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Cite as: [2004] EWHC 2235 (Ch)

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Neutral Citation Number: [2004] EWHC 2235 (Ch)
Case No: 1689 of 1996 & 880/97
App No CC/2004/PTA/0145

IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION

App No CC/2004/PTA/0145
Royal Courts of Justice
Strand, London, WC2A 2LL
7th October 2004

B e f o r e :

THE HONOURABLE MR JUSTICE LEWISON
____________________

Between:
ROSS
Claimant
- and -

STONEWOOD SECURITIES LTD
Defendant

____________________

Colin Ross-Munro QC (instructed by Dass Solicitors) for the Claimant
Gerald Levy Appeared In Person
Hugh Jackson (instructed by Wright Hassall Solicitors) for the Defendant
Hearing date: 29th September 2004

____________________

HTML VERSION OF JUDGMENT
____________________

Crown Copyright ©

    Mr JUSTICE LEWISON:

    Introduction

    1. By an order made on 19 December 2000, in proceedings brought by Mr Ross against Stonewood Securities plc for the dismissal of a bankruptcy petition presented by Stonewood against Mr Ross, the Court of Appeal ordered Stonewood to pay 75 per cent of Mr Ross' costs to be assessed on the standard basis. As Mr Ross was publicly funded, the Court of Appeal also ordered that there be an assessment of his costs payable by the Legal Services Commission.

    2. After two abortive starts, Mr Ross' solicitors, Dass Solicitors, presented a bill which, in total, amounted to more than 400,000. Of that amount, some 171,000 were said to be between parties costs. The assessment was conducted by Costs Judge Rogers over a day and a half on 15 and 16 January 2004. At the end of the assessment he assessed the costs between the parties at 64,000-odd and the costs payable by the LSC at 97,000-odd.

    3. With the permission of Laddie J, both Mr. Ross, and Mr Gerald Levy (whose fees as counsel for Mr Ross had been considerably reduced on the assessment) appeal against Costs Judge Rogers' assessment.

    4. I heard the appeal, sitting with two assessors, Costs Judge Wright and Mr Gerard van Tonder. I am very grateful for their expert advice, which I have fully taken into account. Although this judgment is mine, it accords with their views too.

    Background to the litigation

    5. In order to understand why Dass and Mr Levy say that very substantial costs were justified on what, on the face of it, was a series of relatively short applications and appeals, it is necessary to go into the background to the litigation.

    6. In July 1979 Mr Ross was adjudicated bankrupt. The order was based on a petition presented in November 1976. Mr Ross claimed that he was the beneficial owner of a controlling shareholding in Stonewood. Legal title to the shares had been transferred for no consideration to a company called Acehart Ltd to be held on trust for him. In 1985 Mr Ross says that the shares were transferred, again for no consideration, to Ms Jeffs, who at that time was his secretary and common law wife. He claims that Ms Jeffs was to continue to hold the shares on trust for him. He also claims that the value of the shares at that time was some 4 million. In December 1989 Mr Ross was discharged from the bankruptcy, although the administration of his estate had not been completed. Shortly before his discharge he revealed to his trustee his claim to be beneficially entitled to the shares.

    7. In November 1989 Mr Ross' trustee in bankruptcy brought proceedings against Ms Jeffs and Acehart, seeking the return of the shares or their value. That claim was settled in October 1993 on the eighth day of the trial. The terms of the settlement were recorded in a Tomlin order. But the Tomlin order preserved Mr Ross' personal claim. The terms of settlement required the payment to the trustee of some 1.2 or 1.3 million. In November 1993 the trustee assigned to Mr Ross any surplus remaining in the bankruptcy and any claims against Ms Jeffs and Acehart. By the end of 1993 the trustee had been paid 1.3 million due under the terms of settlement. However, Stonewood remained under the control of Ms Jeffs.

