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England and Wales High Court (Senior Courts Costs Office) Decisions
You are here: BAILII >> Databases >> England and Wales High Court (Senior Courts Costs Office) Decisions >> Antares Srl v The Simkins Partnership [2005] EWHC 90006 (Costs) (29 April 2005)
URL: http://www.bailii.org/ew/cases/EWHC/Costs/2005/90006.html
Cite as: [2005] EWHC 90006 (Costs)
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SUPREME COURT COSTS OFFICE
London, EC4A 1DQ |
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B e f o r e :
____________________
| ANTARES SRL |
Claimant |
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| - and - |
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| THE SIMKINS PARTNERSHIP |
Defendant |
____________________
Mr D. Matthias (Counsel) (instructed by The Simkins Partnership) for the Defendant
Hearing date : 24 March 2005
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Crown Copyright ©
- The Claimant, a company incorporated in Italy and trading in Tuscany, seeks an order for detailed assessment of a total of 32 bills, totalling £589,617.61, pursuant to Section 70 Solicitors Act 1974. Of these bills, 15 with a total value of £555,546.70, relate to some bitterly fought litigation, and all but the last of those bills, rendered on 15 July 2004, have been paid.
- The remaining 17 bills relate to a mixture and contentious and non contentious matters, and all have been paid, the last on 20 September 2004.
- The issue in the case is whether there are "special circumstances" within Section 70(2) Solicitors Act 1974 which would justify my making an order for detailed assessment, and a subsidiary point as to whether I have the power to make such an order in respect of those bills which have been paid for more than 12 months, in the light of Section 70(4) of the 1974 Act.
- The Defendant firm disputes the claim in its entirety, though it would be willing to have the last of the litigious bills, if I can so describe it, which was that numbered 80193 and rendered on 15 July 2004, for a gross sum of £197,976.30 (of which £15,000 has been paid on account), subjected to detailed assessment provided I make stringent conditions for part payment, or an interim payment on account of that bill.
- The vast majority of the bills in relation to this matter, and the sole issues which were addressed before me at the hearing, relate to litigation in the Chancery Division in which Antares SRL, the present Claimant (hereinafter referred to as SRL), were the First Defendants.
- SRL are in the business of supplying specialist plumbing equipment across Europe, which they commonly do through franchisees and sales by catalogues. The Defendant's retainer for SRL lasted from 4 November 2002 until 22 December 2004.
- The nature and flavour of that litigation is well caught by the following paragraphs from the first witness statement of Roger Graham Billins, a partner in the Defendant firm, who had conduct of the litigation on behalf of the Claimant:
- As indicated the litigation lasted for 22 days before Mr Justice David Richards in May and June of last year, and a reserved judgment was handed down by that Judge on 16 November last year, running to 242 paragraphs. The last paragraph of the judgment summarises the preceding paragraphs:
- I was told at the oral hearing that there was a separate contested costs application heard by the Judge in December 2004 which resulted in his awarding Total Supplies Ltd and Antares Limited, the Claimants in the Chancery action, half their costs against SRL. Certain costs orders in favour of SRL against those Claimants are also outstanding, but, I was told by Mr Landolina, the balance was very much in favour of Total and Limited, so that SRL are going to have to pay a considerable sum of money to those companies' lawyers for their costs, which have not yet been assessed or agreed.
- The Claimant seeks detailed assessment on the ground that even though all the bills but one have been paid, there are "special circumstances" which entitle them to have them all referred to detailed assessment. Their case was cogently and efficiently argued by Mr Landolina. His clients' commercial manager, Francesco Gargani, has made a witness statement in opposition to the original application for a detailed assessment after the first hearing before me.
- At the first hearing I only had the first witness statement of Roger Graham Billins, so I directed that each side should have the opportunity to put in (further) evidence, and that the matter should then come before me for the full and effective hearing. As indicated Mr Gargani then put in a witness statement, with a number of exhibits, and Mr Billins then put in a second witness statement with a considerable amount of additional material, much of which was a selection from the voluminous witnesses statements, etc, put in in relation to the original Chancery action.
