Case No: 1998 P No.654
SCCO Ref: 0209606
IN THE HIGH COURT OF JUSTICE
SUPREME COURTS COST OFFICE
Supreme Courts Cost Office
Clifford Inn
Fetter Lane
London
EC4A 1DQ
Before :
MASTER ROGERS, COSTS JUDGE
Between :
| (1) PRITCHARD ENGLEFIELD (A FIRM) (2) MICHAEL LESLIE COHN | Claimants |
| - and - |
|
| JONATHAN ROGER STEINBERG | Defendant |
Mr Alexander Hutton (instructed by Messrs Pritchard Englefield ) for the Claimants/Respondents
Mr Ian Torrance (a partner in Messrs Bernard Oberman & Co ) for the Defendant
Hearing date : 13 February 2003
COSTS JUDGE’S RESERVED JUDGMENT
ON APPEAL FROM COSTS OFFICER
Judgment
Master Rogers
THE BACKGROUND
The First Claimant is a firm of solicitors and the Second Claimant was a partner therein until 1 October 2002, since when he has been a consultant. The Defendant was called to the English Bar in 1976 and practised in this country for some 5 years or so before moving to America. He has not practised in this country for at least 10 years, and is not a "practising" barrister within the definition contained in the Bar’s Code of Practice. He is however an attorney licensed to practice in the fused legal profession in the state of New York, and, I was told at the hearing of this appeal by Mr Torrance, his solicitor, that he now has rights of audience in Federal Courts in the USA.
The Defendant instructed the Claimant firm to represent him in relation to proceedings which he desired to bring against his former counsel, who subsequently became a Judge, for damages for professional negligence. The second Claimant, Mr Cohn had the conduct of that matter. After its conclusion, disputes arose between the Claimants and the Defendant, which led firstly to litigation between them in relation to the payment of charges by the Defendant. This in turn led to proceedings which involved an application for summary judgment, and a counterclaim, but ultimately the Defendant’s counterclaim was dismissed. Subsequently the Claimants took proceedings to obtain a charging order over property which the Defendant had within the jurisdiction of the English courts. That led to further litigation in the Chancery Division which has resulted in costs orders in favour of the Claimants against the Defendant which are awaiting assessment. At the request of both sides I agreed, at the conclusion of the hearing of this appeal, to give directions to ensure that those two bills, which are well below the costs officer level, should in fact be heard by me, because of the issues raised in one of them.
In the meantime the Defendant published on his website a lengthy criticism of the way the Claimants have charged him, which caused the Claimants to initiate proceedings against him for defamation. At one point the Claimants obtained interlocutory judgment against the Defendant for damages to be assessed, but the Defendant successfully applied to Mr Justice Eady to have that judgment set aside. Mr Justice Eady’s order was made on 8 October 2001, and agreed on 9 October 2001, though it was not sealed until 19 November 2001. Paragraph 3 of that Order provides:
"The Claimants do pay to the Defendant one third of his costs of this application, such costs, unless agreed, to be the subject of a detailed assessment."
It is to be noted in passing that that Order did not specifically specify that those costs should be assessed at this stage, the substantive action for damages for libel still being outstanding. Nevertheless no point was taken by the paying party when the Defendant served notice of commencement, and ultimately initiated detailed assessment proceedings in this office seeking a total of £46,881.21.
THE DECISION OF THE COSTS OFFICER
The case was balloted to Costs Officer Lambert, who heard it on 18 November 2002. In one of the bundles put before me for this hearing was included an attendance note by Ms Shirley Dean, the Claimants’ law costs consultant, which both sides agreed was an accurate summary of the argument and submissions made to Costs Officer Lambert. As a result of his detailed assessment, the Costs Officer assessed the costs at the gross figure of £3,595.38. In accordance with Mr Justice Eady’s order therefore the certificate in favour of the Defendant was for £1,198.46, being one third of the above figure. However, since costs of the detailed assessment were awarded against the Defendant, the certificate rightly recites the fact that the net result was that there was no liability in either direction for actual payment.
The principal reason for the substantial reduction in the Defendant’s bill was clearly that he failed to persuade the Costs Officer that his hourly rate should be £327.58. That rather unusual figure was arrived at by the Defendant by converting US $475 to sterling at an average exchange rate of US $1.45 to the £ between August 2000 and October 2001. Mr Lambert decided that the Defendant was only entitled to costs at the litigant in person’s rate of £9.25.
Dissatisfied with that decision the Defendant decided to appeal.
THE APPLICATION FOR LEAVE TO APPEAL OUT OF TIME
His appeal was lodged out of time. Although it was not the first time during the course of the protracted litigation between these parties that the Defendant had had to seek permission from the court to take a step out of time, the Claimants in their skeleton argument adopted the pragmatic approach that they had not suffered any prejudice, and therefore left the matter in my hands as to whether or not to grant permission to appeal.
It seemed to me that in the light of that very sensible approach, and bearing in mind the importance of the issue raised, that it would be right to grant permission to appeal out of time, and I did so at the hearing before me on 13 February.
