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You are here: BAILII >> Databases >> England and Wales High Court (Senior Courts Costs Office) Decisions >> Ivanishvili v Signature Litigation LLP [2023] EWHC 2189 (SCCO) (23 August 2023) URL: https://www.bailii.org/ew/cases/EWHC/Costs/2023/2189.html Cite as: [2023] EWHC 2189 (SCCO) |
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SENIOR COURTS COSTS OFFICE
Royal Courts of Justice Strand, London WC2A 2LL |
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B e f o r e :
____________________
Mr Bidzina Ivanishvili |
Claimant |
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- and - |
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Signature Litigation LLP |
Defendant |
____________________
Ben Williams KC (instructed by Signature Litigation LLP) for the Defendant
Hearing date: 16 May 2023
____________________
Crown Copyright ©
Costs Judge Leonard:
Statutory Bills and Assessment
"(1) Where before the expiration of one month from the delivery of a solicitor's bill an application is made by the party chargeable with the bill, the High Court shall, without requiring any sum to be paid into court, order that the bill be assessed and that no action be commenced on the bill until the assessment is completed.
(2) Where no such application is made before the expiration of the period mentioned in subsection (1), then, on an application being made by the solicitor or, subject to subsections (3) and (4), by the party chargeable with the bill, the court may on such terms, if any, as it thinks fit (not being terms as to the costs of the assessment), order—
(a) that the bill be assessed ; and
(b) that no action be commenced on the bill, and that any action already commenced be stayed, until the assessment is completed.
(3) Where an application under subsection (2) is made by the party chargeable with the bill—
(a) after the expiration of 12 months from the delivery of the bill, or
(b) after a judgment has been obtained for the recovery of the costs covered by the bill, or
(c) after the bill has been paid, but before the expiration of 12 months from the payment of the bill,
no order shall be made except in special circumstances and, if an order is made, it may contain such terms as regards the costs of the assessment as the court may think fit.
(4) The power to order assessment conferred by subsection (2) shall not be exercisable on an application made by the party chargeable with the bill after the expiration of 12 months from the payment of the bill."
The Burden of Proof
Contracts of Retainer and Interim Billing
"… a solicitor may contract with his client for the right to issue statute bills from time to time during the currency of the retainer. Such bills are known as "interim statute bills". They are nevertheless final bills in respect of the work they cover, in that there can be no subsequent adjustment in the light of the outcome of the business. They are complete self-contained bills of costs to date."
"Although they are interim bills they are also final bills in respect of the work covered by them. There can be no subsequent adjustment in the light of the outcome of the business."
The Issues
The Work Undertaken by the Defendant
The June 2016 Retainer and Terms of Business
"Our relationship with you… is governed by the accompanying Terms of Business and also by the terms in this letter, which is specific to this particular matter and will prevail if there is any conflict between the two documents…"
"We will accept instructions either individually from you on behalf of Signature's Clients or (i) from Hunnewell Partners (UK) LLP ("Hunnewell") on behalf of Signature's Clients, acting through Mr. Irakli Rukhadze and assisted by his colleague Ben Marson or (ii) from Mr. George Bachiashvili and Mr. Irakli Karseladze on behalf of Signature's Clients. In addition we will ensure that Mr. George Bachiashvili and Mr. Irakli Karseladze are provided with copies of all communications of relevance on the matter…"
"The scope of our instructions will involve acting as global coordinating counsel to investigate and, if appropriate, pursue claims against Credit Suisse AG (and/or related entities). Such work will in the first instance include (i) instructing and coordinating foreign lawyers in relevant common law jurisdictions (ii) working with and instructing Swiss lawyers (iii) instructing investigators, experts, investment advisors and a forensic accountant as appropriate, dealing with all privilege, confidentiality and billing issues (iv) carrying out initial investigations with the aforementioned into the potential claims against Credit Suisse AG (and/or related entities), the nature of losses incurred, and the apparent reason for those losses, with a view to reporting to you and Hunnewell on the strategy of bringing claims against Credit Suisse AG (and/or related entities) and the costs involved in pursuing such claims (v) taking such steps as are necessary to pursue such claims on behalf of Signature's Clients in the relevant jurisdictions and (vi) controlling the costs of all of the above mentioned service providers and making best efforts to optimize the costs associated with the Claim. In conjunction, we will also advise as appropriate on matters relating to a potential settlement of the dispute with Credit Suisse AG.
