England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM ALDERSHOT & FARNHAM COUNTY COURT
(HER HONOUR JUDGE BONVIN)

		Royal Courts of Justice The Strand London WC2
		30th April 1998

LORD JUSTICE PILL: In this action Penningtons, a firm of solicitors, ("the plaintiffs") claim the sum of £6,427.15, being the balance of fees claimed to be due for successfully representing Mr Steven Brown ("the defendant") in two High Court actions. The short point is whether a letter of 3rd February 1997 from the defendant, who had received a gross sum bill from the plaintiffs, was a request for a bill containing detailed items within the meaning of that term in section 64(2) of the Solicitors Act 1974 or whether, as the plaintiffs submit, it was a request for particulars of the gross sum bill delivered.

Section 64 provides:

"(1) Where the remuneration of a solicitor in respect of contentious business done by him is not the subject of a contentious business agreement, then, subject to subsections (2) to (4) the solicitor's bill of costs may at the option of the solicitor be either a bill containing detailed items or a gross sum bill.

(2) The party chargeable with a gross sum bill may at any time-

(a) before he is served with a writ or other originating process for the recovery of costs included in the bill, and

(b) before the expiration of three months from the date on which the bill was delivered to him, require the solicitor to deliver, in lieu of that bill, a bill containing detailed items; and on such a requirement being made the gross sum bill shall be of no effect.

(3) Where an action is commenced on a gross sum bill, the court shall, if so requested by the party chargeable with the bill before the expiration of one month from the service on that party of the writ or other originating process, order that the bill be taxed.

(4) If the gross sum bill is taxed, whether under this section or otherwise, nothing in this section shall prejudice any rules of court with respect to taxation, and the solicitor shall furnish the taxing officer with such details of any of the costs covered by the bill as the taxing officer may require."

The expressions "bill containing detailed items" and "gross sum bill" are not defined in the 1974 Act. For what are no doubt good reasons in the proper regulation of dealings between solicitors and their clients, the two types of bill are possible. Both terms and both types of bill have been in use for many years. There is no need to attempt a comprehensive definition. For present purposes it is agreed that a gross sum bill claims a global sum, and a bill containing detailed items contains that amount of detail normally contained in a bill when placed before a taxing officer on taxation. In the case of either type of bill the client has a right to a taxation. On 21st January 1997 the plaintiff sent to the defendant a document described as an invoice. It stated that the total amount payable was £7,235.45, amended by means of a reconciliation statement of 22nd January to the sum now claimed.

The only particulars given were that exact sums were stated for travelling expenses, transcript costs and court fees. These represented only a small proportion of the total sum claimed. At the foot of the document was a 14-line narrative setting out the work done, including the number of letters and telephone conversations involved. Though not described as a bill of costs, the document was to be regarded as containing a global sum bill.

On 3rd February the defendant wrote seeking further information, to use a neutral expression. He was unaware when he wrote the letter of that date of the strict distinction between the two types of bill, and the consequences of that distinction by reason of section 64(2). The distinction is strict in the sense that the gross sum bill was of no effect if the defendant required a bill containing detailed items. His request for information was made in ignorance of the distinction between the two types of bill. The court is required to put the defendant's request, as expressed in the letter, into one of the two possible categories. That must be done in a situation where the author was unaware that such categorisation might be necessary or of the basis for it.

District Judge Ackroyd found that the letter amounted to a request for particulars of a gross bill. On appeal to her, Her Honour Judge Bonvin found that it was a request for a bill containing detailed items. Sir Anthony McCowan refused leave to appeal to this court upon a paper application. On a renewed oral application Peter Gibson LJ and Holman J granted leave to appeal, Holman J stating that the point was sufficiently arguable.

The letter of 3rd February states:

"I have received your bill dated 22 January 1997, which is not agreed. I seek to tax the bill if you are not prepared to agree the sum of £5973.42, as full and final settlement.

Should I not hear from you within 7 (seven) days that you agree my reasonable offer I request please, a full breakdown of your firm's bill, that should include please, a copy of the invoice for the proposed transcript costs of £72.37, and the court fees of £604.55. Given that a summons costs £20.00 at the relevant time and an appeal to the Court of Appeal costs £100.00, I submit your invoice represents a misrepresentation of the true cost that may well violate the entire bill.

I await hearing from you by close of business on 14 February 1997, after which time I will apply to the taxation department of the High Court to tax your firm's bill of costs."

