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Cite as: [2000] EWCA Civ 85
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Case No: QBENI 1999/1169/A2
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEENS BENCH DIVISION
(Mr Justice Turner)
Royal Courts of Justice
Strand, London, WC2A 2LL
Thursday 23 March 2000
LORD JUSTICE SIMON BROWN
LORD JUSTICE OTTON
and
LORD JUSTICE JUDGE
ABEDI |
Claimant/Respondent | |
- and - |
||
PENNINGTONS |
Defendant/Appellant |
(Transcript of the Handed Down Judgment of
Smith Bernal Reporting Limited, 180 Fleet Street
London EC4A 2HD
Tel No: 0171 421 4040, Fax No: 0171 831 8838
Official Shorthand Writers to the Court)
- - - - - - - - - - - - - - - - - - - - -
Mrs J. Giret (instructed by Raymond Saul & Co. of 34 Commercial Road, LondonE1 1LN, Solicitors) for theAppellant
Mr M. McParland (instructed by Penningtons of Bucklersbury House, 83 Cannon Street, London EC4N 8PE) for the Respondent)
Judgment
As Approved by the Court
Crown Copyright ©
LORD JUSTICE SIMON BROWN:
In times past, a solicitor's retainer was considered an entire contract for
which he was not entitled to be paid until his work was finally completed.
Down the years that rule has been tempered. First the solicitor became
entitled to determine the contract on reasonable notice. And then there
developed a principle under which solicitors became entitled to bill their
costs when a natural break occurred in the course of protracted proceedings.
These possibilities apart, it has always been open to solicitors to agree the
terms of payment under their retainer and the wiser amongst them nowadays do
so. This appeal, however, concerns bills of costs submitted by the
respondent solicitors to their client, the appellant, in the course of
proceedings which they were conducting on her behalf, with no express agreement
between them for payments on an interim basis. Two central questions arise.
First, under the natural break principle, just what constitutes such a break in
proceedings? Can it be, as the respondent solicitors contend, simply any date
which they themselves choose to regard as convenient for their purpose?
Second, even assuming that solicitors are not strictly entitled to demand
payment on interim bills under the natural break principle, may they
nevertheless be entitled to do so (given always that the bills are in proper
form) by virtue of an agreement to that effect to be inferred from the conduct
of the parties? Is there, in other words, an entitlement to payment in respect
of interim bills submitted in proper form not merely by express agreement
between the parties or if the bills are submitted at a natural break in
proceedings, but also in a third category of cases, namely when agreement to
that effect can be inferred?
Let me at this stage set out s.65(2) of the Solicitors Act 1974 and then quote
from Cordery on Solicitors 9th edition (1999). S.65(2)
provides:
"If a solicitor who has been retained by a client to conduct contentious business requests the client to make a payment of a sum of money, being a reasonable sum on account of the costs incurred or to be incurred in the conduct of that business and the client refuses or fails within a reasonable time to make that payment,the refusal or failure shall be deemed to be a good cause whereby the solicitor may, upon giving reasonable notice to the client, withdraw from the retainer."
Cordery, having explained the "entire contract" rule, set out s.65(2), and referred to the ability of solicitors to agree the terms of their retainer, continues:
"There are two kinds of interim bills, and the difference between them is
crucial.
1. INTERIM STATUTE BILLS
(a) Self contained final bills
These are called statute bills because they comply with all the requirements of
the Solicitors Act 1974 and result in all the consequences which flow from such
compliance - the solicitor can enforce payment by suing the client, the client
can obtain an order for taxation and the various time limits relating to the
client's rights to tax run from the date of their delivery. Although they are
interim bills they are also final bills in respect of the work covered by them.
There can be no subsequent adjustment in the light of the outcome of the
business. They are complete self-contained bills of costs to date. Interim
statute bills are rare and during the currency of the retainer can arise in
only two ways: by natural break or agreement.
