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	England and Wales High Court (Senior Courts Costs Office) Decisions
You are here: BAILII >> Databases >> England and Wales High Court (Senior Courts Costs Office) Decisions >> Keith Billington v Downs Solicitors Llp [2012] EWHC 90219 (Costs) (16 January 2012) URL: http://www.bailii.org/ew/cases/EWHC/Costs/2012/90219.html Cite as: [2012] EWHC 90219 (Costs)

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IN THE HIGH COURT OF JUSTICE
SENIOR COURTS COSTS OFFICE

		Clifford's Inn, Fetter Lane London, EC4A 1DQ
		16 January 2012

Master Leonard:

1. This is an assessment between solicitor and client, ordered under Section 70 of the Solicitors Act 1974. The bills to be assessed, including VAT, are as follows:

Date	Bill No	Amount (including VAT)
24 September 2008	DS1019	£5,287.50
25 November 2008	DS1931	£1,762.50
30 April 2009	DS3969	£18,047.57
8 May 2009	DS4048	£5,566.00
12 June 2009	DS4555	£10,995.00
Total:		£41,658.57

2. The Claimant's part 8 application, showing a smaller total, understates the amount of bill DS3969 (by including only the balance shown as outstanding) and overstates the amount of bill DS 4048.
3. Breakdowns of the above bills, (amended) Points of Dispute and Replies have all been served as ordered. In an Order dated 10 August 2011, I provided for "general points 3 and 4 in the Claimant's Points of Dispute" to be disposed of as preliminary issues.
4. In the Points of Dispute as amended, "general point 3" encompasses the arguments numbered 3, 4 and 5 in the Points of Dispute, raising arguments in relation to estimates of costs. General point 4 raises a different issue, not addressed in the parties' submissions to me or in this judgment. It remains to be addressed in a subsequent hearing.

General Point 3: the Claimant's Case

5. The Claimant instructed the Defendant to act on his behalf in defending proceedings brought by his daughter's partner in the Reigate County Court, seeking the recovery of sums lent by him to the Claimant ("the loan claim"). I am well aware that the Claimant denies that any valid loan arrangements were made, but in giving judgment against the Claimant in that respect, Mr Recorder Soole QC found that they were.
6. I would summarise general point 3 in these terms. The Claimant says that he instructed the Defendant to act on condition that costs were kept within a cap of £20,000, that the Defendant accepted instructions on that basis, expressly confirming that total costs would not exceed that amount, and that there was never any agreement to vary that figure.
7. Alternatively, the Claimant having provided the Defendant with "clear and precise instructions" that costs should be kept to the maximum of £20,000, the Defendant confirmed in writing that it would be able to take the matters to the end of trial well within that figure. In doing so, the Defendant provided an estimate of costs upon which the Claimant relied. Subsequent increased estimates were simply attempts to justify an increase over the original and no adequate explanation for the very substantial increase in costs has been given. Accordingly, the Claimant submits that any costs incurred above the original estimate are unreasonable and irrecoverable. The Claimant refers to Mastercigars Direct Ltd v Withers LLP [2007] EWHC 2733 (Ch), Reynolds v Stone Rowe Brewer (a firm) [2008] EWHC 497 (QB), Leigh v Michelin Tyre plc [2003] EWCA Civ 1766 and Wong v Vizards [1997] No 2 Costs LR 46.
8. The Points of Dispute also argue that, in failing to comply with the Solicitor's Code of Conduct 2007 (in particular its requirements for the provision of costs information) the Defendant leaves itself open to the argument that "a breach of the … code can render a retainer unenforceable and/or illegal". By reference to Garbutt v Edwards [2005] EWCA Civ 1206) the Defendant argues that the Court has a discretion to disallow costs on the basis of "a complete breach of the indemnity principle".
9. In its Replies to the Points of Dispute the Defendant says that this point is misconceived; this is not the forum within which to raise regulatory matters, and the reference to Garbutt is misconceived. I do not (as I have been invited to do) read into that Reply any implicit admission that there has actually been any breach of professional standards.
10. The suggestion that the contract of retainer is unenforceable was not actively pursued in submissions. I am unaware of any sound basis for reaching that conclusion: Garbutt does not support it. In Mastercigars (at paragraphs 107-111) Mr Justice Morgan expressly rejected a submission to the effect that there should be implied into a contract of retainer any requirement for a solicitor to comply with the professional regulatory provisions applicable at the time. I see no basis upon which to distinguish this case.
11. It does not follow that the requirements of the Code of Conduct have no bearing whatsoever upon what a client should reasonably pay, if only because a solicitor can be expected to comply with the professional obligations imposed by the code. I have referred to that where it appears to be relevant.
12. Before I continue I must address an argument raised by Mr Glassbrook in his submissions for the Defendant. He submitted that, as the Points of Dispute state only that the Defendant's entitlement to costs must be limited to the sum of £20,000, it is not open to me - at least on the Points of Dispute as currently drafted – to make any finding other than that the Claimant's liability to pay is or is not so limited.
13. I am unable to accept that submission. The authorities expressly referred to and relied upon by the Defendant (in particular Mastercigars) leave it open to me to conclude that it is reasonable for the Claimant to pay only the amount for which the Claimant contends, or that it is reasonable for the Claimant to pay some larger amount.
14. The Defendant is not prejudiced by my taking that approach. The Defendant's own case is that the figure upon which the Claimant relies was an estimate. The evidence and submissions heard by me addressed the fees and disbursements which accrued as the Defendant managed the defence of the loan claim, the costs information supplied by the Defendant to the Claimant from time to time, and the way in which the parties understood and dealt with that information. Mr Storar, the witness for the Defendant, came to the hearing armed with a detailed breakdown of costs as they accrued, designed to show exactly how and why costs accrued from time to time.
15. In any event, if I were to accept this argument the only effect would be to force the Claimant to make minor amendments to the Points of Dispute so that I could then address issues about which I have already heard evidence and submissions. I would not regard that as correct in principle or as compliant with the overriding objective.

