Background
Vishal Mehta retained Howard Kennedy LLP while subject to a worldwide freezing order in litigation connected with allegations of a US$1 billion fraud. Between June 2022 and May 2023, the firm delivered 24 invoices totalling £3,124,674.04, many of which were paid. Mehta later brought proceedings under the Solicitors Act 1974 seeking assessment of the firm’s charges.
Costs Judge Whalan decided three preliminary issues against Mehta. He held that the invoices were interim statute bills, that the retainer was not a contentious business agreement, and that payments had been made for purposes of the Act without special circumstances justifying an out-of-time assessment. Mehta appealed to the High Court. The High Court initially resolved the statute-bill, payment, and special-circumstances grounds, while staying the contentious-business-agreement issue pending the Court of Appeal’s decision in Barnes v BDB Pitmans. After Barnes was decided, the High Court resumed the appeal and addressed the remaining ground.
The Court’s Holding
The High Court dismissed the appeal. The retainer expressly provided that each periodic invoice was a final bill for the work performed during the stated period and had the status of a statute bill. A clause reserving the possibility of accounting for “value” or “importance” in a concluding bill did not undermine finality because no such uplift, contingency, or outcome-dependent arrangement formed part of this retainer. The invoices were therefore interim statute bills subject to the time limits in section 70 of the Solicitors Act 1974.
The court also upheld the finding that payments from third parties and other available sources discharged Mehta’s liabilities with his knowledge and consent and constituted payment for section 70 purposes. Regular itemised invoices, substantial payments, and repeated cost estimates did not establish special circumstances warranting assessment outside the ordinary limits.
Applying the Court of Appeal’s decision in Barnes, the court further held that the retainer lacked the certainty essential to a contentious business agreement. Although it identified fee-earners and hourly-rate ranges, it did not enable the client to know who would perform particular work, how much work each person would undertake, or how fee-earners would be deployed. The complexity and uncertain strategy of the multinational freezing-order litigation made certainty as to fees impossible. The retainer was therefore not a contentious business agreement, and the appeal was dismissed in full.
Key Takeaways
- A periodic invoice can be an interim statute bill when the retainer makes it final and complete for the work covered, even though further invoices will follow in the same matter.
- Payment by a third party can constitute payment under section 70 when it is made with the client’s knowledge and consent to discharge the client’s liability.
- An hourly-rate retainer is not necessarily a contentious business agreement; it must provide sufficient certainty about the solicitor’s remuneration.
Why It Matters
The decision reinforces the strict effect of section 70’s time limits where a retainer clearly characterises periodic invoices as statute bills. Clients may lose the ability to obtain court assessment if they do not challenge such bills promptly, including where payment is arranged through third parties.
It also applies Barnes to complex hourly-rate litigation retainers, confirming that stated rates alone may not supply the certainty required for a contentious business agreement when staffing, workload, and strategy remain materially unpredictable.