(b) Natural Break
There is authority for the rendering of an interim bill at a natural break in
protracted litigation. There is, however, little authority in identifying
what is a natural break. In Chamberlain v Boodle & King [1982] 1
WLR 1443 Lord Denning said ´it is a question of fact whether there are
natural breaks in the work done by a solicitor so that each portion of it can
and should be treated as a separate and distinct part in itself, capable of and
rightly being charged separately and taxed separately.' In that case the
Court of Appeal held that there had been no natural breaks justifying treating
a series of accounts rendered during litigation as final accounts and that they
should accordingly be treated as one bill all of which could be taxed. The
Council of the Law Society's advice is not to rely on the ´natural break'
principle as a ground for delivering a bill except in the clearest cases.
(c) Agreement
´Before a solicitor is entitled to require a bill to be treated as a
complete self-contained bill of costs to date, he must make it plain to the
client expressly or by implication that that is his purpose of sending in that
bill for that amount at that time. Then, of course, one looks to see what the
client's reaction is. If the client's reaction is to pay the bill in its
entirety without demur, it is not difficult to infer an agreement that the bill
is to be treated as a self-contained bill of costs to date' - per Roskill LJ in
Davidsons v Jones-Fenleigh (1980) 124 Sol Jo 204 (following In re
Romer and Haslam [1893] 2 QB 286).
In that case the court found that each of four bills delivered was complete and
final in its own right and that the time for taxing three of them had expired.
...
2. INTERIM BILLS ON ACCOUNT
(a) Request for payment on account.
... It is vital to differentiate between a request for payment under s.65(2),
which is usually known as a ´bill on account', and an interim statute
bill, particularly as both are often described as ´interim' bills.
(b) Not enforceable by action.
A bill on account is really nothing more than a request for payment on account.
Not being a statute bill it cannot be sued upon by the solicitor, the client
cannot apply for it to be taxed and, of course, the time limits for applying
for a taxation do not run. ... "
I turn to the facts which I propose to state in very summary form. The
appellant is the widow of the founder of BCCI. She and her late husband used
to live together at Southview, a large and valuable property in Harrow.
After BCCI's collapse, the ownership of Southview was contested. The
appellant claimed beneficial entitlement through two Liechtenstein
shell-companies. The bank's liquidators claimed otherwise. There was a
second dispute between the appellant and the liquidators with regard to the
beneficial ownership of certain jewellery and cash which the Metropolitan
Police had seized from a number of safe deposit boxes.
Initially the appellant instructed Amhurst Brown Colombotti in connection with
these disputes. In April 1994, however, having fallen out with them on the
question of fees, she retained the respondents as her solicitors, immediately
putting them in funds to the extent of some £32,000. The respondents
thereafter acted on her behalf with regard to three sets of proceedings - the
Southview proceedings, the jewellery proceedings, and an action brought against
her by Amhurst Brown Colombotti which was settled later in 1994 for some
£26,000.
On 1 June 1994 the respondents began sending the appellant bills of costs. In
all there were a total of forty-two bills submitted, each in the form of an
interim statute bill i.e. a self-contained final bill complying with all the
requirements of the Solicitors Act 1974, and each (if only in the smallest
print) notifying the client of her right to apply for taxation within one month
of the bill's receipt.
The majority of the bills were sent on a monthly basis and were in a round
figure, purporting to cover the work done during that month (or, as the case
might be, during the two or three month period to which some of the bills
related). To take an example, there was a bill dated 3 January 1997 in the
sum of £3,000 for the "provision of legal services" between 6 December
1996 and 3 January 1997, those services then being detailed. There was no
question of these bills being submitted as "bills on account", mere requests
for payment on account with each successive bill giving credit for sums paid
previously and each being subject to adjustment in a final bill. Rather each
bill constituted a clear demand for payment.
The first twenty-six of these bills were duly paid. That is not to say that
each was paid individually in the specific sum invoiced. Rather the earliest
bills were paid out of the initial £32,000 lodged (until that sum was
exhausted by paying off Amhurst Brown Colombotti), and thereafter lump sums
were paid which were applied entirely at the respondents' choice, generally in
settlement of the oldest outstanding bills. Broadly speaking, the bills came
to be paid a few months after delivery.