The History of the Action

16. It is necessary to understand how the loan claim developed between the first meeting of the parties on 25 July 2008 and the termination of the Defendant's contract of retainer by the Claimant on 23 July 2009.
17. The loan claim, according to the limited information before me, was based upon two agreements dated 7 May 2004. The Claimant's daughter's partner claimed that money lent by him to the Claimant was to be repaid, with interest, from the proceeds of sale of a property and that the period for payment had expired. The Claimant contended that the loan agreements had not been validly executed, that the parties to the agreements never intended to be bound by them and that monies were in any event owed to him through other financial arrangements made in relation to the relevant property.
18. On 24 July 2008 the Claimant, who had been unrepresented, had attended the hearing of (I understand) a number of applications, including his opponent's application for the narrowing of the issues to be heard at trial, then listed for 10 September 2008 with a time estimate of two days. His opponent, who was represented by Counsel, was successful and the Claimant felt at a disadvantage. Accordingly he decided that he should seek legal representation to take the case to trial. On 25 July 2008 he met Mr Storar, a consultant with the Defendant, at the "Red House" in Reigate (the Claimant's home at the time) to discuss that.
19. Mr Storar was duly instructed. Although the Claimant says in his witness statement of 26 March 2011 that counsel was not instructed at this stage it seems evident that counsel, Mary Glass, was instructed within a matter of weeks and advised that an amendment to the Defence and Counterclaim and further directions were needed. An application was made for permission to appeal against the District Judge's order, permission to rely upon the amended Defence and Counterclaim and for further directions. Permission to reply upon the amended Defence and Counterclaim was given on 2 September 2008. The appeal was withdrawn and the trial relisted for three and a half days in a window commencing 28 October 2008.
20. In December 2008, that window was also vacated and a trial window set for 26 January 2009 for 12 weeks. The matter was then listed for trial from 9 to 12 March 2009, but due to the illness of the Claimant (who underwent surgery on about 10 February 2009 and was not fit to appear at trial) it was necessary to apply for another adjournment. That application, initially resisted, was eventually conceded and trial relisted for 3 to 8 April 2009. The time estimate remained at three and a half days.
21. In the meantime, the Defendant on behalf of the Claimant prepared further witness evidence and made appropriate arrangements for trial. This included an application to obtain evidence from Hallows, the solicitors who had acted on the original transactions that were the subject of the loan claim. Hallows took the view that they were unable to assist voluntarily with evidence. They had, in one capacity or another, acted for both parties to the loan claim and they were properly concerned about solicitor/client confidentiality and legal professional privilege.
22. In the event the trial occupied four full days of the Court's time. Another half day had to be provided for submissions on 24 April 2009. Judgment was reserved and handed down in early June 2009. The loan claim was successful. Judgment was given against the Claimant for £312,290.40.

The Contract of Retainer and the Costs Estimates Given From Time to Time

23. I have reviewed the correspondence between the parties, as included in the hearing bundles given to me. It has not always been easy to identify the exact sequence of events given that two bundles cover the same period, not all the documents are in date order and no effort appears to have been made to edit out substantial email duplication. The necessity to pick my way through and cross-reference these documents has delayed the production of this judgment and generated work that could have been avoided had one chronological bundle, free of duplicates, been prepared. However these are my conclusions.
24. It is common ground that in their meeting of 25 July 2008, the Claimant and Mr Storar discussed the loan claim and that the Claimant asked Mr Storar to cap his fees at £20,000. The way in which that request was put, whether it included VAT and how Mr Storar responded are matters in relation to which the parties' evidence conflicts. I shall come to that.
25. On 30 July 2008, Mr Storar wrote to the Claimant in these terms:-

"Further to our meeting of last week, I have now had the opportunity of looking through the papers …

The current situation within the action of course, is that all directions have now been complied with, and that the next step is the trial itself. I propose that I instruct Counsel at an early stage to review the papers in order to see whether are not Counsel feels that there should be any more evidence introduced. If we have to introduce further Witness Statement we would need permission from the Court…

I would therefore suggest that I prepare Instructions to Counsel, submit the papers and ask for an urgent opinion …

I confirm that I am a Consultant Solicitor and my hourly rate is £200 per hour plus VAT. We have discussed the overall fees in this matter and you have asked me to cap them at £20,000. I now appreciate that the matter is ready bar trial and I believe that we will be able to take this matter to the end of the trial well within the £20,000 budget. I expect to charge in the region of £3,000 to £4,000 to have matters read for trial, and I expect Counsel will be charging approximately £10,000. I also mention to you Mediation and I would expect a Mediation to cost in the region of £5,000 including myself and a Mediator. Counsel would be an additional cost, possibly in the region of another £2,500 to £3,000 …"

26. The letter enclosed a brochure, a guide to services, and two copies of the Defendant's terms of business. I have not been referred to those documents, which I have not identified in the hearing bundles.
27. On 2 February 2009, following requests for payments of various fees and disbursements, the Claimant wrote to Mr Storar:

"I have to date paid pds 5,500 and you are now asking for further pds 6,500, making a total of Pds 12,500 before preparation for trial and the trial itself … As you are aware before we started this matter I advised you that I needed an indication of the fees, and we agreed that a figure of pds 20,000 would be sufficient … would you please confirm that the agreed fee would be sufficient as I do not wish to exceed the previously indicated figure …"

28. Mr Storar replied on 9 February 2009:

"…The original budget that we discussed was £20,000. There is very little further for me to do on this matter and I would anticipate being able to accommodate £600 excluding VAT … Counsel's fees are likely to be in the region of £8,000, plus VAT. I therefore think your bill would be in the region of £21,700-£22,000 excluding VAT. This does include amounts which were not expected at the time I originally gave that estimate, and the two days at Guildford County Court …"

29. The Claimant wrote to Mr Storar on 14 February 2009:

"…As advised to you I have called in funds to clear the total account. I would however request the clarification regarding fees which I previously asked you for…I have to date paid £5500 and you have requested further payments of £6500 and now £4512 a total to date of £16512 and we have not even appeared in Court … the original budget indication was £20000 and I am concerned that this figure will be wildly exceeded …"

30. In another letter of 21 February 2009 the Claimant asked Mr Storar to "clarify the matter of the total fees".
31. Mr Storar replied on 23 February 2009:

"I believe that I have sent you copies of Counsel's fee notes to date which amount in total, including VAT, to £4,512…I enclose herewith an estimate of fees still to be incurred. You will see that I expect to incur a further £6,885.50 including VAT, to get this matter to trial, including trainee's fees. I expect the Counsel's fees to be a total of £8,812.50. This will make a total of fees at the end of the matter of £27,523.35, which does not wildly exceed my estimate, bearing in mind that when we first discussed costs at your home in Reigate, we were not expecting to have to prepare for an appeal, nor at that stage an application for an adjournment in September. The costs of the application for the adjournment, you will recall, included £2,373.50 for Counsel's fees, and my time would certainly have amounted to £2,000. To that end, I would suggest that had it not been for that application, we would be just outside the budget of £20,000 …

You will see that there is a section in that spreadsheet headed "Application to Adjourn" and I would expect to spend almost £2,000 on that application (Not included in the above total) …

You will further see that there is a section on the spreadsheet which I have headed "Optional". This includes my time in attending Court. You will see that that will amount to £7,285. I regard that as being perhaps unnecessary and unless there is very good reason for me to attend, it may not be possible for me to recover these costs from the other side after a successful trial. We would certainly want someone to sit behind Counsel to take down detailed notes of the evidence. If you wish me to attend, then naturally I shall be glad to do so, however, I will arrange for one of our trainees to attend to take notes …"

32. Mr Storar's letter of 23 February was acknowledged by the Claimant in a letter of 13 March: "I have noted your comments in respect of the costs and no doubt this can be resolved when we next meet", and querying whether the full costs quoted for the adjournment application had actually been incurred. He also explained that he was awaiting funds to meet payments requested to date, from Zambia.
33. It has been suggested that this letter, and a subsequent letter of 17 March explaining further delay, indicate that funds were available to meet all the costs set out in Mr Storar's letter of 23 February but in context they stand to be read, as the Claimant says, in relation to payments actually requested. I find no implicit admission in either letter that the Claimant had more than £20,000 to hand.
34. In response, on 16 March, Mr Storar reported that:

"…The full costs of the adjournment were not required as I did not have to attend court. I think it would probably be fair to say that my costs for the preparation amounted to approximately £1,200 excluding VAT …I propose sending a further account at the end of this month in the sum of £3,500 as an interim bill."

