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
		6th April 2009

Master Rogers:

1. This judgment relates to my decision in respect of two preliminary issues raised on behalf of the Defendant in their amended points of dispute. Both points raise retainer issues, the resolution of which will make a substantial difference to the outcome of the detailed assessment if indeed it has to proceed in the light of this judgment.

The Background

2. The deceased, Derek Borrill, was born in 1943 and worked for some ten years from about 1960-1969 at Chatham Dockyard. He was in a welding gang on various ships and submarines and was, as such, obviously exposed to asbestos. He also worked alongside and in close proximity to laggers, who stripped off and removed old asbestos lagging to be replaced with new asbestos plaster. Laggers poured large sacks of asbestos powder into tubs mixed with water and applied the wet mix to pipe work and boilers. He removed asbestos lagging from pipeworks with a chipping hammer and used asbestos blankets draped over machinery where he was working to provide protection from molten metal.
3. Obviously in those circumstances his workplace was thick with asbestos dust.
4. The deceased left the employment of the Ministry of Defence in about 1969 and took up various teaching appointments until he took early retirement in his fifties.
5. The medical evidence put before the court was that until 1998 he had been a heavy smoker and also that he sometimes drank to excess.
6. The medical evidence also suggested that as a result of back trouble from which he suffered from 1979, he underwent back surgery in 1985.
7. Following admission to hospital in 1996, with ascites, he was found to have alcoholic liver disease and thereafter moderated his alcohol intake temporarily though apparently subsequently increased it again.
8. Following difficulty in walking any great distance, the deceased sought further medical attention in December 1998 and he was diagnosed as having asbestos-related pleurisy but was reassured that the condition was "benign" and "harmless" and that it should not be confused with more serious diseases.
9. On 4 January 2000, the deceased was examined by Dr Mungall in his clinic and following that examination Dr Mungall wrote to Mr Borrills's GP explaining that the deceased had had a CT scan which had shown pleural thickening consistent with previous asbestos exposure and added:

"I have explained that he has benign asbestos pleurisy, no doubt related to his work as a civilian employee in the Chatham Dockyards. I reinforce that this is harmless in itself and not to be confused with asbestosis and mesothelioma. "

10. Although the deceased was then reviewed on an annual basis, no changes were reported in his condition, and his sudden and unexpected death on 1 January 2004 was described by the doctors as "something of a mystery".
11. Following a post mortem, death was stated to be due to a) chest infection; b) asbestos-related diffuse pleural fibrosis.
12. The deceased made his last will on 18 April 2000 by which time he had become estranged from his wife and accordingly did not appoint her his executrix, nor he did leave her anything in his will.
13. The entire estate was left to his children Mark and Glenna, who of course by that time were adult and no longer dependent upon him. The executors appointed were Terence Stanley Pacey and Neil Marsland, both of whom were friends.
14. The Grant of Probate was made to Mr Pacey on 11 April 2005.
15. The deceased's son Mark has made a witness statement in which he states that he is employed by Jaggards Legal Costs Consultants in Peterborough as a costs negotiator and, because of that expert knowledge, when a question of possible compensation arising from his Father's death arose, Mr Borrill recommended to his Mother that she should instruct the Claimant's solicitors Field Fisher Waterhouse because:

"at the time it appeared they had the requisite degree of experience and appropriate level of specialist staff."

16. Messrs Field Fisher Waterhouse (hereafter referred to as FFW) entered into a Conditional Fee Agreement with the deceased's widow, Violet Borrill, on the 26 August 2005.
17. Under the heading "What proceedings are covered by this agreement?" the following appears:

•    "Your claim for damages arising out of your husband's death from asbestos related disease".