- At the full hearing the Defendant was represented by Mr Matthias, and I am indebted to both advocates for the helpful way they took me through what was a mass of material, almost all of which was of direct or indirect use to me in coming to my conclusions.
- The Claimant's principal argument was that the estimates which the Defendant gave to the Claimant during the course of the litigation were so hopelessly inaccurate that they misled the Claimants into paying the bills, whereas, had they known the true position, they would have taken some other action.
- In addition the Claimant alleges that the Defendant's terms of business were at best ambiguous, and that they did not realise that they had the rights that they are now exercising, and could therefore have exercised at a much earlier stage.
- Thirdly, the Claimant relies heavily on the Defendant's admitted failure to comply with the Costs Information Client Care Requirements of the Law Society's Practice Rule 15 applicable to all solicitors.
- The Defendant's terms of business so far as billing is concerned are set out in a document running to two pages, the relevant paragraphs of which read:
- In addition there was a client care letter of 6 November 2002, which reads as follows:
- In addition all the bills had on their front page the following wording, contained in a box at the foot of the page:
- Mr Landolina argued that there was perhaps a higher duty on English solicitors to advise a foreign company as to their rights, and that the wording in particular in the box on the bills, referring though it did to three sections of the Solicitors Act, would not sufficiently alert SRL as to their rights.
- In response to that the Defendant alleges that SRL had, as a member of their staff and a legal adviser, Mr Tom Murray, who was, and is, a Scottish solicitor, and even though it would appear that his knowledge of Italian was not perfect, it was suggested that it was good enough for him to be able to spell out what SRL's duties and rights were in respect of the bills and any challenges thereto.
- Mr Landolina however pointed out that there was evidence before me that Mr Murray "changed sides" and left SRL, and in fact gave evidence at the trial for the English companies, and therefore he was not to be trusted.
- However, the Defendant has a trainee, a Miss Berton, who speaks good Italian, and was, and was able to, and did, regularly communicate with the directors of SRL, who did not speak any, or any significant, English. Miss Berton, of course, assisted Mr Billins in his conduct of the Chancery litigation.
- My conclusion on this issue is the Defendant did all that could reasonably be expected of it to draw SRL's attention to their rights and obligations. There is no evidence that Mr Murray, before he "changed sides" failed to advise the Claimant of its rights in respect of the bills, assuming that he was asked to do so. It is not, in my judgment, necessary for an explanation to be given to a client about the meaning of Section 70 to 72 of the Solicitors Act 1974, in the absence of a specific request. Further, I do not hold, as Mr Landolina has submitted, that there is a higher duty on solicitors acting for foreign clients, at any event where those foreign clients have any English legal adviser to assist them. I do not therefore think that this amounts to "special circumstances".
- Much of the argument before me on 24 March was devoted to this issue, and to an examination of the estimates, and the reaction to the estimates from SRL, and the wide discrepancy between the estimates and the bills.
- The high watermark of the Claimant's claim on this issue seems to me to be contained in their letter of 27 May 2004 to the Defendant. On page 3 of that letter (page 14 of the exhibit to Francesco Gargani's witness statement) Enrica Mattolini says this:
- Mr Matthias, in his able submissions, suggested that the defects in the Defendant's approach to this matter, and in particular their failure to give or update accurate estimates, was one of form and not substance. He made the very telling point that SRL never indicated what they would have done differently had they been given more accurate and complete information than they were in fact given.
- During the course of the submissions I made the observation that it is easier for a Claimant involved in heavy litigation to disengage therefrom if he finds that the costs are getting out of control, or beyond his means, than it is for a Defendant. If a Claimant decides to "pull the plug" he will obviously be faced with a legal bill for the successful Defendant, but if a Defendant seeks to drop out of litigation he may, in addition, end up with a very substantial damages award. There was no evidence before me, nor did Mr Landolina submit, that had accurate or updated estimates been given by the Defendant the Claimant would have sought to disengage from the litigation, or to seek less expensive legal representation.
- Mr Matthias pointed out that the claim against SRL was for well over £1 million, though in fact, of course, Mr Justice Richards only found in favour of the Claimants for a very much smaller sum than that, some £13,000. This of course could not have been known to the Claimant when they were considering what to do, because of the escalating costs of the litigation.