35. The Claimant responded on 19 March:

"…I am becoming concerned that the costs are escalating out of all proportion, and do not wish at any time to be in dispute over these matters … it is easy for you to state that I have costs of £1200, plus VAT, for a hearing that did not happen, and that another bill for £3500 will be sent this week … my wife will arrange for payment of the account and so that there are no misunderstanding I would like to be advised of the following:-

1. Costs to date of Downs Solicitors

2. Costs to date of the barrister

3. Projected further costs of Downs

4. Projected costs of the barrister

… please list the costs under each heading… Please arrange for me to have these details so that we can settle any outstandings next week".

36. Mr Storar responded by letter on 20 March. He summarised the current position regarding costs billed and paid, estimated Counsel's trial fees at £7,500 excluding VAT, and referred to his letter of 23 February and the enclosed spreadsheet.
37. Following some further correspondence about the costs of the adjournment application, Mr Storar sent an email to the Claimant at 12.25pm on 25 March referring to outstanding balances and work in progress and requesting sufficient funds to cover Counsel's brief fee of £8,625, including VAT.
38. The Claimant responded promptly, at 1.41pm, summarising amounts paid, balances claimed as due, estimated future costs, and summarising in these terms:-

"…We are thus at £28970 before your additional costs, the costs of the hearing you advise me of re Hallows and your costs at Court … All this against an estimate of £20000 … you will see that the budget I was advised of has been hugely exceeded and I will need to have the reasons explained".

39. Mr Storar responded by emailing at 2.21 pm enclosing a spreadsheet showing total, present and future estimated costs, including VAT, of £27,452.85. The Claimant responded at 3.11 pm, simply stating "Many thanks. I am sure that we can look at this on Friday". However, he would appear to have followed this with a letter of the same date:

"…When I presented this matter to you for your consideration, it was agreed that the matter was basically ready for trial and that a Barrister needed to be appointed to deal with the matter … As the matter had been so far progressed you indicated a fee in the region of £20000 should cover the costs. I proceeded on that basis … I am now upset that we have already exceeded the indicated figure before trial. The figure after the trial is likely to exceed the budget by some 60% which I cannot understand … We are meeting on Friday and I hope you will be able to explain this … I have been trying to have you provide a proper cost summary but every time I ask there seem to be thousands added … please advise your costs for the trial or a junior solicitor so I may add this to your estimate of Barristers' costs and finalise my own estimate … Costs should not have been allowed to simply run away".

40. I have not identified in the bundles any record of the meeting of 27 March, but on 26 March Mr Storar wrote to the Claimant:

"…You will recall that during our conversation at your property at The Red House I mentioned that the figures I was giving you were excluding VAT. The budget therefore should be £23,500 … At the time of giving that estimate it was not envisaged that we would be making an application for a further adjournment as a consequence of your surgery. Nor, in fairness, was it envisaged that we would have to make an application in respect of Hallows … The Hallows application is therefore another additional cost … It is also the case that you indicated to me that the matter was ready for trial and, indeed, my letter of 30 July sets out that assumption. In fact we still had to prepare the appeal, and further witness statements in addition to the further applications … With regard to a representative from Downs attending at the trial, if you require me to attend for 3½ days, I expect to spend approximately 25 hours, ie a total of £5,000 … if you would prefer that a trainee sits in on the trial … you will be charged at £150 per hour. His costs will be £4,500 excluding VAT … I must disagree that costs have simply run away. The costs that have been incurred have been properly incurred. I believe that you misunderstood the position of your case in July last year in representing the case as being ready for trial. Had the matter been heard in September last year then I would certainly agree that costs would not have reached £20,000. Due to the fact that this matter was not ready for trial in September time has moved on and, as a consequence, costs have increased".

41. In the bundle of evidence accompanying the Claimant's witness statement, this letter is accompanied by a spreadsheet showing the total past and future estimated costs of £24,879.60 inclusive of VAT. It is evident from a comparison of the two documents that this is in fact an incorrectly formatted version of the spreadsheet emailed by Mr Storar to the Claimant on 25 March. In any event £24,879.60 is inconsistent with the previous estimate of 23 February.
42. On 30 March 2009, Mr Storar sent an email to the Claimant:

"Further to our conversation, I am grateful to you for suggesting that we may hold your deeds … I have discussed the matter with my partners and we would be prepared to take a Charge over the property at Buckland, payable on demand. If you would be kind enough to confirm you will accept this position, I will draw up the appropriate Charge for execution …"

43. He sent a further email on 31 March:

"I have had the opportunity to consider your offer in relation to the offer of finance … We are prepared to act on your behalf, and from the proceeds of the finance package, subject to sight of the offer very shortly, we will deduct your fees and disbursements … I appreciate that you have indicated that there are questions in your mind as to our fees in this matter. You have reminded me of the estimate that I gave you that the costs should not exceed £20,000 plus VAT. This estimate was given in July last year when we first discussed this matter, and you said that the case was ready for trial.

It transpired that the case was not ready for trial, and I had to undertake further tasks which were unforeseen, namely:

1. Prepare an appeal against the order limiting the issues

2. Apply for leave to appeal, and/or an adjournment of the Trial, and expand the issues to be tried.

3. Prepare further witness statements

4. Apply for an adjournment as a consequence of their operation,

5. Apply to the Court to ensure Mr Hallows attends to give evidence … I attach herewith my time record to show the time spent".

44. And on 2 April 2009, at 10.03am:

"…I am pleased to confirm I now have a Charge ready for execution by your wife. I have prepared a letter for her to sign also which confirms that she is aware that she is entitled to take independent legal advice, but that she has declined so to do. I look forward to seeing you both at 4:00 this afternoon".

45. The Claimant responded at 10.23 am: "We will be there at 1600 hours".
46. It is not in dispute that by now Mr Storar had warned the Claimant that the Defendant and counsel would be unable to continue to represent him if suitable arrangements for payment of fees and disbursements were not made. The point of this charge over "The Orchard" in Buckland, which (although owned by his wife, Mrs Rosalee Billington) became the Claimant's home from 1 May 2009, was to provide the Defendant with security for accrued and accruing costs so that the Defendant and counsel would, on the eve of trial, continue to act. The intention was that the charge would be redeemed by re-mortgaging "The Orchard".
47. In fact Mr Storar met Mrs Billington in her husband's absence. It would appear that the meeting took place in a public house in Dorking on 2 April. At the meeting, she signed the charge and Mr Storar gave her a letter which read:

"I attach herewith a copy of the charge that you have agreed to enter into between yourself and this firm to cover your husband's legal fees …we believe that you are aware of the current estimates for our fees, including disbursements, which total approximately £35,200. Your husband has paid £5,942 to date and there is therefore approximately £30,000 to pay to the end of the trial … I advise that you should seek independent legal advice in relation to the execution of this Charge, but I understand that you do not wish to obtain such advice …"

