Thompson v Anderson [2003] EWHC 9050 (Costs)

Case No HQ01X05155SCCO REF 02111141[2003] EWHC 9021 (Costs)IN THE HIGH COURT OF JUSTICESUPREME COURT COST OFFICEVenue Royal Courts of Justice, Strand, London, WC2A 2LLDate 9 December 2003
Before
MASTER CAMPBELL, COSTS JUDGE
Between
WAYNE THOMPSONClaimant/
Mr Power for Claimant/AppellantMr Balchin (instructed by Bolt Burdon) for Defendant/RespondentHearing Hearing dates : 3 November 2003
JudgmentMaster Campbell
[1]This judgment addresses three decisions taken by Costs Officer Emery during the detailed assessment of the Defendant’s/Respondent’s bill on 2 July 2003 which the Claimant/Appellant was ordered to pay pursuant to an Order of Master Rose dated 20 February 2003. They are: Item 1 - Allowance of a success fee of £510.64 on costs summarily assessed by Master Rose on 11 June 2002. Item 5 - Allowance of a success fee of £425.53 on costs summarily assessed by McCombe J on 11 September 2002. Item 6 - Allowance of a success fee of £2,382.98 on costs summarily assessed by Master Rose on 20 February 2003.[2]In the Appellant’s view, the Costs Officer was wrong to have allowed the Claimant’s claim for a success fee on the summarily assessed costs. I heard his appeal on 3 November 2003 when he was represented by Mr Power of Counsel. Mr Balchin of Bolt Burdon Solicitors represented the Respondent and at the conclusion of the hearing I reserved judgment. THE BACKGROUND[3]I need to say something of the unfortunate background to the dispute between the parties. In 1988 the Respondent commenced proceedings against Hackney Health Authority for damages for clinical negligence. The Appellant, then a solicitor in private practice styled as Wayne Thompson & Co, represented her in the action from 1991 until the claim was automatically stayed under the Civil Procedure Rules. Subsequently the Respondent complained to the Solicitors Complaints Bureau about the conduct of her case and on 27 September 2001 a case worker adjudicated that the services provided by Wayne Thompson & Co, had been inadequate because: i. There was inordinate delay in making any sort of progress with little being achieved in the eight years that the papers were with Mr Thompson. ii. There was a serious failure by Mr Thompson to provide Mrs Anderson with appropriate advice as to why reasonable progress could not be made, but iii. because of the lack of convincing evidence, the case worker was not satisfied that there was any wilful failure by Mr Thompson to reply to letters and telephone calls from Mrs Anderson.[4]An award of £1,000 compensation was made by the case worker in favour of the Respondent.[5]Matters did not end here. On 17 December 2001 the Appellant issued proceedings against the Respondent claiming that on or about 27 September 2001 she had published, or caused to be published by the Law Society, a document defamatory of Mr Thompson. No acknowledgment of service was filed and accordingly the Appellant entered judgment in default on 14 February 2002. Thereafter, the Respondent took steps to apply to set aside the judgment and counsel was instructed to draft a witness statement in support and a defence. The litigation continued until 30 May 2002 when the Appellant served Notice of Discontinuance.[6]Shortly thereafter, the Appellant served an application notice for an order under CPR 38.6 that there should be no order as to the costs of the action following discontinuance. The application came before Master Rose on 11 June 2002 who ordered that the Appellant pay two thirds of the Respondent’s costs up to the date of service of Notice of Discontinuance to be subject to detailed assessment if not agreed. The Master further ordered that the Appellant pay the costs of the hearing of 11 June 2002 which he summarily assessed in the sum of £600 payable by 25 June 2002. Permission to appeal was refused.[7]On 24 June 2002 the Appellant served notice of appeal which sought an extension of time for service of lodgment of the appeal bundle and a stay of execution of the order of Master Rose. The matter came before Mr Justice McCombe on 11 September 2002 who refused the extension of time requested but stayed the implementation of the order of Master Rose until after determination (on the papers) of Mr Thompson’s application for permission to appeal and thereafter (if permission was granted) until determination of the appeal. The learned Judge further ordered that:
"The Claimant shall pay the Defendant’s costs of this application summarily assessed in the sum of £500 on or before the 18th day of September 2002."
