Amer v London Borough of Barnet

This is my decision on the Claimant’s application for an agreed costs certificate. The application arises out of a dispute about the Claimant’s entitlement to interest following an agreement as to the amount of costs in question. The sum at stake is very small (less than £300 plus the cost of the application to me). The parties have sensibly agreed that I should deal with this application on paper only.

The bill of costs as drawn totals £15,816.45 and a copy of it was sent to the Defendant’s solicitors with a Notice of Commencement on 29 January 2009. On receipt of Points of Dispute the Claimant’s solicitor sent an email dated 20 February 2009 to the Defendant’s solicitors commenting on the Points of Dispute and finishing with the line:

“I would be prepared to agree a reduction in the amount of the bill from £15,816.45 to £14,800. Please advise whether you would be prepared to agree this figure.”

By email dated 24 February 2009 the Defendant’s solicitors replied as follows:

“Thank you for your email. In the interests of resolving this matter my client has agreed your proposals. I have requested cheque and will forward asap.”

That email produced an immediate response from the Claimant’s solicitors pointing out the need to include interest and stating as follows:

“If one assumes that the cheque for the costs will be received on 9 March, interest will be due on £14,800 at 8% pa for the 84 days from 16 December to 9 March in the sum of £272.48. The Legal Aid Fund will not waive its interest and I ask that you arrange for payment of the interest on costs.”

In fact, 9 March 2009 passed without receipt of any cheque at all. By 10 March a chasing email was sent, and by letter dated the same day the Defendant’s solicitors replied as follows:

“I regret the delay in reverting with cheque for £14,800 in respect of your costs but a cheque for this amount is now enclosed in full and final settlement. I note your later comment concerning costs but would point out that your communication of 20 February 2009 made no mention of interest and was accepted by me on 24 February on that basis.”

On the next day, 11 March 2009, the Claimant’s solicitors sent an email repeating the demand for interest coupled with a threat, never in fact acted upon, to request a warrant of execution, if a cheque for £278.97 was not provided. That email begins:

“Thank you for your letter of 10 March and cheque for £14,800. You say this is in full and final settlement. I will be banking it and pursuing a claim in the County Court for interest.”

In his witness statement dated 18 March 2009 Mr Robert Huffam, solicitor for the Defendants, summarised the correspondence I have just described and submits that the sum proposed by the Claimant’s solicitors and accepted by him should be regarded as a sum inclusive of any interest and, no doubt, inclusive of any costs of assessment also.

In his evidence included in the application Mr Joseph Fryer, solicitor for the Claimant, makes the submission that the agreement was for a sum exclusive of interest. He therefore claims interest (presumably up to the date he received the cheque for £14,800) and the costs of this application. He makes no claim for any costs of the assessment incurred after the bill was delivered other than the cost of this application.

Having studied the submissions which have been made and the documentary evidence relied upon, I find in favour of the Claimant. Both sides rely upon what was, or was not, said in the Claimant’s solicitors’ email dated 20 February 2009. To my mind the key words in that email are:

“I would be prepared to agree a reduction in the amount of the bill from …” (emphasis added)

I do not accept that the failure to mention in that email either interest or the costs of assessment should be treated as an implied inclusion of those sums in the £14,800 proposed. At the time that email was written the Claimant had a right to costs which could potentially exceed £14,800 and, if they exceeded £5,000 had a right to interest on those costs. Interest on costs and the costs of assessing costs are incidental extras to the amount of the costs claimed in the bill. The email expressly refers to a reduction in the amount of the bill only and I do not accept that it should be treated as impliedly referring to the incidental extras I have described. Note that, if immediately upon receipt of the bill as drawn, the Defendant had paid the full sum (£15,816.45) the Claimant would still have been entitled to a certificate for the costs claimed, and the reasonable costs of an assessment “less sums already received”. In my judgment, this certificate would have entitled the Claimant to interest from the date of the order for costs even though the main costs had been paid before that judgment was entered. Accordingly, the Claimant is, to my mind, entitled to a similar certificate for the reduced sum of costs agreed.

The Defendants’ solicitors’ letter dated 10 March enclosed the cheque “in full and final settlement”. In his witness statement Mr Huffam for the Defendants, mentions that letter but does not seek to argue that the Claimant’s solicitors’ acceptance of that cheque sent on those terms constitutes an accord and satisfaction of the Claimant’s claim. In my judgment Mr Huffam was right not to argue that. The Claimant’s solicitor had made plain before, and immediately after, receiving that cheque that he still required a sum in respect of interest on costs. Rather than recite law at length I here refer by name to a recent Court of Appeal decision which considered a great many cases on this subject, both English and American, Stour Valley Builders v Stuart (21 December 1992, Court of Appeal) and I set out a short quotation from Chitty on Contracts, 30^th Edition, Vol 1, para 22 – 022:

“The question whether there has been an accord and satisfaction is a question of fact. Thus, retention and use by a creditor of a cheque sent by the debtor in full and final satisfaction of a larger claim does not, as a matter of law, constitute an accord and satisfaction. The intention of the creditor in cashing the cheque must be objectively ascertained. Cashing a cheque or retention of a cheque without rejection is strong evidence of assent by the creditor but it is not conclusive evidence so that a creditor who, at the moment of paying in the cheque or shortly thereafter makes clear that he is not assenting to the conditions imposed by the debtor will not be held to have entered into an accord and satisfaction. The construction of any correspondence which, it is alleged, evidences the accord is, however, a question of law.”

When this judgment is formally delivered I propose to issue an agreed final costs certificate which takes into account £14,800, plus interest, plus the costs of this application, less any sums already paid. My provisional view is that the costs of the application lie in favour of the Claimant and, in respect of them, I have already received a schedule of costs totalling £413.75.

Once this judgment has been formally delivered the parties should seek to agree the amount of interest on the main costs, the entitlement to and the amount of the costs of application, all of which I will take into account in my agreed final costs certificate. They should also seek to agree a date from which entitlement to interest on the costs of this application commences. My provisional view is that that date should be the date this judgment is formally delivered.