- Mr Matthias goes further, however, and points to the unexpected developments in the litigation, which are outlined in Mr Billins' second witness statement. He points out that there are no less than 14 of these, and most, if not all, of them were really matters which could not have been anticipated.
- One example he gave was where it was suggested that one of the directors of SRL was in fact Defendant to criminal proceedings in Italy, whereas the director in question denied that he was a Defendant, but said that he was merely a witness.
- The evidence on this point put forward at the last minute by the Claimants in the Chancery action proved, or seemed to prove, that the director in question was indeed a Defendant, and not merely a witness, and much time and effort had to be put in in trying to refute this point. Clearly, late though the point was raised, it was important because it went to SRL's witnesses' credit. In fact I was told that the investigation disclosed that the director was in fact a defendant, and not merely a witness, but of course the ascertainment of that fact enabled those representing SRL, in the Chancery litigation, to explain the position to the court, rather than having it dragged out of their witnesses under cross-examination.
- Mr Landolina referred me to a decision of Mr Justice Jacob (as he then was), in the case of Harrod's Ltd v Harrod's (Buenos Aires) Ltd, decided on 13 April 2000. He submitted that the case was extremely important, and indeed emphasised the points that he was seeking to make on behalf of SRL.
- On page 6 of that judgment, Jacob J said:
- Later on the Judge says this, on page 9 of the judgment:
- Finally, on page 11 of the judgment, Mr Justice Jacob said:
- Mr Landolina suggested that there were many close parallels between this case and the case of Harrods, and that the comments of Mr Justice Jacob (as he then was) are of strong persuasive value, and ought to persuade me that there are "special circumstances".
- It is clear to me that in that case the Judge took a very strong view, that the solicitors ought not to be allowed to have their bills unchallenged, because he considered, from the evidence that he had seen, that there were legitimate reasons why they could be so challenged. In my judgment however the comments of the Judge, strong though they are, are directed to the parties in the action before him, and are not to be taken as of general application. He may also be right in suggesting that it is high time that the provisions of Section 70 to 72 of the Solicitors Act are "tightened up", but of course that is a matter for Parliament, and not the judiciary, and certainly not a Costs Judge.
- My conclusion on this issue is that although, as the solicitors admit, inadequate information was given to the Claimant in accordance with the Client Care Code, some evidence was certainly given orally, and this is not contradicted, and in any event the developments in the litigation were such that it was almost inevitable that the bills would greatly exceed the amounts of the estimates.
- In addition, during the 22 days of the trial I was told, the Claimants' directors were in count, and could therefore see for themselves what was going on, and of course it is the last bill, for the period of the trial, that is really in issue in this claim.
- Mr Landolina submitted that they could do, and relied for that proposition on the Court of Appeal case of Thomas Watts & Co (A Firm) v Smith [1998] 2 Costs LR 59, as followed by the Court of Appeal in the case of Turner & Co (A Firm) v O Palomo SA [2000] 1 WLR 37.
- Mr Matthias on the other hand submitted that those bills were beyond the reach of an order for assessment by virtue of the decision of the House of Lords in Harrison v Tew [1990] 2 WLR 210.
- The headnote to Harrison v Tew in the Weekly Law Reports reads as follows:
- That headnote seems to me to be fully justified by the principal speech, that of Lord Lowry. The second paragraph of his judgment reads at [1990] 2 WLR 212 letter H:
- That decision would seem to be the end of the matter, but Mr Landolina relied on Thomas Watts & Co (A Firm) v Smith, reported at [1998] 2 Costs LR 59. That is a decision of the Court of Appeal, in which the leading judgment was given by the then Vice-Chancellor, Sir Richard Scott, and the relevant paragraphs read (about halfway down page 73):
- It does not appear that the case of Harrison v Tew was cited to the Court of Appeal in Thomas Watts & Co v Smith, and accordingly some commentators felt that Thomas Watts had to be confined to its own facts.
