Societa Finanziaria Industrie Turistiche SpA v Manfredi Lefebvre D'Ovidio De Clunieres Di Balsorano & Anor [2006] EWHC 90068 (Costs)

Case No AGS/0508384[2006] EWHC 90068 (Costs)IN THE HIGH COURT OF JUSTICESUPREME COURT COSTS OFFICEVenue Clifford’s Inn, Fetter LaneLondon, EC4A 1DQDate 30/06/2006
Before
MASTER GORDON-SAKER
Between
SOCIETA FINANZIARIA INDUSTRIE TURISTICHE SpAClaimantMANFREDI LEFEBVRE D’OVIDIO DE CLUNIERES DI BALSORANODefendantsANTONIO LEFEBVRE D’OVIDIO DE CLUNIERES DI BALSORANODefendant
Mr Nicholas Bacon (instructed by Addleshaw Goddard) for ClaimantMr Jeremy Morgan QC (instructed by Withers LLP) for First DefendantHearing Hearing dates: 25 th& 26 th April 2006
JudgmentMaster Gordon-Saker :The background
[1]The Claimant (“SFIT”), a company incorporated in Italy, is a minority shareholder in another Italian company called Società Incremento Turistico Alberghiero Valdostano S.p.A. (“SITAV”). The Defendants, who are son and father respectively, hold shares in SITAV through a Luxembourg company called Eurosecurities Corp. S.A..[2]There has been a considerable amount of litigation in Italy between these parties. As I understand it there have been over 23 actions since 1996, mostly at the instigation of SFIT. There have been criminal investigations and there have been actions in France, the United States and Luxembourg.[3]The essence of the dispute, insofar as it is relevant to matters before me, is a claim by SFIT that the Defendants were responsible for the diminution in the net asset value of SITAV by approximately €220m. As SFIT held 28% of the issued share capital of SITAV it has argued that it has suffered a loss of 28% of €220m – or approximately €60m. That claim was articulated in proceedings in Italy which have become known as “the Milan Counterclaim”. In February 2002 SFIT sent a letter before action to Eurosecurities in relation to this claim. Eurosecurities’ response was to sue SFIT for sending the letter. SFIT counterclaimed for the relief sought in the letter – hence the Milan counterclaim – and joined various third parties to it, including the Defendants. SFIT counterclaimed damages against these Defendants of €60m.[4]The Defendants are, or have been, or have been said to be, domiciled within this jurisdiction. On SFIT’s application made without notice on 5th May 2004 Moore-Bick J. granted a worldwide freezing order restraining the Defendants from dealing with their assets up to the value of €60m. The order was made under section 25 of the Civil Jurisdiction and Judgments Act 1982, in support of SFIT’s claim against these Defendants in the Milan counterclaim.[5]By consent that order was continued, as against the First Defendant only, by a further order made on 26th May 2004. In September 2004 Langley J. ordered that SFIT should give security for the First Defendant’s costs in the sum of £550,000.[6]In October 2004 SFIT’s application to continue the freezing order and the First Defendant’s application to discharge it came before Gloster J. On 5th November 2004, after a hearing which lasted 7 days, the learned Judge decided that there was no sufficiently good case to justify a freezing order against the First Defendant. She ordered that the freezing order be discharged and that SFIT should pay the First Defendant’s costs of its application to continue the freezing order and of the First Defendant’s application to discharge it, such costs to be the subject of detailed assessment.[7]On 29th November 2005 the First Defendant lodged his bill for assessment. The total sum claimed in the bill is £2,532,545. I am told that about one half of the total sum claimed - £1.25m – relates to work done in Italy.[8]On 21st September 2005 – before the bill had been lodged – Withers, acting for the First Defendant, applied for directions for the determination of preliminary issues in relation to the claims for the fees incurred in Italy.[9]That application came before me on 18th October 2005. The order, which was made largely by consent, provided that: “I. There be determined in respect of the costs and disbursements claimed by the First Defendant (“the relevant costs”):(a) Professor Torrepadula (item 256) £71,690.01(b) Antonio Rappazzo (item 264) £772,864.17(c) Professor Sassani (item 61) £71,609.34(d) Paola Balducci (item 249) £130,521.44(e) Avv Tasco (item 265) £84,181.07(f) Emilio Palma (item 247) £21,237.39(g) Giorgio Scelsi of Lefco (item 262) £162,860.14 the following by way of preliminary issue: (i) whether the method and basis of charging and/or assessing the relevant costs under Italian law is relevant to the issues in the assessment proceedings; (ii) if Italian law is relevant to the method and basis for charging and/or assessing the relevant costs, which Italian law method and basis are to apply and, if so relevant, the hourly rates which would apply under Italian law; (iii) if Italian law on the method and basis for charging and/or assessing the relevant costs is not relevant, the method and basis that is to apply to the assessment, including whether an hourly rate basis for charging applies (and, if so, the hourly rates which should be applied). II. There be determined with regard to the fees of Giorgio Scelsi of Lefco, claimed in the sum of £162,860.14 whether any of the claimed fees are, as a matter of principle, recoverable in the assessment and, if so, the basis on which they are to be calculated for the purpose of their assessment as a preliminary issue.”

