Eversheds LLP v Cuddy & Anor

This judgment addresses the following issues which have arisen in the detailed assessment under Section 70 Solicitors Act (1974) of bills rendered by the Claimant Solicitors (“Eversheds”) to the Defendant and their former client (“Mr Cuddy”).

The detailed assessment took place on 20 and 21 October 2009. The bills subject to the assessment were these:

Of these sums which amount in total to £ 443,077.34 including VAT, Eversheds professional charges came to £187,962 without VAT, and Counsel’s fees to £189,327 without VAT. The balance is made up of minor disbursements and VAT where applicable. On 16 October 2007 a further invoice for £223,905.68 was issued but this was a final bill which replaced Eversheds’ interim invoice for their professional charges dated 29 June 2007 and embodied them in one bill from 8 May to 30 July 2007. I shall refer to the two invoices rendered on 29 June 2007 as “the interim invoices”.

The outcome of the detailed assessment, subject to my decision on the issues set out above, is that the invoices have been reduced to £376,000 including VAT (the parties have been unable to agree on the exact figure and have compromised at £376,000).

The hearing of the remaining issues involved evidence and cross examination which was undertaken on 4 November 2009. On that date the following gave evidence:

At the hearing, Mr Bacon appeared for Eversheds, and Mr Marven represented Mr Cuddy. I heard closing submissions from Counsel on 18 November 2009 and reserved judgment.

It is unnecessary to set out the background in detail because the history of the dispute between Mr Hawkes and Mr Cuddy can be found in the judgment of His Honour Judge Havlock-Allan QC at [2007] EWHC 1789 (Ch) on summary judgment. His judgment was appealed to the Court of Appeal [2007] EWCA Civ 1072) their judgment being given on 17 October 2007. The full trial took place over three weeks before Lewison J (see [2007] EWHC 2999 (Ch) and [2008] EWHC 210 (Ch)), his judgment also being the subject of an appeal to the Court of Appeal (see [2009] EWCA Civ 291). In a nutshell, the litigation involved a bitter dispute between Mr Hawkes and Mr Cuddy about Neath, a company with two issued shares, one held by Mr Hawkes and the other by Mr Cuddy (although registered in the name of Mrs Cuddy). Neath is the owner of the assets of Neath Rugby Football Club. It is also one of the two equal shareholders in Neath-Swansea Ospreys Ltd, which owns the prestigious and well known Ospreys Regional Rugby Team (“the Ospreys”). The other share is owned by Swansea Rugby Football Club of which the shareholders are Mr Davies, Mr James and a Mr Roger Blyth. At the material time, Mr Cuddy and Mr Blythe were the joint Directors of the Ospreys, one nominated by Neath and the other by Swansea. By about May 2006, relations between Mr Hawkes and Mr Cuddy had broken down completely, and on 3 May 2007, Mr Hawkes issued a petition brought under Section 459 of the Companies Act 1985, alleging that the affairs of Neath had been or were being conducted in a manner that was unfairly prejudicial to himself as a member of that company; on a cross-petition brought by Mr Cuddy under the same section, similar conduct was alleged against Mr Hawkes. The principal aim of the Hawkes petition was to seize control of Mr Cuddy’s half share in Neath and then to remove him from the Board of the Ospreys. For their part, the Swansea representatives had made clear that if Mr Hawkes was successful, Swansea would petition to wind up the Ospreys rather than have Mr Hawkes on the Ospreys’ Board. By the time the matter had been played out in the Court of Appeal, the litigation involved not only Mr Hawkes and Mr and Mrs Cuddy, but also Neath, the Ospreys and the Welsh Rugby Football Union. According to a schedule of costs prepared for the Court of Appeal, Mr Cuddy has spent over £1.25 million on legal fees.

The period with which I am concerned, however, covers only 8 May 2007 when Mr Richards first met Mr Cuddy, following a recommendation from his then solicitor, Mr John Morris, who was “conflicted out”, until 2 August 2007. It therefore covers the summary Judgment before HHJ Havelock-Allan which was estimated to last one day but took five days to complete. During this period, the work with which Eversheds were involved included the following:

The material before the court includes the following: witness statements by Mr Cuddy dated 1 and 14 October and 3 November 2009 (Cuddy I, II and III), Mr Davies 30 September 2009, Mr Evans 1 and 3 November 2009 (Evans I and II) and Mr Hopkins 3 November 2009. For Eversheds, Mr Richards 26 October 2009 and Miss Ewington 26 October 2009. During the assessment I also had before me Eversheds’ files of working papers which included a bundle of the solicitor/client correspondence (bundle B), together with the breakdown of the bills and composite points of dispute and replies. Both Mr Marven and Mr Bacon lodged skeleton arguments and each prepared written closing submissions.

Bundle B contains a copy of the retainer letter between Eversheds and Mr and Mrs Cuddy which sets out the firm’s terms of business (see exhibit MC1). It is agreed that Mr Cuddy received and signed the letter (which is dated 30 May 2006) (Cuddy I, paragraph 9).

The following are the material terms:

“Dear Mr and Mrs Cuddy

Confirmation of engagement: Mr Frederick Hawkes

I am delighted that Eversheds LLP (“Eversheds”) has been instructed to act on behalf of yourselves in connection with the above matter.

I enclose:

(1)

Our Standard Terms of Engagement which should be read in conjunction with this Confirmation of Engagement Letter.

(2)

A detailed Record of Instructions, which includes information on the work to be undertaken, our fee arrangements, and details of the team who will carry out the work on your behalf and what to do if you are not satisfied with the service you receive. The Record of Instructions and the applicable terms of this letter will constitute the “Engagement Letter” referred to in paragraph 1 of the Standard Terms of Engagement.

(3)

Dispute Management Essential Guide …

Acceptance

If you are happy with the terms set out in this letter, in the attached Standard Terms of Engagement and in the Record of Instructions, please sign one copy of the letter and return it to us …

As discussed, the first steps to be taken in relation to this matter will be to oppose and defend the summary judgment application and to defend the petition generally …

Yours sincerely

Jonathan Richards

Partner

for Eversheds LLP

Record of Instructions

Under confirmation of engagement letter of 30 May 2007

Client: Mr Michael Cuddy and Mrs Simone Cuddy

Matter: Mr Frederick Hawkes …

Your Instructions

To review Section 459 petition issued by Mr Hawkes and to advise on and defend the petition …

Your Legal Team

Your client partner as referred to in the standard terms of engagement and who will lead the Eversheds’ team is Jonathan Richards. We anticipate that this matter will be handled principally by Jonathan Richards and Louise Ewington …

It is not possible to give a realistic estimate of the likely costs involved at this stage given the urgency of the matter and the volume of documentation to be considered. Following the summary application we will provide a budget for the remaining petition.

