Jersey Unreported Judgments

Costs - leave to appeal sought by the appellant against assessment of the Greffier Substitute.

[2016]JRC101

Royal Court

(Samedi)

2 June 2016

Before     :		W. J. Bailhache, Bailiff, and Jurats Fisher and Ramsden
Between	Darius James Pearce		Appellant
And	Treasurer of the States		Respondent

The Appellant appeared in person, assisted by Advocate J. N. Heywood as amicus curiae.

Advocate G. G. P. White for the Respondent.

judgment

the bailiff:

Introduction

1.        The Appellant rented units 73, 74 and 80 in the Central Market, St Helier.  On behalf of the Public of the Island, the Treasurer of the States sought to recover Goods and Services Tax (GST) on the rents payable by the Appellant for the lease of these units.  The GST amounted to £268.20.  The Appellant disputed that GST was payable on the rents for the units and he refused to pay it in the sum claimed, or at all.  As a consequence, the Treasurer issued proceedings before the Petty Debts Court, which, having regard to the complexity of the arguments raised by the Appellant, transferred the matter to the Royal Court.  Before the Master, the Treasurer made an application to strike out the Appellant's answer to the proceedings and he applied for summary judgment in the sum of £268.20.  This was granted on 22^nd October, 2013, and the Master made an order that the Appellant should pay the Treasurer's costs of the application on a standard basis, to be taxed if not agreed.  Following that decision, the Appellant appealed to the Royal Court against the Master's order for summary judgment.  The appeal was dismissed on 2^nd July, 2014, (Pearce v Treasurer [2014] JRC 139B).  The Treasurer issued two further summonses before the Petty Debts Court seeking payment of an identical sum of GST arrears in respect of rental for later periods of time and obtained judgment in that amount from the judge, Mrs B Shaw.  The Appellant sought leave to appeal that judgment which was refused (Pearce v Treasurer [2015] JRC 009).  Following the refusal of the application for leave to appeal the Treasurer submitted a bill of costs for taxation in respect of the different work covered by the Master's order for costs on 22^nd October, 2013.  The Treasurer claimed for work undertaken by employees of the Law Officers' Department, claiming Factor A rates and a Factor B uplift of 50% on all the work done.  In accordance with customary practice, the Appellant was asked to submit any objections to the bill.  It appears that he raised no objections, and the Greffier Substitute allowed the bill in full in the sum of £25,512.25.  The Appellant has sought leave to appeal out of time against the assessment of the Greffier Substitute.  This was granted on 1^st July, 2015, when the Court also ordered that an amicus be appointed to help the Court on two matters of general principle - whether the public should be entitled to any form of profit by the application of a Factor B uplift to a claim for costs and, secondly, whether the Greffier Substitute should on taxation take into account the question of proportionality of the costs claimed to the sum in dispute.  It is to be noted that there is no appeal against the costs order itself. 

2.        In a skeleton argument filed by the Appellant, he indicated that he had read the skeleton argument from Advocate Heywood, the amicus curiae, and he contended that it accurately and comprehensively outlined the issues which he thought the Court would wish to consider in reaching its decision.  We refer to that because some of the contentions in the skeleton argument filed by the Appellant go to whether or not a costs order should have been made at all, and that is not in issue on this appeal.  We do, however, deal with one matter raised by the Appellant in that skeleton.  He contends that he and the Inspector of Markets agreed that all matters would be resolved expediently at the end of the General Election in October 2014 and that he received a full breakdown of outstanding amounts from an agent or servant of the Treasurer of the States which he duly settled.  He claims that it was his understanding that he had made full and final settlement of all sums relating to the lease which terminated on 24^th December, 2013.  Having reviewed the documentation put before us, it seems to us that the settlement by the Treasurer with the Appellant related solely to the second set of proceedings before the Petty Debts Court in respect of which judgment was given on 22^nd October, 2014, and the monies requested and later paid clearly did not cover those due pursuant to the taxation of the Treasurer's costs submitted by the Law Officers' Department on 15^th January, 2015. 

The question of Factor B uplift

3.        Rule 12/4 of the Royal Court Rules 2004 provides that:-

"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."