the following by way of preliminary issue:

[10]With the exception of Mr Palma, who is an accountant (and whose fees are not in dispute for present purposes), and Mr Scelsi, the named individuals are lawyers practising in Italy.[11]Although nobody said so in terms, there is an underlying assumption that if the Italian lawyers’ fees are to be assessed in the same way as the profit costs of English solicitors, the amounts that would be allowed would be substantially less than are claimed.[12]In broad terms SFIT’s case is that the fees should be assessed on an hourly rate basis. The First Defendant contends that the fees should be assessed according to how they would be assessed in Italy. As there is a tariff in Italy, on the assumption that the lawyers have charged in accordance with that tariff, the sums claimed would be the sums that would be allowed in Italy.[13]The parties subsequently agreed to add a further preliminary issue: “The value of the claim, as a matter of Italian law, for the purpose of determining the appropriate tariffs to be applied to the First Defendant’s Italian lawyers’ fees”.[14]In relation to that, broadly, the First Defendant contends that the value of the claim was €60m – the sum claimed in the Milan counterclaim and the sum restrained by the freezing order. SFIT contends for €30m – on the basis of the expert evidence that it has obtained.[15]There is a different issue in relation to the fees of Lefco Limited, a company resident in the Bahamas. Its invoice dated 23rd February 2005, in the sum of €239,300, is in respect of:
“Services requested relating to the preparation of the defence owing to the dossier of 5 May 2004 preparation of documents analysis and contestation of SFIT’s evidence preparation and analysis of balance sheets.” preparation of documents analysis and contestation of SFIT’s evidence preparation and analysis of balance sheets.”

analysis and contestation of SFIT’s evidence

[16]SFIT’s contention is that Lefco is controlled by the First Defendant and that the services described in the invoice were, in effect, provided by employees of the First Defendant and are therefore not recoverable.

The nature of the evidence produced

[17]Both parties adduced evidence from expert witnesses in relation to Italian legal procedure. Neither expert was produced to give evidence or to be cross-examined on their reports. The parties have left it to me to decide which expert should be preferred without the opportunity of hearing them give evidence.[18]The First Defendant produced witness statements from the Italian lawyers whose fees are in dispute. Again none of these witnesses attended to give evidence.[19]The First Defendant also produced a bundle of the opinions of the Italian lawyers which had been prepared in relation to the freezing order proceedings. These opinions, which clearly are privileged, were not disclosed to SFIT. While it would be highly unusual on detailed assessment for a paying party to request disclosure of an opinion by the receiving party’s lawyers, Mr Bacon, on behalf of SFIT, agreed that I should be permitted to read the opinions without disclosure to SFIT de bene esse. As I understood the concession – if such it be – it was that I could read the opinions to assist my understanding of the matters in issue but that I should not form a conclusion, from my reading of the opinions, which was adverse to SFIT’s case without giving SFIT an opportunity to make submissions on whether the opinions should first be disclosed.[20]I can say that reading the opinions did assist my understanding of the issues but, as it is not the function of this judgment to determine what sum should be allowed for any particular piece of work, I do not consider it necessary to invite further submissions on disclosure at this stage. I should add that the First Defendant has provided SFIT with a schedule which summarised some of the opinions (C9). Issue 1 - Whether the method and basis of charging and/or assessing the relevant costs under Italian law is relevant to the issues in the assessment proceedings.[21]As sometimes happens, what at the outset seemed to be a sensible formulation of a preliminary issue, does not now reflect the true difference between the parties.[22]It would appear that both parties are agreed that the method and basis of charging and assessing costs under Italian law is relevant to the assessment of the Italian lawyers’ fees in these detailed assessment proceedings – see for example paragraph 27 of Mr Bacon’s skeleton argument. The real difference between the parties would seem to be the extent to which this is relevant.[23]There is little direct authority as to how an English court should assess the fees of overseas lawyers. My attention was drawn to three cases, all of which pre-date the Civil Procedure Rules 1998.[24]In Wentworth v Lloyd [No 2] (1865) 34 Beav 455 the question arose as to how the taxing master should tax the “enormous amount of costs” that had been incurred in Australia in the examination of witnesses there. The Master of the Rolls declined to send the bill to Australia for taxation but held that:
“… the Taxing Master must tax this portion of the bill according to the rules and in the way in which it would have been taxed there. If any matter of difficulty should arise, he must refer for information to Australia.”
