Wallace LLP v Yates

A statutory demand for a solicitor’s fees is effective only where the debt is liquidated and immediately payable. An unliquidated claim does not become liquidated merely because the client authorised recovery of corresponding costs from a third party. An express or implied agreement, or an estoppel, must be established on the evidence. The court noted, but did not finally decide, the separate clarity requirements governing statutory demands.

Wallace LLP served a statutory demand on its former client, Yates, for unpaid fees and interest. Yates applied to set it aside. The Registrar held that the fees were not liquidated and that the demand did not clearly identify the sums claimed. Wallace appealed the liquidated-sum issue and later sought permission to amend its grounds to challenge the clarity finding.

The underlying work concerned costs recoverable under chapter 1 of the Leasehold Reform, Housing and Urban Development Act 1993. Wallace argued that Yates had agreed, or was estopped from denying, liability for part of the fees because Wallace had claimed those costs from the lessees. The issue was whether that conduct had made part of the fees liquidated by the date of the demand.

1. Appeal dismissed. The statutory demand was properly set aside. The appellant’s notice did not challenge the Registrar’s independent finding that the demand failed to meet the necessary standard of clarity. The appeal therefore could not succeed even if the liquidated-sum issue were decided for Wallace.
2. For the purposes of section 268 of the Insolvency Act 1986, a debt payable immediately must be both liquidated and immediately payable. The relevant date was 2 March 2009, when the statutory demand was served. A later determination or later crystallisation could not satisfy that requirement.
3. The solicitor’s claim was originally unliquidated. The evidence had to establish an express or implied agreement binding Yates to pay a specific minimum sum, or the sum claimed on his behalf under section 33 of the Leasehold Reform, Housing and Urban Development Act 1993.
4. No agreement was established. Yates knew that Wallace was pursuing a costs claim, but there was no evidence that he knew the figure claimed or how it had been calculated. His authority for the costs claim did not amount to agreement to pay Wallace personally.
5. No estoppel was established. Wallace originated the statement made to the lessees, and it was not shown that Yates made the same representation to Wallace. Wallace also failed to show reliance, a change of position, or inequity sufficient to prevent Yates from raising arguable issues concerning his fees.
6. The court did not determine Yates’s ultimate liability for fees. It held only that no part of the claim had become liquidated by agreement or estoppel before the statutory demand.

The judgment records an appeal from Mrs Registrar Derrett’s decision of 18 December 2009, which set aside the statutory demand and ordered Wallace LLP to pay Yates’s costs. Permission to appeal had been granted. The High Court dismissed the appeal.