Effect of estimate as between solicitor and client
Where a solicitor has given his client an estimate of costs, the final amount payable should not vary substantially from the estimate given unless the client has been informed of the changed circumstances in writing (Wong v Vizards). Although the estimate is not binding upon the solicitor, he will be held to it where it would be unreasonable to do otherwise. In Wong, where the estimate had been given upon a worst case basis, costs were assessed at the amount shown in the original estimate plus 15%.
In Mastercigars Direct Ltd v Withers LLP (Master Rogers 25 April 2007), Withers had given their client an estimate of about £356,000, including costs to date, in May 2005. Following the trial, they presented the client with 21 bills totalling more than £1 million. The costs judge held that Withers were bound by their estimate, subject to some exceptions conceded by the client. He rejected the argument that as the client was an experienced businessman who was in daily contact with his solicitors, it was up to him to ask for an updated estimate. Withers’ failure to warn the client that the costs were escalating well above their estimate was a clear breach of the Solicitors’ Costs Information and Client Care Code. Had Withers billed their client during the course of the case, presumably the lack of a revised estimate would not have mattered to such an extent.
The Mastercigars case illustrates the extent to which solicitors are failing to comply with the requirements concerning estimates in the Civil Procedure Rules. The parties are required to provide an estimate with their allocation questionnaire showing an itemised breakdown of how it is calculated, showing separately the amounts included for profit costs, disbursements and VAT, substantially in the form of Costs Precedent H. They are also required to provide a revised estimate when they lodge their pre-trial checklist and the solicitor must deliver a copy of the estimate to his client. Had Withers complied with this requirement, their subsequent problems might well have been averted.
Effect of inaccurate client estimate on costs payable between parties
Where a client has not been given an estimate of costs or has been given an inaccurate estimate, in breach of the Solicitors’ Costs Information and Client Care Code, this breach cannot be taken into account on an assessment of costs as between the parties to the litigation (Garbutt v Edwards). The Court of Appeal noted that although the Code is incorporated by reference into the Practice Rules and is binding and has statutory effect, this does not mean that any contract made or performed in breach of a requirement imposed by the Code is unenforceable. It will be a question for the discretion of the judge whether to take into account a breach of the Code when assessing costs between the parties. If no proper estimate has been given to the client, the costs judge will have to consider whether and to what extent the costs claimed would have been significantly lower if there had been an estimate. It will usually be difficult to show that the absence of a proper estimate has had a calculable effect on the costs claimed.