In January 1997, however, these payments ceased, leaving outstanding at that
date five bills unpaid and four bills only partly paid. After January 1997
seven further bills were submitted (the last on 3 July 1998) none of which were
paid. The total amount paid in the period June 1994 to January 1997 was
£69,367; the total sum outstanding under the invoices remaining (wholly
or partly) unpaid was £94,422; by writ dated 14 October 1998 the
respondents duly claimed that sum plus interest.
No complaint was made by or on behalf of the appellant until 23 December 1997 (by when all but the very last bill had been submitted) when she went to new solicitors who that day wrote:
"Mrs Abedi is indeed concerned that she was overcharged by yourselves in relation to the above proceedings. She contends that the expense was unreasonable. We have advised her therefore to have a Solicitor-and-Client taxation of the relevant bills."
Before then, so far from there being any complaints or suggestions that the bills already submitted were not payable, there had been an abundance of correspondence by which the appellant's son-in-law, Mr Dadabhoy, who was acting on her behalf, was promising to pay what he repeatedly referred to as "the outstanding legal charges", and encouraging the respondents to continue acting on that basis. For example, in a letter dated 17 June 1997, Mr Dadabhoy wrote to the respondents:
"As discussed with you on the telephone, I am making arrangements to pay
your firm about £30,000 by July 15 1997 of which you can apply £1,500
towards the trial and the rest on clearing the outstanding bills. The
balance of the charges will be cleared by August 30 1997. In these regards I
am also making arrangements to travel to Pakistan to meet with the banks ...
"
None of the promised sums were ever paid.
On 9 March 1999 Master Turner gave the respondents summary judgment under Order
14 in the sum claimed. On 30 July 1999 Turner J dismissed the appellant's
appeal against that order for summary judgment. On 16 April 1999 he had given
an extempore judgment holding the respondents entitled to payment on the basis
that all the bills were enforceable as interim statute bills so that the
appellant was long out of time in seeking an order for their taxation. That
is the judgment which is now under appeal. There is no appeal against Turner
J's further judgment given on 30 July 1999 (reserved following an adjourned
hearing on 21 May 1999) rejecting the appellant's application for leave to
defend on the grounds of a counterclaim for negligence.
The argument now advanced by Miss Giret on behalf of the appellant runs
essentially as follows. There was no express agreement here between the
appellant and the respondents for the payment of interim statutory bills; so
much, indeed, is common ground. The respondents cannot invoke the "natural
break" principle because their bills did not coincide with any such breaks in
the proceedings. Nor can the respondents rely on an inferred agreement to pay
bills periodically (a) because the law does not provide for interim bills to be
enforceable by virtue of any such inferred agreement, alternatively (b) because
in any event no such inference falls to be drawn on the facts of the case.
Counsel reminds us of the observations in Cordery that "Interim statute bills
are rare", and that "the Council of the Law Society's advice is not to rely on
the ´natural break' principle as a ground for delivering a bill except in
the clearest cases". She further points to Bowen LJ's judgment in In re
Romer & Haslam at pages 298-299, making plain that the onus of
establishing that a document constitutes "a separate bill of cost" lies on the
solicitor. In the result she contends that the respondents have yet to submit
an appropriate bill upon which they can properly sue. Were they to do so (in
the form of a bill encompassing their entire work during the period of
retainer) she would seek taxation, presumably of the charges already paid as
well as of those still unpaid.
The respondents put their case in two ways. First they contend that it is for
the solicitors to decide when to bill their client and if it is convenient to
them to do so monthly, then that complies with the natural break principle.
Alternatively they contend that the parties' conduct here plainly enables the
court to infer an agreement that all these bills save the last would be treated
as interim statute bills, the last being in any event recoverable as a final
bill.
Although there are certain passages in the judgment below suggesting that the respondents succeeded on their first argument, I think the real basis of Turner J's decision is to be found in these passages in his judgment:
"I entertain no doubt as a matter of inference that each bill was treated on
its face by each of the parties as being complete in itself, and indeed the
conduct, not just of the plaintiffs in demanding payment, but also the
defendants in making payment, was that each bill was so regarded. By course
of dealing the inference is also strongly in support of the proposition that
each was indeed an interim statute bill." (pp 14/15)
"In my judgment as a matter of proper and necessary inference, each individual
bill is properly to be considered as entire on its face and as such to qualify
for the description an ´interim statute bill'." (p.18)
Let me now turn to consider the two central questions that arise.