4.        Further guidance on taxation appears in Practice Direction RC09/01 and Appendix A to that Practice Direction.  Under RC09/01, the following extracts are of interest:-

"A. The amount of costs to be allowed on taxation shall (subject to any Rule or order of the Court fixing the costs to be allowed) be in the discretion of the Greffier." [paragraph 2.1]

and

"B. In exercising his discretion with regard to the total sum for Factor A and the Factor B uplift, the Greffier shall have regard to all the relevant circumstances, and in particular to:

(a) the complexity of the item or of the cause or matter in which it arises and the difficulty or novelty of the questions involved:

(b) the skill, specialised knowledge and responsibility required of, and the time and labour expended by, the Solicitor or Advocate:

(c) the number and importance of the documents (however brief) prepared or perused;

(d) the place and circumstances in which the business involved is transacted;

(e) the importance of the cause or matter to the client;

(f) where money or property is involved, its amount or value; and

(g) any other fees and allowances payable to the solicitor or advocate in respect of other items in the same cause or matter, but only where work done in relation to those items has reduced the work which would otherwise have been necessary in relation to the item in question."  [paragraph 2.2]

5.        In relation to Appendix A, the following extracts are relevant:-

(a) "Every chargeable item shown in the bill of costs should be represented in two parts, namely a direct cost component (Factor 'A') and a component for care and conduct (Factor 'B'), unless some other method of charging is referred to or allowable. The direct cost component is intended to cover the salary and the appropriate share of the general overheads of each such person. The particular elements that are found to constitute the average direct costs of that category of average fee earner and the methodology employed therein shall be determined by the Superior Number of the Royal Court with the advice and assistance of a committee specially constituted for that purpose."  [para 1.3]

(b) "The second component, the allowance for care and conduct, is intended to reflect all the relevant circumstances of the case and in particular the matters set out in Practice Directions RC09/01 and RC05/12 [which deals with the taxation of costs in criminal proceedings]. It is also intended to reflect those imponderable factors, for example general supervision of subordinate staff, for which no direct time charge can be substantiated, and the element of commercial profit." [para 1.4]

(c) "In the exercise of his judicial discretion, the taxing officer should have regard to

(i) all the circumstances of the case;

(ii) those particular matters set out in RC09/01 ...; and

(iii) the representations of both sides on taxation, setting out their contentions in support of or in opposition to the Factor B claimed in the receiving party's bill of costs. This is an opportunity for all sides on taxation to set out in detail with supporting authorities their submission on Factor B."  [para5.1]

6.        One question raised by Advocate Heywood was whether it is relevant to make a distinction between the Public, the Treasurer of the States and the Law Officers' Department.  We do not think it is necessary to do so for the purposes of this case.  It is clear from the decision of this Court in the instant case reported at Pearce-v-Treasurer of the States [2014] (2) JLR Note 9 that property held "for and on behalf of the Public of the Island of Jersey" was owned by the States for the benefit of the Public.  "The Public of the Island of Jersey" was a conventional description given to the ownership of property owned by the States on behalf of the island community.  The land was owned by the States for public benefit, because the States represented the democratically elected government which existed for the benefit of all.  The Treasurer of the States has been a statutory office for many years, most recently provided for by the Public Finance (Jersey) Law 2005 and has responsibility for States finances.  It follows that there is no distinction between the Treasurer and the Public for the purposes of recovering costs in relation to proceedings brought by the Treasurer to recover monies due to the States on behalf of the Public of this Island.  We also do not think it is relevant to draw any distinction between the Treasurer of the States and the Law Officers' Department in this connection.  In the budgetary arrangements drawn up on behalf of the States of Jersey, a number of different States departments are cost centres, and in some cases also have sources of income.  The Law Officers' Department is no different.  It is an expense of the States of Jersey because, as has been agreed with the Crown many decades ago, the responsibility for providing sufficient assets for the running of the Law Officers' Department rests with the States.  For the purposes of considering the indemnity principle, which we will come on to consider shortly, there is no distinction to be drawn between the Treasurer, the States, the Public and the Law Officers' Department, and it would be artificial to assert that the Treasurer has incurred no actual cost because the cost has been incurred within the Law Officers' Department, which is not the Plaintiff in the proceedings.  This is an appropriate outcome to consideration of these potential distinctions.  As Advocate Heywood submitted, any distinction between an individual department and the public (or the States) should be considered as artificial, and if necessary it would be relevant to "look through" such distinctions to ensure that an order for costs could be made and enforced to compensate the Public for the costs involved in bringing or defending a claim in the public interest.  There is a very strong public policy imperative to ensuring that costs orders in favour of the public, or a Minister, or the States, when made, are effective, for otherwise private litigants would be able to bring or defend proceedings against the public with impunity as to costs; which would have adverse consequences for the administration of justice generally. 