THE APPEAL
On this appeal the Defendant’s case is straightforward and deceptively simple. He says that he is a barrister called in England and Wales, who has not been disbarred, and who is also an active attorney in New York State. His hourly rate for work in the New York is $475 per hour, and it is sufficient to comply with the relevant requirements of English law and practice for him simply to certify that that is so, and that it is not permissible for the court to go behind that certificate, any more than it would go behind the equivalent certificate given by a solicitor litigant in person. The Claimants however argue that the Defendant is not entitled to an hourly rate of $475 because: (a) a barrister is not to be equated with a solicitor litigant in person; and (b) there is no evidence before the court of any actual loss suffered by Mr Steinberg.
The case was extremely well argued by Mr Torrance, a partner in Bernard Oberman, on behalf of the Defendant and Mr Alexander Hutton of Counsel on behalf of the Claimants, and I am greatly indebted, particularly to Mr Hutton, for taking me through what is a far from easy and rapidly developing field of law.
Perhaps sensing that Mr Hutton had gained the advantage during the oral submissions, Mr Torrance in reply suggested that even if the state of law appeared to be against his contentions I ought, even at my judicial level, to be bold, and to extend the law in his favour. Certainly there is some authority for such a suggestion, because I did just that in the case of Jemma Trust Ltd v Liptrott and Forrester (unreported but available on the Court Service page of the Lord Chancellor’s Website) in relation to the method of assessment of solicitors’ costs for non contentious work. Nevertheless that decision of mine is under appeal direct to the Court of Appeal, who are due to hear it in July of this year.
A LITIGANT IN PERSON’S ENTITLEMENT TO COSTS
It was common ground between Mr Torrance and Mr Hutton that Mr Steinberg was at all material times a litigant in person. The starting point therefore must be to examine what regulatory provisions apply to recovery of costs by such a person. Although the matter is now governed by CPR it is, I think, helpful, if only to contrast the present rule, to look at the old pre CPR wording that was contained in RSC Order 62 rule, which reads as follows:
"18. (1) Subject to the provisions of this rule, on any taxation of the costs of a litigant in person there may be allowed such costs as would have been allowed if the work and disbursements to which the costs relate had been done or made by a solicitor on the litigant’s behalf together with any payments reasonably made by him for legal advice relating to the conduct of or the issues raised by the proceedings.
(2) The amount allowed in respect of any item shall be such sum as the taxing officer thinks fit but not exceeding, except in the case of a disbursement, two-thirds of the sum which in the opinion of the taxing officer would have been allowed in respect of that item if the litigant had been represented by a solicitor.
(3) Where it appears to the taxing office that the litigant has not suffered any pecuniary loss in doing any item of work to which the costs relate, he shall be allowed in respect of the time reasonably spent by him on that item not more than £9.25 per hour.
(4) A litigant who is allowed costs in respect of attending court to conduct his case shall not be entitled to a witness allowance in addition.
(5) Nothing in Order 6, rule 2(1)(b), or in rule 17(3) of, or Appendix 3 to, this Order shall apply to the costs of a litigant in person.
(6) For the purposes of this rule a litigant in person does not include a litigant who is a practising solicitor."
Mr Hutton, during the course of his submissions, drew my particular attention to sub-paragraph 6, which states quite plainly that a litigant in person who is a practising solicitor is not included within the definition of such a litigant in person for the purposes of that rule.
The definition of litigants in person since the introduction of CPR is to be found in rule 48.6, which reads as follows:
"(1) This rule applies where the court orders (whether by summary assessment or detailed assessment) that the costs of a litigant in person are to be paid by any other person.
(2) The costs allowed under this rule must not exceed, except in the case of a disbursement two-thirds of the amount which would have been allowed if the litigant in person had been represented by a legal representative.
(3) Costs allowed to the litigant in person shall be –
such costs which would have been allowed if the work had been done or the disbursements made by a legal representative on the litigant in person’s behalf;
the payments reasonably made by him for legal services relating to the conduct of the proceedings; and
the costs of obtaining expert assistance in connection with assessing the claim for costs.
(The costs practice direction deals with who may be an expert for the purpose of paragraph 3(c).)
(4) Subject to paragraph (2), the amount of costs to be allowed to the litigant in person for any item of work to which the costs relate shall, if he fails to prove financial loss, be an amount in respect of the time spent reasonably doing the work at the rate specified in the costs practice direction.
(5) A litigant who is allowed costs for attending at court to conduct his case is not entitled to a witness allowance in respect of such attendance in addition to those costs.
(6) For the purposes of this rule, a litigant in person includes –
a company or other corporation which is acting without a legal representative; and
a barrister, solicitor, solicitor’s employee or other authorised litigator (as defined in the Courts and Legal Services Act 1990 who is acting for himself"
Again, Mr Hutton drew my attention to the very different wording of paragraph 6(b) of 48.6, compared with Order 62 rule 18(6).
With effect from 3 December 2002 rule 48.6 has been amended, and the revised wording is set out below:
"48.6 (3) The litigant in person shall be allowed –
(a) costs for the same categories of –
(i) work; and
(ii) disbursements,
which would have been allowed if the work had been done or the disbursements had been made by a legal representative on the litigant in person’s behalf;
(b) the payments reasonably made by him for legal services relating to the conduct of the proceeding; and
(c) the costs of obtaining expert assistance in assessing the costs claim.
(4) The amount of costs to be allowed to the litigant in person for any item of work claimed shall be –
(a) where the litigant can prove financial loss, the amount that he can prove he has lost for time reasonably spent on doing the work; or
(b) where the litigant cannot prove financial loss, an amount for the time reasonably spent on doing the work at the rate set out in the practice direction."