Natural Break
The origin of the natural break principle is to be found in the judgement of Sir George Jessel MR in In re Hall and Barker (1878) 9 Ch.D 538:
"I cannot see any reason for assuming that a solicitor undertaking a
business of this complicated nature, such as the administration whether of a
dead man's estate or an insolvent man's estate, which may give rise to a score
of suits, and may occupy a score of years before it is finally wound up, should
be held to do a single and entire thing and not be entitled to be paid any
remuneration until that single and entire thing is done. ... (p.544)
It is not reasonable that a solicitor should engage to act on for an indefinite
number of years, winding up estates, without receiving any payment on which he
can maintain himself. In my opinion it would be not only an unwise but an
improper extension of the doctrine of entire contract to apply it to such a
case as this. But, even if it were right, there must be a break somewhere.
... (p.545)"
Having then considered the facts of that case, the Master of the Rolls said this:
"The transaction amounts to this, in my opinion: ´We have done so
much work; there is a convenient break in the business, up to which time we
have made up our bill of costs; please to pay us up to that time, and when the
outstanding matters are concluded, which we hope will be shortly, we will send
in a further bill.'" (p.546)
I pass to In re Romer & Haslam (1893) 2 QB 286, accepted by both
sides to be the leading authority on the point, and one, therefore, which it is
necessary to examine in a little detail. The most convenient summary of the
facts of the case, and, indeed, of the basis of the decision, is to be found in
Kay LJ's judgment at pp.302-303:
"Here there was an arbitration, in which a firm of solicitors were retained for
one of the parties; it commenced on February 28, 1890, and the final
conclusion of the proceedings was reached on July 12, 1892, on which day the
last bill of costs was delivered. There were certain breaks in the
litigation; an award was made on March 17, 1891, and it is possible that if
the solicitors had then sent in their bill there might have been a delivery of
a bill of costs within the meaning of the statute, and within the decision in
In re Hall and Barker. Then on June 27, 1891, the award was referred
back to the arbitrator, and was subsequently confirmed by him. Again there
was, I think, a break in the proceedings. Then came another application to
the Court, and on November 30, 1891, the award was set aside; an appeal from
this decision was dismissed on February 2, 1892; the case went back to the
arbitrator, and on May 13, 1892, he made his last award. It is obvious that
in the course of these proceedings there were breaks, as to which it is
reasonable to say that they might be treated as opportunities for sending in a
bill of costs; but in fact nothing of the kind was done. Bills of costs
were, it is true, sent in from time to time, but not with reference to any kind
of break in the proceedings, and these bills of costs were accompanied by
statements of account, shewing the cash received from the clients and the
balance due from them; in none of them is there a demand for payment. The
true result of what was done is this, that the clients paid moneys on account
to their solicitors, and that it was not intended on either side that the bills
should be the bills of costs required by the Solicitors Act, but that the
intention of both parties was that they should be treated as items in
statements of account sent in from time to time, shewing what funds the clients
might reasonably be asked to supply to the solicitors for the purpose of
carrying on the proceedings."
Essentially, therefore, Kay LJ was saying three things: (i) that there
were breaks in the proceedings which would have justified interim
billing (which, as we shall shortly see, Bowen LJ for the first time called
"natural breaks"); (ii) that although interim bills were periodically sent,
they were not sent by reference to these breaks, and (iii) that in form they
were in any event bills of account and not statutory bills.
