John Dickinson (T/A John Dickinson Equipment Finance) v Duncan Rushmer (T/A Fj Associates)
| Jurisdiction | England & Wales |
| Judge | The Honourable Mr Justice Rimer,MR JUSTICE RIMER |
| Judgment Date | 21 December 2001 |
| Judgment citation (vLex) | [2001] EWHC J1221-6 |
| Court | Queen's Bench Division (Administrative Court) |
| Docket Number | Case No: CH 2001/APP/010461 |
| Date | 21 December 2001 |
[2001] EWHC J1221-6
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
ON APPEAL FROM THE SUPREME COURT COSTS OFFICE
(Deputy Costs Judge Jefferson)
Royal Courts of Justice
Strand, London WC2A 2LL
The Honourable Mr Justice Rimer
(Sitting with Assessors)
Case No: CH 2001/APP/010461
Mr Simon Jonathan Brown (instructed by Cheyney Goulding) appeared for the defendant/appellant
Mr Paul Epstein (instructed by Wakefields) appeared for the claimant/respondent
I direct pursuant to CPR PD 39, para. 6, that no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
John Dickinson(T/A John Dickinson Equipment Finance) v. Duncan Rushmer (T/A FJ Associates)
MR JUSTICE RIMER
This is a defendant's appeal, by notice dated 18 June 2001, against a decision of Deputy Costs Judge Jefferson made on 6 June 2001. The defendant is Duncan Rushmer, who trades as FJ Associates. The claimant is John Dickinson, who trades as John Dickinson Equipment Finance. Permission to appeal was given by the judge.
The action was started in October 1996. The claim was for damages and an account of profits. The action was hard fought, and there was and still is a good deal of acrimony between the parties. There were separate trials on liability (concluding on 11 November 1998) and quantum (concluding on 7 June 1999). The outcome was that the claimant obtained a judgment against the defendant for £16,577.98 plus interest of £7,957.43. The defendant's appeal to the Court of Appeal was dismissed on 14 February 2000. Costs orders were made in favour of the claimant both in the action and on the appeal. The claimant proceeded to a detailed assessment of his bills of costs. They were for some £88,000. The appeal is against the judge's decision on a preliminary issue raised by the defendant on that assessment.
The preliminary issue was as to whether the costs claimed by the claimant involved a breach of the indemnity principle. That principle is to the effect that costs are normally only payable to the receiving party in compensation for what that party has himself paid, or is obliged to pay: he is not entitled to a bonus (see Gundry v. Sainsbury [1910] 1 KB 645; and General of Berne Insurance Co v. Jardine Reinsurance Management Ltd [1998] 2 All ER 301). The defendant's position was and is that there were grounds for the inference that the claimant could not have assumed a personal liability to pay costs of the order claimed in his solicitors' bills. The matters he relies on are as follows.
The claimant is 60 years old. He admitted to Judge Hallgarten during the trial that in the early 1990s he was not earning more than about £25,000 a year. A credit reference report against him revealed that in 1996 his business turnover was only about £25,000. He does not appear to own a house. He lives in rented property and has changed addresses several times over the last 20 years. Judge Hallgarten observed that "he does not strike me as a man of means. There is some prima facie evidence put forward that indeed he is not, which I think could have been resisted by evidence assembled at very short notice". The defendant also relies on a letter dated 13 December 1995 from the claimant which refers to an "industry friend, eager to see that truth prevails at all costs, and who has volunteered his financial support to that end. This will be separate to the M2 action which is already in motion." The defendant suggests that an inference from that is that a third party may have been financing this action.
The claimant prepared two bills for detailed assessment. They were each dated 10 November 2000 and signed by Mr Gould, a partner in Wakefields, the claimant's solicitors. One bill related to the costs of the trials on liability and quantum, the defendant having been ordered to pay 85% of those costs. Under the heading "Costs payable by the Defendant", the bill recorded that "Partner ('PJG'), Solicitor and Barrister-at law (non practising) ('YZ') had conduct of the case. PJG time charged at £150 per hr. Letters out at £15 each. Telephone calls at £15 each. YZ time charged at £100 per hr. Letters out at £10 each. Telephone calls at £10 each." The bill certified that "This bill is both accurate and complete and that in relation to each and every item included in Part(s) … of the bill the costs claimed herein do not exceed the costs which the receiving party/parties is/are required to pay me/my firm." The other bill related to the claimant's costs of the appeal. Under the heading "Costs payable by the Defendant", it listed the same charging rates, and it included a like certificate. On 10 November 2000, the claimant gave notice to the defendant that he had commenced the assessment of his bills of costs, and that he must serve any points of dispute by 4 December 2000.