48. Mrs Billington states in her witness statement of 26 March 2011 that her husband was not present at the meeting "as I was advised…" (she does not say by whom) "…that that would not be ethical". She says that she had been advised by her husband that fees had been set at a maximum £20,000, so she questioned Mr Storar about the £35,200 and was advised that, some money having been paid, she would not have to pay more than £29,000. She says that she did not discuss the figure with her husband but would "assume" the figure of £35,200 to be the "maximum amount payable".
49. On 16 April, Mr Storar wrote again to the Claimant:

" … I wonder whether you are in a position to confirm that you are proceeding with the re-mortgage of The Orchard. I should be grateful if you could let me know the position as soon as possible to give the Partners some comfort as to the fees and, more importantly, the disbursements …we now show £340.40 disbursements, together with the balance of an unpaid bill of £1,550, making a grand total of £1,890.40. I am showing work in progress of £13,300, including 31 hours of attendances at court since 3 April …"

50. The Claimant, in addition to paying a telephone conference fee of £46.00 requested by Mr Storar on 14 April, wrote on 30 April:

"I enclose a cheque in the sum of £9,500 … this will mean that I have paid all the bills I have received, and I should be grateful if you could agree the final account with me before you finalise it … I would like to agree the account …"

51. Mr Storar wrote again on 1 May:

" … I am delighted to hear that the draw-down of funds in respect of the re-mortgage is likely to be imminently. To that end therefore I enclose a note of my firm's charges to date and I look forward to receiving a cheque in due course. I will send you a complete breakdown of costs shortly …"

52. The letter enclosed bill DS3969 in the total sum of £18,047.57.
53. The Claimant responded on 6 May 2009 suggesting a correction to the amount shown on the bill as paid and adding:

"The original cost estimate was £20000 which, with VAT, would amount to some £23,000 plus disbursements … please confirm this is a final account as the total would have reached £23,150 … If however there are further bills to pay and these take the total way in excess of £23,000 then I will need a clear and precise account as to why the cost estimate has been massively exceeded … The court time is as indicated and there seems no other reason for any real cost overrun unless you can justify it … At this time, and unless the account you have sent is final, you should consider that I will need further clarification of the account … I am anxious that we reach agreement on the level of fees as soon as possible … I also confirm that following the mortgage documentation, the lender required a valuation and this is in process."

54. On 8 May, Mr Storar wrote to the Claimant enclosing an account of Counsel's fees (excluding trial fees). As to outstanding costs, he said:

"The only matters that remain are Counsel's fees for the trial, submissions, Judgment, and any argument on costs, and this firm's final bill for any work that may need to be done in connection with the Judgment or thereafter…my accounts department have my spreadsheet and, hopefully, between us, I will be able to prepare a clear statement showing the time spent on the entire matter, the costs, the expenses, and the sums that you have paid so far."

55. On 19 May the Claimant wrote to Mr Storar:

"I refer to your letter of 8 May 2009 enclosing account and as suggested by you in our telephone conversation have filed the papers until the fees are finalized and agreed".

56. On 12 June 2009, Mr Storar wrote to the Claimant advising him that he had heard from the Court in relation to Judgment to be handed down. He added:

"…I need to address the financial matters and I enclose our ledger reports for both time and financial. No doubt you will understand the financial ledgers. May I suggest that we sit down and go through the figures that these can be agreed. We also need to consider in principle whether or not you wish to appeal, once we have reviewed the Judgment. I will need to talk to Mary Glass on that matter and I know that she expects to spend about £1,000-worth of time in assessing this. I enclose herewith our account in respect of Mary Glass's fees and a copy of those fees also".

57. The letter enclosed bill DS4555 for Counsel's fees of £9,526.09, plus VAT.
58. The Claimant replied on 14 June observing that the tone of Mr Storar's letter indicated that the claim had been unsuccessful. He added:

"I have received your various schedules but as I have explained previously they really do not mean anything to me…The real issue is that the matter was ready for trial, having been prepared by myself. You were given all the documents and quoted an indication figure of £20000 plus VAT. It was on this basis that I appointed yourselves…the costs have escalated and I have not been told why such increase has happened. Schedules do not help. I need to know why the costs escalated by some 50-60%. I have asked many times for this information and it has not been forthcoming…Irrespective of the outcome of the trial, I would like this matter sorted out this week and agreement reached …"

59. The Claimant wrote again on 19 June:

"I refer to our discussion of today's date and note that your fees have risen to £41338 against an indicated figure of £20000 plus VAT, which was quoted at the outset of the litigation … as advised to you, if I had been advised that this would have been the likely cost, I would not have proceeded with the action through yourselves … I await your confirmation and explanation as to why the costs have risen so dramatically … At no time until today have you given me an indication of costs far in excess of £40000 and I believe when compared with your initial estimate, it would be hard to justify your additional claim".

60. On 22 June 2009, Mr Storar, having been given permission to advise the Claimant of the outcome of the case, asked the Claimant by email whether he wished to seek permission to appeal. Mr Storar advised that in Counsel's view this would be "a complete waste of money", but also confirmed that he would be happy to support the Claimant, notwithstanding Counsel's view. The Claimant responded on the same date asking for "clear and precise advice "on the hope for success at an appeal, whether there was any other way forward and "…Justification for "the massive increase in fees".
61. He wrote again on 23 June:

"…We met in July 2008 when I advised you that I had lost an application for security of costs and that I was concerned that the claimant had cleverly arranged for the trial issue to be narrowed…You looked at all the papers and confirmed we should apply for the trial to be on all the issues…I advised you at our meeting that I did not have unlimited funds to meet solicitors' fees and you agreed, and subsequently this was confirmed in writing that the fees would be £20000 plus VAT … The matter was ready for trial before you took over the case … No additional documents were requested or supplied…The costs estimate was given with full knowledge of all the facts… At various times I have written to you in respect of costs stating that I was concerned that the original budget be adhered to … I simply cannot accept that your original costs estimate has doubled without your making this fact clear to me…You have in an email today advised that additional work was required other than could have been anticipated at the time of the estimate. I have several times asked for a summary of the "additional work", but you have to date been unable to supply this. A doubling of the fee without notification must be hard to justify … I need to know why your original estimate was so far out and the justification for this. Until this is received there can be no question of further payments to yourselves."

62. The Claimant, having gathered evidence in the hope of justifying an appeal and having been advised that it had no prospect of success, also protested against paying the further costs of reviewing that evidence.
63. Following the further correspondence in relation to counsel's fees, the Claimant made a further payment on 24 June of £5,000, which, he said "will mean that payments have been made at the level originally agreed".
64. He wrote on 11 July:

"…Your original estimate of £20000 included £13000 for the barrister and £7000 for Downs' fees. The final result is that to date I have paid £15000, but Downs' fees have risen without explanation to some £30000. This surely cannot be justified and I did make it clear at the outset that I had a budget."