[8]The application for permission came before Astill J on paper on 10 December 2002 who ordered that the matter be remitted to the Master for rehearing and that there be a stay of the detailed assessment proceedings pending the rehearing. He made no order as to costs.[9]The rehearing took place before Master Rose on 20 February 2003 who ordered as follows:
"1. Under CPR 38.6(1) (A) The Claimant do pay two thirds of the Defendant’s costs of the claim up to and including the date of service of the Notice of Discontinuance. (B) That the costs under (A) above be assessed by detailed assessment if not agreed. (C) That the Claimant do pay two thirds of the Defendants costs of the hearing on 11 June 2002 summarily assessed at £600. (D) That the Claimant do pay two thirds of the Defendants costs of the Claimants application after 11 June 2002 including the hearing today (save that there be no order as to the costs of the Claimant’s appeal (such two thirds being summarily assessed at £2,800). (E) That the Claimant do by 20 March 2003 make a payment on account of £1,000 to the Defendants solicitors under (A) above. …"
[10]The parties could not agree the costs. Accordingly on 20 July 2002 the Respondent served Notice of Commencement pursuant to CPR 47.6 and on 29 July 2002 she commenced proceedings for detailed assessment. In her bill the Respondent claimed that her costs should be uplifted by 100% under the terms of conditional fee agreements with her solicitors and counsel dated respectively 18 April 2002 and 23 April 2002, notice of funding having been served on the Appellant on 25 April 2002. As I have said, on 2 July 2003 the bill was assessed by Costs Officer Emery in the sum of £11,387.32 of which £3,900 (inclusive of VAT) consisted of success fees payable on the costs which had been summarily assessed. On 7 July 2003 Mr Thompson served notice of appeal against these decisions and, as I have said, I heard the appeal on 3 November 2003. THE LAW[11]The starting point is Civil Procedure Rule 44.3A – "Costs orders relating to funding arrangements".[12]This provides as follows:
"(1) The court will not assess any additional liability until the conclusion of the proceedings, or the part of the proceedings, to which the funding arrangement relates. "
Funding arrangement" and "additional liability" are defined in Rule 43.2. (2) At the conclusion of the proceedings, or the part of the proceedings, to which the funding arrangement relates the court may – (a) make a summary assessment of all the costs, including any additional liability; (b) make an order for detailed assessment of the additional liability but make a summary assessment of the other costs; or (c) make an order for detailed assessment of all the costs."[13]The following definitions to be found in Rule 43.2 are relevant to the issue to be decided: " "Costs" includes fees, charges, disbursements, expenses, remuneration … "Funding arrangement" means an arrangement where a party has – (i) entered into a conditional fee agreement or a collective conditional fee agreement which provides for a success fee within the meaning of Section 58(2) of the Courts and Legal Services Act 1990. (d) … "Percentage increase" means the percentage by which the amount of a legal representatives fee can be increased in accordance with a conditional fee agreement which provides for a success fee. "Additional liability" means the percentage increase, the insurance premium or the additional amount in respect of provision made by a membership organisation as the case may be."[14]To put rule 43.2 in context it is necessary to set out the Notes to the Rule. CPR 44.3A.1 provides:
"Comment Because it was felt that disclosure of full details of funding arrangements particularly the percentage success fee in a conditional fee agreement, was prejudicial, the rules provide for limited information to be given to opposing parties until the final assessment (summary or detailed) is made. The provides that the court will not assess any additional liability until the conclusion of the relevant part of the proceedings. At that point the court may carry out a summary assessment of all the costs, make a summary assessment of the base costs only and order a detailed assessment of the additional liability, or make an order for detailed assessment of all the costs. Summary Assessment When the court makes a summary assessment during the course of the proceedings the Judge should state separately the amount allowed in respect of solicitors charges, counsel’s fees and other disbursements. This is so even though any additional liability is not at that stage assessed. The reason for this is that when the final assessment takes place it will be necessary to identify the total figures allowed to solicitors and counsel in order that any percentage increase (which may be different for solicitors and counsel) can be applied."
