[COURT OF APPEAL]

WATSON v. RODWELL.

[1876 W. 103.]

Solicitor and Client - Bill of Costs - Settled Account - Taxation after Payment - Special Circumstances - Undue Influence - Unnecessary Business - Solicitors Act (6 & 7 Vict. c. 73), s. 41 - Practice - Evidence.

An account which had been settled between a client, who was an old lady, and her solicitor, including arranged bills of costs, was ordered to be opened and the bills of costs taxed, after the lapse of nearly two years, without actual proof of error or overcharge, on the ground that the client had acted under undue influence and without sufficient information, and that much of the business charged for was unnecessary and improper.

The judgment of Malins, V.C., affirmed.

All documents intended to be used in evidence in an action ought to be formally put in at the trial and marked by the Registrar.

THIS was an appeal from a decision of Vice-Chancellor Malins(1). The action was brought by Mrs. Watson, a widow, aged seventy-seven, against her solicitor, seeking to open a settled account, dated the 22nd of May, 1874, and to tax bills of costs which had been paid more than twelve months before the institution of the suit.

William Watson, the Plaintiff's husband, by his will, dated in 1861, appointed the Plaintiff and J. Wilson his executors, and gave his property, which consisted only of leaseholds and shares in the London Joint Stock Bank, to the Plaintiff for her life, and after her death he charged his real and personal estate with payment of an annuity of £500 to Mrs. Woodman, the Plaintiff's sister, and after her death upon trust for sale, and to divide the

(1) 7 Ch. D. 625.

produce between Mrs. Woodman's children living at her death; and he gave and bequeathed all his personal estate to the Plaintiff absolutely.

William Watson died in 1872, and an administration suit of Watson, v. Wilson was instituted by the Plaintiff on the 7th of June, 1872, for the purpose of deciding certain questions of construction arising on the will, Messrs. Kimber & Ellis being the solicitors.

On the 29th of November, 1872, a suit of Woodman v. Watson was instituted by Walter Woodman, one of Mrs. Woodman's children, for administration of the same estate. In this suit Mr. Rodwell acted as solicitor for the Plaintiff. It appeared from the evidence that Mr. Rodwell agreed with W. Woodman that he should only pay costs out of pocket.

The Plaintiff in Watson v. Wilson obtained a decree for administration in that suit; but no decree was made in Woodman v. Watson.

Negotiations for a compromise between the Plaintiff and the Woodman family were set on foot, in which Mr. Rodwell acted for the Woodmans; but in the month of July, 1873, the Plaintiff went to Mr. Rodwell's office, apparently at the suggestion of Mr. Rodwell, and became his client. The negotiations proceeded, and resulted in the arranging of a compromise between the Plaintiff, her sister, and her sister's children, by which the Plaintiff was to forgive the latter certain debts, to allow her sister a certain annuity, and to take the residue for herself. All the parties were sui juris, except that two of Mrs. Woodman's sons were bankrupt, and a deed of arrangement was prepared embodying the following terms: - 1. The Plaintiff released her nephews, Mrs. Woodman's sons, from certain debts; 2. Mrs. Woodman and her sons assigned to the Plaintiff their contingent interests in the leaseholds; 3. J. Wilson (the executor) was indemnified from all liability under the will; 4. The Plaintiff allowed Mrs. Woodmana present annuity of £100 in place of the deferred annuity of £500; 5. The Plaintiff undertook to pay all costs of Watson v. Wilson, and Woodman v. Watson and of the compromise. Two of the sons of Mrs. Woodman being bankrupt, the deed was expressed to be provisional only as regarded them.

A petition was prepared by the Defendant Mr. Rodwell, acting as solicitor for all parties (to which, however, the assignees of the bankrupts' estates were not made parties), to obtain the consent of the Court to this compromise and to wind up the administration suits. An order was made in accordance with the prayer of the petition, and the deed of compromise was executed together with other deeds, including a deed of indemnity to Mr. Wilson, the Plaintiff's co-executor.

It was proved to the satisfaction of the Vice-Chancellor that the costs of the deeds of compromise and the petition, which in his opinion was unnecessary, amounted to nearly £1000.

The Defendant produced evidence that the deed and the petition were explained to the Plaintiff, and that at the hearing of the petition the Vice-Chancellor asked the Plaintiff if she understood that she was to pay the costs of the suits, and that she said she did.

At the hearing of the petition it was ordered that £1000 should be deposited to answer the costs of Messrs. Kimber & Ellis, and certain of the bank shares were converted for this purpose.

On the 25th of March, 1874, the Defendant delivered to the Plaintiff his bill of costs and cash account, which, after providing for his own and Messrs. Kimber & Ellis' bill of costs, shewed a balance due to the Defendant of nearly £350.

