Phillips & Company (A Firm)(Claimants Respondents) v Bath Housing Co-Operative Ltd (Defendant Appellant)
| Jurisdiction | England & Wales |
| Judge | Lord Justice Lloyd,Lord Justice McFarlane,Lord Justice Longmore |
| Judgment Date | 11 December 2012 |
| Neutral Citation | [2012] EWCA Civ 1591 |
| Court | Court of Appeal (Civil Division) |
| Docket Number | Case No: B2/2011/2444 |
| Date | 11 December 2012 |
[2012] EWCA Civ 1591
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE SALISBURY COUNTY COURT
HIS HONOUR JUDGE HUGHES Q.C.
Royal Courts of Justice
Strand, London, WC2A 2LL
Lord Justice Longmore
Lord Justice Lloyd
And
Lord Justice McFarlane
Case No: B2/2011/2444
Grant Crawford (instructed by Humphreys & Co) for the Appellant
Jeremy Burns (instructed by Phillips & Co) for the Respondents
Hearing date: 20 November 2012
Introduction and summary
The appellant in this case, Bath Housing Co-operative Ltd (the "Client"), needed to obtain possession of a flat in Bath from one of its tenants. It retained the respondent, Phillips & Co, (the "Solicitors") to act for it for this purpose. Their task was complete by the end of 2003. The Solicitors' fees had not been agreed, so they were entitled to claim a reasonable amount for the work done. It was for them to put forward their claim, by way of a bill, and the Client was entitled to have this assessed by the court. If it was not paid the Solicitors had six years from the end of 2003 in which to bring proceedings to claim payment, but they did not do so until more than six years had elapsed. In the meantime, they wrote to the Client in September 2004 to tell it what amount they claimed was payable to them by way of their costs. The Client replied by a letter dated 20 September 2004, protesting about the amount claimed. Nothing relevant to this appeal happened after that for a long time.
When the Solicitors did bring proceedings for payment, the Client relied, among other defences, on the lapse of time, under the Limitation Act 1980. The Solicitors' response was to rely on the Client's letter as an acknowledgment, which they said had the effect that the six year period started again. If that is right, the claim was not out of time. This gave rise to two questions: (1) is the case within the terms of the Limitation Act 1980 about acknowledgments and (2) if it is, was the Client's letter an acknowledgment for this purpose? The judge below said that the answer was yes to both questions. For reasons which I set out below, I agree with him.
The Solicitors issued these proceedings in the Salisbury County Court on 8 September 2010 claiming some £52,000 which they said was due by way of professional fees and interest. Relying on the limitation defence, more than six years having passed since the work was done, and in the absence of a Reply, the Client applied for summary judgment. The Solicitors said that the Client's letter dated 20 September 2004 was an acknowledgment under section 29(5) of the Limitation Act 1980 so that the six year period had started running again. The Claim Form was issued within six years of the date of that letter.
The District Judge held that the Client's letter was not an acknowledgment, and therefore dismissed the claim. On appeal, His Honour Judge Hughes Q.C. held that the claim fell within the scope of section 29(5), and that the letter was an acknowledgment, so he allowed the appeal and left the claim to proceed as regards the other defences. His order was made on 23 August 2011. Sir Richard Buxton gave permission to appeal on both points.
Thus we have to decide, first, whether a solicitors' claim for costs, billed but not yet fixed by assessment or agreement, is a claim such as falls within the terms of section 29(5) of the Limitation Act 1980 and secondly, if it does, whether the letter was an acknowledgment of that claim for the purposes of the section.
There is authority in the High Court in favour of the judge's reading of section 29(5), which he followed, as he had to. The point has never been considered in the Court of Appeal, despite the provision having been in the relevant form since the Limitation Act 1939. The Law Commission made proposals for the reform of this and other provisions of the Limitation Act 1980 in its report No. 270 in 2001, to which we were referred, but nothing came of those proposals. The enactment of the 1939 Act was preceded by a Report of the Law Revision Committee (its Fifth Interim Report, 1936, Cmd. 5334) but nothing in that report touched upon this particular provision. We are therefore left guessing as to the source and the meaning of the statutory text. Somewhat unexpectedly, in 2012, it was submitted to us that the old forms of action were of assistance on this, for reasons which I will explain.
