Challenge to solicitor’s bill after five years found to be time barred on appeal

About this case:

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The bill related to the work of a solicitor, Ms Mary Dorgan, conducted on behalf of Ms Susan Spillane in two matrimonial proceedings instituted by Ms Spillane’s husband in the Circuit Court.

These proceedings were resolved through a written settlement, which allowed for the transfer of substantial assets to Ms Spillane, including a family home and €1 million within five years.

The settlement also provided for a payment of the sum of €125,000 to be paid to Ms. Spillane within three months.

Following the conclusion of the proceedings, Ms Dorgan furnished Ms Spillane with a bill, which came to €120,855. Ms Dorgan notified Ms Spillane that she had taken payment from the €125,000 which she held in her client account and which had been received from Mr. Spillane’s solicitor on foot of the settlement. Thus she enclosed for Ms. Spillane’s attention a cheque in the sum of €4,145.60, “to conclude”.

In 2009 Ms Spillane retained another solicitor, and had her files transferred.

In 2012, Ms Spillane contacted Ms Dorgan, asking for the bill in connection with her matrimonial proceedings, and requesting that the same be taxed by the taxing master within four weeks.

Ms Dorgan advised Ms Spillane that her right to have the bill taxed had expired after one year, following which Ms Spillane commenced proceedings, claiming that the bill was not a valid bill of costs, and should be submitted to taxation under s. 2 or 6 of the Solicitor (Ireland) Act 1849.

The High Court judge Charleton J found in favour of Ms Spillane, finding that the bill did not follow order 99, rule 29, sub-rule 5 of the Rules of the Superior Courts and that therefore the statute bar did not apply.

He also mentioned that even if it had, he might have used his discretion to refer the bill for taxation anyway.

Court of Appeal judge Ms Justice Irvine noted that the trial judge appeared to have not been fully aware of either the size of the settlement or the size of the case file, and appeared to believe that Ms Spillane’s entire settlement was to be the €125,000 from which Ms Dorgan extracted her fee.

Turning to the relevant statutory provisions and rules of court, Justice Irvine noted that the costs were in respect of solicitor and client costs, and that the bill had been in respect of what is considered to be “contentious business” under s.2 of the Solicitors (Amendment) Act 1994.

It was noted that s.68(6) of the 1994 Act places a number of obligations on a solicitor who has carried out litigation or other contentious business on behalf of a client, including that a bill of costs must be furnished as soon as possible, containing a summary of the legal services provided, the total amount of damages or moneys recovered by the client, and details of all or any part of the charges which have been recovered by that solicitor.

The bill of costs shall show separately the amounts in respect of fees, outlays, disbursements and expenses incurred or arising in connection with the provision of such legal services.

In this regard Justice Irvine noted that the definition of what constitutes a “bill of costs” does not require the same to be in any particular format.

It was noted that s.27 (1) of the Courts and Court Officers Act 1995 gives the taxing master power to tax, assess and determine the value of any work done, and that O. 99 of the Rules of the Superior Courts found that all costs shall be allowed except insofar as they are of an unreasonable amount or have been unreasonably incurred.

Finally, Justice Irvine found that sections 2 and 6 of the Solicitor (Ireland) Act 1849 were applicable, and provided that the client has 12 months within which to demand and obtain taxation, unless the court finds there are special circumstances which require taxation after that period.

It was found that in addition to the statutory regime, the Court had an inherent jurisdiction to refer bills for taxation.

It was found that the case law made clear that s. 2 can only run against a client following the delivery of what is described in those cases as a proper or valid bill of costs.

Justice Irvine therefore considered whether the bill was valid, noting that the bill was “to say the least sparse”.

However, she found that s.68(6)(a) appeared to require only a summary, and she could “find nothing in the sections…from which it could be inferred that a bill of costs is not a proper or valid bill unless it is in the format specified in O. 99 r. 29(5) of the Rules”.

Interestingly, there is no definition in the 1849 Act of what should be deemed a valid bill of “fees, charges, and disbursements” for the purposes of s. 2.

Justice Irvine noted that “if s. 2 of the 1849 Act were to be interpreted by reference to the requirements of O. 99 r. 29(5) that would lead, in my view, to an absurd situation. Every solicitor, regardless of whether they had agreed their fees with their client and had been paid those fees would have to go to the expense in every case of themselves drawing or having a costs drawer prepare a detailed bill of costs in the format set out in O. 99 r. 29(5) lest decades later their client bring an application under s. 2 seeking to challenge those fees.”

She noted that O.99 r.33(2) enables disgruntled clients to lodge bills for taxation regardless of whether they were drawn in accordance with the rules, therefore enforcing her view that the twelve month time limit started to run against Ms Spillane on receipt of Ms Dorgan’s bill.

Thus, she found that Charleton J. incorrectly interpreted s. 2 of the 1849 Act by reference to the provisions of the Rules of Court, which he was not entitled to do.

Furthermore, in doing so he relied upon the decisions in RE Osborn & Osborn 3 KB 862 and Smyth v. Montgomery (Unreported, Blaney. J., 7th July 1986) neither of which are authority for the proposition that if the validity of a bill of costs for the purposes of s. 2 of the 1849 Act is to be interpreted by reference to the requirements of O. 99, r. 29(5).

In relation to the trial judge’s assertion that he would use his inherent jurisdiction to refer the bill for taxation, Justice Irvine reiterated that she believed it was unlikely that he was fully appraised of the likely complexity of the matrimonial proceedings, the extent of the assets to be transferred to Ms Spillane on foot of the settlement and the correspondence concerning the size of the solicitor’s file.

Concluding, she found that: “I am satisfied that the solicitor and client bill of costs furnished by Ms. Dorgan to Ms. Spillane on 12th November, 2007, was a bill of costs in accordance with s. 68(6) of the Solicitors (Amendment) Act 1994. It was thus a valid bill of costs for the purposes of triggering the time limits attaching to s. 2 of the 1849 Act. Accordingly, I am satisfied that the trial judge erred in concluding that Ms. Spillane’s claim to relief under s. 2 of the 1849 Act was not time barred. I am also satisfied that on the facts of the present case the same are not such as would support the exercise by the court of its inherent jurisdiction to refer that bill of costs to taxation.”