Suing For Unpaid Fees? | Statute Bills And The Client’s Right To Challenge

DEVONSHIRES SOLICITORS LLP V ELBISHLAWI & ANOR | FULL DECISION

THE HONOURABLE MR JUSTICE BUTCHER:

Were the invoices ‘statute bills’, and can they be challenged?

19. As I have said the grounds of defence on which Mr Bailey, who had not drafted the Defence and Counterclaim, particularly relied on this application were not those which I have considered above. What Mr Bailey particularly contended was as follows: (1) that save for No. 263739, the invoices were not ‘statute bills’, because insufficient detail had been supplied; (2) that, in any event, the Defendants were entitled to seek a ‘common law’ assessment of all the invoices; and (3) in relation to invoice No. 249442, this related to a period of over 2 ½ years, some of which was a period when only the Firm existed and Devonshires did not.

20. I will take these points in turn. Mr Bailey contended that to be a ‘statute bill’, which complies with the requirements of s. 69 Solicitors Act 1974 (‘the 1974 Act’), there must be sufficient information to enable the client to know what he is being charged for; and that if the bills were not ‘statute bills’, then, pursuant to s. 69(1) of the 1974 Act, the solicitor could not sue on them.

Mr Bailey contended that none of the bills other than No. 263739 had sufficient detail, and therefore there was a complete defence to the action in relation to those invoices.

21. Mr Burkitt submitted that this was not a point which was pleaded and was not open to the Defendants to take. He argued that this point was not taken in the Defence, as opposed to the allegation of the wider term requiring the supply of details of all work undertaken by Devonshires and of payments by and to it which I have already considered. Mr Burkitt argued that had the point about the invoices not being ‘statute bills’ been taken in the Defence, it would have been addressed in the Reply and the evidence for this application. This would have included reference to information which was already in the possession of the client because, as stated in Ralph Hulme Gary v Gwillim [2002] EWCA Civ 1500, at para. [64], information already in the possession of the client can be taken into account in assessing whether an invoice is a ‘statute bill’. Mr Burkitt submitted that it had been for the Defendants to put forward a case of the matters referred to in paragraph [70] of Ralph Hulme Gary v Gwillim, namely that (i) there was no sufficient narrative in the bill for them to identify what they were being charged for and (ii) that they did not have sufficient knowledge from other documents in their possession or from what they had been told reasonably to take advice on whether or not to apply for the bill to be taxed.

22. I consider that Mr Burkitt is right about this. A bill delivered in accordance with subsections (2A) and (2C) of s. 69 of the 1974 Act is to be presumed, until the contrary is shown, to be a bill bona fide complying with the Act: s. 69(2E). It was not suggested that the invoices in this case did not comply with s. 69(2A) or (2C). In such circumstances it was for the Defendants to put squarely in issue that the bills were not ‘statute bills’ because insufficient information had been supplied or was known to the Defendants about the work done to which the invoices related. I do not consider that the Defence does that. Had it been intended to plead that case it could have been simply stated. Moreover, if that point was being taken it would have been necessary to distinguish between the invoices because invoice No. 263739 is accepted by Mr Bailey to be a ‘statute bill’. There was no such distinction made. It also seems clear that the Defence was not understood to have made a case that the bills were not ‘statute bills’, and that it was for that reason that the Reply had not addressed that point in terms.

23. Thus, as Mr Burkitt said, the Defendants have not properly pleaded and have not evidenced the matters referred to in paragraph [70] of Ralph Hulme Gary v Gwillim, which are matters which it is for the client to show. In those circumstances, I reject Mr Bailey’s first argument.

24. Turning to the second point, I accept Mr Bailey’s submission that,

even if the invoices were ‘statute bills’ and even though the period of 12 months specified in s. 70(3) of the 1974 Act had expired without the Defendants’ having made an application for an assessment under that section, that does not mean that the Defendants have no entitlement to challenge the sums claimed in those invoices.

