England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE CENTRAL LONDON COUNTY COURT
HIS HONOUR JUDGE REYNOLDS
CL300374

		Royal Courts of Justice Strand, London, WC2A 2LL
		25 July 2005

Lord Justice Lloyd:

This is the judgment of the court.

1. In this appeal the Claimant, Mr Ali Taefi, challenges the dismissal of his claim against his former solicitors, Jeffrey Green Russell (JGR), in which he alleged that they had been negligent in their advice to him and their conduct on his behalf as regards a claim for rent, interest and costs. That claim could have been settled in early 2000 on payment of the principal sum, without any interest or costs, if a condition had not been imposed on Mr Taefi's behalf requiring payment of his costs, then of £550 plus VAT. It was not settled until a great deal more had been incurred by way of cost both by Mr Taefi and by the landlord. Mr Taefi alleged that the failure to settle the case was due to negligence on the part of JGR, and sued them for the costs that he had to incur and those he had to pay to the landlord, just short of £46,000 in all. His claim was heard by His Honour Judge Reynolds in the Central London County Court over 7 or 8 days, and was dismissed on the facts on 1 November 2004. With permission granted by Longmore LJ, Mr Taefi appeals to this court.
2. For reasons which we set out later, the appeal will be dismissed. Mr Soole's eloquence and close analysis on Mr Taefi's behalf has not persuaded us that it was not open to the judge to make the findings of fact that he did, on which the case depends. The judge was right to dismiss the claim.
3. The essential facts on which the case turns lie in a small compass in terms of time, from 1 December 1999, when Mr Taefi first consulted JGR about the particular claim for rent, to 13 January 2000, when the landlord rejected a counter-offer by way of compromise offered on behalf of Mr Taefi, but we need to start by describing some of the previous history in order to set the scene.

The facts

4. Mr Taefi is a wealthy man, of Iranian origin, with homes, he says, in Spain and the USA as well as in London. He had been a client of JGR for some time. He was actively involved in property dealings. Mr Vala, a senior partner in the firm, was his principal contact, who handled, or delegated, conveyancing matters. Mr Taefi had also been involved in litigation, for which he had used different solicitors within the firm. In relation to the matters now at issue the solicitor responsible was Robert Webster, who had acted for Mr Taefi previously.
5. In 1994 JGR (a Mr McLean) acted on Mr Taefi's instructions on the grant of an underlease from Hammersons of a flat, Flat 29 at 35/37 Grosvenor Square (which we will call the Flat), the tenants under the underlease being named as Malek Madani and Mojgan Malek Madani. The head landlord was Pegasi Management Company Ltd (Pegasi). Mr Taefi said that he was not involved in finding the Flat but became involved later in the negotiations for the underlease. Mojgan Malek Madani is his wife, and he says that Malek Madani is Behrooz Malek Madani, her father.
6. The underlease came to an end on 30 September 1995. A direct lease was then negotiated from Pegasi to the tenants under the underlease, for a three year term to 30 September 1998. JGR did not act in relation to this.
7. Mr Taefi used the Flat as his London base. According to him Mr Behrooz Malek Madani did not want to continue using the Flat after the lease expired. Mr Taefi decided not to seek its renewal, and instead he bought a house in his own sole name at 4 St Mark's Square London NW1. There was a serious fire there early in 1998 with the result that it was not ready for occupation by 30 September 1998. Mr Taefi therefore went on using the Flat, as did others, until 12 December 1998. This was not the subject of any prior discussion with Pegasi. Pegasi wrote to Dr M Madani at the Flat on 18 September, before the expiry of the lease, and afterwards on 14 and 27 October, to ascertain whether a renewal was sought or the Flat would be vacated. Eventually on 9 December Mr Taefi went to see Pegasi, and agreed with their Mr Bleackley what should happen. That agreement is recorded in an internal note of Pegasi dated 9 December, of which the relevant part is as follows:

"Dr Madani/Tafi came to see me today. We agreed: (1) he will leave on 12 December; (2) we will reinvoice him to that date at the old level of rent; (3) please deliver invoice to the flat."

8. It is not in dispute that the person who went to see Pegasi was Mr Taefi. This note discloses that Pegasi treated him as the same person as their tenant Malek Madani. That was later reflected in the terms in which Pegasi brought proceedings for the unpaid rent. The reason for this treatment is that, as the judge found, Mr Taefi had used the name Malek Madani, as well as the name Ali Taefi, in relation to Pegasi, as well as in relation to others. The judge heard evidence about the negotiation of the underlease in 1994, including that of Mr Brown, of Hammersons, who said that he dealt with a person who was introduced to him as Mr Madani but was the same person as Mr Taefi whom he saw in court. He heard similar evidence from Mr McLean of JGR. He heard evidence that Mr Taefi was known at first as Madani and later also as Taefi to staff of Pegasi at the building of which the Flat formed part. He found that Mr Taefi was a principal in the negotiations for the underlease, that Mr Behrooz Malek Madani was never involved in those negotiations and he was never a client of JGR. The judge did not make a finding as to who signed the underlease, or the lease, in the name of Malek Madani, but he held that, whoever signed the underlease, the persons dealing with Mr Taefi believed and were knowingly led to believe that he, under the name Malek Madani, was to be one of the parties to the underlease.
9. In the course of deciding these matters, the judge had to form a view as to the credibility of Mr Taefi, who denied that he had let himself be known as Madani. He denied having attended a meeting with Mr Brown on 6 July 1994, and produced a boarding card which he said showed that he had flown from London to Malaga that morning, so that he could not have been the person recorded as attending that meeting under the name Madani. The judge rejected that evidence, it being clear, from research done for JGR, that the boarding card could not relate to 6 July 1994, but must be for a later year. Having considered these matters and other telling examples the judge came to a conclusion which he expressed as follows at paragraph 39 of his judgment:

"It follows from these findings that the evidence which Mr Taefi has given to this court about those matters is not truthful and that is a matter which I must bear in mind when I consider the conflicts of evidence in relation to later matters."

