England and Wales High Court (Queen's Bench Division) Decisions

IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
ON APPEAL FROM THE SENIOR COURT COSTS OFFICE

		Royal Courts of Justice Strand, London, WC2A 2LL
		15/02/2013

MR JUSTICE GLOBE :

1. This is an appeal from the detailed assessment decision of Deputy Master Rogers on 7^th and 8^th March 2012 in relation to a boundary dispute action in respect of which the respondents, as claimants, were successful before Her Honour Judge Marshall QC in January 2007.
2. The appellants were refused permission to appeal by Deputy Master Rogers. They appeal with the permission of Mr Justice Eady dated 15^th June 2012.

The facts

3. The action has a long history, the full details of which are set out in the judgments of Her Honour Judge Marshall QC dated 30 October 2006 and Deputy Master Williams in October 2009. For the purposes of this appeal, the relevant facts are as follows.
4. On 19^th December 2002, the respondents sought a declaratory judgment in a boundary dispute in relation to the respondents' rights of access across the appellants' premises at Hindes Row, Harrow.
5. The case was listed for trial for five days commencing on 2^nd February 2005 before His Honour Judge Wakefield. After discussions between the parties on the first day of the hearing, it was believed that agreement had been reached. No hearing took place. The parties withdrew to draw up a consent order to be presented to the judge. It was never presented to the judge because the agreement was not signed and concluded. The respondents terminated the retainer of their then solicitors, Shah and Burke, and instructed new solicitors, Ved and Co, who acted for them until October 2012, since when they have been represented by CS Law.
6. In September 2006, there was a five day trial. The respondents succeeded. The complex issues that were considered are reflected in a forty page judgment of the trial judge, Her Honour Judge Marshall. Upon judgment being entered for the respondents, there is an agreed minute of the Order dated 18^th January 2007 wherein, save for discrete orders for the respondents to pay the appellants' costs in respect of an interlocutory order made on 13^th July 2005 and no order for costs in relation to some other interlocutory matters, the respondents were awarded costs against the appellants subject to a detailed assessment and subject to any costs before 13^th March 2005 being subject to a 20% reduction.
7. On 7^th November 2007, the respondents' bills of costs were served. Two separate bills were served, one for Shah and Burke's costs and one for Ved and Co's costs. Shah and Burke's bill totalled £35,037.56. Ved and Co's bill totalled £100,213.06 The detailed assessment was eventually listed for hearing before Deputy Master Williams in May 2009.
8. Between 7^th November 2007 and May 2009, the appellants served Points of Dispute and a Part 18 Request for Further Information. Both of the respondents' firms of solicitors served replies, and the appellants served Amended Points of Dispute. During the course of this procedural history, on 27^th February 2007, there was a fire at the offices of Shah and Burke which destroyed paperwork associated with the case.
9. Upon a preliminary issue, prior to the detailed assessment being able to be carried out before Deputy Master Williams, the appellants, as paying parties, sought an order that the entirety of the respondents' bills of costs be struck out or disallowed and/or that at least the bill of Shah and Burke be struck out or disallowed. In the course of the application, very serious allegations were made by the appellants against both firms of solicitors who had acted for the respondents, including allegations of collusion, concealment contrary to a solicitor's duty to the court, and editing of letters to give a false impression to the court about the firm's billing practices. The underlying point of importance was the allegation that there had been a breach of the indemnity principle in that the respondents had never paid and were not liable to pay any costs to Shah and Burke.
10. Deputy Master Williams heard evidence over three separate days in April, June and August 2009. She handed down a thirty page closely typed judgment on 2^nd October 2009 wherein she indicated that she had not been persuaded that any of the allegations had been made out. She rejected all of the appellants' arguments and directed that the case be listed for a detailed assessment of the bill. She reserved the assessment to herself. In the event, that proved to be impossible. It was eventually listed and heard before Deputy Master Rogers on 7^th and 8^th March 2012.
11. At the hearing, three bills were assessed, which were Shah and Burke's bill of £35,037.56, Ved and Co's original bill of £100,213.06 and Ved and Co's bill of £24,150.79 for the costs of the preliminary hearing before Deputy Master Williams in 2009.
12. At the commencement of the hearing before Deputy Master Rogers, the appellants applied for permission to appeal the decision of Deputy Master Williams. The application was refused on the grounds that it was too late to make the application two and half years after the hearing and that it also had no reasonable prospect of success. The application has not been renewed.
13. Deputy Master Rogers then considered the proportionality of the bills. He decided that, by reason of the complexity of the case in relation to both facts and law, the costs appeared proportionate and as a result of which there was no need to apply the necessity test laid down in Lowndes v The Home Office [2002] EWCA Civ 365, [2002] 4 All ER 775.
14. In a fully reasoned judgment, Deputy Master Rogers explained that he had considered various objections in the appellants' Points of Dispute as amended. The first related to an objection to pay the costs of the abortive trial in 2005 in respect of which the appellants claimed that His Honour Judge Wakefield had made no order for costs. The second related to an objection to paying any of the costs of Shah and Burke. The third related to an objection to pay the fees of counsel instructed by Shah and Burke because, although there was a statement that the fees had been paid, no receipted fee-note had been received. The findings made by Deputy Master Rogers were respectively that no such order had been made, the indemnity principle issue had been determined by Deputy Master Williams and no receipted fee-note was required. He indicated that the amended Points of Dispute raised general issues only and not specific issues with individual items.
15. The appellants applied to serve re-amended Points of Dispute. The respondents objected. Deputy Master Rogers refused to allow the amendments because they were being made too late in the day, they amounted to an attempt to re-open the whole Shah and Burke bill which had already been subject to a specific 20% reduction in the order of Her Honour Judge Marshall in January 2007, they could have been raised at any time during the length of time that had elapsed since the order of Deputy Master Williams in October 2009 and they would necessarily result in an adjournment of the detailed assessment hearing.
16. Thereafter, applying a test of reasonableness to the bills, Deputy Master Rogers assessed the bills and made various reductions. After correction for minor typographical errors, and exclusive of interest payments, costs certificates were issued in the following sums:

	Bill	Assessed	Costs	Totals
Shah and Burke	35,037.56	28,030.05	6,243.00	34,273.05
Ved & Co	100,213.06	79,500.00	7,569.58	87,069.58
Ved & Co	24,150.79	21,446.39	195.00	21,641.39

Grounds of Appeal

17. There are seven grounds of appeal.

Grounds one and two

18. The first two grounds were abandoned on the morning of the appeal hearing. It is worthy of note that the second ground of appeal was that His Honour Judge Wakefield had made no order for costs in 2005.

Grounds three to six

19. Grounds three to six cover the same issue of the wrongful exercise of discretion bearing in mind four separate but intertwined aspects of the bills. In ground three, it is contended that Deputy Master Rogers wrongly exercised his discretion in finding that the bills were not apparently disproportionate, in refusing the individual points in the appellants' amended Points of Dispute, and in refusing the appellants' application to re-amend their Points of Dispute. In grounds four and five, it is contended that thereafter he wrongly allowed Shah and Burke's original bill and Ved and Co's original bill. In ground six, it is contended that he wrongly allowed the costs of both solicitors in relation to the overlap in work occasioned by the change of solicitors.
20. The appellants contend that, although the Points of Dispute were headed "Proportionality", the contents did address specific issues of concern. Various specific issues were relied upon, all of which were raised in the narrative of the Points of Dispute. In essence, they all related to what was contended to be valueless work carried out by Shah and Burke as evidenced by the pleadings being so deficient that there had had to be six amendments to them, the fact that the change in representation included wasted changeover costs and the fact that Ved and Co stated that they had "to start from scratch". These were specific points that required a determination. Albeit that it was a case management decision, and there was a wide area of discretion, Deputy Master Rogers was wrong to have refused to consider these wider points of dispute about the two bills.
21. The appellants further contend that the 80% award made by Her Honour Judge Marshall did not amount to a reduction that reflected the full effect of the handover from Shah and Burke to Ved and Co. Shah and Burke should not have been allowed costs to cover valueless work. The assessment of what was of value and what was valueless was a matter for the detailed assessment and was not dealt with by Her Honour Judge Marshall.
22. Finally, it is contended that the re-amendments should not have been refused. The respondents had had ample notice of the points. In reality, there would have been no delay. The respondents would have suffered no prejudice whereas refusing to allow the re-amendments has caused overwhelming prejudice because it effectively precluded any contest about the Shah and Burke bill.
23. In response, it is argued that the 20% reduction made by Her Judge Marshall reflected her finding that the work undertaken by Shah and Burke was not valueless, and there were overlap issues between the two firms. The order was not appealed. The appellants failed to make detailed submissions about the costs and state exactly what deductions ought to be made from the bills in the Points of Dispute in November 2007. The respondents' reply to the Points in Dispute in January 2008 stated that the objections taken by the appellants in the Points of Dispute were insufficient and the appellants were put on notice that they should provide fully particularised Points of Dispute. The Amended Points of Dispute dated March 2009 were sent under cover of a letter stating that the amendment was restricted to the costs incurred by Shah and Burke generally and did not itemise any deductions. In 2009, Deputy Master Williams did not find the work undertaken by Shah and Burke to have been valueless or there to have been an overlap of costs. It was not until the beginning of the second day of the hearing before Deputy Master Rogers in 2012 that Re-Amended Points of Dispute were served. In so far as that document provided particulars, it was part of an attempt to raise issues already decided and the respondents had had no opportunity to consider the particulars. If permission had been granted to allow them to stand, a further adjournment would have been necessary to have given the respondents time to consider the points. The issue is one of discretion and it cannot be said that Deputy Master Rogers wrongly exercised his discretion in deciding that the overall costs that were allowed were proportionate and reasonable.

