The recent decisions reported by the Supreme Court Costs Office in cost appeals numbers 11 to 17 of 2004 highlighted several points


No 11 of 2004 Peter Stacey v Peter Val Player



In the underlying litigation, a preliminary issue had been ordered as to whether a firm of solicitors had acted with the claimant's authority in signing a contract for the sale of Flimwell Bird Park. In settlement of partnership dissolution proceedings between the claimant and the first defendant, it was agreed that the property should be sold on terms that provided for: the joint appointment of an agreed firm of selling agents to negotiate the sale of the property; and the appointment of the solicitors then representing the defendant as the 'solicitors for the parties for the sale'.


In due course, those solicitors acting, without consulting S, organised a contract race between the persons who had, prior to that date, expressed an interest in purchasing the bird park. They then purported to exchange contracts with the winner of that race on behalf of both claimant and defendant. The claimant subsequently brought proceedings challenging the validity of that contract, which led to the preliminary issue.


At all material times, the claimant had the benefit of a legal aid certificate in respect of the partnership proceedings, but no separate certificate in relation to the contract proceedings. The claimant's costs of the contract proceedings were borne by one of the unsuccessful parties to the contract race (M).


The judge below had denied the claimant his costs of the preliminary issue, which he would otherwise have awarded to him, holding that his legal aid certificate extended to that issue, so that the claimant's receipt of funds from M was contrary to regulation 64 of the Civil Legal Aid (General) Regulations 1989. Such a breach conclusively precluded him from making any order for costs against the defendant, since the Legal Aid Board (as was) was not itself liable to meet any costs incurred by the claimant, and any monies paid to it by the defendant would have to be reimbursed to M.


The Court of Appeal held that the judge had been wrong to hold that any costs paid by the defendant would have to be paid out to M. The correct analysis, once the judge had ruled that the claimant's legal aid certificate covered the preliminary issue, was that the claimant's liability for the costs of his solicitors and counsel fell to be met by the board and not by M who was funding the claimant.



It followed that the claimant's solicitors and counsel were obliged to reimburse M in respect of any amounts paid to them on account of costs, and to look instead to the board for payment of those costs.


The court also found that breach of regulation 64 was not of itself conclusive in deciding that the claimant should not have his costs from the defendant.


The breach of regulation 64 was only discovered after the judge had ruled as to the scope of the claimant's legal aid certificate. Therefore, the judge ought to have appreciated that the payments erroneously received from M did not impact on his jurisdiction to order that costs should follow the event.



No 12 of 2004 Halsey v Milton Keynes General NHS Trust and Steel v Joy & Halliday



In this important ruling, the Court of Appeal used two test cases to found some general and significant dicta as to the extent to which mediation could be ordered in the course of ongoing litigation.



It likewise addressed the consequences of the failure by one party to comply with an order for such mediation in terms of costs at the end of the case.


The court held that European jurisprudence meant that the court could not order mediation as this would be infringing the parties' rights, but nevertheless they should continue to adopt a 'robust' attitude to directing mediation, since there were evident advantages to its use.


The court also ruled that a party who refused to go to mediation should not automatically be condemned in costs if otherwise successful in the litigation. The burden of showing that it was unreasonable for a successful party who had refused or failed to go to mediation, to have all his costs lay firmly on the person making that allegation.


The court then applied the principles that it had enunciated to the facts of the two cases, concluding in both cases that there was no justification for reducing the costs ordered in favour of the successful party because of its failure to go to mediation.



No 13 of 2004 King v Telegraph Group Ltd



This was an appeal against the refusal of a highly experienced defamation judge at first instance to strike out a claimant's action that was pending for trial against the defendant on a number of grounds.


Some of those grounds were of a technical defamation nature, but the decision was taken principally on the basis that the defendant was at a lamentable disadvantage, in that it was facing a claimant whose case was being financed by a conditional free agreement (CFA), but without any after-the-event insurance cover. That meant that if the defendant were to win its case, the prospects of it recovering any costs were remote.


The defendant also contended that there was clear evidence that the claimant's solicitors were running the case in an extravagant fashion to force the defendant into a settlement.


Lord Justice Brooke, who gave the only judgment, was critical of the conduct of the claimant's solicitors. He laid down some stringent guidelines to be followed in future defamation cases to ensure that an appropriate costs cap should be imposed at a comparatively early stage in the litigation, to control costs in situations such as the one before the court.


Lord Justice Brooke's comments would appear to be of general effect, although he was concerned only with the facts of the case before him, and on those facts refused to strike out the action, or indeed to indicate the court's view whether certain costs were excessive and disproportionate.



No 14 of 2004 Smiths Dock Ltd v Edwards



This appeal concerned whether the deputy costs judge had been right to allow an 87% success fee to the claimant on the facts of the case.


Peter Edwards had contracted mesothelioma as a result of exposure to asbestos during his employment with the defendant, and died on 25 May 2000. He had been employed by Smiths Docks from 1948 until 1965, except for two years between 1953 and 1955, when he was in the merchant navy.


Mr Edwards had worked his way up from being an apprentice fitter to becoming a director of the appellant company. He began to experience chest symptoms in 1999, and the diagnosis of mesothelioma was made on 31 August 1999.