10. Going back to the agreement of 9 December 1998, Mr Taefi says that Pegasi never did render him an invoice for the rent due from 1 October 1998. (The judge held that an invoice had been sent: see paragraph 61 of his judgment. Whether it had or had not been sent makes no difference on the questions now at issue.) Instead Pegasi brought proceedings for the rent, which they issued in the Central London County Court on 2 November 1999, seeking £12,734, with interest of £1,324.43 from 1 October 1998 and £375 costs. The Defendants to the claim were named as "Mr Malek Madani (also known as Dr Ali Taefi)" and "Mrs Mojgan Malek Madani". Their address was given as 4 St Mark's Square, and the claim form was served by post at that address. The claim was for arrears of rent, due from the Defendants as having held over following the expiry of the lease. The claim to interest was said to be under clause 4.16.1 of the lease. Since Pegasi regarded Mr Taefi as being the same person as Malek Madani, one of the tenants under the lease, it is not surprising that no reference was made to a separate agreement reached on 9 December 1998 with Mr Taefi, as someone who was not liable under the lease. From Pegasi's point of view, the agreement had been with their tenant, and was, in effect, for the liability to continue as under the lease until 12 December 1998.
11. Pegasi's solicitors were C.L. Clemo & Co. They served the proceedings under cover of a letter dated 12 November 1999 addressed to M. Madani and Mrs M.M. Madani at 4 St Mark's Square, enclosing for each of them the Claim Form, Particulars of Claim, Notes for Defendant and Response Pack.
12. Mr Behrooz Madani and Mrs Mojgan Malek Madani had never lived at St Mark's Square. Mr Taefi lived there, but was away when the letter was sent. He said that he returned to England, having been abroad, on 30 November, and found the letter at St Mark's Square when he arrived there on that day. On 30 November itself he had a meeting at JGR's offices with Mr Vala, Mr Webster and another solicitor about litigation which he had brought arising out of the fire at St Mark's Square, on which his insurers were refusing to pay his claim. After the meeting he went home and found the letter. He also found a default judgment in relation to underpinning work at another property, in relation to which he said that he had not been served with the proceedings at all.
13. On 1 December Mr Taefi went to see Mr Webster again to discuss the default judgment and the claim by Pegasi. This meeting is recorded in a full attendance note by Mr Webster. As regards the default judgment, which was for "a couple of thousand pounds" according to the note, Mr Webster advised that it would be uneconomic for Mr Taefi to instruct him to deal with it, at £250 per hour, and that Mr Taefi should apply to set aside the judgment, explaining why the proceedings had not been received and why he had a good defence. Mr Webster gave him an application form and advised him about the procedure. So far as the rent claim is concerned, Mr Webster's note records that he established that there was no dispute about liability, and advised that the sum claimed should be paid. Mr Taefi asked whether he had to pay interest. Mr Webster said that the claim was under a clause in the lease, and if that clause was there, then the interest was due, even after the end of the lease. Mr Taefi told Mr Webster that the lease was in the name of "his girlfriend" and her father, so that he was not legally liable to pay the rent, but that he wanted to do it, having lived there over the years. Mr Webster advised him to pay the sum claimed and be done with it. The note ends by saying that Mr Taefi accepted this advice, but this turned out not to be the case.
14. What Mr Taefi decided to do was to pay the rent, but not the interest or costs. He got a banker's draft for the rent, and went back to see Mr Webster on 2 December. This is the first occasion on which it is said that Mr Webster was negligent. Mr Taefi asked for 5 minutes with Mr Webster, as he had done the previous day, when the meeting turned out to take an hour. On 2 December Mr Webster was only able, or willing, to make 5 minutes available, and he saw Mr Taefi briefly in the reception area of the firm's offices. Mr Taefi brought back the documents concerning the rent claim, said he had spoken to Mr O'Connor of Clemo & Co, and that he was only willing to pay the rent, for which he handed over the draft. He asked Mr Webster to write to Clemo & Co to offer the rent in full and final settlement, but nothing else. Mr Webster agreed to write such a letter.
15. His letter, dated 2 December, records having been consulted by Mr Taefi and having a copy of Clemo & Co's letter of 12 November "and its enclosures". It denies that Mr Taefi is the same person as Mr Madani, and says that both Mr Madani and Mrs Mojgan Malek Madani live abroad. It denies that Mr Taefi is legally liable for the rent, but offers payment of £12,734 in full settlement of all claims. He also wrote to Mr Taefi enclosing a copy of the letter to Clemo & Co. There is an issue as to whether Mr Webster's instructions on this occasion were only to write this letter, or whether they were more general. It is said that, even if the instructions were so limited, Mr Webster was under a duty to consider whether his client's interests required protection in any other way by advice or action. Mr Taefi asserts that Mr Webster ought to have advised him that an acknowledgement of service ought to be entered, or to have entered such an acknowledgement of service on his behalf.
16. In the meantime Clemo & Co had applied for a default judgment, and one was entered on 8 December, ordering the named Defendants, Mr Malek Madani "(aka Dr Ali Taefi)" and Mrs Mojgan Malek Madani to pay £14,502.71 immediately. Moreover the judgment was registered under the names, not only of the two Madanis but also of Dr Ali Taefi.
17. On 8 December Mr Webster telephoned Clemo & Co to find out what was happening. He was told that an answer to his letter was on its way, by which the offer would be rejected. That answer came in a letter dated 7 December, in which it was said that on 1 December Mr Taefi had telephoned Pegasi and promised to pay the whole sum claimed. In that context, and with substantial fees having been incurred, the offer of only the rent was unacceptable. Both on the telephone, and in a subsequent letter, Mr Webster said that the response would be to apply to have Mr Taefi's name removed from the proceedings and to claim his costs. That, however, was overtaken by the default judgment, which Clemo & Co sent to Mr Webster on 14 December. Mr Webster then wrote to Mr Taefi to inform him of this and to prepare for an application to remove Mr Taefi's name from the proceedings. In order to be able to demonstrate that Mr Taefi and Malek Madani were not the same person he asked Mr Taefi for copies of the passports of the two men.
18. On 6 January 2000, out of the blue, Clemo & Co wrote to Mr Webster offering to accept £12,734 in full satisfaction provided this was paid within 7 days. Mr Taefi was then in Marbella. On 10 January Mr Webster spoke to him on the telephone. This is the second occasion in respect of which Mr Webster is accused of negligence. There is a dispute of fact as to what was said, which the judge resolved in favour of JGR. Mr Webster prepared an attendance note of the conversation, which is in the following terms:

"RW managing to get hold of Dr Taefi in Spain. Explained the letter which had come in from C L Clemo & Co.

He wasn't going to go for this. He wanted the county court judgment removed not only against him but also against his wife and father-in-law. I said I thought that was pushing it a bit but he was clear that those were his instructions. I said the problem with the judgment against his wife and father-in-law was that they were perfectly entitled to it.

I said my costs were a few hundred pounds so why didn't we just throw those in?"

19. On Mr Taefi's behalf it is said, first, that it was Mr Webster's idea, not Mr Taefi's, that Pegasi should be required to pay Mr Taefi's costs, or alternatively that, if Mr Taefi took that decision, Mr Webster should have advised him that he was at risk of having to pay Pegasi's costs, even if he could get the judgment varied or set aside, and that he should therefore agree to Pegasi's offer and not require them to pay his costs.
20. Mr Taefi challenges the judge's findings of fact as to what was said during this conversation, and we will deal with that challenge later. If he could succeed in that challenge he might also have some prospect of challenging another finding by the judge, namely that, even if he had received the advice which it is now said he should have had on 10 January, he would have ignored it and still insisted that Pegasi should be required to pay his costs.
21. The immediate result of the telephone conversation was that Mr Webster wrote to Clemo & Co later that day withdrawing the previous offer of £12,734, and offering instead to pay that sum provided that the default judgment was set aside against all Defendants, and provided that Pegasi agree to be responsible for Mr Taefi's costs which were said to be £550 plus VAT. Clemo & Co's response, in a letter of 13 January, was that Pegasi would not pay any contribution to Mr Taefi's costs, that the judgment would have to be enforced, but that Mr Bleackley would be happy to meet Mr Taefi in an attempt to resolve the matter.
22. Mr Webster says that both these letters were sent to Mr Taefi by fax. Mr Taefi says that he never saw the 10 January letter until much later, and that he did not see the 13 January letter until it was re-sent on 31 January.
23. Eventually JGR applied to have the judgment varied by deleting Mr Taefi's name from it. That application came before a District Judge who held a lengthy hearing including the giving of oral evidence. The application was successful, but Mr Taefi had to pay Pegasi's costs. In the course of the application JGR ceased to act for Mr Taefi. Once the application had succeeded, Mr Taefi settled the dispute with Pegasi.

