Drake & Anor v Fripp

This judgment is concerned with the assessment of costs following a half day hearing of a boundary dispute appeal, which we dismissed. The background facts and reasons for dismissing the appeal are fully set out in Lewison LJ’s judgment, with which Aikens LJ and I agreed – see [2011] EWCA Civ 1279.

After the end of the argument, we indicated that we would be dismissing the appeal for the reasons given the following day in that judgment, and we invited the parties to make submissions as to costs. On behalf of SLA, Mr Falkowski realistically accepted that his client should pay Mr Fripp’s costs, but both he and Mr Leslie Blohm QC, on behalf of Mr Fripp, invited us to direct that those costs be subject to a detailed assessment by a costs judge.

Para 14.1 of Practice Direction 52 states that costs “are likely to be assessed by way of summary assessment” at various types of hearing in this court, including appeals, such as the present one, which are “listed for one day or less”. Accordingly, as I see it, we should assess the costs summarily unless there are good reasons for not doing so.

Two reasons have been advanced as to why we should not do so. The first reason, which is raised by both parties, is that the costs below are currently subject to a detailed assessment, so the costs of this appeal could be conveniently included in the assessment exercise. The second reason, raised only by SLA, is that Mr Fripps’s counsel’s fees are subject to an uplift. I do not regard either reason as a good one.

So far as the first reason is concerned, it would, if we accepted it, apply in a large number of appeals, and would therefore cut across the purpose of para 14.1, which is to get rid of the costs, delay and court time involved in a detailed assessment in relation to an appeal estimated to last no more than a day. The costs which would be involved in a detailed assessment are of particular relevance in the present case, as will be apparent from the facts discussed later in this judgment. Further, there is no reason to think that the costs judge who carries out the detailed assessment of the costs below would be in a better position than we are to assess the costs in this appeal. The second reason is also of little force. It would, of course, be open to us to determine the base costs summarily, and direct a detailed assessment of the appropriate uplift, but it seems to me that we are in a better position than any costs judge to assess the appropriate uplift.

I turn to the summary assessment. Mr Fripp’s solicitors were acting on a traditional basis, charging at an appropriate hourly rate for a partner. Although only junior counsel appeared for Mr Fripp below, he was led on this appeal. Both counsel appeared on a conditional fee basis, and negotiated a success fee, or uplift, of 100%. The total costs claimed by Mr Fripp are £55,188.50, which is made up as follows: (i) solicitors’ costs prior to the hearing: £6006.50 (at the rate of £205 per hour); (ii) solicitors’ costs of attending the hearing: £2870.00 (at the same hourly rate); (iii) out of pocket expenses of £162.00, (iv) counsels’ fees: £23,075.00 (made up of leading counsel £5,425 for advising and preparing the case for trial, and £9,500.00 brief fee, and junior counsel’s £4,150.00 for advising and preparing the case for trial, and £4000.00 brief fee); (v) uplift on counsels’ fees: 100%. The total of items (i) to (iv) is £32,113.50, which represents the base costs, to which item (v) is added.

On a detailed assessment, the costs judge should first look at the overall base figure and consider whether it seems proportionate. If it does, then the costs judge will allow a reasonable sum for each item on the receiving party’s bill which it was reasonable to incur. If the base figure does not seem reasonable, then the costs judge will allow a reasonable sum for each item on the bill only if satisfied that the item was necessarily incurred. That this is the correct approach is clear from Home Office v Lownds (Practice Note) [2002] EWCA Civ 365, [2002] 1 WLR 2450 para 31 as approved and applied in Motto v Trafigura Limited [2011] EWCA Civ 1150, paras 43-50.

I can see no good reason why a similar approach should not be adopted when the court is carrying out a summary assessment. Indeed, it would be rather bizarre if different principles applied in relation to the two methods of assessment.

