Solicitors can rely on Limitation Act when chasing unpaid fees

A solicitor’s claim for costs, billed but not fixed by agreement or assessment, is covered by section 29(5) of the Limitation Act 1980, the Court of Appeal has ruled.

Lord Justice Lloyd said this was the first time the appeal court had ruled on the issue.

Bath Housing Co-operative needed to obtain possession of a flat from one of its tenants and instructed Phillips & Co to act for it, the court heard.

“Their task was complete by the end of 2003,” Lloyd LJ said. “The solicitors’ fees had not been agreed, so they were entitled to claim a reasonable amount for the work done.

“It was for them to put forward their claim, by way of a bill, and the client was entitled to have this assessed by the court. If it was not paid the solicitors had six years from the end of 2003 in which to bring proceedings to claim payment, but they did not do so until more than six years had elapsed.

“In the meantime, they wrote to the client in September 2004 to tell it what amount they claimed was payable to them by way of their costs. The client replied by a letter dated 20 September 2004, protesting about the amount claimed.”

Delivering the leading judgment in Phillips & Co v Bath Housing Co-operative [2012] EWCA Civ 1591, Lord Justice Lloyd said that when the firm did bring proceedings in early September 2010, the client relied, among other defences, on the Limitation Act 1980.

The firm argued that the client’s letter protesting about the size of the bill amounted to an ‘acknowledgement’ under section 29(5) of the Act, so the six year period started running again from the date of the letter and the claim, for £52,000, was made in time.

Lloyd J concluded that a claim by solicitors for remuneration “even though not yet fixed by assessment or otherwise, is within the phrase ‘debt or other liquidated pecuniary claim’ in section 29(5)a”.

He added that looking at the letter, “it does seem to me that it amounts to saying ‘we owe you something’ inasmuch as it refers to the claim and takes issue, or indicates that issue will be taken, with the amount claimed, but not with the principle that something is payable”.

Viewed in that way, he said the trial judge was right to hold that the claim had been acknowledged.

Lord Justice Lloyd dismissed the housing co-operative’s appeal. Lord Justices McFarlane and Longmore agreed.