Factual issues

24. On Mr Taefi's behalf Mr Soole first challenges the judge's findings of fact. We will start by dealing with that challenge. The matters in issue relate partly to the meeting on 2 December 1999 but mainly to the telephone conversation on 10 January 2000.
25. As regards what happened on 2 December 1999, there is little scope for a challenge to the findings of fact. The judge found that Mr Webster's instructions were specific and limited, concerned only with writing the letter to Clemo & Co which he did in fact write on that day. He accepted Mr Webster's evidence that the instructions given and accepted expressly and specifically were only to write the one letter, and rejected Mr Taefi's evidence to the contrary. Mr Soole attacks one finding of fact, as to whether Mr Taefi had left with Mr Webster on 2 December a copy of the Response Pack which had been sent to him by Clemo & Co. We will deal with that issue after addressing the more major issues about the telephone conversation on 10 January 2000.
26. So far as that conversation is concerned, it is not in dispute that it was Mr Webster who raised the question of his costs. It is not in dispute that the outcome was that, on Mr Taefi's behalf, the condition as to payment of his costs was put forward. Mr Taefi says that this was Mr Webster's idea, that he would have been content to pay the "few hundred pounds" when he was next in London, but that if Mr Webster thought it right to ask for payment, he did not object. Mr Webster says that it was Mr Taefi's idea that Pegasi should be asked to pay these costs as a term of the settlement. The judge accepted Mr Webster's account, in preference to that of Mr Taefi. Mr Soole criticises the judge's reasoning and says that it does not do justice to the evidence adduced, and is over-influenced by the judge's finding as to Mr Taefi's poor credibility arising from the events of 1994. He submits that, despite that finding, the judge was required to consider the evidence relevant to the conversation on 10 January and assess its weight and effect, to which views as to Mr Taefi's credibility on other matters were only of peripheral relevance.
27. Naturally, he puts in the forefront of his submission Mr Webster's attendance note, quoted at paragraph 18 above. He submits that the natural reading of this supports Mr Taefi's evidence that Mr Webster not only raised the question of fees but suggested that they be "thrown in", that is to say, the counteroffer to Clemo & Co's offer should require their payment by Pegasi. He also points to Mr Webster's evidence, which he says is unsatisfactory, as to the explanation for the difference between this passage in the attendance note and his account of the conversation in his witness statement made over 4 years later on 4 April 2004 for these proceedings. The judge accepted the submission on behalf of JGR that later documents supported Mr Webster's account of the conversation, but Mr Soole submitted that, examined carefully, these are all neutral at best. Of course Mr Taefi's own evidence on the point has to be brought into the equation as well.
28. In his first witness statement of 6 April 2004, Mr Taefi dealt with what happened on 10 January 2000 in paragraphs 39 to 43. He said that he told Mr Webster that he would happily pay the £12,734, but that he wanted the judgment cancelled against all those concerned, and that Mr Webster was doubtful about being able to achieve this. He said that Mr Webster had mentioned his own fees, which Mr Taefi said that Mr Webster had put at "a couple of hundred pounds", and that Mr Webster had said that he would only charge £200. He said his response had been that he would pay this bill when he was next in London. He said that it was Mr Webster who had suggested that he would ask Pegasi to pay these costs. In response he said he would leave it to Mr Webster to do as he thought best, but that he himself did not regard it as of any importance. Mr Taefi was cross-examined about this during the last of the three days of his oral evidence (pages 31 to 41 of the transcript of that day). That passage shows, consistently with other passages which we saw, how difficult a witness he was. Among other things he said that there had been two separate conversations, not only one on that day, and that the question of setting aside the judgment arose only in the second conversation, though he eventually agreed that Mr Webster said there might be a problem about that but he would see what Clemo & Co would say about it. As regards fees it was put to him that JGR had had difficulties with him about payment of fees. He denied this. He denied having insisted that Pegasi should pay the fees. At the end of this passage of cross-examination he said this:

"He said, my fee will be a couple of hundred pounds or thereabouts, I said I will see you when I pay you, he said, oh, I will throw it in, I said, it doesn't matter, do what you like. Whatever you think is best, it doesn't matter. That is my only conversation with regarding fees to him at the beginning and the only one, so that you don't ask me more. That is the only conversation I had with him."

29. That passage is therefore consistent with what he had said in his witness statement and, so Mr Taefi said, also with Mr Webster's attendance note. According to him, he was content to pay the fees without any contribution from Pegasi, but Mr Webster suggested asking Pegasi to pay the fees, and Mr Taefi authorised him to take that line if he thought it right to do so.
30. Turning to Mr Webster's evidence, in his first witness statement, dated 14 April 2004, he said that the attendance note did not fully reflect what he had said in the conversation. He said that he knew Mr Taefi to be difficult about paying fees and did not want to conclude a settlement on the terms proposed without clearing the question of fees with Mr Taefi, lest he later say that Pegasi ought to have paid them. In seeking to explain the inconsistency of the attendance note with his evidence he said he made many such notes in any given day, and did not always check them. In paragraph 46 of the witness statement he said that something had been omitted and that his secretary had failed to type something that he had dictated. When he was cross-examined about that he moved away from that explanation to saying that it was either he himself who had failed to dictate a full note, or his secretary who had omitted something he did dictate.
31. In the witness statement he went on to give a fuller account of the conversation, as if in direct speech, though not put forward as verbatim. According to this, he raised the question of fees and said he would be sending Mr Taefi a bill, to which Mr Taefi said that Pegasi must pay. Mr Webster said they were only a few hundred pounds, suggesting that Mr Taefi should bear them himself, to which Mr Taefi again insisted that Pegasi must pay. Mr Webster then said that if that is what he wanted he would throw them into the response, and Mr Taefi said they must pay the costs.
32. Neither in Mr Taefi's evidence nor in that passage of Mr Webster's evidence is there any reference to Mr Webster having given Mr Taefi any advice about the likelihood of his being able to recover his costs from Pegasi if it came to a fight about the costs or about the judgment. Mr Webster did, however, say in his witness statement that he thought Mr Taefi had a reasonable prospect, on the facts as he stated them to be, of recovering his costs. In the judgment at paragraph 56 the judge referred to Mr Webster's belief that it might well be possible to get Mr Taefi's name removed from the judgment at the cost of Pegasi, and said that this belief was justified. Mr Webster was cross-examined about this belief and about whether he had conveyed it to Mr Taefi. Mr Webster accepted that he might have communicated his view to Mr Taefi, and that Mr Taefi's evidence was that he had got the impression that he (Mr Webster) was optimistic about recovery of costs.
33. It seems to us that Mr Soole is justified in submitting that the attendance note supports Mr Taefi's case and that Mr Webster's explanation for its inconsistency with his evidence of the course of the conversation is not very satisfactory. Mr Webster does not suggest that he warned Mr Taefi that he faced a real risk of having to pay his own and the Claimant's costs.
34. Undoubtedly there was material available from subsequent events to assist the judge in resolving the conflict of evidence as to what was said between the two men on 10 January, including some documents. As we have mentioned, Mr Webster responded to Clemo & Co on 10 January, and they rejected his counter-offer on 13 January. Quite where Mr Taefi was after 10 January (when he was in Marbella) is not clear. Mr Webster next spoke to him on 31 January, having, as he thought, succeeded in sending him by fax the letters of 10 and of 13 January. On 31 January Mr Taefi said he had not seen Clemo & Co's letter and Mr Webster had it sent again by fax. With it went his own covering letter to Mr Taefi of 14 January, suggesting that Mr Taefi take up the idea of a meeting with Mr Bleackley which Clemo & Co had made, and a further letter of 31 January, referring to the proposal of a meeting and saying "I would encourage you to [meet Mr Bleackley] simply because I do not think the costs involved in all of this are merited". The two men next spoke on 14 February. Mr Webster had had a chaser from Clemo & Co as to Mr Taefi's position. He asked Mr Taefi what his instructions were. The answer is recorded as:

"He said he wasn't prepared to do anything else. I was to write to them saying there was the offer, I had the bankers draft and they could give me an undertaking to send me a cheque in respect of my costs and that would be the end of it."

35. In May Mr Webster issued the application, which was, in terms, to vary the judgment by deleting Mr Taefi's name from it. The application was under CPR 13.3, which presupposes that the judgment had been regularly obtained. In the course of preparation for the hearing, which was due in late July, Mr Webster met Mr Taefi on 15 June, and wrote to him the following week, on 21 June, to confirm various matters. At the end of his letter he said this:

"Do you really want to go through with all of this? Do you want to let me have instructions to try and agree a compromise? You will recall that I previously negotiated us to the point where you were going to pay just the rent (and no interest or costs) but you then decided that you would only pay that less the fees you would have to pay this firm. I consider that that is going to be difficult to achieve now but I may be able to get a drop hands settlement if you are still prepared to pay the rent only of £12,734."

