England and Wales Court of Appeal (Civil Division) Decisions

IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
(HIS HONOUR JUDGE BARKER QC)

		Royal Courts of Justice Strand London WC2A 2LL
		15 March 2016

LORD JUSTICE JACKSON:

1. This judgment is in four parts, namely:

Part 1. Introduction.

Part 2. The facts.

Part 3. The present proceedings.

Part 4. The appeal to the Court of Appeal.

Part 1. Introduction
2. This is an appeal by a Jersey advocate against a summary judgment holding him liable for the fees of English counsel whom he had instructed. The central issue in the appeal is whether the judge erred in summarily assessing those fees.
3. The claimant in these proceedings is Mr Kuldip Singh QC, a barrister practising at Serle Court Chambers in Lincoln's Inn. The defendant is Mr Philip Sinel, an English barrister who qualified as an advocate in Jersey in 1987. Mr Sinel is the principal of Sinels Advocates in Jersey. He is currently suspended from practice in Jersey by reason of misconduct.
4. Trant Construction Limited is a construction company incorporated in England and based in Southampton. At all material times Mr Patrick Trant was chairman of the company. His brothers, Timothy and Simon Trant, were at all material times directors of the company. Where appropriate, I shall refer to the company and the three directors collectively as "Trant".
5. At all material times, Peter Michel was an accountant practising in Jersey. He was principal of the accountancy firm Michel & Co.
6. Both parties to this appeal are experienced advocates. They both appear in person in this court. In the court below, the claimant appeared in person but the defendant was represented by solicitors and counsel.
7. After these introductory remarks, I must now turn to the facts.
Part 2. The facts
8. In the period before 2006 Trant carried on a variety of construction projects, both in England and abroad. One of these projects was in Jersey.
9. Trant was anxious to minimise its tax liabilities in Jersey and to that end sought the advice of Peter Michel. Mr Michel and his firm specialised in schemes designed to avoid tax. They devised one such scheme for Trant.
10. The Jersey authorities did not take a favourable view of these endeavours. During 2006 and 2007, Mr Michel was prosecuted for various offences of money laundering arising out of the schemes. He was convicted after a trial, but in 2009 the Privy Council quashed that conviction.
11. The Attorney General of Jersey sought to obtain evidence from Trant's directors for use in the criminal proceedings. He also sought to call Patrick, Timothy and Simon Trant as prosecution witnesses at the trial in Jersey. In the alternative, he sought to have their evidence taken on conmission in England.
12. The Trant brothers did not wish to have any involvement in the criminal litigation. Accordingly, they issued proceedings against the Attorney General of Jersey, seeking an order to restrain him from involving them in the criminal trial. The primary objective of the Trant brothers was to prevent any damage to the reputation of their company or themselves.
13. Mr Sinel and his firm acted on behalf of Trant in connection with the litigation. Mr Sinel instructed Mr Singh as counsel to do a large amount of advisory and drafting work in connection with the proceedings in Jersey and the related proceedings in England.
14. In May 2006, Mr Sinel telephoned Mr Steve Whitaker, the senior clerk at Serle Court Chambers, and engaged the services of Mr Singh on behalf of Trant. They agreed on a hourly rate of £500.
15. Between May and December 2006 Mr Singh carried out the work which he was instructed to do. Mr Sinel duly paid the fees for that work, albeit after negotiating a reduction.
16. In January 2007, Mr Sinel engaged Mr Singh to carry out further work. The work which Mr Singh carried out between January and April 2007 is set out in four fee notes, which I shall refer to as fee notes 1, 2, 3 and 4. Fee note 1 related to work done by Mr Singh between 8 January and 26 January 2007. Fee note 2 related to work done by Mr Singh between 15 January and 18 January 2007. Fee note 3 related to work done between 29 January and 12 April 2007. Fee note 4 related to work done between 18 and 30 April 2007.
17. Mr Sinel failed to make any payment in respect of those fee notes. Accordingly, after some delay, Mr Singh commenced the present proceedings.
Part 3. The present proceedings
18. By a claim form issued in the Chancery Division of the High Court on 1 April 2013, Mr Singh claimed against Mr Sinel payment of his four outstanding fee notes, totalling £108,694. This sum did not attract Value Added Tax because the instructing advocate was overseas. Mr Singh also claimed interest since the dates when payments became due on those fee notes.
19. Mr Sinel served a defence denying any liability to pay on a variety of grounds. The defence contended that there was no contractual or other liability to pay counsel's fees. Counsel's fees were in the nature of an honorarium, to which there was no legal entitlement. The defence also pleaded limitation. In addition, the defence disputed the quantum of the claimant's fees on the grounds set out in a document entitled "Points of Dispute". The points of dispute was a document which went through each of the four fee notes and set out what the defendant contended to be the proper amount of time required for each of the tasks undertaken.
20. The claimant was unimpressed by the defendant's defence. On 11 April 2014, he issued an application for the defence to be struck out, alternatively for summary judgment.
