Oakwood Solicitors Ltd v Menzies [2024] UKSC 34

A client sought assessment of his solicitor's bill after they deducted fees from his damages. The Supreme Court held that 'payment' under section 70 of the Solicitors Act 1974 requires agreement to the specific amount to be paid, not merely prior authorisation to deduct fees. Delivery of a bill alone does not constitute payment.

Facts

The appellant (Client) was injured in a road traffic accident and instructed the respondent (Solicitors) under a conditional fee agreement (CFA) to pursue a personal injury claim. The CFA permitted the Solicitors to deduct their fees from compensation monies received. The claim settled for £275,000. The Solicitors retained £58,632.79 from the damages and later delivered a ‘Final Statute Bill’ dated 11 July 2019, stating the total charge had been deducted from damages ‘as agreed’.

On 1 April 2021, the Client applied under section 70 of the Solicitors Act 1974 for assessment of the bill. The Solicitors contended the application was statute-barred under section 70(4) as more than 12 months had passed since ‘payment’.

Issues

The central issue was what constitutes ‘payment’ for the purposes of section 70 of the Solicitors Act 1974. Specifically, whether payment by deduction from client funds requires agreement to the specific amount stated in the bill, or whether a prior general authorisation to deduct fees combined with delivery of the bill suffices.

Judgment

The Supreme Court unanimously allowed the appeal. Lord Hamblen, delivering the judgment, held that ‘payment’ requires agreement to the amount to be paid in respect of the delivered bill of costs—a ‘settlement of account’. Mere delivery of a bill combined with prior authorisation to deduct fees does not constitute payment.

“The most obvious example of payment of a solicitor’s bill, or indeed of any bill for services, is the situation where a bill is rendered and then paid by the client transferring money to the solicitor… By making the transfer the client is accepting and agreeing to the amount charged in the bill which has been rendered.”

Lord Hamblen emphasised the statutory context and purpose of section 70, which protects clients by ensuring they have opportunity to consider bills before payment restricts their assessment rights:

“The obvious reason for the stricter regime that applies where the bill has been paid is that payment by a client of a particular bill is taken to represent acceptance and agreement by the client to the sums claimed in that particular bill.”

Analysis of Authorities

The Court reviewed authorities dating from 1845, consistently requiring a ‘settlement of account’ for payment by retention or deduction. Lord Hamblen cited Lord Langdale MR in In re Bignold (1845):

“I have never, hitherto, considered, that the mere retainer by a solicitor, out of monies in hand, of the amount of his bill, amounted to a payment, unless there has been a settlement of account.”

Similarly, in In re Ingle (1855), Sir John Romilly MR stated:

“Payment must either be actual payment in money, or an agreement by the client, on the settlement of accounts between him and his solicitor, that the amount shall be retained.”

Implications

This decision clarifies that solicitors cannot circumvent clients’ statutory rights to assessment by relying solely on prior general authorisation to deduct fees. Clients must have opportunity to consider the specific amounts claimed before payment triggers the stricter time limits under section 70. The ruling restores established understanding of the law and provides important consumer protection in solicitor-client relationships, particularly relevant given the prevalence of conditional fee arrangements.

Verdict: Appeal allowed. Bourne J’s order for assessment of the solicitor’s bill was restored. The Supreme Court held that ‘payment’ under section 70(4) of the Solicitors Act 1974 had not occurred as there was no agreement by the client to the specific amount to be deducted.

Source: Oakwood Solicitors Ltd v Menzies [2024] UKSC 34