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06 MAR 2009

BANKRUPTCY/COSTS: Truex v Toll [2009] EWHC 396 (Ch)

(Chancery Division; Proudman J; 6 March 2009)

The solicitor had been acting for wife in her ancillary relief proceedings, but came off the record because, he alleged, the client was refusing to accept his advice and as a separate matter had not paid fees due. The wife sought an adjournment of the subsequent hearing in the ancillary relief proceedings, because she was unrepresented. The ancillary relief judge conducted an inquiry, concerned to discover whether the situation was the wife's fault and whether her application was a mere delaying tactic. Although the judge gave directions requiring the wife to present evidence, she did not do so; however, in cross-examination she said that she was happy to pay the solicitor's bills and disputed that she had refused to do so. Some months later the solicitor served a statutory demand for the outstanding fees, and then issued a bankruptcy petition based on the alleged debt, filing an affidavit in support stating that at the ancillary relief hearing the wife had agreed that the fees specified in the invoices were due and owing. The chief registrar made the bankruptcy order 'very reluctantly'; he noted that solicitors' costs that had not formed the subject of a judgment, assessment or agreement were not a liquidated sum for the purpose of founding a bankruptcy petition, but proceeded on the basis that the wife had 'just about' admitted the solicitor's invoices within the ancillary relief proceedings. The wife appealed.

Whether a sum was liquidated and whether there was a defence to the claim were separate issues and the first must be determined before the second was addressed. Given the possibility of submitting a solicitors untaxed bill for assessment, if the sum owing was to be recognised as a liquidated sum, any admission, acknowledgement or agreement as to the bill must be one from which the client had bound himself not to resile. A mere acknowledgement or admission of liability would be insufficient to bind the client to forgo judicial assessment or determination. The solicitor's bill in this case had been for an unliquidated sum, and therefore not liable to found a bankruptcy petition. The court acknowledged that this conclusion ran counter to the established practice of experienced registrars in bankruptcy. In any event the wife's statements in the course of the ancillary relief proceedings had not amounted to a sufficiently clear and unequivocal admission of liability on her part.

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