18. FFW undertook the case and in June 2007 they started proceedings. The case was handled by Ms Harminder Bains and amongst the papers lodged before me was an attendance note of 21 June 2007 which reads as follows:

"HZB rang Terry Pacey. I said as Executor the Claim Form would have to be issued in his name. Would he give me authority to do so as time was running out? He said yes he would do so. He said the other Executor had decided not to take a Grant of Probate. I said that was fine, I would just name him. I said it would be for the benefit of the children and the widow. He said OK. He gave me the address and phone number of the other Executor whose name is Neil Marsland. (Phone number and address stated)"

The Proceedings

19. These were brought in the name of Mr Pacey as of course is required under the Fatal Accidents Act but, as is clear from the particulars of claim, they included claims both for the widow under that Act and for the two children under the Law Reform (Miscellaneous Provisions) Act 1934.
20. In due course a second Conditional Fee Agreement was entered into between FFW and the executor dated 17 September 2007 though it is common ground between the parties that it is retrospective to the 21 June 2007 and covers all work done after that earlier date.
21. As there were legal and medical difficulties in proving that the deceased died as a direct result of asbestos exposure, the claim by the widow, which would in any event been limited to the then conventional award, for bereavement, of £10,000, was withdrawn as part of the overall settlement, but since there was clear medical evidence of a connection between the deceased's death and his earlier exposure to asbestos, a claim under the 1934 Act by the children continued.
22. Pleadings were exchanged but shortly before trial the claim was compromised on the following terms:

"(1) There be judgment for claimant £18,000 net in full and final settlement of his claim under the Law Reform (Miscellaneous Provisions) Act 1934.

(2) The defendant do pay the sum £18,000 to the claimant's solicitors by 9^th May 2008.

(3) The defendant to pay the claimant's costs in relation to the claim under the Law Reform (Miscellaneous Provisions) Act 1934 on the standard basis to be subject to a detailed assessment if not agreed and costs to be paid within 14 days of agreement or assessment.

(4) The claimant to withdraw his claim under the Fatal Accidents Act 1976 with no order as to costs."

The Issues which arise

23. As indicated in the first paragraph, there are two of these specifically, the first is a challenge by the Defendant to any claim for costs in respect of work done pursuant to the first CFA. The second concerns the submission on behalf of the Defendant that, in respect of work done pursuant to the second CFA, there needs to be an apportionment as between work done for the Fatal Accidents Act claim by the widow and that done for the estate under the 1934 Act, only the latter being recoverable from the Defendant.
24. Although the bill is "relatively" small (£39,000-odd) and so well within the jurisdictional limit of a costs officer, it was nevertheless passed up to costs judge level on the reasonable basis that, whatever decision might be reached by a costs officer, there would almost inevitably be an appeal by the unsuccessful party to a costs judge, and therefore it would be more cost effective to start at costs judge level, and that is how this case came to be balloted to me.
25. The parties lodged with me two lever arch files, one containing all the relevant documents, and the other containing the authorities upon which they respectively relied, with one or two additional authorities handed up at the hearing.
26. The case was extremely well argued on behalf of both parties by Mr Benjamin Williams on behalf of the Claimant and by Mr Alistair Macpherson, who was a late replacement for Mr Simon J Brown, on behalf of the Defendant, and I am grateful to both of them for their concise submissions which enabled the hearing to be concluded in just over an hour as against the time estimate of half a day.

The First Issue - Recoverability of costs under the first CFA

27. The Defendant's case on this point was a very simple one, namely that on its wording quoted in paragraph 17 above, the work covered was work done on behalf of the widow because it is made with her and says in terms:

"your [my emphasis] claim for damages arising out of your husband's death from asbestos related disease."

28. Mr Macpherson's submission was that since that claim was withdrawn no costs are payable, a proposition which Mr Williams, on behalf of the Claimant, accepted if he could not satisfy me that on the contemporaneous and other evidence in fact this CFA was in reality entered into on behalf of the estate.
29. That evidence consisted of a number of documents. The first is a witness statement from Mr Pacey which was made as recently as the 11^th March 2009, that is to say only just over a week prior to the hearing. That witness statement reads as follows:

"I Terence Stanley Pacey, Executor of the Estate of Derek Borrill Deceased who died on 1^st July2004 hereby states on 11^th March 2009 as follows:-

I was appointed the executor of the late Mr Borrill's estate by his last will and testament dated 18^th April 2000. The sole beneficiaries under the will were Mr & Mrs Borrill's children, Mark and Glenna.