21. There was a hearing of that application before His Honour Judge Simon Barker QC sitting as a judge of the Chancery Division on 23 July 2014. At the start of the hearing Mr Edwards, counsel for the defendant, abandoned the limitation defence because there had been an acknowledgement of the debt within the preceding six year period. Argument proceeded on the other issues.
22. The judge held that there was no contract between Mr Singh and Mr Sinel. On the other hand, the judge held that Mr Singh was entitled to remuneration on a quantum meruit basis. He proceeded on the basis of an hourly rate of £500, which had been agreed at the outset and about which there was no dispute. The judge, after hearing argument and considering the submissions on both sides, gave judgment in favour of the claimant in the sum of £102,307.20. The judge arrived at that figure as follows. He took the amount of fees which, subject to liability, were undisputed, in the sum of £44,826. He then concluded that 90 per cent of the disputed balance was due. 90 per cent of the disputed balance was £57,481.20. By adding those two figures together, he arrived at the sum awarded.
23. The defendant was and is aggrieved by the judge's decision. Accordingly, he appeals to the Court of Appeal.
Part 4. The appeal to the Court of Appeal
24. The appellant essentially advances three separate arguments. First, he says the judge did not have before him the necessary material to assess quantum. Therefore, the judge should have sent the matter off for assessment to a costs judge. Secondly, the appellant argues that the judge did not in fact carry out an assessment. He simply plucked a figure from the air. He gave no reasoned justification for his decision. Thirdly, the appellant says that the judge did not deal with the matter as a summary assessment at all. That is clear, he submits, from an examination of paragraph 36 of the judgment. This shows that the judge was carrying out a different exercise from a summary assessment under part 24 of the Civil Procedure Rules.
25. The respondent resists each of those arguments. He seeks to uphold the judgment given below for the reasons stated by the judge.
26. The first question which I must address is whether the judge had sufficient material to assess quantum of counsel's fees. Fortunately, the dispute on quantum as presented to the judge fell within a narrow compass. The hourly rate of £500 was not in dispute. The number of hours which the claimant actually spent working on the case was not in dispute. Mr Edwards, counsel for the defendant, made it clear that he did not challenge that the claimant had done the number of hours work as shown in the fee notes; see page 17 of the transcript of counsel's argument. The argument which Mr Edwards advanced was that it was not reasonable for the claimant to do that number of hours of work.
27. Let me now look at the material which the judge had before him to assist in resolving that issue. First, there were the four fee notes which I have previously mentioned, fee notes 1, 2, 3 and 4, which set out the tasks done, the time taken and the cost at the agreed rate of £500 per hour. Secondly, there was a schedule of work done plus dates and times, which we now have at bundle C2, tab 5. Thirdly, there was a bundle of emails and correspondence which the claimant sent to the defendant in advance of doing various items of work and estimates of how long the work was likely to take. Fourthly, there was a comparison schedule in respect of a sample period, namely 8 to 26 January 2007. That schedule compares the time spent with the time estimated in advance. The two periods of time are similar. Fifthly, the judge had the defendant's points of dispute, setting out the defendant's case in respect of how long each of the tasks ought to have taken. The judge also had the benefit of full argument from both sides on the question of how many hours were reasonable.
28. Mr Sinel makes the point that the hours worked did not become reasonable merely because they coincided with previous estimates, in so far as they did coincide. Mr Sinel submits that the court below, and now this court, still has to consider whether those periods of time were reasonable. That point has some force. On the other hand, the fact that Mr Sinel acquiesced in advance to certain numbers of hours being spent on his project is a relevant factor.
29. Mr Sinel makes the point that the judge did not have the product of the claimant's work. He did not examine all the documents that the claimant drafted and so forth. On the other hand, looking at the array of bundles which were before the judge, I am quite satisfied that he did have enough evidence to carry out the assessment.
30. Mr Sinel has produced to this court two additional bundles, marked D2 and D3. It is clear that those two bundles were not put in evidence before the judge. Mr Sinel seeks to demonstrate from these bundles that the claimant did not in certain instances do the number of hours work shown on the fee notes. That argument is not open to the defendant on this appeal. The number of hours work done were conceded at first instance. That concession cannot be withdrawn on appeal. We cannot and will not reassess the number of hours work actually done on the basis of evidence which was not put before the judge.
31. I turn now to the second question. Did the judge carry out a proper assessment, or did he simply pluck a figure out of the air? The material part of the judge's judgment reads as follows:

"33. The claimant submits that the sum claimed readily identifiable on an objective basis as reasonable and, moreover, that to order an inquiry would be contrary to the overriding objective.