[25]In Slingsby v Attorney General[1918] P 236 the receiving party sought to recover £3,890 in respect of the fees of American lawyers for obtaining evidence in the United States. In his written reasons the Registrar concluded: “In this case the bulk of the evidence was taken in America, and the charges for the work done there, in my opinion, are payable unless it is very clearly shown either that the charges are excessive according to the scale of charges payable in that country or that any particular charge related to an issue not relevant to the matter before the Court.” (Quoted in the judgment of Swinfen Eady LJ at p.243)[26]The Court of Appeal held that the Registrar had incorrectly reversed the burden of proof and that it was for the receiving party to show that the amount was fair and reasonable and should be allowed. There was not however any criticism of the Registrar’s conclusion that the American fees should be measured “according to the scale of charges payable in that country”.[27]In McCullie v Butler[1962] 2 QB 309 the question arose as to whether the solicitors for an unsuccessful legally-aided plaintiff could recover on a taxation against the Legal Aid Fund the fees of Scottish solicitors who had been instructed as agents to obtain evidence. In holding that such fees were allowable Diplock J (as he then was) said (at p.313):
“I should add that, just as in the case of other foreign lawyers, the proper amount to be allowed for disbursements is the proper rate of charge in the country concerned, in this case Scotland, for the necessary services of the agent employed. To avoid any difficulty for the taxing master in making up his mind on what the proper rate of charge for services is, it seems to me to be very desirable that when an item of this kind is included in the bill of costs there should be a detailed statement of the circumstances which required the services of the foreign lawyer or, in this case, the Scottish solicitor, and that there should be a detailed charge for the individual items.”
[28]Rule 44.5 of the Civil Procedure Rules 1998 provides that: (1). The court is to have regard to all the circumstances in deciding whether costs were –(a) if it is assessing costs on the standard basis – (i) proportionately and reasonably incurred; or (ii) were proportionate and reasonable in amount, or(b) if it is assessing costs on the indemnity basis – (i) unreasonably incurred; or (ii) unreasonable in amount. (2). In particular the court must give effect to any orders which have already been made. (3). The court must also have regard to – (a) the conduct of all the parties, including in particular – (i) conduct before, as well as during, the proceedings; and (ii) the efforts made, if any, before and during the proceedings in order to try to resolve the dispute; (b) the amount or value of any money or property involved;(c) the importance of the matter to all the parties;(d) the particular complexity of the matter or the difficulty or novelty of the questions raised;(e) the skill, effort, specialised knowledge and responsibility involved;(f) the time spent on the case; and(g) the place where and the circumstances in which work or any part of it was done.”[29]Mr Bacon accepted that, on a fair construction of factor (g), where work had been done by professionals in another jurisdiction for the purpose of English proceedings the Court should take into consideration the costs laws of that other jurisdiction. However, he stressed that this is only one of the factors to which the Court should have regard. The thrust of his argument is that where there was a difference between the fees as they would be assessed under the Italian tariff and the fees as they would be assessed on the basis of time spent multiplied by an hourly rate, the Court should allow only those costs which are proportionate and reasonable having regard to all of the criteria in CPR 44.5(3).[30]For the First Defendant Mr Morgan QC suggested the following approach (paragraph 11 of his skeleton argument):
“… the Court must ask itself the following questions (though at the preliminary issues hearing it will not be able to answer them all): a. Are the costs as a whole, or part of those costs, such as those of a foreign lawyer, disproportionate or do they have the appearance of disproportionality? b. If not, was it reasonable, having regard to the reasonable interests of D1, to instruct a foreign lawyer to carry out each of the items in question? c. If the answer to (a) is Yes, was it necessary, having regard to the reasonable interests of D1 and the sensible standard of necessity in Lownds v Home Office[2002] 1 WLR 2450 at [37], to instruct a foreign lawyer to carry out each of the items in question? d. In relation to each item which passes the test of (b) or (c), what is the reasonable amount to allow having regard to Italian solicitor/client charging methods?”