Lord Esher MR (at pp.294-295) said this:
"Now, as regards the first bill sent in, there was nothing at that time that
could be sent in as a final bill which the clients could proceed to tax;
although, of course, the solicitors might ask for payment on account. As to
the later bills, I am inclined to think (though it is unnecessary to determine
it) that when the award was given there was a break - that is, such a
conclusion of a definite and distinct part of the legal transaction as would
entitle the solicitors to send in a final bill of costs ... But a solicitor
cannot be said to have sent in a final bill if he has sent in something which
neither party understood nor intended to be final. Whether in the case of a
series of bills each bill has been sent in as a final bill, or whether they are
mere statements of account showing how far the expenses have gone up to the
point of sending them in, is a question of fact ... The first bill was sent
in when they had no right to send in a final bill, and we are bound to draw the
inference that the solicitors did not intend it to be what it could not legally
be, but that they intended it to be merely a statement of the expenses up to
the time at which it was sent in. A great fact in the case for our
consideration is the nature of the bills sent in and the way in which they were
treated by the parties ... There is the strongest evidence in the present case
that the intermediate bills were intended to be mere statements of how things
were going on and were not intended as final bills. The solicitors never
asked for payment of any of them, but asked for and took payment on account;
they never treated the matter otherwise than as one running account. The
conclusion, therefore, that I have come to that both sides treated this as one
running account ... ."
Bowen LJ's judgment is that most usually cited:
"We have to consider whether the earlier bills of costs sent in were such bills
of costs and so delivered as to make their delivery a delivery of bills of
costs under the Solicitors Act. It is clear that they might have been such
bills, had they been so treated by the parties. ... To make up ones mind on
this part of the case one has incidentally to consider whether the solicitors
had a right to deliver bills of costs, and, if not, whether the documents were
taken by agreement of the parties as separate bills of costs, each standing, if
I may so express it, by its own strength. In the first place, had the
solicitors a right to insist that each document was independent of the others,
and was a bill of costs within the statute? And this is a different question
from the question whether the client had a right so to treat them. This
draws us into a discussion as to whether at the times the bills were delivered
there was such a natural break in the business as to justify the solicitors, if
they wished, in sending in their bill and asking for payment. I need do no
more than observe that the law as to common law actions ... is, that prima
facie a solicitor, when he is retained by the client, undertakes to finish
his client's business. As to business which is not a common law action, but
which may be a suit in equity, lengthy either by reason of the number of the
parties or by reason of its comprehending a variety of really independent
litigation, there may be natural breaks, and this is clearly laid down and
explained by Jessel, MR, in In re Hall & Barker. It is not
necessary in the present case to define the natural breaks which may occur in a
chancery suit. There has here been a protracted arbitration, and we need not
and cannot define the breaks which may take place in such proceedings. There
may, however, be some breaks which must be recognised as such. When we have
made up our minds that the solicitors have a right to treat any division of the
proceedings as a natural break, we have to ask ourselves whether they exercised
that right, for obviously they may have had the right and yet may not have
intended to send in a bill of costs in exercise of that particular right. If,
however, we determine that the solicitors had no such right, we must ask
ourselves the further question of fact whether both parties agreed to treat the
documents as bills delivered under the Act." (pp.297-298)
I shall have to return to that final sentence when I come to the second issue
on the appeal, the question of inferred agreement. With regard to natural
breaks, however, it is surely plain from all three judgments that in 1893
something quite other than the solicitors' own convenience had to be
established before the principle could be invoked. Lord Esher, after all,
described the break as "such a conclusion of a definite and distinct part of
the legal transaction as would entitle the solicitors to send in a final bill
of costs", and observed that "the first bill was sent in when they had no right
to send in a final bill." Bowen LJ, although thinking it unnecessary to
define the natural breaks which might occur in a protracted arbitration,
expressly recognised that it is necessary to decide whether solicitors have "a
right to treat any division of the proceedings as a natural break." Kay LJ
too recognised that only certain types of break in the proceedings could
reasonably be treated as an opportunity for sending in a statutory bill of
costs. The solicitors there, however, failed principally upon the basis that
the bills were neither intended by them nor treated by the client as final
bills.
I come next to Davidsons v Jones-Fenleigh [1980] 124 Solicitors Journal
204, the decision of a two judge Court of Appeal upon whose extempore judgments
Mr McParland places great reliance. Roskill LJ described how the solicitors
there had been retained in connection with complex matrimonial proceedings
between their client and his wife which went on over a number of years. There
were different aspects of the proceedings dealt with at different times and,
from time to time during the proceedings, the solicitors sent in three
successive bills all of which were paid without demur. Finally, after their
client had withdrawn his instructions, they sent him a fourth and final bill.