As mentioned in our standard terms of engagement our charges will be calculated mainly by reference to the time spent on this matter … The current charging rates (exclusive of VAT) of the members of the team whom it is anticipated will be principally involved are:

Jonathan Richards £295

Wayne Davies £175 [it is accepted that this should have said Louise Ewington]

Billing

We will report to you on the amount of outstanding work in progress and disbursements on a monthly basis. We will review this report with you and we have agreed that our invoices will be sent to you monthly covering our fees and disbursements for work carried out in the previous month …

Client Service

Our aim is to provide a service of the highest quality. If you feel at any time that we have failed to meet the standards you expect, please let us know immediately …

Jonathan Richards

Partner

for Eversheds LLP

13 May 2007

Standard Terms of Engagement …

5.

Fees

Our fees in respect of our services are based on the various criteria laid down by statute which states that our charges are to be fair and reasonable having regard to all the circumstances …

We try, however, to be flexible in our charging approach and will consider alternatives to an hourly rate including, for example, fixed fees, blended rates, percentage fees based on specific criteria or retainers. If you require, we can tell you when fees reach a certain level and place a limit on the level of charges that we may incur without further reference to you.

Any estimate is given only as a guide to assist you in budgeting and should not be regarded as a firm quotation or fixed or capped fee unless otherwise agreed in writing …

8.

Invoices

We reserve the right to submit invoices to you at regular intervals (usually monthly) or at appropriate stages in the conduct of the matter …

We reserve the right to request payments in advance of fees, expenses and disbursements …”

The Dispute Management Essential Guide referred to in the retainer letter further stated the following:

“Our [Eversheds] responsibilities

We will

give you the best information we can on likely costs for a particular task

•

in all cases VAT and disbursements will be payable in addition to the costs”

It was not contended on behalf of Mr Cuddy that the Dispute Management Essential Guide formed part of the contract of retainer; that document, to my mind, was simply an information pack although it is referred to by Mr Bacon in his closing submissions.

I should also record that Mr Bacon and Mr Marven were not ad idem about the date on which the terms of the retainer took effect; it is arguable that 8 May 2007, being the date of the first meeting, is the relevant date so that the first interim bill and report on the outstanding work in progress would be due by about 8 June. Alternatively, if the terms were effective only when signed by Mr Cuddy (shortly after 30 May 2007), no bill would be due until the end of June and the second only at the end of July. For my part, I consider the retainer letter simply formalised the terms upon which Eversheds had agreed to represent Mr Cuddy (and Mrs Cuddy) when Mr Richards met Mr Cuddy for the first time on 8 May 2007. I do not believe that this is controversial.

It is Mr Cuddy’s case that Mr Richards gave an oral estimate of £150,000 (plus VAT) for the costs and disbursements Eversheds would charge up to and including the application for summary judgment. The estimate was given orally in the Piercefield public house, Chepstow on either 26 or 28 June or 3 or 4 July 2007, but most probably on 26 June. Accordingly, Eversheds should be limited to the estimate subject to an uplift of £50,000 which Mr Richards told Mr Cuddy in a telephone conversation between 7 and 19 July 2007 would be charged for additional work falling outside the estimate.

If Mr Cuddy be wrong, Mr Marven contends that there should nonetheless be a reduction in the amount allowed on detailed assessment to £200,000, or to a figure above this amount which the court considers it would be reasonable for Mr Cuddy to pay. In reaching its conclusion, the court should bear in mind in particular what Mr Cuddy was told about the likely overall costs as against the level of the invoices he received.

No estimate was given for £150,000 or for £200,000 or, indeed, for any sum. It was made expressly clear to Mr Cuddy by Mr Richards, both orally and in writing, that it would not be possible to provide an estimate until the summary judgment application was over. Accordingly, Eversheds’ costs should not be capped, but should be allowed in the amount that the court has already assessed as being a reasonable sum for the firm to have charged for their work, namely £376,000.

This is a detailed assessment under the Solicitors Act 1974. Accordingly, CPR 48.8-(2) applies and the costs are to be assessed on the indemnity basis, so that the party receiving costs (here Eversheds) receives the benefit of any doubt (see CPR Part 44.4(3)). What is more, the court will not allow costs that have been unreasonably incurred or are unreasonable in amount (see CPR 44.4-(1))

The Rules of Professional Practice relating to solicitors also apply. Those then in force were the Solicitors Costs Information Client Care Code 1999. Paragraph 13.02 says this:

“1.

Introduction

(b)

The main object of the Code is to make sure that clients are given information they need to understand what is happening generally and in particular on:

(i)

the cost of legal services both at the outset and as the matter progresses

…

3.

Informing the client about costs

(a)

costs information must not be inaccurate or misleading...

4.

Advanced costs information – general

The overall costs

(a)

The solicitor should give the client the best information possible about the likely overall costs, including a breakdown between fees, VAT and disbursements.

…

(c)

Giving the “best information possible” includes:

(ii)

giving a realistic estimate; or

(iii)

giving a forecast within a possible range of costs; or

(iv)

explaining to the client the reasons why it is not possible to fix or give a realistic estimate or forecast of, the overall costs and giving instead the best information possible about the cost of the next stage of the matter.

(d)

The solicitor should, in an appropriate case, explain to a privately paying client that the client may set an upper limit on the firm’s costs for which the client may be liable without further authority. The solicitors should not exceed an agreed limit without first obtaining the client’s consent …

6.

Updating costs information

The solicitor should keep the client properly informed about costs as a matter progresses....”

As to estimates, it is agreed that Eversheds did not act for a fixed fee and that an estimate is not a quotation that the work will be carried out for an exact sum. On the contrary, there is an element of “wriggle room” and the figure can go up or down (but not by too much) depending upon whether the work took more or less time than expected. Guidance on this point can be found in MasterCigars [2007] EWHC 233 (Ch). At paragraph 89 (91 in the Bailii report), Morgan J said this:

“In my judgment, so far as a statement of legal principle is concerned, these cases [Garbutt v Edwards (2006) 1 WLR 846) and Lee v Michelin Tyre PLC (1 WLR 846)] are helpful and ought to be applied in the present context in the following way. In a case where a solicitor does not give his client an estimate, the result will not generally follow that the solicitor is unable to recover any costs from his client. In a case where a solicitor does give his client an estimate but the costs subsequently claimed exceed the estimate, it will not follow in every case that the solicitor will be restricted to recovering the sum in the estimate. What these two decisions of the Court of Appeal repeatedly state is that the court may "have regard to" the estimate or may "take into account" the estimate and the estimate is a "factor" in assessing reasonableness.”