7.        The next issue is whether or not we should regard the Treasurer as a litigant in person or as a normal litigant who has instructed lawyers.  In our view there is no doubt that we should regard the Treasurer as a normal litigant.  In some cases, the States (or the Treasurer or a Minister) instructs the Law Officers or lawyers in their Department; in others, the public entity instructs private sector lawyers.  It would be entirely artificial to permit a costs order where private sector lawyers have been retained but not where public sector lawyers were retained - and indeed, not only artificial but it would have these consequences:

(i)        There might in some cases be perceived to be a strong incentive on the part of the public entity to instruct private sector lawyers, which might well be more expensive for the public at the end of the day because indemnity costs would not routinely be recovered, even if the public were successful;

(ii)       The consequence of instructing private sector lawyers would not only be to increase the costs of litigation and of access to justice for the public entity, but there would also be a real risk of increasing the cost of justice for those litigating against the public entity as well, depending upon the outcome to the Factor B arguments. 

8.        The amicus suggests that the Court could adopt a pragmatic approach, and assume that in the round the cost to the public per hour of employing lawyers in the Law Officers' Department is likely to be broadly comparable to the cost to law firms of employing a similar lawyer in private practice.  It would follow that the appropriate cost to the public would on that analysis be the prevailing Factor A rates for the grade of lawyers engaged on the matter.  In principle we think this is correct.  First of all, the Law Officers' Department recruits Jersey lawyers for litigation from the same pool as is fished by private sector employers.  Of course it is true that some lawyers wish to be involved in commercial work, others in private client work, and others in public sector work.  Nonetheless those differences go to the demands for lawyers with particular skills from time to time and the rules for the taxation of costs and the assessment of an appropriate Factor A figure inevitably have to take something of a broad brush approach to that question.  Secondly it is in the public domain from the State's budget figures that the Law Officers' Department are required to pay, notionally, a rent for occupation of its premises, and indeed that would be so if the Law Officers were operating from privately owned premises in that rent would clearly still be due.  There is of course a saving on expense in the Law Officers' Department, at least historically, in the sense that there is an absence of professional indemnity insurance cover, and there is no inter departmental re-charging of cost, both of which would suggest that the Factor A rate was too high for law officer employed lawyers, but that may be compensated by a more generous pension scheme.  Taken in the round, it appears to us that the appropriate cost to the public of lawyers in the Law Officers' Department is appropriately calculated as Factor A, and there is certainly no evidence before us to suggest otherwise. 

9.        The Factor B rate is to compensate for general supervision of subordinate staff, and an element of commercial profit, having regard to those factors set out at paragraph 2.2 of RC09/01.  Clearly the Attorney General does have a general duty of supervision of his subordinate staff, and, equally clearly, commercial profit is not a factor which applies in relation to the Law Officers' Department.  The parties have not presented to us any authority which conclusively suggests that a department of the States obtaining a costs order should be dealt with in any way differently to any other litigant.  We were referred to R (Nicholson) v Tottenham Magistrate's Court [2015] PTSR 1045.  In this case, the claimant, being concerned about the level of costs levied against defaulters by the billing authority in council tax enforcement proceedings, decided not to pay his council tax to enable him to experience the enforcement process for himself.  In due course he was summonsed to appear before the Magistrate's Court and in addition to the outstanding amount of council tax, the authority sought costs in the sum of £125, said to be reasonably incurred in the enforcement process.  The claimant queried the basis on which the authority had calculated the costs claimed, and when the justices ordered the claimant to pay the costs sought without making any further investigation of the sums claimed, the claimants sought judicial review of their refusal to state a case.  Permission was granted to challenge the decision of the justices, and the court allowed the claim holding that the power to order a respondent to pay the costs of the billing authority reasonably incurred in the enforcement proceedings could only be exercised where the court was satisfied that the costs had actually been incurred and that the costs were incurred in obtaining the liability order and that it was reasonable for the authority to have incurred those costs; it was not sufficient simply to ascertain whether the enforcement costs claimed were broadly in line with those charged by other local authorities and that in effect the claimant had been denied any opportunity properly to challenge the sums claimed and accordingly the order for costs had been unlawful. 

10.      This case would prima facie be authority, if we followed it, to require that the Law Officers' Department justified its costs by reference to the expense of pursuing the individual claim in every piece of litigation with which it was concerned, and it would militate against the approach which we have set out at paragraph 8 above.  However we do not think that the case is on all fours with the present case.  First of all, it cannot be said that the billing authority was claiming only legal costs.  It does appear that Regulation 34(7) of the Council Tax (Administration and Enforcement) Regulations 1992 may well enable the billing authority to recover administrative costs as well as legal costs and as the base costs would be liable to vary from one Council to another, it is unsurprising that some proof of actual costs incurred might be desirable.  Secondly the pool of lawyers to which reference was made at paragraph 8 above is in the United Kingdom a much bigger pool than exists in Jersey, and accordingly the basis upon which Factor A rates are calculated, which is in our view easily transferred from the private sector into the Law Officers' Department in Jersey, may not apply with such force in the United Kingdom.  Accordingly we have not followed the authority of R (Nicholson) v Tottenham Magistrate's Court. 

