Home > Ainsworth v Stewarts Law – the Court of Appeal gives guidance on solicitor/client costs disputes

Ainsworth v Stewarts Law – the Court of Appeal gives guidance on solicitor/client costs disputes

19th February 2020

Ainsworth v Stewarts Law – the Court of Appeal gives guidance on solicitor/client costs disputes

Robin Dunne, who successfully represented Stewarts Law in the Court of Appeal in Ainsworth v Stewarts Law LLP looks at the judgment and the implications of the decision.

This decision is important for any professional involved in solicitor and client disputes.   The judgment is another example of the senior courts being willing to uphold robust case management decisions of first instance judges.  Here the court held that “the judge was entitled to take the course he did which was well within the ambit of the proper exercise of his discretion.”

In addition, the court gave general guidance regarding points of dispute that will be relevant not only to these cases but also to between the parties detailed assessments.

This was a second  appeal from the decision of the senior costs judge to dismiss points of dispute relating to document time as a result of their being vague, generic and not drafted in such a way as to allow the receiving party or the court to identify the nature of the objections.

The judge’s decision was upheld by the High Court and, in a judgment handed down on 19th February, by the Court of Appeal (Lewison LJ, Peter Jackson LJ and Asplin LJ).

The judgment, given by Asplin LJ (with whom all the court agreed) set out what the appeal was concerned with:

“It raises the question of how detailed points of dispute must be on a solicitor and own client assessment, particularly where a challenge is made to all of the items in an invoice on a number of grounds.”

Background:

Mr. Ainsworth was involved in a highly acrimonious dispute regarding his assets with his ex-partner.   Having previously instructed  another firm of solicitors, he transferred instructions to Stewarts Law.

Bills were delivered to him regularly during the retainer.  Once the retainer was terminated, he made an application to have the fees assessed under part III of the Solicitors Act 1974.

As is usual in such cases, the court gave directions which provided for inspection of Stewarts’ files and the service of points of dispute and replies.

Mr. Ainsworth’s costs draftsman attended the firm’s office for the purpose of inspection on 15 March 2018,  The next day he acknowledged by email that he had  “got everything [he] needed by way of a feel for the case, consideration of communications with the client etc”.

Points of dispute were served.  In respect of document time they were drafted as follows:

“The Claimant requests the court to note that over a period of 11 working days the Defendant seeks to claim 46.8 hours of work which is equivalent to approximately 4.3 hours of time every single day. It is the clear opinion of the Claimant that under any stretch of the imagination, the level of time expended can in no way be justified and against the relevant test, the time expended, and its subsequent cost must be deemed to be unusual in nature and amount.

As with the timed attendances upon the Claimant, the Claimant is mindful of the requirements of the Civil Procedure Rules as to the need to keep Points of Dispute brief and succinct. It must therefore be stated that all entries are disputed. By way of general indication however, the Claimant can confirm the main issues with the document time are as follows:

  1. Significant duplication between fee earners
  2. Wholly excessive time expended by fee earners reviewing documentation provided by the Claimant
  3. Too much time claimed generally in relation to preparation
  4. An excessive level of time claimed in relation to drafting of communications
  5. Unnecessary inter-fee earner discussions arising due to the duplication
  6. Excessive time spent collating documentation
  7. Significant preparation time claimed in relation to meetings with the Claimant.

It can be confirmed that the above stated list is not exhaustive of the issues but provide a general overview as to the reason why the time claimed is unusual in nature and/or amount. The Claimant reserved their position generally.”

Stewarts served replies which stated the following in respect of the document time objections:

“The defendant cannot provide any meaningful reply to this general point. In the absence of itemised points of dispute being served (permission to rely on the same being a matter for the court and the Defendant’s position will be reserved), the Court will be asked to dismiss this point.”

These replies were served 5 months before the hearing.  Mr. Ainsworth did not serve any further detail or particulars setting out the reasons for the objections.

None of the objections to the document time listed any specific objections to the time claimed or made any offers at all as against the hours within the schedule (either individually or even on a general basis).

The hearing before the senior costs judge:

At the hearing the points were dealt with in the usual way until the document time.

Mr. Ainsworth’s draftsman stated that general arguments had been raised and what he would like to do was to “run through some of the entries in relation to the schedule and . . . sort of consider some of those entries and then form a view as to the costs as a whole   . . .”  In other words, he was asking the judge to consider the entire item on a ‘broad brush basis.’