36. On 3 July Mr Taefi attended a meeting with Pegasi, seeing Mr Bleackley and Pegasi's in-house lawyer Julie Lofthouse. Neither Mr Webster nor anyone else from JGR was present. Each side rehearsed the relevant events as they saw them, including reference to the counter-offer put forward by Mr Webster on 10 January. According to Ms Lofthouse's note she referred to the demand being for £550 costs plus VAT. Mr Taefi responded that "these costs had been incurred in defending the claim that he was known as Mr Madani". The parties were unable to agree a compromise.
37. The application came on for hearing in August. Just before the hearing Mr Webster arranged a conference with Counsel on 15 August, which Mr Taefi attended. In the course of Mr Webster's notes of that conference there is this passage, recording things said by Mr Taefi:

"I told RW – rent bankers draft, pay costs from IOU. They said no – not pay costs. I got annoyed – I've been clear with you. Months passed – said no"

38. On behalf of JGR it is said that what was said and happened on 31 January, 14 February, 21 June and at the conference with Counsel on 15 August support Mr Webster's case as to the course of the conversation on 10 January. So far as the 31 January is concerned, the point is that Mr Taefi saw Clemo & Co's letter of 13 January, from which the sticking point was clearly the question of contribution to Mr Taefi's costs. Even if he had not seen the letter from Mr Webster of 10 January (as to which his evidence was particularly unsatisfactory, well warranting the judge's finding that he had in fact seen it) he must have seen from this letter that the only point was costs. If he was so relaxed about costs as he now says, he would have instructed Mr Webster to drop the condition as to costs, or at least have taken up the suggestion of a meeting with Mr Bleackley. His explanation in evidence was that he thought the problem was about setting aside the judgment against all parties, following Mr Webster's comment on that on the telephone on 10 January, and that was why he would not meet Mr Bleackley.
39. Turning to the conversation on 14 February, Mr Soole submits that there is no indication that Mr Webster gave any further advice, to qualify either the optimistic impression he had given as to recovery of costs, or the pessimistic approach to the setting aside of the default judgment as against all parties. Mr Webster does not suggest that he gave any advice on that occasion; he merely asked for his client's instructions, having sent him the letters on 31 January including advice that the costs were more than the issue merited, and that he ought to consider a meeting with Mr Bleackley, and had heard nothing in the meantime.
40. The judge dealt with this part of the history at paragraphs 53 to 55. He considered the four episodes to which we have referred as supporting the evidence of Mr Webster that Mr Taefi was consistent in his insistence that his costs should be paid. He said that he found these four matters compelling and that there was no record of Mr Taefi ever saying that he wanted to settle without receiving his costs until 3 July, by which time considerable costs had been incurred on both sides. He concluded at paragraph 55 by finding as a fact that it was Mr Taefi who throughout insisted that Pegasi should pay his costs, and this insistence prevented the case from being settled. On that basis he rejected the allegations of negligence against Mr Webster in relation to the negotiations.
41. Mr Soole mounted a subtle challenge to this finding as regards the supporting material. He submitted that it was not in dispute that Mr Webster had raised the question of his fees, and it was also not in dispute that when Mr Webster asked Clemo & Co to pay his firm's fees, he was acting in accordance with Mr Taefi's instructions. The question, he says, is how Mr Taefi got to the point of giving those instructions: was it of his own accord and despite advice, or was it because Mr Webster suggested it and advised that he had a reasonable prospect of getting his costs, or at least failed to advise that he risked having to pay the costs? He submitted that these four instances are all consistent with Mr Taefi's account of events, and therefore Mr Taefi's words, or his failure to challenge Mr Webster's words, do not cast doubt on his own evidence or support that of Mr Webster. He points out that, at paragraph 51, the judge posed two questions, as to the start and finish of the conversation about fees, but not the intermediate question as to how Mr Taefi got to the position (if he did) of giving instructions that his fees were to be sought from Pegasi, and whether Mr Webster gave any and if so what advice on the point.
42. The judge did not expressly address this intermediate question, but we do not accept that to do so was necessary in order to resolve the issues of fact which arose on the evidence. In particular the submission fails to take account of the extent of the contradiction between Mr Taefi and Mr Webster as to what was said. Mr Taefi did not say that he decided to instruct Mr Webster to require Pegasi to pay his costs on the basis of advice from Mr Webster. He said that he did not decide about this at all, but left it to Mr Webster to decide, and authorised him to ask for the costs if he thought it right. The judge thought it uncharacteristic of Mr Taefi to take this non-committal line, just as he regarded the suggested willingness to pay Mr Webster's costs when he was next in London to be inconsistent both with Mr Taefi's general attitude on fees and with the practice which he said he had come to by agreement with Mr Vala. Both of those features added to the material which undermined Mr Taefi's credibility on this particular part of his evidence.
43. As regards the later material, the proposition that Mr Taefi was concerned about the setting aside of the judgment and not about the costs is not consistent with his failing to take up the suggestion of a meeting with Mr Bleackley, suggested by Clemo & Co in their letter of 13 January, which Mr Taefi saw at the latest on 31 January. Rather this suggests that the costs were the important point for Mr Taefi, as is also shown by the terms of his instructions on 14 February. Mr Webster's words in the letter of 21 June "you then decided that you would only pay that less the fees you would have to pay this firm" are inconsistent with Mr Taefi's evidence, and consistent with that of Mr Webster, because on Mr Taefi's evidence he did not take that decision, instead he left it to Mr Webster to decide what line to take. The comments in the course of the conference with Counsel are more equivocal but the reference to Mr Taefi getting annoyed after Pegasi had refused his requirement that they pay costs is not consistent with his evidence that if he had known that the costs were the only problem he would have told Mr Webster to drop that condition.
44. For those reasons it seems to us that Mr Soole's submission that these later matters do not assist with the resolution of the conflict between the evidence of Mr Webster and of Mr Taefi as to what was said on 10 January is not justified. On the contrary, they are inconsistent with Mr Taefi's evidence and the judge was entitled to have regard to them in the way he did in paragraph 54 of his judgment.
45. Mr Soole accepts that to challenge a judge's findings of fact as to what was said between two individuals where both of them have given evidence, and the judge has been able to assess their credibility from the way they gave evidence as well as from what they said, is an uphill task. He has sought to demonstrate that the judge's findings about the conversation on 10 January do not take account of the unsatisfactory features of Mr Webster's evidence about the attendance note, are not supported by the four later matters to which we have referred, and were excessively influenced by the judge's findings about Mr Taefi's lack of credibility in relation to the events of 1994. We disagree on the second of these points. For reasons to be mentioned later, we do not accept the first point as a valid basis for regarding the judge's findings of fact as inadequately founded. We also regard the third point as an unjustified criticism of the judgment.
46. The judge had to consider the events in 1994, and he therefore heard evidence from Mr Taefi and others and had to consider which account he should accept. It is unreasonable to propose that the judge should have set aside altogether the poor view he took of Mr Taefi's credibility in respect of these matters, and have started afresh to consider his credibility in respect of the later events without regard to the view he had taken from the evidence about the earlier history. It is plain from the transcript that his evidence was very unsatisfactory on both subjects. Looking back at the whole of his evidence, as the judge did when preparing his judgment in the three weeks or so after the end of the trial, he was entitled to have regard to his view of Mr Taefi as a witness from the whole of his evidence, both about 1994 and about 1999 and 2000, when deciding whether to accept Mr Taefi's account of what was said on 10 January or rather that of Mr Webster. We therefore do not accept Mr Soole's criticism of the judge who said at paragraph 22 of his judgment that if he came to the conclusion that Mr Taefi was not truthful about his dealings with JGR in 1994 it must have a bearing on how his evidence is to be viewed in relation to the instructions given to Mr Webster in 1999 and 2000. The judge recorded that he had been invited to look at each disputed incident in isolation and decide the matter on the balance of probabilities but that he had to consider the weight of each witness' evidence set against what other evidence reveals about them.
47. To be fair, Mr Soole did not submit that the judge was not entitled to take into account the view that he had formed of Mr Taefi's credibility overall in deciding whether or not to accept his evidence about what was said on 10 January. Instead he submitted that the judgment showed that the judge had been excessively influenced by that view, and that his assessment of the relevance and import of the later matters had been distorted by his prior conclusion that Mr Taefi was not to be believed.
48. In support of this he also relied on another issue of fact, on which he submitted that the judge's finding in favour of JGR was against the weight of the evidence. This was as to whether on 2 December Mr Taefi left with Mr Webster the Response Pack which had been sent with Clemo & Co's letter of 12 November 1999. This is at most of marginal importance in itself, but Mr Soole submits that it is revealing of the judge's lack of balance in reviewing the evidence as to the factual disputes.
49. Clemo & Co had sent a Response Pack (in fact, presumably two – one for each named Defendant) among the enclosures to their letter of 12 November. Mr Taefi said that he brought Clemo & Co's letter and its enclosures when he went to see Mr Webster on 1 December, but he did not leave them with Mr Webster on that occasion. He went back to see Mr Webster the next day, and saw him briefly. He certainly left the letter from Clemo & Co with Mr Webster on that day, because Mr Webster needed it for his own letter to Clemo & Co which he wrote later that day. In that letter he referred to having Clemo & Co's letter "and its enclosures". Mr Soole says that shows that he had all the enclosures including at least one Response Pack. Later, when Counsel was instructed, Mr Webster sent him the Particulars of Claim. There is no separate record of Mr Webster having obtained this from Mr Taefi or anywhere else at that time, so it seems likely that he had it already. It also seems likely that he obtained it from Mr Taefi on 2 December. The Clemo & Co letter is on JGR's file, but there is no Response Pack on the file.
50. Mr Webster in his witness statement did not deny having had the Response Pack: he said he did not know whether he had had it, and that Mr Taefi may have left it with him. In cross-examination he said he could not remember whether he had had it.
51. The judge dealt with this issue at paragraphs 44 and 45 of his judgment. He referred to all the relevant factors mentioned above. He said, rightly, that it was for Mr Taefi to show on the balance of probabilities that the Response Pack had been left with Mr Webster. He concluded that he was not satisfied that it had been left. It is true that the judge did not have to resolve a conflict on this between Mr Taefi saying one thing and Mr Webster denying it and saying the opposite. But the facts were in dispute. On JGR's behalf it was not admitted that the Response Pack had been left with Mr Webster, and there were indications that it had not (its absence from the file) as well as that it had been (the general reference to "its enclosures").
52. It seems to us that the judge was well entitled to consider that Mr Taefi's evidence was of no assistance on this point, and that he had to balance the various objective indications either way in assessing the probabilities. Mr Taefi had said that he gave to Mr Webster everything he had from Clemo & Co, because he was going to America. He then referred in cross-examination (21 September page 127 D) to Mr Webster's letter having said that he had the Response Pack. That is a reference to the words "and its enclosures" in Mr Webster's letter to Clemo & Co, and an example of Mr Taefi's tendency, remarked on by the judge, to latch on to parts of other people's documents, distort them in his mind, and use them to influence his own evidence instead of saying what he really remembered.
53. It does not seem to us that the judge's finding about the Response Pack can be regarded as perverse. There were factors in the documentary material which pointed either way. Mr Webster's recollection was neutral on the point. Mr Taefi's recollection was not regarded by the judge as reliable, and it seems to us that there was specific justification for that in what Mr Taefi said on this point, as well as the general justification from Mr Taefi's evidence as a whole. It cannot be said that the finding was one which is not supported by reference to the evidence given at the trial.
54. Accordingly we reject Mr Soole's submission that the judge's findings of fact as regards what was said between Mr Taefi and Mr Webster on 10 January 2000 and as to whether Mr Taefi left a copy of the Response Pack with Mr Webster on 2 December 1999 are contrary to the weight of the evidence. As we read the judgment, it seems that the judge was influenced – and fairly so – by his view of Mr Taefi's credibility, but that he did not regard that as determinative. He did consider the material directly relevant to the conversation on 10 January, including the relevant parts of Mr Taefi's own oral evidence, which were far from convincing. The fact that he did not expose the attendance note to detailed analysis such as Mr Soole put before us does not show that he did not give proper consideration to it. In our judgment the findings of fact that he made were open to him on the evidence, and were reached by a proper and fair examination of that evidence.
55. At paragraph 57 of his judgment the judge went on to say that he was satisfied that, whatever warning Mr Webster had given to Mr Taefi about costs, it would not have deterred the latter from taking the line that he did, nor altered the instructions that he gave as regards the recovery of his own costs. Mr Soole challenged that finding, but it seems to us that, on the basis of the judge's findings of fact about what was said during the telephone conversation, his conclusion in this respect is fully justified and cannot be challenged on this appeal.