11.      Advocate Heywood also provided us with a copy of a decision of Mr John Jarvis QC sitting as a Deputy High Court judge in the case of Stratford-on-Avon District Council v Clarke [2015] EWHC 1539 (Ch).  In this case objection was taken to a bill of costs which had been summarily assessed by a district judge in the Banbury County Court, the judge reducing an assessment of costs claimed at £7,571.20 to a very much lower figure namely £1,852.50.  The initial reaction of the district judge had been to say that it was "a scandalously high costs schedule" a reaction which the Deputy High Court Judge felt bound to say he understood given that this was an undefended bankruptcy petition.  Consideration of the judgment in the case however shows that the main objections were as to the proportionality of spending and the amount of time actually spent, and there was no real assessment of the Factor A/Factor B issues.  It is therefore not particularly helpful on this point. 

12.      On behalf of the Treasurer, Advocate White referred us to Lloyds Bank Limited v Eastwood and Others [1975] CH 112.  In this case, the Attorney General appeared on a construction summons of a will involving charitable gifts and his costs were ordered to be taxed on the common fund basis and paid out of the estate.  An item of £75 was included in the bill of costs to cover the care and conduct of the matter over a period of two years, which was dealt with by a senior solicitor in the Treasury Solicitor's office.  The taxing master reduced the amount to £45 assessed at a rate of £7 per hour and disallowed £30 "profit costs" on the grounds that the Crown was not represented by an independent solicitor but by the Treasury Solicitor and his department and that a different method of assessment should be applied to a bill of costs of a party represented by a salaried solicitor.  The Attorney General appealed from a decision of Mr Justice Brightman who, sitting with assessors, had upheld the taxing master's decision.  Allowing the appeal, the Court of Appeal held that the appropriate method of taxation of a bill of costs where a party was represented by a salaried solicitor was to treat it as though it were the bill of an independent solicitor, assessing the reasonable and fair amount of a discretionary item having regard to all the circumstances of the case and the principle that the taxed costs should not be more than an indemnity to the party against the expense he had incurred in the litigation.  At page 130, Russell LJ said this:-

"The provisions of RSC Ord. 2 relating to taxation of costs awarded to a party to litigation against another party, or as here to be paid out of an estate or trust fund, are at least primarily directed to cases where the party has instructed an independent solicitor....  Now, except no doubt for purposes of internal accounting, the employed solicitor or legal department renders no bill to the employer or organisation; he or it makes no professional charges.  It is however quite clear on authority that it is not permissible to say that consequently the party is limited to disbursements specifically referable to the particular ligation on the ground that the salaries of employees and other general expenses of the department would have been incurred by the party in any event. 

Until the late 1960's, as we understand it, in such cases, on taxation, the bill was treated in the same manner as would have been the case had an independent solicitor been instructed by the party, the conventional approach now being that stated in the report below in the advice of the assessors to Brightman J in relation to discretionary items such as that in the instant case, and we observe that for very many years there have been examples of organisations such as railways with their own legal departments engaged in considerable litigation resulting in orders for costs in their favour which have required taxation; the system seems to have worked without objection, and without a suggestion that in such cases some detailed and complicated method should be adopted of breaking down the activities of the legal department so as to arrive in some other way at a proper attribution of the total expense of the department to the particular litigation. 

In the present case, the taxing master arrived at a figure of £45, based upon a time rate of £7 per hour, as representing that which was referred to in the assessors' advice as figure A, and declined to allow the addition thereto of what is referred to as figure B, on the ground that figure B in an independent solicitor's bill of costs would reflect or contain the profit element in the case of such independent solicitor; though we cannot think it was intended to stress that, had it been an independent solicitor, he would have been making a pure £30 profit in an item of profit costs of £75; "profit costs" of course, is a phrase used to denote items in a bill of costs which are not disbursements.  It was the view of the taxing master that, since there was no element of a solicitor's profit in cases such as the present, item B was not allowable; for otherwise the party would be making a profit contrary to the well-established principle that taxed costs should not be more than an indemnity. 

It should be stated that the taxing master was under the impression, which he stated in his answer to objections, that the Crown had conceded that his figure A was "adequate to cover the actual cost incurred in doing all the work done"; if such a concession had been made, and if it was to be taken as an acceptance of the fact that a detailed breakdown and analysis of the activities of the treasury solicitor's office would correctly attribute to this item of this litigation £45 as the proportion of the whole expenses thereof, then the decision would be correct, but we were assured that a concession to that effect was not made and was certainly not intended...

