| COSTS — Detailed assessment — Estimate of costs — Contract of retainer — Margin above estimates — Whether solicitor bound by costs estimate supplied to client — Whether rule as to addition of a margin to estimate
Mastercigars Direct Ltd v Withers LLP [2007] EWHC 2733 (Ch)
Ch D: Morgan J: 23 November 2007
A solicitors’ costs estimate was relevant on a detailed assessment of costs as a useful yardstick, by which the reasonableness of costs could be measured, and on the issue of reliance by a client on that estimate. It was not correct that unless a client was notified of the further sums payable, preferably before they were incurred, the solicitor would be unable to recover costs in excess of the estimated amount.
Morgan J so held in the Chancery Division when allowing an appeal by the defendant, Withers LLP, from, inter alia, an order of 25 April 2007 of Costs Judge Rogers that the defendant was bound by its costs estimate given to the claimant and could not recover costs in excess of that estimated amount. The claimant had instructed the defendant solicitors to act on its behalf in a trade mark dispute. The defendant had supplied a costs estimate which it had updated from time to time. The claimant issued a Part 8 claim for an order for the delivery of the bill of costs and an order for the detailed assessment of that bill, claiming that the defendants’ invoices were for a figure substantially in excess of its first estimate. A detailed assessment was ordered of some of the defendant’s bills.
MORGAN J said that the contractual position was that solicitors were entitled to a reasonable fee, pursuant to s 15 of the Supply of Goods and Services Act 1982, and in the instant case in respect of certain bills that fee was to be the subject of a detailed assessment. On a detailed assessment, the relevance of an estimate was as a useful yardstick, by which the reasonableness of costs could be measured, and in respect of any case raised by a client as to reliance on the estimate. It was not the case that, unless a client was notified of the further sums payable, preferably before they were incurred, then the solicitor would be unable to recover costs in excess of the estimated amount. The decisions of the Court of Appeal in Leigh v Michelin Tyre plc [2004] 1 WLR 846 and Lahey v Pirelli Tyres Ltd [2007] 1 WLR 998 did not give a solicitor any kind of automatic entitlement to add a margin to an estimate or allow a client to cap his liability at the estimate plus a margin. However, a margin might offer something useful where an excess of the final bill over the estimate warranted an explanation and the court was required to exercise its judgment as to what figure could properly be added to an estimate so as not to exceed a sum that it would be reasonable to expect a client to pay.
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