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

IN THE HIGH COURT OF JUSTICE
SENIOR COURTS COSTS OFFICE

		Royal Courts of Justice Strand London WC2A 2LL
		7th March 2013

MASTER GORDON-SAKER:

1. This is an application by the Appellants for an order for payment on account of costs under CPR 44.3(8). The Appellants are entitled to their costs under an order made by consent in the Supreme Court which provides that the Respondent should pay the Appellants' recoverable costs in the courts below, to be assessed by way of detailed assessment in the Senior Courts Costs Office if not agreed.
2. The consent order provided for the withdrawal of the appeal, the deemed satisfaction of earlier costs orders made against the Appellants in the courts below and the repayment to the Appellants of the sums that they had paid to the Respondent by way of insurance premiums, which was (as I understand it) the relief they sought in the proceedings.
3. The total costs claimed in the bills which have been served on the Respondent in respect of the proceedings in the County Court, the High Court and the Court of Appeal, come to a total of over £1.5 million, of which £1.48 million is claimed in respect of the appeal in the Court of Appeal. Those figures include a 100 per cent success fee on the solicitors' profit costs and counsel's fees.
4. The application is opposed strenuously. Mr Saoul (who represents the Respondent) submits that there are fundamental difficulties both with the application and with the claims for costs. In respect of the application, he submits that I do not have jurisdiction to make the order because the court that ordered the Respondent to pay costs is the Supreme Court, and the Civil Procedure Rules do not apply to the Supreme Court. This application is made to me as a Master of the senior courts and Mr Saoul submits that there are no orders entitling the Appellants to costs made in the senior courts and no orders entitling the Appellants to costs to which the Civil Procedure Rules apply.
5. It seems to me that the effect of the order of the Supreme Court is to reverse the orders below, and that the Supreme Court is in effect exercising the jurisdiction of the courts below in ordering that the Respondent should pay the Appellants costs in those courts.
6. I am satisfied that the Civil Procedure Rules do apply to those orders, that they do apply to the detailed assessment of the costs made under those orders and that I do have jurisdiction to make the order sought under 44.3(8) of the Civil Procedure Rules. As a subsidiary point of jurisdiction, Mr Saoul submits that an order for payment on account (as opposed to an order for an interim costs certificate under Part 47 of the Civil Procedure Rules) is better exercised by the court making the order for costs than by a costs judge. Once upon a time I did have sympathy with that argument, but I have been persuaded in other cases that I am the court for the purposes of 44.3(8) and again it seems to me that I have jurisdiction to make the order sought.
7. As to the costs which will be recovered, Mr Saoul submits that there are fundamental issues in relation to the Appellants' recovery of any costs. It is submitted that no costs will be recoverable in respect of the proceedings in the County Court, the High Court and the Court of Appeal because each stage of the proceedings was governed by a separate conditional fee agreement.
8. The proceedings in the County Court were governed by a conditional fee agreement dated 13^th January 2009 between the Appellants and their solicitors. That agreement provided that costs would be payable in the event of a win, and a win was defined at (A) of the Standard Terms as:

"Your claim for damages is finally decided in your favour, whether by a court decision or an agreement to pay your damages or in any way that you derive benefit from pursuing the claim. 'Finally' means that your opponent is not allowed to appeal against the court decision or has not appealed in time or has lost any appeal".

9. The conditional fee agreements in relation to the proceedings in the High Court and the Court of Appeal were governed respectively by conditional fee agreements dated 24^th August 2010 and 2^nd December 2010. Again they provided that the liability of the Appellants to pay their lawyers would only arise in the event of a win and in respect of both agreements win is defined at (L) of the Standard Terms as:

"Your claim for compensation, damages and account of commissions or relief under the Consumer Credit Act is finally decided in your favour whether by a court decision or an agreement to pay you compensation, damages on account of commissions or you obtain relief under the Consumer Credit Act. 'Finally' means that your opponent is not allowed to appeal against the court's decision or has not appealed in time or has lost any appeal."