I was aware after the Inquest that Mr Borrill was thought to have died from an asbestos related disease. The inquest took place on 29^th November 2004 and the death certificate was issued on 9^th December 2004.

After this, and with my knowledge, Mark and Glenna decided to investigate making a claim for compensation arising from their father's death. As the beneficiaries under the will, theirs was the sole interest in the claim under the Law Reform (Miscellaneous Provisions) Act 1934.

Mark and Glenna asked their mother to handle these investigations. It was she who initially appointed Field Fisher Waterhouse, at Mark and Glenna's request.

In this, Mrs Borrill was again acting with my knowledge, and on behalf of the estate. As a contemporaneous demonstration of this, I exhibit a copy of a letter which I sent to the late Mr Borrill's GP on 4^th November 2005, marked TSP1.

From this it can be seen that, in retaining solicitors, Mrs Borrill acted, with my authority, as the agent of the estate, as well as on her own behalf.

I believe the facts stated in this witness statement are true."

30. Emphasis, of course, was placed by Mr Williams on paragraph 3 of that document which he said supported his contention.
31. Secondly, Mr Williams relied on a letter written by the executor to the deceased's former GP, Dr Marshall, on 4^th November 2005 which reads as follows:

"Dear Dr Marshall,

I have received a written request by Miss H. Bains of Field Fisher Waterhouse to write to you regarding the claim for damages by Mrs Violet Borrill who is acting on behalf of the two children of the marriage. The two children, Mark and Glenna, are the sole and joint beneficiaries of the estate and Mrs Borrill has stated that she has no intention to benefit from any award for damages if the claim is successful.

I enclose a copy of the Grant of Probate for your records and return and would ask if you could provide assistance, including the release of the medical records of Derek, to the said Miss Bains.

The two children have indicated their approval of this request by countersigning this letter. If you would like to discuss this matter then please ring me on the number below. "

32. Finally, Mr Williams placed reliance on the witness statement to which I have referred to already, made by Mark Borrill, explaining why he had recommended to his mother to go to FFW.
33. Mr Williams submitted that those documents were sufficient to indicate that, although the CFA might have been entered into with the widow, and might appear on the face of it only to cover costs in relation to her claim (which could of course only be under the Fatal Accidents Act), in reality it covered the work to be carried out on behalf of the estate.
34. Although there was some suggestion in the skeleton arguments that the work done under the first CFA could in fact be ratified by the executor, once proceedings had started, this argument was not pursued, and I think rightly so.
35. Mr Macpherson, in his reply, made the telling point that there was no evidence from the widow or from FFW supporting the contention which they were now advancing through Mr Williams.
36. I am driven to the conclusion that there is no answer to Mr Macpherson's argument. Although the 2005 CFA was in standard form, it could have readily been adapted to cover any claims brought on behalf of the estate as well as the widow's claim under the Fatal Accidents Act, but it simply was not.
37. I hold as a matter of construction that because of the wording of the first CFA, FFW are unable to claim any costs thereunder.
38. It was suggested on behalf of the Claimant that this would be unfair and that justice would be achieved if I would construe it in the way that Mr Williams submitted. Mr Macpherson's point, which I think is irrefutable, is that this retainer was quite separate from the second retainer evidenced by the second CFA. In addition, the solicitors are highly experienced in this field and would be well aware of the distinction between a Fatal Accidents claim and one under the 1934 Act and could, as I have indicated, so readily have amended the standard form CFA to cover the situation that had arisen.
39. Accordingly on the first preliminary issue I find in favour of the Defendant.

The Second Issue – Apportionment of costs under the second CFA?

