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An increase to the hourly rate amounted to special circumstances in this Solicitors Act assessment - Raydens Ltd v Cole [2021] EWHC B14 (Costs) (30 July 2021)

In the case of Raydens Ltd v Cole [2021] EWHC B14 (Costs) (30 July 2021) an increase in hourly rates amounted to special circumstances for a Solicitors Act assessment.

Background

The Claimant solicitors acted for the Defendant in matrimonial proceedings. The Claimant rendered bills totalling £263,426.11 inclusive of VAT over a 5-year period. A letter of claim was served on the Defendant on 18 September 2019 and proceedings were issued for recovery of the costs.

Application for detailed assessment

In the defence to the proceedings, the Defendant confirmed she had requested a full assessment of her costs be carried out. A CCMC took place on 26 October 2020 where District Judge Ayers found that the Defendant was out of time for applying for a detailed assessment unless she could establish special circumstances pursuant to Section 70(3) of the Solicitors Act 1974. The county court proceedings were stayed, and the case was transferred to the SCCO to determine, as a preliminary issue, whether there were special circumstances in this matter.

The Law – Section 70 Solicitors Act 1974

70 (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.

The test applied

Costs Judge Leonard explained the test is whether there is something out of the ordinary course which is sufficient to justify a departure from the time limit otherwise imposed by section 70(3).

Increases in hourly rates

The Claimant’s engagement letter provided for hourly rates to be reviewed yearly at the beginning of April. Increases were made in April 2014 to April 2017 but there were no increases in 2018 and 2019. The hourly rate started at £245 and increased up to £320 an hour (30% increase) for the partner and £100 up to £165 for the junior fee earner (65% increase).

Decision

  • There was quite an exceptional increase in the Claimant’s hourly rates between 2014 and 2015.
  • If there is an explanation to justify the exceptional hourly rate increases, it does not seem to have been provided to the Defendant.
  • The increases call for an explanation.
  • The finding of special circumstances is justified by the “exceptionally large increases in the Claimant’s hourly rates”.
  • Directions for assessment will be provided.

Note

The case only addresses the question of special circumstances to allow a detailed assessment of the costs and does not limit any arguments that the parties wish to put forward on assessment.

The Claimant’s solicitors intend to appeal the decision.

Should you have any queries in relation to legal costs, please do contact our specialists and award-winning team on 01733 350 880 or by email at mail@aandmbacon.co.uk.

Published 16 August 2021

Author – Nicola Magrath

 

 

 

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