The Client's letter dated 20 September 2004 was in the following terms:
"We received your letter and associated figures dated 10 th September on 16 th September. They were brought to the attention of the Ordinary General Meeting of Bath Housing Co-operative held that evening.
The members were astonished and deeply shocked by the level of the costs claimed: they are in order of 3–4 times higher than was anticipated and budgeted for.
Throughout the course of the case, we repeatedly requested your estimates of the costs incurred to date. However, no written notification was received.
The co-op is currently under intense pressure in terms of losing a significant tranche of its housing stock. I enclose a copy of an e-mail from Councillor Darracott of B&NES which illustrates this.
As you know, Bath Housing Co-operative is a small, voluntary organisation run by its un-paid members in their spare time. We simply do not have the capacity to deal both with your invoice and these pressures from B&NES and Solon at the same time and we are already on track with the latter.
Accordingly, we have no option but to put your invoice to one side until mid to late October when (hopefully) we shall have more time to deal with it in the detail which it warrants."
Section 29(5) is as follows:
"(5) Subject to subsection (6) below, where any right of action has accrued to recover
(a) any debt or other liquidated pecuniary claim; or
(b) any claim to the personal estate of a deceased person or to any share or interest in any such estate;
and the person liable or accountable for the claim acknowledges the claim or makes any payment in respect of it the right shall be treated as having accrued on and not before the date of the acknowledgment or payment."
Subsection (6) is of no relevance to this case. Under section 30 the acknowledgment must be in writing and signed by the person making it, and must be made to the person whose claim is being acknowledged. Section 23(4) of the 1939 Act was in the same terms as the present section 29(5).
Acknowledgments: the legislative history
In the Limitation Act 1623 no provision was made for time to start again by virtue of an acknowledgment or part payment. Judges mitigated the effect of the statute by treating an acknowledgment or part payment in the first six years as a promise to pay which revived the original action, by a process which Lord Sumner in Spencer v Hemmerde [1922] 1 AC 507 at 519 described as "the task of decorously disregarding an Act of Parliament".
Statutory recognition was given to this approach by section 1 of Lord Tenterden's Act, in 1828, in which, after referring to the 1623 Act, and its equivalent for Ireland, the provision continued as follows:
"and whereas various questions have arisen in actions founded on simple contract, as to the proof and effect of acknowledgments and promises offered in evidence for the purpose of taking cases out of the operation of the said enactments; and it is expedient to prevent such questions, and to make provision for giving effect to the said enactments and to the intention thereof: Be it therefore enacted … that in actions of debt or upon the case grounded upon any simple contract no acknowledgment or promise by words only shall be deemed sufficient evidence of a new or continuing contract, whereby to take any case out of the operation of the said enactments or either of them, or to deprive any party of the benefit thereof, unless such acknowledgment or promise shall be made or contained by or in some writing to be signed by the party chargeable thereby."
The Mercantile Law Amendment Act 1856 extended the provision to acknowledgments signed by the agent of the relevant party.
The Limitation Act 1939 made the new provision as to acknowledgments which is now found in section 29(5) of the 1980 Act. Section 23(4) sets it out, removing the reference to a promise, and using, in place of the words (in 1828) "in actions of debt or upon the case grounded upon any simple contract", the words "any right of action … to recover any debt or other liquidated pecuniary claim".
The nature of the Solicitors' claim
The first issue on the appeal is therefore whether the Solicitors' claim was for "a debt or other liquidated pecuniary claim". For this purpose it is necessary to examine the nature of the claim. It is not said that there was any agreement as to the basis of the costs payable, which would be a contentious business agreement under section 59 of the Solicitors Act 1974. Accordingly, the Solicitors' entitlement to costs is to an amount which, if the Client sought an assessment of the bill, would be determined by a costs judge having regard to the skill, labour and responsibility involved in the work done: see section 66 of the 1974 Act. By comparison, if the work in question had been non-contentious business the solicitor would be entitled to "such sum as may be fair and reasonable to both solicitor and [client] having regard to all the circumstances of the case" and to a number of other matters specified in article 3 of the Solicitors'...
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