Case 62 Adams. Al Malik

Transcription

1 985 Case 62 Adams v Al Malik [2014] 6 Costs LR 985 Neutral Citation Number: [2003] EWHC 3232 (QB) High Court of Justice, Queen s Bench Division 4 December 2003 Before: Fulford J Headnote Before a solicitor can rely on the principle of natural break as a ground for delivering an interim statute bill that is capable of being charged and assessed separately, he must make it known to the client what rights are being negotiated and dispensed with. It must be made plain to the client that the purpose of sending the bill is that it is to be treated as a complete self-contained bill of costs to date. Here the solicitor on an application for permission to appeal had not crossed the threshold under CPR 52.3, and permission to appeal against the Master s ruling that the bills were interim on account bills and not statute bills would be refused. Editors note: this judgment was delivered in 2003 on an application for permission to appeal. Accordingly it must be cited with care, but it is included as it is frequently referred to on applications for assessment under the Solicitors Act Cases Cited Chamberlain v Boodle and King [1982] 1 WLR 1443

2 986 Adams v Al Malik [2014] 6 Davidsons (a Firm) v Jones-Fenleigh (1980) Costs LR (Core) 70; [1980] 124 SJ 204 Ladd v Marshall [1954] 1 WLR 1489 Penningtons (a Firm) v Rabia Abedi OBENI 1999/1169/A2, 23 March 2003 Judgment 1. FULFORD J: The applicant, Mr Nigel Adams, practising as Nigel Adams and Co, was the solicitor for Al Malik Carpets PVT Ltd, the respondents, between October or November 2000 to September The applicant was instructed to obtain a restraining order against Al Malik Carpets partner, Sharafi and Co. 2. In essence it was suggested that Sharafi and Co were acting in such a way as to cause substantial damage to the respondent s lawful business. During the relevant period the applicant rendered eight bills to the respondent, as rehearsed below, although it needs to be stressed that only the second and the fourth are of central relevance to the application before me. The First Invoice 3. This was dated 18 December 2000 and the period covered was not specified. The profit costs were and the total was 900. This was said to be deliberately limited to reflect the amount already paid on account. The application for detailed assessment of this bill was withdrawn by consent. The Second Invoice 4. This invoice was dated 15 February 2001 and again the period covered was not specified, although it included work since the period spanned by the first invoice up to 15 December The profit costs were 8, and the total was 17, This invoice was not sent until May 10 and it was accompanied by a letter. The final paragraph set out the following: 47 hours time spent by Mr Nigel 185 per hour equals 8, less 10% discount, giving agreed fees of 7, plus VAT

3 Costs LR 985 Adams v Al Malik 987 at 1, Five hours of time spent by Mr 160 per hour equals 800 less 10%, gives an agreed fee of 720 plus VAT at 126. The Third Invoice 5. This was dated 10 May 2001 and the specified period was 15 December 2000 to 15 February The profit costs were 2,190 and the total was 4, The application for detailed assessment of this bill was withdrawn. The Fourth Invoice 6. This was dated 10 May 2001 and the period covered was 15 February 2001 to 5 May The profit costs were 3,515 and the total was 5, The Fifth Invoice 7. This was dated 26 September 2001 and the period covered was 15 February 2001 to 30 March The profit costs were 2, and the total was 2, The Sixth Invoice 8. This was dated 26 September 2001 and the period covered was 2 April 2001 to 31 May The profit costs were 4, and the total was 7, The Seventh Invoice 9. This was dated 26 September 2001 and the period covered was 1 June 2001 to 1 August The profit costs were 5, and the total was 10, The Eighth Invoice 10. This was dated 26 September 2001 and the period covered was 1 August 2001 to 6 September The profit costs were 4,190 and the total was 5, The first invoice was sent with a letter dated 18 December As I have already indicated, the application for detailed assessment for this invoice was withdrawn with consent. The second, third and fourth invoices were sent with a letter dated 10 May The second and fourth invoices are the subject matter of the hearing before me and the application for detailed assessment of the third invoice was withdrawn with consent. 12. The last four invoices were sent with a letter dated 27 September