In MasterCigars v Withers (2009) EWHC 651 (Ch) Morgan J said this 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.”

It follows that if Mr Marven is correct on the estimate, Eversheds will be held to £200,000 or thereabouts, or alternatively to such sum as it is reasonable for Mr Cuddy to pay applying Reynolds v Stone Rowe Brewer [2008] EWHC 497 (QB) (see paragraph 79-80 post if there was no estimate).

Since the extent of any common ground between Eversheds and Mr Cuddy is limited, it is appropriate to reconstruct the sequence of events between 4 May and 31 July 2007 by reference to contemporaneous documents such as court orders, letter, emails etc. All references are to 2007 save where otherwise indicated.

The parties also agree about the following:

Mr Cuddy’s case hinges on whether Mr Richards gave him an estimate that the costs would be limited to £200,000 for the work Eversheds had been instructed to undertake on his behalf. He contends that a discussion took place in the Piercefield in late June 2007; (he now accepts 27 June stated in Cuddy I may be incorrect and it could have been either 26 or 28 June, or 3 or 4 July). The occasion was after a day in court. Mr Cuddy recalled that he, Mr Evans and Mr Richards had intended to call in at a pub just off the Old Severn Bridge crossing, but as this had been closed, they chose the Piercefield near Mr Richards’ home in Chepstow. According to Mr Cuddy’s statement (Cuddy III, paragraph 24), Mr Richards stated that the total fees would be £150,000. Mr Richards also demanded payment of £100,000, which Mr Cuddy said he could manage by the end of July 2007, to which Mr Richards had responded by saying that if his request was not met “I will have your f_***ing house” or words to that effect. It was Mr Cuddy’s belief following this conversation that Eversheds’ costs would be £150,000. In a subsequent telephone conversation with Mr Richards after he had received the interim invoices, Mr Cuddy recalled his being told by Mr Richards that, due to unpredicted work, he anticipated that the total fees would be around £200,000 (Cuddy 1, paragraph 23). However, it had not been until after Mr Cuddy had terminated the retainer and he had received the final invoices that he had learned that the costs exceeded £432,000, far above the revised estimate of £200,000. Until then, he had no idea that Eversheds’ costs amounted to anything like that figure.

Mr Evans (Evans 1, paragraph 6) confirmed Mr Cuddy’s account of what had been said at the Piercefield. In his view, there had needed to be a “catch up” meeting as to “where we were going” during the trial. He could not remember the exact date either, but he did remember that (a) the venue was the Piercefield and (b) the nature of the discussion. Mr Evans recalled that it had been Mr Richards who had raised the question of costs and that he had mentioned the figure of £150,000. Mr Richards had said that he (meaning Eversheds) needed to be paid, that the costs were £150,000, and that he would take Mr Cuddy’s house if necessary to ensure that that happened. Mr Evans had interpreted this as meaning that the costs were going to be £150,000 for what Mr Cuddy had instructed Eversheds to do. At first, Mr Evans had thought the reference to Mr Cuddy’s house had been made in jest. In fact, this had not been the case because when Mr Evans had mentioned that Mr Cuddy’s house was, in fact, in Mrs Cuddy’s name, Mr Richards had replied to the effect that “that was alright, because she was a Defendant too”.

Mr Richards’ recollection was quite different. At paragraph 61 of his witness statement Mr Richards says this:

“61.

I did not meet Mr Cuddy in a pub in Chepstow on 27 June 2007. I deny that I told Mr Cuddy on 27 June 2007 or at any time that the “total fees will be £150,000”. By 27 June the combined fees of Eversheds and Counsel were already £250,000 plus VAT.

62.

Mr Cuddy’s recollection of meeting me in a pub in Chepstow on 27 June is wrong. On 27 June I spent the day in Cardiff. I met Mr Cuddy at our office late that day and was with him there until 7.30 pm. My time record for this day (page 53, core bundle A) confirms this.”

The inference to be drawn from paragraphs 61 and 62 is that there was never a meeting and that Mr Cuddy made it all up. In fact, what Mr Richards meant (as he made clear in the witness box) was that whilst there was no meeting on 27 June, that did not mean that no such meeting had ever taken place. During cross-examination, Mr Richards agreed that there had been a discussion in a pub but that had not been on 27 June because he had spent that day in Cardiff. Mr Richards thought it unlikely that the meeting had been during the trial; more likely, he thought, it occurred after Mr Cuddy had received the interim invoices or when the judgment was handed down. He did not recall Mr Evans having been at the Piercefield, but could not be certain on that point. At all events, Mr Richards denied providing an estimate of £150,000 in a pub or anywhere else.

In reaching my decision I have reviewed the common ground, the matters about which the parties disagree and the documents before the court. They lead me to conclude that it is more likely than not that the following occurred.

On 26 June, Mr Richards, Mr Cuddy and Mr Evans had been in court on the first day of the summary judgment application, Neath had been a party since 13 June 2009 much to Mr Evans’ chagrin (transcript page 60 lines 22 to 43). At the end of the proceedings, the trio agreed to meet in a pub to discuss the day’s events. Both Mr Cuddy and Mr Evans think it could have been that date (Evans II, paragraph 4 and Cuddy III, paragraph 24). Mr Richards does not know (transcript page 78, line 22) but he accepts a meeting did take place in a pub. In my judgment it is improbable that it was after Mr Cuddy had received the interim invoices or after judgment as Mr Richards has suggested. In my view it is more likely that it was the 26^th because Mr Richards did not attend court on the 27th and Mr Cuddy did not receive the interim invoices until after the summary judgment hearing had been concluded.

Because the intended pub had been shut, the trio went instead to the Piercefield. The question of costs arose. Mr Evans was concerned that the dispute between Mr Cuddy and Mr Hawkes was or could potentially become, prejudicial to Neath. Aware of what his costs were to mid June because on his case he had obtained a print out up to 13 June and had or was on the point of raising invoices for this sum (Bacon closing submissions paragraph 73 a), Mr Richards mentioned the figure of £150,000, and that he would be expecting £100,000 to be paid on account. From Mr Evans’ view this was memorable because Mr Richards had added that if he was not paid, he would “have [Mr Cuddy’s] f *** ing house”, an exchange that became even more memorable when it emerged that the house being in Mrs Cuddy’s name would not be a problem to payment because she was a party to the proceedings. From Mr Cuddy’s perspective, in the absence of any other information about fees, this was what the summary judgment would cost.