Other grounds of appeal

56. Mr Soole contends that, quite apart from his challenges to the judge's factual findings, JGR should be held liable in negligence on Mr Webster's own account of the facts. He submits that Mr Webster should in any event have advised Mr Taefi on 2 December 1999 of the need to acknowledge service and, on 10 January 2000, of the risk that he would have to pay Pegasi's costs even if the judgment were set aside or varied. It is not said that Mr Webster did advise in either of these ways.
57. Dealing first with 2 December 1999, the judge rejected this claim on the basis that Mr Webster's instructions were specific and limited, concerned only with writing the letter to Clemo & Co which he did in fact write on that day. He accepted Mr Webster's evidence that the instructions given and accepted expressly and specifically were only to write the one letter, and rejected Mr Taefi's evidence to the contrary.
58. Mr Soole submits, as Mr Hill-Smith did to the judge, that although a solicitor is not under a duty to expend time and effort outside the scope of his retainer, if in the course of doing what he is instructed to do he becomes aware of a risk or potential risk for the client, it is his duty to inform the client of the risk: see Laddie J in Credit Lyonnais v. Russell Jones & Walker [2002] EWHC 1310 (Ch) at paragraph 29. Applying that test, it is said that the risk was that a default judgment would be entered if service was not acknowledged, and that Mr Taefi needed to be warned of this. The judge rejected that for two reasons: first (and above all) because the instructions were so specifically limited and second because he considered that it would not have been appropriate for Mr Taefi to acknowledge service, given that he denied that he was the same person as Mr Madani, the First Defendant. He rejected another objection, namely that it would have been too late. He considered that, if the form had been completed and sent off on 2 December, there was a reasonable chance that it would have arrived in time to prevent a default judgment being entered against Mr Taefi.
59. So far as 10 January is concerned, Mr Soole relies on the evidence (not in dispute) that Mr Webster thought that Mr Taefi had a reasonable prospect of getting his costs from Pegasi, and that he gave at least implicit advice to Mr Taefi to this effect. He submits that this advice was negligent, because there was no reason to suppose that, if the judgment was accepted to be regularly obtained as against Mr Taefi, the normal rule as to costs would not follow namely that, even on a successful application to set the judgment aside, the Defendant has to bear the costs. He says that Mr Webster ought to have warned Mr Taefi that, though it might, or even should, be possible to have the judgment set aside as against him, if the right evidence could be produced, there was a real risk that he would have to bear his own and the Claimant's costs of the application, so that it would be foolish to ask the Claimant to pay Mr Taefi's costs up to that stage.
60. However, given the judge's finding at paragraph 57 of his judgment (see paragraph 55 above) it seems to us that each of Mr Soole's challenges to the judge's findings that Mr Webster was not in breach of his duty is academic, because Mr Taefi could not show that any loss would have resulted even if he had received the advice which it is said he should have had on either occasion.
61. It is for a Claimant to prove that, if he had had the correct advice, he would have acted differently, so that the breach of duty has caused him loss. Mr Taefi cannot show this in respect of the failure to warn him about costs on 10 January. It follows that, even if he were able to show a breach of duty on the part of Mr Webster in not giving him the advice, he could not show that this caused him any loss.
62. The same is true of the contention that Mr Webster should have advised Mr Taefi about the need to acknowledge service on 2 December 1999. Mr Soole accepted that if he could not challenge the judge's findings about 10 January then even if he was able to establish that Mr Webster was negligent at this stage, little, if any, loss would have flowed from earlier negligence because, on the judge's findings, soon afterwards Mr Taefi rejected an offer from Pegasi which would have given him all he wanted at minimal cost.
63. If Mr Webster had advised Mr Taefi on 2 December 1999 of the need to acknowledge service, it is reasonable to suppose that he would have done so, with Mr Webster's help in one way or another, that day or the next. On the judge's finding, there was a reasonable prospect that this would have been in time to prevent judgment in default being entered. It would then have been up to Mr Taefi to defend the proceedings, putting in a defence by 28 days after service of the Particulars of Claim, plus any extension he was able to obtain. He would therefore have incurred some additional costs himself. There seems to be no reason to assume that the attitude of Pegasi to settlement would have been any different from that which they showed in fact, rejecting Mr Taefi's original offer of the rent alone, but later offering to accept it. By then Mr Taefi would have incurred additional cost, from having to put in a defence. It seems to us that there is no reason to suppose that his own attitude to Pegasi's revised offer in early January would have been any different. Mr Webster would not have had the reason that Mr Soole submits he did have to advise him specifically about the risk that he would have to pay his own and Pegasi's costs. The risks as regards costs would merely have been the general risks as to costs in litigation, with which Mr Taefi clearly was familiar. We therefore conclude that the judge's comments in paragraph 57 apply just as much to the consequences of the suggested breach of duty on the part of Mr Webster on 2 December as they do to the immediate consequences of any breach of duty on his part on 10 January.
64. It follows that even if Mr Webster could be shown to have failed in his duty to advise on either or both of these two occasions, neither failure would have caused Mr Taefi any loss because he would have acted in the same way as regards Pegasi's offer of compromise in early January, even if he had received what is said to be the advice that he should have had.