The plaintiffs replied promptly to the letter giving a breakdown required under the stated items and giving some further information. It is not suggested that their letter of 7th February constitutes a bill containing detailed items within the meaning of the statute, whether read alone or with the invoice. It was many months later that the point was taken by the defendant that he had made a request under section 64(2). This delay has led to an understandable sense of grievance on the part of the plaintiffs, but does not assist the court upon the construction of the letter. By letter of 4th July the defendant, still apparently unaware of the consequences of section 64(2), wrote stating:

"I wish to see the whole bill that I may assess the reasonableness of the charges."

In his helpful submissions on behalf of the plaintiffs, Mr Simmonds submits that the request for "a full breakdown of your firm's bill" is in terms a request for particulars of the bill which the defendant had just received, and was not a request for a replacement bill. Secondly, he submits that the statements in the letter of the defendant's intention to tax the bill are inconsistent with a section 64(2) request, in that, if such a request had been made, the bill would be of no effect and could not be taxed. The references in the letter, Mr Simmonds submits, should be not to the charges which the plaintiffs were purporting to make, but to the document in which they were made; that is the invoice of 21st January.

In re Taxation of Costs In re Solicitors [1943] KB 69 this court considered under the then existing regulations whether, when a client does request a detailed bill, the solicitor can recover the amount of the taxed bill although it exceeds the amount of a gross sum first charged. The court held that it could. It follows that a client who requests a bill containing detailed items may end up paying more costs than one who deals on the basis of a gross sum bill. That possibility cannot, in my view, influence the construction of the letter of 3rd February. However, Mr Simmonds relies upon the case because of the distinction drawn between the two types of bill by MacKinnon LJ at page 72. MacKinnon LJ stated:

"Here, the detailed bill was not merely an explanation of a previous request for payment of a gross sum put forward by the solicitors. It was an alternative charge insisted on by the client pursuant to her rights under the Solicitors' Remuneration (Gross Sum) Order, 1934, and the client exercised her further right under the order to have that detailed bill taxed."

The letter of 3rd February, Mr Simmonds submits, cannot be construed as a request for an alternative charge. The defendant did not cross the bridge between asking for particulars of the invoice and asking for a bill containing detailed items. Goddard LJ stated, at page 73:

"The client who, not being satisfied with the gross sum charged, demands a detailed bill of charges must put up with the consequences, if the amount of the detailed bill turns out to be larger than the gross sum first charged."

It is submitted that what the defendant sought was particulars of an existing bill. If the existing bill was of no effect, it could not be taken to taxation as the defendant intended.

In Carlton v Theodore Goddard & Co. [1973] 1 WLR 623, a solicitor sought to rely on a letter from his client as justifying the presentation of a new and larger bill. It was in that case the solicitor who argued that information received from the client, represented in that case by other solicitors, amounted to a request for a bill containing detailed items. At one stage the client's new solicitors wrote:

"Accordingly, it would seem that there is no alternative but for your bill to be prepared and lodged for taxation."

Megarry J stated:

"First, then, there is the question whether the plaintiff ever required the defendants to deliver to him in lieu of the gross sum bill "a bill containing detailed items." I cannot see that he has. To require a bill to be taxed is plainly not per se a requirement that a detailed bill should be delivered; for as provisos (b) and (c) to section 64 itself make plain, a lump sum bill may be taxed."

(I add that Megarry J was considering an earlier statute, the Solicitors Act 1957, but that the provisions are in so far as material, identical. What in that Act was proviso (a) to section 64 is now, in substance, section 64(2).)

"The letter seems to me to contain not a word about "a bill containing detailed items." At most, there is the somewhat indefinite expression employed by the defendant in his affidavit. Nor does the letter require any bill to be delivered to the plaintiff: all that it does is to say that a bill should be "lodged for taxation." There is some ground for saying that one bill was to be replaced by another, in the reference to there being "no alternative but for your bill to be prepared," so that it can be said that the letter was not asking for the existing bill to be lodged for taxation but for some other bill to be prepared: but that by itself is not enough. Furthermore, the language of the letter is not so much the language of requiring something to be done as the language of a somewhat reluctant acceptance of the inescapable. It seems to me that before proviso (a) of section 64 is brought into play there must be something which can fairly be described as a request or requirement that the solicitors should deliver to the client a detailed bill to replace the gross sum bill already delivered: and although I do not think that any particular form of words need be employed, the substance of what is relied upon must amount to a request or requirement of this kind. If in doubt, of course, the solicitors, before embarking on the work, can always inquire whether some equivocal communication that they have received is or is not intended to be a requirement under the proviso."