    8. Mr Ross then issued an application for the lifting of the stay imposed by the Tomlin order. The application failed before Arden J but Mr Ross appealed to the Court of Appeal. The appeal came before Nourse, Brooke and Waller LJJ on 5 and 6 March 1997. Judgment was delivered on 17 April 1997. Mr Ross' appeal was dismissed. In the course of his judgment Nourse LJ summarised Mr Ross' claim (in more detail than I have) and the course of the proceedings. The judgments of the Court of Appeal are reported at [1997] BPIR 735 and [1998] 1 BCLC 56. All three Lords Justices expressed concern that the administration of Mr Ross' estate had not been completed.

    9. In 1995 Stonewood brought proceedings against Mr Ross and obtained an interim judgment against him of 40,000. That sum was not paid, and on 20 June 1997 Stonewood presented a bankruptcy petition against him. One of the reasons for the presentation of the petition was Ms Jeffs' desire to prevent Mr Ross from pursuing any claim against her.

    The litigation

    10. The bankruptcy petition came before District Judge Dowling on 9 July 1997. Mr Ross appeared in person. He sought to put in evidence about the history of the relationship between the parties (summarised above) in order to support his case that the petition had been presented by Stonewood with an ulterior motive, namely to prevent Mr Ross from pursing his claim against Ms Jeffs. The District Judge took the view that "a judgment is a judgment is a judgment" and refused to admit the evidence. He therefore made a bankruptcy order.

    11. Mr Ross applied for permission to appeal out of time against that order. By now he was in receipt of legal aid and advice from counsel. The application came before Jacob J on 3 July 1998. Mr Levy represented Mr Ross at that hearing. Mr Ross filed an affidavit in which he made his claim that the petition had been presented for ulterior purposes, namely to stifle his claim against Ms Jeffs. Jacob J rejected Mr Ross' explanation of the delay in appealing as "fantastic" and rejected it. Mr Levy argued that the District Judge had failed to consider the court's power to dismiss a bankruptcy petition under section 266 (3) of the Insolvency Act 1986 "for any other reason". Although it was true that section 266 (3) had not been mentioned before the District Judge, Jacob J rejected Mr Levy's submission on the basis that section 266 (3) was irrelevant.

    12. On 14 July 1998 Jacob J refused permission to appeal. However, on 24 November 1998 Judge LJ and Sir John Knox granted permission to appeal. The appeal came on before Nourse and Clarke LJJ on 20 May 1999. The administration of Mr Ross' estate under the first bankruptcy order had still not been completed; and Nourse LJ reiterated the court's concern. He said that the Court of Appeal could not fairly deal with Mr Ross' appeal without knowing more about the administration of the first bankruptcy. The Court of Appeal therefore made an order requiring the trustee in bankruptcy to attend an adjourned hearing and to put in evidence about the current state of the first bankruptcy. The trustee duly complied with that order, and the adjourned hearing of the appeal took place before Nourse and Mantell LJJ on 28 July 1999. Mr Levy, again appearing on behalf of Mr Ross, accepted that the trustee's report was sufficient to enable the court to deal with the appeal. However, the appeal was adjourned again, and came back for hearing before Nourse and Mantell LJJ on 2 March 2000. Judgment was delivered on 19 April 2000. Mr Ross' appeal was allowed and the petition was dismissed. On 19 December 2000 Stonewood were ordered to pay 75 per cent of Mr Ross' costs.

    The detailed assessment

    13. The first notice of commencement of the assessment of costs was given on 10 October 2002. The total costs claimed were 461,222 (including both between parties costs and those claimed against the LSC). Detailed points of dispute were filed on 18 November 2002. Among the points made were that:

    i. The narrative gave insufficient background detail;
    ii. The bill did not give details of documents supplied to counsel or of what happened at various conferences;
    iii. The costs were not reasonable or proportionate to the "relatively simple application";
    iv. The charging rates were excessive;
    v. There was no explanation of why conferences were necessary.

    14. That bill was withdrawn and a second bill was served on 6 February 2003. This time the costs claimed against Stonewood were 155,000-odd. On 28 February Stonewood again filed points of dispute. Those points of dispute raised many of the same objections about proportionality, lack of detail and the like. The assessment of that bill was listed for 23 and 24 September 2003. However, on 23 September, the Supreme Court Office made an order, by consent, permitting that bill to be withdrawn and for a third bill to be served. The third bill was listed for assessment before Costs Judge Rogers on 15 and 16 January 2004 with a time estimate of one and a half days.

