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

IN THE HIGH COURT OF JUSTICE
SUPREME COURT COSTS OFFICE
IN THE MATTER OF THE SOLICITORS ACT 1974
AND IN THE MATTER OF HERBERT SMITH LLP SOLICITORS

		Clifford's Inn, Fetter Lane London, EC4A 1DQ
		12 February 2009

Master Campbell:

1. On 19^th January 2009 I heard an application issued by the claimants on the 13^th January 2009 for an order in the following terms:-

"…the defendant do make available within 7 days of this order, hard copies of all the categories of documents specified in the defendant's notice dated 30^th December 2008, currently being withheld from inspection from the claimants."

2. The defendant is Herbert Smith Solicitors and the claimants are Rosserlane Consultants Limited, a private company registered in the Isle of Man and Swinbrook Developments Limited, a company registered in the British Virgin Islands. Until 15^th February 2008 Rosserlane was the only general partner and Swinbrook the only limited partner of a Scottish limited partnership know as Caspian Energy Group LP ("Caspian"), registered in Scotland under the Limited Partnerships Act 1907.
3. The documents mentioned in the order sought belong to Credit Suisse International ("Credit Suisse") and concern transactions to which I shall refer involving (inter alia) Caspian, Rosserlane, Swinbrook and Credit Suisse (for whom Herbert Smith act). Although Credit Suisse have made available for inspection certain categories of these documents which fill 16 lever arch files, I understand that agreement to disclose the balance (another 5 or 6 files) is being withheld. It is those documents which are itemised in the notice of 30^th December 2008 that the claimants wish to see. A subsidiary but important point concerns the adequacy of a breakdown of Herbert Smith's fees in respect of the work the firm undertook on Credit Suisse's behalf in the transactions. Having heard argument, Mr. Bacon appearing for the claimants and Mr. Post for Herbert Smith, I reserved judgment.

Background

4. This can be stated shortly. Until 20^th March 2008 Caspian was party to a joint venture agreement dated 25^th December 1995 with the State Oil Company of the Azerbaijan Republic ("SOCAR") regarding the exploitation of the Kurovdag oil field in Azerbaijan. On 14^th December 2006 Caspian was re-financed by way of a loan agreement for a First Loan of $115 million and a Drilling Plan Loan for $12 million entered into between Credit Suisse and Caspian, together with other companies, as guarantors, including Rosserlane and Swinbrook. In addition, on 14^th December 2006 Caspian, Rosserlane and Swinbrook (together with others) entered into a Participation Agreement with Credit Suisse the terms of which included (under clause 4) the right for Credit Suisse from 14^th August 2007 to conduct a forced sale of all or part of the assets or capital stock of Caspian. In December 2007, both the Loan Agreement and Participation Agreement were amended and re-stated under the terms of Deeds of Amendment and Re-Statement.
5. Credit Suisse's right to conduct a forced sale under clause 4 of the Participation Agreement was exercised on 15^th February 2008 and the proceeds of sale were paid into a Credit Suisse account from which were deducted costs that Herbert Smith had invoiced in US dollars on 11 January 2008 (two bills) and 20 February 2008 for their work in the transaction. At the relevant rate of exchange, that sum amounted to £430,870.66 of which the February bill (number 11133347) accounted for £217,727.59.
6. Credit Suisse's entitlement to make this deduction stems from clause 5 of the Deed of Amendment (relating to the Participation Agreement) which provides as follows:-

"(a) Clause 5.1 transaction expenses. The borrower [Caspian] shall promptly on demand following production of an invoice re-imburse the Bank [Credit Suisse] the amount of all costs and expenses (including legal fees) reasonably incurred by the Bank in connection with the negotiation, preparation, printing and execution of this deed and all documents entered into ancillary or pursuant to this Deed or the Re-stated [Participation] Agreement and the amount of all fees, costs and disbursements (including legal fees) incurred by the Bank in connection with or in contemplation of any Sale ["Sale" is defined as including a "Forced Sale"].

