Costs

Mr and Mrs R had each made wills intending to leave their entire estate to each other. On the death of the survivor, the entire estate was to go to the claimant, M, whom the couple had treated as their son. However, the solicitor who had drafted the wills had, as an oversight, presented Mr and Mrs R with, and they had each signed, the will intended for the other.

Following the death of Mr and Mrs R, M brought proceedings against the defendants, Mr R’s children, who stood to inherit his estate on intestacy. The value of Mr R’s estate was around £70,000. A judge refused to admit to probate a document as the validly executed will of Mr R (the will) since the will appeared to be that of Mrs R, who had pre-deceased Mr R, notwithstanding that it had been signed by Mr R. The Court of Appeal, Civil Division, dismissed M’s appeal against the judge’s decision. The Supreme Court allowed M’s appeal (see [2014] 1 All ER 807]). The present judgment concerned costs.

In the Supreme Court, the defendants’ solicitors and two counsels had been acting under a conditional fee agreement (a CFA), although they were acting on the traditional basis in the Court of Appeal and at first instance. Under the terms of the CFA: (i) the defendants were liable for the solicitors’ costs if they recovered any damages ‘or in any way… derive benefit from pursuing the claim’, and (ii) if the respondents lost, the solicitors ‘may require[them] to pay [their] disbursements’.

M submitted that the defendants should pay his costs, including the two appeals, in addition, to paying their own costs. The defendants submitted that M’s costs and those of the defendant should be paid out of the estate, or, in the alternative, that those costs should be ordered to be paid by the solicitor who had made the error in respect of the wills. The solicitor’s insurer submitted that the defendants should pay M’s costs.

The issues for consideration were accordingly: (i) the appropriate order for costs on the assumption that the defendants’ solicitors and two counsel had been acting on a traditional basis; and (ii) the appropriate order for costs in respect of the defendants’ costs in the Supreme Court in the light of the CFAs, including  whether counsels’ fees should include the 100% uplift agreed in their CFAs. The insurers submitted that, on a true construction of the CFAs, the defendants were not obliged to pay any costs to their lawyers and therefore, no order should be made in respect of the respondents’ costs in the Supreme Court.

Consideration was given to the meaning of ‘your’ in the CFAs, which provided that the solicitors were liable for costs if, among other things, ‘either the opposing party (to include the estate) agrees to pay or the court orders that they pay your costs’.

The court ruled: (see [6], [9]-[11] of the judgment).

(1) In the present case, it had been the error of the solicitor which had caused the problem that had given rise to the proceedings, as reflected by the fact that the insurers had accepted liability to M for his costs in the Court of Appeal and the Supreme Court. An order that the parties recover all their costs out of the estate seemed justified in pragmatic terms, on the basis that all those costs would, in practice, be recovered by M from the solicitor, and by the solicitor from the insurers.

Accordingly, assuming that the defendants had funded the litigation traditionally, it would be appropriate to order that the insurers pay all the costs of M and the defendants in relation to the proceedings throughout.

Such an order would be appropriate in relation to the costs up to and including those incurred in the Court of Appeal. It was necessary to consider what order was appropriate in respect of the defendants’ costs in the Supreme Court, given that their solicitors and counsel were acting under CFAs (see [9], [11]-[13] of the judgment).

Brown v Bimson [2010] All ER (D) 325 (Jul) considered; Gerling v Gerling [2010] EWHC 3661 (Ch) considered.

(2) It might be that the word ‘your’ in the CFAs should be interpreted as referring to the solicitors, given that the CFA was a contract between the solicitors and counsel, and ‘the client’ was a defined term. However, on any view, the word ‘your’ was inappropriate, and it made little sense that the recoverability of counsels’ costs should depend on the recoverability of solicitors’ costs as opposed to the recoverability of the client’s costs.

Subject to the issue of the uplift on counsels’ fees, the logic of the proposed order, when applied to the costs in the Supreme Court would be that it applied to counsels’ fees in the Supreme Court and that it only applied to the solicitors’ disbursements in connection with the appeal to the Supreme Court, but not to the other costs of the solicitors. It made little sense that the recoverability of counsels’ fees should include the 100% uplift agreed in their CFAs. It would usually be inappropriate not to allow the lawyers who had acted for successful clients under a CFA an uplift.

However, the instant case was a very long way indeed from being normal. On the very unusual facts of the case, the court would be prepared to include counsels’ base fees in the scope of any order against the insurers, but would not be prepared to include any uplift for counsel. Unless both the defendants’ counsel were prepared to waive their success fees, it would be right to depart from the order which the court would otherwise propose, so that the defendants would be entitled to recover no costs from the insurers in connection with the Supreme Court appeal.

That was a fairly remarkable course to take, but the unusual facts of the case, coupled with the many unsatisfactory aspects of the CFA system required and justified an unusual approach in order to achieve a just result. In all the circumstances, the right order to make was that: (i) the solicitor’s insurers  pay the costs of the proceedings (a) of M up to and including the Supreme Court and (b) of the defendants up to and including the appeal to the Court of Appeal, and that (ii) the solicitor’s insurers pay the defendants’ solicitors’ disbursements and, since both counsel for the defendants disclaimed, for all purposes, the right to recover any uplift to which either of them would otherwise be entitled under their respective CFAs, counsels’ base fees, in relation to the further appeal to the Supreme Court (see [21], [23], [24]-[27] of the judgment).

Robert Ham QC and Teresa Rosen Peacocke (instructed by Hugh Cartwright & Amin) for M; Nicholas Le Poidevin QC and Alexander Learmonth (instructed by Gillan &Co) for the defendants.