R (Harrison) v Birmingham Magistrates Court
| Jurisdiction | England & Wales |
| Judge | Lord Justice Lloyd,Mr Justice David Richards,Lady Justice Black,Lady Justice Arden |
| Judgment Date | 25 March 2011 |
| Neutral Citation | [2011] EWCA Civ 331,[2010] EWCA Civ 1037 |
| Docket Number | Case No: A3/2010/0191 & (A),Case No: A3/2010/0191 |
| Court | Court of Appeal (Civil Division) |
| Date | 25 March 2011 |
[2010] Ewca Civ 1037
His Honour Judge Behrens
Before: Lord Justice Lloyd
Case No: A3/2010/0191 & (A)
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM CHANCERY DIVISION
LEEDS DISTRICT REGISTRY
The Appellant appeared in person.
The Respondent did not appear and was not represented.
(As Approved)
Lord Justice Lloyd:
This is an application for permission to appeal, renewed after refusal on paper by Arden LJ. The appeal is a second appeal. The original order was by District Judge Barraclough in the Huddersfield County Court in bankruptcy and was made on an assessment of the costs of the Trustee in Bankruptcy, Mr Reed, and of the costs of his solicitor in relation to bankruptcy proceedings concerning Mrs Helen Brook, who is the appellant.
She appealed to the High Court against District Judge Barraclough's order and her appeal was successful, but not as successful as she feels it should have been. The appeal came before HHJ Behrens sitting with assessors, and he gave judgment: the written judgment is dated 6 May 2009, the hearing having been on 30 April; his order is dated 28 May 2009. I am not sure that the appeal bundle contains a complete copy of that order; I rather think that there is at least one further page of it which needs to be found and added to the appeal bundle before any appeal proceeds. But HHJ Behrens allowed the appeal by reducing the bill for the Trustee in Bankruptcy's solicitor's costs up to 28 July 2008 to a figure of just over £10,000 with some modest disbursements and the costs of the assessment, that being in total the sum of £10,734.74. He also reduced the bill of the Trustee in Bankruptcy himself up to 28 July 2008, assessing it in the sum of £9,929.75 together with two items of disbursements, £32,610.75 and £280, plus £300 assessment fee giving a total of £13,120.50.
I am told by Mrs Brook that he made no order as to the costs of the appeal and that may well be one of the things that appears on the second page of the order that the court does not currently have.
The judge in his reserved judgment explained why he allowed the appeal and said that the district judge had really not entered into an assessment of the costs at all. With the benefit of his two assessors the judge conducted an assessment of the costs. The Trustee in Bankruptcy, who is a member of the firm of PricewaterhouseCoopers, had instructed Eversheds as his solicitors in relation to the bankruptcy and Eversheds had instructed Mr Hugh Jory of counsel for the appeal.
I do not need to refer to a great deal of the judge's judgment, but I do find it helpful to mention that in paragraph 16 he made a number of general observations. The first was that the costs claimed were exorbitantly high and such as give the insolvency profession a bad name, and he went on to say that it was about as simple as an insolvency as it was possible to imagine. There were two creditors with debts totalling less than £20,000 and two assets, the matrimonial home and a business, which was the business of a flower shop with the benefit of a lease. The lease had been assigned for £10,000 to the debtor's husband, the landlord having no wish to forfeit the lease.
Mrs Brook had applied to annul the bankruptcy, and it may be that the way in which she did that led to some unnecessary costs being incurred, but, as the judge said, a number of the matters in the two bills cried out for investigation. He referred to the decision of the Court of Appeal in Lownds v Home Office [2002] 4 ALL ER 775 as to the principle of proportionality in relation to an assessment of costs, and he said that if global costs are considered disproportionate then the court will consider the individual items in the bill and allow only those costs that are considered necessary and reasonable in amount.
