Sisu Capital Fund Ltd v Tucker
| Jurisdiction | England & Wales |
| Judge | THE HONOURABLE MR JUSTICE WARREN,Mr Justice Warren |
| Judgment Date | 28 October 2005 |
| Neutral Citation | [2005] EWHC 2321 (Ch) |
| Docket Number | Case No: 002816 of 2005 |
| Court | Chancery Division |
| Date | 28 October 2005 |
[2005] EWHC 2321 (Ch)
The Honourable Mr Justice Warren
Case No: 002816 of 2005
Case No: 007084 of 2003
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
COMPANIES COURT
Royal Courts of Justice
Strand, London, WC2A 2LL
Mr S Davies QC, Mr P Gillyon, Mr D Wolfson, & Mr E Davies (instructed by Bingham McCutchen LLP) for the Applicants
Mr M Crystal QC, Mr R Dicker QC, Mr M Arnold & Mr D Allison (instructed by Allen & Overy) for Mr Wallace & Mr Tucker (the Respondents)
Mr M Briggs QC Mr J Machell & Mr D Drake (instructed by Fladgate Fielder) for Mr Spratt & Mr O'Connell (the Respondents)
Hearing date: 12 th October 2005
Approved Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
Mr Justice Warren
Introduction
Following my Judgment handed down (subject to corrections) on 9 September 2005, the parties now ask me to decide a point of principle which will arise in the detailed assessment of costs.
A great deal of time was spent by the office-holders and their colleagues at KPMG in dealing with the proceedings. As between the office-holders and the estates, the office-holders are entitled to receive payment in respect of the time spent by KPMG subject to the usual constraints on charging and the payment of fees and disbursements which apply generally under the Insolvency Rules. The office-holders themselves are entitled to recover payment from the estates for their time as remuneration. Although KPMG is an LLP, and thus has a legal personality separate from those of the partners individually, it is accepted by the office-holders that payment in respect of the work done by their colleagues at KPMG also falls to be recovered as remuneration and not as a disbursement. I am asked to proceed on that basis and to ignore the possibility that KPMG might have been able to bill the office-holders for the work undertaken by KPMG's employees, the payment of such bills being recoverable from the estates as proper disbursements. I shall, like counsel, refer to the totality of all these costs, both of the office-holders themselves and of their colleagues at KPMG as "the KPMG costs".
The KPMG costs relate to a variety of tasks some of which may have called for special expertise, for instance, the financial modelling, or at least some aspects of it, undertaken during the course of the proceedings. But the KPMG costs relate also to time spent on some matters which, if undertaken by a litigant (or his employees) who instructs solicitors and counsel, would not ordinarily give rise to a liability to a paying party under a costs order, for instance, time spent in reviewing documents for disclosure, in assisting in the preparation of witness statements and in attending court hearings.
Mr Briggs, for Mr Spratt and Mr O'Connell (whose submissions are adopted by Mr Crystal, for Mr Tucker and Mr Wallace) submits that the entirety of the KPMG costs should, subject to detailed assessment, be recoverable. In summary, he says that the term "costs", and the indemnity intended to be provided by an order for costs, is broad enough to encompass a litigant's expenditure of time just as much as his expenditure of money subject to the qualification that the court must be able to quantify the amount of money which the expenditure of time gives rise to. In a case such as the present where the litigants (the office-holders) are professionals and where the insolvency code itself provides controls on remuneration, quantification gives rise to no problems so that the costs should be allowed. Essentially, it is submitted that time is money (whether the time is that of the office-holders themselves or of KPMG personnel) and that the cost of that time can be quantified: the office-holders can and should therefore be indemnified for that cost.
Mr Davies, for the Applicants, says, in summary, that there is no authority for such a novel approach and that it would have far-reaching consequences pushing up yet further the cost of litigation, although he does accept that there is an exception in relation to in-house expert advice the cost of which may be recovered.