On the 22nd of May, 1874, the balance due to the Defendant was agreed at £230, and a memorandum to that effect was placed at the foot of the cash account, and signed by the Plaintiff and the Defendant. The Defendant relied on this as a settled account, and declined to reopen it, or to have any bills prior to that date taxed.

The Defendant was in the habit of making advances to the Plaintiff, who was now in great poverty, and held securities upon her interest in the leasehold houses to secure the amount owing from her to him, which included further costs.

The facts and correspondence which were considered material by the Court of Appeal are specially referred to in the judgment.

The present action was brought on the 21st of March, 1876, and came on for hearing before Vice-Chancellor Malins on the 13th of December, 1876.

The Vice-Chancellor gave judgment for a general account of all dealings between the Plaintiff and Defendant, and the usual accounts of what was due on the securities, and ordered that the Defendant should pay the costs of the action.

From this judgment the Defendant appealed. The appeal came on for hearing on the 13th of December, 1878.

Glasse, Q.C., and Renshaw, for the Appellant: -

The judgment of the Vice-Chancellor is against the weight of evidence, and is wrong in point of law. There is no evidence of pressure, nor are there any special circumstances to justify the Court in opening the settled account of May, 1874, or taxing the bills before that date: Blagrave v. Routh (1).

In the course of the argument certain letters were tendered in evidence which were not marked by the Registrar, or specially noticed in the judgment of the Vice-Chancellor as it was drawn up. The judgment, which was in the form usually adopted in the Chancery Division, ran thus: "This action coming on for trial on, &c., and upon reading the statement of claim, &c., two notices to admit certain documents as evidence, dated respectively, &c., and the admissions thereof in writing signed by the solicitor for the Plaintiff, and the usual documents therein referred to respectively; two notices to admit certain documents as evidence dated respectively, &c., and the admissions thereof respectively, signed by the solicitor for the Defendant, and the usual documents therein referred to, &c."

JAMES, L.J. , said that no documents were evidence unless they were put in at the trial. The mere fact that they were admitted in the admissions did not make them evidence. Every document which it was intended to use in evidence ought to be formally put in, and marked by the Registrar.

Fooks, Q.C., and W. Fooks, for the Plaintiff, supported the judgment of the Vice-Chancellor. They cited Nokes v. Warton (2).

Glasse, in reply.

(1) 8 D. M. & G. 620.

(2) 5 Beav. 448.

1879. Jan. 11. JAMES, L.J. , now delivered the judgment of the Court (James, Baggallay, and Thesiger, L.JJ.) as follows: -

The Plaintiff in this action seeks an account of the moneys received on her account by the Defendant, who was her solicitor. The Defendant admits that she was entitled to such account, but insists that it should be taken with directions that an account alleged to have been settled between them in May, 1874, should not be disturbed, and that the bills of costs paid in and by such settlement should not be taxed or opened. The account is produced, signed by the Plaintiff and the Defendant, and is attested by the Defendant's clerk. The account, when produced, shews that the Defendant takes credit for, among other sums, the following amounts: - Costs of the Plaintiff herself, £513 1s. 1d., and the costs of several other persons, clients of the Defendant, making a total of £345 2s. 6d. These costs are alleged to have been incurred, and the right to charge them against the Plaintiff to have arisen in the following circumstances: - The Plaintiff's late husband, who was possessed of an estate of moderate amount, sworn under £10,000, made his will in March, 1861, by which he gave his property to the Plaintiff for her life, and after her death charged his real and personal estate with payment to Mrs. Woodman(the-Plaintiff's) sister of an annuity of £500, and after her death upon trust for sale, and to divide the produce between her children living at her death, and he gave and bequeathed all his personal estate to the Plaintiff absolutely. There arose a doubt as to the true construction of the will with respect to the respective interests of the Plaintiff and the Woodman family, and it was thought necessary, and it probably was necessary, that a suit should be instituted, a common administration suit, for the purpose of taking the ordinary accounts and settling the construction of the will. This legal controversy did not disturb the amicable feelings which existed between the Plaintiff and her relatives, the Woodmans, and there was no reason why the suit should not have been as friendly, as short, and as inexpensive as any administration suit ever instituted in the Court of Chancery. A bill was filed by Messrs. Kimber & Ellis, as solicitors of the Plaintiff, against her co-executor, Mr. Wilson, and Mrs. Woodman, the annuitant, who appeared respectively by solicitors

other than the Defendant Rodwell. But the Defendant Rodwellwas consulted by some members of the Woodman family as to their interests under the will and as to a compromise of their claims. The first appears to have been James Woodmann, and after many attendances, letters, conferences, &c., extending from the 18th of July to the 26th of August, the Defendants ascertained that James Woodmann was a bankrupt, and had, therefore absolutely no interest under the will and no right whatever to interfere. The Defendant Rodwell continued, however, to act as if his client James Woodmann had an interest, making costs for himself and, of course, making costs against the Plaintiff, whose solicitors had to receive and answer letters and other communications. But on the 26th of September, this entry appears in the bill of costs: - "Attending you, long conference with you as to filing a bill against your uncle's estate, when I advised that you not being sui juris were not in a position to do so, and you were to call here with your brother Walter." On the same day the Defendant Rodwell wrote to Walter Woodman as follows: -

