2000/181
12 pages
ROYAL COURT
(Samedi Division)
14th September, 2000
Before: J. G. P. Wheeler, Greffier Substitute
Between |
Margaret Milne Boyd |
Plaintiff |
|
And |
David Eldon Le Cornu and Barry Keith Pickersgill exercising the profession of Advocate and Solicitor under the name and style of Pickersgill & Le Cornu |
Defendants |
|
Summons regarding the taxation of costs
The Plaintiff appeared in person
Advocate R J Michel for the Defendant
Advocate P de C Mourant
JUDGMENT.
THE MASTER:
1. The question which comes before me is somewhat unusual in that it relates to the taxation of various bills of costs submitted by Messrs. Mourant du Feu & Jeune for taxation on behalf of the plaintiff. By agreement, a summons was issued and heard before me on 8th August, 2000. It was agreed that in addition to Miss Boyd appearing in person and Advocate Michel appearing for the defendants Advocate Mourant would also attend.
2. The factual background to the principal action has been set out in a number of judgments of both the Royal Court and the Court of Appeal. In April 1997 the plaintiff commenced proceedings against the defendants by way of Order of Justice alleging, inter alia, professional negligence. On 21st November, 1997, the defendants issued a summons seeking to strike out the Order of Justice. This summons was superseded by a summons dated 27th April, 1998, seeking the determination of the question of prescription as a preliminary issue. The Royal Court ordered, on 27th April 1998, that the question of prescription be tried as a preliminary issue and at a hearing on 6th August, 1998, it found that the plaintiff's action was prescribed. The plaintiff appealed against that decision and on 30th September 1999 the Court of Appeal allowed the plaintiff's appeal and ordered that the costs of the plaintiff of and incidental to the appeal, both in the Court of Appeal and in the Royal Court, be paid by the defendants on the standard basis after taxation by the Judicial Greffier.
3. Subsequently, a bill of costs has been submitted by Messrs. Mourant du Feu & Jeune for taxation in the total sum of £37,478.59. In addition, the plaintiff has submitted a claim for the payment of costs incurred by her as a litigant in person in the sum of £6,522.76.
4. Following correspondence and discussions with Mr M J Haines, the Assistant Judicial Greffier dealing with questions of taxation, the defendants issued a summons on 26th May convening the plaintiff and Messrs. Mourant du Feu & Jeune before me to show cause why taxation of the bill of costs submitted by Mourant du Feu & Jeune should not be refused. Following informal discussions with Advocates Michel and Mourant I agreed to hear the summons and it came before me on 8th August, 2000. By agreement, the plaintiff appeared in person, Advocate Michel appeared on behalf of the defendants and Advocate Mourant appeared on behalf of his firm as the matter related to the taxation of the bill of costs submitted by that firm.
5. Although the summons sought the refusal of the taxation of the bill submitted by Messrs. Mourant du Feu & Jeune it was agreed, when the parties came before me, that my decision would be restricted to certain questions of principle. Once those questions had been answered and subject to any appeal, the taxation of the bills of costs by the Assistant Judicial Greffier could proceed.
6. At the hearing on 8th August and after hearing submissions from Advocates Michel and Mourant and also after hearing Miss Boyd in person it was agreed that I should proceed to answer the following questions:-
(a) Does the principle known as the "indemnity principle" apply to costs in civil proceedings in Jersey?
(b) If so, how does the indemnity principle operate?
(c) Are decisions of the English Courts on the questions raised in (a) and (b) above of assistance?
(d) Does the decision of Santos-Costa -v- Attorney-General (1996) JLR 87 (a decision relating to costs in criminal proceedings) have any relevance?
(e) Are there any particular factors which apply to the taxation of costs in civil proceedings in Jersey where the receiving party has been granted legal aid?
7. Before considering these questions, it will be useful to review briefly the provisions of the Royal Court Rules 1992 as amended which deal with the taxation of costs. The whole matter is addressed in Part 9A of the Rules. The relevant provisions came into effect on 1st June, 1999 and set out in some detail the principles which apply and the procedures which have to be followed where costs have been awarded in civil proceedings.