There was some debate before me as to whether the new 48.6 applies to all assessments on or after the date it came into force in early December, or only in respect of work done after that date. Mr Hutton suggested that if the Rules Committee had considered the radical proposal addressed to me by Mr Torrance, that the position of barristers should be equated with that of solicitors when acting as litigants in person, they had, following the case of Malkinson v Trim [2003] 1 WLR 463; [2002] 3 Costs LR 515 (CA) the opportunity to change the rule to give effect to what Mr Torrance said was the effect of Malkinson v Trim, but they had not done so.
I very much doubt whether that was the position, because the decision in Malkinson v Trim was handed down by the Court of Appeal on 13 September 2002, and the drafting of the new rule 48.6 must have been put in hand, and probably completed, before that date for it to have been published and to come into effect a bare three months later.
At first it was suggested that it did not make any difference anyway, because the assessment in this matter before Mr Lambert took place prior to the amendment to rule 48.6. However, it was agreed between the parties that an appeal from a Costs Officer to a Costs Judge is by way of rehearing, and therefore I have to consider the position as at the day the hearing takes place before me, which is of course after the coming into force of the new rule 48.6.
Although this is a nice point of construction and interpretation, I do not think that it makes any difference to the decision that I have to take in principle, and so I make no finding on it.
A "PRACTISING" BARRISTER AND A "PRACTISING" SOLICITOR
Mr Hutton submitted that there was an important distinction to be drawn between a barrister and a practising barrister. So far as solicitors were concerned the old Order 62 rule 18 referred to a practising solicitor, which clearly meant a solicitor who had a practising certificate. Mr Torrance suggested that, at the very least, that distinction was blurred, by reference to the decision of Stockinger v Highdorn Ltd . I was the Master assessor sitting with Mr Justice Douglas Brown on that appeal in Appeal 2001, and, until the hearing before me on 13 February, I assumed that the only information about the Judge’s judgment in that case was to be found in the Unreported Appeal Summary No.3 of 2001. However the parties were able to provide me with a transcript of what Mr Justice Douglas Brown said in that case. The Claimant is described in paragraph 2 of that judgment as follows:
"(2) At all material times, Mr Stockinger was working as a Company/Commercial Lawyer in the City of London. He was admitted as a solicitor in England and Wales in 1990 and is legally qualified in New Zealand, Victoria, Australia, and New York. Although he held practising certificates in overseas jurisdictions for the entire duration of the litigation his practising certificate from the Law Society is dated 8 May 1998."
It is clear from the whole of that judgment that the Deputy Costs Judge from whom the appeal was brought, had treated Mr Stockinger as someone entitled to more than £9.25 per hour as a litigant in person up until the date when he formally obtained a practising certificate. That was obviously based on a sensible and pragmatic concession by the paying party, and accordingly it was not an issue which was before Mr Justice Douglas Brown. The level of the hourly rate was, but that is a different point. I do not therefore think that the Stockinger case assists Mr Torrance in his arguments.
Mr Hutton helpfully included in his bundle of authorities extracts from the Bar Code of Practice, in particular paragraphs 201 and 202 thereof:
"201 For the purposes of this Code:
(a) a barrister practises as a barrister if he supplies legal services and in connection with the supply of such services:
a. he holds himself out or allows himself to be held out as a barrister; or
b. he exercises a right which he has by reason of being a barrister.
(b) any reference to the supply of legal services includes an offer to supply such services.
202 Subject to the provisions of this Code a barrister may practise as a barrister provided that:
a. he has complied with any applicable training requirements imposed by the Consolidated Regulations which were in force at the date of his Call to the Bar;
b. he has complied with any applicable requirements of the Continuing Professional Development Regulations (reproduced in Annex C);
c. he has a current practising certificate issued by the Bar Council in accordance with the Practising Certificate Regulations (reproduced in Annex D);
d. he has provided in writing to the Bar Council details of the current address(es) with telephone number(s) of the chambers or office from which he supplies legal services and (if he is an employed barrister) the name address telephone number and nature of the business of his employer;
e. Not used.
f. A barrister who practises as a barrister in independent practice may not also practise as an employed barrister except as permitted by paragraph 806."
I find as a fact that Mr Steinberg is not, and was not at the time he was doing the work that led to this bill, a "practising barrister". Mr Torrance effectively conceded that point, though he said that it actually made no difference to his arguments. He submitted that in the same way that a solicitor was allowed to "self certify" that his hourly rate was £x, so a barrister could do the same. The court could not cross-examine a solicitor as to whether or not he was fully extended on the work in question so as to justify the hourly rate, and Mr Torrance submitted that the same ought to apply to a barrister, whether or not he was a "practising barrister". He emphasised that CPR 48.6(6)(b) expressly referred to a barrister, a solicitor’s employee or other authorised litigator as defined in the Courts and Legal Services Act 1990 who is acting for himself, and therefore the definition is very much wider than under the old Order 62 rule 18, which referred simply to a "practising solicitor".
This in turn led to an argument as to whether or not a barrister, whether practising or not, is an "officer of the court". Mr Torrance’s initial submission was that he was, though I think ultimately he accepted that the highest he could put the matter was that a barrister owed a duty to the court not to mislead it etc.