In relation to this appeal, I am quite satisfied that the base costs incurred by Mr Fripp are disproportionate – and in fairness to his legal advisers, I should emphasise that that is not the same thing as saying that they are unreasonable, in particular as between solicitor and client. The land at stake is a strip of scrubland some one and a half acres in extent; it appears to have no significant value to SLA; while it was not suggested that it had any intrinsic value to Mr Fripp, it does appear to provide an improved means of access to other land, but, as far as I can see, if he had not won this case, he would simply have had to move a gate. It is true that this a second appeal, so two sets of costs were also potentially at stake, but I do not think that that can justify as proportionate the expenditure of over £30,000 on costs for an appeal estimated to last a day on an issue of such relative insignificance, which simply raised the same three points of law (one of which we have not had to decide) which had been argued at both previous hearings.

The ownership of this strip of land has been litigated over a three day hearing with two counsel and two solicitors before an adjudicator, then over a one day appeal with three counsel and two solicitors before a judge, and finally over a half-day (albeit originally estimated at one and a half days) further appeal with four counsel and two solicitors in the Court of Appeal. To say that this is plainly inconsistent with one of the most fundamental aims of the CPR, proportionality, would be an understatement.

No doubt the parties felt strongly about this matter, as is sadly not uncommon in boundary disputes. However, although access to justice and party autonomy must be respected, there are occasions on which it is not unreasonable for the appeal system to protect parties from themselves, and to take into account that court availability is limited, and that time taken up by one case is time not available for another. (It is only fair to add that Mr Drake, on behalf of SLA, does appear to have made a sensible offer at one stage, although he did subsequently decide to pursue this appeal.)

The main point for present purposes, however, is that the base costs of over £32,000 claimed by Mr Fripp for this appeal appear plainly disproportionate, and hence the items on the bill must only be allowed if and to the extent that this court considers that they were necessarily incurred, and then only in a reasonable amount.

So far as item (i), the solicitors’ pre-hearing costs are concerned, the charge out rate of £205 per hour for a partner is not challenged, and I see no reason not to adopt it. However, the total number of hours claimed, is excessive so far as 8.9 hours are claimed in respect of attendances on the client. 0.7 hours must be disallowed as they relate to the agreement of the conditional fee agreement (see Motto [2011] EWCA Civ 1150, paras 104-114); even allowing for this, the hours spent on attendance are somewhat excessive for a respondent to a second appeal, which involved no new evidence. The other items of pre-hearing expenditure (8.9 hours on attendances on opponents and others, and 11.00 hours on the documents) appear to be somewhat on the high side. I would disallow a total of seven hours, resulting in a deduction of £1435.00.

Before turning to item (ii), I would like to commend Mr Fripp’s representatives for accompanying their schedule of costs with an explanatory three page note, which very helpfully and clearly explains how the various components of pre-costs hearing as set out in the pro forma schedule are actually made up. Such an explanatory note, provided that it is short and clear, can be very helpful to the court when assessing costs, and is regrettably very rare in my experience. In many cases where the solicitors’ costs may require to be explained to the court such a note should be provided, albeit only in cases where it is proportionate and where an explanation of solicitors’ costs may reasonably expected to be necessary.

This is not a new idea. In para 114 of the Report and Recommendations of the Commercial Court Long Trials Working Party (December 2007), it is suggested that, at least where the costs claimed exceed £100,000, the schedule of costs should be accompanied by “a short written explanation from the solicitor who has done the bulk of the work”, and that that solicitor “should be present in court for the summary assessment and should be prepared to answer questions directly from the court”.

As to item (ii), the solicitors’ costs in attending the hearing, Mr Falkowski contends that it was unnecessary for a partner in the firm acting for Mr Fripp to travel some distance to London and to attend court, on the basis that a more junior representative from a London firm could have done the job. In my view, given that it was necessary for Mr Fripp to have a solicitor present in court, it was reasonable that it was the solicitor who had been at the two previous hearings, and who had prepared for this appeal, to attend. The only adjustment which I would make is to reduce the number of hours for attending the hearing from six to three, to reflect the fact that the appeal took half a day. This results in a reduction of £615.