There was no argument but that he was entitled to have that fourth bill taxed
since he had applied to do so within the permitted time. It was his
contention, however, that he was entitled also to have the earlier three bills
taxed on the basis that there was really only one single bill and not four
individual ones. Roskill LJ, having set out something of the history of the
common law rule, said this:
"... By the time one reaches In re Romer & Haslam, it is plain that
the Court of Appeal ... recognised that in certain circumstances a solicitor
might, in the course of a long drawn out common law action or arbitration,
properly send in bills from time to time to his client, bills made out to a
certain date or up to a certain point which is described in the judgments as a
´natural break', intending them to be paid up to that date or point
subject of course to the client's statutory right ... to have that bill taxed
... But as the judgments in In re Romer & Haslam show, for this
entitlement to remuneration to arise a very clear intention had to be
manifested by the solicitor when he sent in his bill to the client that it was
intended to be a complete bill to date, which the solicitor wanted to have
finally settled and that the solicitor was not, in sending in that bill, merely
either telling his client how matters were going on or only seeking a payment
on account towards whatever the final bill might be."
Having then cited at some length from the judgments in In re Romer &
Haslam, Roskill LJ continued:
"There is now no doubt, I venture to think, what the law is. In a case such
as the present, a solicitor is entitled to select a point of time which he
regards as an appropriate point of time at which to send in a bill. But
before he is entitled to require that bill to be treated as a complete
self-contained bill of costs to date, he must make it plain to the client
either expressly or by necessary implication that that is his purpose of
sending in that bill for that amount at that time. Then of course one looks
to see what the client's reaction is. If the client's reaction is to pay the
bill in its entirety without demur it is not difficult to infer an agreement
that that bill is to be treated as a complete self-contained bill of costs to
date.
The first part of that paragraph, of course, goes to the question of a natural
break; the second part, and the next passage I shall cite, goes to the
question of an inferred agreement. Roskill LJ then described the bills and
continued:
"Looking at each of those first three bills, it seems to me, applying the
principles laid down in In re Romer & Haslam, that there was a clear
intention on the part of the [solicitors], and indeed a plain agreement to be
inferred from the conduct of the parties that those bills should be treated as
completely self-contained bills covering the period down to the relevant date
given."
Lord Justice Roskill then turned to the client's argument on the question of
"natural break":
"... It was said that those bills do not show on their face any ´natural
break', to use the phrase which is used in the judgments in In re Romer
& Haslam. If by ´natural break' it is meant a ´natural
break' which can be identified as a particular point in the litigation that is
so. But I do not see why there should not be a ´natural break'
ascertained by reference to one or more particular points of time. In the
ultimate analysis it must always depend, as Lord Justice Bowen said, upon the
right deduction to be drawn from the particular facts of each case."
Eveleigh LJ agreed and added:
"In this case the solicitors were not retained for a single action or specific
litigation where it may be that, prima facie, the contract is entire and
one bill would be contemplated by the parties. In this case they were
retained generally in relation to the defendant's matrimonial affairs, and it
seems to me that it could not possibly be understood by the parties, nor indeed
a workable rule, that the solicitors should not be paid until the relationship
between the parties had ceased. ... The client in this case accepted the
bills and he accepted them as final, and I think that the transaction here was
the same as that envisaged by the Master of the Rolls, Sir George Jessel, in
In re Hall & Barker ... "
The only other authority I need mention on this part of the case is
Chamberlain v Boodle & King [1982] 1 WLR 1443 which, as has
been seen, is the single authority cited by Cordery under the heading "Natural
Break". Cordery quotes the relevant brief passage from Lord Denning's
judgment. I would merely make the point that, although the Court of Appeal
there had been referred to Davidsons v Jones-Fenleigh, Lord Denning's
formulation was expressly based on what Bowen LJ had said in In re Romer
& Haslam.