Having given due consideration to this evidence, I accept the accounts of Mr Cuddy and Mr Evans that a figure of £150,000 came up in conversation, and whether it was said in jest or not, that Mr Richards had stated that he would “have” Mr Cuddy’s house if he did not pay. I reach this view because in the absence of any attendance note or other documentary evidence that is supportive either way, I found Mr Cuddy and Mr Evans both to be unshakeable in their recollections whereas Mr Richards was not. His witness statement originally gave the impression that there had been no meeting at all. He clarified that point orally but still could not be sure whether it was during or after the trial and whether Mr Evans had or had not been present. There is also a good reason for Mr Richards having had a figure of £150,000 in mind which he then mentioned; he had already drafted the interim invoices in this sum and knew that that was Mr Cuddy’s exposure up to 13 June. For these reasons, I prefer the evidence of Messrs Cuddy and Evans about the Piercefield.

However I do not agree that these mere words can be elevated to the status of an estimate with the consequences that Mr Marven urges on me must follow. I reach this conclusion for the following reasons. First, both Mr Cuddy and Mr Evans accepted that the meeting at the Piercefield developed an importance which had not existed in their minds at the time. Mr Cuddy’s evidence was that it was only as time went by that it had become clear how very relevant the Piercefield had been (transcript page 27 line 20). Mr Evans’ view was that none of this was then important (transcript page 67 line 34) although what he thought must be qualified by the fact that it was not to Mr Evans that the estimate (if it be that), was being given. Second, no confirmation of the figure in question was requested or given and it is common ground that no individual document actually mentions the sum of £150,000. Third, the fact that the conversation about £150,000 was not thought to be of particular relevance or importance at the time, does not sit comfortably with Mr Cuddy’s submission to the Court that he had been very disturbed and shaken by what had taken place (Cuddy 1, paragraph 21). In my judgment, if Mr Cuddy believed the discussion about £150,000 was an estimate, he is mistaken in this respect; expressed in legal-ease, the form of words used by Mr Richards was not a binding estimate from which Eversheds cannot now resile, and to which the firm is bound so the estimate point fails.

Such a conclusion is consistent with Mr Evans’ evidence. His response to Mr Bacon’s question “how was this [the £150,000) mentioned?” was: “the costs were £150,000”. In my opinion that is open to more than one interpretation, namely that it was £150,000 to date, or alternatively that it was going to be £150,000 all-in. It follows that whilst the figure was mentioned by Mr Richards, it was not said in the context “It’s £150,000 for the job”, albeit that such a figure to an experienced solicitor such as Mr Evans to cover a s459 petition and summary judgment, might not have appeared out of place. It follows that Eversheds’ costs will not be limited by what was said at the Piercefield.

If I am wrong and Mr Cuddy is right, I need to consider whether the estimate was increased to £200,000.

On or just before 29 June 2007, Mr Richards prepared the interim invoices which were dated 29 June, but he did not mail them to Mr Cuddy until at least 6 July (the date of his covering letter). Between that date and 19 July 2007 the invoices came to Mr Cuddy’s attention. On his case they were in line with the figure he had been given at the Piercefield, but in a subsequent conversation with Mr Richards, there had been an upwards revision which had concerned him because the case would cost another £50,000 taking the total to £200,000. Mr Richards agrees that there was a conversation, but denies he said “£50,000”. Like Mr Cuddy, he cannot recall the exact date of the conversation.

In my judgment, the likelihood is that Mr Richards’ actual words were to the effect that “it could be £200,000”, meaning that sum again, not £50,000 on top of the £150,000, total £200,000 as Mr Cuddy thought. For his part, Mr Cuddy, having received the interim invoice for £150,000 believed that the total would now be £200,000. Unnerved by this course of events, he met Mr Davies on 19 May and informed him of his likely exposure. Having not seen either the invoices or any breakdown of them, Mr Davies then expressed his concern in no uncertain terms to Mr Richards over the telephone on 19 July 2007. Mr Richards’ response was to send an e mail to Mr Cuddy the following day (see paragraph 63 post).

As I have said, 3 days later the judgment was handed down and a week after that, Mr Cuddy withdrew his instructions. At no point was either side able to direct me to any document that was supportive either way, either confirming to Mr Cuddy that the job would cost an additional £50,000 (his case) or that there would be a further £200,000 to pay (Eversheds’ case). In these circumstances, I am not prepared to find that there was a revision to the figure mentioned in the Piercefield. Mr Cuddy’s recollection is just too vague when unsupported by any corroborative document and in view of Mr Richards himself having no memory of such a conversation. The submission that the estimate was revised upwards fails.

Should there nonetheless be a reduction to £200,000 or to a figure above this amount which, in all the circumstances (in particular having regard to what Mr Cuddy was told about the likely overall cost and the invoices he received), the court considers it is reasonable for Mr Cuddy to pay?

If Mr Marven is to make good his client’s case on the third issue, he will need to satisfy me that:

Mr Bacon’s riposte, in brief, is that (i) Eversheds complied with the Code and the terms of the retainer, (ii) costs generally were discussed as the matter progressed (closing submissions 42c), (iii) a print-out of the up to date costs was provided on 15 June 2007 (iv) the Court has already decided what sum it is reasonable for Mr Cuddy to pay, namely £383,470.26 but agreed at £376,000, (v) any failure to comply with the Code is a regulatory matter to be dealt with by the Legal Complaints Service/ Solicitors Regulation Authority and is not a matter over which the court has jurisdiction (closing submissions 35) and (vi) there is no authority for Mr Marven’s proposition that having assessed under detailed assessment the sum that it is reasonable for the client to pay, the court is then permitted to make further reductions to a different or lower figure (closing submissions paragraph 2 (vi) and (vii)).

To address these points, in my view, it is important to analyse exactly what costs information Mr Cuddy was given and when. If, thereafter, I am satisfied that Eversheds were in breach of the Code and/or the terms of the retainer, it will then be necessary to decide whether Mr Marven is right, and that the firm’s failure in this respect permits the Court to reduce the costs still further from the sum assessed under the Act and the CPR.

Mr Richards gave evidence that he had been generally aware of what the level of costs were and had communicated that fact to Mr Cuddy on a regular basis (transcript page 76, line 37); “I gave him what I felt was the best information that we could in the circumstances” (transcript page 92, line 1).

Mr Bacon relies on the following to support Mr Richards’ evidence in this respect:

In Mr Bacon’s submission, the combination of these factors support Eversheds’ case that the level of costs information which the firm gave Mr Cuddy complied fully with both the Code and the retainer letter.

The countervailing evidence of Mr Cuddy focuses on the following. Save for:

To enable me to reach a decision on this mass of conflicting evidence, it is first appropriate to approach the task by reference to how the case for Eversheds unfolds if I accept Mr Richards’ account.