"Dear Sir, - Re Watson - Adverting to the instruction given to me by you to-day to file a bill for the administration of the late Mr. Watson's estate, I beg to say that I will only hold you responsible for costs out of pocket, but if I obtain my costs out of the estate I shall make no charge against you whatever in the intended suit."

After a long series of conferences, letters, &c., it was at last determined to file the bill in Woodman v. Watson and it was filed on the 28th of November, 1872. This was a common administration suit, with the addition of a prayer for a receiver and an injunction. But there were no sufficient grounds for such a prayer, and the Defendant Rodwell was so advised and so advised his client. There was one object, and one object only, in adding such prayer, viz., to make it appear that the suit was not merely a suit for the same objects as the existing suit of Watson v. Wilson. That suit was ready to be heard as a short cause, and in the ordinary course it would have been so heard and a decree made under which decree all the Woodmans interested would have had

a right to appear in Chambers and have had every opportunity to protect their own interests. But Mr. Rodwell was of opinion, or represented it as his opinion, that if such decree were made the chance of obtaining the terms of compromise insisted on by his clients, the Woodmans, would be gone. On the 2nd of December, he is found attending counsel to confer as to the course to be pursued to prevent a decree being made in the suit of Watson v. Wilson, and on the same day we find the following entry in his bill of costs: - "Attending at your request and conferring and advising on matters generally, and particularly pointing out that if a decree was made in the suit of Watson v. Wilson, all chances of compromise of this suit would probably fall through, when you informed me that your mother's solicitor had countermanded his consent to the cause of Watson v. Wilson being heard as a short cause." And the Defendant Rodwell, by various steps and means, succeeded in preventing its being heard until the 15th of February, when it was heard and the usual decree made. The Defendant Rodwell again interfered to endeavour to prevent the decree being drawn up, but in vain. It is impossible to conceive anything more reprehensible than this conduct on the part of the Defendant. It was the plain interest of his clients, the Woodmans, as of all other persons interested in the estate, to have such a decree made as soon as possible, and as cheaply as possible, and to have the usual accounts taken without delay. It might have served, and probably did serve, by the fear and annoyance occasioned by the new suit, to coerce Mrs. Watson into a concession of his client's terms of compromise, and of course it served to enable him to heap up the enormous bill of costs which we have before us in Woodman v. Watson and which he looked to have paid out of the estate to which he had (except as to costs out of pocket) bound himself to his client exclusively to look. After the decree was made in Watson v. Wilson, the Defendant Rodwell took the usual step of appearing for the parties interested under the will, and the unusual step of including among them two persons, one of whom was a bankrupt and the other bad filed a liquidation petition, which, while it, of course, had deprived them of all interest, opened fresh fields from which Mr. Rodwell could gather

in a fresh harvest of costs. On the very day the bill in Woodman v. Watson was filed, Rodwell wrote to Walter Woodman a letter in which occurs the following passage: -

"It would seem that Mrs. Watson has turned Mr. Ellis up. If that be so, can she not be induced to come here and instruct me to prepare a deed of arrangement - that would be one way of curtailing expenses? In the course of to-morrow you will doubtless see which way the cat jumps, and be able to furnish me with information as to Mrs. Watson's line of policy."

In the month of December, 1872, Rodwell became the solicitor for Mrs. Woodman in the suit of Watson v. Wilson, so that he had every means of protecting the interest of the Woodman family if they required protection. Notwithstanding this, Rodwell proceeded in the most energetic way to carry on the unnecessary suit of Woodman v. Watson and in like manner to oppose the usual decree being made in Watson v. Wilson. After many months' accumulation of costs in both suits, Rodwell, in July, 1873, became the actual solicitor of Mrs. Watson herself. On the 10th day of July, 1873 (I read from the Defendant's answer), a meeting took place between Mrs. Watson and all the members of the Woodmanfamily, when it was arranged that Mrs. Woodman should release her annuity, and that Mrs. Watson should allow her to have a house and furniture for her life and pay her an annuity of £100 a year, and this agreement was reduced into writing. Nothing was said about the costs of any parties, but the Defendant says, and apparently with accuracy, that it was understood that the costs of all parties were to be pail, the Woodmans having always insisted on that term during the negotiation. To carry out this compromise, very voluminous and very expensive deeds and a petition to the Court were the machinery resorted to. A more unnecessary or futile proceeding was probably never taken than this petition. The parties, except the bankrupts, were fully competent to make any arrangement they thought fit without the consent of the Court, and the Court, of course, had no power to bind the estate of the bankrupts, who were not represented. It had one effect, however - it appeared to give, and was, no doubt, understood by Mrs. Watsonas giving, the personal sanction of the Vice-Chancellor to the compromise