40. On behalf of the Defendant Mr Simon Brown in his revised skeleton argument said this:

"9. Further, the costs claimed in respect of works carried out which was common to both claims and/or in respect of all the costs should be apportioned. There is a presumption, which has not been rebutted, that the costs incurred in these circumstances are to be split between the parties' instructing solicitors (in accordance with the principle in Beaumont v Senior [1903] 1 KB 282; see also Russell Young v Brown [2007] 4 Costs LR 552; [2007] EWCA Civ 43; and discussed in Meretz v ACP Ltd & Ors [2008] 1 Costs LR 42; [2007] EWHC Ch 2635 para 25-34). Those costs, which following application of the indemnity principle and an appropriate apportionment of the common costs, are found to be attributable to the FFA claim and/or the instruction by Mrs Borrill (i.e. her costs) should be disallowed."

41. The matter was put slightly differently by Mr Macpherson in his supplementary skeleton argument in the following paragraphs:

"10. CFA1 was not cancelled or overridden by the signing of CFA2 in 2007. It expressly continued in effect until the conclusion of the proceedings which it covered, and thus it continued to govern those costs incurred in relation to the 1976 Act claim up until the order of 25 April 2008. CAF2 related to costs incurred in relation to the 1934 Act claim. In the event, most of the costs incurred in the proceedings could not be attributes to one retainer or the other, but are generic in that they related both to the 1976 Act claim and to the 1934 Act claim.

11. It is trite law that under the indemnity principle C can only recover such costs as he is liable to pay FFW. The generic costs clearly cannot be recoverable in full by FFW from both clients under both CFAs. The usual rule where costs are incurred for the common benefit of two clients is that the costs are apportioned 50/50, subject to any agreement between the parties to the contrary.

12. There is no reason to depart from this rule in this case. No evidence has been adduced to suggest that the terms of agreement drawn up in the CFAs did not in fact reflect the agreement as to liability for costs, or that there was some collateral agreement whereby C agreed to be liable for costs incurred partly for Mrs Borrill's benefit. The terms agreed make commercial sense: there would be no reason for the estate to agree to be liable for the costs incurred in bringing the claim of Mrs Borrill (who was not a beneficiary of the estate), and there would also be no reason for Mrs Borrill to agree to be liable for the costs incurred in bringing the estate's claim."

42. In his submissions, Mr Williams suggested that these submissions were factually misplaced because this was not a Beaumont v Senior situation where one Defendant succeeded and another failed. Here there was one claim which succeeded, albeit and only in respect of the Law Reform Act claim and therefore no apportionment is necessary.
43. Should I be against him on that submission Mr Williams said that the case of Keen and Others v Towler TLR 28 November 1924 was of assistance. In that case, five claimants brought a claim arising out of a motor accident. One accepted the sum paid in, and one recovered more than was paid in, but the other three recovered less than was sum paid in, and the question then arose as to the proper costs order.
44. The judge, Lord Darling, said this:

"The question is, To what costs is the plaintiff who has succeeded entitled? The action was tried with a jury, and therefore, under Order LXV, rule 1, the costs 'follow the event', unless for 'good cause' I 'otherwise order'.

Up to the time of payment into Court all the plaintiffs are entitled to their costs. One Plaintiff has accepted the amount so paid in, and he may therefore be disregarded as to the subsequent costs. This leaves four plaintiffs to be dealt with. The 'event' is that one plaintiff has succeeded and three have failed. The successful plaintiff is entitled to judgment. The defendant is entitled to judgment against the three plaintiffs who failed.

One must assume in the absence of evidence to the contrary, that all these four plaintiffs are solvent, and that no special arrangement was made between then as to their liability to their solicitor for costs. On this assumption, although each of the four plaintiffs may be liable to the solicitor for the whole of the costs common to all of them, still as between themselves, each is liable to contribute one-fourth. From this it follows that ultimately each of the plaintiffs is only liable to pay one-fourth of the common costs, and that, therefore, as costs are given as an indemnity only, one-fourth is all that the defendant should be called upon to pay to one plaintiff. To order the defendant to pay to the successful plaintiff more than one-fourth would be to order him to pay an amount in relief of the amount that the unsuccessful plaintiffs ought to pay."