- However, in Turner & Co v O Palomo SA [2000] 1 Costs LR 37 (CA), both Thomas Watts & Co and Harrison v Tew were indeed quoted to the court. In that case Mr Downes of Counsel argued that Thomas Watts & Co v Smith was inconsistent with Harrison v Tew, Evans LJ (who gave the judgment of the court) said (on page 49E):
- Finally, the conclusion on page 51D:
- As indicated, we spent a considerable time looking at this issue, and the conclusion which I have reached is that, odd though the distinction may seem to be, the present position is that if a client, or former client, seeks assessment under Section 70 more than 12 months after the bill has been paid, then Harrison v Tew is fatal to such a claim. If, on the other hand, the solicitor seeks to bring an action on the bill, the client, or former client, can raise as a defence over-payment, and so forth, even outside the primary 12 month period, and so obtain an order for detailed assessment of the bill(s).
- Since the Claimant here is relying on its Section 70 rights, I conclude that, in respect of all the bills which have been paid more than 12 months before the date this application was issued, the Claimant cannot obtain an order for assessment, whatever merits it may have.
- Having carefully considered all the evidence, not least the detailed and helpfully full judgment of Mr Justice Richards, I can well understand the particular difficulties that this litigation represented, and, having reviewed all the evidence, I do not think that the Defendant should be unduly criticised for not giving the Claimant more information, and certainly there are, in my judgment, no sufficient "special circumstances" to direct a detailed assessment of those bills.
- Accordingly, I intend to dismiss the Claimants application in respect of all the bills, with the exception of the bill rendered in July.
- The Defendant suggests that I should make an interim payment in respect of that bill in the sum of £80,000 as a condition of the matter being allowed to proceed, and indeed that I ought to award a further sum by way of security, since the Claimant is out of the jurisdiction and may not be able to meet the judgment if at the end of the detailed assessment the Claimant fails.
- As I pointed out in the case of Rotary Watches Ltd v Rotary Watches (USA) Inc (on the SCCO page of the Court Service website) it seems to me that there was no jurisdiction to order an interim payment, pursuant to CPR 47.15, since there has been no request for detailed assessment from the receiving party, nor can there be until an order for detailed assessment has been made, and points of dispute have been filed.
- However, as I pointed out in Rotary Watches, there is an alternative power to make an order for payment, which is in CPR 44.3(8), which reads:
- I am "the court" for this purpose, and I am now ordering that those costs be assessed, and therefore, it seems to me, that I can bring myself within paragraph 44.3(8) and order a payment on account.
- The £80,000 sought is to pay Mr Gourgey QC's fees, and Mr Matthias limited his claim to that sum. I think that that is the right figure to order, and I intend to do that.
- So far as ordering further sums as security, as I pointed out during the argument, I am always reluctant to order security in a Solicitors Act case, because it tends to stifle what by definition is the client's, or former client's, undoubted right to test the Defendant's bill, and I am therefore not inclined to order any additional payment, whether by way of payment on account or security for costs beyond the £80,000 I have already directed.
- When this judgment is formally handed down I will of course deal with the Directions that are necessary to progress the assessment that I have directed should take place pursuant to Section 70, and also deal with the question of interest, and any other ancillary or consequential issues which the parties may wish to raise with me.
Master Rogers
THE ISSUE
THE BACKGROUND
"3. Our retainer arose from bitterly contested litigation between the Claimant and its UK franchisee, Antaras Limited ("Limited") and Total Spares and Supplies Limited ("Total"), which had acquired the share capital in Limited from Srl. Total and Limited claimed that Srl had unlawfully terminated the Franchise Agreement with Limited and, prior to our retainer, had obtained an injunction restraining Srl. from further breaching the Franchise Agreement. We took over the case from a firm of London solicitors who were also Italian speakers called Pini Bingham.
4. The case was hard fought from beginning to end culminating in a trial of the action in the Chancery Division last summer which lasted 22 days and involved expert accounting evidence. Furthermore, both parties made numerous, substantial interlocutory applications. By way of example, the Claimants in the proceedings made an application for summary judgment which took up 3 days of court time. Three orders for costs were made against them, all of which were subject to detailed assessment. Ultimately the court held that Srl. had unlawfully terminated the franchise but awarded only a relatively nominal sum of over £13,000 as against a potential claim of £1.4 million but ordered Srl to pay half the costs of the action. I understand that Srl. are seeking permission to appeal from that judgment."
