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

IN THE HIGH COURT OF JUSTICE
SUPREME COURT COSTS OFFICE

		Clifford's Inn, Fetter Lane London, EC4A 1DQ
		4th December 2007

Master Campbell:

1. In this judgment I provide my reasons for dismissing the following application issued by the Claimant ("Ruttle") against the Defendant, ("DEFRA") on 1 November 2007:-

"We [Ruttle] intend to apply for an order that [DEFRA] do disclose by provision of invoices or accounts for the period 1 July 2002 to 30 June 2005 details of the costs incurred by the Defendant in respect of the provision of accountancy, building and quantity surveying services provided to it in the course of this litigation. Such disclosure to identify the time charged by the individuals who provided those services because the provision of such information is likely to assist the court in whether [Ruttle's] internal costs were proportionately and reasonably incurred."

2. At the hearing of the application, Mr Spink QC appeared for Ruttle and Mr Acton-Davis QC represented DEFRA. A witness statement made by Allan Edward Yates on 29 October 2007 supported the application to which Diane Mary Bennett of Eversheds LLP Solicitors, responded on 14 November 2007 on behalf of DEFRA. As I have said, at the conclusion of argument I dismissed the application with reasons to follow.

BACKGROUND

3. On 22 January 2007 I handed down a judgment on Preliminary Issues, "Campbell 1". At paragraphs 4 to 5 I outlined briefly the nature of the litigation between Ruttle and DEFRA. In his judgment on appeal from Campbell 1 on 12 July 2007, Griffith Williams J set out the background in more detail at paragraphs 2 to 5. For the purposes of this judgment, it is unnecessary to say more.

THE DETAILED ASSESSMENT PROCEEDINGS

4. Ruttle is entitled to costs under the terms of an order of His Honour Judge Thornton QC sitting in the Technology and Construction Court dated 30 June 2005. On 30 September 2005 Ruttle commenced proceedings for detailed assessment by serving on DEFRA under CPR 47.6 a bill which claimed £1,206,815.67 for the costs incurred by Ruttle's solicitors, Yates Barnes (including counsel's fees and other disbursements). Of this sum the internal costs of Ruttle's quantity surveying team amounted to £655,374.37. Only the latter costs remain outstanding, Yates Barnes' costs having been agreed long since.
5. Mr Spink QC's Skeleton Argument dated 19 November 2007 sets out concisely and uncontroversially what happened next:-

"7 … The subsequent history of the assessment of Ruttle's internal costs is set out in paragraphs 3 to 6 of Mr Yates' witness statement but in essence, it has been dominated by a dispute between the parties as to (a) the recoverability of such of Ruttle's internal costs as are' non-expert' in nature and (b) the correct application of the indemnity principle to those costs. The latter issue (indemnity principle) was resolved by Master Campbell in his judgment dated 22 January 2007 without successful appeal by either party. The former issue (recoverability of non-expert internal costs) was not resolved until 24 July 2007, when Griffiths Williams J allowed Ruttle's appeal against the decision of Master Campbell that recovery of Ruttle's internal costs was limited to costs incurred on work of an "expert" nature. As a result, the distinction between "expert" and "non-expert" internal costs has disappeared and Ruttle is entitled to recover on assessment all its reasonable and proportionate internal costs including those costs incurred in respect of Matthew and Daniel Ruttle [members of the Ruttle QS team]."

THE NATURE OF THE APPLICATION DATED 1 NOVEMBER 2007.

6. The issues for decision (again succinctly summarised by Mr Spink QC) are twofold:-

"(1) Does the court have any power to order DEFRA to provide the information sought by Ruttle within the detailed assessment proceedings?

(2) If there is such a power, should the court exercise it?"

7. Insofar as (1) is concerned, the Application Notice contended for such a power of disclosure but during the course of argument, Mr Spink QC ceased to argue for full disclosure and instead limited his submission to the provision of information by DEFRA to the court.
8. In respect of (2), were the court to find that it had power to order disclosure and/or the provision of information by DEFRA, the following would require determination in order for the court to decide whether, in all the circumstances, the provision of information should be ordered. They are:-

(a) whether the information sought is relevant;

(b) whether it would be disproportionate to provide the information; and

(c) whether the application is brought too late.

THE SUBMISSIONS FOR RUTTLE

9. In his submissions on behalf of Ruttle, Mr Spink QC argued that the court would be assisted in carrying out the detailed assessment if it could compare how much each side had spent on accountancy, building and quantity surveying services during the litigation. For its part, the internal QS team at Ruttle had spent many hours working on the case which, in Campbell 1, I had described as "enormous" (a word carefully chosen)". In Mr Spink QC's submission, whether or not Ruttle's costs were "enormous" could only be fairly gauged if the court was able to carry out a comparison with the level of charges that DEFRA had incurred over similar periods of time. For example, from November 2002 until July 2003 DEFRA had retained Gardiner Theobald Fairway ("GTF") as their external quantity surveying consultants. GTF had spent nine months working as a team on the accounts producing material for the Scott schedule. If the court could be apprised of how much GTF had charged for this work, this would be a useful yardstick by which to gauge whether the costs claimed by the Ruttle QS team were reasonable.
10. Mr Spink submitted that there is a power which would permit the court to order DEFRA to provide information of this nature within the detailed assessment process. He drew my attention to the judgment of Judge LJ in Bailey v IBC Vehicles Ltd [1998] 3 All ER 570 at 573, when the learned Lord Justice said this:-