8. Rule 9A/2 deals with the amount of costs recoverable and paragraph (1) of the Rule is in the following terms;-
"9A/2.-(1) Subject to the provisions of this Part of these Rules, the amount of costs which any party shall be entitled to recover is the amount allowed after taxation on the standard basis unless it appears to the Court to be appropriate to order costs to be taxed on the indemnity basis."
The standard basis is defined in Rule 9A/4 which provides as follows:-
"9A/4. On a taxation of costs on the standard basis there shall be allowed a reasonable amount in respect of all costs reasonably incurred and any doubts which the Greffier may have as to whether the costs were reasonably incurred or were reasonable in amount shall be resolved in favour of the paying party."
Rule 9A/5 then goes on to deal with the indemnity basis and is in the following terms:-
"9A/5. On a taxation of costs on the indemnity basis all costs shall be allowed except insofar as they are of an unreasonable amount or have been unreasonably incurred and any doubts which the Greffier may have as to whether the costs were reasonably incurred or were reasonable in amount shall be resolved in favour of the receiving party."
9. Rule 9A/14 empowers the Greffier with the approval of the Bailiff to issue practice directions from time to time in relation to taxation practice and scales of fixed costs for the purposes of Part 9A of the Rules. On 8th April 1999 the Judicial Greffier issued Practice Direction 99/2 which sets out in some detail the procedures to be followed for the taxation of costs in civil proceedings. This Practice Direction includes a specified format for the layout of bills of costs to be taxed and also provides detailed notes for guidance.
10. I now proceed to deal in turn with the particular questions which it is agreed I should consider. The first question is "Does the principle known as the "indemnity principle" apply to costs in Jersey?"
11. The parties were unable to draw to my attention any decision in Jersey in which the principle has been considered. There are, however, a number of English cases in which the matter has been addressed. The first case to which I will refer is that of Gundry -v- Sainsbury (1910) 1KB 645. This case turned on a question of party and party costs and also the construction of an 1870 English statute which does not apply in Jersey. In its decision the English Court of Appeal held that a plaintiff could not recover from a defendant more costs than he was liable to pay his own solicitor because party and party costs were awarded as an indemnity only. In the course of his judgment Cozens-Hardy M.R. at page 649 summarised the common law position as follows:-
"What are party and party costs? They are not a complete indemnity, but they are only given in the character of an indemnity. I cannot do better than read the opinion expressed by Bramwell B. in Harold v. Smith : "Costs as between party and party are given by the law as an indemnity to the person entitled to them; they are not imposed as a punishment on the party who pays them, nor given as a bonus to the party who receives them. Therefore, if the extent of the damnification can be found out, the extent to which costs ought to be allowed is also ascertained." Now in the face of the evidence which the learned county court judge has accepted, and which he was perfectly justified in accepting, if he had ordered the defendant to pay these costs he would have been giving a bonus to the party receiving them. That is contrary to justice and to common sense and also to the law as laid down in Harold v. Smith. That is a decision which has remained undisturbed for fifty years, and I am not prepared to depart from it."
12. The meaning of the indemnity principle was also considered as recently as 1998 by the English Court of Appeal in the case of General of Berne Insurance Co. -v- Jardine Reinsurance Management Ltd. (1998) 1 WLR 1231. The matter before the Court of Appeal related to the construction of the Solicitors Act 1974 of the United Kingdom but the common law indemnity principle was considered. In the course of his judgment May L.J. said at page 1234 as follows:-
"The appeal turns, as I say, on the construction of section 60(3) of the Act of 1974. It is said to enshrine a common law principle to which the label "the indemnity principle" has been given. The principle is simply that costs are normally to be paid in compensation for what the receiving party has or is obliged himself to pay. They are not punitive and should not enable the receiving party to make a profit."
13. Practice Direction 99/2 to which I have previously referred deals with the procedures to be adopted on the taxation of costs in Jersey and sets out the format required where a bill of costs is to be taxed. Any such bill of costs is required to be certified and the wording of the certification which is contained in the Practice Direction is as follows:-
"I certify that:-
(1) the bill has been checked by..........................(state name and status);
(2) the bill is complete;
(3) to the best of my knowledge and belief the bill is accurate; and
(4) in relation to each and every item that the bill covers, the costs claimed herein do not exceed the costs which the receiving party/parties is/are required to pay me/my firm;
In Legal Aid cases (4) above should be replaced by the following paragraphs:-
(5) the basis upon which fees were agreed with my client when instructions were first given/the basis upon which costs are being claimed is....[State the basis]; and
(6) in relation to each and every item that the bill covers, the costs claimed herein are in accordance with the basis set out in (4) above.
