England and Wales High Court (Senior Courts Costs Office) Decisions

IN THE HIGH COURT OF JUSTICE
SUPREME COURT COSTS OFFICE

		Cliffords Inn Fetter Lane London EC4A 1DO
		18th October 2006

MASTER HAWORTH:

1. These are two applications made by the defendant, News Group Newspapers Limited, arising out of proceedings brought by Ashley Cole and compromised by way of a Tomlin order on 23^rd June 2006. I do not propose to go into the history of that matter, save to say that it was alleged that a substantial libel had been committed by the defendants and an offer of amends, was made on 21^st April 2006, was accepted on 23^rd June, On 27^th September 2006, the claimant's solicitors served a notice of commencement of their bills of costs in respect of their costs in this matter, which, I should say, it had been agreed in the Tomlin order defendants would pay. I will come back to the question of the precise terms of the agreement as to costs in due course.
2. On 27^th September 2006, bills of costs were served. I am advised that those bills of costs exceed some £400, 000, and it is apparent from the bills of costs that the claimant's solicitors were engaged by the claimant under the terms of a CFA agreement. That agreement has not been disclosed. Voluntary disclosure has been refused and applications are, therefore, made by the paying party for disclosure of those agreements pursuant to 47. 14 and costs practice direction paragraph 40. 14, The applications are supported by a witness statement from Julian Charles Pike dated the 10^th October 2006, and I have also seen a witness statement from Navinder Singh Grover, the claimant's solicitor, dated the 17^th October 2006. No points of dispute have been served at this stage, indeed the principal ground made out by the paying party for this application is that it will save costs were I to make an order that the CFA be disclosed at this stage. It would narrow the issues between the parties and effectively enable them to fully prepare their points of dispute for service.
3. The paying party relies on the case of Hollins v Russell which is a Court of Appeal case, and I have been taken extensively to various aspects of that case. The paying party's principal argument is that a procedure has grown up of late, subsequent to Hollins v Russell, whereby CFAs are, as a matter of course, routinely disclosed prior to detailed assessment or at the commencement of detailed assessment proceedings. In particular, the paying party prays in aid, at paragraphs 79 and 80 of the judgment, although I have also been referred to paragraphs 53, 71 and 82.
4. To paraphrase paragraph 79, the Court of Appeal, in their judgment in Hollins v Russell, said, "As we have explained, we consider that the costs judge has ample powers which he should normally exercise to put the receiving party to his election as to whether to produce a copy of the CFA to the paying party", and, in paragraph 80, "We conclude, therefore, that if [in costs proceedings] a party seeks to rely on the CFA as a matter of fairness, she should ordinarily be put to her election under the Pamplin procedure. This procedure applies whether or not the document is privileged. It is no answer to an exercise of the discretion to contend that the document is privileged", and I say at this point that the receiving party states quite clearly that the document, which is the CFA in this case, is, in their view, a privileged document.
5. Paragraph 80 goes on to say, "This is not simply because of the fact of reliance, but because of the centrality of the CFA in an assessment of costs in which a CFA is relied upon. If the party does not wish to produce the CFA, she can, theoretically, undertake to prove the terms of the agreement in some other way. Moreover, there may be exceptional cases in which the costs judge is prepared to say that no purpose would be served by the disclosure of the CFA. However, we have been unable to think of any circumstances in which this might arise but the possibility exists".
6. Reliance is placed by the paying party oil Hollins and also the Pamplin procedure, which effectively is the procedure whereby a party is put to an election. The paying party says I should make my order now with a view to saving costs.
7. An issue was raised with regard to estoppel, and that arises from the wording of the Tomlin order. At paragraph 3 of the order recites that the defendant "do pay the claimant's costs of this action on the standard basis, to be assessed if not agreed, to include the success fee payable under the terms of the conditional fee agreement". The schedule at paragraph 2 refers to the fact that the claimant and defendant agree that the success fee is not payable by the defendant upon costs incurred in relation to work undertaken by the claimant specifically in respect of paragraphs 9 to 13 of the particulars of claim. In other words, a standard order for costs whereby the paying party argues that it is not estopped from raising the generality of the terms of the CFA and whether it complies with the appropriate regulations or the section 50 test of the Act, and hence is another reason why they wish to see the agreement now.
8. From the receiving party's side they contend, that this application is premature, that the assessment procedure is not yet engaged and, more particularly, the Pamplin procedure for an election is not engaged. Accordingly there is no material before the court for the court to take any view with regard to the CFA. It has not been voluntarily disclosed, professional privilege is claimed in relation to it, and, in the circumstances, they say that the Hollins v Russell test was a test that was relevant when the 2000 CFA Regulations were in place. Now that they no longer apply from 1^st November 2005, it being agreed by all parties that this CFA postdates the old regime, and, therefore, is subject only to the s. 58 test of the Act, and the provisions of Rule 15, as amended from I^st November 2005 by the Solicitors Costs and Information Regulations. As a separate argument, they claim estoppel in the light of paragraph 3 of the Tomlin order in relation to the argument that the paying party is entitled to review the terms of the CFA, save for the level of success fee.
9. It is fair to say that in the course of this application, and prior to today's hearing, a detailed statement of reasons has been disclosed by the receiving party. They make the point that this was done voluntarily and that there is no legal requirement that they should have to do so.
