Papera Traders Co Ltd & Ors v Hyundai Merchant Marine Co Ltd. & Anor

On 23 July 1998 there was a fire on board Eurasian Dream. As a result of the fire all the cargo owned by the claimants was either a total loss or was damaged due to fire, smoke, soot and/or heat. Initial investigations by the fire experts led to the conclusion that the vessel had been unseaworthy. The vessel’s firefighting systems were ineffective and/or had been improperly maintained and/or the crew had been improperly trained in their operation. The defendants denied liability and put the claimants to strict proof. The trial took place between 3 and 20 December 2001, subject to a short adjournment. Judgment was handed down by Cresswell J in the claimants’ favour on 7 February 2002 with a costs award in favour of the claimants. The order was drawn up finally on 6 March 2002.

There was a dispute concerning the claimants’ claim to recover the fees of W K Webster & Co ("Websters") as part of the damages. They were the claims and recovery agents appointed by Allianz. Their offices are situated at Sidcup, Kent. The claim was for 5% of the recovery by way of principal and interest in respect of their costs insured by Allianz Insurance Ltd of South Africa ("Allianz"). In the alternative the claimants claimed the fees as costs. The issues to be determined were set out in the Order dated 6 March 2002, which included, in paragraph 7(1):

Mr Sharma was a claims handler with Websters. He provided three witness statements dated respectively 27 July 2001, 14 December 2001 and 10 May 2002. The issue was tried before Cresswell J on 23 and 24 September and 1 and 2 October 2002 ("the second trial"). At the hearing the claimants were represented by Mr Priday. The defendants were represented by Mr Rainey QC and Mr Charkham. Judgment was handed down on 18 October 2002. Cresswell J noted that the issues were novel and important on which there was no reported case in the Commercial Court, Admiralty Court or in London Arbitration.

Websters was described by the judge as:

It is apparent from the judgment that shortly after the fire Websters were approached by various of the cargo underwriters to represent their interests. They carried out salvage/GA work on behalf of these underwriters and, in accordance with their usual practice and market practice in relation to such work, they charged for it on a time and trouble basis.

Websters were also contacted by Allianz with a view to them assisting in protecting their recovery/legal interests and assisting with a surveyor. They rendered services to Allianz in the nature of salvage/GA work, focusing in particular on the salvage and sale of the cargo. Work for other insurers and underwriters was charged on a time and trouble basis. The account rendered to Allianz dated 14 December 1998 for the period July – December 1998 (pages 821-823) was charged on a time and trouble basis.

Allianz instructed Websters who in turn instructed Richards Butler. According to Websters’ faxed letter dated 2 September 1998, the fees of solicitors, if instructed, would be a disbursement. The recoverable costs of Richards Butler have been agreed.

Cresswell J held that the fees of Websters were to be recoverable as costs as defined in CPR 44.3(1)(a) to be assessed (if not otherwise agreed) on the standard basis and as further set out in the order.

On 18 February 2003 I made an order for the submission of skeleton arguments and evidence. The defendants identified six issues on which decisions were required, namely:

Prior to December 1998 Websters charged on a time and trouble (i.e. hourly rate) basis for salvage and general average work. After December 1998 Websters charged on a contingency fee basis. There is an issue, which I shall have to decide at the detailed assessment, whether some of the work done by Websters prior to December 1998 was included in the contingency fee arrangement and not covered by the account dated 14 December 1998.

Mr Bacon explained that the fees to be determined arose out of a contingency fee arrangement rather than an hourly time charging arrangement where no hourly rate was agreed. While Mr Sharma gave evidence in the second trial, there was no documentary evidence to support the rate claimed at £175 per hour. There was no evidence of any tariff of hourly rates or schedule of hourly rates for different fee earners. Although a draft did exist it was never produced to the court. As part of the time and trouble basis in December 1998, Websters had charged on an hourly rate multiplied on a time basis. The invoices provided no indication of the time on which the bill had been prepared. Cresswell J came to the conclusion that the going rates varied, dependent upon seniority, from £40 per hour to £175 per hour.

Paragraph 30(1) of his judgment reads as follows:

That passage was taken from page 3 of the agreed response to questions posed by the judge (page 637). I was informed that the document had been agreed before the four-day hearing and that the contents would have been known to Mr Sharma before the second trial. The defendants had added a caveat at the last page which did not affect the hourly rates (page 639). In making this point Mr Bacon said that in no way was he intending to impugn Mr Sharma as a witness. Mr Morgan referred later to two passages in exchanges between the judge and Mr Priday where the judge commented that Mr Sharma was not an independent expert in the international market practice for claims handlers (see pages 360, 372 and 383). Mr Bacon submitted that Mr Sharma was not an independent expert.