Item (iii), out of pocket expenses of under £200, was, entirely realistically, not challenged.

I turn to item (iv), counsels’ fees. In my view, it was not reasonable or proportionate, let alone necessary, to incur the expense of both leading counsel and experienced junior counsel on this appeal. It is true that permission to appeal was given by a member of this court even though it was a second appeal, and that this could be said to give some credence to the notion that the appeal raised at least one point of importance, and raised a case which stood a chance of success. However, in my view, in terms of what was reasonable as between the parties, the expenditure of a total of £23,075 on two counsel to advise, prepare, draft a skeleton argument, and appear on the appeal was simply too much.

It is true that SLA was also represented on this appeal by two counsel, but that does not cause me to reconsider my view. Mr Falkowski and his junior charged much less than Mr Blohm and his junior, and Mr Falkowski’s junior was only a few years’ call. In any event, the mere fact that SLA employed two counsel cannot automatically render it reasonable for Mr Fripp to recover the cost of employing two counsel. In my view, the right sum to allow under this head is an amount equal to the total fee charged by Mr Blohm, namely £14,925. As an experienced leader was briefed on this appeal on behalf of Mr Fripp, I consider it would be unreasonable to expect SLA to pay for a junior as well. Certainly, it was unnecessary for Mr Fripp to brief a junior as well as Mr Blohm. (I emphasise again that I am concerned with reasonableness as between the parties and necessity: I am not expressing a view either way as to what was reasonable as between Mr Fripp and his solicitors). This leads to a reduction of £8,150.

Finally, there is item (v), the appropriate uplift to be applied to counsels’ fees. Logically, a 100% success fee suggests an assessment of Mr Fripp’s prospects of success on this appeal as 50/50. That seems to me to be patently too pessimistic. His case had been vindicated for essentially the same reasons in two careful and fully reasoned judgments after being competently and clearly advanced. SLA’s case on the interpretation issue was plainly weak, and its case on the general boundaries issue also faced difficulties. I accept, of course, that when considering such a question one must beware of relying on the wisdom of hindsight, and it is right to bear in mind that Mr Fripp and his advisers would have known that a member of this court thought that the appeal stood a real chance of success. Further, Mr Fripp could have lost the appeal if he had lost on either of the two issues we have decided (although he may have succeeded, even if he had lost on the general boundaries issue, provided he won on the interpretation issue, and then won on the issue which we have not had to consider).

I believe that there may be a regrettable, if understandable, tendency to charge the maximum success fee of 100% in every case. The client with whom the fee is negotiated by the lawyer has no interest in the level of success fee (at least in a case such as this, where he has to pay no more than he is entitled to recover from the paying party), and the lawyer has an obvious and strong interest in the success fee being as high as possible. In many cases, it is easy for a lawyer, acting in complete good faith, to persuade himself that the prospects of his client’s case succeeding are no better than 50% when it is in his interest to do so, and when he has no negotiations with the party who will or may have to pay the success fee. The court has a particular duty, therefore, to be vigilant in considering the reasonableness of the level of success fee agreed, but, as I have said, this does not mean that the court can invoke the wisdom of hindsight or should adopt an unduly harsh approach.

In my judgment, the 100% success fee implies a significantly too pessimistic assessment of Mr Fripp’s prospects of success following the giving of permission to appeal to SLA to this court. There was, I accept, some prospect, or risk, of SLA’s appeal succeeding, but it was not an appeal with good prospects, on any fair-minded assessment. In my view, the appropriate and reasonable success fee was 50%. As that involves applying a 50% uplift to a figure of £14,925, rather than a 100% uplift to a figure of £23,075, this results in a reduction of £15,612.50.

Accordingly, I would assess the costs payable by SLA to Mr Fripp in respect of this appeal in the figure of £29,376.00.

I agree.

I also agree.