Whilst that is undoubtedly true, I think that Mr Hutton is correct when he submits that a barrister is not an officer of the court because any disciplinary action taken against a member of the Bar must be under the Bar’s own Code of Practice, whereas the court itself, ultimately the Master of the Rolls, has jurisdiction over solicitors.
It seems to me that the distinction is important, not least because what is said by Lord Justice Henry in the case of Bailey v IBC Vehicles [1998] 3 All ER 570 at page 575 H-J:
"The signature of the bill of costs under the rules is effectively the certificate by an officer of the court that the receiving party’s solicitors are not seeking to recover in relation to any item more than they have agreed to charge their client under a contentious business agreement.
The court can (and should unless there is evidence to the contrary) assume that his signature on the bill of costs shows that the indemnity principle has not been offended."
Accordingly, it has frequently been argued before me and other Costs Judges that when the issue of the indemnity principle is raised by a paying party all the receiving party needs to do is to refer to the certificate on the back of the bill, and that is the end of the enquiry. Whether that is in fact so, is something which is shortly to be decided by the Court of Appeal. However, in this case the Defendant has not provided any certificate because he is a litigant in person, and does not need to do so.
MALKINSON v TRIM
Considerable time was taken by Mr Hutton in analysing this recent Court of Appeal decision in which he appeared for the successful party before me, where the case originated, and on direct appeal to the Court of Appeal. Mr Torrance, in his submissions, suggested that the Court of Appeal had misunderstood the distinction between a solicitor and a barrister, but Mr Hutton sought to convince me, by detailed reference to the Malkinson v Trim judgments, that this was not in fact the case.
In that case Lord Justice Chadwick, who delivered the main judgment very carefully analysed the judgments in the long established case of London Scottish Benefits Society v Chorley, Crawford & Chester, both at first instance and in the Court of Appeal with a view to deciding the first question in Malkinson v Trim of whether the principle that a solicitor litigant in person could charge for his time in litigation and also for the time of any employee doing the litigation for him could logically be extended to cover work done by the solicitor litigant in person’s partners. He concluded in paragraphs 14 and 15 of his judgment that it did so extend.
However the more important part of the decision, so far as this appeal is concerned, is that section which follows the cross heading "Has the principle survived the Civil Procedure Rules?" After quoting the relevant rules, that I myself have quoted earlier in this judgment, Lord Justice Chadwick said in paragraphs 19 to 22 of his judgment, in effect, that the Chorley principle had survived the rule change. Those paragraphs read as follows:
"19. At first sight, therefore, the effect of RSC Order 62 rule 18(6) – which excluded a litigant in person who was a practising solicitor from the ambit of that rule – has been reversed. Solicitors are now to be treated in the same way as other litigants in person. In particular, the costs to be allowed to a solicitor litigant in person are to be subject to the two thirds restriction. Attention is drawn to the change by a comment in Note 48.6.1 to Civil Procedure (Spring 2002):
"The previous exemption for a solicitor acting on his own behalf has been removed …"
But it is accepted that CPR 48.6(6)(b) must be read subject to section 52.5 of the Practice Direction about Costs (set out at 48PD.3 on page 1002 of Civil Procedure). The paragraph is in these terms:
"Attention is drawn to rule 48.6(6)(b). A solicitor who, instead of acting for himself, is represented in the proceedings by his firm or by himself in his firm name, is not, for the purposes of the Civil Procedure Rules, a litigant in person."
20. That direction can, I think, apply only to a practising solicitor; in that it is difficult to see how a solicitor who is not in practice could represent himself in his firm name, or could be represented in proceedings by his firm. The effect of the direction, therefore, is that the position of a practising solicitor who chooses to represent himself in his firm name, or (where in partnership) to be represented by his firm remains unaltered by the provisions of CPR 48.6. his costs are allowed (or not, as the case may be) by virtue of, and in accordance with, the principle established in the London Scottish Benefit Society case.
21. This, of course, is a case in which the respondent, a practising solicitor, was represented by his firm. It would follow, if CPR 48.6(6)(b) is to be read subject to section 52.5 of the Practice Direction, that the costs judge was right to decide that the principle in the London Scottish Benefit Society case was applicable. But it is submitted on behalf of the appellant that, once it is accepted that the respondent is not a litigant in person for the purposes of the Civil Procedure Rules, that principle becomes irrelevant. As it is put, at paragraph 4 of the revised skeleton argument prepared for this appeal:
"Once it is accepted that the [respondent] was not a litigant in person then the authority in [the London Scottish Benefit Society case] has no application. A successful party, who is represented by a firm of solicitors, can only recover costs to the extent that he has incurred or is otherwise liable for the costs. A partner to a solicitor’s firm enjoys no special status and is not an exception to this rule."