10. Dealing with the question of whether the application is premature or not, I was referred by the paying party to the Civil Procedure rules, and in particular, 47. 6, commencement of detailed assessment proceedings, 47.6.1, "Detailed assessment proceedings are commenced by the receiving party serving on the paying party" and there then follows the detail of what must be served.
11. It is clear from any reading of 47.6 that detailed assessment proceedings have been commenced and certainly from that point of View, costs proceedings are afoot between the parties. What is also clear from the evidence is that no points of dispute have been served and, as a result, the provisions of 47.14 are not yet engaged. Rule 47.14 deals with the detailed assessment hearing and refers to the filing of various documents and obtaining of directions from the court as to a date and how a detailed assessment hearing should progress.
12. It is relevant to note that 47.14 is backed up by a very detailed section in the costs practice direction at paragraph 40, which, for example, at 40.2(i), deals with the specific request that where there is a dispute as to the receiving party's liability to pay costs to the solicitors who acted for the receiving party, any agreement, letter or other written information provided by the solicitor to his client explaining how the solicitor's charges are to be calculated should accompany the papers that are lodged with the bill for the assessment procedure.
13. Furthermore, at paragraph 40.14 (and this is an important provision, in a sense a draconian provision so far as the receiving party may be concerned), is that the court may direct the receiving party to produce any document which, in the opinion of the court, is necessary to enable it to reach its decision. These documents will, in the first instance, be produced at the court, but the court may ask the receiving party to elect whether to disclose the particular document to the paying party, in order to rely on the contents of the document, or whether to decline disclosure and instead rely on other evidence. In essence, this is the codifying of the Pamplin procedure into the costs practice direction. What is clear is that that procedure cannot be engaged before the detailed assessment, or a request for detailed assessment has been sought pursuant to rule 47.14. It is clear, beyond any doubt, that no such request has yet been made, for the obvious reason that there are not yet points of dispute. There is not in that sense a dispute engaged between the parties in relation to the issue of costs.
14. At first blush it seems a very sensible application that the paying party makes to ascertain the details of the agreement at this stage and to decide whether there is to be a dispute or not. However, when one analyses the situation and the questions raised in Hollins v Russell, it perhaps turns the coin the other way round. The Court of Appeal did say in paragraphs 79/80, which was equally prayed in aid by both receiving and paying party, is that the costs judge has ample powers which he should normally exercise to put the receiving party to her election as. to whether to produce a copy of the CFA to the paying party. I can, of course, only exercise those powers, to which I have just referred, once the detailed assessment hearing has been applied for and rule 47.14 is engaged. Similarly, in paragraph 80, whilst there is a reference to costs proceedings, which clearly have commenced in relation to this matter, if a party seeks to rely on the CFA, as a matter of fairness, she should ordinarily be put to her election under the Pamplin procedure. That, all parties agree, is the procedure under rule 40.14 which is not yet engaged, irrespective of whether the document is privileged.
15. In relation to the argument by the receiving party, that this application is premature, I incline to that view. This is an application that could have been made once a detailed assessment hearing has been sought. It is an application that can still be made once a detailed assessment hearing has been sought, and m those circumstances it would appear to me that I then would have the full panoply of the provisions of rule 47. 14, and paragraph 40 of the Costs Practice Direction, available to me. At this stage, and in my judgment, I do not. In relation to the paying party's application justice and fairness dictates that I should engage any other rules or directions which may be available to me under either the overriding objective of rule 1 of the CPR or the general case management directions under rule 3.
16. When one reviews the Pamplin decision, which, again, was quoted extensively by both parties to me, it does seem clear that in the judgment of Hobhouse J., the essence of the question is to identify the stage at which the claimant has to be put to his election. I appreciate that this as a decision made well before CFAs were even contemplated by the then Lord Chancellor. I have no doubt that the "election stage" is not reached when the claimant lodges his documents under the old Ord. 62, r.21 of the practice rules. At that stage the claimant is simply complying with the requirements of the rules. The fact that the Master goes through the lodged documents does not at that stage raise any problems of natural justice.
17. Whilst it may be helpful for the paying party to have a copy of the CFA at this stage, in my judgment, I do not have the power to make the order which is sought. Certainly the basis upon which the application is made is misconceived, in that the application is made under r.47.14 and the costs practice direction.
18. The Supreme Court Costs Office Guide, which is currently being revised, but with the 2002 version, at paragraph 10.5, clearly presupposes these issues with regard to avoiding or minimising the expense and delay of production of documents at detailed assessment. Whilst it would be clear from the judgment that I have given that I intend to dismiss the applications made by the paying party today, as night follows day, when this matter comes back before the court, as it is bound to do, unless the costs are resolved by agreement, then it will be necessary for the court to case manage this detailed assessment very closely, and it may very well be that at that stage a disclosure of the CFA is appropriate. If such disclosure necessitates some amendment to the points of dispute, then so be it that will have to take place, but is a matter for another day.
19. I have left open the question of the estoppel which was raised by the receiving party in its witness statement. This does not require me to make a judgment in relation to the estoppel point today. Again, it is a matter which I leave open and it may well be argued again on another occasion. So, for all those reasons, I intend to dismiss the applications made by News Group Newspapers Limited.

