Crane v Canons Leisure Centre
| Jurisdiction | England & Wales |
| Judge | Lord Justice May,Lord Justice Maurice Kay,Lady Justice Hallett |
| Judgment Date | 19 December 2007 |
| Neutral Citation | [2007] EWCA Civ 1352 |
| Docket Number | Case No: A2/2006/1387 |
| Court | Court of Appeal (Civil Division) |
| Date | 19 December 2007 |
[2007] EWCA Civ 1352
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM WANDSWORTH COUNTY COURT
MASTER WRIGHT
4WT13909; SCCO Ref: 0505183
Royal Courts of Justice
Strand, London, WC2A 2LL
Lord Justice May
Lord Justice Maurice Kay
Lady Justice Hallett and
Chief Master Hurst
Case No: A2/2006/1387
John Foy QC (instructed by Messrs Rowley Ashworth) for the Appellant
R Drabble QC and Robert Marven (instructed byMessrs Mccullagh & Co) for the Respondent
Hearing dates: 19 th November 2007
This appeal has an unsavoury flavour to it. It does not concern the real dispute between the parties. That dispute concluded more than two years ago when Mr Crane's personal injury claim for receiving an electric shock to his left hand at work on 24 th January 2002 was compromised on 10 th August 2004 for an agreed payment of £1,500 plus costs on a standard basis to be assessed if not agreed. It was not necessary, I believe, for Mr Crane to start proceedings to secure this agreement. Since then, Mr Crane's solicitors, Rowley Ashworth, and the defendants' insurers have been arguing about costs which by now will have exceeded Mr Crane's agreed damages by more than ten times. The further unsavoury feature is that this appeal is not about the costs of Mr Crane recovering £1,500, but about the satellite costs of assessing those costs in the Part 8 costs only proceedings begun for that purpose. This all arises in large measure because claims for personal injury in excess of £1,000 cannot be brought in the small claims track, as they should, since, in my view, the £1,000 should be substantially increased; and because Mr Crane's Union entered into a Collective Conditional Fee Agreement with Rowley Ashworth.
Rowley Ashworth engaged costs consultants, Costings Limited, to conduct the detailed assessment of Mr Crane's costs. They wrote to the defendants' insurers saying that they were acting under delegated authority from Rowley Ashworth. They prepared an initial schedule and then a detailed bill of costs. They then conducted detailed assessment proceedings before a costs officer. It was determined that Rowley Ashworth were entitled under the Collective Conditional Fee Agreement to a success fee, having succeeded in recovering £1,500 for Mr Crane. It was further determined that the solicitors (nominally the claimant) were entitled to recover a proper amount for the costs of Costings Limited conducting the detailed assessment. The costs officer assessed the costs in Rowley Ashworth's bill at £6,572.70 (on an amount claimed which exceeded £9,500). It will be recalled that Mr Crane recovered a mere £1,500. The costs officer reduced the success fee claimed at 50% to 45%. He allowed the costs of the assessment in a total of £3,860 85 including the success fee of 45%. Master Wright, as costs judge, on appeal from the costs officer on 1 st March 2006 disallowed the success fee part of this assessment, and reduced these costs to £2,930.51, still nearly twice what Mr Crane recovered as damages.
The question was and is whether the satellite costs of conducting the detailed costs assessment are to be regarded as profit costs or disbursements. The significance of the distinction is that Rowley Ashworth would be entitled to a percentage success fee on these costs, if they are profit costs, as part of their base costs, but not if they are disbursements. Master Wright decided that these costs were disbursements which did not attract the success fee. This is the solicitors' (nominally Mr Crane's) appeal against that decision, with permission from HHJ Paul Collins CBE, who transferred the appeal directly to the Court of Appeal.
The starting point is the definition of “base costs” and “disbursements” in the Collective Conditional Fee Agreement. “Base charges”, upon which the solicitors were entitled to a success fee uplift, were defined as:
“… charges for work done by or on behalf of the Solicitors which would have been payable if this agreement did not provide for a success fee, calculated on the basis of the fees allowable for that work in the court in which the action in question is conducted or would be conducted if proceedings were to be issued.”