Ground seven

24. Ground seven relates to the contention that Deputy Master Rogers wrongly allowed the detailed assessment costs of both Shah and Burke and of Ved and Co.
25. The appellants contend that Deputy Master Rogers should not have allowed both sets of costs. In so far as Deputy Master Rogers stated that there had been no objection to there being two bills, he was in error. All parties had been aware of the objection. Only Ved and Co were retained and on the record by the appellants. The attendance of both firms at the detailed assessment was unjustified. In allowing the costs of Shah and Burke, he was making an order in favour of a non-party. Further, or in the alternative, they were more properly solicitor and client costs which had been unreasonably occurred and for that reason should not have been allowed.
26. The respondents contend that the issue was not raised in the Points of Dispute. Even if it had been, the situation here was that Ved and Co had no knowledge of what had gone on when Shah and Burke had been handling the case. There was no dispute between them. They just could not advance any information about the bill. In these circumstances, that had to come from Shah and Burke and it was therefore justifiable for there to be two sets of representation and two sets of costs.

Discussion

27. I remind myself that an appeal from a costs judge is not a re-hearing. The proper approach is that the appeal should be allowed if I am satisfied that the decision was wrong (Hornsby v Clark Kenneth Leventhal [2000] 2 Costs LR 295). The issue is whether Deputy Master Rogers reached a decision which was within the ambit of reasonable decisions open to him on the facts of the case (Griffiths v Solutia UK Ltd [2001] EWCA Civ 736). Further, given that the assessment was a case management decision, I should not interfere with decisions within it taken by a costs judge who has applied the correct principles and who has taken into account matters that should be taken into account and left out of account matters which are irrelevant, unless I am satisfied that the decisions were so plainly wrong that they must be regarded as outside the generous ambit of discretion entrusted to the judge (Walbrook Trustee (Jersey) Limited v Fattal [2008] EWCA Civ 527).
28. In 2002, the appellants denied access to the respondents to the side of Hindes Road in Harrow. Thereafter, lengthy and protracted proceedings commenced.
29. In 2006, Her Honour Judge Marshall heard a considerable amount of evidence and handed down a lengthy reserved judgment wherein she found for the respondents and dismissed the appellants' counterclaim. She made specific costs orders at the end of the hearing. The orders were not all in favour of the respondents. She made two specific orders in relation to a hearing before District Judge Lightman on 13^th July 2005. She ordered the respondents to pay the appellants' costs in relation to the re-amendment of the particulars of claim. She made no order for costs in relation to all other matters that had been heard by District Judge Lightman on 13^th July 2005. In relation to the rest of the costs, she ordered standard basis costs to be paid by the appellants subject to the appellants' liability for costs prior to 16^th March 2005 and their liability for fees of the appellants' expert being limited to 80% of the bill. Deputy Master Rogers' interpretation was that the reduction of 20% was Her Honour Judge Marshall's assessment of the appropriate reduction in overall fees that was reasonable due to the change of representation. Having tried the case over a number of days, she was in an excellent position to make the costs orders that she made. She will have studied the pleadings and heard all of the evidence about the case and its procedural progress. It was a decision about the principles to be applied to the costs bill as a whole. I find no error in the reasoning of Deputy Master Rogers in reaching his conclusion about what Her Honour Judge Marshall was intending when she made the 20% reduction.
30. In 2009, Deputy Master Williams also heard a considerable amount of oral evidence in the preliminary costs hearing and handed down a lengthy reserved judgment dismissing the claim by the appellants that there had been a breach of the indemnity principle. A study of that judgment satisfies me that the respondents are correct in submitting that the appellants made very serious allegations against both Shah and Burke and Ved and Co and took just about every point they could take before Deputy Master Williams to defeat the bills of costs submitted by both firms of solicitors. The application to appeal that order at the beginning of the hearing before Deputy Master Rogers two and a half years later in 2012 was justifiably and correctly met with a firm refusal of permission to appeal for the reasons stated in the judgment and referred to above.
31. A study of the judgment of Deputy Master Rogers makes it clear that he was not prepared to consider anything in relation to the detailed assessment that amounted to the re-opening of any argument which had been considered by Deputy Master Williams. In that he did so, that too was a justifiable and correct decision.
32. Deputy Master Rogers was correct to approach the detailed assessment applying the principles in the decision in Lowndes v Home Office. Applying those principles at the outset of the assessment, the judge was required to stand back to consider the global proportionality of the costs claimed. If he considered that the costs were globally disproportionate, he would apply the twin tests of reasonableness and necessity. The judge therefore applied the correct test. The issue is whether the judge's conclusion that the bills were proportionate was so plainly wrong that it was outside the generous ambit of discretion entrusted to him. In my judgment, he exercised his discretion correctly.
33. Paragraph 5.2(b) of the Costs Practice Direction states as follows:

"(b) The points of dispute should identify each item in the bill of costs which is disputed; state concisely the nature and grounds of the dispute and, where practicable, suggest a figure to be allowed instead of a figure which has been claimed."

34. Given the history of what had happened and the full contents of what was in the Points of Dispute and the Amended Points of Dispute, Deputy Master Rogers was entitled to conclude that there had been insufficient precision in contesting specific items in the bills and that the real issues were general points of principle all of which had either been determined by Her Honour Judge Marshall or by Deputy Master Williams. In the circumstances, he was entitled to disregard the above submissions being made by the appellants about the Points of Dispute as amended. He was entitled to look at the bills as a whole and the complexity of the procedural and legal issues in order to decide if the bills were proportionate bills. In my judgment, there is no basis for contending that the conclusion he reached that the bills were proportionate was so plainly wrong that it was outside the generous ambit of discretion entrusted to him.
35. Further, it was entirely within his discretion to refuse to permit a further amendment of the Points of Dispute upon objection being taken by the respondents for the reasons identified above.
36. In relation to ground seven, the approach that was taken by the appellants before Deputy Master Williams and the attempts to re-open the same issues before Deputy Master Rogers is the best evidence in support of the reason why it was necessary for Shah and Burke to be separately represented at the detailed assessment. It was reasonable for Shah and Burke and Ved and Co to have taken the view that the appellants would challenge everything they could in relation to Shah and Burke's bill. No representative appearing for Ved and Co would have been able to answer any such queries. In such circumstances, it was not unreasonable for Shah and Burke to be separately represented, and there is no basis for contending that Deputy Master Rogers' decision to allow two sets of costs for the assessment was a wrongful exercise of his discretion.
37. My conclusion is that Deputy Master Rogers approached the detailed assessment in a correct and lawful manner. He was entitled to reach the decision that he did reach about proportionality. It was a proper exercise of his discretion. Thereafter, and as is apparent from the figures listed in the above table, his assessment of the reasonableness of the bills led to significant reductions. In accordance with the minute of the order I made at the conclusion of the hearing of the appeal on 4^th February 2013, the appellants' appeal is dismissed, the stay of execution previously imposed upon the payment by the appellants of the respondents' costs is lifted and the appellants are ordered to pay the respondents' costs of the appeal summarily assessed in the sum of £11,526.10 within 14 days. No further order is made in relation to the costs due and owing to the respondents from the appellants which, for the avoidance of doubt, are payable forthwith.