22. That submission, as it seems to me, is founded on a misunderstanding of the reasoning in the London Scottish Benefit Society case. As I have sought to point out earlier in this judgment the basis of the principle that a solicitor who acts for himself in litigation is entitled to compensation, by way of costs, for his time and trouble is a recognition that he (in common with any other litigant) ought to be indemnified against the expense to which (on the hypothesis that he has been successful in the litigation) he has been unjustly put. The special position of a solicitor is that he does not need to employ others to provide professional skill and knowledge in the conduct of litigation. He can provide that skill and knowledge himself. Further, there is no difficulty in measuring what it costs him to do so; and there is a potential saving in costs if he is not discouraged from doing so. One effect of CPR 48.6(6)(b), read in conjunction with sections 52.5 of the Practice Direction, is that there is now more clearly recognised a distinction between the solicitor litigant who provides, in connection with his own litigation, professional skill and knowledge in the course of his practice as a solicitor – that is to say, who "is represented by himself in his firm name" – and the solicitor litigant who provides skill and knowledge in what might be described as "his own time" – that is to say outside the course of his practice as a solicitor and (typically) outside the office. The latter is treated as a litigant in person for the purposes of CPR 48.6; and so is subject to the restrictions imposed by that rule, including the two-thirds restriction imposed by sub-rule (2). The former is not. Nor is there any reason, consistent with the need to provide an indemnity, why he should be. Further, there is no reason, consistent with the need to provide an indemnity, why he should not recover the cost of providing professional skill and knowledge through employees of his practice."
Accordingly I accept Mr Hutton’s submissions that the Court of Appeal did not ignore the distinction between solicitors and barristers in Malkinson v Trim, but very carefully analysed the origin of the Chorley rule, considered that it was still a valid rule, and indeed had survived the substantial rule change between Order 62, rule 18 and CPR 48.66.
KHAN v LORD CHANCELLOR
Mr Torrance submitted that this very recent decision of Mr Justice Mitchell had effectively assimilated the position of solicitors and barristers, and had indeed extended the Malikinson v Trim principle.
As Mr Hutton rightly pointed out, this criminal case for payment of the successful defendant’s costs out of public funds originated with me as Determining Officer, went to the Senior Costs Judge as the Redetermining Officer, and ended its legal journey with Mr Justice Mitchell, the final Court of Appeal in such matters. The only, albeit highly important, point which that case decided was whether or not a barrister litigant in person, who had ultimately been acquitted of a serious criminal charge, was entitled to payment, from Central Funds, of certain costs which he had incurred in the course of those proceedings.
Mr Justice Mitchell set out the nature of the claim in the following paragraphs from his judgment (they are not numbered as I am quoting from a copy of the judgment not finally approved by the Judge, and so still unnumbered):
"Whether Mr Khan himself is entitled to payment under the section 16 order depends in part upon whether a barrister litigant acting on his own behalf in the proceedings to which a costs order in his favour relates is in the same position as a solicitor. In the case of a solicitor his entitlement and the principle to which it is anchored could not be clearer and, as I have said, was recently re-stated by Chadwick LJ in Malkinson v Trim . I have already cited the relevant passage in the judgment – it is worth repeating:
"the basis of the principle that a solicitor who acts for himself in litigation is entitled to compensation, by way of costs, for his time and trouble is a recognition that he (in common with any other litigant) ought to be indemnified against the expense to which (on the hypothesis that he has been successful in the litigation) he has been unjustly put. The special position of a solicitor is that he does not need to employ others to provide professional skill and knowledge in the conduct of litigation. He can provide that skill and knowledge himself. Further, there is no difficulty in measuring what it costs him to do so; and there is a potential saving in costs if he is not discouraged from doing so."
That principle can be traced back to Chorley . In Boswell at p517 Leggatt J said:
"It reliance on [ Chorley ] counsel for [the barristers] has only to add the submission that the costs recoverable where one counsel instructs another must be the same as where one solicitor instructs another. In my judgment this submission is correct. Indisputably an appellant solicitor or counsel can conduct his own appeal. An attempt to equate such a professional person with a litigant in person is unhelpful because … such an appellant brings to bear professional skill and labour the value of which can as readily be assessed as if they were performed for him by another lawyer."
In my judgment the true basis of the decision in Boswell is that contended for in the submissions advanced on behalf of Mr Khan namely Leggatt J in Boswell extended the indemnity concept to the skill and labour of a barrister.
It is submitted in the alternative that even if the true ratio of Boswell does not incorporate the " Chorley " principle, that principle can properly be extended to a barrister in Mr Khan’s position. It is rightly accepted that the fact of expenditure by him of his skill and labour in his own defence does not change the capacity in which either he appears in court or performs the preparatory work. Throughout he is and remains a defendant/appellant. Nonetheless, so it is submitted, his expenditure, subject to proof and reasonableness, is to be indemnified in accordance with the principle. If the true ratio of Boswell is narrower than that contended for on behalf of Mr Khan then in my judgment this alternative submission is sound. In short, in my judgment no provision in the Code of Conduct is an answer to Mr Khan’s claim nor should his position be equated to that of a lay litigant in person.
Given then that in my judgment Mr Khan’s circumstances fall four square within the Chorley principle (as explained in Malkinson v Trim ) does that principle enable him to be indemnified having regard to the provisions of section 16(6) and regulation 7? In my judgment it plainly does. Under section 16(6) he is entitled to reasonably sufficient compensation for "any expenses properly incurred by him in the proceedings". The relevant head of expense (and "expenses" includes "expense" – Interpretation Act 1978, S6), is the work he performed – namely the professional skill and labour expended by him on his own defence to the allegation of criminal conduct and thereafter, having been convicted, in lawful pursuit of his various statutory rights relating to the challenging of the conviction. It is difficult to see how in principle this head of expense was not "properly incurred" because had the work being performed by another barrister on behalf of Mr Khan it is not suggested, not could it be, that such a barrister would not have been entitled to remuneration for it and that such remuneration would properly have been an item in a bill of costs submitted for taxation in pursuance of an order under section 16. The fact that here the necessary work involving the exercise of professional skill was performed by Mr Khan himself does not remove this work from the ambit of compensation provided for in the words "any expenses properly incurred by him in the proceedings". The argument that such work fall outside the ambit was advanced and rejected in ex p Robinson ( ante).