    15. The third bill was served on 31 October 2003. Yet again points of dispute were filed, this time on 21 November 2003. Yet again the points of dispute raised many of the same objections about proportionality, lack of detail and the like. Points of reply were filed on 22 December 2003.

    16. Costs Judge Rogers had had a cancellation on 14 January 2004, and he used the time to read the papers in some detail. He had also been involved in the case before, so that when the assessment began on 15 January he had familiarised himself with the case. His reading included a reading of the judgments of the Court of Appeal.

    The preliminary ruling

    17. In Lownds v. Home Office [2002] 1 W.L.R. 1311 Lord Woolf CJ explained the approach to a detailed assessment that is now required by the CPR. He said:

    "In other words what is required is a two-stage approach. There has to be a global approach and an item by item approach. The global approach will indicate whether the total sum claimed is or appears to be disproportionate having particular regard to the considerations which CPR r 44.5(3) states are relevant. If the costs as a whole are not disproportionate according to that test then all that is normally required is that each item should have been reasonably incurred and the cost for that item should be reasonable. If on the other hand the costs as a whole appear disproportionate then the court will want to be satisfied that the work in relation to each item was necessary and, if necessary, that the cost of the item is reasonable. If, because of lack of planning or due to other causes, the global costs are disproportionately high, then the requirement that the costs should be proportionate means that no more should be payable than would have been payable if the litigation had been conducted in a proportionate manner. This in turn means that reasonable costs will only be recovered for the items which were necessary if the litigation had been conducted in a proportionate manner . "

    18. He continued:

    "Based on their experience costs judges will be well equipped to assess which approach a particular case requires. In a case where proportionality is likely to be an issue, a preliminary judgment as to the proportionality of the costs as a whole must be made at the outset. This will ensure that the costs judge applies the correct approach to the detailed assessment. In considering that question the costs judge will have regard to whether the appropriate level of fee earner or counsel has been deployed, whether offers to settle have been made, whether unnecessary experts had been instructed and the other matters set out in rule 44.5(3). Once a decision is reached as to proportionality of costs as a whole, the judge will be able to proceed to consider the costs, item by item, applying the appropriate test to each item."

    19. Costs Judge Rogers followed this two stage approach. He considered first whether the overall costs were disproportionate. It was conceded before him that in forming that judgment he had to look at the overall costs, rather than just the between parties costs. The total costs amounted to over 400,000. It was pointed out to him that the case had been before the Court of Appeal on five occasions and that the Court of Appeal itself wanted more information about the first bankruptcy. It was pointed out to him that the papers were in a mess and had to be sorted out for counsel. It was said that the trustee in bankruptcy had been unwilling to provide information. Mr Dass (who was the principal solicitor for Mr Ross and an insolvency specialist) told Costs Judge Rogers that it was the most complex case that he had come across. On the other hand Stonewood drew attention to the very large disparity between its own costs and those claimed on behalf of Mr Ross.

    20. Having heard submissions from both parties, Costs Judge Rogers gave his ruling on the "Lownds point". It is clear from a reading of the transcript of the discussion and from the transcript of the ruling itself, that Costs Judge Rogers had in mind not only the guidance given in Lownds itself but also the elaboration of that guidance given by Morland J in Giambrone v. JMC Holidays Ltd [2003] 2 Costs LR 189 and by Lloyd J in Ortwein v. Rugby Mansions Ltd [2004] 1 Costs LR 26 (a case in which Costs Judge Rogers had himself been reversed on appeal).