His solicitors first intimated the claim on 7 September 1999, and a CFA was entered into between the widow and her solicitors on 31 August 2000, proceedings being started on 20 March 2001.


On 22 September 2002, shortly before trial, liability was admitted, and on 2 October 2002, the first day of the quantum trial, the widow was, by agreement, awarded £180,000 plus costs to be assessed if not agreed.


The judge, in upholding the decision of the costs judge to allow an 87% success fee, held that, at the time of the CFA, a number of issues were still very much live, notably contributory negligence, not guilty exposure and the possible exposure while in the merchant navy. In addition, a payment of £165,000 had been rejected on the solicitors' advice, and, taking all these factors into account, the deputy costs judge had been justified in allowing the 87% successful fee, and accordingly, the defendants' appeal was dismissed.



No 15 of 2004 The Accident Group test cases



The Court of Appeal considered the recoverability of costs relating to, and including, insurance premiums as operated by The Accident Group (TAG). In particular, the court considered the status of fees required to be paid to TAG's sister company, Accident Investigation. It considered whether such fees were disbursements of the solicitor, and particularly how much of the 'premium' charged to the client was a premium in respect of the risk referred to in section 29 of the Access to Justice Act 1999.


The Court of Appeal paid tribute to, and completely upheld, the comprehensive judgment below of the senior costs judge on all issues taken to appeal. Indeed, Lord Justice Buxton, who delivered the leading judgment, said this in paragraph 46 of his judgment: 'I would therefore uphold the decision of the senior costs judge in its entirety. While I understand why the senior costs judge gave permission to appeal, and did so without limitation, this court has had to reconsider a series of matters that are questions neither of law nor principle, but rather issues of fact or judgment on which the court is likely to be slow to differ from the assessment of the very expert tribunal below. If in future similar cases should come before the costs judges they, and this court are likely, when considering applications for permission to appeal, to need to see detailed grounds, and to require specific demonstration that those grounds do indeed raise matters of principle suitable for the consideration of this court.'



No 16 of 2004 In the matter of Burton Marsden Douglas; Marsden v Guide Dogs for the Blind Association



Adolfos Henry Simonson died on 29 May 1994, having by his will appointed as executors Mr Piper, a chartered accountant, and Mr Burton, a solicitor.


Only Mr Piper proved the will on 9 February 1995, but he instructed Mr Burton to act as solicitor in the administration of the estate. At that time Mr Burton practised in partnership with Caroline Dilkes, under the firm name SJ Burton & Co. Although Ms Dilkes appears to have done some of the work, she left the firm later that year. Mr Burton carried on administering the estate under the firm name SJ Burton & Co, but effectively as a sole practitioner until 31 August 1999.


On 1 September 1999, Mr Burton went into partnership with Mr Marsden and Mr Douglas, the appellants, under the firm name Burton Marsden Douglas. He 'brought with him' the administration of Mr Simonson's estate, but some of the charities that were beneficiaries of the will had become concerned at the delays in completing the administration of the estate and were pressing for estate accounts. Mr Burton provided these in January 2000, and they showed payments of fees totalling £102,300.50. A bill for this sum was rendered on 5 March 2001, in the name of Burton Marsden Douglas, to Mr Piper.


On 20 June 2001, Mr Burton left the partnership, and, on 19 October 2001, the charities sought detailed assessment of the bill. This was ordered by the costs judge. He further ordered the preliminary issue as to whether, if the bill were reduced on assessment, the appellants should be ordered to repay to Mr Piper any money overpaid in respect of legal services which were the subject of the bill, and, if so, whether there was any limit to the amount which might be ordered to be repaid.



The costs judge decided those preliminary issues in favour of the charities, and the solicitors appealed.



The respondents suggested that the decision below could be upheld on the ground of novation of contract if the judge were to decide, as he did, that under partnership law Mr Marsden and Mr Douglas were not liable in respect of the bill, even though it had been rendered on their notepaper, and while Mr Burton was a partner with them.


The judge rejected the argument based on novation, and also a subsidiary argument on estoppel.


The judge also held that section 71(3) of the Solicitors Act 1974 does not permit the court to order repayment of monies overpaid. He accepted that the section governs first the process of taxation, and secondly, the consequences of taxation, but does not of itself create a liability to repay on the part of someone who would not otherwise be subject to that liability.


The judge accordingly allowed the appeal, and directed that Mr Marsden and Mr Douglas were not liable to repay to Mr Piper any sum which was reduced as a result of the detailed assessment of the bill, the only person liable for such reduction being Mr Burton.



No 17 of 2004 Alistair McPherson v BNP Paribas (London Branch)



In this appeal from the Employment Appeal Tribunal, the Court of Appeal laid down the circumstances in which, exceptionally, an employment tribunal could award costs against the appellant who withdrew his case before a full hearing on the merits.


The court reviewed the authorities, and then applied those to the facts of the case. It held that the claimant was only liable to pay the costs of the proceedings incurred after the date of the application to the tribunal to adjourn on medical grounds, the hearing fixed for some months later.



The Supreme Court Costs Office prepares summaries of recent costs appeals, copies of which are available from the Law Society library, tel: 0870 6062511, or visit: www. courtservice.gov.uk/3561.htm