4 988 Adams v Al Malik [2014] The application for detailed assessment was made within a month of the delivery of the invoices and accordingly the respondent had an absolute right to detailed assessment (see s 70(1) of the Solicitors Act 1974). 13. The heart of the issue between the parties before the costs judge, Master Seager Berry, can be summarised as follows: the respondent maintained that the second and fourth invoices were interim bills whilst the applicant argued that they were final statute bills. The respondent s case was that the first three invoices were no more than requests for payment on account and that in making payment he had not waived any right for the bills to be assessed. Mr Malik maintained that it was his practice to pay bills because it helped the VAT accounts and enabled his accountant to allocate payments to the correct amount and that he had never been told that after payment he would not be entitled to challenge the bill. 14. The applicant submitted that there was a binding agreement to pay the first three invoices reached during discussions at a lunch on 15 February It was his case that at that meeting the second invoice was expressly negotiated, discounted and agreed. The applicant observes that once it was delivered the respondent paid in full. Further, the applicant relies on the letter of 22 June 2001, in which Mr Malik stated as follows: In my last meeting with yourself when the issue was discussed I had agreed the amounts that have already been paid to you and had also expressed the desire that this covers the period until the next CMC. 15. I note in passing that the learned master reminded himself of the submissions based on this letter (see para 90) and it is clear that he fully understood the arguments that Mr Adams was developing as a result, namely, that Mr Malik had agreed the fees (see the concluding sentence of para 90). 16. As regards the fourth invoice, Mr Adams maintains it was subsequently agreed and payment in full was promised, expressly or by inference, and payment was made of most of it. The applicant submits also that a binding agreement should be inferred from the conduct of the parties (see Penningtons (a Firm) v Rabia Abedi OBENI 1999/1169/A2, judgment 23 March 2003), and because of the effect of natural breaks. However, it should be stressed that many other issues were raised and considered.

5 Costs LR 985 Adams v Al Malik The hearing before the master commenced on 19 June It was adjourned until 20 June 2002 and final submissions by the parties were submitted in writing thereafter. The judgment was handed down on 19 December 2002 and permission to appeal was refused in a short extempore judgment given on the same day. Both Mr Adams and Mr Malik gave evidence and they were extensively cross-examined. 18. Certain key issues emerging from a very substantial body of facts should be emphasised: (a) Mr Adams did not send Mr Malik a letter setting out the terms of retainer dealing with issues such as the billing arrangement, recoverability of costs in the event that his company was successful and his hourly rate, although he did provide an indication of future costs in the final paragraph of his letter sent on November 1. The hourly rates were set out in a letter dated December 18. The learned master noted there is no obligation in the rules imposing on a solicitor the obligation to explain the difference between an interim statute bill and an interim payment on account but the importance of providing a retainer letter was a recommendation set out in para 5(h) of the Solicitors Costs Information and Client Care Code (see p. 268 of the Guide to the Professional Conduct of Solicitors, 8th edition 1999). 19. (b) Mr Adams and Mr Malik met for lunch on February 15 in a restaurant near Mr Adams office. Mr Adams made a manuscript note about the fees discussed. Contrary to the evidence of Mr Adams, Mr Malik had no recollection of a statement to the effect either that an agreement had been reached in full and final settlement or that he had a right to a detailed assessment of the bill. 20. (c) As regards the fourth invoice, Mr Malik said that he disputed it because, amongst other things, it overlapped with the period the third invoice should have covered, namely, the period between the meeting on February 15 and the case management conference on 10 April He maintained the fourth invoice should have started from April 10 and that he had paid Mr Adams 5,000 because he asked for it. His evidence was that he would have paid whatever figure was claimed because the request came from his solicitor and he had not been able to make an objective assessment. He understood it was not necessary to challenge the bill at that stage and, moreover, payment of the bill did not mean he necessarily agreed with it. 21. The judgment of the learned master is detailed and covers 129 paragraphs. This was not least because of the extensive evidence and