65. On 23 July, terminating the retainer, the Claimant wrote: "…I did accept your estimate of £20000 as the top figure of costs…Your new figures are frankly impossible to justify".
66. On the same date the Claimant wrote to Mr Storar:

"…It seems your bills grow by the day and you seem now to be claiming £47149.50 plus VAT against an original estimate of £20000…I have this week seen a copy of the document you asked Mrs Billington to sign and this was for an amount of £35000 one day prior to the trial. The £35000 would have included VAT and advised that £5000 plus had already been paid. I did not take part in those discussions and until this week was unaware the amount you had put in your letter to my wife…Any correspondence in respect of fees was generated by me as I concerned that the fees should be kept within the original limits. At no time did you advise me the costs would rise from an estimate of £20000 to £54000 plus including VAT … I am upset that the situation has arisen whereby your costs have escalated by 135% over the original estimate, particularly as I advised you at the outset that this was the only amount I was prepared to spend. You agreed to this and confirmed it in writing. Nothing that happened later can justify your increase…In the circumstances I enclose a cheque for my wife in the sum of £5000 and insist that the balance of your fees be assessed …"

Conflicting Evidence

67. The parties' evidence conflicts on whether on 25 July 2008 the figure of £20,000 discussed included VAT, whether Mr Storar agreed to cap his fees, whether the Claimant told Mr Storar that he would not instruct the Defendant should the figure of £20,000 be exceeded, and whether the Claimant gave Mr Storar a full account of the hearing of the previous day.
68. In determining these issues it has been necessary for me to choose between the evidence of the Claimant and Mr Storar. Mr Glassbrook for the Defendant has drawn my attention to two previous occasions upon which the Claimant has failed to persuade the Court to accept his version of events rather than those of his opponents.
69. Apart from the Claimant's unsuccessful defence of the loan claim, in which the learned Judge preferred the factual evidence of his opponent, Mr Glassbrook referred me to the conclusions of the Honourable Mr Justice Eady in Parshotam Mahtani v Billington [2003] EWHC 3127 (QB). In that case the Claimant defended a claim for a sum in excess of 900,000 US dollars. Giving judgment for his opponent, the Learned Judge found the Claimant's evidence to have in various respects been opportunistic and untrue.
70. It does not follow that I cannot or should not prefer the Claimant's evidence to that of Mr Storar in this case. Regardless however of those previous cases, I would (and do) in most respects prefer the evidence of Mr Storar to that of the Claimant, for these reasons.
71. Although, as will become apparent, I am unable to accept Mr Storar's evidence in its entirety, I do accept that he has done his best to assist the court in stating the facts as he understands them. His evidence was consistent and clear, and generally matches the documentary records I have seen. When, under cross-examination, he felt it appropriate to concede or reconsider a point, he did so.
72. As regards the Claimant's evidence, it seems to me that in order to avoid admitting in evidence matters which might be properly covered by legal professional privilege, I should attach no weight to inconsistencies between an unsigned version of his witness statement included in the hearing bundles and his signed statement of 26 March 2011. Nonetheless I have concerns about the Claimant's evidence generally. On cross-examination he frequently attempted to argue with questions rather than answer them, and some of the answers he did give were evasive. He also admitted that his evidence was self-serving.
73. I also, I regret to say, found the Claimant's evidence in relation to several specific matters not to be credible. This takes me to the disputed issues of fact.

The Meetings of July and August 2008 and the Letter of 30 July 2008

74. It is, as I have said, common ground that on 25 July 2008, the Claimant met Mr Storar to discuss his case and that the Claimant requested that Mr Storar cap his fees at £20,000. The Claimant says (a) that Mr Storar agreed to do so; (b) that he expressly advised Mr Storar that he would not instruct the Defendant if fees might exceed that amount; (c) that the figure discussed was inclusive of VAT; and (d) that in the meeting, he gave Mr Storar a full account of the orders made on 24 July. Mr Storar says (a) that he did not agree to cap his fees; (b) that the Claimant gave no such indication; (c) that the £20,000 discussed was not a VAT-inclusive figure; and (d) that the Claimant gave only a vague account of the previous day's hearing.
75. In reaching my conclusions on these points I have borne in mind the rebuttable presumption which arises in favour of a client where the material terms of a solicitor's retainer are unclear. Here, the terms of the Defendant's retainer were recorded in writing, by Mr Storar's letter of 30 July 2008 and its enclosures, and in all material respects seem to me to be sufficiently clear.
76. My first conclusion is that the figure of £20,000 discussed on 28 July 2008 and referred to in Mr Storar's letter of 30 July 2008 excluded VAT. Mr Storar's letter of 30 July 2008 refers to a request to cap "fees" at £20,000, immediately after stating that his fees are subject to VAT. That is clear enough, and the equally clear implication is that the figure discussed five days earlier excluded VAT. If there had been some inconsistency between the letter of 30 July and the discussion of 25 July I would have expected the Claimant, who had experience of instructing solicitors in litigation and who would always have known that legal fees are subject to VAT, to raise it at the time.
77. The subsequent correspondence passing between the parties (at least until the outcome of the loan claim was known to the Claimant) is consistent with that. In particular the Claimant's own letters show a clear acceptance that the £20,000 discussed on 25 July excluded VAT. I am unable to accept his claim, under cross-examination, that he was in correspondence conceding a point which he believed to be incorrect. He was quite prepared to express his dissatisfaction about any costs in excess of the originally discussed maximum. It is not credible that he would have accepted that figure to be £23,500 if he believed that it was in fact £20,000.
78. I do not accept that the Claimant told Mr Storar on 25 July 2008 that he would not instruct him if costs might exceed £20,000. Mr Storar says that the Claimant only indicated that he had a budget of £20,000 (excluding VAT), that he would not be happy if costs exceeded that amount and that he might be in financial difficulty if they did. On this point I again prefer the evidence of Mr Storar. If the Claimant had said at the outset that he would not instruct the Defendant if costs might exceed £20,000, he would surely have reminded Mr Storar of that fact as soon as it became clear that costs would exceed that figure. He did not.
79. Nor do I accept that in the meeting of 25 July or in his letter of 30 July, Mr Storar agreed to cap his fees. The Claimant says that he told Mr Storar that £20,000 was all that he could afford. (It follows from the conclusions that I have already reached that, if only by implication, he was saying that he could afford £20,000 plus VAT.)
80. Mr Storar recorded the position in his letter of 30 July 2008, following an initial review of the available papers. He recorded the Claimant's request to cap fees, but he did not agree to do so and his letter is inconsistent with any previous agreement to do so. What he said in his letter was that "…I believe that we will be able to take this matter to the end of the trial well within the £20,000 budget". The words "I believe" clearly indicate that the figure is an estimate, not an agreed cap. The obvious implication was that it would not be necessary to consider any such cap because costs could not in any event be expected to exceed a maximum estimate of £20,000.
81. In subsequent correspondence the Claimant consistently referred to £20,000 as an estimated or budget figure. Under cross-examination the Claimant indicated that he had in correspondence merely been repeating words and phrases used by Mr Storar, and that (in respect of the period following his hospitalisation) that he had written in such terms because he was unwell. As with the VAT issue, the Claimant's attempt to disavow his own words is not convincing. From 10 February to about mid-March 2008 he was unfit to attend and give evidence at trial, but I have seen nothing to substantiate the suggestion that he was at any time not competent to understand what he was writing.
82. As to whether the Claimant explained to Mr Storar on 25 July 2008 the nature of the orders made by the judge the previous day, in particular the order narrowing issues, Mr Storar says that he was given only a vague account of the hearing and that the Claimant said that the case was ready for trial. He did not fully understand the position until he received all the papers, which he had done (he agreed in giving evidence) before his second meeting with the Claimant on 7 August 2008. At that point he was (he agreed) aware of all the issues.
83. Again, for the reasons I have given, I prefer the evidence of Mr Storar. His letter of 30 July is inconsistent with a detailed knowledge of the court's orders of 24 July. I am unable to accept the Claimant's assertion, made for the first time under cross-examination, that he telephoned Mr Storar after he received that letter to remind him about those orders.
84. In summary, Mr Storar's letter of 30 July gave an estimate of costs at between £13,000 and £14,000 plus VAT (excluding mediation, which did not happen) and gave a strong indication that in any event they would not exceed an estimated £20,000 plus VAT. He did so on the express understanding, communicated by the Claimant in the meeting of 25 July, that that was what the Claimant could afford to commit to the case, but not on the alleged understanding that the Claimant would not instruct the Defendant if the estimate might be exceeded. Mr Storar did not on 30 July 2008 have detailed knowledge of the orders made by the court on 24 July 2008. He did have such knowledge by 7 August 2008.