The high watermark of Eversheds’ case is that in accordance with the terms of the client care letter, Mr Cuddy was told that it was impossible to provide an estimate until after summary judgment. A month into the litigation Mr Cuddy was given a breakdown of counsel’s fees and Eversheds’ costs up to 13 June, so he knew the figure incurred at that date was about £150,000 plus VAT, which sum was billed on 29 June with the covering letter being sent a week later. At subsequent meetings and in telephone conversations which were almost daily, Mr Richards told Mr Cuddy regularly about costs issues. In line with the retainer letter, the next bill was due at the end of July. When this was delivered, Mr Cuddy terminated his instructions so any estimate for further work was otiose. In Mr Bacon’s submission, in acting in this way, Eversheds met their promise to report on the amount outstanding, work in progress and disbursements on a monthly basis (closing submissions paragraph 42).

For his part, Mr Cuddy is adamant that Mr Richards is mistaken in his recollection that he handed him any print-out on 15 June or at any other time. He also disputes absolutely that any such information was imparted orally. He contends that the only figure he was told was the £150,000 in the Piercefield, which was revised upwards to £200,000 by Mr Richards over the telephone after 6 July.

In so far as written information about costs is incurred, these conflicting submissions can be reconciled in the following way. It is agreed that no further costs information was provided by Eversheds to Mr Cuddy after his receipt of the interim invoices but before his decision to terminate the retainer (Mr Bacon’s closing submissions paragraph 32(h)). Accordingly, if Mr Cuddy is correct that he was not handed the print-out, it becomes clear that he did not receive any written costs information other than the retainer letter from start to finish, save for the interim bills. In view of this, it is critical to Eversheds’ case on costs information that Mr Richards is correct about the print out and that his evidence is accepted on this point.

The starting point in deciding whose evidence to prefer about the print out lies in a review of any contemporary documents which exist and throw light on the recollections of the protagonists (see Earles v Barclays Bank PLC (2009) EWHC 2500 (Mercantile) for a recent review of the authorities on this point).

The first and indeed only document deployed by Eversheds in this respect, is the print out itself. On the date in question, 15 June, Mr Richards recorded 8 hours on the case, which included dealing with a case management conference by telephone. The tasks he undertook that day are set out on page 47 of the print-out. Nowhere is it recorded that a meeting with Mr Cuddy took place. Mr Bacon attempted to explain this by saying that the description encompassed many tasks and that the meeting time had not been expressed separated out, but rather had remained within the block of 8 hours claimed. In my view, his submission would have carried more weight had Mr Bacon been able to direct me to a subsequent document such as a letter, e mail or attendance note referring to the meeting but he was unable to do so.

A second, but not contemporary document is the breakdown of the bills but this too makes no reference to such a meeting under the “time spent on the client”, although it was prepared by an experienced costs draftsman with considerable care and in great detail. The documents item at schedule A does not record any time for a meeting either, the previous entry having been made on 13 June and the next entry on 27 June 2007.

There is also Bundle B, Eversheds’ solicitor/client file. This contains correspondence and e mails passing between Eversheds and Mr Cuddy together with various attendance notes but Mr Bacon was unable to draw my attention to any which gave costs information save for the retainer letter, interim bills and a note about Counsels’ hourly rates.

For Mr Cuddy, the only contemporary document is a copy of his diary for the 15^th June (exhibited to Cuddy III). This makes no reference to a meeting with Eversheds but records other meetings that took place that day. In my opinion, if Mr Cuddy had had a pre-arranged meeting booked with Mr Richard’s that day, it is likely the diary would have said so. It did not.

My conclusion on the contemporary and other documents is therefore as follows:

Is there anything in the oral evidence which was given that could lead to a different conclusion?

Mr Richards’ evidence was that Mr Cuddy had not attended the telephone CMC on 15 June, but had “popped” into the office during the course of the day, as was his habit, at which point he had been given the print-out. There were, in any event, many meetings with Mr Cuddy that had not been recorded.

Miss Ewington confirmed that Mr Cuddy was in the habit of “popping into” the office without an appointment and that he and Mr Richards would then have meetings on their own, but on the crucial date in question, 15 June, Miss Ewington was unable to say whether they had done so. Certainly there was no attendance note on the file that she had written that supports Mr Richard’s recollection.

Mr Cuddy’s evidence, as I have said, is that there had been no meeting on the 15^th June and no handover of any print out of any nature.

In my judgment, the only conclusion to which this combination of facts can drive me is that no meeting took place on the 15^th June and that Mr Cuddy was not given the print-out on that date. The absence of any attendance note or subsequent e mail or letter is persuasive in Mr Cuddy’s favour; after all, it would have been a simple task for Mr Richards to have recorded what he had given Mr Cuddy in this way. Such documents as there are favour Mr Cuddy and the fact Miss Ewington was unable to corroborate Mr Richards’ account make it inherently unlikely that any meeting took place on 15 June. I prefer Mr Cuddy’s evidence on this point.

A further matter that is telling on this point is to look at what Mr Cuddy did when it is agreed he received costs information, namely the interim bills after 6 July 2009. His reaction was to contact Mr Davies because, on his, Mr Davies’ evidence, he (Mr Cuddy) had £150,000 to pay and was “very confused, very upset and he needed support – both physical and mental. He was distraught” (transcript page 53, line 37). Had Mr Cuddy, indeed, been handed the print-out on 15 June, in my judgment, in all likelihood his reaction would have been the same as it was in mid July about the level of the costs. At the very least he would have taken the matter up with Mr Davies, since he was paying some of the fees. I consider the reason why Mr Cuddy did not say anything about the costs, on or shortly after 15 June, is because Mr Richards had not provided him with the print out. Had he done so, I am satisfied that Mr Cuddy would have raised his concerns with Mr Davies, in which case the conversation with his fellow financier on 19 July and subsequent email by Mr Richards on 20 July would have occurred a month earlier.

The contents of Mr Richards’ email of 20 July are also significant. It said this ;

“Dear Mike

I am writing further to my telephone conversation with Robert Davies yesterday concerning payment of the outstanding invoices. He has asked for copies of the invoices so I am copying him in on this email.

As I explained to Robert on the telephone you and Simone are my clients in this matter and I am not going to get involved in any arrangements between you and third parties concerning reimbursement between you. I made this clear to you all at our initial meeting on 8 May and the position has not changed.

I will be sending you a letter later today setting out the current financial position between us. The current invoices are now overdue and I will be seeking a payment on account in respect of unbilled work in progress to bring matters up to date.

