Presumptions and proof

In Herbert -v- H H Law Ltd (Final) the role of the presumptions came to the fore. It is worth remembering why there is a procedure for the assessment of costs under section 70 of the Solicitors Act 1974 at all. It’s justification, is that although some items of costs might be specifically agreed by the client, in advance of them being incurred, many will not.

A client may agree an hourly rate: a client is most unlikely to agree with her solicitor, how many hours will be incurred at that hourly rate. Accordingly, when billed in arrears after the work has been done, fairness and justice, demands that the client must have a route to challenge the reasonableness of the fees, that they have not specifically agreed to.

Different considerations apply, when an item of costs has been flagged up in advance, quantified, and the client has agreed to pay it. The Civil Procedure Rules, provide that in that context, a set of presumptions may be brought into play. As noted  in paragraph 3 of the judgment:

CPR 46.9 is headed “Basis of detailed assessment of solicitor and client costs”. CPR 46.9(3) is as follows:

“(3) Subject to paragraph (2), costs are to be assessed on the indemnity basis but are to be presumed

(a) to have been reasonably incurred if they were incurred with the express or implied approval of the client;

(b) to be reasonable in amount if their amount was expressly or impliedly approved by the client;

(c) to have been unreasonably incurred if

(i) they are of an unusual nature or amount; and

(ii) the solicitor did not tell the client that as a result the costs might not be recovered from the other party.

(4) Where the court is considering a percentage increase on the application of the client, the court will have regard to all the relevant factors as they reasonably appeared to the solicitor or counsel when the conditional fee agreement was entered into or varied.”

These presumptions are thus very important. If they apply, they go a long way to preventing a client from unravelling a bargain struck on costs, and rewriting the price of the solicitors remuneration. Rule 46.9 CPR is supplemented by a Practice Direction as noted in paragraph 4 of the judgment:

46 PD.6 concerns the assessment of solicitor and client costs and relates to, among other things, CPR 46.9. It provides, so far as relevant to this appeal, as follows:

“6.1 A client and a solicitor may agree whatever terms they consider appropriate about the payment of the solicitor’s charges. If, however, the costs are of an unusual nature, either in amount or the type of costs incurred, those costs will be presumed to have been unreasonably incurred unless the solicitor satisfies the court that the client was informed that they were unusual and that they might not be allowed on an assessment of costs between the parties. That information must have been given to the client before the costs were incurred.

6.2 Costs as between a solicitor and client are assessed on the indemnity basis. The presumptions in rule 46.9(3) are rebuttable.”

The Court of Appeal began its discussion in these terms:

33. It is common ground that CPR 46.9(3) and (4) must be read together.

34. CPR 46.9(3) gives rise to presumptions about the reasonableness or unreasonableness of costs on a detailed assessment of solicitor client costs in the three circumstances specified in CPR 46.9(3)(a), (b) and (c). In the case of (a) and (b) the presumption is that the costs were reasonably incurred and reasonable in amount. In the case of (c) the presumption is that the costs were unreasonably incurred.

35. There is no longer any dispute between the parties in relation to CPR 46.9(3)(c). The Judge recorded (at [27]) that Mr Andrew Hogan, counsel for HH before him and junior counsel for HH before us, accepted that an irrecoverable success fee could be regarded as a cost of an “unusual nature or amount” but had submitted that, as the retainer made it clear that the success fee could not be recovered from the other party, the condition in CPR 46.9(3) (c)(ii) was not satisfied, and so there was no presumption under CPR 46.9(3)(c) that it was unreasonably incurred. The Judge agreed with that submission (at [47]). There is no respondent’s notice challenging that decision.

37. CPR 46.9(3)(a) and (b) means informed approval in the sense that the approval was given following a full and fair explanation to the client (although there was dispute between them as to the reasoning and significance of the Macdougall case cited by the Judge). We agree.

The Court then expressed a view about how a presumption should be raised and how it relates to the burden of proof:

38. There was some debate before us as to whether it is the client who bears the burden of satisfying the court that express or implied approval was not given or it is the solicitor who bears the burden of satisfying the court that it was given. We consider that where, as here, the client brings proceedings under the Solicitors Act 1974 s.70(1), it is for the client to state the point of dispute and the grounds for it. If the solicitor wishes to rebut the challenge by relying on the presumption in CPR 46.9(3)(a) or (b), the burden lies on the solicitor to show that the pre-condition of the presumption, informed approval, is satisfied. Once the solicitor has adduced evidence to show that the client gave informed consent, the evidential burden will move to the client to show why, as a result of having been given insufficiently clear or accurate or comprehensive information by the solicitor or for some other reason, there was no consent or it was not informed consent. The overall burden of showing that informed consent was given remains on the solicitor.

An intriguing point remains the notion that the presumptions are rebuttable: if informed approval is shown, it remains slightly opaque as to what scope there is to rebut a presumption in the context of an agreement made, after a full explanation of the costs, which in turn generates informed approval by the client of the “deal”. One would suspect that there is very limited scope indeed.

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