Hammond v Herrington Carmichael: Interim Statute Bills and Special Circumstances (2026)

Solicitor & Client — 2026-03-24

Costs Judge Whalan considers whether 29 invoices totalling £174k from family proceedings were Interim Statute Bills or Chamberlain bills, and whether special circumstances exist for a section 70 assessment.

Overview

Date: 24 March 2026

Judge: Costs Judge Whalan

Court: Senior Courts Costs Office

Citation: [2026] EWHC 701 (SCCO)

Nature of Proceedings: Solicitor-client assessment under section 70, Solicitors Act 1974

Key Issues:

Whether 29 invoices totalling £174,183.36 were Interim Statute Bills (ISBs) or a series of interim invoices forming a single Chamberlain bill

Whether special circumstances existed under s.70(3) to justify assessment of invoices delivered and paid more than 12 months before the claim

The scope of the court's discretion under s.70(2) in respect of the remaining disputed invoices

The Facts

Carl Brendan Hammond instructed Herrington Carmichael LLP from 10 August 2023 to 26 June 2025 in family finance remedy proceedings. The litigation was protracted and comparatively complex, with an effective hiatus between January and March 2025 during which the firm came off the court record before re-engagement. The parties concluded four separate but continuous retainers during the relevant period, each comprising a Client Care Letter (sometimes supplemented by a Terms of Business Letter) and annexed Standard Terms of Engagement.

The firm delivered 29 invoices between 25 August 2023 and 7 August 2025 for costs, disbursements and VAT totalling approximately £174,183.36. Many of these invoices were paid or part-paid by Mr Hammond. Notably, after paying the first nine invoices himself (totalling £39,461), Mr Hammond exhausted his own resources. Thereafter, his legal costs were funded through an escrow account established with £120,000 deposited by his brother-in-law, Mr Garry Moore.

Mr Hammond issued a Part 8 claim on 14 August 2025 seeking a s.70 detailed assessment of all 29 invoices. The firm conceded that two invoices, 225141 (27 June 2025) and 226664 (7 August 2025), could properly be assessed. The dispute therefore turned on the remaining 27 invoices and whether Mr Hammond could establish any entitlement to have them assessed.

The underlying family proceedings had attracted judicial criticism of costs. HHJ Farquhar, during the substantive proceedings on 26 June 2025, described the combined costs of both parties (totalling approximately £366,000 against a single asset valued at £500,000) as "frankly ludicrous", adding that the parties had been "failed by the system".

Key Holdings

1. The Invoices Were Interim Statute Bills

The central question was whether the invoices constituted ISBs or formed a series of interim invoices delivered as part of a single Chamberlain bill that became "final" only upon delivery of the last invoice in August 2025. The distinction was critical: if the invoices were elements of a Chamberlain bill, the time limits under s.70 would run from the date of the final invoice, potentially bringing all 29 invoices within the scope of assessment.

Costs Judge Whalan identified three general propositions from the authorities, including Richard Slade & Company plc v Erlam [2022] EWHC 325 (QB), Abedi v Penningtons [2000] 2 Costs L.L. 205 and Boodia v Richard Slade & Company [2024] Costs L.L. 753. First, the burden of proving that the retainer provides for the delivery of ISBs falls on the receiving party. Second, the court must construe the relevant contractual provisions as a whole. Third, any fundamental ambiguity should be resolved against the ISB construction.

The Standard Terms of Engagement, annexed to each retainer, contained the following provision:

In many cases, we will normally render our invoice at or towards the end of your matter (a Final Bill). However, if your matter becomes protracted or we have notified you that Interim Statutory Bills (ISBs) will be issued regularly as the case progresses, we will deliver an ISB to you from time to time. An ISB is an invoice covering the work carried out up to the date of the ISB or a specified earlier date, and issued before the matter ends. This will help you to budget for costs. Also, we may ask you for further payments to settle disbursements that are in excess of the initial payment on account. The initial sum paid on account will not be accounted for in an ISB but will be shown as a credit in the Final Bill. Any reference in correspondence or on invoices to "an interim invoice" means an ISB.