    21. Costs Judge Rogers said that "at first blush when you look at a bill of approaching half a million pounds for setting aside a bankruptcy order it jumps out of the page". However, he went on to say that when he read through the papers "it became apparent that this was not a simple case at all". He accepted that "it was a case that had considerable difficulty" but "on the other hand the costs are extremely high for what should have been a reasonably straightforward matter." He took into account that Stonewood's costs were considerably less, but said that that was not determinative because claimants had to make the running. He expressed his conclusion as follows:

    "I gave this quite a lot of thought before the hearing, obviously, and I have listened carefully to the submissions made to me, and I have not found this altogether an easy decision but in the end I have come to the conclusion that, on the face of it, these costs are disproportionate and that is my ruling and I am therefore going to apply the necessary as well as the reasonableness test when we come to go through the bills."

    The challenge to the preliminary ruling

    22. Mr Ross Munro QC, appearing for Mr Ross, supported by Mr Levy, appearing on his own behalf, challenged the preliminary ruling. They both accepted that the appellate jurisdiction in this case was one of review; and that consequently I could only interfere with Costs Judge Rogers' decision if I were persuaded that he had "exceeded the generous ambit within which a reasonable disagreement is possible": G v. G (Minors: Custody Appeal) [1985] 1 WLR 647, applied in Tanfern Ltd v. Cameron-MacDonald [2000] 1 WLR 1311. In both Giambrone and Ortwein Morland and Lloyd JJ respectively deplored the idea of appeals on the preliminary decision as to the proportionality of costs. However, that seems to me to be a matter that is relevant at the stage of giving permission to appeal. Once permission to appeal has been given, the duty of the appeal court is to review the decision of the lower court and to decide whether it was wrong.

    23. It is not suggested that Costs Judge Rogers misstated the legal test that he was required to apply. The essence of the challenge was that he had paid no more than lip service to the difficulties in the case. He had not appreciated quite how complex the case was; and never rid himself of the thought that the application was only an application to set aside a bankruptcy order based on a judgment debt of 40,000. Both Mr Ross-Munro QC and Mr Levy submitted that both Dass and Mr Levy himself had to read and assimilate vast quantities of paper, driven partly by the request of the Court of Appeal itself for more information about the first bankruptcy. The facts were complex and involved an investigation of 18 years of dealings between the parties. Mr Ross Munro QC also criticised Costs Judge Rogers' use of the phrase "on the face of it" as indicating that the Costs Judge had come to a superficial view of the case. If Costs Judge Rogers had properly considered the background to the case, he would have realised that the costs, although extremely high at first glance, were in fact proportionate. Thus, it was submitted, Costs Judge Rogers failed to take into account the relevance of the background and attached too much weight to the amount of the judgment debt on which the bankruptcy petition was founded. Mr Ross Munro also submitted that Costs Judge Rogers did not go through the list of factors in CPR 44.5 (3) to which the court is required to have regard.

    24. In order to make a preliminary ruling on the question of proportionality the costs judge is not required to "plough through in detail [a] gargantuan mass of material": Giambone at para 37. Even in complex litigation an experienced costs judge if provided with succinct skeletons of the parties' contentions beforehand should be able to determine overall proportionality within an hour or less: Giambone at para. 38. If certain facets of the bill strike the costs judge as being disproportionate he is entitled to rule that the bill as a whole fails the proportionality test: Giambone at para 54. The question is whether the total sum claimed is "or appears to be" disproportionate: Lownds at para. 31. It is not necessary or reasonable to expect an experienced costs judge, when giving a ruling on overall proportionality at the outset of an assessment, fresh from a reading of the documents and the advocates' submissions, to go through the seven items in CPR 44.5 (3) as a checklist: Ortwein at para 23. Finally, and most importantly, a finding of disproportionality does not penalise the receiving party; nor does it determine the amount of the assessment. It merely regulates the manner of the detailed assessment; and requires the receiving party to justify each item in the bill as being both necessary and reasonable: Giambone at paras. 32 and 33.

    25. Costs Judge Rogers recognised that this was not a run of the mill case. He appreciated that the case had its difficulties, and that there had been a number of appearances before the Court of Appeal. The effect of his decision was not that the receiving party was precluded from receiving payment for the reading of the voluminous mass of paper that was read; merely that the need to do so had to be justified.