I am not prepared to get involved in lengthy discussions about fees until I have received some payment. We have carried out a considerable amount of work at short notice on good faith. You have accepted our terms and conditions of business and these must be honoured. The current invoices must be paid immediately and I will let you know what is required by way of a payment on account. If there is any issue about this then please let me know at once. I will not be prepared to continue working on this matter unless some payment is forthcoming immediately. Unless this is resolved satisfactorily I will have no choice but to stop acting apply to the court to come off the record and take separate action to recover my fees.

As you will probably gather I am disappointed that I am having to write to you in these terms but I was not impressed with having to deal with Robert Davies in relation to fees incurred on your behalf. Robert has not been directly involved in these matters, he is not aware of the amount of work that has been done and gave the distinct impression that he wanted to start haggling over the detail. My contract is with you and Simone not with him so I expect to deal with you whatever arrangements exist between you and them are not my concern.

Regards

Jonathan

Jonathan Richards

Partner.”

Strikingly, the email makes no mention of the print-out. Since this was the information that Mr Davies had requested, it might be expected that there would at least have been a passing reference to it, since, on Mr Richards’ case, this had already been provided to Mr Cuddy on 15 June so he, Mr Cuddy, would have known exactly how the costs had been expended. Mr Richards accepts that Mr Davies wanted a breakdown (witness statement paragraph 72); had one been provided already, he could have told Mr Davies “get it from Cuddy – he’s already had a print-out” but the e mail is silent on this point too. I consider this further supports Mr Cuddy’s evidence that he never received the print out.

Against this, Mr Bacon has made the point that it was Mr Cuddy’s evidence that he did not read important documents such as client letters or bills but my impression of Mr Cuddy as a witness was that if he was not a details man, he was certainly a “bottom line” man (see for example his answers, transcript page 26, line 36, et seq.). For my part, I consider Mr Cuddy gave his evidence truthfully and to the best of his ability. Although at the outset I formed the impression that in answering many of Mr Bacon’s questions by the words “I don’t remember” he was being evasive, two hours later I was in no doubt that he was being truthful. Where Mr Cuddy remembered matters, he said so and was unshakeable. Where he could not recall them, he said so and did not make any attempt at invention in order to cover the gap. Mr Cuddy was not a perfect witness, as Mr Marven conceded in his closing submissions (take as an example an error he had made about having paid £5,000 on account (see Cuddy I paragraph 6 and Cuddy II paragraph 6)) but in my judgment, he was honest. That is not to say that I consider Mr Richards was misleading the court. On the contrary, as he himself said, the case was intense and there were many documents which he needed to send Mr Cuddy and upon which he was required to take instructions. In the hurly-burly of the litigation I consider Mr Richards is simply mistaken in his recollection of what he handed Mr Cuddy in mid June and the evidence he has given has fallen short of proving or satisfying me that the material in question was provided.

Having found that Mr Cuddy did not receive the print-out in June, Eversheds’ case on the provision of costs information now unravels. On Eversheds’ own evidence, Mr Cuddy was given no written information about costs (save for the print out) from 30 May (the retainer letter) until receipt of the 29 June invoice in the second week of July and nothing thereafter (closing submissions paragraph 32(h)). Accordingly, unless costs were discussed over the telephone or face to face, which Mr Cuddy flatly denies save for the “£50,000” conversation and for which there are no attendance notes or letters to support, the only costs information, written or oral, that Mr Cuddy would have received from the date of the client care letter were the invoices in the second week of July. Thereafter Eversheds accept that no further costs information was provided between the receipt of the invoice and the termination of the retainer (closing submissions, paragraph 32(h)).

Mr Richards’ answer is that he regularly discussed costs and gave him the best information he could in the circumstances (witness statement paragraph 64 et seq.). In any event, Mr Cuddy was not interested in costs. He just wanted to win. His responses to costs issues were simply to shrug his shoulders. He did not show any interest in the detail. Mr Cuddy had made no comment either then or subsequently.

I do not accept Mr Richards’ evidence that Mr Cuddy was told the position in their regular discussions, either face to face or by telephone. The material before the Court simply does not support this; firstly, Mr Richards did not trouble to prepare attendance notes to support these conversations. Secondly, I observed Mr Cuddy as a witness several times to shrug his shoulders. In my judgment, this could not be taken as an indication, still less confirmation, that each such a shrug meant Mr Cuddy was agreeing with every proposition put to him. Far from it. In my opinion, this is simply a mannerism that Mr Cuddy has (if I may put it like that), no more, no less.

At this point I remind myself of the Code at paragraph 4, the standards of which Mr Bacon accepts Eversheds were obliged to meet (closing submissions paragraph 17) :

“Advance costs information – general

The overall costs

(a)

The solicitor should give the client the best information possible about the likely overall costs, including a breakdown between fees, VAT and disbursements.

(c)

Giving “the best information possible” includes:

(ii)

giving a realistic estimate …”

The notes to the 2007 Code also provide:

“It is often impossible to tell at the outset what the overall costs will be. Rule 2.03 allows for this … if a precise figure cannot be given at the outset, you should explain the reason to the client and agree a ceiling or review dates.....

6.

Updating Costs information

The solicitor should keep the client properly informed about costs as a matter progresses.... ”

I remind myself too of the terms of the retainer letter:

“Billing

We will report to you on the amount of outstanding work in progress and disbursements on a monthly basis. We will review this report with you and we have agreed that our invoices will be sent to you monthly covering our fees and disbursements for work carried out in the previous month …

Our [Eversheds] responsibilities

We will

give you the best information we can on likely costs for a particular task.”

Mr Marven submits that if (as I have found) no estimate was given, it would be perverse if a solicitor who failed to comply with the Code were to be in a better position than a solicitor who did so, albeit that the estimate given was too low. On the facts before me, I do not agree with him on this point. Firstly, there are the notes to the Code which acknowledge that an estimate is not appropriate in every case. Second, Mr Richards made it plain at the outset that he could not give an estimate until after the disposal of the summary judgment as the case was fast moving and any figures given would quickly have been out of date. He had grounds for that view since it quickly became evident that Mr Hawkes had instructed his solicitors to throw everything but the kitchen sink at Mr Cuddy, writing on occasions up to six letters a day. It follows that I reject in so far as it is advanced, the submission that Eversheds were in breach of the Code for want of an estimate.

I reach a different view so far as paragraph 6 of the Code and Eversheds’ terms and conditions are concerned. Having found that Mr Cuddy did not receive the print-out on 15 June, even if Mr Richards is mistaken in his recollection that a figure of £150,000 was mentioned at the Piercefield, the first written notification that the costs to mid June were at this level was only given in the interim invoice received by Mr Cuddy after 6 July. In my view this does not meet the requirements of paragraph 6 of the Code nor the standards Eversheds set themselves in their retainer letter, still less does it comply with the Dispute Management Guide.