As a matter of language, the important part of this is that the charges are charges by or on behalf of the solicitors. It has been taken to equate with solicitors' profit costs, being their charges for work which they undertake themselves and upon which they aim to make a profit. “Disbursements” were defined in the Collective Conditional Fee Agreement as:
“… expenses which the Solicitors incur on the member's behalf in the course of an action, such as court fees, fees for experts, barristers' fees (including success fees for barristers where appropriate), copying charges made by others, travelling and hotel expenses (this is not an exhaustive list).”
Solicitors charge disbursements at cost. They do not attract an uplift for profit nor a success fee.
By clause 2 of the agreement, it covered all claims for damages for personal injury. “Claim” is defined to include any proceedings to enforce a judgment, order or agreement. It was held by this court in Halloran v. Delaney [2003] 1WLR 28 in very similar circumstances that the agreement covered costs only proceedings and that a success fee was in principle recoverable in such proceedings.
Some solicitors draft their bills of costs themselves within the firm and use their own staff to conduct costs assessments. Others engage independent costs draftsmen or consultants, as in the present case. I apprehend that, if they do the costs work themselves in house, the cost of doing so would be legitimately charged as profit costs.
Barristers' fees are conventionally charged as disbursements, although some work done by barristers might be done by the solicitors themselves. So are fees for expert witnesses. On the other hand, there are cases in which work done by outsiders has been held to have been done for costs purposes as a fee earner for the solicitor. This is acknowledged to be so when a solicitor engages another solicitor, as for instance when a London agent acts for a solicitor out of London, as to which see paragraph 4.16(6) of the Costs Practice Direction. See also in re Pomeroy & Tanner [1897] 1 Ch. 284 and Agassi v. Robinson [2006] 1 All E.R. 900 at paragraph 74. There may be a case for reconsidering this, but the question does not arise on this appeal and a change would probably require changing the Costs Practice Direction. Other cases include:
Smith Graham v. Lord Chancellor's Department (30.7.99), where a litigation enquiry agent was treated as a fee earner of the solicitors so that the costs of engaging him were not disbursements – this in the context of the Legal Aid in Criminal and Care Proceedings Costs Regulations 1989. The work he did was appropriate for a solicitor to do and the fact that the enquiry agent was not actually employed by the solicitor did not exclude him from being a fee earner. The solicitor was entitled to charge for this work, which was done, not for the client, but for the solicitor;
Stringer v. Copley (17.5.02) where HHJ Cook, an acknowledged and publishing expert on costs, held that charges of a litigation support agency who took witness statements were part of the profit costs, not disbursements.
Two other cases are Cannon v. Mid-Essex Hospital Services NHS Trust (2.4.06) and Guy v. Castle Morpeth Borough Council (9.1.06) in which HHJ Marr-Johnson and HHJ Hewitt respectively came to essentially conflicting conclusions about costs draftsmen.
Master Hurst, the Senior Costs Judge who sits with us a assessor on this appeal, has held that a characteristic of whether charges of a person engaged by solicitors are profit costs or disbursements is whether the solicitors have personal responsibility to the client for the work done – see Claims Direct Test Cases, Tranche 2 at paragraph 80. This could be expressed as whether the outside agency is engaged to act for the solicitor or for the client. That in turn accords with the definition of base costs in the Collective Conditional Fee Agreement in the present case.
When Costings Limited conducted the costs assessment hearing, their rights of audience rested on a fiction that they were employed by the solicitors and derived from section 27(2)(e) of the Courts and Legal Services Act 1990. The terms of this section include that the person may be employed or otherwise engaged to assist in the conduct of the litigation doing so under instructions given by a qualified litigator. The solicitors urge this in this appeal as an indicator that Costings Limited are to be taken as their employee. I do not consider that a provision about rights of audience has much to do with whether Costings Limited's charges are profit costs or disbursements.
Costings Limited's initial schedule of Rowley Ashworth's costs identified their own fee for preparing the schedule as a disbursement. The bill with which they started the detailed assessment proceedings had their own costs of preparing the bill as a disbursement.
The solicitors' case is that the work done by the costs consultant was the type of work which the solicitors were retained to do themselves. It was solicitors' work. They chose to delegate it, but they retained control and supervision. The costs draftsman was effectively their temporary employee with a right of audience under the Courts and Legal Services Act 1990. The solicitors remained liable to the client for any negligence in the conduct of the costs...
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