The court's task upon the present appeal is to construe section 64(2), and whether the letter of 3rd February amounts to a request for delivery, in lieu of the gross bill, of a bill containing detailed items.

I respectfully agree with Megarry J that the court must be concerned with the substance of the request. That is contained in paragraph two of the letter:

"... I request please, a full breakdown of your firm's bill."

In substance I can regard that only as a request for what would amount to a bill containing detailed items. The letter as a whole supports the view that it is a bill containing detailed items which the defendant requires. His request "includes" a request for more details of the only items about which he is in a position to request more details. What in substance he sought was a bill containing detailed items within the meaning of section 64(2). The fact that he referred to the piece of paper sent to him as a "bill of costs", a description which the document itself does not bear, should not be taken to limit him to a request for particulars of an existing bill. That, in my view, would be an over-technical construction of a layman's letter. The defendant was unaware of the technicalities involved. There is a distinction between the two types of bill, and it was considered in the cases to which I have referred.

I read the defendant's insistence on going to taxation as entirely consistent with a request for a bill containing detailed items. He was unaware that the effect of his request was to render the existing bill of no effect. It was a detailed bill he wanted to take to taxation, even though he used the expression "your firm's bill of costs". I doubt whether the present point would have taken had the defendant accurately used in his letter the word "invoice" rather than the word "bill". He could not have known the significance of the distinction. What in substance he was referring to was the charge of the plaintiffs or the amount claimed by them and not merely a document.

The plaintiffs should not, in my judgment, be permitted to use the technical legal words upon which the defendant essayed in parts of his letter to defeat the substance of his true request. That substance was a bill containing detailed items, as contemplated in section 64(2).

It is unfortunate that the plaintiffs, who unlike the defendant could be expected to know of the strict distinction the law draws between a gross sum bill and a bill containing detailed items, did not take the advice of Megarry J and draw the attention of the defendant to that distinction and ask him which course he wished to follow. Megarry J perceptively anticipated the difficulty which could arise upon the wording of section 64(2). I read that section as covering the letter which is in dispute in this case. For that reason I would dismiss this appeal.

SIR JOHN VINELOTT: I have found this question one of considerable difficulty and it is one on which my mind has fluctuated more than once during the course of the argument. There can be no doubt that to a lawyer or to a layman familiar with the relevant provisions of the Solicitors Act 1974, the letter of 3rd February was a request for further details of the gross sum bill which had been delivered on 22nd January. The words "your bill" and "the bill" in the first paragraph, and the statement in the last paragraph of the respondent's intention to apply "to tax your firm's bill of costs" are prima facie references to a bill which has been provided. That was the only bill which he could refer to taxation. The appellant firm so read it and it is remarkable, if the respondent was seeking a fresh detailed bill that, having received the appellant firm's letter of 7th February, setting out in more detail the hours spent on the work summarised in the narrative to the original gross sum bill, he did not at once respond by saying that what he wanted was a detailed bill showing charges in respect of each item included in the bill, and not merely further details of the work included in the gross sum charged. Instead he did nothing until some six months later, when the appellant firm commenced proceedings to recover the gross sum.

However, the letter was written by a layman. There is no evidence as to whether he was or was not aware of the terms of section 64 thought I observe that, in his affidavit in opposition to the appellant firm's proceedings, which was apparently prepared before he obtained legal advice (it was certainly obtained before solicitors came on to the record) the terms of section 64 subsections (1) and (2) are clearly and accurately stated. Nonetheless, I must bear in mind that the letter was written by a layman. I am persuaded that, in the context of a letter written by a layman apparently without legal assistance, the court should not take what may prove to be an unduly technical approach to the construction of the letter, and that the full breakdown requested should be taken to be a request for a detailed bill showing the amount charged in respect of each item included in the gross sum bill. If there is doubt as to the way in which the letter should be interpreted, the doubt should be resolved in favour of the client for whose protection these provisions were enacted.

I should add that I share Holman J's anxiety as to the disproportionate amount of costs that have been incurred in this litigation. The respondent is unlikely to learn anything from the detailed bill that he would not have learned from the taxation to which he was always entitled. He may, of course, be faced with a larger bill, and if he seeks to have it taxed he may be met with the costs of the taxation. In the light of the narrative on the gross sum bill, and the further explanation given by the appellant firm, the gross bill seems to me a modest one. The respondent's apparent victory in this court may therefore prove to be a Pyrrhic one. He will have gained nothing except delay.

I agree with the order proposed by my Lord, Lord Justice Pill.

ORDER: Appeal dismissed with costs. Leave to appeal to the House of Lords refused.

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