Re Eastwood, deceased

The Judgment I am about to deliver is the Judgment of the Court.

The circumstances with which this appeal is concerned are set out in the report of the case below at 1974- 3 Weekly Law Reports, 795, to which reference should be made in order to understand this judgment.

The question of principle involved is whether the Taxing Master correctly approached the problem of taxation of costs awarded to the Crown, having regard to the fact that the Crown was represented on the Originating Summons not by an independent solicitor but by the Treasury Solicitor and his department. The question of principle would apply equally to the case of a local government authority, a nationalised industry such as British Rail, and any industrial concern conducting litigation through its own legal department of which all the expenses, including the salaries of solicitors, assistant solicitors and legal executives, are paid by it, and not by instructing an independent solicitor or firm to act for it.

The provisions of Order 62 relating to taxation of costs awarded to a party to litigation against another party, or as here to be paid out of an estate or trust fund, are at least primarily directed to cases where the party has instructed an independent solicitor: for example, Rule 25 requires that the bill of costs of the successful party to be submitted for taxation shall enter "professional charges" in a separate column, and be indorsed with the name or firm of the solicitor "whose bill it is". Wow, except no doubt for purposes of internal accounting, the employed solicitor or legal department renders no bill to the employer ororganisation: he or it makes no professional charges. It is however quite clear on authority that it is not permissible to say that consequently the party is limited to disbursements specifically referable to the particular litigation on the ground that the salaries of employees and other general expenses of the department would have been incurred by the party in any event.

Until the late 1960's, as we understand it, in such cases, on taxation, the bill was treated in the same manner as would have been the case had an independent solicitor been instructed by the party, the conventional approach now being that stated in the report below in the advice of the assessors to Mr Justice Brightman in relation to discretionary items such as that in the instant case. And we observe that for very many years there have been examples of organizations such as Railways with their own legal departments engaged in considerable litigation resulting in Orders for costs in their favour which have required taxation: the system seems to have worked without objection, and without a suggestion that in such cases some detailed and complicated method should be adopted of breaking down the activities of the legal department so as to arrive in some other way at a proper attribution of the total expense of the department to the particular litigation.

In the present case the Taxing Master arrived at a figure of £45, based upon a time rate of £7 per hour, as representing that which was referred to in the assessors' advice as figure A, and declined to allow the addition thereto of what is referred to as figure B, on the ground that figure B in an independent solicitor's bill of costs wouldreflect or contain the profit element in the case of such independent solicitor: though we cannot think it was intended to suggest that, had it been an independent solicitor, he would have been making a pure £30 profit in an item of profit costs of £75 "profit; costs", of course, is a phrase used to denote items in a hill of costs which are not disbursements. It was the view of the Taxing Master that, since there was no element of solicitor's profit in cases such as the present, item B was not allowable: for otherwise the party would be making a profit, contrary to the well-established principle that taxed costs should not be more than an indemnity.

It should be stated that the Taxing Master was under the impression, which he stated in his answer to objections, that the Crown had conceded that his figure A was "adequate to cover the actual cost incurred in doing all the work done": if such a concession had been made, and if it was to be taken as an acceptance of the fact that a detailed breakdown and analysis of the activities of the Treasury Solicitor's office would correctly attribute to this item of this litigation £45 as the proportion of the whole expenses thereof, then the decision would be correct,...