Stewarts objected to that approach because specific objections to items had not been made.  It was argued that consideration of a few items and a broad brush reduction would not be satisfactory because they did not know what had been objected to and there was not time to go through everything in the allotted one day remaining.

Master Gordon-Saker responded by stating that:

“While the claimant has indicated that all entries are disputed, it isn’t stated why any particular entry is disputed and that does cause the defendant a bit of a problem because how can they prepare for a detailed assessment when they don’t know what is being alleged against them.”

The judge therefore dismissed the points of dispute in respect of document time on the following basis:

(i) There was a difficulty in the claimant’s proposed course of action because the he had not set out within his points which items he wished to challenge and why.

(ii) This would cause the defendant difficulties because they are entitled to know that information; they would need to look at the attendance notes to see what work was done and why and consider the context in which it was done, why a particular fee earner (or fee earners) undertook the work etc so as to justify the time.

(iii) The purpose of points of dispute is to prevent work being done ‘on the hoof’ at the hearing.

(iv) Where a client is objecting to each and every item it is beholden upon him to explain why each particular entry is challenged and whether he is asserting that no time should be allowed, or work should have been done by a different fee earner.

(v) The points of dispute as pleaded did not raise a proper challenge to the document time and certainly did not raise a challenge that could be properly answered by the defendant.

(vi)  The task of the defendant considering the challenges and replying would take a considerable amount of time and it is something that should be done prior to the hearing, rather than at the hearing itself.

(vii) The objection placed the court in a difficult position as well as the defendant.  The senior costs judge noted that he had read the papers in the light of the points of dispute and was not able to identify which particular items were challenged and why.

(viii)  In those circumstances it was only fair to dismiss the objection to document time as it had not been properly pleaded.

That decision was upheld by HHJ Klein (sitting as a High Court Judge) on the basis that it was a permissible case management decision which furthered the overriding objective.

The Court of Appeal’s judgment:

Mr. Ainsworth’s appeal was dismissed.

The entitlement ground

The court rejected Mr. Ainsworth’s submission that the senior costs judge’s decision was unfair in that, in dismissing the document objections (which comprised more than half of the breakdown’s total), it meant that he had lost his right to an assessment under the Solicitors Act.  He further argued that the judge was under an obligation to assess those costs pursuant to section 70 of the Act.

Asplin LJ, in rejecting the argument, held:

“Although Mr Ainsworth, as the party chargeable, was entitled to an order for the assessment of Stewart Law’s bill, having requested such an assessment within the relevant period (see section 70(5)) that right, and the concomitant obligation of the “costs officer” under section 70(7) to assess those costs and the costs of the assessment itself, are not absolute. When Parliament provided for a right to apply to court, it must have envisaged that the rules of court would apply to such an application. Both the right and the obligation must inevitably be subject to the rules and procedures which relate to the exercise of that right which include the rules of the court itself. Had it been intended that the right, and the obligation for that matter, was absolute, it seems to me that section 70 would have been worded very differently. As it stands, in my judgment, the ordinary meaning of section 70 is that the solicitor and own client assessment will be carried out by the court in accordance with the rules by which such matters are governed, including the case management powers of the court.”

Thus, the court found that there is no absolute right to an assessment; but rather that right is subject to the rules of the court.  As such, where the paying party acts in such a way as to frustrate the overriding objective, the court is entitled to refuse to allow them to be heard.  At [22] the judgment states that if the right were absolute:

“…one would reach the absurd position in which all assessments of costs under the Solicitors’ Act 1974 would be ungoverned and ungovernable by any procedure and the paying party would be entitled to demand a hearing before the court of indeterminate length, whatever that party’s behaviour and whether or not such a hearing would be proportionate in all the circumstances.”

Part 46 and 47

The court held that, where part 46 CPR is silent, Part 47 applies.  That means that PD47 8.2 (relating to points of dispute) is relevant to solicitor and client assessments and, in particular, the guidance at Precedent G (which is the costs precedent for points of dispute) applies to these cases.

Precedent G:

The court rejected Mr. Ainsworth’s submission that his points of dispute were compliant with precedent G.  Indeed, it was argued that the points served in this case were more detailed than those in the costs precedent.