The second, third and fourth Client Care Letters also contained a "Billing Arrangements" clause stating: "It is our practice to bill monthly." The fourth retainer's Terms of Business Letter added: "We will raise invoices for work done on a periodic basis, whether on completion of a particular element of the work or otherwise."

The judge was satisfied that the invoices were ISBs, finding the Terms of Engagement to be "unequivocally clear":

They provide for the delivery of interim invoices and state that they have the status of ISBs. Indeed, the 'Invoicing' provision provides for no real, alternative characterisation, given that: 'Any reference in correspondence or on invoices to "an interim invoice" means an ISB'.

The judge also noted that the invoices exhibited all the relevant requirements of ISBs. They were drafted with "considerable detail", providing a clear breakdown of costs, expenses and disbursements. Each invoice was signed, provided a payment due date and displayed clearly the client's right of assessment under the SA 1974. Crucially, each invoice covered a defined period and represented a complete and effectively final account for that period; billing was "in no way accumulative".

2. Time Limits Under Section 70

Having determined that the invoices were ISBs, the judge applied the statutory time limits under s.70 of the SA 1974. The consequences were significant. Nine invoices delivered and paid more than 12 months before the Part 8 claim (issued 14 August 2025) were subject to the absolute bar under s.70(4) and could not be assessed at all. These were the invoices dated between 25 August 2023 and 27 June 2024.

Three further invoices, 211203 (18 July 2024), 211953 and 211946 (both 31 July 2024), could only be assessed if the court found "special circumstances" pursuant to s.70(3), as they had been delivered and paid but fell within the 12-month window following payment. The remaining 15 disputed invoices (dated between 27 August 2024 and 29 May 2025) were subject to the court's general discretion under s.70(2), without the requirement for special circumstances.

Following the Supreme Court's guidance in Oakwood Solicitors Limited v Menzies [2024] UKSC 34 on the question of "payment" under s.70, it was common ground that the monies transferred from or on behalf of Mr Hammond to the firm constituted payment within the meaning of the Act.

3. No Special Circumstances

The claimant advanced four grounds for special circumstances: (i) judicial findings on costs, proportionality and litigation conduct; (ii) the pension disclosure issue; (iii) representation and escalation of costs; and (iv) assertions concerning Mr Garry Moore's funding arrangement.

The judge applied the test from Falmouth House Freehold Co. Ltd v Morgan Walker LLP [2010] EWHC 3092 (Ch), where Lewison J stated at [13]:

Whether special circumstances exist is essentially a value judgement. It depends on comparing the particular case with the run of the mill case in order to decide whether a detailed assessment in the particular case is justified, and despite the restrictions contained in section 70(2).

The judge also referred to Masters v Charles Fussell & Co. LLP [2021] EWHC B1 (Costs), confirming at [60] that special circumstances need not be exceptional but must involve something "out of the ordinary course, sufficient to justify departure from the general position under s.70". The helpful test from Raydens Ltd v Cole [2021] 7 WLUK 539 was also applied: whether there is something in the fees or the circumstances "which call for an explanation".

The judge was not satisfied that any of the four grounds amounted to special circumstances. On the costs criticism, the judge accepted the firm's submission that disproportionality in the inter partes sense was "of no general relevance" to a solicitor-client assessment, which proceeds on the indemnity basis. On the pension disclosure issue, the evidence suggested the error was essentially that of the opposing party. On the escrow arrangement, the court accepted it was a "necessary security against non-payment" that was endorsed by all parties and did not give rise to any suggestion of unauthorised payments.

In a passage central to the decision, the judge stated:

There is nothing, in my conclusion, that 'calls for an explanation' or the scrutiny of the court. Pursuant to the retainer(s), the Defendant delivered regular, itemised invoices that exhibited very detailed breakdowns of the profit costs, expenses and disbursements that the Claimant had incurred during each relevant period. These costs were incurred pursuant to his instruction and he was aware of his ongoing, accumulating liability.

The judge also noted that "it is hard to foresee that the presumption of reasonableness would be dislodged on the particular facts of this case", given the absence of any identifiable or sustainable criticism of the firm during the periods of representation and the claimant's willingness to re-engage the firm after March 2025.