Other issues

65. The judge also considered different issues of causation, it being said that Mr Taefi's loss was really caused by his concealment from JGR of the fact that he really was known as Mr Madani, and contributory negligence. Questions of the admission of evidence also arose, because on Mr Taefi's side witness statements had been served, made by Behrooz Malek Madani and Mojgan Malek Madani, but they did not attend at trial to be cross-examined, despite an order to that effect under CPR 33.4. The judge rejected Mr Taefi's application that their witness statements be read. Mr Soole submits that he was wrong in all these respects.
66. So far as the admission of the witness statements is concerned, that was entirely within the trial judge's discretion. The points about causation and contributory negligence do not arise given that, even if breach of duty were established, no loss could be shown to have resulted. So it is unnecessary to say anything more about those points.

Conclusion

67. We therefore dismiss this appeal on the ground that neither in respect of the events of 2 December 1999 nor of those of 10 January 2000 has Mr Soole been able to show that the judge was wrong in his findings of fact, and that even if the judge's decision that no breach of duty by JGR was established could be shown to be wrong (as to which we express no view), no loss would have been caused by the breaches of duty alleged to have taken place on 2 December 1999 or on 10 January 2000.
POST-JUDGMENT DISCUSSION

Monday, 25th July 2005

68. LORD JUSTICE BROOKE: For the reasons given in the judgment of the court, copies of which have been made available to the parties, this appeal is dismissed.
69. MR SOOLE: My Lord, before I deal with the question of costs, could I just be certain that the corrections I sent on Wednesday were received by the court.
70. LORD JUSTICE LLOYD: Yes, I am most grateful to you, Mr Soole, and indeed to some from Mr Roberts, and I think they have all been reflected in the final form of the judgment.
71. MR SOOLE: I do not have a further document.
72. LORD JUSTICE LLOYD: Well, it will be made available.
73. MR SOOLE: I am grateful.
74. LORD JUSTICE LLOYD: I think it is probably in court ready to be made available, I am sorry you have not had it.
75. MR SOOLE: I am obliged.
76. LORD JUSTICE BROOKE: Yes, Mr Roberts?
77. MR ROBERTS: I do not think there is any dispute that arises from this that Mr Taefi will pay Jeffrey Green Russell's costs of this appeal on the standard basis. What issues remain are two matters; (1) whether your Lordship should, today, embark upon a summary assessment of my side's costs --
78. LORD JUSTICE BROOKE: When was your schedule filed with the court?
79. MR ROBERTS: When was our schedule filed with the court?
80. LORD JUSTICE BROOKE: Yes.
81. MR ROBERTS: To my knowledge, my Lord, it was given in this morning.
82. LORD JUSTICE BROOKE: That is too late. We will not do a summary assessment. The Rules are quite clear.
83. MR ROBERTS: Well, my Lord, yes. I was not myself asking for a summary assessment.
84. LORD JUSTICE LLOYD: No, you were seeking a detailed assessment.
85. MR ROBERTS: I was asking for a detailed assessment in the ordinary course of events.
86. LORD JUSTICE BROOKE: Yes. If the costs judge takes a view that it should have been a summary assessment you will have to pay an additional whack on the detailed assessment.
87. MR ROBERTS: I take that point, yes, my Lord.
88. LORD JUSTICE BROOKE: We are used to doing summary assessments. This was a one day appeal. So far as I know -- it came down to a day. It is not terribly difficult to assess.
89. MR ROBERTS: That being so, the outstanding matter, my Lord, is our application for an interim payment on account of costs pending detailed assessment.
90. MR SOOLE: I am so sorry to interrupt my learned friend, but in fact, in this case, it is we who were hoping for a detailed assessment.
91. LORD JUSTICE LLOYD: Yes. Have we had your schedule of costs?
92. MR SOOLE: Our schedule of costs has been supplied this morning.
93. LORD JUSTICE LLOYD: I have not seen one.
94. LORD JUSTICE TUCKEY: You were asking for a summary assessment of their costs?
95. MR SOOLE: Yes, indeed, that is right.
96. LORD JUSTICE BROOKE: We usually look at both.
97. MR SOOLE: Our schedule was there by way of comparison.
98. LORD JUSTICE LLOYD: It is here. There is something in front of us on the bench, but none of us have had any prior notice of it. I appreciate --
99. LORD JUSTICE BROOKE: What sort of world are we living in?
100. MR SOOLE: Could I just go back to the basis of the application? I take your Lordship's point on our schedule. We wrote, on 5th July, saying we thought this was a case for summary assessment and could they prepare themselves.
101. LORD JUSTICE BROOKE: Yes, dead right.
102. MR SOOLE: We wrote again, on 20th July, saying the same thing.
103. LORD JUSTICE BROOKE: Dead right.
104. MR SOOLE: From the outset we asked them to supply us with a summary assessment so we could take instructions on that point so everyone could be ready for that.
105. LORD JUSTICE BROOKE: Yes.
106. MR SOOLE: Our point being that although, yes, it was listed for one and a half days, I fully accept that, I, in the week beforehand, put in a note revising it down and in any event we finished within a day. It was not the world's greatest case, if I can put it that way. Given it was the sort of case where the court would be reading in detail to a fact case, the court might think it was in as good a position as a costs judge, perhaps a better position, to get an idea of what counsel and the solicitors might have to do in this sort of case. That was the whole purpose, and if it has failed because we have not got our own comparison --
107. LORD JUSTICE LLOYD: Not so much yours, Mr Soole, as that from Jeffrey Green Russell.
108. MR SOOLE: It does not comply with the Rules, as I see it, but that should not, in my submission, be an argument against making a summary assessment if they have not done what should have been done. That is really a point in our favour. We want to try and avoid the palaver and detail, in this case of all things, of yet another hearing before a costs judge, and one can well imagine what that would be like.
109. LORD JUSTICE BROOKE: We are in the business of avoiding hearings before costs judges if we possibly can. It is an enormous waste of money.
110. MR SOOLE: Could I take your Lordship to that?
111. MR ROBERTS: My Lord, I have not made good my application yet for detailed assessment.
112. MR SOOLE: I am so sorry. I was anxious not to depart from the possibility of a summary assessment today rather than a detailed assessment since the roles are unusually reversed.
113. LORD JUSTICE BROOKE: Mr Roberts, what on earth was going on?
114. MR ROBERTS: On 20th July --
115. LORD JUSTICE BROOKE: What about the reply to the letter of 5th July?
116. MR ROBERTS: Yes, I will take you through the letters that were sent. The letter I have on 5th July from Judge Sykes Frixou asked for us to provide "your costs schedule for summary assessment when judgment is formally handed down".
117. LORD JUSTICE BROOKE: Yes.
118. MR ROBERTS: On 20th July we had a letter saying that the court will wish to deal with a draft order of the question of costs by way of summary assessment. We provided a schedule on 20th July, that being the document that you see, the first two pages of the document which should be --
119. LORD JUSTICE TUCKEY: This is for 132,000?
120. MR ROBERTS: That is the one, yes.
121. LORD JUSTICE LLOYD: Which does not comply with the summary assessment direction, does it?
122. MR ROBERTS: No, my Lord, it does not. You are right.
123. LORD JUSTICE LLOYD: So it is not what they were asking for.
124. MR ROBERTS: Then, on 22nd, we provided --
125. LORD JUSTICE BROOKE: What is this for, the whole trial?
126. MR ROBERTS: No, this is for the appeal.
127. LORD JUSTICE BROOKE: £132,000 for a straightforward appeal in the Court of Appeal?
128. MR ROBERTS: Obviously one has to make submissions on how it has come to be, but that is right.