(b) Clause 5.3 enforcement expenses. The borrower [Caspian] shall, promptly on demand, indemnify the Bank against any loss or liability (including the amount of all costs and expenses) including legal fees reasonably incurred by the Bank in connection with the enforcement of, or the preservation of any rights, powers and remedies under this Deed or the Re-stated [Participation] Agreement)."

7. On 29^th August 2008 the claimants issued an application under section 71 of Part III Solicitors Act 1974 for a detailed assessment of the invoices delivered by Herbert Smith to Credit Suisse incurred in connection with the forced sale. Under the terms of a consent order dated 2^nd December 2008, the parties agreed that only the invoice dated 20^th February 2008 should be assessed. The consent order further provides as follows:-

"4. … The defendant to serve a breakdown of costs of the bill of costs by 4.30pm on 6^th January 2009.

5. From the date of service of the breakdown of costs, the defendant is to make available on request by the claimants (subject to 5.1 below) hard copies of all documents that a client would ordinarily be entitled to inspection of upon detailed assessment under section 70 Solicitors Act 1974 in relation to invoice no. 11133347, for inspection by the claimants.

5.1. In the event that the defendant proposes to withhold any categories of documents from inspection, the defendant shall by 4.30pm on 30^th December 2008 notify the claimants by notice in writing of (a) the category of documents they propose to withhold and (b) provide reasons, for each and any category, as to why they propose to withhold inspection.

5.2 Either party may apply on notice to the court for an order determining (a) whether inspection of any categories of documents identified by a notice pursuant to paragraph 5.1 should be granted and (b) if so on what, if any, terms such inspection should take place."

8. In compliance with paragraph 5 of the order, subsequent to service of the breakdown of costs on 6^th January 2009, Herbert Smith made available to the claimants various categories of documents. However Herbert Smith also told the claimants that the firm would withhold from inspection other documents which they identified in the Notice served on 30^th December 2008 by Herbert Smith on the grounds that:-

"Credit Suisse, being the defendant's client in respect of the work carried out under bill 11133347 is entitled to claim privilege over such documents (such privilege arising to Credit Suisse acting in its own capacity and not in a capacity as agent acting for the claimants) and Credit Suisse has not given the defendant permission to waive such privilege in these proceedings, nor has it waived such privilege itself."

9. Subsequent negotiations have resulted in the disclosure of the 16 files previously mentioned but I am told by Mr. Bacon that approximately 25% of the documents set out in the Notice have yet to be inspected and that Herbert Smith has no instructions to consent to their release. It follows that the issue for the court to decide as encapsulated in paragraph 19 of Mr. Bacon's skeleton argument is "…whether Herbert Smith's claim as to confidential privilege overrides the claimants' right to have equal access to the documents, from which Herbert Smith claims it is entitled to be paid, so that the claimants have a bona fide opportunity to challenge the bill in accordance with natural justice".

Detailed assessment under the Solicitors Act 1974 Part III

10. At the close of the parties' submissions on 19^th January, it had been my intention to deliver an extempore judgment. On reflection, I decided not to do so. The subject matter of the dispute raises an interesting point under the Act about the extent to which (if at all) a party who obtains an order under section 71 is entitled to access the solicitor's papers (in this case those of Herbert Smith) for the purpose of challenging the solicitor's costs. Although assessment under section 71 is not rare, it is perhaps surprising that neither counsel, both highly experienced in costs, were able find a case directly on the point.
11. The Act Part III provides as follows:-

"Taxation or application of party chargeable or solicitor

s.70. - (1) Where before the expiration of 1 month from the delivery of a solicitor's bill an application is made by the party chargeable with the bill, the High Court shall, without requiring any sum to be paid into court, order that the bill be taxed and that no action will be commenced on the bill until the taxation is completed …

Taxation on application of third parties

s.71.-(1) Where a person other than the party chargeable with the bill for the purposes of section 70 has paid, or was liable to pay, a bill either to the solicitor or to the party chargeable with the bill, that person or his executors, administrators or assignees may apply to the High Court for an order for the taxation of a bill as if he were the party chargeable with it [emphasis added], and the court may make the same order (if any) as it might have made if the application had been made by the party chargeable with the bill."