Mr Bacon took me through Mr Sharma’s second and third witness statements. In his first witness statement dated 27 July 2001 (which was not before me) Mr Sharma described himself as being employed by Webster & Co as an assistant manager in the General Average Casualty Management Department. He had been employed by Websters for three years. Previously he had worked for Dolphin Maritime Ltd and for the managers of the Steamship Mutual Underwriters Association (Bermuda) Ltd. He thus had ten years experience of handling marine claims.

Mr Bacon noted that nowhere in his second and third statements did Mr Sharma indicate the level or rate at which he was charging. This was in spite of the fact that the second statement was made "to explain in further detail the claim which is made for the fees of W K Webster & Co" and the third statement was made "in order to clarify certain issues which have arisen in relation to" the fees of his company.

Mr Bacon explained that work in the General Average Department was generally invoiced on a "time and trouble" basis and Allianz were charged on that basis. Fees in the Recovery Department were charged on a "no cure, no pay" basis. Once Allianz decided to pay out to their assured on the basis of a constructive loss, their claim became a matter of recovery. Accordingly the basis of charging was changed from "time and trouble" to "no cure, no pay". Mr Sharma continued to handle the claim although it passed to the General Average Department. The fee for recovery above £6,000 was reduced to 5% in view of the size of the claim and in order to cement a relationship with Allianz.

Mr Bacon submitted that no benefit could be derived from the invoice referred to by Mr Sharma in paragraph 12 of the second statement. The invoice dated 14 December 1998 was on a time and trouble basis (i.e. hourly rates) and appeared at pages 821-823. The bill was for a rounded figure of £32,400 unsupported by an computation of hourly rates and time expended. It was accompanied by a three-page narrative which concluded with the words "general care and attention throughout". I interpose here to mention that Mr Morgan relied upon the narrative.

Mr Bacon explained that there were two bases of charging:

Mr Bacon referred to the letter dated 14 February 1998 (pages 580-581) which identified the 5% basis of charging. He explained that it would be necessary for me to resolve at some stage whether the 5% fee agreement started for work after December 1998 by reference to the invoice dated 14 December 1998. That was the last time and trouble invoice. He would submit that it was only after that invoice that the 5% applied.

Mr Bacon referred to the concerns held by the defendants about the invoice dated 14 December 1998. This resulted in paragraph 17 of Mr Hoyes’ third statement dated 26 April 2002 and in letters written on 29 November 2001 and 23 January 2002 (see pages 761, 842/3 and 863/4). Mr Hoyes was the solicitor and associate employed by the defendants’ solicitors. There was a clear request for clarification by way of breakdown by reference to hourly rates and how the fees were calculated. I note from the letter that it identifies six invoices and also refers to receiving for the first time two weeks previously the further invoice dated 14 December 1998. The second letter clearly requested again how the invoice was broken down by reference to hourly rates, etc. Mr Bacon explained that on 6 February 2002 Richards Butler provided a response in the following terms:

For convenience I set out the reply to the point of dispute under the heading ‘Estimated time’ (page 51 of the Websters’ bill):

Mr Bacon explained that it was not clear whether or not the 5% figure was included in these costs. He took me through e various passages in the evidence of Mr Sharma beginning with page 149.

Mr Bacon submitted that Websters have not rendered time and trouble invoices to Allianz for recovery work, although they had done so for the sale of goods and salvage services. Mr Joannou was the equity partner who supervised case workers and may have been involved in this case. Theresa George was the general manager who wrote letters when Mr Sharma was absent on holiday. She reported to Mr Joannou. Cases were allocated by them to claims handlers dependent upon experience and capacity. Mr Sharma was the case handler. He was uncertain who supervised him. Any supervision was minimal. Mr Bacon noted that only one fee earner had been claimed on page 10 of the bill at £175 apart from the cost draftsman. Mr Sharma was not the most senior person in Websters. He was third in rank and one of many claims handlers subject to some supervision. That was relevant to any comparison with solicitors. Mr Bacon noted that Mr Sharma had been unable to provide any table of rates and that any enquirer would merely be told that "our hourly rate for that particular case handler is whatever it is and that would be it, really …" (page 176). Mr Sharma accepted that he should have responded to Allianz’s letter dated 30 July […..] requesting a breakdown of Websters’ fees. However, Allianz had not raised the issue for a further four years.

Mr Sharma would have charged £175 in 1998 and the same in October 2002 (when he was giving evidence). He also said he would have given that rate to Allianz. He would not have provided a mark-up on that figure on a straight time and trouble basis (page 178). A discount might have been given if the claim was very small or did not merit a full fee. Mr Bacon put down a marker on the reference to no mark-up because a claim for such a mark-up at 100% appeared on page 18 of the bill. He submitted that this further uplift on £175 an hour was to bring Websters into line with the 5% fee that was charged. That was contrary to Mr Sharma’s evidence. There was more likely to be a discount than an uplift. Furthermore, at page 189 Mr Sharma said that it would be very unlikely that there would be a mark-up for work charged on a time and trouble basis on his £175 per hour.