[31]Save for the last paragraph, Mr Bacon agreed with that analysis. It is therefore the last paragraph which is the battleground: Does one have regard exclusively to Italian methods (as the First Defendant contends) or is Italian practice simply a factor (as SFIT contends)?[32]Mr Morgan rightly foretells that not all of the questions he poses will be answered in this judgment. Proportionality (whether of the First Defendant’s bill as a whole or of just the claim for Italian lawyers’ fees) is a matter which will be left over for detailed assessment. As will the question of whether it was reasonable to instruct the Italian lawyers to undertake any particular task.[33]Those are what one might term “all or nothing questions”. They do not go to the quantum of the specific items. They do not affect the issue of whether a specific sum claimed is reasonable or, if it is not, what sum would be reasonable. Rather they affect the question of whether an item is recoverable at all – either because it was not necessary, following a finding that the bill or part of it is disproportionate, or because it was not reasonable to incur it at all.[34]The first preliminary issue must therefore be refined by assumptions that the bill or relevant part is not disproportionate and that the instruction of the Italian lawyers was reasonable. It seems to me that the real issue between the parties is therefore not that formulated in the heading above, but rather: To what extent is the Italian practice of charging relevant to the assessment of the reasonableness of the Italian lawyers’ fees.[35]Is it wholly determinative? So that, if proportionate and reasonably incurred, the fee which would be allowed in Italy must be considered reasonable in amount on assessment in this country. Or is the Italian practice simply one factor under CPR 44.5(3)?[36]In my view one has to take a common sense approach – and that is the approach taken by the Courts in Wentworth, Slingsby and McCullie. This work was done in Italy. The Italian lawyers have charged their fees in accordance with their local practice.[37]I am told, and for present purposes I accept, that they have not kept time records. Any attempt to guess the number of hours that they might reasonably have spent would be wholly unrealistic. In my judgment there is no sensible way to assess the quantum of these fees other than by the Italian method of charging.[38]I am not persuaded that the Civil Procedure Rules require me to take a different approach. I am required by Rule 44.5 to have regard to all of the circumstances including the factors specifically identified in 44.5(3). But the relevance of those factors will vary from case to case, and from item to item. Factor (f) – time spent – will have no relevance to the assessment of disbursements, commonly found in bills, such as travelling expenses, couriers’ fees or photocopying.[39]When assessing costs incurred in a foreign jurisdiction, the place where the work was done – factor (g) – will assume significant importance. In my judgment it would be artificial to attempt to shoe-horn the other factors into an assessment of costs incurred in another jurisdiction where the assessment of costs within that jurisdiction has no regard to those factors. For example, where it is not the practice in that jurisdiction to charge by reference to time, the time spent – factor (f) – will be of no relevance.[40]Nor am I persuaded that I should ignore the decisions in Wentworth, Slingsby and McCullie on the basis that the Civil Procedure Rules have rendered them of no relevance. The factors identified in CPR 44.5(3) have a distinguished pedigree – through Part X of Appendix 2 of Order 62 of the Rules of the Supreme Court back to the Solicitors Remuneration Orders for non-contentious work – and cannot be described as novel. Their provenance would suggest that they were designed more with solicitors’ profit costs in mind, having regard to the way in which solicitors charge in this country.[41]My decision should not be taken as an abrogation of the Court’s responsibility only to allow costs which are proportionate and reasonable. But in my judgment that responsibility cannot be exercised by applying English principles of legal charging to the different systems of charging in other jurisdictions. Rather that responsibility should be exercised by answering the following questions: i) Are the fees incurred overseas proportionate? ii) If not, were they necessarily and reasonably incurred? iii) If they are proportionate, were they reasonably incurred? And in deciding whether they were reasonably incurred the Court should have regard to the fact that the receiving party would or should have known that costs which may be considered reasonable in amount in the jurisdiction in which they were incurred may appear extravagant on assessment in this country and may be disallowed in toto on the basis that they are disproportionate and unnecessary or were incurred unreasonably.