You, on behalf of Signature's Clients, and/or Hunnewell and Mr. George Bachiashvili and Mr. Irakli Karseladze, will be responsible for giving us timely and prompt instructions and you and/or Hunnewell and Mr. George Bachiashvili and Mr. Irakli Karseladze will let us know of any queries regarding our costs estimates and bills…"
"We have agreed in principle a Conditional Fee Agreement pursuant to which you, on behalf of Signature's Clients, will be liable to pay 65% of the Standard Fee mentioned above in any event in accordance with our usual invoicing and payment terms (the "Discounted Rate"), and the remaining 35% (the "Additional Portion of the Standard Fee") will only be chargeable in the event that a successful recovery above an agreed amount is achieved. We have also discussed and agreed in principle the basis on which you, on behalf of Signature's Clients, will be liable to pay to us an Uplift Fee and a Success Fee, again on the basis that a successful recovery is achieved between a certain range and/or up to an agreed amount. For the purposes of charging the Additional Portion of the Standard Fee, the Uplift Fee and the Success Fee, a successful recovery will be defined as occurring if and when the Claim is resolved in favour of Signature's Clients, either by agreement or following a trial or other final hearing, which in this case shall mean that Signature's Clients receive money or monies worth (e.g. assets with an intrinsic value) up to the specified ranges and/or amounts to be finally agreed between us. The precise terms of our agreement, evidencing the agreement in principle already reached, will be set out in a subsequent letter.
In the interim, and until the aforementioned letter is issued, we will continue to invoice you at the Discounted Rate on the basis that you, on behalf of Signature's Clients, will be liable to pay us the Additional Portion of the Standard Fee on all invoices issued by us to you (whether before or after the date of this letter) as and when there is a successful recovery within the agreed specified range applicable to the Additional Portion of the Standard Fee. The Uplift Fee and Success Fee will likewise be chargeable as and when there is a successful recovery within the agreed specified range and/or amount applicable to the Uplift Fee and the Success Fee…"
"Unless we agree otherwise, we will normally issue invoices to you on a monthly basis, and will then send a final invoice when the work has been, or is about to be, completed. This should help to keep you informed of the costs which are being incurred.
In addition, each bill delivered by us will:
(a) identify the value of the bill based on the hourly rates as stated above:
(b) contain a breakdown of hours worked for each fee earner and a narrative of tasks carried out during the period, with further information to be supplied as agreed with you; and
Our invoices must be paid within 30 calendar days. We reserve the right to charge interest on any overdue amounts on a daily basis at the official rate payable on judgment debts…"
"Our relationship with you is governed by these Terms of Business and by any Engagement Letter which you receive for a particular matter, and the latter will take precedence if there is any conflict between the terms. Together, these documents constitute our contract, which will apply retrospectively to replace any previous discussions, correspondence and agreement between you and us. This is the case even if you do not sign and return a copy of our Engagement Letter. The terms contained in this document will also apply whenever we work with you in future, except to the extent that they are varied in writing by a partner of Signature Litigation LLP…"
"From time to time we may ask our clients to pay sums on account of the charges, disbursements and other costs which are anticipated at that stage of the matter. We will keep any such sums in our client account and unless otherwise agreed, we will credit these sums toward your invoices in a manner and at a time which is at our discretion…"
"6.1… Unless otherwise agreed in writing, you will receive invoices on a monthly basis for all work undertaken during the relevant period…
6.3… (a) You agree that our invoices are payable within 14 days of the date of the invoice. If possible please make payment by bank transfer (our bank details appear on our invoices). We may charge interest on all or part of an invoice which remains unpaid after 30 days at the prevailing rate for judgment debts…
(b) You agree that our fees, disbursements and other costs will be payable by you irrespective of whether the outcome of any proceedings or other dispute is favourable to you.