45. In his reply, Mr Macpherson referred me to the structure of the Fatal Accidents Act 1976, and pointed out that this required there to be a single action in respect of any claim arising out of a death, whether under the 1934 Act or under that Act itself. That was merely a procedural requirement to prevent multiplicity of actions.
46. Merely because there was one claim does not mean that there was only one retainer, because quite clearly in this case there were two retainers, it being the Defendant's submission that the second CFA did not in any sense purport to override or otherwise contradict the first CFA retainer.
47. As to Mr Williams' reliance on Keen v Towler, Mr Macpherson referred me to paragraphs 26 and 31 from Lady Justice Smith's judgment in Russell Young which read as follows:

"26. Mr Brown submitted that there is no distinction in principle between costs that are incurred solely for the benefit of an individual claimant (for example a medical report) and costs which are incurred for the benefit of several claimants such as a joint advice on liability. The sharing of costs is an every day occurrence and there is no warrant for the suggestion that the client had to give his express approval for this to occur. He gave, as an example, the case of a solicitor who travelled up to London for the day for three separate conferences with counsel in three different actions. The solicitor would apportion his travelling expenses and travelling time between the three cases. That was plainly fair and sensible as between everyone. There was no need for the clients to be told that this would happen. Indeed, if the solicitor did not share the costs in this way, he might well be open to criticism.

…

31. I am satisfied that there is no requirement for any such additional or collateral agreement relating to generic costs. The client's entitlement is to recover the costs for which he would have been liable to his solicitor. He would be liable for all costs properly incurred whether they were incurred solely on his behalf or whether they were incurred for the benefit of a large group and he had only to pay an appropriate proportion. There is nothing fundamentally different or special about generic costs; they are simply costs that have been shared for the sensible purpose of keeping the costs of each claim down. I can see no merit in the suggestion that some special rule applies to the generic element of a bill of costs."

48. He submitted that that represented the current state of the law, and that the case of Keen v Towler was no longer good law.
49. Meretz v ACP could be readily distinguished because that was a case where there was one retainer albeit for a number of claimants, whereas in this case, as I have held in respect of the first issue, there where in fact two quite separate retainers.

My conclusion on the second issue

50. I have come to the conclusion that the Defendant's submissions are to be preferred. This is clearly a case where work was done in respect of both claims, that under the Fatal Accidents Act and that under the Law Reform Act and, in those circumstances, the authorities cited clearly support Mr Macpherson's argument that there has to be an apportionment.
51. As to that apportionment, there was some discussion before me as to whether I could give some indication in this judgment of the likely apportionment which might assist the parties to resolve the issue of costs without the necessity for a full assessment, which both accepted was to be avoided in view of the relatively small amount of the bill.
52. In that connection, Mr Macpherson suggested the conventional 50/50 apportionment would be the appropriate one but Mr Williams, on the other hand, said it should be much less, certainly no higher than 25:75, not least because the question of limitation was a very important issue in relation to the 1934 Act claim.
53. However Mr Macpherson, in his reply, pointed out that under the Fatal Accidents Act, a limitation defence that would be applicable to a 1934 Act claim would also be equally applicable to a FAA claim.
54. Whilst I would like to assist the parties if I could, I think it is impossible for me to give any indication without first having seen the documents which, of course, I have not done, these being preliminary issues only.
55. I was also asked if I could give some indication of my likely decision in respect of costs, were I to decide the first issue one way and the second issue the other.
56. However, as I have decided both issues in favour of the Defendant, the presumption must be that the Claimant must pay the costs of and incidental to the preliminary issue, though obviously I will hear any submissions to the contrary on this and any other matters, that may be made when this judgment is formally handed down.