[42]In my judgment the answer to the first issue is that the amount of the Italian lawyers’ fees must be assessed according to the rules and in the way in which they would have been assessed in Italy. But that does not prevent the paying party from contending on detailed assessment that the fees are disproportionate and unnecessary or were unreasonably incurred and so should not be allowed at all. Issue 2 - if Italian law is relevant to the method and basis for charging and/or assessing the relevant costs, which Italian law method and basis are to apply and, if so relevant, the hourly rates which would apply under Italian law[43]It is not in issue between the parties that the relevant tariff for the lawyers’ fees is that at Table D of Chapter III of Ministerial Decree No 127 dated 8th April 2004. The table and its translation appear in a number of places in the bundles. For this judgment I am using the translation to be found at E3, subject to the amendment to Article 9(1) that was agreed by Counsel.[44]The table divides work into inter alia “Advisory Work Services” and “Legal Assistance Services”. For present purposes I do not have the material available to me to determine whether any particular item of work falls into either category. That will be a matter for detailed assessment.[45]For “Advice” under the first category and for “Examination and Study of the matter” under the second category, ranges of fees on a sliding scale are prescribed for items of work where the value of the matter is less than €5,164,600.01 or where the matter has “indeterminable value”. Where the value of the matter is over €5,164,600.01 co-efficients of the value are prescribed. So for a written advice a range of co-efficients of 0.000296 – 0.000650 is prescribed. For a matter with a value of €60m that would give a range of €17,760 to €39,000 per written advice.[46]The position within the range is regulated by Article 1(2) of Chapter III:
“(2) In determining the fees as between the established minimum and maximum tariffs, the value and nature of the matter, the number and importance of the issues and quality of the work undertaken, the results and advantages achieved for the client (economic and non-economic) and urgency of the matter should be taken into account.”
[47]This has a reassuring air of familiarity.[48]Article 1(3) provides that in cases of : “particular importance, complexity and difficulty, maximum fees can be doubled” 52. and that “for matters of extraordinary importance, maximum fees can be quadrupled, provided a favourable opinion of the Consiglio dell’Ordine has been obtained”.[49]I am not going to decide as part of this judgment what particular fee should be allowed for individual items of work. Effectively the parties have asked me to give such guidance at this stage as I can based on what I have seen so far. The assessment of the individual fees of the Italian lawyers will be a matter for the detailed assessment.[50]It is in relation to this issue that the expert evidence has been adduced. That evidence conflicts on many points.[51]Following the decision in Wentworth it seems to me that I am entitled to take account of information from Italy as to how these fees would be assessed there. Having been provided with conflicting information, I have to decide which to prefer.[52]The First Defendant relies on the reports of Mr Remo Danovi. He is a lawyer registered with the Bar Council of Milan and has been in practice since 1963. He practices in Milan in a firm which employs 25 staff. He was for many years a councillor of the Council of the Milan Bar Association. Since 1994 he has been a councillor of the National Bar Council, which is based in Rome. He was Vice-President of the National Bar Council from 1997 and President from 2002 until May 2004. In his time as President he “promoted and took care of the procedure for the enactment of the current Scale of Legal Fees, issued in Decree No 127 of 8th April 2004 of the Ministry of Justice”. For many years he has taught legal ethics at the University of Milan and has published works on that subject.[53]He does not list in his reports the documents with which he was provided. But it would seem that he was provided with at least SFIT’s Statement of Case (C7) and the witness statements of the Italian lawyers which exhibited their invoices. By the time that he wrote his supplementary report (E4) he had seen the report of Miss Trunfio dated 12th March 2006.[54]SFIT relies on the reports of Miss Trunfio. She qualified as an Avvocato in November 1996. She practises at the Studio Legale Trunfio in Reggio Calabria. Her statements are otherwise silent as to her qualifications. Mr Bacon did however show me a publication that she had written.[55]Mr Morgan produced some pages from Miss Trunfio’s website which suggests that her practice is what would be described here as “general civil litigation”.