129. LORD JUSTICE BROOKE: This is what is going to give the bar and solicitors a phenomenally bad name. This is why parts of the bar are on their knees because the world outside reckon that the bar is living in a different world. £130,000 for a single day in the Court of Appeal on a pretty straightforward solicitors' negligence appeal on fact. Is this seriously what you are putting forward?
130. MR ROBERTS: May I explain how it has come to be? The appeal that was presented to this court was brought on the broadest of bases and you will recall from the papers you have seen, my Lords, that the original skeleton argument, prepared by Mr Alex Hill-Smith, ran to some 30-pages and 95 paragraphs, and appealed just about every conceivable issue in the case. The other side then retained leading counsel and so did we. We retained Mr Price QC, who is pre-eminent in this field, and because of the broad nature of the appeal, which was never resiled from even though, at the end of the day, the matter was argued on a very narrow compass in front of your Lordships, my leading counsel had to read into the whole of the panoply of the case, prepare a detailed skeleton argument, which was then the subject of review before it was finalised.
131. LORD JUSTICE TUCKEY: His fees are approaching £70,000, is that right?
132. MR ROBERTS: My Lord, yes. That is as it appears to be. I can take you to them. You will see that --
133. LORD JUSTICE BROOKE: £70,000, you take a little bit off for expenses, and that is for what, three days work?
134. MR ROBERTS: Well, no, if your Lordship looks at his fee notes, which is pages effectively 3 and 4 of this clip that I have put in this morning, you will see exactly what he has charged for and what he has done: his reading of the papers, which is the trial files and the various transcripts which we had at that stage, you will see amounted to --
135. LORD JUSTICE BROOKE: It seems to me that you are going to have to tell this all to a costs judge, with a thick helmet on.
136. MR ROBERTS: I totally accept, my Lord, that obviously fees of this nature have to be justified, as it were.
137. LORD JUSTICE BROOKE: They cannot be. They cannot be. Proportionality comes into it as well. It is not just a question of a tariff of a taxi meter going up. It makes no sense at all.
138. MR ROBERTS: That is not for me to say, my Lord. I take on board what your Lordship says, obviously.
139. LORD JUSTICE BROOKE: Somebody has to be brave enough to go to the costs judge and I hope it is a very tough costs judge. I am inclined to order this as a detailed assessment to be sent to the senior costs judge.
140. MR ROBERTS: Well, if I may move on from that, my Lord?
141. LORD JUSTICE BROOKE: Mmm.
142. MR ROBERTS: On the footing that this matter will be the subject of detailed assessment, the other matter that we seek, or I apply for, is an interim payment on account of costs.
143. LORD JUSTICE TUCKEY: How much are you asking for?
144. MR ROBERTS: We asked for £100,000 in correspondence.
145. LORD JUSTICE BROOKE: You are not going to get it. You are going to have an uphill task to persuade us to order a penny. This is a totally, totally disproportionate bill.
146. MR ROBERTS: My Lord, the practise of the courts --
147. LORD JUSTICE BROOKE: Whatever the practice of the court is we do not usually see bills for 130,000 for a one day appeal.
148. MR ROBERTS: No, my Lord, that may be so, but what you do have in front of your Lordship, albeit late in the day, is my learned friend's bill which he would doubtless have said would be perfectly reasonable and the fees that have been charged in that case --
149. LORD JUSTICE BROOKE: Well, I do not have anything.
150. LORD JUSTICE LLOYD: £22,000?
151. MR ROBERTS: No, my Lord, that is not the case.
152. LORD JUSTICE BROOKE: I have something that says £26,000 and one that says £35,000 and your solicitors have not supplied us with anything else.
153. MR ROBERTS: There are two. There is one for 26,000.
154. LORD JUSTICE LLOYD: I see, that is the application, so that is 22,500.
155. MR ROBERTS: And 35,000.
156. LORD JUSTICE LLOYD: Well, ignoring VAT, so 22,500 and 30,000.
157. MR ROBERTS: If that is regarded as the benchmark of reasonableness, which doubtless my friend would say, then I would submit it is entirely fair and reasonable --
158. LORD JUSTICE LLOYD: To order £100,000 on account.
159. MR ROBERTS: No, my Lord, Brooke LJ has made his position very clear about that, and I am not going to gainsay that, but I would certainly ask for an interim payment in the order of £52,000.
160. LORD JUSTICE BROOKE: You are not going to get it.
161. MR ROBERTS: If I may just complete my submission on this, it is the practice of the court to order interim payments.
162. LORD JUSTICE LLOYD: The Rules encourage us to do so in a suitable case.
163. MR ROBERTS: Indeed so. On any footing the sort of benchmark of fees that my learned friend is putting forward must be a reasonable amount by comparison. Therefore, that is the amount we seek. The fact that the matter has to go to assessment, and the fact that the sum may or may not - and I do emphasise that - may or may not be reduced substantially or to some degree, is not, in my submission, reason for not exercising the usual discretion on an interim payment. Merely because the bill is found or regarded as presently --
164. LORD JUSTICE BROOKE: Somehow or other we have to get practitioners in the Court of Appeal into the real world. How else do we do it, apart from denying them money on account and making it clear that if they are going to go to detailed assessment for astronomical bills they may have a nasty fright on the costs of the assessment?
165. MR ROBERTS: That may be, but the fact that there is going to be detailed assessment of a sum which, at the moment, looks to your Lordship like an alarming sum of money, the fact that there is going to be detailed assessment --
166. LORD JUSTICE BROOKE: Shall I go out to the Strand and ask ten members of the public to come in and say what they think about a bill for £130,000 for a one day appeal on fact in the Court of Appeal?
167. MR ROBERTS: My Lord, it would be inappropriate for me to answer that.
168. LORD JUSTICE BROOKE: It would probably be a bad area to choose because they may be punch drunk by the fees concerned.
169. MR ROBERTS: Yes, you might find the wrong comparators, my Lord. There it is.
170. LORD JUSTICE BROOKE: Take it or leave it you say.
171. MR ROBERTS: No, I do not say that at all. I say that will follow its course, and your Lordship may or may not be right about what happens in that detailed assessment once the whole story is made clear, but all that said, that is not, in my submission, a reason for not awarding an interim payment, and you can properly have regard to the fact that the claimants/appellants in this case plainly think that their fees are entirely fair and reasonable and that therefore represents a benchmark. On that footing, it would be proper, in my submission, to make an interim payment in that amount.
172. LORD JUSTICE BROOKE: Thank you very much. Yes, Mr Soole?
173. MR SOOLE: My Lord, I would still invite your Lordship to consider the possibility of taking a scythe rather than the costs judge's razor to this bill so we can deal with this now. Your Lordships have heard this case and read into it in great detail. The total is, in our submission, quite disproportionate. Your Lordship has said as much. A lot of trouble and expense in this particular case could be solved by taking their bill and taking a view on it as to what is appropriate, perhaps as a matter of general policy and guidance for those at the bar.
174. If one does look at the totals and compare them, and the headlines show that for leaders of a multiple of 4, nigh on 70,000 as against a total of 17,500, which includes two hearings and also the preparation of the principal submissions for that first hearing which narrowed down the ambit of the principal arguments as requested by Mummery LJ. As far as juniors are concerned, it is not so different; 25 against 15.
175. As far as solicitors are concerned it is 35 odd against 15, which is an enormous bill of solicitors' costs. I do not know if your Lordships have seen those which are attached. Mr Webster, if one just looks, for example: 24th March, 4½ hours, "Instructions to Leading Counsel", 1,282. There is then, on 30th March, a conference attended by both Mr Price and Mr Webster, which costs something like £3,000.