To discharge its obligations about providing costs information, I consider that in the absence of an estimate, Eversheds ought regularly to have told Mr Cuddy about the level of the costs he was incurring. My findings on the evidence have been that the first time Mr Cuddy was given a report was when he was sent the interim invoices on 6 July, but they only gave the position up to 13 June. In fact by 6 July, the costs were over £350,000, information that was available to Mr Richards “at the push of a button” (see transcript of his evidence page 77 lines 36 to 37) via Eversheds’ sophisticated time recording system (RAPID). This enables anyone interested to access the work undertaken by each fee earner, the date, the hours billed, the rate and the billed value (Richards witness statement paragraphs 44-46) so that a statement of the firm’s costs was “available to print-off the system at any time” ( Mr Richards- transcript page 72, line 11).

I do not consider it was Mr Cuddy’s duty to request this information; it was Eversheds, themselves, who had written the terms of the retainer letter and the onus was on them, as the solicitors with access to the figures, to provide the relevant material. If it was impossible to give an estimate until after the summary judgment ended on 4 July, in my judgment it certainly was not impossible to tell Mr Cuddy what he had spent and what he would be likely to incur in the immediate aftermath. Given the availability of RAPID, it is reasonable to ask rhetorically, what was difficult about telling him “We have spent £150,000 to 13 June; next week we have two meetings arranged, one conference and a case management conference which will be attended by counsel. In addition there will be correspondence from Hawkes’ solicitors to address. The likely charge will be £ X, but we cannot give an estimate beyond the next 7 days for the reasons we have already given”? If, at the end of the week, this information proved to be inaccurate because unpredicted costs had arisen, Mr Cuddy could have been told the revised position “at the push of a button”; having found instead that apart from the interim invoices, Mr Cuddy was given no costs information from the date of the client care letter until he received the interim invoices and thereafter nothing until delivery of the final invoice, in my judgment Eversheds breached of the terms of the retainer and paragraph 6 of the Code. In short, he was entitled to reports about costs but did not get them.

Mr Marven states in paragraph 21 of his closing submissions that there is no direct authority on what should happen where no express estimate has been given but where, as here, the solicitors failed to give the best information possible about the likely overall cost. In his submission, the question must be answered in the same way as if an estimate had been given, namely, what is it reasonable for the client to pay?; (see Reynolds v Stone Rowe Brewer [2008] EWHC 497 (QB) paragraph 71) He argues that where proper estimates are not given, it is right to look at other information provided (expressly or by implication) to clients and to what they were entitled to infer from that about the costs to the end of a particular stage in the litigation. In the present case, Mr Marven submits that I should have regard to what Eversheds indicated to Mr Cuddy about the costs for the whole action and to what payments he was requested to make as the claim went along.

As to the first point, Mr Marven submits that the message conveyed by Eversheds at the outset was that the total litigation would cost some hundreds of thousands and accordingly the Court should order a proportion of that figure to reflect the fact that the work undertaken by Eversheds only reached the summary judgment stage. He contends that £200,000 would be a fair reflection. As to the second point, Mr Marven argues that as the first invoice was for only £172,000 odd, a sum of round £200,000 would be a fair reflection also. Moreover, Mr Cuddy had not been asked to pay any money on account.

Mr Bacon submits that there is no basis in law for the Court to make a further reduction. He argues that it would be in flat contradiction to the agreed terms of business if such a reduction were to be made to the costs found to have been reasonably incurred and reasonable in amount.He contends that having assessed the reasonable costs, the court cannot apply a further reduction.

I disagree. First, authority for the court to do so is plain from MasterCigars at paragraph 101, in respect of which counsel in Reynolds did not invite Tugendhat J to take a different view (see paragraph48). At 101, Morgan J said this:

“ ....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.”

For his part, Tugendhat J said this at paragraph 57:-

“I assume that the Solicitors have spent a reasonable time on reasonable items of work, and that the charging rate is reasonable. But I find that the resulting figure exceeds what it is reasonable in all the circumstances to expect the client to pay...”

Second, the court will not allow costs that have been unreasonably incurred or are unreasonable in amount (see CPR 44.4-(1) ante). If such costs were incurred in breach of the Code, in my opinion they too are vulnerable to reduction. It follows that I am satisfied I can reduce the costs still further from the assessed amount in deciding what is a reasonable sum for Mr Cuddy to pay.

In reaching my conclusion on this point, I bear in mind the backdrop against which the fees were incurred. There is no issue that this was a major piece of litigation. So far as Mr Hawkes was concerned, he had long been planning his attack on Mr and Mrs Cuddy, and once the petition was issued, he instructed his Solicitors to drive the case forward relentlessly, so that Mr Cuddy had no choice but to run at Mr Hawkes’ pace or give up. Once Mr Cuddy had chosen to stand his ground and fight, in my opinion the litigation became one of those cases which takes over the lives of the lawyers, requiring their undivided attention in court, out of court, in office hours, out of office hours and at weekends. I have not lost sight of this fact in deciding what is a reasonable sum for Mr Cuddy to pay.

That all said, there were breaks in the litigation when Mr Richards would have been able “to come up for air”, so to speak. One such occasion was at the conclusion of the summary judgment on 4 July, when HHJ Havelock-Allen QC reserved his judgment. By then the hearing had seriously overrun. Mr Richards and Eversheds could not be responsible for that; indeed, it is not a charge that Mr Cuddy levels at him. Nonetheless, from then until the end of the retainer, Eversheds ran up a further £91,754.86 (including VAT) in costs and disbursements when the only court appearance in this period was the handing down of the judgment on 23 July. In my judgment, there is nothing on or after 4 July that would have prevented Mr Richards from:

In the event, Mr Richards did neither of these things, as a result of which, in my opinion, it is not be reasonable to expect Mr Cuddy to pay over £90,000 for under a month’s work when the only major task he could anticipate being undertaken in this period was attending the handing down of the judgment.