Advocate A.B. Person
Dated.............199 "
It will be noted that paragraph (4) of the certificate required in the case of non legal aid cases effectively states in another way the indemnity principle as it has been defined in English decisions.
14. My conclusion is that the indemnity principle does apply to costs in Jersey and, in the absence of direct Jersey authority, that it has the same meaning as in the English cases to which I have referred.
15. I now turn to address the second question posed, namely how does the indemnity principle operate? The answer to this question is generally clear in the statements and definitions of the indemnity principle as mentioned above. There are, however, a number of more specific matters which require further consideration. In particular, it is necessary to consider circumstances where a third party (such as an insurance company or a trade union) is responsible for the payment of costs in a civil action and also the question arises of circumstances where a lawyer has agreed to waive any requirement for the payment of fees by his client. These two matters have been addressed in a number of English cases although I should point out that the cases concerned were primarily involved with the construction of various English statutes which are not applicable in Jersey.
16. In the case of Lewis -v- Averay (No.2) (1973) 1 WLR 510 the English Court of Appeal considered the question of a third party funding litigation in the context of the Legal Aid Act 1964 of the United Kingdom. The case concerned the dishonest sale of a motor car and one of the parties was supported by the Automobile Association. The party concerned sought to recover costs from the Legal Aid Fund on the basis that they were "incurred by him" within the meaning of the Legal Aid Act 1964 and the argument was raised that the costs were not incurred by the party concerned but by the Automobile Association. This question was addressed by Lord Denning M.R. in his judgment and at page 513 he stated as follows:-
"Mr. Hames suggests that in this case the costs were not incurred by Mr. Averay, but were incurred by the Automobile Association; because the Automobile Association undertook the appeal and instructed their solicitors and paid them. I cannot accept this suggestion. It is clear that Mr. Averay was in law the party to the appeal. He was the person responsible for the costs. If the appeal had failed, he would be the person ordered to pay the costs. It the costs had not been paid, execution would be levied against him and not against the Automobile Association. The truth is that the costs were incurred by Mr. Averay, but the Automobile Association indemnify him against the costs. This is borne out by a letter of April 11, 1972, from Amery-Parkes & Co., the A.A. solicitors, to the area secretary of The Law Society. They say:
". . . we had made it clear that Mr. Averay was indemnified in all respects by the Automobile Association so that no part of the cost of the appeal has or would have fallen on him."
The litigant, Mr. Averay, is the person who is legally responsible vis-à-vis the other party; but he is indemnified by those standing behind him. That is sufficient to satisfy the requirement that the costs were "incurred by him."
Next, Mr. Hames says that it is not just and equitable that the costs should be paid out of public funds: because the Automobile Association has borne them, and not Mr. Averay. But, as Phillimore L.J. pointed out, Mr. Averay is one of the members of the Automobile Association. He might well wish to put back into the funds of the Automobile Association the costs which they had provided for him. It is rather like In re Hope (1872) 7 Ch.App. 766, to which Mr. Hames referred us. Or take a case where a litigant is helped by a friend or relative If he recovers costs from the other side, he should reimburse the one who helped him."
17. The matter was considered further in the case of R. -v- Miller (1983) 1 WLR 1056 which dealt with the interpretation of the phrase "incurred by him" in the Costs in Criminal Cases Act 1973 of the United Kingdom. In his judgment Lloyd J. reviewed the applicable authorities including Lewis -v- Averay (No.2) cited above and concluded at page 1061 as follows:-
"I would hold, following Adams v. London Improved Motor Coach Builders Ltd. [1921] 1 K.B. 495 and the other cases I have mentioned, that costs are incurred by a party if he is responsible or liable for those costs, even though they are in fact paid by a third party, whether an employer, insurance company, motoring organisation or trade union, and even though the third party is also liable for the costs. It is only if it has been argued that the client shall in no circumstances be liable for the costs that they cease to be costs incurred by him, as happened in Gundry v. Sainsbury [1910] 1 KB 645."