It was contended before us that in any event there was an onus upon the party with its own legal department to produce figures to demonstrate that the operations and expenses of that department, analysed and broken-down and apportioned would throw up a figure properly attributable to the litigation in question which would be not less than the figure of reasonable cost to be allowed had it been a case of the use of an independent solicitor.  In the first place, we should have thought it a perfectly sensible presumption as a starting point that it would not be less.  Secondly, we view with horror the immensity of the complication which would be introduced in to an already complicated system of taxation.  It may be said that without such an added complication there may be rare cases in which the taxed costs of a successful party will exceed what is needed to indemnify him.  Even so this is preferable to requiring the successful party to prove in all cases in detail the contrary, that is to say, that the other party has not obtained a fortuitous benefit by the use by the successful party of a salaried solicitor and not an independent solicitor. 

In our view, the system of direct application of the approach to taxation of an independent solicitor's bill to a case such as this has relative simplicity greatly recommended, and it seems to have worked without it being thought for many years to lead to significant injustice in the field of taxation where justice is in any event rough justice, in the sense of being compounded of much sensible approximation."

13.      Eastwood was followed by the English Court of Appeal in Cole v British Telecommunications Plc [2000] 2 Costs LR 310. 

14.      In that case, the plaintiff Mr Cole had brought some lengthy and unsuccessful proceedings against BT, and was ordered to pay BT's costs.  The defendant had throughout acted by an employed "in-house" solicitor, whose work was charged at £105 per hour together with a mark-up of 60%.  The Court of Appeal sat to consider various objections raised by Mr Cole on the assumption that Eastwood remained authoritative.  Because there was no challenge to the basic principle laid down in Re Eastwood, the Court of Appeal applied it and nothing in the judgment suggests any concern at the underlying principles.  On the facts of Cole, it was contended that it did appear reasonably plain that the indemnity principle would be infringed - this was on the basis that the gross hourly rate produced by the application of the A and B figures, £168 per hour, if multiplied by the number of hours that the solicitor would be expected to work in any one year would mean that the annual cost of his services to BT would be some £300,000, which was not a credible amount.  Accordingly it was said that on the face of it, there was a breach of the indemnity principle.  The Court accepted the so-called "obvious fallacy" in the argument namely that it assumed that the solicitor would be generating a "chargeable" hour for every hour that he worked under his contract of employment.  Accordingly it was not "reasonably plain" that the indemnity principle would be breached by the application of the conventional approach. 

15.      With respect to the Court of Appeal in that case, it is not clear to us in this Court that it really was an obvious fallacy.  We accept that the solicitor would not generate a chargeable hour for every hour worked but that does not mean that the taxing master would have to accept the employer had no value from his employee outside the work done on the litigation.  The application of the indemnity principle does not sit easily with the notion that as a result of the employer receiving, for example, the full costs of his employee's annual remuneration for less than a full year's work, the employer was entitled to the non-monetary benefit of the balance of the year's work without paying for it.  At all events, these considerations do not apply in the present case. 

16.      What is clear from these two decisions is that in England and Wales the approach has been taken for a number of years that not only are the costs of an in-house solicitor recoverable, but they are also recoverable on the same basis as the costs of a solicitor in private practice.  That being so, the use of expressions such as "commercial profit" which have no application to the public sector, is not helpful in the context of the taxation of costs incurred with the Law Officers' Department.  The rules adopted in England and Wales are clearly there for the pragmatic assessment of bills of costs without too much additional enquiry, unless on the face of it there appears to be an obvious breach of the indemnity principle.  Implicit in the rules is that Factor A rates do not necessarily reflect the total costs of the employed solicitor and that it is therefore legitimate, painting with a broad brush, to apply a Factor B rate unless there is clear evidence that it would be wrongly applied.  We mention briefly in passing that Advocate Heywood suggested that it might be fair to require the Law Officers to indicate what the actual cost to the public is of providing the legal services in question.  We decline to follow that course.  We do not see why the Law Officers' Department should be in a different position than employers of private sector lawyers as far as that is concerned, and the onus, so it seems to us, should be on the paying party to adduce sufficient evidence that there has been a breach of the indemnity principle before the Court will direct further enquiry to be made. 

17.      It is true that the taxation practice notes provided in Appendix A to Practice Direction RC09/01 do provide that Factor B contains an element of commercial profit, and there is no basis for the Law Officers' Department to recover on behalf of the States such a profit - that is not the rationale for the existence of the Law Officers' Department at all.  If ever there were to be a claim for 100% of Factor B, or indeed a figure in excess of 100%, we can see that there may well be sufficient immediately to prompt an enquiry as to whether the indemnity principle is breached.  At a 60% uplift for Factor B, it is not necessarily the case that a commercial profit has been obtained.  Factor A constitutes the average direct costs of employing the solicitor in question, with an appropriate share of general overheads of each such person.  But as indicated at paragraph 1.4 of Appendix A, there is the general supervision of subordinate staff for which no direct time charge can be substantiated and we think we can note that there will be other indirect costs which Factor A is not intended to address. 