6 990 Adams v Al Malik [2014] 6 submissions that he was called on to consider. The learned master concluded that Mr Adams never explained to Mr Malik the difference between a statute bill, an interim statute bill and a bill or payment on account (see para 104) nor had he explained to Mr Malik his rights to detailed assessment (see para 106). 22. Against the background that Mr Adams did not make a contemporaneous note of the meeting on February 15 (this was agreed) the learned master concluded that he did not focus on the details of the meeting until he prepared his statement in January 2002 (see para 106). Accordingly, he concluded that Mr Adams was mistaken in believing that an agreement had been reached. 23. In the event he concluded, having extensively reviewed the evidence set out before him, that no agreement was reached orally or in writing that bills rendered were to be treated as interim statute bills (see para 106). He accepted Mr Malik s understanding of the situation in this regard, fortified by the delay on Mr Adams part to send the relevant bill for some three months. To use the words of the learned master: There was no accord and satisfaction at the meeting and no final agreement was reached. 24. Notwithstanding the documentary material relied on by Mr Adams, on all of the evidence this was a conclusion that was open to the learned master and accordingly it was not perverse or without proper foundation. 25. The learned master accepted the submission that the relevant point in time for considering whether the bill had been rendered at a natural break is the date the bill is sent to the client. In those circumstances he found that the date of the second invoice was artificial in that it coincided with the date of the lunch meeting. The bill itself was not prepared until early May and was not sent until 10 May 2001 and the period covered by the second bill was not clearly identified. Overall, the learned master was unable to accept that February 15 was a natural break (see paras 112 and 114). The period covered by the fourth bill was from the date of the lunch meeting until a point in time when Mr Malik asked for the billing to be brought up to date. 26. The learned costs judge concluded that a solicitor could not choose any point in time to send a bill and designate that point as

7 Costs LR 985 Adams v Al Malik 991 constituting a natural break. Instead it must coincide with a natural break in the subject matter of the work, in this case the litigation. He found there were no natural breaks in either case and that the bills were sent without any reference to what was happening in the litigation. Further, the learned master reminded himself that there was no retainer letter providing for statute bills or interim statute bills. 27. The learned master referred to the need for bills to contain sufficient information so that they identify the matter and the period to which they relate (see para 1407 of the Guide to the Professional Conduct of Solicitors). There was an overlap between the periods covered by these bills and it was difficult to understand the date from which the second bill ran and, although it had certain hallmarks of a statute bill, it was also deficient in this respect (see para 118). 28. I emphasise that the learned master rejected both the evidence and the submission that if the second bill was an interim bill it had been converted into a statutory interim bill through agreement. In particular, he did not accept that the terms of the second bill sufficiently made it clear that it was intended to be a self-contained interim statute bill. 29. As regards the fourth bill, the learned master paid heed to the fact that Mr Malik sent a cheque for 13, that was close to the net costs due under the third and fourth bills, namely 13, However, on this he accepted Mr Malik s evidence that he placed no significance on the reference in the second bill to the costs having been agreed and that he considered the bills to be requests for payment on account and that he preferred to pay the bill in order to keep his VAT records up to date. 30. In particular, I also emphasise at this stage because of its relevance to the grounds of appeal that the learned master found that it was unnecessary to determine whether the fourth bill was an interim statute bill or a request for payment on account because it had not been paid in full. However, the court rejected the evidence and the submission that in agreeing to send a cheque for 5, Mr Malik was intending to accept this was an interim statute bill. On the evidence the learned master accepted that the fourth bill was a request for payment on account. 31. Critically, the learned master concluded that, even if the second and fourth bills were interim statute bills, special circumstances applied such as to justify detailed assessment. In particular he accepted

8 992 Adams v Al Malik [2014] 6 the following matters as being determinative of this issue: (a) the lack of any discussion or explanation setting out the difference between a statute bill, an interim statute bill or a bill on account, (b) the lack of any advice to Mr Malik as to his right to a detailed assessment of the bills or the fact that payment of them could affect his right to a later detailed assessment, (c) the unresolved issues over the second bill, (d) the pressure that was brought to bear on Mr Malik because of Mr Adams cash flow problems, and the short period of time, between five to ten minutes over lunch, when the two bills (and including the second) were discussed, and (e) the disparity between the original estimate and the sum ultimately billed, particularly in light of the fact that no subsequent hearing took place. 32. Mr Adams written submissions in support of the application for permission to appeal run to 99 pages. There is a skeleton argument of 19 pages in addition to the amended appellant s notice and two new witness statements, Mr Adams seventh and eighth statements. The court has been provided with five lever arch files. Mr Adams made oral submissions in addition to that written material. 33. I entirely concur with the view of the learned master that the submissions of the applicant are not only extremely prolix, they are also disproportionate to the issues before the court. I fear it has been necessary to read a considerable amount of unnecessary material in order to understand the real issues raised by the applicant in support of this application. The First Issue 34. The applicant seeks to introduce evidence that in November 2001 Collier Bristow, the applicant s new solicitors, requested a fee note of all of counsel s outstanding fees and that he received payment on 15 February 2002 in the sum of 6,000. I am told that this was not disclosed at any time prior to judgment and that it is relevant because the respondent was able to argue that the fourth invoice was not paid in full because the balance of counsel s fees had not been paid, whilst the true position was that they had been paid four months before the hearing. 35. The applicant submits that in the event he was deprived of an opportunity to attack Mr Malik s memory and/or honesty because of this point and, further, he was deprived from running a more focused s 70(3) argument to the effect that once an invoice has been paid in full