4. Discretion Refused on Remaining Invoices

Having found no special circumstances, the court could not order assessment of the three invoices that required that threshold. For the remaining 15 disputed invoices subject to the court's general discretion under s.70(2), the judge also declined to exercise that discretion, for the same reasons that underpinned the special circumstances analysis.

The net result was that only two out of 29 invoices could be assessed: the two invoices that the firm had conceded from the outset.

Practical Implications

For Costs Lawyers

Contractual clarity is decisive on ISB characterisation. The judgment confirms that clear contractual language providing for ISBs will be upheld, particularly where the Standard Terms of Engagement explicitly equate "interim invoices" with ISBs. Practitioners advising clients on the scope of assessment must scrutinise the retainer terms with care. The statement "any reference in correspondence or on invoices to 'an interim invoice' means an ISB" left no room for a Chamberlain bill argument.

ISB characterisation has severe time limit consequences. Where invoices are found to be ISBs, each invoice triggers its own time limit under s.70. The absolute 12-month bar from payment under s.70(4), combined with the special circumstances requirement under s.70(3), can render the vast majority of invoices immune from challenge. Clients who wish to challenge their solicitor's bills must act promptly, ideally within one month of delivery under s.70(1).

Inter partes disproportionality carries little weight on solicitor-client assessment. Even where a judge has described costs as "frankly ludicrous" in the underlying proceedings, this does not translate into special circumstances for the purposes of s.70(3). The solicitor-client assessment proceeds on the indemnity basis, and inter partes proportionality is a different exercise entirely.

The "calls for an explanation" test remains the practical yardstick. The Raydens v Cole test, applied alongside the Falmouth framework, provides the most accessible formulation of the special circumstances threshold. Costs lawyers should advise clients that the question is not whether costs are high, but whether there is something in the fees or the circumstances that warrants scrutiny beyond what the client already knew.

For Litigation Practitioners

Monthly billing with detailed breakdowns strengthens the ISB position. Herrington Carmichael's practice of billing monthly, with signed invoices, specified payment due dates, detailed billing guides and express statutory notices, provided a textbook example of ISB compliance. Firms seeking to protect themselves from retrospective challenge should follow this model.

Escrow and third-party funding arrangements constitute "payment". Following Oakwood v Menzies, the court confirmed that monies paid from a third-party escrow account are payments within the meaning of s.70. This is particularly relevant in family proceedings where one party's costs may be funded by relatives or other third parties.

Re-engagement after a break supports the solicitor's position. The claimant's willingness to re-enter a fourth retainer with the firm after the January to March 2025 hiatus weighed against his subsequent assertion that the firm's representation was inadequate. Practitioners should note that continued or renewed instruction may undermine a client's later complaints.

The absence of contemporaneous complaints is significant. The judge noted that the claimant made "no contemporary criticism" of the firm during the periods of representation. This factual finding was important to the overall assessment. Clients who have concerns about the level of costs being incurred should raise them at the time, not only after the retainer has ended.

Conclusion

Hammond v Herrington Carmichael is a significant decision on the classification of solicitor-client invoices and the practical operation of the time limits under section 70 of the Solicitors Act 1974. The judgment provides a clear illustration of how well-drafted retainer terms, combined with regular, detailed and compliant billing, can effectively insulate the majority of a solicitor's invoices from subsequent challenge. For a client facing a total bill of over £174,000 spread across 29 invoices, the practical outcome was stark: only two invoices, conceded by the firm, remained open to assessment.

The special circumstances analysis is equally instructive. Judicial criticism of costs in the underlying proceedings, third-party funding arrangements and allegations of escalating costs were all advanced as grounds for ordering assessment outside the ordinary time limits. Each was rejected. The judgment reinforces that special circumstances require something beyond general dissatisfaction with the level of costs, particularly where the client was kept informed through regular, itemised billing and chose to continue instructing the firm.

For costs practitioners, the case serves as both a reminder of the importance of prompt action under s.70 and a practical guide to the factors that the SCCO will consider when evaluating whether invoices are ISBs. The contractual analysis is thorough and will be of direct assistance in advising clients on the characterisation of their own bills, whether they are solicitors seeking to defend their billing or clients seeking to challenge it.

Citation: Hammond v Herrington Carmichael LLP [2026] EWHC 701 (SCCO)

Full judgment available at: BAILII

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