Lygoe (t/a David Parry & Co) v Ilsley

A person who instructs solicitors on behalf of a company is not ordinarily personally liable for the company’s costs. Personal liability may arise where the instructions concern the individual’s own position, including his position as a company director, unless it is specifically agreed that another person will pay. An unusual agreement imposing personal liability for corporate work requires clear evidence. Solicitors’ bills must be judicially assessed before judgment for payment where the amount remains unquantified. A claim for fees may be dismissed where sums already received exceed the properly payable bills, even though a later bill for separate estate work may be assessed outside the action.

The claimant, formerly a solicitor, claimed unpaid legal fees from the defendant, who had instructed the claimant’s practice in relation to his own affairs and matters involving companies with which he was associated. The defendant accepted personal liability for some work but denied agreeing to pay the costs of corporate matters. He also counterclaimed for sums taken from his late mother’s estate funds without authority.

The principal issues were whether the defendant had assumed personal liability for corporate work, whether he had authorised payment from the estate funds, which matters were personal to him, and what sums remained due after assessment of the relevant bills.

1. Alleged agreements. The claimant failed to prove either an agreement that the defendant would personally pay all costs incurred on instructions given for companies, or an agreement authorising payment of those costs from the estate funds. The alleged agreements were unusual, the claimant could not identify when they were made, and the documents relied upon were equivocal or adverse to his case. The claimant’s evidence on both agreements was rejected.
2. Personal liability. The defendant was personally liable in principle for the proper costs of work done for him personally, including the Abbey Action, the Netvest Action, litigation concerning the Settlement, and the work covered by bills 8802 and 8803. He was not personally liable for the other corporate matters identified in the claim, including the Garnham, Your Space and VMRTM matters.
3. A person acting as a company director acts in that capacity as an individual. Instructions concerning the individual’s position as a director are prima facie personal to him. Unless it is specifically agreed that another person will pay, acceptance of those instructions gives rise to an implied contract between the individual and the solicitor for payment of the proper costs.
4. Assessment and disposition. Under Solicitors Act 1974, s 70, the defendant could no longer seek taxation as of right, but the court still required judicial assessment before ordering payment of unquantified solicitors’ bills. The approach in Thomas Watts & Co v Smith (unreported, 16 March 1998) was applied.
5. The bills for which the defendant was liable in principle totalled £92,967.67, whereas sums already received or retained totalled £114,558.14. The claimant’s claim was therefore dismissed. The relevant bills were to be assessed by a Costs Judge to determine the amount, if any, due on the counterclaim. A final bill for estate administration could be delivered and assessed separately.