"242. My overall conclusion is that SRL acted in breach of the franchise agreement in giving notice of immediate termination in both September and December 2002. Limited affirmed the agreement after the first notice but lawfully terminated it on 11 December 2002 and is entitled to claim damages for any loss between September and December 2002 and for loss of future profits. However Limited was itself already in breach of the agreement in a number of respects which would have entitled SRL to give six months' notice of termination. I am satisfied that SRL would have exercised its right of termination and that Limited are entitled to damages for loss of profits only for the period to 11 June 2003."
THE BASIS OF THE CLAIMANT'S CLAIM
THE FIRST ISSUE – AMBIGUITY OF THE DEFENDANT'S TERMS OF BUSINESS
"Billing Arrangements
Unless we have agreed otherwise, we will send you an interim bill for our charges and expenses at the end of each month (or, on less active matters, each quarter) whilst work is in progress.
Payment is due to us upon delivery of our bill. We reserve the right to charge you interest on unpaid bills at the rate applicable to judgment debts (currently 7% per annum) on amounts which have been outstanding for more than one month. Interest will be charged on a daily basis. We reserve the right to cease acting in any matter when our bill is overdue. We will not exercise this right without first giving you reasonable notice.
If you have any query about any bill sent to you, you should upon its receipt contact the person who sent it to you.
Even if another party has agreed to pay or is liable to pay all or part of your legal costs, you will have the primary responsibility for payment of our bills, which will ordinarily be addressed to you."
"Dear Tom
Antares Limited & Total Spares & Supplies Limited
Laura and I were pleased to meet you and Snr Gargoni and Dott Mattolini on Monday. I do hope that your journey home was not too difficult. I am writing as required by the English Law Society to confirm the terms of our engagement. These are contained in this letter and the terms of the business enclosed. Together, these form the basis of your contract with us. Please let us know if anything is unclear and I would be happy to explain.
Representation
You have asked us to assist you in relation to a claim issued against Antares srl ("SRL") and others by Total Spares & Supplies Limited and Antares Limited. It would be helpful if you could also confirm to us whether you wish us to act for European Plumb Direct Limited.
Reporting Responsibility
Unless you direct otherwise, we shall take instructions from any of Snr Gargoni, Dott Mattonlini and yourself.
Staffing
I shall be your client partner with overall responsibility for the matter. As I have indicated to you, my charging rate is £300 per hour. I shall be assisted by Laura Berton whose charging rate is £120 per hour. If I also need to involve other solicitors employed by us and, if that is the case, I shall let you know what their charging rates are. Should you ever be dissatisfied with the service of any us is providing, please let me know straightaway.
It is at this stage very difficult for me to provide you with an estimate of how much the case will cost. The initial steps that we have to take are the service of a Defence and an application for the discharge of the injunction. I envisage that that would cost somewhere between £10,000 and £15,000 including the cost of Counsel's fees. I mentioned to you the possibility that I would undertake the representation of the company at the hearing of the application myself without the assistance of Counsel. However, I believe that the matter is of such seriousness that we should appoint Counsel.
If anything arises which makes me change the estimate, I shall again let you know. I acknowledge receipt of the sum of £5,000 on account of our costs and £8,000 in respect of the Court's Order against SRL.
I strongly suspect that if we are successful in applying for the discharge of the injunction then the case may be resolved quite quickly. However, if that is not the case and we have to go to trial, then I shall provide you with an estimate of those costs as well.
If you have any queries in respect of this letter please do not hesitate to let me know.
Kind regards.
