Malkinson v Trim
| Jurisdiction | England & Wales |
| Judge | Lord Justice Chadwick,Mr Justice Wall,Lord Justice Potter |
| Judgment Date | 13 September 2002 |
| Neutral Citation | [2002] EWCA Civ 1273 |
| Docket Number | Case No: 2001/2629 |
| Court | Court of Appeal (Civil Division) |
| Date | 13 September 2002 |
[2002] EWCA Civ 1273
Lord Justice Potter
Lord Justice Chadwick and
Mr Justice Wall
Case No: 2001/2629
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE SUPREME COURT COSTS OFFICE
(Costs Judge Rogers)
Royal Courts of Justice
Strand,
London, WC2A 2LL
Mr Simon Jonathan Brown (instructed by Messrs Ashton Bond Gigg, Solicitors for the Claimant/Appellant)
Mr Alexander Hutton (instructed by Messrs Crusts, Spalding for the Respondent)
This is an appeal from an order made on 21 September 2001 by Costs Judge Rogers. It raises a point of some general importance: is a solicitor who has been represented by his own firm in the successful defence of proceedings brought against him personally, entitled (under an order for costs in his favour) to the profit costs of his firm in defending those proceedings?
The underlying facts
The appellant is the son of the late Mr Bertram Malkinson and his wife, Mrs Marjorie Malkinson. Mrs Marjorie Malkinson died on 10 April 1985. By her will dated 8 August 1984 she left her home and the residue of her estate to her husband. Probate of her will was granted on 11 October 1985 to the executors named therein, Mr Eric Christie and Mr Sydney Malkinson. Mr Bertram Malkinson died on 24 March 1986. By his will, also dated 8 August 1984, he left the residue of his estate to his three children. Probate of his will was granted on 12 February 1987 to Mr Christie and Mr Sydney Malkinson. At the relevant time Mr Christie was in practice as a solicitor in partnership under the firm name Tinn Thimbleby & Co. As one of the residuary legatees under his father's will the appellant was beneficially interested both in his father's estate and in his mother's estate (which had not been fully administered at the date of his father's death). He was dissatisfied with the way in which the estates of his parents had been administered.
These proceedings were commenced by the appellant in October 1993 by the issue of a writ in the Chancery Division of the High Court. By that date it appears that Mr Christie was insolvent, being subject to an interim order made on 1 June 1992 under section 252 of the Insolvency Act 1986. The claim in the proceedings against his former partners in Tinn Thimbleby & Co – who are named as the second to sixth defendants in the writ—was for reinstatement of monies which, it was said, had been wrongfully paid out of the two estates in respect of solicitors' charges for administration; and to a firm of accountants for accountancy services.
The fifth named defendant, Mr Christopher Trim, who is the only respondent to this appeal, had ceased to be a partner of Tinn Thimbleby on 31 December 1987. In November 1988 he became a partner in the firm of Crusts. In November 1993 Crusts acknowledged service of these proceedings on the respondent's behalf; and went on the record as his solicitors. On 22 May 2000 – following settlement negotiations in which the respondent had declined to participate but which, it seems, had led to a compromise of the claims against the other defendants – the appellant served notice of discontinuance of the proceedings against him. The effect of a notice of discontinuance, under CPR 38.6(1), was that, unless the court otherwise ordered, the appellant was liable for the costs which the respondent had incurred in the proceedings on or before the date of service. A bill of costs in the total amount of £15,246.95 (including value added tax) was lodged by Crusts for assessment.
The partnership deed into which the respondent had entered on 22 November 1988 contained a clause – clause 13 – in these terms:
"Provision of Legal Services for Partner and Connected Person
If any of the parties hereto or any office of the practice shall act as solicitor or solicitors for any partner or for the wife or any child or children or the parents of any partner or his or her personal representatives or trustees then no charge shall be made by the partnership practice for the provision of such services except in respect of out of pocket expenses and of costs recovered from other parties in any proceedings or out of any estate or property the subject of any such proceedings and any costs so recovered shall belong to the practice."