"The taxing officer is exercising a judicial function with substantial consequences for the parties. To perform it he is trusted properly to consider material which would normally be protected from disclosure under the rules of legal professional privilege. If, after reflecting on the material available to him, some feature of the case alerts him to the need to make further investigation or causes him to wonder if the information with which he is being provided is full and accurate, he may seek further information. No doubt he would begin by asking for a letter or some form of written confirmation or reassurance as appropriate. If this were to prove inadequate he might then make orders for discovery or require affidavit evidence … If all else fails, it would theoretically be open to him to order interrogatories … This jurisdiction having been acknowledged, an emphatic warning must be added against the over-enthusiastic deployment of these powers, particularly at the behest of the party against whom the order for costs has been made."

11. Whilst Mr Spink recognised that the power to exercise a judicial function in this way would most usually be carried out in the context of the court requiring information from the receiving party, nowhere in the judgment was it stated that the power did not extend to the paying party. On the contrary, where the provision of information flowing to the paying party would assist the court, it would be iniquitous and contrary to the principles of natural justice if the power to order provision was exercisable only against the receiving party and not against the paying party.
12. Mr Spink next drew attention to the delicate mechanism which the court engages to deal with privileged information on detailed assessment. He referred to Pamplin v Express Newspapers Ltd [1985] 1 WLR 689, which dealt with the issue of disclosure by a receiving party of privileged information and the fact that that mechanism is now enshrined in CPR 47 Practice Direction Section 40.14. The Section 40.14 procedure enables the court to direct the receiving party to produce any document which, in the opinion of the court, is necessary to enable it to reach its decision. Any such documents will first be produced to the court, which thereafter may ask the receiving party to elect whether to disclose a particular document to his opponent in order to rely on the contents of the document or to decline disclosure and instead rely on other evidence. Mr Spink accepted that the court cannot order disclosure of privileged documents; his submission stopped short of that ; Ruttle was simply asking the court to conclude that information from DEFRA was required if a detailed assessment was to be conducted fairly and that this information could be given in a letter from DEFRA's solicitors or in a witness statement.
13. Mr Spink gave an example of the exercise of the power to seek information from a paying party. This would arise where such a party is asked by the Costs Judge for information about the costs it incurred in unsuccessfully defending the receiving party's claim in relation to counsel's fees. In such a situation it is plain that the Costs Judge is likely to be assisted in assessing the reasonableness of the fee claimed by counsel for the receiving party by knowing the fee charged by counsel for the paying party. Such information is "certainly a factor of weight but not … by any means conclusive" (see judgment of Pennycuick J in Simpson's Motor Sales (London) Ltd v Hendon Corporation (No.2) (1965) 1 WRL 112 at page 119.
14. Mr Spink rejected the proposition advanced in Miss Bennett's witness statement that to provide the information would be disproportionate. Simply knowing, for example, the hourly charging rate made by DEFRA's experts (for example, Mr de Kock) would assist the court in working out the overall reasonableness of the fees claimed by the Ruttle QS team. Such an exercise would not be disproportionate.
15. As to delay, Mr Spink pointed out that Ruttle's application had been sent to the court for issue on 29 October 2007, over five weeks before the date fixed for the detailed assessment. It had originally been listed for 13 November but was moved back in order to accommodate DEFRA's leading counsel. In any event, the fact that an adjournment of the assessment hearing might be necessary was not a good reason for declining to make a proper order that would assist the court. For these reasons Mr Spink submitted that an order should be made against DEFRA to provide information which would assist me on the detailed assessment, such an order to be distinguished from full disclosure of documents which might include privileged material.