Finally, there is the question of policy. Is there any policy objection to extending the principle to a barrister in Mr Khan’s position? On his behalf it is argued that no such objection can be advanced because of the potential saving of costs to "central funds". That claim is sound but perhaps is not a complete answer to the question. There is a further point which has the smack of a policy objection namely that there is something unsavoury about a barrister being remunerated at public expense for defending himself against an allegation of criminal conduct. To characterise Mr Khan’s circumstances in that way in my judgment borders upon misrepresentation. First and foremost Mr Khan was an accused person charged with a criminal offence to which he had pleaded not guilty and in respect of which he had been acquitted. He happened to be a barrister with considerable and very relevant professional experience and skills. Providing he observed the provisions of the Code of Conduct of the Bar, which he did, I can see no basis for any objection on public policy grounds if he applied that skill and experience in his own case and, in the event of his acquittal, if he is remunerated for it within the ambit of compensation permitted by section 16. Almost certainly in such circumstances there will be a saving for the public purse. It should not be overlooked that under Article 6(3)(c) "Everyone charged with a criminal offence has the following minimum rights … (c) to defend himself in person or through legal assistance of his own choosing …" Here Mr Khan defended himself through legal assistance of his own choosing which included a role for himself. That was a combination of choice to which he was entitled as a Convention Right. It was argued on behalf of Mr Khan that to deny him payment in relation to his role would be a violation of the right. This was not by any means a principal plank of Mr Khan’s case. Although I am not impressed by the argument, given the conclusion I have reached, it is unnecessary for me to decide that particular point."
Mr Justice Mitchell however did not simply direct Senior Costs Judge Hurst or me to reinstate the items which we had disallowed, but said this:
"My conclusion is that the arguments advanced on behalf of Mr Khan must succeed. What I am unable to do, (nor I am sure could a costs judge on the current information), is to assess Mr Khan’s costs in accordance with the Act and the regulations. His appeal is allowed because I have upheld the principle for which he argued. The next step is to apply that principle by formulating a bill of costs which takes account of this judgment and the earlier cases. Clearly the work he performed falls into two general classes – work prior to a hearing and work during and for the purposes of the hearing. Bearing in mind regulation 7(2) and 7(3) Mr Khan will have to formulate his claims with very great care. If he decides to claim for work he performed during a hearing (the mere fact of his attendance is obviously insufficient to found a claim) then he may well find that the costs judge will require confirmation from leading counsel as to the need for the work for the purpose of the hearing and, more particularly, that it was work which ordinarily would have been carried out by junior counsel rather than by an intelligent lay client. I strongly suspect that the more fertile area so far on Mr Khan’s claims are concerned is his preparatory work. For the reason just given it would be inappropriate for me merely to remit the claims to the costs judge for re-assessment. Mr Khan has leave therefore to begin again."
Accordingly the task of considering Mr Khan’s redrafted bill will fall to me in the future.
I accept that the case of Khan v The Lord Chancellor has extended the law as set out in Malkinson v Trim , but not as far as Mr Torrance submits that it has done, and he cannot succeed on this appeal on the basis of the law as set out by Mr Justice Mitchell, particularly as that was a criminal case concerned essentially with the proper interpretation of the relevant statutory and regulatory provisions in relation to the payment of a successful defendant’s costs out of Central Funds.
I also decline to move the law further forward, as Mr Torrance has suggested I should. Mr Hutton rightly drew my attention to the distinctions that still exist between solicitors and barristers, and presumably will continue to do so until and unless they become a fused profession in this country, and I do not think it would be right for me to seek to equate the two in an appeal which, with due respect to Mr Torrance, is a relatively small one in terms of the costs involved.
THE DEFENDANT’S LACK OF EVIDENCE OF FINANCIAL LOSS
Mr Hutton said that the Defendant, although invited to do so, both before the Costs Officer and before me, had failed to put in any evidence as to his actual loss, simply contenting himself with saying that he was a registered attorney in New York State, that his hourly rate was $475 per hour. Mr Hutton drew my attention to what was said in that context by Mr Justice Robert Walker, as he then was, in the case of Mainwaring v Goldtech Investments [1997] 1 All ER 467.
That case raised a number of issues in taxation proceedings by Ms Mainwaring, but this particular issue is dealt with by the learned Judge starting on page 477 at letters C to D:
" The second review: Miss Mainwaring’s pecuniary loss
That brings me to the other point on the second review. On 27 July 1992 Miss Mainwaring commenced proceedings for taxation of her costs under the master’s order of 20 September 1991 mentioned at the beginning of this judgment. Her bill amounted to £87,250 (plus VAT), reached by charging Miss Mainwaring’s time at a basic rate of £75 an hour, uplifted to £125 in respect of research and inquiries, and to £200 an hour in respect of preparation and advocacy. The bill claimed not less than 30 hours for travelling and waiting, not less than 200 hours for research and inquiries, and not less than 300 hours for preparation and advocacy. Disbursements and overheads were included within this charge.