Yours sincerely
Roger Billins"
"NOTICES UNDER THE SOLICITORS (NON-CONTENTIOUS BUSINESS) REMUNERATION ORDER 1994 AND THE SOLICITORS ACT 1974
REMUNERATION CERTIFICATES – (Non-Contentious Business only)
If you are not satisfied with the amount of our fees, then within a month of receiving this notice you can ask us to obtain a Remuneration Certificate from the Law Society. This will either say that our fee is fair and reasonable, or it will substitute a lower fee. However, before we take steps to obtain a Remuneration Certificate, you must first pay us half the fee, all the VAT and any expenses we have incurred (all as shown on the bill), unless we already hold money to cover these. You may ask us, or if we refuse, the Office for the Supervision of Solicitors currently at 8 Dormer Place, Royal Leamington Spa, Warwickshire CV32 5AE, to waive this requirement so that you do not have to pay anything for the time being. You would have to show that exceptional circumstances apply in your case. Your rights are set out more fully in the Solicitors' (Non-Contentious Business) Remuneration Order 1994.
ASSESSMENT and INTEREST – (All Business)
You may be entitled to have our charges assessed by the Court. The procedure is different from the Remuneration Certificate procedure and is set out in Sections 70, 71 and 72 of the Solicitors Act 1974. We may charge interest on unpaid bills and we will do so at the rate payable on Judgment debts from one month after delivery of this bill."
MY CONCLUSION ON THIS ISSUE
THE SECOND ISSUE: DISCREPANCY BETWEEN ESTIMATE AND BILLS
"Finally for us, as for any company that sets out an economical and financial budget, it is very negative for us not to know exactly the amount of expenses we will have and the payment schedule.
We have the right to know the real entity of the legal action to decide if we can afford it or not and for this reason we never received the right answer neither a year ago nor two months ago as the invoices do not correspond to what estimated and are twice or three times higher!"
"Before going on with that point it is worth looking at the general rules as to taxation contained in s.70. Sub-section (1) provides that:
"Where before the expiration of one month from the delivery of a solicitors' bill an application is made by the party chargeable with the bill the High Court shall, without requiring any sundry payments in court or that the bill be taxed and that no action will be commenced on the bill until the taxation is completed."
So if a bill is delivered and you challenge it within a month there will be a taxation.
"(2) Where no such application is made before the expiration of the period mentioned in sub-section (1) …"
– i.e. after one month –
"… then, on an application being made by the solicitor, or, subject to sub-sections (3) and (4) by the party chargeable with the bill, the court may on such terms, if any, as it thinks fit, not being terms as to the costs of the taxation, order:
(a) that the bill be taxed; and
(b) that no action be commenced on the bill and that any action already commenced be stayed until the taxation is completed."
The client is subject to sub-sections (3) and (4). Sub-section (3) provides as follows:
"Where an application under sub-section (2) is made by the party chargeable on the bill:
"(a) after the expiration of 12 months from the delivery of the bill or …"
– (b), which does not count; or:
"(c) after the bill has been paid but before the expiration of 12 months from the payment of the bill
"no order shall be made except in special circumstances and, if an order is made, it may contain such terms as regards the costs or taxation as the court may think fit."
Plainly this section calls for legislative re-examination under the modern costs rules practice. Quite apart from anything else, it refers to "taxation" where the modern word and the word used in the Rules of Court is "assessment". Much more significantly, it fails to take into account the modern practice of solicitors of sending bills on a regular basis which are complete bills, not interim bills. That causes difficulty when you have litigation which is ongoing. The client is called upon by these provisions to challenge an interim bill within one month, if he wants to do it as of right; and if he does not challenge it within 12 months then he has to show "special circumstances" to challenge his solicitors' bill. That puts him in an impossible position. Either he challenges his solicitors' bill – the very solicitor who is now acting for him – and continues using that solicitor at the same time; or he has to change solicitor, all in the middle of litigation when he is facing another enemy. It may well be that the court would regard ongoing litigation as, itself, "special circumstances."
There are other reasons why there may be "special circumstances": for example, monthly bills, which are complete bills in themselves, may all relate to one piece of litigation and it may be difficult to see whether work was justified or not without seeing all the other items in the bill or earlier and letter (sic this should read later) bills. In other words, one may well want to read the entire content of the bill."
"… But I remain unsatisfied that a taxation, looking at the costs incurred between the client and the solicitors, will not reduce the bill by that amount, which I think is about 8 per cent or 9 per cent.
