Re Van Laun. ex parte Chatterton
| Jurisdiction | England & Wales |
| Date | 1907 |
| Year | 1907 |
| Court | King's Bench Division |
Bankruptcy - Solicitor and Client - Cash Accounts - Draft Bills of Costs agreed - Contentious Business - Delivery of Detailed Bills waived - Stated Account - Mortgage to secure agreed Balance of stated Account - “Payment” - Bankruptcy of Client - Proof by Solicitor - Trustee's Title to go behind Mortgage and stated Account and require Particulars with Vouchers -
The giving of a mortgage with a covenant to pay for the agreed amount of a solicitor's bill of costs is not equivalent to payment of the bill within the meaning of s. 41 of the Solicitors Act, 1843.
A solicitor from time to time rendered to his client a debtor and creditor cash account, and his draft unsigned bill of costs for contentious business. On each occasion the client waived the delivery of a signed bill and discussed and agreed the amount of the draft bill, which amount was then debited against him in the cash account and a balance was struck, and the client wrote at the foot of the cash account “I agree this account” and signed it. On the third occasion the client gave the solicitor a mortgage for the agreed balance of the stated cash account, which for the main part represented the agreed sum for costs, and covenanted to pay it with interest. More than twelve months afterwards the client became bankrupt, and the solicitor claimed to prove for the principal and interest due under the covenant in the mortgage less the value of the security, and he also claimed to prove for the same principal sum on an account stated:—
Held that, as between the debtor and the solicitor, the carrying of the agreed sums for costs into the cash account and the subsequent statement of account between them was equivalent to payment of the costs within the meaning of s. 41 of the Solicitors Act, 1843, and that there were no special circumstances which entitled the debtor to require delivery of a detailed bill for taxation.
But held that, as between the trustee in bankruptcy and the solicitor, the trustee represented the general body of the creditors, and was entitled to go behind the covenant in the mortgage and the stated account and to require satisfactory evidence, before admitting the proof, that the claim for costs represented a genuine debt.
THIS was an appeal by a creditor against the rejection of his proof by the trustee under these circumstances.
For several years prior to his bankruptcy the debtor was engaged in large commercial and financial transactions, and from March, 1901, to June, 1905, he employed Mr. Chatterton to act as his solicitor. During this period Mr. Chatterton collected for the debtor some 16,000l., of which about 13,000l. passed through the hands of Mr. Chatterton, who from time to time rendered to the debtor cash accounts of his receipts and payments, and these accounts were balanced and agreed to on four occasions. The first occasion on which the account was balanced was on March 30, 1903, when a balance of 1354l. was shewn in favour of Mr. Chatterton. This balance was arrived at after debiting against the debtor at the foot of the account the sum of 6600l. for “my costs up to November 15, 1902, as agreed.” The next occasion on which the account was balanced was on July 24, 1903, when, after carrying forward the balance of 1354l. and debiting at foot as before a sum of 1801l. 7s. 1d. for “my costs, November, 1902, to June 24, 1903,” there remained a balance of 443l. 0s. 9d. due to Mr. Chatterton. The third occasion on which the account was balanced was on January 5, 1905, when, after debiting the said sum of 443l. 0s. 9d. and also a sum of 2932l. 1s. 5d. for costs from June 24, 1903, to December 14, 1904, there remained a balance of 3818l. 14s. 1d. due to Mr. Chatterton.
On January 10, 1905, a deed was executed between the debtor as mortgagor and Mr. Chatterton as mortgagee, whereby, after reciting “Whereas the mortgagor is indebted to the mortgagee for advances made to the mortgagor and moneys paid on his account and for costs in respect of business done and professional services rendered to him by the mortgagee, and an account of such indebtedness up to December 14 last has been stated as between the mortgagor and the mortgagee and has been settled and agreed at the sum of 3818l. 14s. 1d. And whereas the mortgagor has requested the mortgagee to continue to act for him as his solicitor in various matters and as an inducement thereto has agreed to give to the mortgagee such security as is hereinafter contained. And whereas the mortgagee may make further advances to the mortgagor and may pay further sums on his account,” the mortgagor covenanted on demand to pay the mortgagee the 3818l. 14s. 1d. with interest at 5 per cent., “and also on such day as the same shall be ascertained either by...
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