Before addressing the arguments, I propose to consider the authorities which have been cited. In doing so, I bear in mind that many of them pre-date the introduction of the CPR and note at this point that I will need to deal with rival submissions about the difference, if any, in the meaning of "costs" in the RSC on the one hand and the CPR on the other.
The London Scottish Benefit Society v Chorley (1884) 12 QBD 452 ; 13 QBD 872 (CA) was a case against a litigant in person who was himself a solicitor. He succeeded in his defence. It was held, both in the Divisional Court and the Court of Appeal, that he was entitled on taxation to the same costs as if he had employed a solicitor, except in respect of items which the fact of his acting rendered unnecessary. Since the litigant was a solicitor, it is not surprising that the question of recovery of costs was addressed in the context of the costs which would have had to be incurred if the solicitor had not acted for himself but had instructed another solicitor; and in that context, it is clear that, subject to proper assessment, such costs would have been recoverable.
Since Mr Briggs relies heavily on this case, I should deal with it in some detail. Three passages from the judgments of Denman J (at p455), Manisty J (at pp456–7) and Watkin Williams J (at p459–60), in the Divisional Court are of relevance:
"[Denman J] …..treating the costs as being in a reasonable sense of the word equivalent to an indemnity, I am not aware of any principle which ought to prevent a successful party who is a solicitor, and who does solicitor's work, from being indemnified not merely for the time he must necessarily expend as a witness in his own case, but also for the pains, trouble, and skill which he has to incur and to exercise in order to bring it to a successful conclusion. …….the solicitor's time is valuable: he applies his skill to a suit or action in which he is obliged to spend his time and exercise his skill in consequence of the wrongful act of his opponent; and therefore it is not an unreasonable view that the word "costs," in the sense of an "indemnity," should be held fairly to include a reasonable professional remuneration for that work which, if he did not do it himself, would have had to be done by another solicitor and paid for by his unsuccessful opponent."
"[Manisty J] ……. It is said that because he [the solicitor] is a party to the action, no costs, except costs properly so called, that is, money out of pocket, ought to be allowed him; and that there is no difference between a party who is a solicitor and one who is not a solicitor. It seems to me that the observation may be answered at once, and conclusively answered. The reason why costs are allowed to a solicitor being a party, and not to another person who is not a solicitor, is simply this, that the one is a solicitor and the other is not. For instance, what a strange thing it would be that a person who is not a solicitor should be allowed solicitors' charges. …… Time is money to a solicitor; and why should he not be as much entitled to his proper costs, if he affords the time and skill which he brings to bear upon the business where he is a party to the action as he is where he is not a party?"
"[Watkin Williams J] It seems to me that the word "costs," though a technical term now, may very well have been used to include, not merely money expended, but any real expenditure, whether of time or money, incurred by the party in defending himself against an unjust claim. If that expenditure takes the form of employing skilled persons to do the work necessary to insure success, this would fall within the expression "costs" in its primary sense: but, if the defendant be himself a person of skill, and devotes that skill and valuable time and legal knowledge to the doing of that for which he would otherwise have been obliged to employ and pay some one else, it seems to me both upon principle and on the ground of expediency that time so spent, and skill so devoted, and professional knowledge so applied, should be compensated for under the name of "costs."…."
Then, in the Court of Appeal, Brett MR (at p 875) and Bowen LJ (at p 877) said this:
"[Brett MR] ……It was contended for the plaintiffs that there is no difference as regards the right to costs between a solicitor and an ordinary person; and for the defendants it was contended that the costs of a solicitor, who is party to a suit, ought substantially to be taxed as if he had been acting for a different person. I think neither contention correct. I cannot think that any privilege of a solicitor exists. I am wholly unable to agree to any argument standing upon that footing. I should have thought that a person wrongfully brought into litigation ought to be indemnified against the expenses to which he is unjustly put; but there cannot be a perfect indemnity, because it is impossible to determine how much of the costs is incurred through his own over-anxiety. When an ordinary party to a suit appears for himself, he is not...
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