34. In my judgment there is considerable force in the claimant's submission. In this context I remind myself of the decision in Re Loquitur Ltd [2003] EWHC 999 (Ch) where Etherton J, as he then was, declined -- in a different case where an inquiry was sought in a much more substantial sum -- to order an inquiry. There were two main reasons. The first was that the applicant seeking the inquiry had adduced no evidence to enable the court to estimate the sum in question (a provision for liabilities); the second was that an inquiry would be contrary to the overriding objective.

35. As to the first point, in the case before me there is considerable evidence going to quantum about the work required and undertaken. As to the second, the overriding objective has been redefined since 2003 and now includes the delivery of justice at proportionate costs as an express factor.

36. Having regard to the sum in issue and the cost of an inquiry, I propose to make an order that, subject to a reduction of 10 per cent in respect of the contested sum, the defendant should pay the balance of the claim in addition to the sum accepted as reasonable by the defendant. That is rough justice but, as I see it, it accords with the overriding objective in what is a not insubstantial commercial dispute ..."

32. In relation to paragraph 35, the judge's reference to 2003 must be a slip. It was in 2013 that the overriding objective was amended in the manner outlined by the judge.
33. Mr Sinel submits that the judge gives no reasons and no explanation for the 90 per cent assessment which he made. Mr Sinel is quite right that the judge does not go through each of the fee notes item by item. On the other hand, the judge's reasoning is clear. He has made a broad brush assessment in order to deal fairly with the totality of the criticisms which the defendant advances. This is similar to the exercises which judges do every day of the week on summary assessments. The whole rationale of summary assessment is that detailed, line by line assessment of costs is often disproportionately expensive and disproportionately time consuming.
34. Mr Sinel cites the decision of the Court of Appeal in 1-800 Flowers Inc v Phonenames Limited [2001] EWCA Civ 721. He submits that the judge in the present case made the same error as the trial judge in that case. I do not agree. In 1-800 Flowers, the judge ignored the detailed bills of costs lodged by both parties. He said that (by reference to his experience in other cases) a one day case of the sort before him should not cost more than £10,000. He assessed costs in that sum. The court criticised that approach. See paragraphs 112 to 115 of the judgment of Jonathan Parker LJ, which the other members of the court, namely Buxton LJ and Peter Gibson LJ, agreed. Mr Sinel relies upon those paragraphs in the judgment of Jonathan Parker LJ.
35. I readily accept the principles which emerge from 1-800 Flowers. On the other hand, the judge in our case did not make the same error as the judge in that case. The judge in the present case paid close attention to the costs figures put forward by both parties and he arrived at a conclusion. That conclusion lay some way between the claimant's contentions on the one hand and the defendant's contentions on the other, although the judge's conclusion was very much closer to the claimant's figure than the defendant's figure. I therefore reject the second argument deployed by Mr Sinel.
36. I come now to the third issue. The defendant says that the judge did not deal with this matter as a summary judgment application at all. The first point to note is that the order which the judge made was in the form of a summary judgment. Mr Sinel countered that point by submitting that there is a conflict between the wording of the order on the one hand and the wording of paragraph 36 of the judgment on the other hand. I do not agree. What the judge has decided is that, as to the vast majority of the claimant's fees, there is no defence which has any real prospect of success. He has quantified the fees as to which the defendant has no defence at £102,307.
37. The arguments which the defendant advances under this head are really a revised version of his second argument. I reject it.
38. As Mr Singh pointed out in the course of his submissions, judges regularly carry out summary assessments of costs in large sums on the basis of less information than was available to the judge in the present case.
39. Let me now draw the threads together. The judge reached a decision which was open to him on the evidence adduced below. There are no grounds upon which this court is entitled to reverse or revise the judgment below. If Lord Justice Floyd and Lady Justice Macur agree, this appeal will be dismissed.

Lord Justice Floyd:

40. I agree.

Lady Justice Macur:

41. I also agree.