12. The Civil Procedure Rules (CPR) part 48 deal with special cases including the assessment procedure in respect of solicitor and client costs. The rule says this:-

"48.10 - (1) This rule sets out the procedure to be followed where the court has made an order under part III of the Solicitors Act 1974 for assessment of costs payable to a solicitor by his client.

(2) The solicitor must serve a breakdown of costs within 28 days of the order for costs to be assessed.

(3) The client must serve points of dispute within 14 days after service of him of the breakdown of costs.

…

(6) This procedure applies subject to any contrary order made by the court."

13. The Costs Practice Direction ("CPD") at section 56 provides guidance about the procedure which applies on an assessment of solicitor and client costs under CPR 48.10. The section says this:-

"56.5 The breakdown of costs referred to in rule 48.10 is a document which contains the following information:-

(a) details of the work done under each of the bills sent for assessment ...

56.6 ... precedent P of the Schedule of Costs Precedents Practice Direction is a model form of breakdown of costs...

56.15 unless the court directs otherwise the solicitor must file with the court the papers in support of the bill not less than 7 days before the date of the detailed assessment hearing and not more than 14 days before that date."

14. It is common ground between Mr. Bacon and Mr. Post that on an assessment commenced under section 70, the client (or more likely, the former client) will have unrestricted access to the solicitor's papers since none of the documents in question will be privileged as between the client and one time solicitor. If the bill has been paid, the client will have the papers if he requested their return on payment of the invoice. However, if costs are outstanding and the solicitor is entitled to exercise a lien over the papers, problems can arise over the terms upon which inspection will be given but the reason for this has nothing to do with privilege, only payment. Once the bill is settled, the lien is defeated and the client is entitled to call for those papers he has paid for (as defined in the Law Society Guidance), since he owns them. When the documents are lodged at Court under CPD 56.15, the assessment is conducted without either party having any concerns about what papers the other sees, since privilege is irrelevant between them.
15. Under section 71 the position is different. Issues of privilege can arise where the bill is rendered to one party (here Credit Suisse) but paid by another party (here the claimants). In the present case it was to address this point that paragraph 5.1 was included in the consent order dated 2 December 2008 as a mechanism whereby Credit Suisse could assert privilege if it wished to do so. It is also agreed that the claimants do not own the documents in question by dint of payment as would be the case under s.70; they belong to Credit Suisse. It follows that where the owners of the documents assert privilege, the party chargeable under s.71 cannot call for them as if he owned them and a problem is likely to arise on detailed assessment if, as here, he is not permitted by the owner to inspect the very papers by which the solicitors intend to justify their fees. In the present case Counsels' views diverge about the extent to which, if at all, the claimants are entitled to inspect the documents over which Credit Suisse still assert privilege.
16. Against that background, I turn to the parties' submissions.

