Ildar Zakirov v Newmans Solicitors
| Jurisdiction | England & Wales |
| Judge | Master Leonard |
| Judgment Date | 26 September 2012 |
| Neutral Citation | [2012] EWHC 90222 (Costs) |
| Docket Number | Case No: 10.P8.3803 |
| Court | Senior Court Costs Office |
| Date | 26 September 2012 |
[2012] EWHC 90222 (Costs)
IN THE HIGH COURT OF JUSTICE
SENIOR COURTS COSTS OFFICE
Clifford's Inn, Fetter Lane
London, EC4A 1DQ
Master Leonard
Case No: 10.P8.3803
Mr Benjamin Williams (instructed by Pinsent Masons) for the Claimant
Mr Roger Mallalieu Counsel (instructed by Newmans) for the Defendant
Hearing date: 23 July 2012
Master Leonard, Costs Judge:
Introduction
This is the assessment under Section 70 of the Solicitors Act 1974 of a bill of costs rendered by the Defendant to the Claimant on 13 August 2010. The bill totals £12,927.69, including disbursements and VAT.
On 10 February 2012 I handed down judgment on the disputed terms of the Defendant's contract of retainer with the Claimant. That judgment followed three days of evidence, followed by written submissions. I had to decide between two wholly incompatible versions of events, in particular over the period between 25 May and the beginning of September 2010.
Among my findings were that extensive allegations of forgery and dishonesty made by the Claimant against Ms Saira Babar, one of two partners in the Defendant firm (which if proved would have been likely to destroy her professional standing and her livelihood) had no foundation in fact. They included allegations to the effect that Ms Babar made handwritten changes to a retainer document after signature, to include additional fees of which the Claimant had no knowledge; that she compounded this fraud by purporting to send an engrossed version to the Claimant without actually doing so; and that she manufactured false file records to support her case.
My conclusion was that the detailed account of events given by the Defendant and the Defendant's witnesses was in every respect accurate, whereas the Claimant's account and that of his witness, Ms Svetlana Sartayeva, were not.
On 31 May 2012, the court approved a consent order (sealed on 6 June) settling the issue of the amount due to the Defendant and providing that the Claimant pay the Defendant's costs. This judgment addresses four matters which remain disputed. They are whether those costs should be paid on the standard or indemnity basis; whether the Defendant is to be regarded as litigant in person, so that the costs "cap" set by CPR 48.6(2) applies; whether Ms Babar is to be classed as a grade A fee earner for hourly rate purposes; and whether the Defendant's rates are to be assessed with reference to Central London or Surrey rates.
On the matter of indemnity basis costs, my conclusions in this judgment are based on the findings in my judgment of 10 February 2012 and should be read accordingly. I shall adopt, for ease of reference, some of the terms I coined in that earlier judgment.
The Basis of Assessment: the Claimant's Submissions
Mr Williams for the Claimant refers to Excelsior Commercial & Industrial Holdings v Salisbury Hammer Aspden & Johnson [2002] EWCA Civ 879. Lord Woolf CJ did not in that case set guidelines for awarding costs on the indemnity basis, but held (at paragraph 19) that the normal order for costs was to be on the standard basis. For the indemnity basis there must be some conduct or some circumstance which takes the case out of the norm.
Mr Williams submits that Lord Woolf's approach appears to have been to consider whether there was some feature in the litigation which made it unjust to impose the proportionality requirement which does not apply on the indemnity basis.
Mr Williams also refers to Kiam v MGN Ltd (No 2) [2002] 2 All ER 242 (CA), in which Simon Brown LJ (at paragraph 12) observed that in general the indemnity basis would be appropriate where there was conduct which was 'unreasonable to a high degree' and not merely 'wrong or misguided in hindsight', and Digicel (St. Lucia) v Cable & Wireless [2010] EWHC 888 (Ch), in which Morgan J stated (at paragraph 28):
'… Where one is dealing with the losing party's conduct, the minimum nature of that conduct required to engage the court's discretion would seem, except in very rare cases, to be a significant level of unreasonableness or otherwise inappropriate conduct in its widest sense in relation to that party's pre-litigation dealings with the winning party or in relation to the commencement or conduct of the litigation itself.'