The Context in Which Estimates Were Given

85. It follows from the conclusions I have drawn that all the cost figures supplied by Mr Storar from time to time were estimates. In considering the effect that those estimates might have upon the amount payable by the Claimant to the Defendant for the Defendant's services, I have borne in mind a number of judgments to which the parties have referred me: as mentioned above, Mastercigars, Reynolds v Stone Rowe Brewer and also Minkin v Cawdery Kay Fireman & Taylor [2011] EWHC 177 (QB) and Eversheds LLP v Cuddy [2009] EWHC 90154 (Costs).
86. This is an assessment under section 70 of the Solicitors Act 1974, and in accordance with CPR 48.8 (2) costs are to be assessed on the indemnity basis. Any doubt as to whether costs were reasonably incurred or reasonable in amount will be resolved in favour of the Defendant. That principle must be applied in the light of the authorities in relation to the significance of costs estimates, to which I now turn.
87. It seems to me that, as Mr Perry submits for the Claimant, this case bears many similarities with Reynolds v Stone Rowe Brewer. In that case Mr Justice Tugendhat reviewed the decision of Mr Justice Morgan in Mastercigars and quoted the following key paragraphs from his decision:

"98. Solicitors are entitled to reasonable remuneration for their services: see s 15 of the Supply of Goods and Services Act 1982. In considering what is reasonable remuneration, the court will want to know why particular items of work were carried out and ask whether it was reasonable for the solicitors to do that work and for the client to be expected to pay for it…

99. The first part which an estimate can play in the assessment of reasonableness is the way described [by] Dyson LJ in Leigh v Michelin Tyre plc…The estimate is a useful yardstick by which the reasonableness of the costs may be measured. If there is a modest difference between the estimate and the final bill, because an estimate is not a fixed price for the work, one may be very little surprised by the modest difference. The greater the difference the more it calls for an explanation. If there is a satisfactory explanation for the difference then the estimate may cease to be useful as a yardstick with which to measure reasonableness. Conversely, if there is no satisfactory explanation the estimate may remain a very useful yardstick with which to measure reasonableness.

100… No doubt, if the client put its case on the basis of estoppel by representation or a promissory estoppel then that would have to be considered. A client may have difficulty in showing such an estoppel. It might be said that the estimate was not the same as identifying a maximum or fixed price and the client could not rely on the estimate not being exceeded. Further, in some cases (but perhaps not all cases) a client may have difficulty in showing that he may have acted differently if the estimate had been for the amount of the final bill. What should the court do where the client does not, or is not able to, contend that there is an estoppel but he is able nonetheless to satisfy the court that he took the estimate completely seriously and it is possible he might have approached the litigation differently if he had been given a figure nearer to the figure in the final bill?…

102. Wong v Vizards is an authority at first instance, prior to Leigh v Michelin Tyre plc, of a case where there was reliance by a client on his own solicitor's estimate. The judge in that case did not approach the matter on the basis of an alleged estoppel. Instead, he indicated that 'regard should be had' to the level of costs the client had been led to believe he would have to pay. The question was then expressed as to whether it was reasonable for the client to pay much more than the estimated costs. In my judgment, the proper response to this decision is to hold that the court in that case was finding that, for the purpose of assessing reasonable remuneration payable to the solicitor, it is relevant as a matter of law to ask: 'what in all the circumstances it is reasonable for the client to be expected to pay?' Thus, even if the solicitor has spent a reasonable time on reasonable items of work and the charging rate is reasonable, the resulting figure may exceed what it is reasonable in all the circumstances to expect the client to pay, and to the extent that the figure does exceed what is reasonable to expect the client to pay, the excess is not recoverable."

88. Accordingly, the question I have to decide is what, in the circumstances, it is reasonable for the client to be expected to pay. As to how that exercise is undertaken, Master Campbell in Eversheds LLP v Cuddy also quoted Morgan J in Mastercigars, at paragraph 54:

"In my judgment, the legal process involved in a case where a client contends that its reliance on an estimate should be taken into account in determining the figure which it is reasonable for the client to pay is as follows. The court should determine whether the client did rely on the estimate. The court should determine how the client relied on the estimate. The court should try to determine the above without conducting an elaborate and detailed investigation. The court should decide whether the costs claimed should be reduced by reason of its findings as to reliance and, if so, in what way and by how much. Whether there should be a reduction, and if so to what extent, is a matter of judgment. Specific deductions can be made from the costs otherwise recoverable to reflect the impact which an erroneous and uncorrected estimate had on the conduct of the client. Such an approach requires the court to form an assessment of the impact of the estimate on the conduct of the client. The court should consider the deductions which are needed in order to do justice between the parties. It is not the proper function of the court to punish the solicitor for providing a wrong estimate or for failing to keep it up to date as events unfolded. In terms of the sequence of the decisions to be made by the court, it has been suggested that the court should determine whether, and if so how, it will reflect the estimate in the detailed assessment before carrying out the detailed assessment. The suggestion as to the sequence of decision making may not always be appropriate. The suggestion is put forward as practical guidance rather than as a legal imperative. The ultimate question is as to the sum which it is reasonable for the client to pay, having regard to the estimate and any other relevant matter."

89. One notable similarity between this case and Reynolds v Stone Rowe Brewer is that the costs accrued well beyond the level that either solicitor or client expected at the outset. However in Reynolds v Stone Rowe Brewer the solicitor's initial estimate was expressly qualified, with some emphasis, by the possibility of revision. In this case, while not being (in the words of Morgan J) a "maximum or fixed price", the figure of £20,000 was not (other than by the words "I believe") so qualified. Further, it was not the Defendant's estimate of likely cost (which was £13-£14,000) but of maximum cost, covering any contingencies that might arise.
90. Often standard terms of business emphasise that estimates are subject to revision, but the Defendant here does not rely upon such terms, and in any event such a standard term would do little to reduce the significance of a specific assurance that the cost of instructing the Defendant should not exceed what the Claimant said he could afford. That assurance was clearly of decisive importance in the Claimant's decision to instruct the Defendant. Whether or not, as the Defendant asserts, the Claimant actually had more than £20,000 available to him appears to me to be irrelevant. That was the figure the Claimant was prepared to, and considered that he could afford to, invest in legal representation.
91. Given that Mr Storar did not agree to cap the Claimant's fees, Mr Glassbrook for the Defendant argues the only way to reach any conclusion on what it is reasonable for the Claimant to pay is to undergo the full process of detailed assessment. I do not entirely agree. A detailed assessment hearing will, in the absence of some agreement between the parties, be necessary in due course, but in the meantime it is possible for me to identify the extent to which, given the estimates offered by the Defendant, and the Claimant's response to them, the Defendant should be held to the figure of £20,000 plus VAT and for me to identify particular categories of cost which it will (subject to detailed assessment) or will not be reasonable for the Claimant to pay. Before I do so I should consider the Claimant's response to the Defendant's estimates as supplied from time to time.