[56]In addition to the witness statements produced in relation to the preliminary issues Miss Trunfio has also seen a number of documents relating to the proceedings in Italy and the freezing order proceedings in this country – listed at paragraph 4 of her second witness statement.[57]It is invidious to have to choose between the opinions of two experts without hearing their evidence. However I have to make a choice and I have found the evidence of Mr Danovi to be the more impressive. Clearly he is a very senior and experienced lawyer and at the top of his profession in Italy. Clearly he has close experience of the use of the relevant ministerial decree.[58]The experience of Miss Trunfio is less clear. I did detect in her reports an enthusiasm to be helpful without indicating the foundation of her views. For example at paragraph 21 of her second report she commented:
“Whilst it is possible that the Italian Court would value the English claim at €60 million, I consider it more likely that a lower figure would be applied. It is also possible that the figure will be fixed at a value close to the value of the assets caught by the freezing order. However the most likely outcome is that the relevant value will be fixed somewhere between these two poles (i.e. somewhere in the region of €30 million).”
It is important that the Court should have confidence in the information with which it is provided in relation to foreign practice. While I am sure that Miss Trunfio is simply doing her best to be helpful, this sort of reasoning does not inspire confidence.[59]Although it would appear that Mr Danovi saw rather fewer documents than Miss Trunfio in relation to the underlying litigation, it is clear that he had a good understanding of the issues involved and I am satisfied that he had sufficient understanding to express the views set out in his reports.[60]In relation to practice in Italy, this court has to be guided by expert evidence. Where it is presented with conflicting evidence, it cannot cherry pick between the views of the two experts. On those issues where Miss Trunfio and Mr Danovi have reached conflicting views, I prefer the evidence of Mr Danovi and I will use his evidence as the basis for my decisions as to the sums that would be allowed in Italy for the fees in question.[61]In my judgment the answer to the second issue is that the relevant tariff for the lawyers’ fees is that at Table D of Chapter III of Ministerial Decree No 127 dated 8th April 2004 as explained in the reports of Mr Danovi. Issue 3 - if Italian law on the method and basis for charging and/or assessing the relevant costs is not relevant, the method and basis that is to apply to the assessment, including whether an hourly rate basis for charging applies (and, if so, the hourly rates which should be applied).[62]As I have found that Italian law is relevant, this issue falls away. If however my decision on the first issue is wrong, the answer to this question would have to be that the amount of the fees of the Italian lawyers should be determined in accordance with CPR 44.5 and without having regard to the amount of fees that would be allowed in Italy. In relation to individual fees one would have to estimate the time spent – in the absence of time records – and invite evidence as to hourly rates. Issue 4 - There be determined with regard to the fees of Giorgio Scelsi of Lefco, claimed in the sum of £162,860.14 whether any of the claimed fees are, as a matter of principle, recoverable in the assessment and, if so, the basis on which they are to be calculated for the purpose of their assessment as a preliminary issue.[63]The nature of the fees claimed is explained in the witness statement of Mr Scelsi at D17:
“I am the Chief Executive Officer of Lefco Limited, a company which provides Trustee services to trusts, and company secretarial services to companies. … In order to carry out my duties competently I have kept a document library of all important transactions and documents, including those relating to all of the numerous proceedings which have involved the First Defendant over the last ten or more years … I and my assistant Pierre Martinerie and two secretarial assistants spent a great deal of time in providing information requested, and answers to queries raised by the First Defendant’s Italian lawyers and Withers LLP in relation to these proceedings in England. It was necessary to conduct researches for the information requested from amongst the library of documentation in possession of Lefco Limited. I considered the information set out in the Witness Statements served on behalf of the Claimant and assisted in providing information to show the full context of facts stated therein for analysis by the First Defendant’s English lawyers. I also had to consider factual matters that were set out in drafts of my Affidavit. … we have limited the time charged to 8 hours per day for 32 days i.e. to 256 hours … and applied hourly rates of € 350 for myself, €250 for Pierre Martinerie, €100 for Nadine Granger and €100 for Elda De Lorenzo to arrive at the fees charged and rounded down in our invoice of February 2005 to €204,100. Disbursements were added to this for travel expenses of €19,200 and for “materials” i.e. faxes and photocopies together with translation expenses of €16,000. The First Defendant has duly paid this bill and a copy of the receipted bill is annexed hereto…”
