Turner & Co v O Palomo SA (Palomo (O) SA v Turner & Co)

The expiry of the statutory period for taxation of a solicitor’s bill does not prevent a client from disputing the reasonableness of unpaid fees in ordinary court proceedings. Unless the amount was expressly agreed, the solicitor must prove that the remuneration claimed is reasonable.

An agreed hourly rate fixes the rate, but ordinarily leaves the solicitor to establish that the number of hours charged was reasonable. A request expressly made for payment on account under the Solicitors Act 1974 is not converted into an interim statutory bill merely because the client pays it, even at an agreed discount.

The solicitors acted for a Spanish commodity trader in several commercial arbitrations. They sued for unpaid fees relating to the Sasson, Nidera and Agro-Trading matters.

Buckley J held that five paid Agro-Trading invoices were statutory bills and that the time for seeking taxation had expired. The client appealed. In separate summary judgment proceedings concerning Sasson and Nidera, a deputy High Court judge ordered liability to be entered but directed that the amount due should be assessed by a Costs Judge. The solicitors appealed that decision.

The central issues were whether expiry of the taxation periods under section 70 of the Solicitors Act 1974 extinguished the client’s ordinary right to contest the reasonableness of the fees, and whether invoices expressed to be requests for payment on account were statutory bills.

1. Disposition. The client’s appeal from Buckley J was allowed, and the solicitors’ appeal from the deputy High Court judge was dismissed. Evans LJ delivered the judgment of the court, with Schiemann LJ and Lindsay J.
2. Section 70 of the Solicitors Act 1974 provides the statutory code governing applications for taxation, including its time limits. It does not expressly remove the court’s ordinary jurisdiction to determine a contested claim. A client sued for unpaid fees may therefore challenge their reasonableness after the statutory period for seeking taxation has expired. In re Park (1889) 41 Ch D 326 and Jones v Whitehouse [1918] 2 KB 61 established that principle.
3. Harrison v Tew [1990] 2 AC 523 held that section 70(4) excludes any inherent jurisdiction to order statutory taxation outside the permitted period. It did not exclude the ordinary jurisdiction to determine the amount recoverable in a contested claim. A Costs Judge may undertake the necessary judicial assessment without the assessment becoming statutory taxation.
4. Unless remuneration has been expressly fixed, a solicitor claiming fees must establish that the amount is reasonable. An agreed hourly rate removes the need to prove the reasonableness of that rate, but it ordinarily leaves the solicitor to prove that the number of hours charged was reasonable. The client need not counterclaim in negligence before putting that matter in issue.
5. Where a solicitor delivers a gross-sum bill without providing a breakdown, the client may raise a triable issue by evidence challenging the total amount. The evidence of an experienced solicitor familiar with the relevant arbitration work was sufficient in this case.
6. Section 65(2) distinguishes a request for a reasonable payment on account from an interim statutory bill. An interim statutory bill requires the client’s agreement and may then be sued upon and taxed. The wording, form, payment destination and contrast with the final invoice showed that the first five Agro-Trading invoices were requests for payment on account.
7. Payment of those invoices after a negotiated discount did not convert them into statutory bills. An agreement to pay can apply equally to an on-account request, and the evidence did not establish a final compromise excluding the client’s right to challenge the charges. The first five invoices could consequently be included in the assessment associated with the final bill.

1. Court of Appeal: Allowed the client’s appeal from Buckley J concerning the Agro-Trading invoices and dismissed the solicitors’ appeal from the deputy High Court judge concerning the Sasson and Nidera fees. Permission to appeal to the House of Lords was refused.
2. High Court, Queen’s Bench Division (Buckley J): Held that the first five Agro-Trading invoices were statutory bills and that the time for taxation under section 70 of the Solicitors Act 1974 had expired.
3. High Court, deputy judge: Allowed the client’s appeal from Master Rose in the Sasson and Nidera proceedings. Entered judgment on undisputed liability but directed assessment of the amount due by a Costs Judge.
4. Master Pollard: Held that the first five Agro-Trading invoices were not statutory bills.
5. Master Rose: Granted the solicitors summary judgment for the Sasson and Nidera fees.