18.      In our judgment the approach adopted in Eastwood does have the advantage of simplicity and consistency.  It is well known to all practitioners that costs orders and their implementation by the taxation of costs are relatively blunt tools for the delivery of justice, and unless there were to be an inordinately detailed assessment of everything done by a lawyer in the course of litigation and whether it was necessary and proportionate in every case, which itself would carry the risk of spin-off litigation, the costs regime is bound to have an element of rough and ready justice to it. 

19.      For these reasons we conclude that the taxation of costs incurred by a public sector body with the Law Officers' Department should be effected in the same way as the taxation of costs incurred with a lawyer in private practice.  This is consistent with what in our experience has been done in the past, and it is consistent with the principles set out in Eastwood.  Accordingly, unless it is clear that a further investigation of some kind is necessary because of an apparent breach of the indemnity principle (see Eastwood), some Factor B costs are recoverable by the Law Officers' Department on behalf of a public sector entity in the same way as Factor A costs. 

20.      We noted Advocate Heywood's submission that on every bill of costs the advocate must certify that the sums claimed do not exceed the sums incurred.  The form of certificate that was adopted in the instant case was this:-

"I certify that:-

(1)       the bill has been checked by Advocate Gregory White;

(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 may be required to pay to the Law Officers' Department."

21.      That certificate was signed by Advocate White.  It seems to us that in order to sign it, Advocate White must have given consideration to whether there was in fact a breach of the indemnity principle.  In the absence of any evidence to the contrary, we do not see any reason to look behind that certificate. 

Proportionality

22.      The second issue which arises on this appeal is whether and to what extent the Greffier Substitute should have regard to issues of proportionality when taxing costs.  It is possible that questions of proportionality may be relevant to the making of a costs order by the court in the first place, but that is not of concern at this stage of the process.  What is of concern here is the question of proportionality in the context of the actual sum of money claimed for a particular piece of litigation. 

23.       The starting point is paragraph 2.2 of the Practice Direction, cited above at paragraph 5.  In exercising his discretion the Greffier as taxing master has regard to all the relevant circumstances.  In particular, he has regard, inter alia, to the importance of the cause or matter to the client and, where money or property is involved, its amount or value.  This is said to apply to both Factor A and Factor B costs.  Given that the Factor A figure is calculated as a direct cost component, it is apparent that the inclusion of sub-paragraphs (e) and (f) in paragraph 2.2 demonstrates that the taxation is not simply a question of assessing how much it cost to do the work but also how much would be appropriate to require the paying party to pay having regard to the importance of the cause or matter to the receiving party and, where money or property is involved, its amount or value.  That of itself imports a requirement for considering proportionality in assessing Factor A, the direct cost component, because in our judgment it is clear that if one is to have regard to the amount or value of the property involved when taxing the Factor A sum, it must have been contemplated that there would be cases where that amount or value simply does not make it proportionate to permit a recovery of expenses at the full cost.  This argument does not apply to make proportionate the increase of a Factor A charge where there is a very large sum of money or quantum of property involved, or the cause or matter is very important to the receiving party - because the factors in those circumstances cannot go to the direct cost of doing the work.  This has what looks like a curious result, but it nonetheless seems fair to us, that where there is a low value or quantum of property or money involved, the direct cost component may be reduced, but where it is a high figure, it is not to be increased.  The reason this is fair is that if there is a high value or high quantum, then that would justify a higher Factor B charge, for appropriate care and conduct. 

24.      There is in our view a second reason why it is appropriate that the Judicial Greffier should have regard to issues of proportionality when taxing a bill of costs, whether under Factor A or Factor B.  It is essential that all should have access to justice.  Any other outcome has the probable result of putting the Island in breach of the European Convention on Human Rights, and in breach of the Human Rights (Jersey) Law 2000.  It is an obligation of the state to provide a judicial system which enables the rights to be upheld and in particular the rights conferred by Article 6 of the Convention.  The extent of the state's obligation does not arise in the context of the present proceedings, and is left over for determination in a case in which it naturally arises, but these considerations do go more generally to the issue of policy in setting a structure for the recovery of costs.  If, argumentatively, there were to be no limit on the costs which could be recovered, and one continued to have the starting point that the losing party paid the costs, it might be that many putative plaintiffs would not bring proceedings or defendants would not defend them because they would be risk averse in terms of their possible costs liability.  By contrast, if no costs were ever recovered by the successful party, it may be that putative plaintiffs would not bring proceedings because the cost of doing so would not be justified by the benefit to be obtained if successful.  In our judgment there are access to justice considerations which need to be taken into account in determining the extent to which costs should be recovered by the receiving party from the paying party and this policy reason also drives the conclusion that the issue of proportionality arises on the taxation of costs, where the Court must be conscious of the consequences of approving bills of costs which bear no relationship to the value or importance of what is in dispute. 

