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England and Wales High Court (Senior Courts Costs Office) Decisions
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Cite as:  EWHC 9015 (Costs)
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No.15 of 2000
MacDougall & Ors v Boote Edgar Esterkin
12 October 2000
Mr Justice Holland Sitting With Assessors
In this important review decision the Judge considered sub-paragraphs (b) and (c) of Order 62 rule 15(2) (now largely reproduced in rule 48.8(2)(b) and (c)).
The solicitors acted for the claimants in ultimately successful proceedings, firstly before the Lands Tribunal and then on appeal in the Court of Appeal in relation to a property dispute with Wrexham Maelor Borough Council. For a period during the course of the litigation the solicitors were put in funds by way of payments pursuant to a legal insurance policy, but these afforded only a modest contribution in the ever growing expenditure of costs, and there was no other significant on-going source of funds.
According, on 4 August 1992, the date when the unsuccessful Council lodged Notice of Appeal to the Court of Appeal against the decision in favour of the claimants by the Lands Tribunal, a meeting was held at the solicitorís offices to discuss the costsí position. The partner concerned, Mr B (who has since died), and one of his partners (Mr D), were present, and their attendance notes suggested that the clients had agreed to pay the solicitors at the rate of £300 per hour for all work, both work already done and prospective work. This was confirmed in a letter sent by Mr B to the claimants on 15 December 1992.
A dispute having arisen between the parties as to what was or was not agreed the Costs Judge heard oral evidence from both parties over five days, and made primary findings of fact from which he concluded that the claimants had agreed to pay the solicitorsí costs for both past and prospective work at that rate.
On appeal the Judge carefully analysed the primary findings of fact made by the Costs Judge (which were not challenged on the appeal), and held that for consent to be implied under rule 15(2) sufficiently to displace any indemnity taxation of that item on a subsequent solicitor client taxation/assessment, the approval has to be "informed". The Judge said in his judgment:
"To rely on the applicantsí approval the solicitor must satisfy me that it was secured following a full and fair exposition of the factors relevant to it so that the applicants, lay persons as they are, can be reasonably bound by it."
The Judge then subjected the attendance notes and other evidence to critical analysis and concluded that the consent had not been informed for six reasons. Firstly Mr D had never sought to explain the relationship between party and party and solicitor/client costs and the approach of the Taxing Officer, and indeed had misrepresented it; secondly the solicitors did not clearly specify what, in the instant case (as opposed to another case they were conducting for the same claimants), they were going to seek by way of party and party charging rate; thirdly the use of that other case as a yardstick for the fixing of Mr Bís solicitor client charging rate offered no pertinent information to the applicants for the purpose of an approval decision; fourthly whereas the solicitors were justified to be concerned about the financial implications of a lack of interim funding, Mr D had made no attempt to calculate what that might be, and the increase in the hourly rate from £225 to £300 on the 750 hours of work claimed would have resulted in an additional payment to the solicitors of over £56,000, simply to compensate them for lack of cash flow; fifthly at the meeting on 4 August it was possible to have calculated the number of hours already incurred, but no such figure was put forward which could justify implied retrospective approval by the claimants; finally there had been no attempt by the solicitors to raise as different issues the retrospective fixing of a solicitor client rate for hours previously to be remunerated as on taxation and prospective fixing of charging rates for hours yet to be charged.
Accordingly, the Judge concluded that the solicitors had not satisfied him as to sub-paragraphs (a) or (b) of Order 62 rule 15(2), so that he, with the help of his assessors, had to fix a reasonable hourly charging rate. The rate he fixed in those circumstances for work done up to 4 August was the rate claimed in the party and party taxation of £171 per hour, which represented a 90% uplift on the rate which could have been expected to be recovered in 1992. For future work a 150% uplift was felt to be justified, so giving an hourly rate for work done after 4 August of £250.
The Judge was at pains to emphasise that throughout Mr B "gave devoted skilled service on a sustained basis" to the claimants.