THE SUBMISSIONS ON BEHALF OF DEFRA

16. Mr Acton-Davis QC opposed both the application for disclosure set out in the application notice and the case advanced orally by Mr Spink for the provision of information. In the first place, Mr Acton-Davis contended that there is no power in the Rules or elsewhere which permits the court to order a paying party to disclose or otherwise provide information for use on detailed assessment. Whilst he accepted that CPR 40.14 enabled the court to direct the production of particular documents which might be necessary to enable the court to reach a decision, this power was directed at "the receiving party"; the paying party is not mentioned. As to Bailey and Simpson's Motor Sales, Mr Acton-Davis submitted that these cases were not relevant and were, in any event, against the submissions advanced by Mr Acton-Davis. In Bailey the power to be exercised by the Costs Judge, if at all, was against the receiving party, not the paying party, whilst in Simpson's Motor Sales, what Pennycuick J had actually said was that it is not a sound principle of assessment to use the fees paid to counsel by one side as a yardstick to judge the reasonableness of the fees to pay the other side.
17. Mr Acton-Davis next drew my attention to the real reason that lay behind Ruttle's application; it was clear from the bill that Ruttle lacked the records which would enable the QS team to justify their costs on detailed assessment. To make good this submission, he took me to various sections of the bill which indicated that, on particular days for which costs were claimed, the fees in question had not been attributed to any particular task. In fact, the purpose of Ruttle's application was to permit a receiving party to plug the holes in its inadequate internal records by reference to the work which DEFRA had undertaken during the litigation. Expressed differently and more colloquially it boiled down to this - "You show us what you, DEFRA, did and we will use that material to prove what we could not otherwise prove in order to support our fees". In any event, the information sought was irrelevant. It would be disproportionate to put DEFRA to the time, trouble and expense of providing it and in any case Ruttle were too late.

DECISION

18. At the conclusion of argument I informed the parties that the application would be dismissed because I did not consider that there is any power available to the court in detailed assessment proceedings under which a paying party can be compelled to produce invoices or accounts (whether by letter, witness statement or otherwise) in relation to professional services they have used during the course of litigation. Firstly, I am not persuaded that I can rely on Bailey in the way urged upon me by Mr Spink. In my opinion, the mind of the Court of Appeal was directed at situations which might arise on the detailed assessment of a receiving party's costs, with particular reference to privileged material, where some feature of the case gives the Costs Judge such cause for concern that he considers further investigation is necessary. What was not the subject of argument in the Court of Appeal in Bailey was whether further investigations could or should be made against a paying party. In my judgment this is unsurprising. On detailed assessment, there is no requirement upon a receiving party to lodge with the court every scrap of paper that the case in question has ever generated. On the contrary, it is a matter for a receiving party to chose those papers which he wishes to deploy and those which it does not. If, in exercising its powers under CPR 40.14, the court directs that a particular document should be produced, the receiving party can decline to comply on the grounds that it will no longer pursue the claim for the particular item in question. An example would be the costs of a potential expert who sought a fee but produced no material such as a receipted invoice to justify the charge. In my opinion, if the court cannot compel a receiving party to produce material when CPR 40.14 is engaged, a fortiori it cannot do so against a paying party whose papers are not, in any event, the subject of detailed assessment.
19. I derive no assistance, either, from Simpson's Motor Sales. Whilst I accept Mr Spink's submission that the costs incurred by a paying party can be a useful yardstick in deciding the reasonableness of the costs of the receiving party, the way in which this information comes to the attention of the court is through it being volunteered by the paying party. It frequently arises on assessment, for example, that a paying party will challenge a brief fee by reference to the sum it paid his own counsel. On other occasions, when the paying party has agreed a higher brief fee than the receiving party, the item is unlikely to be challenged. Although it is often useful to know how much a paying party has expended on a particular counsel or expert, in my opinion the court cannot compel a paying party to disclose this information. After all, it is the bill of the receiving party and not the paying party which is under scrutiny. It follows, for the reasons I have given, the application fails.
20. In case I am mistaken, it is appropriate I should consider that if, contrary to my finding, I would have ordered the provision of further information if empowered to do so. First and foremost, as I have said, I accept to a considerable extent Mr Spink's submission that knowing how much the paying party expended on a particular counsel or expert can be useful in deciding the reasonableness of the fees claimed by receiving parties to their respective counsel and experts. However, as Simpson's Motor Sales makes clear, what is sauce for the goose is not sauce for the gander. The level of fees paid by one party is simply a point to weigh up in the overall assessment of the fee when deciding how much to allow. Equally persuasive is Mr Acton-Davis's submission that a receiving party who declines to put material before the court in support of his claim, (either because there is none or because he does not wish to do so), should not be permitted to bolster his own inadequate records by reference to information that an opponent may have to plug the gaps. In the present case, Ruttle has not been in person, but has had the benefit of advice from solicitors throughout the claim. I do not know the nature of that advice, but it occurs to me that at some point the issue of maintaining adequate records which would be required on detailed assessment to justify the costs of the Ruttle QC team, ought to have been discussed. Detailed assessment is adversarial; if Ruttle kept inadequate records, then in my judgment it cannot expect to look to DEFRA for information to make good the gaps. For these reasons I would not have exercised my discretion or powers (if they existed) in favour of Ruttle in relation to the provision of further information from DEFRA. In view of these conclusions, whether or not the application was issued late is no longer relevant.
21. For completeness I should add that the Court can issue a witness summons requiring a party to produce documents to the Court (see CPR 34), but I shall say no more about the point as neither party raised it during the course of argument.

NEXT STEPS

22. The application is dismissed. If Ruttle wish to apply for permission to appeal, time is extended until 21 days have elapsed from the handing down of this judgment. Any application for permission should be made in writing to save costs. The parties need not attend when this judgment is handed down unless they wish to do so.