When is payment not Payment?
Judgment has been handed down in Menzies v Oakwood Solicitors Ltd [2024] UKSC 34 one of the very few cost cases to have reached the Supreme Court. Craig Ralph and Erica Bedford acted for the solicitor Respondents.
The decision concerns with the definition of ‘payment’ within s.70 Solicitors Act 1974.
A strong Court of Appeal led by the Master of the Rolls had determined in July 2023 that, “payment” in s 70 was to be construed as including the deduction of fees payable under a statutory bill with the knowledge and consent of the paying client. That consent did not require that it be given after the delivery of the bill, if the client had already validly authorised the solicitor to recoup his fees by deduction from funds in his hands via the retainer. What the client needed consent to, in order for payment to take place, was “the transfer of money”, not necessarily the precise amount to be transferred. Since the client had authorised the solicitor to recoup fees by way of deduction, payment of the bill had taken place when, after delivery of the bill, the solicitors had made the deduction and notified the client.
The Supreme Court have have now reversed the Master of the Roll’s decision and have reinstated the decision of Mr Justice Bourne stipulating that ‘payment’ for the purpose of s.70(3) Solicitors Act 1974 requires the client’s agreement to the actual sum charged within a statute bill.
The implications for the profession are significant, particularly in personal injury work given current billing practices and common retainer provisions providing for payment by way of deductions from damages. It is expected that many firms will have fallen foul.
A considered response to the Judgment would be well advised, to include reviewing all retainer provisions and billing process for current and future work to ensure both are sufficiently robust to place practitioners in the best possible position to take advantage of the considerable limitation protections provided for within s.70(3) within the frame work understood by Menzies.
Join Mr Ralph and Ms Bedford on 20 November 2024 when they outline the decision and the steps to be taken in response.
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