He then went on first to deal with Eversheds' bill, and he was quite critical of various of the submissions of Mr Jory in support of that bill and of the charging rates, which he cut significantly. He said that it was unclear how much had been charged for non-contentious work carried out by Eversheds, although a schedule to their bill gave some details of the time charged. There seems to have been a good deal of duplication and the judge, with the advice of his assessors, cut Eversheds' bill as initially claimed from over £23,000 to, as I say, just under £10,000 plus £96 of disbursements. He then went on to consider the trustee's costs including two disbursements, one being an item of commission on the sale of the lease to Mr Brook and the other being an insurance premium. He considered that both of those disbursements were properly allowable. That may be a position which is unchallengeable, but I think it is appropriate to consider it together with the question of the trustee's costs generally.
He pointed out that there was a substantial difference between the charging rates quoted to creditors in the letter in September 2007 and those actually applied. The amount claimed was somewhat in excess of £20,000, which was analysed but was not the subject of any details or timesheets supporting the time analysis. The judge asked counsel for a breakdown of the various significant items and counsel was able to provide some assistance, in somewhat general terms, by getting instructions over the lunchtime adjournment. The judge commented that there were no detailed timesheets and there could therefore not be any accurate breakdown of the time spent; that Mrs Brook was being, in effect, charged a very significant amount in respect of one meeting to discuss what her legitimate concerns were over the amount of fees. There was no justification for the charging rates exceeding those quoted to creditors and the overall costs were wholly disproportionate to what was involved and what had been achieved. The asset had been realised for £10,000 and was largely realised before the appointment of the trustee. He therefore reduced substantially the hours claimed and applied the hourly rates that had been quoted rather than those that were sought to be charged, and that produced a reduction to just under £10,000.
Mrs Brook's appeal as originally mounted contended, as she had before HHJ Behrens, that the amounts were still entirely disproportionate, having regard to the modest size and extreme simplicity of the bankruptcy and the lack of any proper attention to the amount that it was appropriate to incur and expend in relation to a case of this kind. As she said to me this morning (though these are not her words), it was absurd for a firm such as PricewaterhouseCoopers to be instructed in relation to a bankruptcy as modest as this, and it was equally absurd for Eversheds to be instructed and for a senior partner to do most of the work that was involved. Both of those features, she says, are entirely disproportionate.
I should say that she had some practical problems launching her appeal and it appears, possibly because of failure in the post or failure in this building, that it was not issued within the due time, but Arden LJ granted an extension of time so there is no further issue about that. Once the time for an appeal against HHJ Behrens' order had expired, no Appellant's Notice having been served by then, the Trustee in Bankruptcy issued a further application seeking to enforce the costs by applying for an order for possession of the matrimonial home with a view to it being sold, that being the one remaining asset of the estate which, if whatever costs that were otherwise due were not paid in some other way, would have to be sold in order to defray the outstanding costs. I should mention that Mrs Brook says that all the creditors have been paid in full, so the only question remaining outstanding is whatever the costs are.
In resisting the application for an order for possession Mrs Brook put in a witness statement in the County Court in which she mentioned that she was trying to appeal and she mentioned, for the first time, the practice statement issued in 2004 about the fixing and approval of the remuneration of appointees. That, which had evidently come to her attention since the appellant's notice was originally prepared, has borne further fruit in a statement which she put forward voluntarily—but extremely helpfully from the court's point of view—following the refusal of permission by Arden LJ, who was unable to perceive any important point of principle or practice or compelling reason for a second appeal. The statement under paragraph 4.14A of the practice direction to Part 52 focuses more closely on the practice statement that I have referred to on the remuneration of appointees, which of course includes Trustees in Bankruptcy, and also on a number of authorities relevant to the point, some before the practice statement and some since, in particular a relatively recent decision of Proudman J in Hunt v Yearwood-Grazette [2009] EWHC B13 (Ch) on 7 April 2009. Although, so far as I can see, this is a decision on an application for permission to appeal and therefore possibly not strictly citable, it contains a useful review of the point. She has also referred me to a case relevant to a slightly different (although related) point, the decision of Peter Smith J in Jacob & Anr v the UIC Insurance Company Ltd [2006] EWHC 2717. The practice statement relates to the applications to the court for the fixing and approval of his remuneration where it has not been otherwise already fixed and approved, and other applications to...
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