On 15 December 1992 the master directed Miss Mainwaring to lodge a chronology and a detailed breakdown of her bill, together with affidavit evidence of her pecuniary loss. She complied with this direction on 10 May 1993, but under protest at least so far as the affidavit was concerned. On 9 December 1994 Lipkin Gorman took out a summons for an order that Miss Mainwaring should provide further evidence of pecuniary loss. That summons was dismissed on the basis that her evidence was what she regarded as sufficient for her purposes. Miss Mainwaring has taken the view, both before the master and on this review, that the burden of proof is on Lipkin Gorman, and that in the absence of any affidavit evidence in answer from Lipkin Gorman the master was not merely entitled but was bound to conclude that she has suffered pecuniary loss in relation to all, or at any rate the bulk of the items of work set out in her detailed breakdown (which covers the period from September 1989 to June 1992, together with one further isolated item, her affidavit sworn at the master’s direction in May 1993).
I do not think that Miss Mainwaring’s contention as to the burden of proof can be right, either as a matter of common sense or as a matter of legal principle. In principle, the 1975 Act and the rules of court (Ord 62, r 18) made pursuant to it are intended to remedy the grievance (which was a real grievance) that a successful litigant in person could recover no more than out-of-pocket expenses even if he or she had suffered significant loss of earnings as a result of the litigation. But (subject to the minimum rate fixed by r 18(3)) there is no reason why the indemnity principle should not apply here too. Whether a litigant in person has suffered significant loss of earnings is a matter peculiarly within his or her own knowledge. Sometimes the position will be obvious and each side will accept it without the need for any affidavit evidence: at one extreme, for instance, a self-employed tradesman in a small but profitable way of business, who has more customers than he can cope with and can fill every working hour to advantage; at the other extreme, a retired civil servant with an index-linked pension who finds the conduct of litigation a more interesting pastime than bowls or crossword puzzles.
To my mind the formula ‘where it appears’ in r 18(3) (which appears elsewhere in Ord 62, for instance r 28(1) and is indeed a common expression in statutes and statutory instruments) says nothing, or almost nothing, about the burden of proof. It would be most unusual for the paying party to have to undertake the burden of proving a negative on a matter peculiarly within the receiving party’s knowledge, and probably outside the paying party’s own knowledge. In any case in informal—and not wholly adversarial—proceedings such as a taxation the burden of proof is something that can shift very readily. Miss Mainwaring had been appearing in person before the master intermittently over a period of many months. He must therefore have observed, because it is obvious, that she is intelligent, articulate, well-educated and under pensionable age; but he may not have known much more than that. He may have gleaned a little more about her background from the documents lodged with him, but that information would have been random and not directed to the issue in hand. Once it was known that Lipkin Gorman was challenging her bill, it was sensible, and well within the master’s powers, for him to direct her to make an affidavit of pecuniary loss in support of a bill which, with VAT, amounted to well over £100,000. The fact that the bill charged VAT (but seems to have left blank Miss Mainwaring’s VAT registration number) was by itself a matter of some interest.
I must therefore consider Miss Mainwaring’s affidavit dated 7 May 1993, which she made under protest. A good deal of the affidavit is concerned with criticisms of the current treatment of litigants in person. Those criticisms may have force, and so far as they do it is to be hoped that changes following on the Woolf report will ameliorate the position; but the criticisms do not really help to establish that the deponent has suffered pecuniary loss. What Miss Mainwaring deposed to as regards her pecuniary loss amounted to this.
(a) The litigation started in March 1988 and she had devoted herself to it full-time ‘ever since’ [she made the affidavit in May 1993].
(b) She had to spend more time reading documents and authorities than if the issues had been identified in good time by the professionals on the other side.
(c) She worked for Encyclopaedia Britannica International Ltd for eight years until 1986, earning over £100,000 in the last year.
(d) She and Mr Lisle jointly obtained judgment (on the inquiry as to damages on Goldtech’s undertaking) for over $2·8m for lost earnings for a period of little more than a year, ending in May 1989. This was presumably on an unopposed inquiry held when it was obvious that Goldtech could not pay damages.
(e) On 2 October 1991 Hoffmann J expressed regret that she should be devoting her whole life to litigation ‘when you could, I am sure, have a much more rewarding existence in other ways’.
I accept Miss Mainwaring’s evidence on points (b) to (e) above, but point (a) calls for some further examination. Miss Mainwaring’s bill of costs covered a period of 34 months, from September 1989 to June 1992 (together with the isolated item of her most recent affidavit). During that period the only times of intense activity, so far as the taxation is concerned, were August 1990 (when she spent an unspecified number of hours on her ninth affidavit) and March to July 1991 (culminating in a three-day hearing before the master). Almost all the substantive first instance hearings were over by the end of 1989. The two hearings in the Court of Appeal were at the end of 1990 and at the beginning of 1991. I understood Miss Mainwaring to make some reference during the hearing to other litigation involving quite different parties (and it is mentioned in the master’s reasons), but I have no clear picture of the history or significance of any other litigation.