Having now referred to the few relevant authorities at some length, I can state
my conclusions upon this point really very shortly. The appellant's argument
is surely correct. A natural break cannot mean simply a date thought by the
solicitors to be convenient else the very concept of a natural break would
itself be meaningless - quite apart from the fact that s.65(2) would then
appear largely redundant. In any event, all three judgments in In re Romer
& Haslam (as well as Sir George Jessel's judgment in In re Hall
& Barker) make plain that, agreement apart, solicitors can only insist
upon being paid for a separate and distinct part of the overall work for which
they are retained. That was the formulation adopted by Lord Denning in
Chamberlain v Boodle & King, and Roskill LJ in Davidsons v
Jones-Fenleigh cannot be supposed to have been suggesting otherwise since
he was expressly purporting to follow the principles laid down in In re
Romer & Haslam.
In my judgment, therefore, had the appellant in fact disputed at the outset the
respondents' entitlement to submit interim statutory bills, the mere fact that
they were in final form would not have given rise to any right of recovery.
In the event, however, so far from being disputed, they were regularly paid and
it thus becomes necessary to consider the second question.
Inferred Agreement
Contrary to Miss Giret's submission, it seems to me clear that the law
does provide for the possibility of interim bills being payable by
virtue of an inferred as well as an express agreement. That to my mind is
apparent from the judgments in In re Romer & Haslam and perhaps
still more so from Roskill LJ's judgment in Davidsons v Jones-Fenleigh -
a judgment which in this respect accurately reflects the principle laid down in
the earlier authority and which is appropriately cited by Cordery in the
paragraph headed "Agreement".
I return, as I said I would, to the final sentence of the passage cited above
from Bowen LJ's judgment in In re Romer & Haslam:
"If, however, we determine that the solicitors had no such right [which he had
earlier described variously as ´a right to insist that each document was
independent of the others, and was a bill of costs within the statute', and
´a right to treat any division of the proceedings as a natural break'], we
must ask ourselves the further question of fact whether both parties agreed to
treat the documents as bills delivered under the Act."
And that reference by Bowen LJ to both parties agreeing to treat the documents
as statutory bills is mirrored in the judgments of the other two members of the
court: Lord Esher MR, as we have seen, stated that "a great fact in the case
for our consideration is the nature of the bills sent in and the way in which
they were treated by the parties"; Kay LJ reached his conclusion on the basis
that "the intention of both parties was that [the bills] should be treated as
items in statements of account ... ".
Making the point no less strongly, Roskill LJ in Davidsons v
Jones-Fenleigh, it will be remembered, said:
"If the client's reaction is to pay the bill in its entirety without demur it
is not difficult to infer an agreement that that bill is to be treated as a
complete self-contained bill of costs to date. ... Looking at each of [the
bills], it seems to me, applying the principles laid down in In re Romer
& Haslam, that there was a clear intention on the part of the
[solicitors], and indeed a plain agreement to be inferred from the conduct of
the parties that those bills should be treated as completely self-contained
bills covering the period down to the relevant date given."
What, then, of Miss Giret's fall-back argument that in any event, on the facts
of this case, no such inference falls to be drawn?
For my part, I would accept Miss Giret's initial submission that agreement
ought not readily to be inferred from the mere fact of payment being made in
response to the submission of interim bills, not least where, as here, (a) the
bills were for the most part in round figures and rendered on a monthly basis,
and (b) payments were effected by lump sums rather than being specifically
attributable to individual bills. After all, as Bowen LJ pointed out in In
re Romer & Haslam (in a passage at p.298 I have not previously
cited):
"Payment on account by the client in respect of the separate bills is not
conclusive to shew that each of them was a separate bill of costs under the
Act; it may be consistent with a clear understanding between the parties that
the ultimate bill sent in should be the ultimate bill of costs, and that the
payments were to be considered as made against that bill. It must always be a
question of fact whether a document is a separate bill of costs or, so to
speak, a chapter in a volume. In determining whether a document has been
delivered as a bill of costs, it must not be forgotten that the onus of shewing
that it has been lies on the solicitor ..."