as a proper one; and it appears that the Vice-Chancellor, who had seen something of the old lady in Chambers, and saw her in Court on the hearing of the petition, did take the trouble of calling her to him and ascertaining whether she understood and approved what was proposed to be done. The petition contains the following statement of the arrangement as to costs. "Your Petitioner also undertakes to pay all the costs of and incidental to the two suits of Watson v. Wilson and Woodman v. Watson and of this compromise thereof." And it contains the following statement: "The draft of a deed of compromise and arrangement or settlement embodying all the terms aforesaid has been prepared and approved of by all parties," and it craves leave to refer to such draft as part of the petition.

The covenant as to costs contained in the draft is as follows: - [His Lordship then read the terms of the covenant as to costs contained in the draft deed of compromise by which the Plaintiff covenanted with the several parties to pay all their costs relating to the testator's estate.] This is a very different covenant indeed from the arrangement which the Court was told was embodied in it. In terms and in legal effect it was a covenant by Mrs. Watsonwith the several covenantees to pay their costs; but in intention and practical affect it was an obligation by Mrs. Watson to discharge all Mr. Rodwell's bills of costs against all the parties in respect of anything that he had ever done, said, or written to or for every one of the parties in any way in respect of the testator's estate. He being her solicitor, and she having no other advice or assistance, takes from her an obligation to pay all these costs without any information as to the amount, or probable amount, or as to how they had been incurred. He did claim under it to retain hundreds of pounds of her money. It might just as well have been so many thousands. He might have had a dozen interviews here he had one, he might have written a dozen letters where he wrote one, and multiplied indefinitely cases, opinions, conferences, and consultations. It is out of the question that a solicitor can be allowed to avail himself against an unprotected client, a lady of advanced years, of a demand so founded. The settled account is based upon this deed, and it is obvious that a settlement so based cannot stand.

A good deal of argument was addressed to the Court below and in this Court as to the opportunity the Plaintiff had of taxing the bills, and on the point that there was no sufficient allegation or proof of error in the settled account, or of overcharge in the costs, as to entitle her to have the account opened or the bills taxed. This case, however, does not depend on opening settled accounts for error alleged and proved, or on the taxation of bills after payment. It is not necessary, therefore, to go into what took place between Mrs. Watson and the solicitor into whose hands she gave the bills for taxation, or as to the money which Mr. Rodwell lent her to meet the requisition of such solicitor, nor as to the correspondence and communications which passed between Mr. Rodwell, Mrs. Watson, and the Woodmans prior to the alleged settlement of the account; for no settlement, no payment, no taxation even, is or would have been of any avail between a solicitor who had got his client bound by such an obligation and that client, unless and until she had the fullest information and independent legal advice as to that obligation, and as to all the circumstances under which he had continued to multiply and accumulate costs against her. The Vice-Chancellor was of opinion that the mere aspect of the bills was sufficient to justify opening the whole matter, and if it were necessary we should say that we are not prepared to dissent from him. The amount of costs, the booty which was carried off from this small estate without the slightest benefit to any human being, except the professional men, shocks one's conscience and induces one to say Res ipsa loquitur. The Vice-Chancellor's decree directing the accounts to be taken, in effect setting aside the settlement and the payment of costs made in and by such settlement, must stand. The Vice-Chancellor goes on to declare that the Defendant is not entitled to any costs of the petition. We entirely agree that it was not only unnecessary and fruitless, but it was from the first futile. But more than that, it was in our opinion presented entirely in the interest of the Defendant himself in order to get the apparent sanction of the Judge to his getting paid out of the estate costs which it was quite certain he would never get from his several clients, or in any other way, The Vice-Chancellor has also disallowed him his costs in the suit of Woodman v. Watson, This also is right in

principle, although unnecessary in point of form; for as between the Plaintiff and the Defendant, the latter has no legal or equitable demand in respect of the costs of any other persons. His right, whatever it may be, is against such other persons as his clients, and they may have such remedy over against her as they may be entitled to under her covenants. That is the legal effect and result of the covenant as framed by him, and he must abide by it. The appeal must be dismissed with costs.

Solicitors: J. Mote; Stevens & Co.