25.      There will be cases like the present case, where the costs are increased to a degree which is disproportionate to the amount involved.  With amounts in dispute at a low level, as here, they are normally dealt with in the Petty Debts Court and indeed the mediation and other procedures applied in that court usually keep costs within bounds.  We also accept the premise that where there is a relatively low value dispute in this court, it is an obligation on the Court, and on all parties, to do whatever is possible to conduct the litigation in such a way as enables justice to be done at a reasonable price.  This is an overriding objective which will perhaps appear at some point shortly in the Royal Court Rules.  It is an objective which should be borne in mind both as to costs incurred on an advocate and own client basis and on a party and party basis.  Lawyers must be efficient in dealing with litigation at a reasonable cost and the court must help them in this respect by appropriate procedural rules. 

26.      The conclusion we have reached is that basic fairness requires that even though a party may lose litigation and be on the wrong end of a costs order, the calculation of those costs must bear some relationship, inter alia, to the value of the dispute. 

27.      For these reasons we set down the principle that in every taxation of costs, the Greffier should apply the test of proportionality to the overall bill which would otherwise be allowable.  It follows that he would tax the receiving party's bill in the usual way, but, having concluded that taxation, would then apply the proportionality requirement of looking at the totality of the bill which the paying party had to discharge and considering whether it would be disproportionate to require the paying party to pay all of it.  If it would, then the Greffier should reduce the bill on taxation accordingly. 

28.      When a bill is prima facie disproportionate, the Greffier should examine closely how and why the costs have been incurred.  Was the bill as high as it was because of some unreasonable conduct on the part of the paying party?  Were the arguments considered of sufficient weight that they merited further research or were they too sophisticated for a low value dispute?  Did the receiving party have some other objective in mind outside the winning of the litigation itself which underlay the incurring of costs at this level, whether or not the costs were incurred on a point relevant to the litigation?  This is a non-exhaustive list of considerations which the Greffier should address on taxation. 

29.      In this case, the amount in question was £268.20.  The total costs, Factor A plus a 50% uplift for Factor B, came to £25,512.25, with £15 disbursements, making a total of £25,527.25.  We do not have any hesitation in saying that that total was not proportionate to the amount in dispute, and on the application of the proportionality test, it falls to be reduced. 

30.      We now go on to consider whether we should remit the matter to the Greffier, or make an assessment ourselves as to the amount by which the bill should be reduced.  In our judgment it is right that we bring these proceedings to an end as speedily as possible, and we propose not to remit the matter to the Greffier but to give our own decision as to what would be proportionate in this case.  For the purposes of making that assessment, we have paid close attention to the bill submitted by the Law Officers' Department, and to the proceedings and judgments which have been issued both by the Master and in this Court.  We have had regard to the affidavit evidence which has been put before us, and to the procedural history of the case.  We have also had regard to the correspondence shown to us and to the way in which the proceedings have been conducted by the Appellant.  We very much take into account that the level of costs incurred has been directly affected by the conduct of the Appellant in running before the Master and to some extent before us complex and argumentative defences which themselves were out of proportion to the Treasurer's claim.  We note and accept that we are making a rough and ready assessment of the amount which can fairly be allowed to the receiving party, but we think that doing so is in accordance with authority. 

31.      We have concluded that the Appellant's attitude and his conduct have undoubtedly increased the costs which have been incurred by the Treasurer of the States.  An example of the Appellant's unreasonable conduct is the personal attack which the Appellant has made on counsel for the Treasurer of the States.  The Appellant challenged on more than one occasion the right of Advocate White to appear, and challenged his motivation for doing so.  This was unnecessary and inappropriate, and it undoubtedly increased costs. 

32.      It is said by the Treasurer that although this was a relatively small amount of GST at stake, there was a very important principle at stake, namely whether GST was properly to be applied to rental payments received by the Public of this Island.  The nature of the defence pleaded by the Appellant made the issue even more important because he challenged the nature of the public ownership of the Central Market.  In essence, he claimed that when a contract was passed "for and on behalf of the Public of the Island" the lease fell within an exemption under Schedule 5 to the Goods and Services Tax (Jersey) Law 2007 thereby rendering the lease not liable to GST.  As was indicated in this Court's judgment on 2^nd July, 2014, at the heart of the case was the question of how and why the Public of Jersey holds property and whether the Public of Jersey was a separate entity from the States of Jersey.  That made the case very important to the Treasurer of the States, far more important than the mere sum of money sought to be collected would suggest.  When one looks at issues of proportionality, there is no doubt that one should have regard to the importance of the litigation to the receiving party and we have fully taken that into account.  At the same time, we do not think the Appellant should have to bear all the costs of establishing an important point of principle. 