    26. Moreover, the complexity of the case can be overstated. Costs Judge Rogers was right to remind himself that at bottom, the case was an application to set aside a bankruptcy order. It is perfectly true that there was a long history of transactions and disputes between the parties. But it is not obvious (at least without cogent explanation) why it was necessary to master the intricacies of that history for the limited purpose in hand. There was, after all, a lucid summary of the material events in the judgement of Nourse LJ, which was reported in two series of reports. Moreover, the desire of the Court of Appeal to have more information about the first bankruptcy was a desire to have information from the trustee; not from Mr Ross or his advisers. I emphasise again that Costs Judge Rogers' decision on the question of proportionality did not shut out the receiving party from obtaining the costs of that exercise; it required him to demonstrate that the costs were necessary. That is why Costs Judge Rogers' use of the phrase "on the face of it" was entirely appropriate. This was only a preliminary ruling. It was still open to the receiving party to justify the costs which, on the face of it, were disproportionate as having been necessary.

    27. The decision whether costs are disproportionate is one of judgment and "feel". In the case of an experienced costs judge it will be based on his experience of litigation generally. I have not been persuaded that Costs Judge Rogers' judgment on this question fell outside the generous ambit within which a reasonable disagreement is possible. The challenge to the preliminary ruling therefore fails.

    More detailed items

    28. Mr Ross-Munro submitted that if the challenge to the preliminary ruling failed, I should concentrate on three areas of the bill:

    i. The charging rate allowed;
    ii. The number of hours allowed for going through documents, which he said is what the Court of Appeal had requested; and
    iii. The 25 per cent of Mr Ross' costs which Stonewood were not liable to pay, and which should have been allocated to the LSC column in the bill.

    29. The 25 per cent. The last point can be disposed of at once. It was not a point taken before Costs Judge Rogers. It did not feature as one of the grounds of appeal, either in the Appellant's Notice or in skeleton arguments. The LSC was not given any notice of the point and was not represented on the appeal. It would not be right to permit Mr Ross to take the point now.

    30. The charging rate. The bill claimed an hourly rate for a Grade 1 fee earner at 280 per hour, inclusive of 175 per cent enhancement. This implied a base rate of 102. The base rate of 102 per hour was not challenged. Costs Judge Rogers was referred to rates of charge for the appropriate geographical area (inner Birmingham) for May 2001. This indicated a charging rate of 158 per hour. Stonewood submitted that even these rates had to be discounted because the work in the case at hand had been carried out earlier. It offered 120. Mr Morris, the costs draftsman appearing for the receiving party, accepted that an enhancement of 175 was high. His explanation was that there was a high degree of responsibility accepted by the solicitor and that the client was very tenacious. He referred to a clinical negligence case (Higgs v. Camden & Islington Health Authority [2003] Costs LR 211) in which Costs Judge Rogers himself had allowed a charging rate of 300 per hour and on appeal Fulford J had declined to say that that was wrong. Costs Judge Rogers was plainly aware that bankruptcy is a specialised field and that the Court of Appeal had requested information. He was rightly unimpressed with the attempt to use Higgs as a comparator. Higgs was a decision on its own facts, and did not establish any general rule about the appropriate level of charging rates, even in specialised cases. Costs Judge Rogers, as the costs judge in Higgs, was particularly well placed to evaluate the difference between that case and this. In giving his ruling on this point he said that he understood the difficulties of the underlying situation but "at the end of the day it was only an application to set aside a bankruptcy". Bearing in mind that in order to attract 100 per cent uplift the case had to be an exceptional one, he allowed an enhancement of 85 per cent. He rounded that up to 190 per hour.

    31. Did this decision fall outside the generous ambit within which a reasonable disagreement is possible? In my judgment, no. The underlying history of relationships between the parties may have been complex, but an investigation into that relationship was not a specialised question of insolvency law. Mr Ross' previous solicitors had claimed at a rate of 150 per hour, which was an appropriate comparator. Mr Morris conceded that the enhancement of 175 per cent was high and did not, to my mind, give a cogent reason for it. The rate Costs Judge Rogers allowed was above the guideline rate for solicitors in inner Birmingham. In my judgment it is not possible to say that Costs Judge Rogers was wrong. This challenge therefore fails.