The court held that:

“Common sense dictates that the points of dispute must be drafted in a way which enables the parties and the court to determine precisely what is in dispute and why. That is the very purposes of such a document. It is necessary in order to enable the receiving party, the solicitor in this case, to be able to reply to the complaints. It is also necessary in order to enable the court to deal with the issues raised in a manner which is fair, just and proportionate.” [38]

In a solicitor and client matter, the points must be formulated by reference to the presumptions at r.46.9.  In other words, they must address whether the client is arguing that the item is unusual in nature or amount (and say why if so) and allow the solicitor to be in a position to rely upon the presumptions in their favour (namely that the item was incurred with the express or implied approval of the client).  Any points of dispute which do not allow such consideration will not be compliant and would be liable to be struck out.

The principle, which the court said was “very simple” was set out as follows:

“In order to deal with matters of this kind fairly, justly and proportionately, it is necessary that both the recipient and the court can tell why an item is disputed. The recipient must be placed in a position in which it can seek to justify the items which are in dispute.” [39]

As to precedent G, the court agreed with the Respondent that the document is:

“…only an example and is premised upon a party and party detailed assessment in which the paying party will not have had sight of the relevant documentation and the presumptions in CPR 46.9(3) do not apply… it is only a simple example of the kind of challenges to items which might arise in a party and party assessment.”

Nevertheless, it is an example of the form in which points of dispute should be drafted so far as is practicable, whether in solicitor and client cases or between the parties assessment.

The dangers of relying upon the content of the simple example in precedent G was made clear by the court when dismissing the Appellant’s case:

“Points of Dispute 10 was general in nature and stated that all items were disputed, that the list provided was not exhaustive of the issues but provided a general overview and that Mr Ainsworth reserved his position generally. It did not contain cross references to the numbers of the items disputed on particular grounds. In fact, it was accepted that it did not state why any item in the bill was disputed. In my judgment, therefore, it did not comply with 47PD.8 para 8.2, nor, for that matter, did it take the form of Precedent G.”

Consequences of the judgment:

The judgment does not mean that parties will need to produce prolix points of dispute or that the cost of preparing points and replies will become disproportionate.  The need to keep points of dispute “short and to the point” is clear in PD47 8.2.

However, the PD also makes it clear that points of dispute must:

Identify specific points, stating concisely the nature and grounds of dispute.”

Following this judgment, it has been made clear that it will not be sufficient, where one item comprises multiple parts (document time for example) to set out  a very general point of dispute.  The points of dispute must allow the parties and the court to identify precisely what is disputed and why.

It is common in between the parties’ assessments for document times to be objected to by reference to a single all encompassing paragraph which sets out various general grounds for objection without delving into specific objections.  That approach will be very risky going forward.

In Solicitor and client cases, the points must also address the presumptions at r.46.9.  No doubt, in such a dispute, where the client has seen the entirety of the solicitor’s files, the requirement for detail in points will be even greater than in between the parties assessments.

Any points which fall short of this requirement are susceptible to dismissal.  If, as here, the replies to points of dispute argue that further detail is required, it would be a very brave paying party who simply relied upon the document as drafted.

Ultimately, the practice of preparing a counter schedule of document entries is likely to be used by paying parties who do not wish to risk having their objections dismissed.   That does not mean that paying parties will need to write out each and every objection to each and every document item claimed; the PD makes it clear that repetition is  discouraged and that objections of the same nature can be grouped together under a single heading.

The key is that, no matter how the objections are presented, they function so as to allow the receiving party to properly understand what is being objected to and the reason for the objection.  Generic and vague assertions which simply make general objections will not suffice.

The courts are most unlikely to allow a party who has served insufficiently pleaded points of dispute to seek to ‘make good’ those deficiencies through oral argument at the hearing itself.  Such an approach is self-evidently prejudicial to receiving parties.

Click here for a copy of the judgment.

Robin Dunne is a specialist in costs and litigation funding at Hardwicke and was instructed by the Respondent in Ainsworth v Stewarts Law LLP.

This content is provided free of charge for information purposes only. It does not constitute legal advice and should not be relied on as such. No responsibility for the accuracy and/or correctness of the information and commentary set out in the article, or for any consequences of relying on it, is assumed or accepted by any member of Chambers or by Chambers as a whole.

Contact

Please note that we do not give legal advice on individual cases which may relate to this content other than by way of formal instruction of a member of Hardwicke.  However if you have any other queries about this content please contact:

Sally Wollaston
Sally Wollaston
Business Development and Marketing Director
Menu