The Claimant's Knowledge of the Costs Position

92. Much of the cross-examination of the Claimant focused upon two points: the fact that he appeared to be aware of the costs position as advised to him from time to time and said nothing to the effect that Mr Storar had bound himself to a capped figure, and the fact that he did not "sack" the Defendant when their costs exceeded that figure. In response, the Claimant offered a number of justifications and explanations, including suggestions that he had not received all the revised costs information prepared for him by the Defendant.
93. I have already found that Mr Storar did not agree to cap his figures. As for revised estimates, the weight of evidence leaves little room for doubt that the Claimant had full knowledge of most of the figures being provided by Mr Storar from time to time, when or shortly after they were delivered.
94. I do not exclude from that conclusion the figure of £32,500 mentioned in Mr Storar's letter to Mrs Billington on 2 April 2009. I am unable to accept that the Claimant was unaware of that figure until 23 July 2009. I appreciate that his letters, until 23 July 2009, give no indication that the Claimant was aware of it. Nonetheless I conclude that he was, for these reasons.
95. The Claimant's witness statement of 26 March says only that he did not see the figure of £32,500 before the charge was signed on 2 April. He had agreed that his wife would provide the charge. He said that he would attend the meeting in which the charge was to be signed, and Mr Storar was expecting him to attend. He was closely involved in making arrangements for the charge to be given and, subsequently, redeemed by re-mortgage. Under those circumstances it is not credible that he would not have reviewed the charge and the letter that accompanied it until late July.
96. As for Mrs Billington's evidence in this respect, I regret that I am unable to accept it. I again take the view that I should attach no weight to differences between an unsigned version of her statement included in the hearing bundles and her signed statement of 26 March 2011. However it is hard to understand her statement to the effect that she had been advised "that it would be unethical" for the Claimant to attend the meeting of 2 April 2009, given that she received no independent advice before signing the charge. Nor was I reassured by the fact that her first response under cross-examination was to look to her husband for the answer.
97. I am unable to accept that Mrs Billington was, as she says, told by her husband that costs would not exceed £20,000, yet failed to mention to him before late July 2009 that she had signed a charge securing at least £12,500 more than that. It seems to me much more likely that on or shortly after 2 April 2009, the Claimant was aware both of the amount of costs estimated on that date, and the terms of the charge securing them.
98. However – and this seems to me to be much more to the point - I have seen no evidence to support the proposition that the Claimant was aware of this new figure before the charge was signed by his wife. I find no basis for concluding that he agreed that his wife should sign a charge securing costs estimated at £32,500.
99. Even if the Claimant had known of the revised figure beforehand it would not follow, from the fact that the charge was signed, that he accepted it. He had to arrange for the charge to be signed in order to keep the services of the Defendant and counsel on the eve of trial. He had no choice, especially in a situation where (according to the information before me) he had not yet paid or offered security for the amount of £20,000 he has always been prepared to concede. For reasons which I shall set out more fully below, I am of the view that he was entitled to continue to instruct the Defendant, to arrange for the charge to be signed and to proceed with re-mortgaging whilst reserving (as he did) his position on the amount actually payable to the Defendant.

The Amount that it is Reasonable for the Claimant to Pay

100. The Claimant contends that the maximum cost figure of £20,000 (which, I have concluded, was an estimate excluding VAT) was given by Mr Storar on 30 July 2008 in full knowledge of the state of preparation of the loan claim and of the work needed to see the matter through to the end of trial. I have found that such was not the case, because Mr Storar was on 30 July 2008 still unaware of exactly what the court had done on 24 July.
101. However, that and the other unforeseen events relied upon by Mr Storar do not seem to me to offer an adequate explanation for the very substantial difference between his maximum estimate of 30 July 2008 and the final cost figure.
102. In Mr Storar's letter of 30 July he advised the Claimant that it might be necessary to adduce further evidence and he recommended that Counsel be instructed to advise. He did record an understanding that the case was ready for trial, but he clearly envisaged that further work would be necessary. He also indicated that such work would not take the total cost over the Claimant's budget of £20,000 plus VAT.
103. Mr Storar maintained that position after he had full knowledge of the facts, which on his own evidence he did by 7 August 2008. He continued to maintain it at least until 9 February 2009, over seven months later and less than two months before trial. Even then the initial revision was not substantial.
104. I agree with the Claimant's interpretation of Mr Storar's letter of 9 February 2009, which Mr Storar effectively conceded under cross-examination. He was saying that he would be willing to forego costs of £600 to keep to the originally contemplated maximum estimate plus additional, originally "unexpected" costs bringing the total to a maximum of £22,000 (excluding VAT). He also indicated that there was little further work for him to do.
105. Mr Storar's more detailed figures, as supplied on 23 February and 25 March, did not represent a very substantial increase from £22,000 plus VAT. However by 2 April, estimated "fees, including disbursements" were £35,200. The Claimant did not know of that figure until some point after his wife, on the eve of trial, had given security for the Defendant's costs. By the end of April, according to Mr Storar's schedule, the running total excluding VAT was £38,000.
106. Part of the steep increase in costs can be justified by events unforeseeable on 30 July 2008. Much, given that the original estimate was £13-£14,000 and that the £20,000 figure was intended to cover contingencies, cannot. Unfortunately for all concerned, Mr Storar's initial estimates were much too low. He underestimated the amount of work that would be necessary to take the loan claim to trial and so he underestimated the cost of doing so.
107. Most of the matters to which Mr Storar refers by way of explanation for increased costs (considered in more detail below) would or should have become apparent by his second meeting with the Claimant on 7 August 2008. If he had thought them outside the scope of the contingencies covered by his maximum estimate of a week earlier he would no doubt (in accordance with his obligations under what was then rule 2.03 of the Code of Conduct) have revised his estimate. He, not the Claimant, had the expertise to assess the work needed to take the case to trial and the likely cost. He made no revision to his figures until February 2009, and no really substantial revision until the eve of trial. In the circumstances I have to conclude that his subsequent references to the Claimant's assurances that the case was ready for trial were attempts, with the benefit of hindsight, to justify an inaccurate initial maximum estimate.
108. I have found that the Claimant did not state to Mr Storar on 25 July 2008 in terms that if costs might exceed £20,000 he would not instruct the Defendant. It does not follow that the Claimant would have instructed the Defendant if he had at the outset been given a more realistic estimate. Given his budget figure, faced with a VAT-inclusive outlay in the region of £40,000 it is more likely than not that the Claimant would have gone elsewhere, or just carried on representing himself. In any event, having (as I find he did) instructed the Defendant in reliance on an assurance that he would not have to account for more than £20,000 plus VAT, at the very least the Claimant lost the opportunity to explore alternatives to instructing the Defendant on the Defendant's terms.
109. The Claimant instructed the Defendant on the clear understanding and assurance that a budget limit, which he had made expressly clear from the outset, would not be exceeded. Although I have found that that figure was not a cap on costs, the question "why did you not sack the Defendant when costs exceed that amount?" seems to me to be an unfair one. The Claimant had a legitimate expectation, subject to genuinely unforeseeable contingencies, that the Defendant would complete the task undertaken for him within a maximum estimate which, as he had clearly indicated, represented the most he could afford. Sacking his solicitors or refusing to provide security would have put him in a very difficult position.
110. In those circumstances the Claimant was perfectly entitled to continue to instruct the Defendant, give the security and arrange the re-mortgage demanded by the Defendant while reserving his position as to costs. In fact, as is clear from the correspondence, that is precisely what he did. He did not conceal his dissatisfaction. He complained about costs running away and he stated in terms that he did not find the explanations given adequate to account for the very substantial increases reported. I have to agree.
111. In all the circumstances, it seems to me that the Claimant should not be responsible for costs of more than £20,000 plus VAT, other than those that can properly be said not to fall within that maximum estimate.