There are an awful lot of reasons for so saying. First of all, the overall bill itself, £1.3 million. That is an enormous sum of money for a trial and an appeal with one interlocutory injunction application. Secondly, there was the consistent under-estimate of costs given to the client during the course of the litigation. Of course, the mere fact that an under-estimate is given is neither here nor there if it turns out to be wrong. It is a pointer to the fact that the actual bill may, itself, be wrong and the estimate right.
There is also, most unfortunately, an express claim to a premium charged as "a success fee". It is called a "modest" premium. I have no idea what the figure is. I asked but was not told. That could not be legitimately allowed.
From time to time, the clients were told that they would be getting money back. There is then the unfortunate episode of the changing of the hourly rates. During the course of the litigation Eversheds changed their hourly rates without telling the client who only discovered the change through some incidental matter. I doubt the increased rate can be charged."
"Incidentally, none of the bills which were sent on a monthly basis did more than refer in a small footnote to those provisions. They did not warn the client that if he wanted to challenge the bill there was a time bar. I was told that one seldom does that. Well, it is time it was done."
MY CONCLUSION ON THIS ISSUE
CAN THE CLAIMANTS HAVE THEIR BILLS PAID MORE THAN 12 MONTHS BEFORE THE DATE OF THE APPLICATION ASSESSED?
"The plaintiffs had instructed the defendant, a solicitor, in respect of a number of property transactions. When moneys from sales of property had been paid into the solicitor's clients' account, the solicitor's costs had been agreed by the parties, a bill drawn up and the moneys transferred from the clients' account to the firm's account. Twelve months after the settlement of the last bill, the plaintiffs consulted other solicitors and claimed that as a result they had discovered that the solicitor had overcharged them. On an application by the plaintiffs that the bills of costs be referred to a taxing master for taxation notwithstanding that under the provisions of section 70(4) of the Solicitors Act 1974 no application could be made after 12 months had elapsed since the payment of the bills, the master, purporting to exercise the court's inherent jurisdiction, made the order and that order was affirmed by the judge. On an appeal by the solicitor the Court of Appeal, by a majority, held that the court did not have jurisdiction to make the order for taxation sought.
On appeal by the plaintiffs:-
Held, dismissing the appeal, that on its true construction section 70(4) of the Act of 1974 had displaced the court's inherent jurisdiction to make orders for taxation of a solicitor's bill of costs where the relevant application had been made more than 12 months after payment of the bill; that similarly the court's disciplinary jurisdiction over solicitors as officers of the court, although preserved by section 50(2) of the Act of 1974, had been expressly made subject to the provisions of that Act, including section 70(4); and that, accordingly, the order for taxation of the solicitor's costs had been made without jurisdiction."
"The question for decision is whether section 70(4) of the Solicitors Act 1974 precludes an application for taxation of a solicitor's bill of costs by the party chargeable after the expiration of 12 months from the payment of the bill or whether, notwithstanding the wording of that subsection, the court has an inherent jurisdiction to order taxation."
and then later in his speech Lord Lowry said (at [1990] 2 WLR 220 letters D/E):
"I might venture to remind your Lordships of the terms of section 41 of the Act of 1843:
"And be it enacted, that the payment of any such bill as aforesaid shall in no case preclude the court or judge to whom application shall be made from referring such bill for taxation, if the special circumstances of the case shall be in the opinion of such court or judge appear to require the same, upon such terms and conditions and subject to such directions as to such court or judge shall seem right provided the application for such reference be made within 12 calendar months after payment."
That provision impliedly and section 70(4) of the Act or 1974 expressly were negative enactments which in my clear opinion ousted the inherent jurisdiction to refer a bill for taxation in conflict with what they laid down."