The submissions for the parties on the order sought for inspection

S 71 of the Act

17. Mr. Bacon's starting point is that section 71 gives the claimants not only the right to assessment of the fees and expenses that they have paid but also (implicit in such an express statutory right), the ability to inspect the papers upon which the claim for costs rests (see his skeleton argument paragraph 28 (e)). Were that not to be the case, Mr. Bacon argues that the express statutory right to challenge the fees and expenses would be rendered meaningless. As things stand at present, 75% of the documents have been made available for inspection. The balance have not and it is the claimants' case that unless they see those documents it will be impossible to know whether the charge is justified by reference to the work done. Of particular concern is that the 25% of undisclosed documents may be worth 80% of the bill and until disclosure is given, the claimants cannot be sure that items claimed in the breakdown are the subject of a fair and reasonable charge. Since the claimants under s.71 are simply standing in Credit Suisse's shoes had the application been made under s70, they have a right of access to the documents currently being withheld from inspection. All that the claimants request is that they be treated no worse under s.71 than they would be had the application been made under s.70.
18. I cannot accept that submission. As Mr. Post pointed out, all that section 71 does is to give the party chargeable with the bill the ability to make an application for assessment. I do not consider that the entitlement of a s.71 applicant goes further than that. A client who pays his solicitor's bill can call for the return of any original papers he gave that solicitor plus any documents for which he has paid e.g. counsel's opinions, copies of original letters to other parties etc. But it does not follow, in my opinion, that because the bill is paid by somebody else, pursuant to an entirely different contract and as part of a contractual obligation under that contract, that that third party is entitled, as of right, to inspect what he has paid for. In other words, the fact here that the claimants paid the Herbert Smith invoices pursuant to a contractual obligation in the Deed of Amendment (relating to the Participation Agreement) does not mean that they thereby purchased or attained a right to inspect them. I agree with Mr Post that a third party who becomes a party chargeable under section 71 simply because he performs a contractual obligation to pay a solicitor's bill, does not thereby become entitled to read the documents which reflect the work covered by the bill. All that section 71 does is to permit the party chargeable to apply for detailed assessment. For that reason the submission set out in paragraph 28 (e) of Mr Bacon's skeleton argument fails.

Privilege – express waiver

19. I have already said (see paragraph 15 above) that I agree with Mr. Bacon's submission that disclosure in assessment proceedings as between solicitor and client is never the subject of privilege. So much is common ground. However Mr. Bacon's argument goes further: he submits that in agreeing to an assessment of the Herbert Smith invoices, Credit Suisse waived privilege in its own files and in doing so, momentarily for the purposes of the assessment, waived the privilege that would otherwise attach to the documents (see Goldman v Hesper (1988) 1WLR 1238). I cannot accept that submission either. In the present case, Credit Suisse was never in a position to consent to an order for detailed assessment because the application was made against Herbert Smith and Credit Suisse is not a party to these proceedings. Moreover, as Mr. Post is right to emphasise, any privilege belongs to Credit Suisse and is not for Herbert Smith to waive unless authorised by their client to do so.
20. Mr Bacon's submission goes further however. He contends that where a party has invited the court to adjudicate upon questions directly arising from the contractual relationship which has subsisted between them, then that confidential relationship is brought into the public domain and privilege is waived. To support this argument, Mr. Bacon draws attention to the line of cases from Lillicrap and others v Nalder and Son (1993) 1 WLR 94 to the judgment of Lord Bingham of Cornhill C.J. in Paragon Finance Plc v Freshfields (1999) 1 WLR 1183.
21. In Paragon Finance on page 1188 at E, Bingham CJ said this:-

"When a client sues a solicitor who has formally acted for him, complaining that the solicitor has acted negligently, he invites the court to adjudicate on questions directly arising from the confidential relationship which formally subsisted between them. Since court proceedings are public, the client brings that formerly confidential relationship into the public domain. He thereby waives any right to claim the protection of legal professional privilege in relation to any communication between them so far as necessary for the just determination of his claim; or, putting the same proposition in different terms, he releases the solicitor to that extent from the obligation of confidence by which he was formerly bound. This is an implication of law, the rationale of which is plain. A party cannot deliberately subject a relationship to public scrutiny and at the same time seek to preserve its confidentiality."

22. In Mr. Bacon's submission, had Credit Suisse been the applicant, the principles in Lillicrap and Paragon Finance would have prevented the bank from maintaining a claim of privilege. It follows that where, as here, Herbert Smith has accepted that the claimants should be placed in the same position as Credit Suisse (as though Credit Suisse were the applicant), privilege is waived.
23. That is not a proposition with which I agree. In Paragon Finance, the claimant sought the court's adjudication on questions which had arisen from the contractual relationship that had existed between Paragon on the one hand and Freshfields, their solicitors, on the other. That is not the position here where there is no claim in negligence and neither party has invited the court to adjudicate upon legal questions arising under the contractual relationship; on the contrary, this is an assessment under the Act applying CPR 44-48 and disclosure obligations that would otherwise apply under CPR 31 in an action between the parties are not relevant here. My task is to decide whether the charges rendered by Herbert Smith were fair and reasonable not whether the firm was negligent. Credit Suisse is not a party to the proceedings and has done nothing to bring its confidential client relationship with Herbert Smith into the public domain, as was the case in Paragon Finance. For these reasons Mr. Bacon's submission fails.