(c) You have the right to complain about an invoice through the Firm's complaints procedure (see clause 3.4). You may also have the right to apply to the court for an assessment of a bill under Part III of the Solicitors Act 1974…"
"… records our agreement that Signature's engagement with me will now be managed through MKD who will provide instructions to Signature on my behalf and who will consult with you. For that and any other purpose requested by MKD we will take all steps available to us to ensure MKD are able at any time to contact any and all lawyers and experts engaged by Signature in any jurisdiction in furtherance of Signature's mandate…
We understand and recognise that you reserve the right to request any and all such lawyers to be directly instructed (or disinstructed) by MKD or any other lawyers instructed by you."
"… This letter evidences the detailed agreement referred to at paragraph 5 of the letter of 7 June 2016, which we previously agreed would be set out later in writing. Unless otherwise defined herein, capitalised terms used in this letter shall have the same meaning as in the letter of 7 June 2016.
1. You have agreed to pay the Standard Fee on a time-spent basis calculated at the agreed hourly rates we charge for the various team members from time to time. To date, and as agreed, you have paid 65% of the Standard Fee ie the Discounted Rate. This generates a low margin for the firm. If, at the conclusion of the case, your successful recovery does not exceed USD350 million, then you will not pay anything more to us than 65% of the Standard Fee. To date we are agreed that there has been a recovery of USD79.08 million.
2. If there is a successful recovery of at least USD350 million, and the case continues, then our Standard Fee for all future time spent following the date of receipt by you of that amount will be chargeable in full (ie 100%).
3. We have also agreed that if your final successful recovery exceeds USD450 million, then you will pay to us at the conclusion of the case and following receipt of that recovery:
(a) the Additional Portion of the Standard Fee for all work billed at the Discounted Rate;
(b) an Uplift Fee, in addition to the Standard Fee, of 35% of the Standard Fee for work done during the whole of the period of billing, if the final successful recovery exceeds USD450 million but does not exceed USD550 million; and
(c) if the final successful recovery exceeds USD550 million, a Success Fee of 4.5% of the total amount of the final recovery, less Agreed Costs (as defined below)1 payable by the Claimants pursuant to invoices known by Signature to have been delivered to any of those Claimants in respect of existing and anticipated claims by those Claimants worldwide (save for the avoidance of doubt that nothing in this paragraph 3(c) shall disentitle Signature to the entitlements which may be due pursuant to paragraphs 2 and 3(a) to (b) above).
4. "Successful recovery" shall be defined as occurring if and when the Claim is resolved in favour of Signature's Clients and/or the companies beneficially owned by Signature's Clients or any of them (the "Claimants"), either by agreement or following a trial or other hearing, whereby the Claimants receive money or monies' worth (eg assets with an intrinsic value) over the agreed threshold.
In all other respects, our instruction continues as set out in our letters of 7 June and 7 November 2016. In particular, references herein to "you" mean you and each of Signature's other clients… It goes without saying that if any part of the amount(s) due under our retainer generally, and paragraph 3 above in particular, cannot be claimed because of professional conduct rules as they may exist at any relevant time in any relevant jurisdiction, then that part will not be due and payable…"
"… Please see attached our current terms of business (May 2021) which accompany the supplemental engagement letter.
For completeness, I also attach our terms of business from June 2016, together with a comparison document which shows the changes to our terms since then.
Our terms of business dated June 2016 will apply from the date of our Engagement Letter of 7 June 2016 through to the date of our supplemental letter, so that those terms then apply from then on."
"Unless otherwise agreed in writing, you will receive invoices on a monthly basis for all work undertaken during the relevant period…"
"(a) We shall bill you monthly during a matter unless otherwise agreed (see clause 6.1). Generally, our invoices are interim statute bills meaning that they are final in their own right for the period covered, whether or not they contain the disbursements and/or all costs incurred. You agree that we have the right to issue an additional interim statute bill for costs and disbursements incurred in respect of the same period. Unless stated otherwise, you may assume that your bill is an interim statute bill.
