Candey Limited v Stephen Finnan
[2023] EWHC 3261 (SCCO)
Amanda Kenton v Slee Blackwell Plc
19 October 2023
[2023] EWHC 2613 (SCCO)
Senior Courts Costs Office
A client's lawyer gave a really low estimate for their fees. The actual fees were much, much higher. The judge decided the client only needed to pay what the original (low) estimate was, because the lawyer didn't explain the real costs well enough and the client relied on the low estimate when agreeing to the case.
Key Facts
- •Claimant engaged Defendant solicitors for a professional negligence claim against ABC solicitors.
- •The negligence claim arose from ABC's handling of a private prosecution that was ultimately discontinued and resulted in a wasted costs order against the Claimant.
- •A Conditional Fee Agreement (CFA) was entered into with a success fee of 90% if the claim concluded at trial, or 80% if settled beforehand.
- •The CFA included estimated costs ranging from £5,000-£20,000 if settled before trial, and £30,000-£50,000 if proceeding to trial.
- •The claim settled via mediation for £295,000 plus assessed costs.
- •Defendant billed Claimant £342,738.60, significantly exceeding the initial estimates.
- •Detailed assessment focused on profit costs and success fee.
- •Claimant argued that the initial cost estimates were misleading and relied upon, leading to her incurring excessive costs.
Legal Principles
In cases where a solicitor provides an estimate that is later exceeded, the court considers the estimate a factor in assessing reasonableness, but not necessarily a binding limit.
Mastercigars Direct Ltd v Withers LLP [2007] EWHC 2733 (Ch)
Client reliance on the estimate is an important factor in determining the appropriate cost reduction.
Leigh v Michelin Tyre Plc [2004] 1WLR 846; Garbutt v Edwards [2006] 1WLR 2907
The court assesses whether the client relied on the estimate and how that reliance impacted their actions. Detriment need not be proven, but the opportunity to act differently is relevant.
Mastercigars (second appeal) [2009] 3 Costs LR 393
A modest cost excess requires little explanation, while a substantial excess demands detailed justification.
Mastercigars (first appeal)
Costs are presumed to be reasonably incurred and reasonable in amount if they were expressly or impliedly approved by the client (informed approval required).
CPR 46.9(3)
When considering percentage increases in CFAs, the court considers all relevant factors as they reasonably appeared to the solicitor when the agreement was made.
CPR 46.9(4)
Outcomes
The reasonable amount for the Claimant to pay in profit costs is £40,000 plus VAT.
The initial estimate was deemed hopelessly unrealistic, and the Claimant relied on it to her detriment. The court considered the lack of proper cost information provided by the Defendant.
The reasonable success fee is 50% of the basic charges (£20,000 plus VAT).
The Defendant's risk assessment was deemed unreasonable and didn't justify the staged success fees of 80% and 90%. The Claimant's approval wasn't informed, and a more realistic assessment would have yielded a 50% success fee.
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