9 Costs LR 985 Adams v Al Malik 993 the client can only obtain an order for detailed assessment if he can show special circumstances. 36. The insurmountable problem for this proposed ground of appeal is that the learned master concluded on grounds that were essentially not dependent on a resolution of the factual differences between the parties that, even if he was wrong in his conclusion that he did not have to decide whether the fourth bill was an interim statute bill or a request for payment on account because it had not been paid in full, special circumstances applied such as to justify detailed assessment. Accordingly, even if the true position as regards counsel s fees had been revealed and if the applicant had been given this further potential line of cross-examination the overall outcome of the case would inevitably have been the same. 37. I have borne in mind that in the event of permission being granted it may be possible for Mr Adams to suggest a deliberate concealment of this fact by Mr Malik and/or his lawyers, although there is no evidence of bad faith in this regard apart from the nondisclosure itself. However, the critical factor is that the arguments in this case for finding special reasons were strong and they were freestanding of the factual disputes between the parties. In those circumstances this material does not found a supportable reason for granting permission either to call the evidence or to appeal because the outcome, in the light of the learned master s overall conclusions, will be the same. Accordingly, this fails the relevant part of the Ladd and Marshall test ([1954] 1 WLR 1489). The Second Issue 38. The applicant wishes to introduce evidence that is set out in his seventh and eighth witness statements and he further wishes to crossexamine Mr Malik on some of these matters. This evidence is as follows: (a) evidence concerning the possibility that Mr Malik misled the court over his availability for the adjourned hearing of the trial of this action in This centres in part on a letter dated 28 March 2002 in which Cooke Matheson stated that Mr Malik would be returning to Pakistan on April 11 and would not be back in the United Kingdom until June 2002, as opposed to representations made by Mr Hender at the hearing on April 4 when he said that Mr Malik was returning to Pakistan on April 10. This was raised by Mr Hender, together with

10 994 Adams v Al Malik [2014] 6 other linked matters, and they were the subject of dispute by Mr Adams, who wrote to Cooke Matheson on 17 June 2002 highlighting, amongst other things, the fixing of the main action during May (b) The outcome of the main hearing of the action, (c) the policy of the Supreme Court Costs Office in exercising its discretion under s 70 of the Solicitors Act 1974, (d) the applicant s involvement in four different criminal cases over the last eight years, including as a prosecution witness in three of them, and (e) what is said to be the Court of Appeal s preference for the applicant s recollection as to what had occurred at one or more hearings over that of senior junior counsel and a partner in a firm of solicitors in 2001, and other similar evidence. 41. I turn to the proposed introduction of evidence regarding Mr Malik s absence from the country. The short answer to this application is that this material should have been deployed if it was sufficiently relevant and material, which I doubt, during the hearing of 19 and 20 June All of the main matters relating to this point were set out in a letter from the applicant to Cooke Matheson, dated 17 June The applicant failed to develop this point before the learned master and he cannot seek to turn a proposed appeal into a rehearing so that he may run his case differently second time around, deploying material that was available to him at the original trial. Given the thorough way he presented his case before the learned master, ill health or forgetfulness are both insufficient bases for permitting this evidence to be called at this stage. 42. Focusing next on the decision in the background litigation, the evidence that the applicant seeks to introduce is a conversation that he had with a representative of Quastells after the hearing in May This material, if admissible, was available to the applicant in June 2002 since it could have been obtained with reasonable diligence. I note that the judgment of the court is not relied on but instead the hearsay account contained in the eighth witness statement. The issues that were contested in the background litigation are so removed from the matters raised before the master as to be wholly irrelevant. Accordingly, no persuasive argument in this regard has been advanced. 43. As regards the policy of the Supreme Court, this again should have been researched and introduced by Mr Adams during the original hearing if it was sufficiently relevant and admissible. In my judgment, the applicant cannot seek to use new material at this juncture that