The appellant, through his solicitors, served points of dispute in respect of the bill of costs. They contended, as a preliminary point, that:
"The 5 th Defendant and Crusts entered into a contingency fee agreement contrary to Rule 8(1) of the Solicitors' Practice Rules 1990, and the retainer (if any) of Crusts is contrary to public policy and unenforceable, and the 5 th Defendant has not incurred costs recoverable from the Claimant."
The point was rejected by Costs Officer Worthy, in a ruling on 6 July 2001. The appellant appealed, as he was entitled to do under CPR 47.20. The appeal came before Costs Judge Rogers in September 2001. He dismissed the appeal; but gave permission to appeal against his own order and directed, under CPR 52.14(1), that the appeal, which would otherwise have gone to the High Court, should be transferred to this Court.
The decision of the costs judge
The costs judge in a careful written judgment handed down on 20 September 2001, identified three issues for decision: (i) whether clause 13 of the Crusts partnership deed of 22 November 1988 constituted a contingency fee agreement; (ii) whether, if so, that agreement was unenforceable, either by virtue of the Solicitors' Practice Rules or under the common law; and (iii) whether the respondent was entitled to recover costs in any event under the principle in London Scottish Benefit Society v Chorley Crawford and Chester (1884) 12 QBD 452, (1885) 13 QBD 872 (CA). He held, on the first of those issues, that the effect of clause 13 of the partnership deed was that the respondent incurred no liability to the firm, save in respect of disbursements, unless and until a costs order was made in his favour. He rejected the submission that the agreement was unenforceable under the Solicitors' Practice Rules, as in force in 1992 (which he held to be the relevant date); but accepted the alternative submission that it was unenforceable at common law. He reached that conclusion on the basis of the decision of this Court in Awwad v Geraghty & Co [2000] 1 All ER 608. His findings on those issues would have led to the conclusion that the respondent's costs (other than disbursements) were not recoverable in the present case. But he did not reach that conclusion because he accepted that the principle in the London Scottish Benefit Society case had survived the introduction of the Civil Procedure Rules, and was applicable. He held that, under that principle, the respondent should be allowed his firm's costs, subject to assessment.
The issue on this appeal
The only issue on this appeal is whether the costs judge was right to hold that the respondent's costs were recoverable under the principle in the London Scottish Benefit Society case. There is no cross-appeal challenging his conclusions on the other two issues. But, as I shall explain, that issue turns on two distinct questions: (i) whether, in a case where the solicitor litigant carries on practice in partnership, the principle extends to work done on his behalf by the partnership and (ii) whether the principle has survived the introduction of the Civil Procedure Rules.
The principle to be derived from the London Scottish Benefit Society case
The principle for which the London Scottish Benefit Society case has long been treated as authority is that set out in the headnote of the report of that case in the Divisional Court, at (1884) 12 QBD 452:
"Where an action is brought against a solicitor who defends it in person and obtains judgment, he is entitled upon taxation to the same costs as if he had employed a solicitor, except in respect of items which the fact of his acting directly renders unnecessary. "
The principle was confirmed, on appeal, by this Court—see (1884) 13 QBD 872, 876. It was incorporated, in substantially those terms, into the County Court Rules, 1903–1908, as Order LIII, rule 25 – and, as such, was applied by this Court in H Tolputt & Co Limited v Mole [1911] 1 KB 837. It was treated as "well established" by this Court in Buckland v Watts [1970] 1 QB 27, 35G-H, 37F.
In London Scottish Benefit Society v Chorley, Crawford and Chester the defendants Crawford and Chester were solicitors. They were sued, as such, for money had and received to the use of the plaintiff society. They conducted their own defence, were successful and obtained an order that the plaintiff pay their costs. The Divisional Court held that, on taxation, they were entitled to be reimbursed for the time and skill which they had expended in defending the claim. It was in that context that the principle for which the case has become established authority was enunciated. The first question raised by the appellant on this appeal is whether the principle applies where (a) the defendant, although a solicitor, does not expend his own time and skill in defending the claim – because the defence is undertaken by one of his partners or by others within the firm of which he is member—and (b) the claim in the action is not a claim which is, or could be, brought against that firm – that is to say, it is not a claim in respect of anything done by the defendant while a partner or employee of that firm.
In order to resolve that question it is necessary to analyse the reasoning – both in the Divisional Court and in this Court—which underlies the decision in the London Scottish Benefit Society cas...
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