18. In the recent case of Bailey -v- IBC Vehicles Ltd (1998) 3 All ER 570 the English Court of Appeal reviewed the operation of the indemnity principle covering the principles which I have raised and Judge L.J. at pages 573-4 stated as follows:-
"The indemnity principle is well understood. It was most recently considered by the Court of Appeal in General of Berne Insurance Co v Jardine Reinsurance Management Ltd [1998] 2 All ER 301. May LJ said (at 304):
"The principle is simply that costs are normally to be paid in compensation for what the receiving party has or is obliged himself to pay. They are not punitive and should not enable the receiving party to make a profit."
Sir Brian Neill summarised the principle (at 312):
"That as between party and party, an order for costs is not intended to provide more than an indemnity. The receiving party is not entitled to a bonus".
He referred to Gundry v Sainsbury [1910] 1 KB 645, which May LJ (at 305) considered to state "a general principle". Miss Booth did not argue to the contrary. Therefore for present purposes it is unnecessary to revisit the consistent line of authorities beginning with Gundry v Sainsbury and culminating, for the moment, in the General of Berne case, nor to consider the effect on the indemnity principle of the recent decision of the Court of Appeal in Thai Trading Co (a firm) v Taylor [1998] 3 All ER 65, [1998] 2 WLR 893, where it was held that a solicitor who had agreed to forego all or part of his fee if the action failed, was not acting unlawfully if he sought to recover his reasonable profit costs when the plaintiff's action was successful, provided he did not seek to recover more than his ordinary profit costs and disbursements.
It is also clearly established that the indemnity principle is not undermined merely because the successful litigant is a member of a trade union whose claim is being pursued with financial support from his union: for example, see Adams v London Improved Motor Coach Builders Ltd [1921] 1 KB 499, [1920] All ER Rep 340, followed in R v Miller (Raymond) [1983] 1 WLR 1056 at 1061, where Lloyd J considered the authorities and encapsulated the relevant principle in this observation:
"Once it was shown, as is now conceded, that Mr Glennie was indeed the client, then a presumption arose that he was to be personally liable for the costs That presumption could, however, be rebutted if it were established that there was an express or implied agreement, binding on the solicitors, that Mr Glennie would not have to pay those costs in any circumstances."
19. From a review of the English authorities which I have mentioned and which I consider to be of persuasive assistance I consider that the following conclusions may be drawn:-
(1) The fact that a third party such as an insurance company, trade union or other independent organisation has agreed to underwrite costs does not preclude the recovery of costs from the other side in accordance with the operation of the indemnity principle;
(2) Only where it has been agreed between a client and his lawyer that in no circumstances shall the client be liable for costs will such costs cease to be costs incurred by the client and in the absence of any such agreement the recovery of such costs from the other party to the litigation will not infringe the indemnity principle.
20. With regard to the question of an agreement between a lawyer and his client that the client shall in no circumstances be liable for costs Advocate Michel asked me to consider at what stage it would be necessary for such an agreement to be reached. He argued that this was really something which could only arise at the commencement of litigation and the client and his lawyer could not wait, for example, until the outcome of the litigation and then reach such an agreement. Advocate Mourant argued the contrary view and cited the example of circumstances changing during the course of proceedings because, for example, a client enjoyed good fortune by way of a windfall such as a lottery win or an inheritance.
21. Having considered this particular point I do not consider that it is correct or necessary to lay down any principle. Instead, it seems to me that the question can only be addressed on the particular facts and circumstances of any individual case. It is a matter to be addressed at the time of taxation and I cite Lloyd J in R -v- Miller above at page 1061 where he states:-
"In practice, of course, the taxing officer will have before him on the taxation the whole of the solicitor's file. If it appears to the taxing officer that there is doubt whether there was an express or implied agreement, binding on the solicitors, not to seek to recover the costs from the client, the taxing officer should ask for further evidence. It must then be for the taxing officer to come to a conclusion on the whole of the facts presented to him. Unless these facts establish a clear agreement, express or implied, that in no circumstances will the solicitors seek to obtain payment from their client, then the basic presumption stands, and reasonable costs must be allowed on a taxation out of central funds."