33.      The Factor B component has been charged in this case at 50%.  What is of interest is that it has been charged routinely across the board against every item of work which has been recorded.  Thus for example on 1^st May, 2013, there is an entry for Advocate White to attend the Petty Debts Court where the matter had been listed.  It appears he spent 1.583 hours on that occasion.  In fact the court merely remitted the matter to the Royal Court as has been indicated.  To apply a Factor B uplift for a routine item such as that seems to us to be an example of a disproportionate application of the rule permitting Factor B uplifts.  Where there is a relatively small amount of money involved, the Factor B uplift might need to be omitted from the more routine items of work.  We have given that as an example, but there are in fact a number of such examples in the case which we have taken into account in reaching a rough and ready conclusion.  A second example might well be the four hours spent in the preparation of a draft bundle index and the collation of documents, where the full 50% uplift has been applied to what is in effect an administrative, albeit important, function.  We emphasise that this analysis would not be relevant where the overall bill is proportionate to the amount involved, but once proportionality is engaged, it naturally falls to be applied both to the direct cost component and to the question as to whether any Factor B uplift should be applied, and if it should, whether it should be applied across the board. 

34.      In this case we have resolved that, having regard to the amount involved, a Factor B uplift would not be proportionate, notwithstanding that we recognise the importance of the points raised by the Appellant in the litigation in so far as the Treasurer of the States is concerned. 

35.      The Appellant did not submit any detailed criticisms of the bill which has been submitted by the Respondent for taxation.  That makes our analysis of the bill more difficult. It would have been helpful had particular entries been criticised.  Nonetheless we have been through the bill ourselves, and in our view it is clear that on taxation on the standard basis where there is a presumption that any doubts are to be resolved in favour of the paying party, we think a reduction can be justified, either in amount or on the basis the costs were not reasonably incurred. 

36.      The Appellant submitted to us that no business would spend £25,000 on a bill of £260.  That may be true, although in our judgment the submission fails to recognise the consequences of such a contention.  If it were taken to mean that a defendant could, by his unreasonable conduct, ensure that it was not worth a plaintiff recovering monies that were due to him by legal action, the result would be that the legal system was preventing the plaintiff having access to justice.  We do not think that is right.  We are as indicated above, completely satisfied that a significant proportion of the Treasurer's costs were incurred because the Appellant acted unreasonably and in that sense, the Appellant brings a costs penalty upon himself. 

37.      Having regard to all these features, we consider the appeal succeeds and we reduce the bill of costs on taxation to the sum of £12,500, which is the amount this Court will allow to the Respondent on its bill, and which is recoverable from the Appellant pursuant to the Master's order that the Appellant pay the costs of the Respondent, taxed on the standard basis. 

Postscript

38.      This case concerns recoverable costs on taxation and does not directly address the proper costs of an advocate or solicitor incurred with his or her own client.  Those will doubtless be influenced by the contract between them, although it seems clear that, unless excluded by such a contract, the lawyer must owe a duty to the client to explain inter alia the risk of non-recovery of costs, even were the client to be successful, if the costs incurred were disproportionate to the amount in dispute.  The nature of the duties of the lawyer was in this context considered in part at paragraphs 15 - 18 of Cunningham v Sinel and another (a firm) [2011] JRC 015.  We raise this because although the present case is concerned with recovery of costs incurred by the Law Officers' Department, the principles have not only an obvious application to all litigation when costs orders are made but also an obvious interface with advocate/solicitor and own client costs as well. 

Authorities

Pearce v Treasurer [2014] JRC 139B.

Pearce v Treasurer [2015] JRC 009.

Royal Court Rules 2004.

Pearce-v-Treasurer of the States [2014] (2) JLR Note 9.

Public Finance (Jersey) Law 2005.

R (Nicholson) v Tottenham Magistrate's Court [2015] PTSR 1045.

Council Tax (Administration and Enforcement) Regulations 1992.

Stratford-on-Avon District Council v Clarke [2015] EWHC 1539 (Ch).

Lloyds Bank Limited v Eastwood and Others [1975] CH 112.

Cole v British Telecommunications Plc [2000] 2 Costs LR 310.

Human Rights (Jersey) Law 2000.

Goods and Services Tax (Jersey) Law 2007.

Cunningham v Sinel and another (a firm) [2011] JRC 015.