Privilege -implied waiver

24. In relation to implied waiver, Mr Bacon's submission is advanced on the basis that Credit Suisse necessarily waived privilege in its files in view of the terms of the indemnity provisions in the contractual documents. In support of this contention, Mr. Bacon relies on Winterthur Swiss Insurance Co. and NIG Limited v AG (Manchester) Limited (in liquidation) and others (2006) EWHC 839. At paragraph 107 Aikens J said this:-

"Therefore, once NIG [the insurer] has become obliged to indemnify the TAG claimants for the losses it suffers as a result of its legal liabilities to pay his opponent's costs and his own legal team's bills and to repay the Funder, NIG has a contractual right to demand that the TAG claimants give it access to documents in the hand of the Panel Solicitors for use to pursue its right and remedies to which it is "entitled"…. Any assertion of a right to "litigation" privilege by the TAG claimants in respect of pre-ATE or post-ATE policy documents would be inconsistent with NIG's rights of access. On the authority of cases such as Brown v GRE ...1994) 2 Lloyds REP 325, the insured cannot use "litigation privilege" to prevent the insurer using his contractual right of access to the documents."

25. In the present case, Mr. Bacon submits that the inclusion of contractual terms as between Credit Suisse and Caspian of the right to indemnity for legal costs by necessary implication amounts to a waiver of privilege (see his skeleton paragraph 26 c).
26. For reasons advanced by Mr. Post, I do not agree with Mr. Bacon's submission. It is trite law that the test for the implication into a contract of an implied term is one of necessity (Liverpool CC v Irwin (1997) 1 AC 239 (pp 253h – 254A). In the present case, I am not persuaded that in order for the terms of the indemnity in the contractual documents to be effective, it is here necessary to imply a waiver of privilege. It follows that I am against Mr. Bacon's submission that such a term must necessarily be implied in order to give the indemnities in the present case business efficacy. Moreover in Winterthur, NIG had a contractual right to demand that the TAG claimants give it access to documents; that is not the case here where there is no such express right.

Privilege- extended waiver

27. It is agreed that since the date of the consent order, Credit Suisse has waived privilege in some documents in Herbert Smith's possession and that these have been made available for inspection. Others have not and in these circumstances it is Mr. Bacon's submission that where some but not others have been disclosed, there has been an extended waiver; in other words, Herbert Smith cannot "cherry pick" as to what the claimants can and cannot see; having disclosed a proportion of the documents, they must also make available every associated document. To make good this submission, Mr. Bacon referred to Hollander, Ninth Edition Sweet and Maxwell page 385 to 386 and to the cases referred to therein including Great Atlantic Insurance Company v Home Insurance Company Limited (1981) 1 WLR 599.
28. In his judgment in Great Atlantic at 536A-C Templeman LJ had dealt with the possible severance of material from a document over which privilege had been asserted and had expressed the view that this was not possible unless the additional matter dealt with entirely different incidents and:-

"…could in effect be divided into two separate memoranda, each dealing with a separate subject matter…. It would not be satisfactory for the court to decide that part of a privileged document can be introduced without waiving privilege with regard to the other part in the absence of informed argument to the contrary and there can be no informed argument without the disclosure which would make argument unnecessary …"

29. In my judgment there is a flaw in Mr. Bacon's submission which is that Great Atlantic is not on all fours with the facts before me and is also subject to exceptions. This is not a trial at which each party is bound to give disclosure under CPR 31. On the contrary, it is a detailed assessment governed by CPR 43-48 and the disclosure obligations under CPR 31 do not apply. This is plain from Pamplin at 695 at when Hobhouse J said this:-

"Taxation, although adversarial, is not subject to all the incidents of ordinary litigation. RSC order 62 [predecessor to CPR 43-48] is, for the present purposes, a self contained code. Provision of other orders for discovery and inspection of documents, etc., do not apply. However it cannot be disputed that the rules of natural justice apply to taxation proceedings and the question of principle which I have to decide on the present appeal is how the requirements of justice are best served in taxation proceedings, having regard to the fact that many of the relevant documents will be privileged and the claimant may have a legitimate interest in protecting that interest."