10. Mr Saoul submits that in respect of the proceedings in the County Court, the High Court and the Court of Appeal the Appellants lost, they did not win, each conditional fee agreement is an entirely self-contained agreement, and concluded upon failure of the proceedings to which it related.
11. It seems to me (although I am not deciding the point) that, if this argument is pursued on detailed assessment, the effect of the consent order in the Supreme Court is that the Appellants did win at each stage in the courts below because their claim for damages or relief was finally decided in their favour, and in respect of the proceedings in the County Court they did derive benefit from pursuing the claim, namely the repayment of the premiums that they had paid.
12. The Respondent also relies on the financial position of the Appellants and of their solicitors. I accept on the evidence before me that the Appellants are clearly in financial difficulties and it is unlikely that they would be able to repay anything in the event that the court were to order costs on account which exceeded the amount allowed on detailed assessment. Although there is some evidence of the failure of a company associated to the Appellants' solicitors, there is no evidence before me (and I have to say I would not expect any) as to the financial position of the Appellants' solicitors. While the costs claimed are the costs claimed of the Appellants, in reality and under the terms of the agreements between the Appellants and their solicitors, any sums paid to the Appellants under an order for payment on account will go straight to their solicitors and will be retained by them on account of costs. There is no prospect (it seems to me) of any money ending up in the hands of the Appellants.
13. I suggested that any concerns might be alleviated by an undertaking by the Appellants' solicitors to repay sums if any are overpaid. No such undertaking has been offered but it seems to me, on an application such as this, that where a payment on account is ordered and the court is certain a sum will be due, in my judgment it would be inappropriate to require an undertaking from the Appellants' solicitors.
14. Another point of significance in relation to the costs claimed is in relation to an alleged failure to serve notices of funding. This has not been fully explored today; as I understand it, it was raised rather late in the day. If no notices of funding were served in relation to the conditional fee agreement in the High Court and the Court of Appeal (as I understand is suggested) and if relief from sanctions is not granted, the success fees in the High Court and the Court of Appeal (which would probably be about £700,000) would not be recoverable. That is a factor that I have to bear in mind when exercising this jurisdiction.
15. Another factor I have to bear in mind is the amount of costs claimed. There are (it seems to me) serious issues as to the hourly rates that have been charged, particularly in relation to the Court of Appeal, and to the time which is claimed; and particularly in the Court of Appeal, with an apparent chunk of over 400 hours of undated research coming to over £200,000 and other examples of time spent, which Mr Saoul submits would suggest that the Court of Appeal bill may be amenable to significant reduction on detailed assessment. I think there are very significant issues as to the quantum of the Court of Appeal bill.
16. The effect of the issue as to notice of funding and the effect of the points raised by the Respondent as to the quantum of the Court of Appeal bill lead me to the conclusion that I cannot be certain that the Appellants will recover more than £150,000, and that is the amount that I allow by way of a payment on account.
17. It is of course for the Appellants' solicitors to consider, but I know that these bills have been or will be assigned to me for detailed assessment, as the Supreme Court bill has been assigned to me for detailed assessment. Clearly there are significant issues in relation to these bills which will inevitably lead to a lengthy detailed assessment. I can indicate now that as and when hearing dates are requested (at present my first available dates are in October), it may well be that the Appellants may wish to pursue any claim for relief from sanctions at an earlier date and then perhaps pursue an application for an interim costs certificate, subject to the outcome of the application for relief from sanctions, but that is a matter for them.

[Discussion regarding dates of availability]

18. The Appellants are entitled to a payment on account in the sum of £150,000. The sum shall be paid by the Respondent to the Appellants' solicitors by 4 pm on 28^th March 2013.

[Discussion on costs]

19. The costs of today shall be in the detailed assessment. Doubtless when we come to it (if we come to it), then I will be reminded of the battle that took place today.

End of judgment