176. One goes over the page, "Note of Conference with Counsel"; 31st March, "Working on File", £1,300; dictating note of conference; 1st April, going through first draft of note of conference with counsel, making amendments and forwarding to leading counsel, that is five hours, £1,400. Then there is receiving leading counsel's skeleton on 4th April.
177. One goes on then down to 7th April, "Review of File", 2 hours, 570. Various smaller items, 22nd April, "Considering Junior Counsel's Note to Leading Counsel". Then over the page, 9th May, "Perusing Transcripts of Evidence", one sees the like. Over the page, perhaps more strikingly, 17th May, "Preparing for Conference", nearly £1,000. Then, "Note of Conference", 18th May. A transcript of permission hearing read, review e-mails, received skeleton argument from junior counsel, received revised skeleton from junior counsel, 1,700. Then it goes on, 20th May: a 10.30 conference with leading junior counsel, drafting letter, et cetera, 900. 24th May, £1,700: discussing latest draft of skeleton, proposing conference, further conference until 3.00pm, working on skeleton and appeal bundle, conference with junior counsel going through last --
178. LORD JUSTICE LLOYD: It certainly seems to have been done on an intensive basis.
179. MR SOOLE: It is almost worth being sued in that sense. 25th May: work on appeal bundles and e-mails to counsel, 1,852. So there is six and a half hours on 25th May. Then the bundles come back in again on 27th May, I think it is 11 hours then on appeal bundles. 31st May, "Transcript of Judgment".
180. In context, the total -- if one goes back to the short note -- Mr Webster is 110 hours, one has 35 chargeable hours a week, that is about 3 weeks work, perhaps it is a little less than that. Going back to the sequence: 1st June, work on judgment, slow read through, correct scanning errors, et cetera; 2nd June, all work today, £1,400.
181. My Lord, so it goes on. Over the page, 8th June: e-mails to counsel, reviewing junior counsel's latest note; 9th June, some relatively unspecified work totalling 7.42 hours, 2,142; long e-mail re skeleton. There was a lot of work on the skeleton. Then down to 14th June: final skeleton received, read through. Then one has, on 28th June, at the foot of the page, both Mr Price and Mr Webster's charges for preparing and attending the Court of Appeal £1,600, plus £1,500, and the like, and various unidentified items towards the end of that.
182. I appreciate it is difficult for your Lordship to take that line by line, which is what a summary assessment requires, but it is, in my submission, a case where an agricultural scythe could be taken to this and to say it really is so disproportionate and we shall do our best to make a figure rather than have us going to a costs judge albeit with strong words of comment.
183. LORD JUSTICE BROOKE: Anything you want to add?
184. MR ROBERTS: My Lord, yes. Your Lordship has raised his eyebrows at this bill and plainly it has to be justified.
185. LORD JUSTICE BROOKE: Our litigation system in this country is practically collapsing because of practitioners' demands for money. It really is.
186. MR ROBERTS: Well, my Lord, these observations are at your Lordship's prerogative.
187. LORD JUSTICE BROOKE: It is based on 40 years' experience.
188. MR ROBERTS: Based, as you rightly say, on 40 years' experience. There is nothing I can gainsay about those. What I have to do here, my Lord, in the narrow compass, is make some submissions for my client and leave it at that. What I am saying to your Lordship is that plainly this is a large bill and we have to justify it. We accept that. But the most appropriate form to justify it is in detailed assessment. Attractively as ever, Mr Soole urged on your Lordships a different course. That is all very well, but injustice can arise from taking that course. Taking the swinging agricultural approach, as my learned friend urges upon you, is all very well, but it may indeed not be entirely fair to my client if, in fact, in the fullness of time and in the proper form for justifying the bill, a greater justification is shown for this bill than Mr Soole would otherwise wish us to show.
189. The ball is in our court, I accept that, and there it remains, but it would be equally unfair, in my submission, having taken agin the bill to start with, if one then takes a cutlass to it and chops it down in a fairly rough way. So I do urge on your Lordships to go down the detailed assessment route and I do ask for an interim payment in a sum that patently Mr Soole and his instructing solicitor regards as entirely reasonable.
190. LORD JUSTICE BROOKE: We will retire for a moment.
(Short Adjournment)
191. LORD JUSTICE BROOKE: There is no dispute that the appellant should pay the respondents' costs of this appeal, to be assessed on a standard basis. There are two issues we have to determine. The first is whether we should attempt a summary assessment of the respondents' costs and, second, as to whether any amount of money should be paid on account. On the first it appears to us that this is not an appropriate case for a summary assessment. The helpful guidance as to costs in the Court of Appeal suggests that a case which was originally listed for a day and a half involving leading counsel is not immediately obvious for summary assessment and having looked at the detailed schedules it seems to be inappropriate for us to take an axe or scythe, as Mr Soole enduringly suggested we should do, to a bill for not less than £132,953 for an appeal in the Court of Appeal which lasted only one day.
192. We therefore direct that there should be a detailed assessment. We are extremely concerned about the size of the respondents' bill and we direct that papers should be initially lodged with the senior costs judge so that he can either undertake the assessment himself or can direct a suitably tough costs judge to undertake the assessment.
193. So far as payment on account is concerned, we were, at one stage, tempted to say that nothing should be paid on account in view of the enormity of the bill posed before us. Second thoughts have prevailed and we consider it appropriate to order £25,000 to be paid on account.
194. MR SOOLE: My Lord, can I ask one matter, and that is to the costs of today?
195. LORD JUSTICE BROOKE: They lie where they fall.
196. MR SOOLE: The position is that on Friday we were told for the first time that indemnity costs would not be sought --
197. LORD JUSTICE BROOKE: Who was not going to claim indemnity costs? You or them?
198. MR SOOLE: They wrote to us before the appeal, after leave and before the appeal, saying they would be seeking indemnity costs at the end of the trial. That was only abandoned on Friday.
199. LORD JUSTICE BROOKE: The kindest thing would be that costs should lie where they fall. Do you have anything to say about that, Mr Roberts?
200. MR ROBERTS: Well, they follow the event.
201. LORD JUSTICE BROOKE: It is a pretty unsatisfactory event for you considering what you are asking for. I dare say Mr Soole might have conceded it.
202. MR SOOLE: We said at least 30,000 in our note which I re-wrote having heard there was not --
203. MR ROBERTS: That note was not presented to me until this morning. If I have to go into this, Mr Soole only tried to get in contact with me at 5.30 on Friday night.
204. LORD JUSTICE BROOKE: We do not encourage these hearings. I dare say you could have agreed 25,000 on detailed assessment. Anything else you want to add?
205. MR ROBERTS: No, just, as I understand it, the costs of today follow the event.
206. LORD JUSTICE BROOKE: Yes, at the discretion of the court.
207. LORD JUSTICE LLOYD: No order for costs for today.
208. LORD JUSTICE BROOKE: What I am suggesting is no order for costs of today. They should lie where they fall.
209. MR ROBERTS: I understand.
210. LORD JUSTICE TUCKEY: You were asking for 100,000, he was asking for summary assessment. He has not got summary assessment and you have not got 100,000.
211. LORD JUSTICE LLOYD: So the appellant to pay respondents' costs except for today. No order of costs for today.
212. MR SOOLE: My Lord, I must ask for permission to appeal.
213. LORD JUSTICE BROOKE: We must refuse it.