30. Hobhouse J then dealt with General Accident on page 698 at B:-

"However as was stressed in the General Accident case at 114, "the underlying principle is one of fairness in the context of the trial and does not go further than that". Applying that principle to the conduct of taxation, it will be seen that the requirement of fairness means that a claimant must often be allowed to be more selective.

In any given incidence, it will be a matter for the Master to consider how far the waiver of privilege has gone. In taxation it will normally be a matter of express waiver only. It should always be possible to avoid having to get involved with implied waiver, but when, exceptionally, questions of implied waiver do arise, the Master should decide them by applying the principle of fairness as between the parties and the conduct of the taxation. The claimant should not have imposed on him an unintended waiver unless fairness to both parties really does necessitate that result."

31. It follows that, in my judgment, the "cherry pick" argument must fail since I am not persuaded that disclosure of some but not all of the privileged documents means that privilege cannot be maintained in relation to associated documents. In my opinion, Credit Suisse is entitled to be selective in the material which it chooses to make available, and in doing so cannot have imposed upon it an obligation to go further as would be the case were the Court to accept Mr Bacon's submission on this point.

Retainer

32. Mr. Bacon's final submission is directed at the true identity of Herbert Smith's client. Was this, in truth, Credit Suisse and specified individuals therein or were there communications with other individuals in Credit Suisse who were "non clients" and accordingly any communications with them could not be privileged? In this respect it is relevant to consider the state of the claimants vis a vis Herbert Smith; Mr. Bacon contends that having requested the claimants to pay for legal work, Credit Suisse thereby invited them to retain Herbert Smith jointly in order to conduct that work. In this respect, he draws my attention to clause 4.2 of the Agreement which says this:-

"For the purposes of effecting a Forced Sale, each of the Equity Owners :

4.2.1 hereby irrevocably appoints the Bank [Credit Suisse] as its attorney to execute and do in its name or otherwise and on its behalf all documents, acts, deeds and things which the Bank shall in its absolute discretion consider necessary or desirable in order to implement the Forced Sale; and..."

33. Mr Bacon summarises his submission on joint retainer in this way (his skeleton paragraph 31):-

"...the indemnification by the claimants of CS's [Credit Suisse] costs is analogous to a situation of joint privilege where, in circumstances of a joint retainer of solicitors, persons retain no confidence if they subsequently fall out and sue each other. In this matter, by requesting the Claimants to pay for their costs, CS has invited the Claimants to jointly retain HS to conduct the legal work. Accordingly, there can be no confidence in documents for which the Claimants are now expected to pay HS for their production. The limitation to this waiver implied by a joint retainer, is to exclude those documents created after an actual conflict of interest has occurred." [I assume should "confidence" should be "privilege"]