The defendant served points of dispute on 15 December 2000. He raised several pages of queries or disputes about particular items in the bills, and also what he described as a preliminary point. It was that the bills failed to provide any details of the solicitors' retainer. He said:
"The Claimant is requested to provide a copy of the solicitor client care letter to the court and to confirm if the solicitor client bills covering the period of the bill for assessment have been paid by the Claimant, who is requested to provide evidence regarding this. If the Claimant seeks to argue that those solicitor client bills remain unpaid and there is a primary liability upon the Claimant to pay them, the Defendant will make reference to the decision in British Waterways Board v. Norman (1993) 26 HLR 232 QBD, to the comments of His Honour Judge Hallgarten during the hearing of 7th June 1999 and the contents of the affidavit of Mr Christopher Millar of 4th June 1999 to argue that the Claimant is not a man of means and that there is no prospect of him being able to pay legal costs of this magnitude. In the event of the Court finding for the Defendant on this point the entire bill should be struck out."
The claimant served points of reply on 5 March 2001. With regard to the preliminary point, he simply said that "The client care letter will be produced to the Costs Judge. The claimant will satisfy the Costs Judge regarding his liability to pay his solicitors costs."
At the hearing of the preliminary issue, Mr Gould of Wakefields produced to the costs judge various documents apparently directed at proving that there was a lawful retainer of his firm by the claimant, and that the claim to recover the billed costs from the defendant involved no breach of the indemnity principle. None of the documents was provided to the defendant or his representatives and, despite request, the judge refused to require them to be so provided. The defendant was therefore unable to comment on them. The judge held that the indemnity principle had not been breached and proceeded to a detailed assessment of the costs. Final costs certificates dated 21 June 2001 were issued in the aggregate sum of £84,648.91, together with interest.
At the request of the defendant's solicitors, the judge gave written reasons dated 13 June 2001 for his decision on the question of the retainer between the claimant and Wakefields. He said that Mr Gould had assured him that there had been no breach of the indemnity principle and had produced to him a copy of the client care letter, copies of the bills delivered to the claimant and a calculation showing that the claimant had paid about 40% of the costs due. The judge then cited from a reference in Cook on Costs to Bailey v. IBC Vehicles Limited [1998] 3 All ER 570. The point that Cook derived from that decision was that Henry LJ there suggested that the signing by the receiving party's solicitor of the bill of costs was effectively a certificate by an officer of the court that his firm was not seeking to recover in relation to any item more than they had agreed to charge the client. The judge said he "had seen and heard enough to satisfy me that there was no breach of the indemnity principle." What he had seen included the documents which had been produced to him, but not to the defendant.
On this appeal, the defendant says that, in order to be satisfied that the indemnity principle is not being breached, the court must be satisfied that there is an enforceable contract between the receiving party and his solicitor for the payment to the solicitor of all items which are the subject of the bill. Any arrangement between solicitor and client whereby the latter is only liable to his solicitor if he wins, or if he recovers costs from the other party, is unlawful. Similarly, the maintenance of an action by a third party may also be unlawful. The defendant says that, if there is any doubt on this, then it should be resolved in favour of the paying party.
More fundamentally, the defendant submits that the procedure adopted by the judge for inquiring into this issue was manifestly unfair. A party is entitled to know what the other party's case is and how he claims to prove it. In particular, he is entitled to a sight of the documents on which the other party wishes to rely. If he is given that basic information and material, he is then in a position to test and challenge the other party's case. If he is not, the hearing degenerates into what may be, to a material extent, a private exchange between one party and the judge, about which he is kept in ignorance. A hearing of that sort infringes the most basic principles of natural justice. The defendant submits that the judge's refusal to require the disclosure to his representatives of the documents produced by the claimant...
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