That is clear from the decision of the Court of Appeal in Turner v Palomo [2000] 1 WLR 37, which itself referred to and applied the earlier decisions in In re Park; Cole v Park (1889) 41 Ch. D. 326, Jones & Son v Whitehouse [1918] 2 K.B. 61 and Thomas Watts & Co v Smith [1998] 2 Costs L.R. 59. In Turner v Palomo it was explained that a claim by a solicitor for unpaid sums is an unliquidated claim, for payment of a reasonable charge. That had to be understood, in the context of a claim by a solicitor, as subject to the terms of the retainer and of the 1974 Act but, as Evans LJ said in giving the judgment of the court, ‘we do not see any difficulty in holding that the solicitor’s claim is for a reasonable sum, whether by statute or at common law’ (p. 52A/C). I also accept Mr Bailey’s submission that,

if the reasonableness of the bill is challenged, it is for the solicitor to show that it is reasonable. This is stated in Turner v Palomo at 51E and 52C.

25. There remains the question, however, as to whether a sufficient challenge has been made by the Defendants for them to resist the present application for summary judgment and require Devonshires to justify the reasonableness of the invoices. In this regard,

it is apparent from Turner v Palomo at 45C-E that the Court of Appeal considered there to be a difference on a summary judgment application between a case in which a gross sum bill has been broken down in a way which allows it to be seen not only what work has been done but also how much time has been spent and the rates charged, and a case where such detail has not been given. In the former, the Court of Appeal envisaged that there would need to be a specific challenge to particular items for there to be grounds on which summary judgment might be refused.

That is consistent with the approach in Jones v Whitehouse [1918] 2 K.B. 61 at 64-65. As Evans LJ pointed out in Turner v Palomo, at the time of the decision in Jones v Whitehouse the solicitor would have been obliged to serve a particularised bill of costs. It was in that context that Pickford LJ said that, if a client could point to particular items as being extravagant, then he was entitled to have those items taxed, but not the whole bill. The result in Jones v Whitehouse, which was that if no ground for objecting to any particular items was shown there should be summary judgment, must be seen in the same context.

26. By contrast, the Court of Appeal in Turner v Palomo envisaged that,

in a case in which there is no breakdown of the bill allowing specific items to be challenged, and where all that the client can do is to challenge the reasonableness of the total sum claimed then, if such a general challenge is made, it may well be appropriate for there to be an assessment of the whole bill.

The order actually made in that case was that the bill of costs should be referred to a costs judge to be the subject of assessment, albeit not one pursuant to s. 70 of the 1974 Act. This way of dealing with such cases is recognised in the note to the White Book, 2020, para. 24.6.3, which is in these terms:

27. On a claim by a solicitor against their former client for non-payment of costs, the court may, if there is no real prospect of defending the claim, give summary judgment for a sum to be determined by means of a detailed assessment. … Such an order can be made even if the former client has lost the opportunity to apply for a detailed assessment of the solicitor’s bill under Part III of the Solicitors Act 1974.’

27. In the present case,

it is apparent on the material before the court that detailed breakdowns, including of time spent, have been provided in relation to invoices Nos. 263739 and 253173. No specific points have been taken in relation to particular items on those bills being excessive. In the circumstances, I consider that there should be summary judgment for the amounts claimed in those invoices: that is to say, there should be judgment for £44,266 in respect of invoice 263739, and for £8,711.40 in respect of invoice 253173.

In each case judgment should be against LAM, it having been accepted by Mr Burkitt that judgment should be given against the party that the Defendants accept, subject to their other points, to have been liable. In the case of both the invoices I have referred to, that is LAM.

28.

In relation to the other invoices, it is not clear on this application as to exactly how much detail has been supplied. I have not been shown details of time spent in relation to those invoices. In the circumstances, I consider that the position as to those invoices is effectively the same as that for the bill considered in Turner v Palomo, and that the order should be substantially the same as was made in that case, namely that there should be summary judgment for a sum to be determined on a detailed assessment to be carried out by a costs judge. Therefore there is such judgment against LAM in respect of invoices 249442, 251328 and 252592, and against Mr Elbishlawi in respect of invoice 267076.

29. Mr Bailey’s third point is that invoice 249442 may cover a period in which only the Firm existed and Devonshires did not. I agree that Devonshires cannot claim for sums due to the Firm, and only Devonshires is a party to the action. It appears to me, however, that in the process of assessment which will take place in relation to invoice 249442 in accordance with the previous paragraph it will be identified exactly when all relevant work was carried out and if and to the extent that there are items which relate to the period before Devonshires existed they should be excluded from the sum which it is assessed that LAM should pay to Devonshires.

30. I would ask the parties to draw up an order to reflect the above, and I will hear counsel if necessary if any matters remain outstanding and cannot be agreed.