    32. Hours spent on documents. Although Dass appear to have spent a lot of time on documents, there was no adequate explanation of why it was necessary to do so. Over 100 hours related to the preparation of bundles for the Court of Appeal. It is apparent from a reading of the transcript of proceedings before the Court of Appeal that the court thought that it had been burdened with an unnecessary quantity of paper. As I have already said, the background had already been lucidly summarised by Nourse LJ and publicly reported. Moreover, as I have also already said, the Court of Appeal's request for more information was directed to the trustee in bankruptcy rather than to Mr Ross or his advisers. Mr Ross Munro submitted that the documents had to be read in order to see whether there was anything of relevance in them. But it was not demonstrated that there actually was anything of relevance over and above what could be gleaned from Nourse LJ's summary and the trustee in bankruptcy's report to the Court of Appeal.

    33. In the light of his preliminary ruling Costs Judge Rogers was required to be satisfied that the hours spent on documents were necessary. He was not so satisfied. In my judgment it is not possible to say that Costs Judge Rogers' decision fell outside the generous ambit within which a reasonable disagreement is possible. This challenge therefore fails.

    Mr Levy's fees

    34. Some 20 conferences were held with Mr Levy. Of the many hours which Mr Levy spent in working on the papers, Costs Judge Rogers disallowed some 225 hours. He also radically reduced many of Mr Levy's brief fees.

    35. I must make it absolutely clear that it is no part of Stonewood's case:

    i. That Mr Levy did not do the work which his fee notes and time sheets recorded him as having done or
    ii. That Mr Levy "padded out" the work to finance his impending retirement.

    36. It is fair to say that there are isolated passages in the transcript where it could be thought that Costs Judge Rogers was sceptical about the amount of work that Mr Levy claimed he had done. His choice of language was at times unfortunate and intemperate, particularly bearing in mind that Mr Levy was not there to answer for himself. Although a detailed assessment is an informal hearing, it is still a judicial hearing. Costs Judges are judges and must behave as such. Mr Levy was, as much as anything, aggrieved at what he perceived to be a slur on his integrity. He may be assured that there is no such slur.

    37. On more than one occasion Costs Judge Rogers referred to the absence of an Armitage v. Nurse memorandum. This is a reference to Armitage v. Nurse [2000] Costs LR 231 in which Lloyd J said:

    "One thing that does emerge from this case is that, at any rate in a case in which substantial fees are sought by counsel are going to be open to review in a legal aid detailed assessment, it would certainly be helpful to the court and wise from the point of view of counsel to furnish at least some substantial additional material at the stage of the detailed assessment as to why the substantial fees ought to be regarded as proper. It may, for example, be a useful practice for counsel to prepare a short note in the course of, or at the conclusion of the case, to be submitted to the solicitors with fee notes for the purposes of the legal aid assessment."

    38. Armitage v. Nurse was another appeal from Costs Judge Rogers himself. In the course of the assessment under review in the present case Costs Judge Rogers said:

    "The reason I reduced the fees was because I thought they were too high and without explanation. Then there was an appeal to the judge; lo and behold counsel produces a 15 page screed setting out exactly what he had done and the judge said "Oh Master Rogers got it wrong but I don't blame him because he didn't have the information, and in future if counsel come with a fee which on the face of it appears to be far more than should be claimed then it is his duty to produce a memo." Although he said it in the context of legal aid, it applies across the board, and I would go further and say that if it is the duty of counsel to provide it, it must be the duty of counsel's clerk. It is the duty of solicitors to say "Look, these fees are high. We've got Master Rogers and he's a stickler so you had better produce a piece of paper saying why it is 7,000." If you had done that you might have got something. "