34. As Mr. Post points out, this is not a submission that was advanced at any stage prior to the date of Mr. Bacon's skeleton argument. He submits, anyway, that clause 4.2 does not have this affect. On the contrary, here the nature of the dispute was a forced sale rather than a consensual joint act. In view of this, since here the action had been imposed by one party upon another, there can be no question of a joint retainer. I agree with that submission. On the facts of this case, I consider there was no "invitation" as Mr. Bacon expressed the proposition whereby Credit Suisse "invited" the claimants to retain Herbert Smith jointly in relation to the legal work. Accordingly the submission fails.
35. For these reasons, I decline to make the order for inspection sought. That said, if they be wrong, and there reposes on the Court a discretion to make such an order, I would decline to exercise it in favour of the claimants. My reasons are the following. First, Mr. Post has advised me that Herbert Smith is instructed in proceedings in the Commercial Court involving Credit Suisse, Caspian, Rosserlane, Swinbrook and the beneficial owner of Caspian, a Dr. Leshkasheli in which a preliminary experts' report served on their behalf has apparently valued Caspian at $518 million as opposed to the sale price of $245 million. In my opinion, even if I had power to do so, it would be an incorrect exercise of discretion to make an order for disclosure in this court in respect of documents to which the litigants in the commercial action may have no entitlement to inspect under CPR 31.
36. Second, I accept Mr. Post's submission that fairness on detailed assessment can be achieved through the Pamplin procedure without the need to override a party's privilege. On page 695 at G Hobhouse J said this:-

"…the principle that each party must have the right to see any relevant material which his opponent is placing before the tribunal, and which the tribunal is taking into account in arriving at its decision, must prevail. In the final resort, the claimant must be put to his election whether he wishes to waive privilege and use the material, or to assert his privilege and retain confidentiality of the document which the respondent is asking to see …"

37. This procedure is now embodied in the Costs Practice Direction section 40.14 which provides:-

"The court may direct the receiving party to produce any document which in the opinion of the court is necessary for it to reach its decision. These documents will in the first instance be produced to the court, but the court may ask the receiving party to elect whether to disclose the relevant 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".

38. In my opinion there is no reason why the Pamplin procedure should not be used if and when the appropriate time to do so arises. Such a course of action is accepted by Mr. Bacon if his principal submissions fail (see his skeleton paragraph 32 d) and in my judgment, the concerns his clients have expressed will thereby be addressed without any loss of fairness at the detailed assessment hearing.
39. For these reasons the application for inspection is refused.

The Breakdown

40. The hearing on 19^th January 2009 was also fixed for the court to give directions. In this respect, Mr. Bacon has complained on behalf of the claimants about the format of the breakdown served by Herbert Smith. In his submission, merely reproducing computerised time sheets is inadequate and a breakdown which follows precedent P of the Costs Practice Direction should be served. Mr. Post disagrees; he contends that the breakdown sets out on a day by day basis the work done and time spent. Any suggestion that that level of information renders it impossible for the claimants to raise points of dispute is difficult to sustain and is misplaced.
41. I have examined the breakdown and it is right that this is no more than a computer print out setting out the identity of each fee earner involved on a daily basis and his hourly charge out rate; the grand total is £182,915.90 (before vat). I am in no doubt that Mr. Bacon's submissions are correct in this respect and that the breakdown is inadequate. By way of example, many of the hours spent are in "block" items e.g. on 15 February 2008, Mr. Henry Davey spent 6 hours on "completion" and another 3 hours on the same day on "completion matters" at a cost of £3660 and £1,830 respectively. No information is given as to whether this was preparing for a completion meeting in which case the documents reviewed would need briefly to be identified, or for attending the meeting and if so, how long this took. On another date, 12^th February 2008, Mr. Davey has claimed 3.25 hours for making "various telephone calls (internal and external), Sale and Purchase Agreement/side letter/reading documents". It is impossible to work out from this entry how many calls were made, the identity of the recipients and how long each call took. In my opinion, in order to be satisfied that the fees were reasonable, the claimants are entitled to this information in a breakdown that complies with precedent P.

Formal Order

42. The application for disclosure and inspection is dismissed. I further direct that Herbert Smith serve an amended breakdown complying with Precedent P within 14 days from the date that this judgment is handed down. So far as costs are concerned, neither party complied with the CPD so far as lodging a schedule in advance of the hearing is concerned. Both must do so by noon on 11 February 2009. I can then either hear argument about costs when this judgment is handed down, or they can be reserved to the detailed assessment to save the expense of an additional hearing. The parties should confer and decide what they wish to do. If there is not to be an attendance and one or other party wishes to apply for permission to appeal, then submissions should be lodged in writing within 7 days of the date of handing down and I will deal with the application on paper.