22. The third question which I agreed to consider and which follows on quite logically from the first two questions is the extent to which decisions of the English courts on the matters raised in the first two questions are of assistance. As previously stated, none of the parties were able to refer me to any Jersey cases in which the questions at issue have been raised. In the absence of any such Jersey authority I have reached the conclusion that English decisions such as those which I have cited are of assistance in considering the customary or common law principles such as the indemnity principle and their application in Jersey. In reaching that conclusion I do, however, mention the caveat that many English cases turn on the construction of various statutes which do not apply in Jersey and this must be borne in mind in reviewing and referring to them. Nevertheless, I consider that the cases are of assistance in reviewing applicable customary law principles and they may also be relevant where there is similar statutory wording being considered in any particular case in Jersey.
23. The next question which I have to consider is whether the decision of Santos-Costa -v- Attorney-General (1996) JLR 87 (a decision relating to costs in criminal proceedings) has any relevance to the issues before me. That case concerned a criminal matter where an accused had been acquitted and an order was made under Article 2(1)(c) of the Costs in Criminal Cases (Jersey) Law 1961 that the costs of his defence be paid out of public funds. The question which arose for consideration was whether under that statutory provision all expenses properly incurred were recoverable or whether the statute meant that, because the accused was legally aided, only the amount of his own contribution, not the entire costs of the defence, should be paid out of public funds. The decision of the Royal Court is stated at page 88 in the following terms:-
"Since the legislature had clearly had in mind the question of legal aid when enacting the 1961 Law but had not made specific reference to it in art. 2, in the absence of express words the article was to be given its ordinary and natural meaning. It was therefore clear that if on the acquittal of an accused who had been granted legal aid the court ordered the costs of the defence to be paid out of public funds, the whole of the costs were to be paid and not an arbitrary lower sum which it was believed he was able to pay. Because the existing judgments on this issue had reached the opposite conclusion, they were clearly wrong and the court would decline to follow them, even though this would have the consequence of giving defence advocates in legal aid cases an extra incentive to win the case that did not exist in other cases."
24. The actual decision in the Santos-Costa case turns largely on the construction of Article 2 of the Costs in Criminal Cases (Jersey) Law, 1961 and a review of earlier decisions of the Royal Court which had limited the recoverability of costs from public funds where legal aid had been granted. In the course of his judgment (at pages 92 to 94) the learned Bailiff reviewed the cases of R. -v- Miller and Lewis -v- Averay (No.2) to which I have previously referred. Having done so he then concluded (at page 94) as follows:-
"Mr. Whelan's argument was that a legally aided client is not liable for the costs of his defence. If he were liable, he would not be on legal aid. But it seems to me that there is a circularity in this argument. A client obtains legal aid because he is not able to pay for the costs of his defence. But if the court has ordered, following his acquittal, the costs of his defence to be paid out of public funds, he is surely ex hypothesi able to pay them. In those circumstances, his lawyer would be entitled to charge him the full fee rather than a reduced fee to reflect his means. In my judgment, the construction of art. 2(4) of the 1961 Law adopted by the court in Bouchard amounts to the insertion after the words "reasonably sufficient to compensate the accused for the expenses properly incurred by him in carrying on the defence" of some such phase as "except that where the accused is legally aided, only such contribution as he could afford to pay shall be recoverable." This seems to me to strain the statutory language beyond its breaking point. I am reinforced in my conclusion by the fact that in enacting the 1961 Law, the Legislature was clearly alive to the question of legal aid. In art. 3(3), specific provision is made for the payment of the advocate's fees and expenses on an appeal irrespective of its outcome. Paragraphs (1) and (2) of art. 2 make similar provisions to those found in art. 2(1) for the payment of costs by the appellant or out of public funds as the case may be. Article 3(3) states:
"Whether or not the court makes an order under the provisions of this Article, there shall be defrayed out of public funds, up to an amount allowed by the court-
(a) where, by reason of the insufficiency of the appellant's means, an advocate has been assigned to him, the fees and expenses of the advocate ..."