[15]Paragraph 2.2 of the Costs Practice Direction ("CPD") defines "base costs" as meaning costs other than the amount of any additional liability.[16]Section 11.8 of the CPD provides that in deciding whether a percentage increase is reasonable the relevant factors to be taken into account may include:
"(1) "(a) the risk that the circumstances in which the costs, fees or expenses would be payable might or might not occur; (b) the legal representatives liability for any disbursements; (c) what other methods of financing the costs were available to the receiving party. (2) The court has the power, when considering whether a percentage increase is reasonable, to allow different percentages for different items of costs or for different periods during which costs were incurred."
THE APPELLANTS SUBMISSIONS[17]The Appellant’s arguments were advanced by Mr Power of Counsel. In his submission, it was not Rule 44.3A(1) but Rule 44.3A(2) which applied in this case. Whilst it was clear that the court could not assess an additional liability until the conclusion of the proceedings, in the present case, the proceedings had been concluded by service of the notice of discontinuance on 30 May 2002. It followed that when the matter came before Master Rose on 20 February 2003 the proceedings had been concluded and accordingly it was open to the Master to make an order under Rule 44.3A(2)(a)to (c). In Mr Power’s submission, by a process of elimination, it was clear that the Master had exercised his power under sub-section (2)(a) of the rule and made a summary assessment of all the costs, including the additional liability. What he had not done was to make a summary assessment of the base costs and order detailed assessment of the additional liability under sub-section (2)(b) of the rule. Nor had he made an order for detailed assessment of all the costs under sub-section 2(c) of the rule.[18]In Mr Power’s opinion, the wording of the order was clear; the Respondent was to have the costs of the action up to the date of discontinuance to be quantified by detailed assessment. Accordingly, the bill referred to Mr Emery should not have included any costs for work undertaken after 30 May 2002 and the Costs Officer had been wrong to have allowed success fees on the costs claimed for the three hearings after the action had been discontinued.[19]Mr Power also referred to paragraph 13.7 of the Costs Practice Direction which provides that:
"If the court makes a summary assessment of costs at the conclusion of proceedings the court will specify separately – (1) the base costs and the appropriate additional liability allowed as solicitor’s charges, counsel’s fees, other disbursements and any VAT; and (2) the amount which is awarded under Part 36 (fast track trial costs)."
[20]Ideally Master Rose should have broken down the costs in order to show separately the base costs and, if appropriate, the additional liability. However, that he had not done so had not prevented the Master exercising his powers under 44.3(A)(2)(a). In short, as the proceedings had been concluded, it had been open to him to make a summary assessment of the costs incurred after 30 May 2002, including the additional liability. Moreover, the Master had made no order for detailed assessment of any costs incurred after that date and accordingly, the Costs Officer had been wrong to allow a success fee on the sums summarily assessed. THE RESPONDENT’S SUBMISSIONS[21]Mr Balchin appeared for the Respondent. He accepted that, in principle, it was open to McCombe J and Master Rose to carry out a summary assessment of both the base costs and the additional liability because the proceedings had been concluded but he did not accept that either had done so in this case. To support this submission Mr Balchin relied on the statements of costs which had been produced to McCombe J and to Master Rose and set out the Respondent’s claims for the base costs of attending those hearings. It was plain from those statements that no claim had been made for the assessment of the additional liability. In particular, no risk assessment had been before the court which would have enabled either Judge to have examined the risks of the case. It followed, in Mr Balchin’s submission, that neither Judge had been in a position to assess the success fees. This was consistent with paragraph 48.23 of the Guide to Summary Assessment 2002 which says this:
"Orders made at the conclusion of proceedings 19. Where the court makes a summary assessment of an additional liability at the conclusion of proceedings, that assessment must relate to the whole of the proceedings; this would include any additional liability relating to base costs allowed by the court when making a summary assessment on a previous application or hearing."
