Strand, London, WC2A 2LL
B e f o r e :
| DAVID TRUEX
|- and -
|EUGENIE ROMANOVNA TOLL
Duncan Macpherson (instructed by Cubism Law) for the Defendant/Appellant
Hearing dates: 13th February 2009
Crown Copyright ©
Mrs Justice Proudman:
"1. There is a substantial dispute about the money said to be owed" and
4. Bill to be reviewed under the assessment procedure".
Mr Truex filed an affidavit in support of his petition stating that at the hearing before Singer J Mrs Toll had agreed that the fees specified in the invoices were due and owing.
The Order of Chief Registrar Baister
Provisions of the Insolvency Act 1986
a) the debt is at least equal to the bankruptcy level of £750,
b) the debt is for a liquidated sum,
c) the debt is one which the debtor appears to have no reasonable prospect of being able to pay and
d) there is no outstanding application to set aside a statutory demand served in respect of the debt.
S. 268 deals with service of a statutory demand. A statutory demand which is neither complied with nor set aside enables the petitioning creditor to satisfy the court as to inability to pay under s. 267 (2) (c). It is common ground that it does not assist him as to whether the debt founding the petition is for a liquidated sum.
What is the nature of a solicitor's bill?
"…in order to convert what is clearly an unliquidated sum to a liquidated sum there must be…clear and unequivocal conduct or agreement on the part of the debtor to demonstrate acceptance of those bills of costs such as to forego the right of assessment and to convert them to a liquidated sum."
This was the principle that the Chief Registrar sought to apply in the present case. It was only his doubts about how clear Mrs Toll's agreement was that gave rise to his reluctance. The appellant challenges the principle as understood by the Chief Registrar and, in the alternative, his application of it.
"The possibility that the amount of the bills might be reduced on a taxation which has still not been initiated is not a sufficient reason in this case for setting aside the demand."
Vinelott J commented,
"Solicitors would be placed in an intolerable position if no statutory demand could be served as long as it was open to the client to apply for taxation."
At the end of his judgment he added "for completeness",
"…there is nothing to prevent [the debtors] from now applying for leave to tax the bill. If leave is given and the bill is taxed down, they will be entitled to repayment of an excess over the amount of the taxed bill which they have paid. What they cannot do is to defer paying any substantial part of the bill until the process of applying for leave and, if leave is granted, taxing the bill as being completed."
"It is a fact that [the client] never entered into any contract to pay the sums as claimed. He engaged Thomas Watts & Co as his solicitors but was not asked to and did not agree any particular rate of remuneration. The solicitors are entitled to reasonable and fair remuneration for the work they have done. It is too late for [the client] to apply with any prospect of success for the bills now to be submitted for taxation…
But the position of the plaintiff firm is not, in my judgment, one in which they can simply ask the court, without any further investigation, to underwrite the amount they have chosen to claim in their three invoices. It may be that the amounts are reasonable. It may be that in one, or other, or several respects, the amounts are inflated…
In my judgment, in a case such as this, where solicitors are applying for payment of their bill, the situation is analogous to one in which a plaintiff is applying for an unquantified sum which has to be quantified by a judicial process before judgment can be awarded for the appropriate amount."
"…the position apart from the Act is broadly as follows. If the solicitor wishes to be paid and is not in funds he will need to sue and prove that his charges were either expressly agreed or are reasonable charges. If he is in funds and purports to deduct the amount of his bill but the client challenges the deduction, the solicitor will still need to prove that the charges were either expressly agreed or were reasonable charges. The question is whether the client loses these rights to challenge the amount of the bill after the period for taxation has passed….
"…a client who is sued by his solicitor for the amount of his charges is entitled to challenge the reasonableness of the sum claimed, notwithstanding that the period during which he may apply for an order for taxation under what is now s. 70 of the 1974 Act has expired.
"Nor do we consider that the solicitor is disadvantaged by the possibility that the client is entitled to have the reasonableness of the charges assessed by the court after the statutory periods for taxation have expired. He can himself claim an order for taxation under s. 70(2), without any time limit, and obtain a form of summary judgment when the taxation certificate is issued…
"We do not see any difficulty in holding that the solicitor's claim is for a reasonable sum, whether by statute or at common law, and not for a liquidated sum. Again in accordance with general principles, the burden of proving that the sum is reasonable rests upon him. This is supported, if authority is needed, by the judgments in Re Park [Re Park, Cole v. Park (1889) 41 Ch D 326] and Jones & Son v. Whitehouse [ 2 KB 61]…"
In what circumstances is the sum claimed in a solicitor's bill converted from unliquidated to liquidated?
"Nothing [in the Solicitors Act 1843], or its successors, takes away the need for the solicitor to prove that his fees are reasonable, if they are challenged, absent any express agreement as to what they should be."
"I do not say that a statutory demand can never properly be presented in such a case- that the creditor must always quantify his claim by obtaining a judgment before serving a statutory demand. There may be cases where the minimum sum due can be ascertained by reference to some objective standard. There may be cases where the rate of charging is agreed and the minimum time that had to be spent on the task for which remuneration is sought can be similarly established; or advance or periodic payments may have been agreed. But these cases must be regarded as exceptional."
Informal application for assessment
Was there a clear and unequivocal admission of the invoices?
"Mr Justice Singer: They were asking you to pay…outstanding costs.
Mrs Toll: Yes, and I- which I said I am happy to pay; and, more than that, I came with a friend who actually was willing to lend me money to pay these costs, and also- we did not ever discuss costs really because…to discuss because they just did not want to talk to me really…"
"Mr Justice Singer: …you would have known that your lawyers…first of all took the view that this hearing would be necessary, and, secondly, were asking you for costs, which you had not in fact paid, despite what they say were a number of requests, both written and oral, since 25th January. Taking that into account, it seems to me that I would normally not grant an adjournment.
Mrs Toll: Well, I can prove that I did- I was going to pay them, and I came to discuss it, and after that I asked the Law Society [to whom she had previously told Singer J that she had complained about Mr Truex] to call them and ask them if they still can meet me and we can solve this sort of difficulty.
Mr Justice Singer: Is there anything in this affidavit that you dispute?
Mrs Toll: I dispute that I refused to pay- it wasn't true, even if I…"
"Mr Justice Singer: …Would you like to see the letters that were sent asking you for money?
Mrs Toll: Yes, I know that, but I just, we never discussed, and I came to discuss the money…
Mr Justice Singer: Does that ask you to pay by a certain date?
Mrs Toll: Yes, but I wanted answer to my questions, which I couldn't…
Mr Justice Singer: Did you pay?
Mrs Toll: I came to discuss it, because…I said I'm happy to pay but I would like to find, to have explanation what exactly he is doing for me…And I didn't get an explanation."