MASTER HAWORTH: Yes, Mr. Bowden, do you have any other applications?

MR. BOWDEN: Just for cur costs, Master. There is a statement of costs here. My learned friend, you may have noted in his witness statement, was seeking costs on an indemnity basis. I have no such need. This is my learned friend's statement of costs as well. You will see they are broadly similar.

MASTER HAWORTH: Broadly similar?

MR. BOWDEN: Indeed, Master. There is a notable difference. Our costs are actually less than theirs.

MASTER HAWORTH: Yes, although you have referred to a success fee.

MR. BOWDEN: Although we have a success fee on ours.

MASTER HAWORTH: I do not suppose were wanting me to give you your success fee. This is a summary assessment of the costs of today, is it not?

MR. BOWDEN: I suspect it is a summary assessment and the usual order, I suspect, on a summary assessment, and I can take you to the rule, would be for base costs to be summarily assessed and the success fee to be reserved pending the next hearing.

MASTER HAWORTH: Yes, further on.

MR. BOWDEN: Or perhaps the one after that, Master. I do not know if my learned friend has any objection to our costs.

MASTER HAWORTH: I am not going to order any success fee.

MR. PIKE: Master, I am grateful.

MASTER HAWORTH: Which may be a contradiction in terms.

MR. PIKE: Bit harsh.

MASTER HAWORTH: So you have got the base costs of £3,500.

MR. PIKE: Master, yes.

MASTER HAWORTH: Do you want five minutes?

MR. PIKE: Master, you are going to pick a figure and, being pragmatic about it, I would not object if that figure was £3,000.

MR. BOWDEN: There is no objection there, Master. My learned friend's own costs are £4,000. His rates are higher, his time is higher. We have a costs draftsman on this side, we have a partner on that side.

MASTER HAWORTH: Whilst we may have disagreed about how I have arrived at the decision, you were absolutely on the button with the figure that I had in the back of my mind; with regard to costs. I am going to summarily assess the costs of the application at £3,000, I assume plus VAT?

MR. BOWDEN: Yes, Master.

MASTER HAWORTH: All right. When I said I dismissed your application, I dismissed the application in so far as the disclosure of CFA.

MR. PIKE: That is right.

MASTER HAWORTH: If you have a further application

MR. PIKE: Obviously we need an extension of time to serve

MASTER HAWORTH: To serve the points of dispute.

MR. PIKE: The draft order sought 21 days from the date of the election. Clearly that is not appropriate. So I would suggest, probably 14 days should be sufficient from today.

MASTER HAWORTH: From today? Any objection to that at all?

MR. BOWDEN: We are in some difficulty, Master, because there is no request for an extension other than on the basis of the fact they will need to see the CFA. They started working on the points of dispute, Master. We know that because

MASTER HAWORTH: It is two bills. It is £400,000.

MR. BOWDEN: Fourteen days, Master.

MASTER HAWORTH: As you rightly pointed out, it is not a personal injury action, is it?

MR. BOWDEN: It is straightforward, I think, on any stretch of the imagination, and there has not been a huge amount — when was the bill served? The 27^th September?

MR. PIKE: It is 21 days ago, Master.

MASTER HAWORTH: I think 14 days. Are you happy with 14 days?

MR. PIKE: I think that should be fine.

MASTER HAWORTH: So that takes us to 1^st November, does it not?

MR. PIKE: Actually, Master, I know that I am away that day. Can I just ask that it be the end of that week, which would be the 3^rd.

MASTER HAWORTH: So 4 o'clock, the 3^rd.

MR. BOWDEN: I am sure we can live with the 3^rd, Master.

MASTER HAWORTH: Time for serving points of dispute extended to 4. 00pm, 3^rd November 2006. Any other orders?

MR. BOWDEN: I am sure we can agree between us the wording for the success fee.

MASTER HAWORTH: I am just going to say, base costs summarily assessed at £3,000. That is the simplest way of doing it, is it not, and then it remains a live issue, does it not?

MR. BOWDEN: Yes, Master. Hopefully a simple calculation sometime later down the line.

MASTER HAWORTH: All right Thank you very much.