"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. This is common in damages claims. Judgment for damages to be assessed is a very common form of order under an Order 14 application. Where a quantum merit for work done, the benefit of which has been obtained under a contract but where the contract sum has not been agreed, is claimed, there may be an order for judgment to be entered for the plaintiff with the quantum to be assessed. In my judgment that is the position of the plaintiffs claim in the present case. It is no doubt too late, having regard to the terms of section 70 of the Solicitors Act 1974, for Dr Smith to make an application for taxation. But if the court is to be asked to make an order for payment by Dr Smith, the client, of the amount claimed by the solicitors, a process of judicial assessment must, in my judgment, first take place. The judicial assessment should be carried out by a taxing master. It is the taxing masters that have the requisite expertise for that purpose.
In my opinion the order that Master Hodgson should have made would have been an order for judgment to be entered for the plaintiff firm for an amount of costs to be assessed. He could at the same time have made an order for an interim payment of the minimum that would be payable, the £67,000 as he found it, to be paid in the meantime. We have power to make any order that the court below could have made and, in my judgment, an order in that form is the order that this court should now make. I would not be prepared simply to dismiss this appeal and leave the client, Dr Smith, liable to pay the sums that the solicitors have chosen, perhaps rightly chosen but that has yet to be tested, to include in their bills."
"Mr Downes submits, however, that the case was wrongly decided, and in particular that it is inconsistent with the House of Lords' decision Harrison v Tew [1990] 2 A.C. 523. Sir Richard Scott V-C's judgment does not refer to this earlier judgment, and Schiemann L.J. has confirmed that it was not cited by either of the parties, who appeared as litigants in person. The reasons for the House of Lords' decision were given by Lord Lowry who said, at p.528:
"The question for decision is whether section 70(4) of the Solicitors Act 1974 precludes an application for taxation of a solicitor's bill of costs by the party chargeable after the expiration of 12 months from the payment of the bill or whether, notwithstanding the wording of that subsection, the court has an inherent jurisdiction to order taxation.""
and then later on, page 50 at E, Lord Justice Evans said:
"Harrison v Tew [1990] 2 A.C. 523 therefore was a case where the client sought only taxation, if not under the statutory provisions, then under the "inherent jurisdiction" of the court, which the court held that the statute prevented him from doing. If Mr Downes's submission were correct, and the House of Lords was holding that the ordinary jurisdiction was excluded also, then their Lordships would not have dealt with the alternative submission in this way. It cannot be said that they decided that the ordinary jurisdiction does remain, because that issue was not argued before them, but for present purposes it is sufficient that they did not decide that it is excluded by the Act of 1974. The judgments in Jones & Son v Whitehouse [1918] 2 K.B. 61 and Thomas Watts & Co v Smith [1998] 2 Costs L.R. 59 therefore are not inconsistent with it. Moreover, Lord Lowry appears to have accepted that the ordinary jurisdiction does coexist with the statutory scheme. When considering the argument that "a client who had been grossly overcharged would have no remedy once he had been careless or unfortunate enough to fall foul of the 12-month time limit", he continued, at p.538: "But it has to be said that in some cases the solicitor will have deducted his costs from money received on the client's behalf, in which case the client could sue under the ordinary jurisdiction described in In re Park, 41 Ch.D. 326." That would be a case where the client had paid the bill and more than 12 months had elapsed since payment. If he claimed money which was due to him from the solicitor, and the solicitor deducted his charges from it, then the client could put the solicitor to proof that the charges were not unreasonably high. This comes so close to the situation in the present case as a matter of principle that, in our view, it is indistinguishable from it."
"In our judgment, the authorities show quite clearly that Mr Downes's submission is wrong. The Act of 1843 introduced a taxation procedure, because it was regarded as more convenient and advantageous for the client, and perhaps for both parties, than the existing procedures were. Nothing in the Act, 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. The Court of Appeal has held, three times, that the common law or "ordinary jurisdiction" of the court is not excluded, and these judgments are not in any way inconsistent, in our view, with the decision of the House of Lords in Harrison v Tew [1990] 2 A. C. 523. 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 section 70(2), without any time limit, and obtain a form of summary judgment when the taxation certificate is issued: section 72(4). The present issue arises only when that is not done."
THE ISSUE OF DISCRETION
THE TERMS UPON WHICH THE JULY BILL SHOULD BE ASSESSED
"Where the court has ordered a party to pay costs, it may order an amount be paid on account before costs are assessed."
CONCLUSION