(b) On occasion, we may, and reserve the right to, issue interim 'payment on account' invoices which shall be labelled as such. Payment on account invoices may contain charges pursuant to conditional or contingent fee arrangements as agreed between you and the Firm. We may invoice you for additional costs subsequent to the issue of "payment on account" invoices.
(c) You have the right to complain about an invoice through the Firm's complaints procedure (see clause 3.4).
(d) Subject to clause 6.4(e) below, if you wish to make a complaint about an interim statute bill or a statute bill, you have the right to apply to the court for an assessment of such a bill under section 70 of the Solicitors Act 1974, normally within twelve months of the delivery of the bill…
(e) A "payment on account" invoice is not a statute bill under the Solicitors Act 1974 and cannot be assessed under section 70 of that Act..."
45. "Following termination we will deliver to you our final invoices for all outstanding work.…
We also draw your attention to your entitlement to challenge the reasonableness of some of our invoices, either through the firm's complaints procedure… or by way of an application to the Court for an assessment under the Solicitors Act 1974 (clause 6.4(d))."
The Form of the Defendant's Invoices
"You are also entitled to invoke our complaints handling procedures and may be entitled to have our charges reviewed by the court by way of the assessment procedure under Sections 70,71 and 72 of the Solicitors Act 1974."
"Finality" and the Effect of a Finding in the Claimant's Favour
Informed Consent
"Bills are rendered monthly in arrears. Our bills are detailed bills and are final in respect of the period to which they relate, save that disbursements ( costs and expenses which we incur on your behalf) are normally billed separately and later than the bill for our fees in respect of the same period."
CFAs and Interim Statutory Bills
"At the heart of an assessment is whether the sum charged by the solicitors to the client is reasonable. The charge for work done at 40% of the normal rates might well be reasonable, but at 100% not reasonable. A client would not know until the end of the claim… at which rate he was being charged…"
(Nicklin J's) "… construction of the CFA is consistent with the principle that a statute bill cannot subsequently be amended… The effect of the clauses I have identified was that the 40% invoices were liable to be later changed. What was ultimately to be paid for the work that was the subject of any 40% invoice would not be known until the appellant won or lost the claim..."
"I accept in that case there was an added complication that the solicitors hourly rate increased if the condition which triggered the success fee applied. Not surprisingly Mr Justice Nicklin found that an interim bill at the lower hourly rate could not be an interim statute bill because it was not a self-contained and final bill for that period…"
Whether the June 2016 Retainer Authorised the Delivery of Interim Statutory Bills: Conclusions
Whether an Agreement for the Delivery of Interim Statutory Bills Can Be Inferred from the Parties' Conduct
"Before a solicitor is entitled to require a bill to be treated as a complete self-contained bill of costs to date, he must make it plain to the client expressly or by implication that that is his purpose of sending in that bill for that amount at that time. Then, of course, one looks to see what the client's reaction is. If the client's reaction is to pay the bill in its entirety without demur, it is not difficult to infer an agreement that the bill is to be treated as a self-contained bill of costs to date" – per Roskill LJ in Davidsons v Jones-Fenleigh…"
" … an inferred agreement between the parties that the 40% invoices that were rendered would be statute bills… would have been inconsistent with the terms of the CFA as I have held them to be and inconsistent with the principle from Bari that the bills had to be final bills in respect of the work that they purported to cover (because they were liable to be increased if the claim were won …"
Whether the 19 September 2021 Variation Retrospectively Applied the May 2021 Invoicing Terms
"Even if there was a contractual right to issue interim statute bills, it would be a question of fact whether any individual bill issued to the client was a statute bill."
Whether the 19 September 2021 Variation Authorised the Delivery of Interim Statutory Bills
Whether the Defendant Rendered Statutory Invoices at "Natural Breaks"
The Effect of Termination
"… a solicitor cannot be said to have sent in a final bill if he has sent in something which neither party understood nor intended to be final."
Summary of Conclusions