All that said, however, I for my part have not the least doubt that there was
here, no less than in Davidsons v Jones-Fenleigh, a "plain agreement to
be inferred from the conduct of the parties that those bills should be treated
as completely self-contained bills covering the periods down to the relevant
date given." Unlike the position in In re Romer & Haslam - and,
indeed, unlike Chamberlain v Boodle & King where Lord Denning noted
that: ´When the bills were delivered they were delivered each time as
part of the running account - ´account rendered' being carried on in each
to the next', and unlike too the position in O Palomo SA v Turner &
Co (unreported, Court of Appeal transcript, 28 July 1999) where the court
had ´no doubt that these were ´on account´ bills when they were
sent out' - the bills here were in every respect in proper form as
self-contained statutory bills. Lord Esher MR and Kay LJ could not have said
of these bills, as were said of the bills in In re Romer & Haslam,
that ´the solicitors never asked for payment of any of them, but asked for
and took payment on account' (Lord Esher); ´In none of them is there a
demand for payment' (Kay LJ). Indeed not merely did each bill here constitute
a clear demand for payment, but those bills that were unpaid were treated by
the client as "outstanding legal charges" and were repeatedly the subject of
promises to pay. This case may be unique in including within the scope of the
inferred agreement a number of bills still unpaid but the facts as a whole to
my mind amply justify such a view.
I conclude, therefore, that although these bills were not submitted at natural
breaks in the proceedings there was an inferred agreement between the parties
that they were nonetheless to be treated as if they were all interim statutory
bills - all, that is, save the last which, of course, (a) was not inferentially
agreed (having been submitted after the dispute broke out), but (b) was on any
view a final bill and therefore recoverable in its own right.
Miss Giret took one final point before us, a point not even raised before the
master or judge below, namely that, notwithstanding that the time for taxation
of all these bills has long since expired under the statute, this court should
exercise its inherent jurisdiction to order taxation. Clearly there would
need to be very exceptional circumstances to justify such a course. In my
judgment there are none. The bare submission that the bills are excessive and
contain no detailed breakdown of the time spent on the appellant's litigation
is plainly insufficient.
It follows from all this that in my judgment the appeal should be dismissed.
LORD JUSTICE OTTON:
I agree.
LORD JUSTICE JUDGE:
I agree with Simon Brown LJ's judgment.
I propose to reflect briefly on the observation of Roskill LJ in Davidsons v
Jones-Fenleigh [1980] 124 Solicitors Journal 204, heavily relied on by the
solicitors in the present appeal, that
"A solicitor is entitled to select a point of time which he regards as an
appropriate point of time at which to send in a bill."
From June 1994 bills of costs, in the form of interim statute bills, were sent
to Mrs Abedi by her solicitors. The only discernible pattern to the sending of
these bills was the passage of time, usually once a month, but occasionally two
months or even three. Each bill was self contained, reciting all the relevant
events which had happened and the work done by the solicitors during the period
covered by the bill, each simply following its predecessor in steady succession
and an unbroken chain, unrelated to any feature, highlight, or distinct stage
in the proceedings. None was related to a "natural", "reasonable", or
"convenient" break, all descriptions to be found in the authorities analysed by
Simon Brown LJ.
A solicitor may choose to send bills at or in anticipation of specific moments
in the proceedings. If so there is plainly a sense in which he is selecting an
appropriate time or times, or date or dates, for this purpose. These times may
sensibly be described as natural breaks because they coincide with them. It
does not follow that times related exclusively to dates in the calendar rather
than stages in the proceedings fall within the scope of the principle of the
natural break. If that was what Roskill LJ meant he would have been departing
from the earlier authorities which he was expressly intending to follow.
My only other observation is that it remains pretty startling that in the
circumstances in which the present solicitors were retained by Mrs Abedi, the
terms of payment were not expressly agreed from the outset. The desirability
of such arrangements is likely to be reinforced by the increasing impact of the
Civil Justice Reforms on a client's entitlement to be kept properly informed of
his escalating financial obligations at each stage of the proceedings. As
clients should know exactly where they stand throughout the process, it is
reasonable to anticipate that questions of their own costs, and payment, should
be arranged at an early stage in the process.
(Order does not form part of the approved judgment)