    39. Armitage v. Nurse, did not, with respect to Costs Judge Rogers, lay down a duty (either a legal duty or, I think, a professional duty) to prepare a memorandum. What it did was to point out the obvious risk to counsel that if fees are unexplained they may not be allowed on a detailed assessment. The Professional Standards and Remuneration Committee of the Bar Council produced "guidance" in March 2000. It said that counsel "should" keep proper records of time taken on each individual item of work done. In paragraph 6 the guidance stated:

    "Clients in cases where Counsel fail to keep proper records to support claimed fees may find the fees reduced. Counsel may then find that a complaint of inadequate professional service may be upheld, in which circumstance Counsel can be ordered to reduce or waive fees and/or to pay compensation up to 5,000. In addition the Legal Services Ombudsman has power to require Counsel to pay unlimited compensation."

    40. The formulation of this "guidance" and in particular the sanctions which it contemplates for failure to follow it may be regarded as imposing a professional duty to keep records. In fact Mr Levy did keep time sheets, although these were not produced to Costs Judge Rogers. Mr Levy at one stage submitted that Costs Judge Rogers ought to have adjourned the assessment to allow Mr Levy an opportunity to explain his fees. But the lack of details of exactly what work Mr Levy had done, and why 20 conferences were said to have been necessary, had been complaints clearly raised by Stonewood in each of the three sets of points of dispute filed in opposition to the three bills. Despite having had ample notice of this objection, Mr Morris had not made any enquiries of Mr Levy or his clerks for any additional material on which the fees could be justified; and during the detailed assessment it became clear that he did not feel able to justify them to Costs Judge Rogers. No adjournment was sought and Mr Levy fairly accepted that it was not for Costs Judge Rogers to adjourn the assessment of his own motion.

    41. However, Mr Levy has a fair point in saying that, on the face of it, Costs Judge Rogers appears to have elevated the desirability of an explanatory memorandum into a legal duty. If so, he misdirected himself in law. Mr Levy went on to say that if Costs Judge Rogers misdirected himself in law that was an end of it, and his decision could not stand. I do not think that it is that simple. An appeal is allowed if the decision of the lower court is wrong. Costs Judge Rogers' decision was a decision to disallow a large part of the fees claimed by Mr Levy. What needs to be done is to analyse why he disallowed them. An erroneous piece of legal reasoning on the way to the decision may or may not show that the decision itself is wrong.

    42. In the light of his preliminary ruling Costs Judge Rogers needed to be satisfied that the costs claimed were necessary costs. On many occasions he asked Mr Morris for an explanation of why a particular item of work was necessary, or simply what it was, and got no satisfactory explanation. He pointed out that simply to record time spent did not materially assist him to decide whether the time spent was necessary time. As he put it towards the end of the first day of the assessment:

    "when you report back, as you are bound to, to counsel, would you please also confirm my comments that it is not just me being liverish because I am getting tired, it is because there is no material upon which I can say that the fee is justified."

    43. In my judgment, on the basis of the material placed before him, Costs Judge Rogers was entitled to come to that conclusion. Indeed even after the reception of new evidence on appeal, it was still unclear to me why it was necessary for Mr Levy to have held 20 conferences, and why it was necessary for him to have spent so many hours reading papers and preparing for hearings. He submitted that the background to the case was complex; that documents needed to be read in order to see whether they might be relevant; and that he needed to be prepared to answer any questions that the Court of Appeal might ask about the intricacies of the past history and the first bankruptcy. However, it does not seem to me to be necessary to prepare for every possible eventuality; and although I do not underestimate (and indeed remember) the difficulties of "getting up" an adjourned case, the number of hours that Mr Levy spent on the case was not, to my mind, satisfactorily explained. Nor was Mr Levy able to point to any particular fact or document that emerged from the many hours spent reading documents (other than the trustee in bankruptcy's report to the Court of Appeal) that had any influence on the outcome of the case.

    44. I do not doubt that Mr Levy performed his duties as counsel conscientiously (perhaps over-conscientiously), but I cannot say that Costs Judge Rogers was wrong in the ultimate decision to which he came. It follows, therefore, that Mr Levy's appeal also fails.


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