A further factor which bears with me on this point is to consider what Mr Cuddy would have done had Mr Richards actually told him how much the trial had cost and what his likely charges would be for the remainder of July. Mention was made by Mr Marven that had he had proper costs information, Mr Cuddy might have gone elsewhere, but in my view it is idle to suppose that he would have done so before the result of the summary judgment was known. But as Mr Marven submits, Mr Cuddy could have done other things had he been told that from the moment the Judge rose on 4 July, the costs for the rest of the month could approach £100,000. In all likelihood I consider, for example, that Mr Cuddy would have told Mr Davies straightaway, who, as a witness, gave me the impression that he wished to know precisely how his money was being spent. As businessmen, I believe Mr Cuddy and Mr Davies would have then discussed how the coat of legal expenditure could be cut according to the cloth, to see if there was any scope for limiting their joint outlay. For example, would it have been essential to have both Leading and Junior Counsel attending on the handing down, or was this a task that Junior Counsel could undertake alone? Did Mr Richards need to attend, or would it have been sufficient for Ms Ewington alone to be present? If Mr Hawkes won, how much would counsel charge for advising on the merits of the appeal, and so on? Other matters which Mr Cuddy could reasonably have been expected to know about would have been the need for Eversheds to deal with Mr Hawkes’ solicitors’ letters in this period but he would also have been aware that the lengthy drafting sessions he had spent with Mr Richards leading up to the hearing would no longer be required. It follows, in my judgment, that Mr Cuddy’s reasonable expectation would have been that the costs to the end of July ought to be far lower than those that had gone before. Indeed, as he said in his evidence, the majority of the costs would have been expended by the beginning of that month (see transcript page 32 line 3).

I have already given my reasons for preferring Mr Cuddy’s evidence about whether or not Mr Richards provided costs information in meetings and over the telephone. With the arguments on summary judgment having been completed and absent any information from Mr Richards about what the next stage could cost, in my judgment, Mr Cuddy could not reasonably have had in mind that the charges for the rest of July would be getting on for £100,000 or a figure anywhere that amount. I consider these are relevant factors to take into account in deciding how much it was reasonable for Mr Cuddy to pay.

Plainly the answer lies somewhere between £376,000, being the sum agreed following the assessment and the figure contended for by Mr Bacon, and £200,000, being the figure advanced by Mr Marven. Having weighed the matter, I do not consider it would be just to revisit the pre-summary judgment hearing costs. First, Mr Richards told Mr Cuddy at the start that he could not give a realistic estimate until the summary judgment hearing was over. Second, had Mr Cuddy been told that as the case was overrunning, the costs would be more, I do not consider he would have bailed out at that point. In any event, Mr Cuddy was in court and could see for himself that the overrunning was not Eversheds’ fault. Knowing the hourly expense rates, he would have been able to work out for himself the costs of each extra day would be at least £10,000. Third, Mr Cuddy has settled Mr Hollington’s fees on the basis of an agreed reduction. If I was to reduce the summary judgment costs further, this would, in effect, unpick the agreement Mr Cuddy reached with Mr Hollington but at Eversheds’ expense, since they would be obliged to bear the decrease. For these reasons I shall not make any changes to the assessed costs up to 4 July.

I reach a different conclusion for the post summary judgment hearing period. As I have said, after 4 July the pressure let up and there was no reason why Mr Richards could not have updated Mr Cuddy as to where he was up to that point, and where he was likely to be costs-wise by the end of July. Based upon his then knowledge, Mr Cuddy could expect to pay for attending the handing down of the judgment and, depending upon the result, for some advice on appeal. In my opinion he certainly would not have been expecting to pay without prior notification over £4,000 for each subsequent working day as has been the case.

As things currently stand, Mr Cuddy is due to pay £376,000 less the £150,000 paid on account. Taking into account the factors I have set out above in paragraph 85, the fact that under CPR 44.4-(1) the court will not allow costs that have been unreasonably incurred and doing the best I can, in my judgment a reasonable amount for Mr Cuddy to pay after the Judge rose on 4 July to the end of the retainer would be in the region of £25,000 plus VAT instead of the £91,754.86 charged. As stated by Morgan J in MasterCigars, the excess is not recoverable. It follows that when this has been deducted, the costs will be reduced significantly. For convenience I propose to round the figures and assess Eversheds’ costs and disbursements at £325,000 inclusive of VAT to reflect this reduction. Therefore the final costs certificate will issue in the sum of £325,000 less £150,000 paid on account less £57,500 paid to Mr Hollington, leaving a balance due of £117,500.

Both Mr Bacon and Mr Marven made other points which for completeness I should deal with but which, in the event, did not assist me significantly in reaching my decisions in this case. It was said in the course of argument that because Mr Cuddy has paid Geldards hundreds of thousands of pounds, this was indicative of the fact that he cared not about how much the case was costing when Eversheds were instructed. Mr Cuddy’s evidence, which I accept, was that Geldards have provided stage by stage estimates which has enabled Mr Cuddy “to keep tabs” on the costs and to budget appropriately. Next, it is agreed that there was a blazing row between Mr Richards and Mr Evans about the case in a coffee shop which on the former’s evidence took place on 26 June 2007, and on the latter’s case in early July. It matters not. Mr Richards thought the argument was about changes to Mr Evans’ witness statement. Mr Evans’ recollection was that it concerned the level of costs being expended but whoever is right, it is not clear to me how this dispute bears upon the costs that it is reasonable for Mr Cuddy to pay in this case.

The costs are allowed at £325,000 inclusive of VAT. I propose to deal with (and assess) the costs of the reference and any applications for permission to appeal when this judgment is handed down, and the parties should be ready to address both at that time.

In the result, the reductions will bear heavily on Eversheds’ professional charges in circumstances where the firm can assert with justification that Mr Cuddy’s affairs were dealt with conscientiously and urgently. When the reductions to Miss Stonefrost’s fees are taken into account and which Eversheds must bear unless she is willing to discount them, the firm will be left with heavily reduced professional charges for handling this difficult case. Whilst this might give the appearance of being unjust, I observe that in Reynolds, Mr Justice Tugendhat found that that case had been “a disastrous experience for the claimant and little better for the solicitors” (see paragraph 69), but even then he did not take any steps to address this situation beyond the detailed assessment of the costs. In any event, in my view all that Eversheds needed to do to safeguard its position was to have complied with the terms of their own retainer letter and paragraph 6 of the Code. It would have taken little for Mr Richards, or one of his assistants at his direction, to have provided Mr Cuddy with a regular printout sent under cover of an explanatory letter or email. Mr Richards was fond of saying during the course of the hearing that Mr Cuddy was “self made”, his wealth emanating from demolition, who was ostentatious with his money and took every opportunity to demonstrate or talk about it (Richards, paragraph 38). If that was Eversheds’ perception of their new client, I consider Mr Cuddy was just the sort of person who needed to be given the costs information required by the Code and the retainer letter, all the more so where, as here, the litigation was fast moving, complex and expensive. Having failed to comply with the Code and with their own terms of business, Eversheds have only themselves to thank for their omissions in this respect, for which they must now bear the consequences.