The Supreme Court Costs Office
No.37 of 2004
Silvia Kundruth v Harry Kwatia & Gooding
9 December 2004
Mr Justice Beatson (Sitting with Assessors)
The defendant solicitors represented the claimant in contested bankruptcy proceedings, and sent her a letter saying that unless she gave instructions by 12 July 2002 they would no longer be in a position to defend the action on her behalf. She had been out of the country during June, and was away again when that letter arrived. However, as it was in fax form a friend of hers saw it, and informed the defendants that she was away.
Accordingly, on 15 July 2002, without expressly terminating the retainer, the defendants prepared a bill in the sum of £23,746.05, which was faxed to her on 18 July.
On her return to the country she replied on 14 August 2002, part of her letter reading:
'I am in receipt of your letter of 18 July enclosing your bill for the sum of £23,746.05 which I do not accept. I would ask pursuant to Section 70, 70(1) and 70(2) of the Solicitors Act that you apply if you want the bill to be taxed and certificated.'
On 19 August the solicitors replied, and part of their letter read:
'It is a matter for you to apply to the Supreme Court Costs Office for an order that this bill be assessed. Since more than one month has elapsed any order made by the court to assess the bill will be conditional upon you paying into court 40% of the bill.'
The Costs Judge who heard the application described the part of the letter quoted above as 'a complete misrepresentation' and 'inaccurate'. He further stated that it might well have misled the claimant into believing that she could only get the bill assessed if she paid 40%. However the Costs Judge did not make any finding as to whether, at that time, the retainer had been formally terminated by the solicitors.
Thereafter nothing happened at all, until 14 March 2003, eight months after delivery of the bill when a statutory demand was prepared, though it seems it was not actually served on her until 23 June 2003, which is of course 11 months after delivery of the bill. The claimant obtained pro bono assistance, and this took the form of detailed draft points of dispute, which were primarily concerned with whether the retainer had been lawfully terminated, the validity of the statutory demand and the lawfulness of the bankruptcy proceedings, but it did not address the requirement laid down in Section 70(3) Solicitors Act 1974 of advancing 'special circumstances' as to why an order should be made for detailed assessment.
The Costs Judge concluded that there were no special circumstances advanced, and therefore refused to direct detailed assessment of the bill. The claimant thereupon appealed.
The Judge concluded that the Master was in error in holding that there were no special circumstances. Firstly, and most importantly, he should have concluded that the letter of 19 August from which I have quoted amounted to undue pressure on the claimant, which might have deterred her from seeking a detailed assessment, and such undue pressure could itself amount, on the authorities, to 'special circumstances'. The Judge also stated that the Costs Judge was wrong not to make an express finding as to the status of the retainer as at the time of the bill, this being important because it was conceded that there was no client care letter sent by the solicitors to the claimant at any time.
The Judge acknowledged that a considerable period of time had occurred between August 2002 and the institution of bankruptcy proceedings on 21 October 2003, which was still, even on appeal, not explained. Nevertheless, following the decision in Arrowfield Service Ltd v BP Collins (A Firm) [2003] EWHC 830 (Ch), in the absence of evidence of prejudice to the defendants, the Judge felt that he should exercise his discretion to direct detailed assessment of the bill, which he duly did.