In the present case, submits Mr Williams, the Claimant's case was (on the balance of probabilities) rejected and the Defendant vindicated. It does not follow from this that the Claimant acted unreasonably, still less that he did so to a high degree. In the professional judgment of both the Claimant's solicitors and counsel, there were reasonable grounds on which to allege wrongdoing against the Defendant. While dismissing those allegations, the judgment of the court did not suggest that the case which had been made against the Defendant was an irresponsible or improper one.
The Claimant's case is that he came before the court in good faith, telling the truth as he believed it to be. The failure of his case on the civil standard of proof, enhanced as it is where serious wrongdoing is alleged, does not mean that it is right for his conduct to stigmatised by an indemnity basis costs order.
Nor, submits Mr Williams, can it be said that this is a case where justice demands that the requirement of proportionality be disapplied. When considering whether the costs claimed appear disproportionate the court will give full weight to the seriousness of the issues raised as to the Defendant's professional conduct. However the court may conclude that the costs being claimed in this case appeared disproportionate even to those issues. In that event a test of necessity should be applied.
Mr Williams refers me to estimates of the Defendant's total costs of the assessment, totalling £145,848 without VAT. That includes profit costs of £118,619. He describes this total as 'staggering' for an assessment in which the disputed events occurred over a short period and disclosure and witness evidence were quite limited. This he says should have been a case where there was relatively modest preparatory work, with most of the expense resulting from the three day trial: an experienced litigation firm in the Defendant's locality might have managed the case within a total budget of about £50,000.
In contrast, the Claimant's City solicitor's profit costs, notwithstanding having the carriage of the case for a non-English speaking client, were £44,082, 37% of the Defendant's. Almost a third of his total costs related to counsel (£23,125), reflecting the dominance of the trial.
Mr Williams submits that Ms Babar's approach to the litigation was more intense than that of an independent solicitor, that she has delegated no work at all and that costs are likely to have been further increased by her lack of litigation experience. He contrasts 201 hours spent on this case by the Claimant's solicitors, 181 hours by grade C staff and 18.5 hours by grade A.
Given the very real concerns as to the quantum of the Defendant's costs this is, submits Mr Williams, not a case where it would be right for the court to deprive itself of the ability to apply a test of proportionality.
The Basis of Assessment: the Defendant's Submissions
Mr Mallalieu for the Defendant agrees that an order for indemnity basis costs may be appropriate in circumstances where the facts of the case and/or the conduct of the parties is such as to take the situation away from the norm. However he submits that this case is far from the norm.
The full potential amount actually in dispute here was £7,763.00 and in reality probably closer to £5,000. The costs of that dispute, however assessed, will be many times that amount because of the unusual nature of the Claimant's allegations and the method in which he chose to present those allegations. This was not a dispute about £5,000 or £7,000, or even the detailed assessment of the Defendant's costs (which was agreed). Rather, it was an attempt, based on untruthful evidence, to have a practising solicitor found to be dishonest, with all the potential consequences for her career.
The key issue, says Mr Mallalieu, was whether Ms Babar was telling the truth or whether the Claimant and Ms Sartayeva were. Mr Williams, at the outset of the hearing, stated that this was not one of those cases where the court might be able to conclude that both were giving truthful and honest accounts. One side was not telling the truth. That side, submits Mr Mallalieu, was the Claimant's.
The court found the Claimant's (and Ms Sartayeva's) evidence on the key issues not to be credible. They had come to court, says Mr Mallalieu, to give false evidence on oath for the purpose of pursuing their own aims against the Defendant.
This was a lengthy trial, split over two hearings over four months, featuring extensive cross examination of five witnesses. This case is far out of the norm because of the Claimant's untruthful evidence and his conduct of the case.
Further, the conduct of the case by the Claimant generally was unsatisfactory. Notwithstanding detailed case management orders the Claimant produced key evidence for the first time at the hearing, including photocopies of text messages and notes purporting to relate to meetings with other solicitors. In contrast the Defendant, having been forced to contest unjustified allegations of dishonesty, made offers to settle in March and June 2011 both of which, if accepted, would have achieved a better outcome for the Defendant at much less cost.
The Basis of Assessment: Conclusions
This is a case in which the Defendant took on, honestly and in good faith, what must have seems a fairly routine task for a client on agreed standard terms. Rather than pay what was agreed the Claimant...
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