Thomas Watts & Co (A Firm) v Smith

Where solicitors claim substantial remuneration without an agreed fee, the court should not enter judgment for the invoiced sum without judicial assessment. The proper course is judgment for the amount found due on assessment, normally by a taxing master, with an interim payment only for a sum the court considers will in any event be recoverable.

A client resisting summary judgment need show an arguable cross-claim, not establish its merits at that stage. A solicitor is not ordinarily negligent for failing to estimate costs in litigation which is too complex and unpredictable for a reliable estimate. Making a properly formulated application to the court is not itself contempt, although an application may be abusive.

Thomas Watts & Co sued Dr Malcolm Davies Smith for approximately £184,000 in unpaid solicitors’ charges arising from contentious and related property work. The invoices followed payments of approximately £95,000 on account.

A Master entered summary judgment for £67,000, leaving the balance to be defended. A judge dismissed Dr Smith’s appeal. Dr Smith appealed to the Court of Appeal and advanced negligence and other cross-claims, including failure to estimate costs and failure to pursue annulment of the opposing party’s bankruptcy. He also sought committal of Mr Watts for contempt based on garnishee applications made after stays had been granted or lifted.

The central issues were whether the cross-claim was sufficiently arguable to prevent summary judgment, whether the solicitors’ charges required judicial assessment, and whether the applications for garnishee orders could constitute contempt.

1. Disposition. The appeal was allowed. The order giving judgment for the solicitors’ claimed balance was set aside. The amount payable was to be assessed by a taxing master, with Dr Smith entitled to judgment for the amount assessed. An interim payment of £67,000 was permitted, adjusted for sums recovered in garnishee proceedings and potentially repayable after assessment. There was no order for costs.
2. Cross-claim. A defendant resisting summary judgment must show an arguable cross-claim arising from the work for which the solicitors seek payment. The merits need not be finally determined at that stage. Dr Smith’s allegations concerning costs estimates, the bankruptcy, the appeal, further defamation proceedings and injunctions did not disclose an arguable negligence claim. In unusually complex and unpredictable slander litigation, failure to provide an advance estimate of total costs was not, on the evidence, an arguable breach of duty.
3. Assessment of solicitors’ remuneration. Dr Smith had not agreed any particular remuneration rate. The solicitors were therefore entitled only to reasonable and fair remuneration. Although taxation under section 70 of the Solicitors Act 1974 was no longer realistically available, the court could not simply enforce the invoiced sums without investigation. The claim was analogous to a claim for an unquantified sum requiring judicial assessment. Assessment by a taxing master was appropriate, and the Master’s figure of £67,000 could stand as an interim minimum payment.
4. Contempt and procedure. The committal application was dismissed. It could not be contempt merely to make a due-form application for relief to the court; the court could grant or refuse the relief, and an abusive application would be dealt with as such. The Vice-Chancellor also held that an appeal from a Master’s order under Order 58 of the Rules of the Supreme Court ordinarily lay first to a judge in chambers, rather than directly to the Court of Appeal.
5. Lord Justice Schiemann agreed with the order proposed.

• Court of Appeal (Civil Division): Appeal from the order of Sir John Wood, sitting as a High Court judge, was allowed. The Master’s summary judgment was replaced by an order for assessment and an interim payment.
• High Court, Queen’s Bench Division: Sir John Wood dismissed Dr Smith’s appeal from Master Hodgson’s summary judgment order. The judgment appealed from is not given a separate citation in the supplied judgment.
• Master Hodgson: Entered summary judgment for £67,000, with leave to defend the balance.