableness the client could ask the court to examine.
Ordinarily, a client pays a bill by transferring money after receiving it, thereby accepting the sum charged, or after questioning items and agreeing a figure. Where the solicitor already holds the client’s money, deduction can also be payment, but only if there is likewise agreement to the amount taken for that bill. Treating delivery of the bill itself as payment did not fit the ordinary meaning of payment, because no transfer or deduction need then occur at the moment said to be payment.
The statutory context pointed the same way. Section 70 is concerned with the proper amount of a particular bill. Delivery of a complete, compliant bill is central: it starts the one-month unconditional right and the 12-month period, and no action for costs can be brought before delivery. The scheme envisages payment after delivery, not by delivery. Its purpose is to protect the client from excessive charges. That protection would be reduced if payment could occur before the client could consider the bill and decide whether, and how far, to pay it. The stricter regime after payment makes sense if payment of a particular bill shows acceptance of the sums claimed in it. A general advance authority to deduct does not.
The older cases and modern practice
Earlier decisions distinguished a deduction after settlement of an account from unilateral retention of money by a solicitor. The legislation had continued to use the language of payment against that background. Agreement could be inferred from conduct, but delivery of a bill and general authority to deduct were not enough by themselves.
The solicitors argued that requiring a further agreement would let a difficult client delay payment and would be impractical under modern retainers. Lord Hamblen considered those concerns overstated and, in any event, not a reason to depart from the statute’s meaning. A fixed fee or a formula which actually quantifies costs can be agreed in advance; the formula here only capped them. The settlement-of-account requirement was long established, communication is now easier, and solicitors can agree terms which help show acceptance. A client can insist on assessment in the first month anyway, and a solicitor who succeeds on assessment can claim its costs.
Verdict: The Supreme Court unanimously allowed Mr Menzies’ appeal and restored Bourne J’s order for assessment. Section 70(4) did not bar the application. The Court did not assess the bill or decide whether the charges were reasonable.