I have to say that I find Miss Mainwaring’s affidavit provides only the most tenuous evidence of what (if any) pecuniary loss she has suffered, either in lost salary or in lost profits of some self-employed activity, between September 1989 and June 1992. Among the matters which Miss Mainwaring does not cover in the affidavit are her training and qualifications; what work she did for Encyclopaedia Britannica; why she stopped working for that company; what paid employment she might have taken, but for the litigation, and at what remuneration, and what job offers she may have received and refused; alternatively what trade or profession she might have followed, with what likely customer or client base and with what prospects of profits; and finally, the significance of the blank VAT number on the first page of her detailed breakdown of costs.
The Chief Taxing Master discussed Miss Mainwaring’s affidavit and concluded:
‘Even if I accept, as I do, that Ms Mainwaring is a witness of truth, and that she is capable of earning a substantial salary, I am still without any evidence of her actual loss. The fact that she elected to devote herself full-time to this litigation is not sufficient. Ms Mainwaring states that it would have been a waste of everybody’s time for her to apply for jobs which she had no intention of taking up, but I do not have any evidence of what employment was available to her during the relevant period. The employment market is constantly changing, and I cannot infer from the fact that Ms Mainwaring is employable that she would in fact have been employed had this litigation not taken place. Mr Sheridan complains that Ms Mainwaring does not explain what she does or how she supports herself. Mr Sheridan also points out that r 18 in its present form refers to pecuniary loss in doing any item of work. In other words, it would be necessary to look at each item of work and to see whether a pecuniary loss had been incurred in respect of it. In short, I have quite simply insufficient information to enable me to reach the conclusion that Ms Mainwaring has suffered pecuniary loss. She has gone part way to showing that she is in a situation where a pecuniary loss might arise, but has failed to produce evidence of what that pecuniary loss might be. In those circumstances I have no alternative but to allow the rate prescribed by the rule in respect of the work done by Mrs Mainwaring.’
I find myself in complete agreement with the master’s conclusion on this point."
There are inevitably distinctions to be drawn between the facts of Ms Mainwaring’s case and the facts of this case. One of the most important in my mind is the fact that Ms Mainwaring was seeking to recover more than £9.25 for a considerable amount of work over a longer period of time in preparing her case. On this appeal we are only concerned with a relatively short period when Mr Steinberg was preparing and proceeding with his application to set aside a default judgment. Indeed, it is to be noted that for the actual hearing he briefed Mr Gordon Bishop of counsel, who is an extremely experienced libel barrister, and this would have resulted in less work than Ms Mainwaring undertook.
In Khan v The Lord Chancellor Mr Justice Mitchell said that when assessing Mr Khan’s new bill I must be careful to allow only costs for "work which ordinarily would have been carried out by junior counsel rather than by an intelligent lay client". Mr Hutton suggested that if one looked at the witness statement put in by the Defendant in support of his application to set aside the judgment it did not raise any points which only junior counsel could have raised, but common sense points which an intelligent layman could have put forward. I am not sure that I go all the way with Mr Hutton on that point, but, in the event, it does not seem to me to matter, because, in the absence of proof on an item by item basis, that Mr Steinberg has suffered financial loss he cannot recover more than £9.25 per hour.
Mr Torrance said that his client’s position was different from that of a barrister practising in this country as to satisfying me about his actual loss. He said that an attorney in New York was part of a fused profession, and would be undertaking work, though not necessarily advocacy. However, as Mr Hutton submitted, I do not think it is sufficient simply to say that Mr Steinberg undertook X hours of work, and therefore his loss can be computed by multiplying those hours by an hourly rate. Mr Torrance suggested that the Claimants had in fact conceded that there should be payment at an hourly rate if it was decided that Mr Steinberg was entitled to recover costs on an hourly rate basis rather than £9.25.
Mr Hutton however drew my attention to the specific wording in the Points of Dispute on this point, which read as follows:
"The claimants invite the court firstly to determine that the defendant is a litigant in person and that the rate applicable to the bill should be no more than £9.25 per hour. In the alternative, in the event that the defendant provides written evidence of financial loss which the court finds acceptable, the claimants will submit the hourly rate is excessive and offer £275 per hour being the rate which is claimed for the claimants in their own schedule of costs for the application where work should properly have been carried out by a grade A fee earner, with reduced rates for elements of work which should have been delegated to lower (grade D) fee earners of £100 per hour.
For the avoidance of doubt the offers of £275 and £100 per hour are only effective if the court is satisfied that the defendant’s costs should paid on the basis of proven financial loss."
CONCLUSION
Despite the attractively presented arguments for the Defendant put forward by Mr Torrance, I have come to the clear conclusion, both on the facts and the existing state of the law, that this appeal must fail. It may be that when a root and branch updating of the law relating to litigants in person takes place, which many will hope will not be too much longer delayed, the situation of someone in Mr Steinberg’s position will indeed be equated with solicitors, and indeed other professionals who undoubtedly suffer loss as a result of being involved in litigation but cannot prove that loss in a way which entitles them to more than a paltry £9.25 per hour. That step however is one to be taken by the Rules Committee, or, perhaps in an appropriate case, by the Court of Appeal, but it is not an appropriate case, in my judgment, for me to seek to change the law in the way Mr Torrance would wish.
The disclosure, yesterday, that the Defendant was at all material times a "practising barrister" did not cause me to modify the above judgment other than to accept that the first sentence of paragraph 25 is factually inaccurate.