[64]SFIT’s case is that Lefco is an offshore holding vehicle for the interests of the First Defendant’s family and is controlled by the First Defendant.[65]In the First Defendant’s second affidavit, sworn in the freezing order proceedings on 32nd July 2004, he deposed at paragraphs 25 and 26:
“25. Since the implementation of the settlement with Francesco (the First Defendant’s brother), I have been running the Silversea cruise operation of the Lefco Group. … The Claimant suspects that because I come from a rich family and am chairman and chief executive officer of a number of companies I must be interested in acquiring and owning wealth. I am not. … The family wealth originated from my father, whose intentions were that it should be transmitted to future generations through the trusts, and that we should make it grow. … 26. When my Lefco Group took control of the Eurosecurities group from Francesco in June 2001, we inherited a mess …”
[66]While the latter passage and in particular the use of the possessive pronoun was the subject of some discussion in front of Gloster J., as far as I can tell the learned Judge made no specific finding of fact as to whether the First Defendant owned Lefco. In paragraph 36 of her judgment however she did refer to Lefco Ltd as “another Lefebvre family company”.[67]Mr Morgan accepted that I was bound by the decision in Sisu Capital Funds v Tucker & Spratt[2006] 1 All ER 167, and accordingly that Lefco’s fees would be irrecoverable unless this case were distinguished on its facts. He seeks to do so by submitting that Lefco is an independent entity – it is neither the First Defendant nor an employee of the First Defendant.[68]It is a principle of long standing that payment for work done by employees of a litigant is not recoverable as costs unless the payment is referable to work done by in-house experts, see: Re Nossen’s Patent[1969] 1 WLR 683, Richards & Wallington (Plant Hire) Ltd v Monk & Co Ltd (1984) Costs LR (Core Vol) 79, Admiral Management Services Ltd v Para-Protect Europe Ltd[2003] 2 All ER 2017, and Sisu Capital Funds (supra). The erosion of this principle would lead to claims by litigants for their own time.[69]As to the relationship between the First Defendant and Lefco, on the evidence before me I can do no better than the conclusion of Gloster J. that Lefco was “a Lefebvre company”.[70]The work described in Mr Scelsi’s witness statement – giving instructions to the First Defendant’s lawyers in England and in Italy and producing documents – is that which a litigant would normally do. This work was being done on the direction of the First Defendant by employees of a company which, if not controlled by the First Defendant, was “a Lefebvre company”. It is relevant that the invoice was addressed to the First Defendant rather than to his solicitors. It is also relevant that this work was not mentioned in the First Defendant’s application for security for costs. In my judgment this work falls within the principle that I have described above.[71]I do not accept Mr Morgan’s submission that Mr Scelsi was a professional witness and entitled to charge as such. It would appear that he and Lefco are heavily involved in the litigation. There is no evidence that he would not have been willing to become involved had Lefco not been paid.[72]I suspect that Lefco’s invoice is an afterthought. The First Defendant’s bill falls to be assessed on the standard basis and any doubt should be exercised in favour of SFIT. That must apply to the determination of a preliminary issue as it does to detailed assessment. I have considerable doubt in relation to this item.[73]Although Mr Scelsi’s witness statement purports to exhibit a “receipted invoice”, the invoice exhibited [p.129 of bundle D] would not appear to be receipted.[74]In answer to the fourth issue, in my view these fees are, as a matter of principle, not recoverable. Further, based on what I have seen so far, it would not be reasonable as between the parties to allow these fees. Issue 5 - The value of the claim, as a matter of Italian law, for the purpose of determining the appropriate tariffs to be applied to the First Defendant’s Italian lawyers’ fees.[75]It follows from my decision to prefer the evidence of Mr Danovi that the value of the matter for the purposes of Table D of Chapter III of Ministerial Decree No 127 dated 8th April 2004 is €60,000,000.