[22]Whilst Mr Balchin accepted that in principle the court could have carried out a summary assessment of both base costs and the additional liability, because the proceedings were at an end, neither Judge had done so. Instead they had simply assessed the base costs and left the additional liability to be quantified by the Costs Officer. Accordingly, Mr Emery had been correct to make the allowances he had when he carried out the detailed assessment of the Respondent’s bill. MY DECISION[23]It is common ground that the proceedings were at an end. Mr Power submitted and Mr Balchin agreed that it was open to Master Rose (and by inference McCombe J) to carry out an assessment of both the base costs and the additional liability under CPR 43.3(A)(2). The difference between them is that in the view of Mr Power, both Judges made an assessment of the base and additional liability whereas in Mr Balchin’s opinion only the base costs could have been dealt with. This was because no material had been before the court which could have enabled those Judges to have carried out an assessment of the additional liability. That task was entrusted to Costs Officer Emery who discharged it correctly at the detailed assessment.[24]The issue I have to decide, therefore, is whether the learned Costs Officer was correct to allow success fees on the post discontinuance costs. As I have said, both sides agree that because the proceedings were at an end, Rule 43.3(A)(2) applies and in my judgment Mr Power was correct to say that it was open to Master Rose on 20 February 2003 (and by inference McCombe J) to make one of the three orders permitted under Rule 43.(A)(2)(a)to(c). Under sub-section (2)(b) of the Rule, he could have made a summary assessment of the base costs and referred the additional liability for detailed assessment. Alternatively, under sub-section(2)(c) of the Rule he could have referred all the costs to detailed assessment. In my judgment it is plain from the wording of the order that he did not exercise his powers under sub-section (2)(b) or (c) of the rule. On the contrary, I believe Mr Power to be correct in his submission that, by process of elimination, he applied sub-section (2)(a) of the rule.[25]For convenience I repeat that the relevant part of McCombe J’s order which said this:
"3. The Claimant shall pay the Defendant’s costs of this application summarily assessed in the sum of £500 on or before 18 September 2002."
[26]In respect of Master Rose’s order of 20 February 2003 the relevant part said this:
"(D) That the Claimant to pay two thirds of the Defendant’s costs of the Claimant’s application after 11 June 2002 including the hearing today (save that there be no order as to the costs of the Claimant’s appeal) such two thirds being summarily assessed at £2,800."
[27]It follows that in my judgment what the court did not do in either case was to order a detailed assessment of the additional liability. Whilst I accept that in making their orders, neither learned Judge followed strictly Section 13.7 of the Costs Practice Direction by specifying separately the base costs and the additional liability, in my view that is not fatal to Mr Power’s submission. If, as Mr Balchin contends, it was the Respondent’s intention to claim an additional liability on the post discontinuance costs, I consider that should have been made plain to the learned Judges at the time the orders were made. Had that been done, the orders would have read:
"… the Claimant shall pay [two thirds] of the Defendant’s costs [of the application] the base costs summarily assessed in the sum of [£ ] and a detailed assessment be made of the additional liability."
[28]Mr Balchin submitted that Master Rose had no material before him which would have enabled him to carry out an assessment of the additional liability. Whether or not that is correct is, to my mind, neither here nor there. My task is to give effect to the order in the form that it was drawn up and sealed. What, as a Costs Judge, I am not permitted to do is to go behind the order because I consider the learned Judge was mistaken, had no power to make the order he did, or that the order has an effect which he did not mean it to have - see Cope v United Dairies (London) Ltd [1963] 2 WLR 926, when Megaw J said this:
"Counsel for the Law Society agreed that the Taxing Master could not properly refuse to carry out an order for taxation, in while or in part, because he considered it to be wrong or ultra vires and that the same applies to this court on a review. With that proposition, I agree."
[29]In my judgment the Respondent ought to have been alert to the point that as the proceedings were at an end, it was open to the court to assess both the base costs and the additional liability. In these circumstances the Respondents should have asked the learned Judge to exercise his power under Rule 43.3(A)(2)(b) and not sub-section (a). Had that been done, it would have been clear that only the base costs had been assessed and that the additional liability was to be referred to the Costs Officer for detailed assessment. FORMAL ORDER[30]The appeal is allowed. The Respondent’s time for applying to me for permission to appeal will expire after seven days have elapsed from the handing down of this judgment. I further direct that the Respondent pays the costs of the appeal assessed in the sum of £1,351.25 payment to be made within 14 days of the date that this judgment is handed down.