11 Costs LR 985 Adams v Al Malik 995 could have been researched and put before the original tribunal with reasonable diligence. Mr Adams appears to be seeking to introduce as part of this proposed appeal the result of cases with which he was involved in 1996 and 1997 and at other times. Reading from page 9 of the relevant affidavit onwards, the applicant sets out his memory as to how these other cases were dealt with, together with more recently available hearsay evidence from an unnamed costs draftsman relating to certain purported decisions of the learned master. 44. There is no justification for introducing Mr Adams past cases at this stage, even if they have any bearing on the hearing before the learned master, and the hearsay evidence of the unnamed costs draftsman, even if not available at the original hearing, is imprecise and almost undoubtedly inadmissible. In any event in its current form it is without any weight at all. The suggested introduction of the applicant s prior history as a witness and what is said to have been the Court of Appeal s reaction to his capacity to recollect matters relating to other cases is simply without any proper evidential foundation. 45. There is no rule of evidence that allows a party to enhance the evidence of a witness by introducing material to the effect that the witness has been believed on other wholly unrelated occasions. In any event the true reaction of other courts to Mr Adams is not a matter for him to assess but for them and that evidence is, of course, absent. The only evidence in support of this part of the application is the evidence of Mr Adams setting out his understanding of the reaction of the various courts to his evidence. However, as I say, on first principles this application fails. The Third Issue 46. It is suggested that the learned master misapplied the law as regards natural breaks. This assertion is without any proper foundation. Notwithstanding the extensive written submissions by the applicant, the law is summarised at para 306 of Cordery as follows: In Chamberlain v Boodle and King Lord Denning said: It is a question of fact whether there are natural breaks in the work done by a solicitor so that each portion of it can and should be treated as a separate and distinct part in itself capable of and rightly being charged separately and taxed separately. 47. And later:

12 996 Adams v Al Malik [2014] 6 The Councillor of the Law Society s advice is not to rely on the natural break principle as a ground for delivering a bill except in the clearest cases. 48. This was the principle applied by the learned master and as a matter of discretion his approach and conclusions are not open to sustainable attack. In particular the party must know what rights are being negotiated and dispensed with in the sense that the solicitor must make it plain to the client that the purpose of sending the bill at that time is that it is to be treated as a complete self-contained bill of costs to date (see the judgment of Roskill LJ in Davidsons v Jones-Fenleigh [1980] 124 SJ 204). 49. Mr Adams complains that the learned master failed to pay sufficient accord to the case of Penningtons (a Firm) (see para 16 above). In that case the Court of Appeal essentially determined firstly a natural break did not simply mean a date thought by the solicitor to be convenient and secondly agreements to pay by way of interim bills can be inferred. The learned master clearly considered the possibility of the court inferring that an agreement had been reached. He left the issue of natural breaks (at para 115) by adding: There was no conduct expressly or by implication that there were to be self-contained bills for the period. 50. The learned master returned to the subject of implied understandings (at para 121). In my judgment, there can be no doubt but that the learned master clearly understood the various routes to a conclusion that there was, in a given case, an interim statute bill. As the courts have emphasised time and again, it is a matter of assessing the evidence in the particular case. The Fourth Issue 51. It is submitted that the learned master misapplied and misdirected himself as to the facts. I have summarised some of the key factual matters in this case in detail above to demonstrate that the costs judge approached the issues rehearsed before him wholly properly. The evidence was investigated exhaustively, and in a lengthy judgment wholly sustainable decisions were set out and explained. The learned master addressed the absence of a retainer letter and equitable estoppel and dealt with them appropriately. In his submissions the applicant has attempted to rerun many of the main arguments put before the master.

13 Costs LR 985 Adams v Al Malik 997 He can only rely on such arguments if the approach and decision of the master was unsustainable which, in my judgment, they were not. 52. I have read and considered each of the many matters raised by Mr Adams but I have confined myself in this judgment to addressing those arguments that potentially raised an argument of substance. In the event this application is without merit. The threshold for granting permission has not been crossed that there is a real prospect of success or other compelling reason (see CPR 52.3) and I have no hesitation in those circumstances in refusing permission to appeal. Nigel Adams appeared in person.