Costs above £20,000 plus VAT

112. It is possible to identify additional categories of costs expressly authorised by the Claimant or arising from issues which Mr Storar could not reasonably have been expected to foresee when he gave his estimate. Mr Storar, in the schedule prepared by him for the hearing, attempted to identify those additional categories, and to attach a costs figure to each. I set them out below, with the figure attributed to those issues by Mr Storar (which, where I have concluded that any addition to the original figure is justified, will still be subject to detailed assessment) and my own conclusions as to whether they justify an increase over the original maximum estimate.

Appeal - £1,150

113. This refers to the appeal against the District Judge's order of 24 July 2008 narrowing the issues to be considered at trial. Although I accept that Mr Storar was not fully aware of this issue when he wrote his letter of 30 July, he was aware of all the issues by 7 August 2008, when he met the Claimant again, and it did not cause him to revise his costs estimate. It evidently falls within the sort of contingency that he had in mind in allowing a possible increase of his estimate of £14,000 to up to £20,000. It is not open to him to rely upon it now to justify an increase over that maximum estimate.

Amendments - £5,600

114. This refers to the need to amend the pleading. The need to do so became apparent not long after Mr Storar was first instructed – it arose from Counsel, on his recommendation, being instructed to advise. It was implemented by 2 September 2008. Again, the need to do so did not cause him to change his maximum costs estimate before February 2009, and it would seem to fall within the sort of contingency contemplated when giving a maximum costs estimate. For that reason I am of the view that the Defendant cannot rely on it now.

Further Statements - £1,030

115. As I have observed, Mr Storar had it in mind from the outset that further witness evidence would be necessary, and this was expressly contemplated when he wrote his letter of 30 July 2008. It does not constitute good reason for departing from his original maximum figure.

Adjournment - £1,900

116. This refers to the adjournment of the trial from March to April 2009. In his witness statement of 26 March 2011 the Claimant alleged that Mr Storar had been aware of his inability to attend before the March date was set. In giving his evidence, he corrected that. The true position is that Mr Storar was faced with the need to prepare an unexpected, initially opposed application for a further adjournment. There is no good reason why he should not recover the additional cost of doing so, subject to assessment.

Hallows' Evidence - £460

117. It is clear that the need to obtain evidence from Hallows was understood from a very early stage. Mr Storar says that the Claimant told him that Mr Hallows was "keen" to give evidence, so he did not foresee the additional expense of an application to obtain evidence from him. Whatever the Claimant told him, I would have thought that armed with a knowledge of the general facts of the case, Mr Storar would have appreciated that – "keen" or not - Mr Hallows would have been inhibited by proper professional considerations (as he duly was) from volunteering evidence, at least without the permission of all the other clients concerned, which in the context of a bitterly fought dispute for a large sum of money could hardly have been taken for granted. This does not seem to me to be a good ground for exceeding the original maximum estimate.

Extra Costs in Trial - £6,500

118. The change from trial estimate from two days to three and a half days occurred at an early stage – in about September 2008 - and for that reason, does not in my view offer a sound basis for exceeding the original maximum estimate. If it had not fallen within the sort of contingency foreseen by him, Mr Storar would no doubt have revised his costs estimate as soon as the time estimate changed.
119. I take a different view in respect of the fact that the trial period exceeded the three and a half day estimate by another full day. No-one seems to have thought the time estimate of three and a half days to be unrealistic and Mr Storar cannot be criticised for that. The Claimant attempts to do so by blaming counsel and the Defendant for failing to foresee a submission made by his opponent at trial. Mr Storar simply says that this is not raised in the Points of Dispute. In any event I can attach little weight to it. Such problems often arise at trial and it would take a great deal more than a bare assertion that they should have done better to disentitle solicitors and counsel from payment of their proper fees.
120. Trial costs were also increased by Mr Storar's personal attendance at trial on the instructions of the Claimant, in the full knowledge that costs would exceed the original maximum estimate. There is no good reason why Mr Storar should not recover the additional cost incurred by his attending trial instead of the trainee offered. Giving evidence, the Claimant accepted that he had given such instructions but attempted to distinguish between the trial itself and attendance at the final day of submissions. As I have no basis for concluding that his instructions drew any such distinction, there is nothing in that point.

"General" - £8,720

121. Some of this "general" time may be accounted for by reference to matters expressly excluded from Mr Storar's original maximum estimate. An obvious example would be his advice on appeal, which by definition would not be covered by an estimate to the end of trial. I am unable to accept the Claimant's argument that he should not have to pay for such advice. He was warned from the moment that appeal was discussed that counsel thought the prospects of success very poor, and he required further advice notwithstanding that. Similarly, it is evident from the correspondence that Mr Storar had to spend time chasing agreed, unpaid fees so that the Defendant could carry on working for the Claimant. That is a cost that must be borne by the Claimant.
122. Otherwise, these additional costs would seem to arise from the fact that more time and energy was needed to prepare for trial than Mr Storar had anticipated. He says that the Claimant was a "demanding" client and it is clear that much work had to be done in the run up to trial, but faced with a claim of in the region of £300,000, turning on fiercely disputed issues of fact, most clients would be demanding. If a client's demands go beyond what is reasonable in the circumstances a solicitor can refuse to meet them, or specifically warn the client that what is being asked is beyond what was reasonably contemplated and will cost more. Otherwise, the amount of general preparation which will reasonably have to be undertaken for trial is something that a solicitor is expected to able to assess when he offers an estimate of costs. He cannot pass responsibility for that to his client.

Conclusion

123. My conclusion is that with the exception of the additional work, either reasonably unanticipated or expressly authorised, identified above (the costs of which stand to be assessed on the usual solicitor/client basis) the fees and disbursements payable by the Claimant to the Defendant should be limited to £20,000 plus VAT.