It was open to the legislature to make specific provision to cover the situation in which an accused person was legally aided if it had wished to do so. In default of any express provision, it seems to me that the statutory language must be given its ordinary and natural meaning. If, on the accused's acquittal, the court orders the payment of the costs of the defence out of public funds, that is what should be paid.
I reach the conclusion with some diffidence, in the knowledge that I am differing from the conclusion reached by two learned judges of this court. My conclusion also has the result, which might be thought unfortunate, that there is a premium on success for the lawyer acting for a legally aided defendant. However unfortunate that outcome may be, if it is the result of a proper construction of the statutory language, it must be a matter to be addressed by the legislature. I am comforted, however, by the thought that on this construction, the costs of the defence can at least be objectively determined. On the Bouchard ruling, the costs of the defence are determined by a subjective assessment by the lawyer acting on legal aid of what he thinks his client can reasonably afford to pay. It may be doubted whether this is really a satisfactory way of assessing the costs of the defence which are to be paid out of public funds.
I accordingly find, with some diffidence as I have said, that Bouchard was wrongly decided on this point and I grant the declaration sought by Mr. Costa. The costs of Mr. Hakes' defence should be assessed by the Judicial Greffier without regard to the fact that Mr. Hakes was assisted under the legal aid scheme."
25. The Santos-Costa decision is one relating to costs in criminal proceedings and turns largely on a construction of the provisions of the Costs in Criminal Cases (Jersey) Law 1961. Nevertheless, there are a number of points in that case which I consider relevant to the matters presently before me. Firstly, the Royal Court cited with approval some of the English authorities to which I have made reference in the course of this judgment. Secondly, the Royal Court drew no distinction between a legally aided person and one not so assisted when the question of recovering costs under the 1961 Law arose. Although, because it turns on questions of statutory construction, the Santos-Costa case is not directly relevant to the questions raised before me, I do consider that it would not be stretching matters too far to say that I consider that it would be appropriate in applying the indemnity principle in relation to costs in civil proceedings to conclude that no distinction should be drawn between a legally aided client and any other. I draw some comfort from the like conclusion reached by the Royal Court in the Santos-Costa case although conceding that it was done in a different context.
26. The final question which falls for consideration by me is whether there are any particular factors which apply to the taxation of costs in civil proceedings where the receiving party has been granted legal aid in Jersey. In my view, the application of the indemnity principle in the manner to which I have referred in this judgment should be the same whether or not a party to civil litigation is legally aided. This seems to be the correct conclusion, having regard to the principle itself. I also consider, for the reasons just stated, that it is correct to apply, by analogy, the view of the Royal Court as expressed in the Santos-Costa case. For those reasons I consider that there is no real difference between a legally aided party and one not so assisted save for the observation that the certification actually required on a bill of costs submitted for taxation does require a statement by the lawyer certifying the bill as to the basis upon which fees were agreed with the client and is in a different form from that required where there is no legal aid.
27. In conclusion, therefore, I answer the five questions posed as follows:-
(a) |
The indemnity principle does apply to costs in civil proceedings in Jersey; |
(b) |
The indemnity principle operates in like manner to that described in the various English cases which I have cited; |
(c) |
In the absence of any Jersey cases the decisions of the English courts are of assistance with particular reference to the common law questions raised; |
(d) |
Although not directly relevant the Santos-Costa decision is of assistance in that it has cited with approval various English cases and also may be applied by analogy to civil proceedings; and |
(e) |
There are no particular factors of principle applying to the taxation of costs in civil proceedings where the receiving party has been granted legal aid which require a departure from the indemnity principle and its operation generally. |
Authorities
Royal Court Rules 1992, as amended - Part 9A.
Gundry -v- Sainsbury (1910) 1 KB 645.
General of Berne Insurance Co. -v- Jardine Reinsurance Management Ltd. (1998) 1 WLR
1231.
Lewis -v- Averay (No. 2) (1973) 1 WLR 510.
R. -v- Miller (1983) 1 WLR 1056.
Bailey -v- IBC Vehicles Ltd. (1998) 3 All ER 570.
Santos-Costa -v- Attorney General (1996) JLR 87.
Costs in Criminal Cases (Jersey) Law, 1961: Article 2.