Mr Sharma conceded that computing the fee by reference to an hourly rate was a bit too precise. There would not have been a mathematical calculation. There would have been an evaluation based upon a reading of the files. When asked whether he drew up a narrative bill, he said, at page 181:

Apart from the current sixth or seventh draft on charging, Mr Sharma accepted that there was no guidance on how time and trouble fees should be assessed. He confirmed he did not record time, although some people did so in different departments. There was no point in doing so if work was done on a contingency basis.

On fixing the hourly rate by his bosses, Mr Sharma said at page 187:

Mr Bacon made a further submission to the effect that the amount to be allowed in this case per hour should be substantially less than a solicitor undertaking this work. He referred to the passage at paragraph 30(1) of the judgment of Cresswell J which is set out in paragraph 12 above. Mr Bacon stressed the judge’s view that the hourly rates would be less than a City solicitor’s fees for doing the same work.

Mr Bacon relied upon the judgment of Potter J (as he then was) in Piper Double Glazing Ltd v D C Contracts [1991] reported at Costs Law Reports Core Volume page 256. The case concerned the costs of claims consultants in arbitration proceedings. The matter was considered under the former rules and could be relied upon under CPR. Potter J held that Rules of the Supreme Court did enable the taxing master to tax the fees in principle. The first two paragraphs on page 266 upon which he relied made reference to the possibility of work being carried out by a fee earner who might in effect have been undertaking two jobs, thereby saving time and money for the client. Other work might be carried out by a fee earner who lacked the expertise of a conventionally qualified fee earner so that the fee would be lower. Mr Bacon relied in particular upon the final paragraph on page 266 and the top paragraph on page 267 which reads as follows:

Mr Bacon submitted that Potter J was saying that Order 62, by virtue of the rules relating to the recoverability of costs by reference to a litigant in person, effectively recognised the de facto position that solicitors’ charges were the very most that fee earners could recover. At this stage I queried whether Potter J was really making that point because he used the words "it may be thought appropriate" rather than making the clear statement that such costs should not or must not exceed those of solicitors. Mr Bacon submitted that the previous and present rules provided that de facto protection. Under RSC Order 62 Rule 18 and CPR 48.6 there was a limit of two-thirds of the solicitor’s charges, provided the litigant in person could establish pecuniary loss. There was thus an unspoken assumption that the solicitors’ fees were the maximum sum which could be recovered under this de facto protection. Potter J was by analogy linking the recovery of other costs to the ceiling imposed on the costs of litigants in person. Mr Bacon conceded that Potter J did not make a finding. However, he understood the judgment to be interpreted in the manner set out in his submissions since the court had been mindful of the cap. He invited me to adopt the same approach.

For convenience I set out the two relevant rules, which read as follows:

Mr Bacon submitted that the only persons entitled to recover costs under the old Rule and CPR were solicitors, experts and litigants in person, and disbursements of professional witnesses, counsel and medical witnesses. Potter J and this court were looking at a new breed of costs. Websters were not litigants in person. They were an agency employed by the claimants to bring recovery in respect of fire on the ship. They were entitled to recover fees, provided they were not more than the costs solicitors would receive.

I referred Mr Bacon to RSC Order 62, Rule 17 and Appendix 2 Part 1 which set out what are usually called the seven pillars of wisdom. I put it to him that there was no ceiling on these costs. Mr Bacon speculated why non-solicitors might be entitled to recover more than solicitors. He submitted that claims handlers like Mr Sharma had no professional qualifications and were not subject to professional rules and controls and had no accreditation. They should not be entitled to charge the same fee as a solicitor entitled to appear in this court. Potter J appeared to be bracketing such people as claims managers as litigants in person. Accordingly, it was necessary to identify a fee referable to a fee earner in a solicitor’s firm and apply the one-third discount. There must be a separation or diminution between the fees of solicitors and the fees of unqualified individuals. This submission was reflective of what had been said by Potter J in the Piper judgment and by Cresswell J in the present case at paragraph 30(1).

Mr Bacon then developed his geographical location submission. The nearest courts to Websters’ offices in Sidcup were Bromley and Croydon. The rates allowable for a paralegal in 1998 and 1999 was about £80 per hour. Two-thirds of that would be £53, which fell within the bracket of £40 - £175 stated by Cresswell J. If the hourly rate for a solicitor fee earner has not been agreed with the client, recourse would be had to the appropriate rate applicable to the solicitor’s office by reference to the court guidelines. It was inappropriate for Websters to apply City of London rates.

It was also necessary to identify the comparable fee earner in the solicitor’s office, namely, a paralegal in the Croydon area. That could be ascertained from the amount of work carried out by Richards Butler’s fee earners as set out, for example in the documents schedule at page 11 for work undertaken in August 2000. It was undertaken by an assistant solicitor with minimal involvement by the partners. Much work was undertaken by the trainee solicitors. Mr Bacon referred to the summary at the end of the schedule of documents, which is also set out on pages 38 and 39 of the bill. For convenience I set it out in full:

Mr Bacon submitted that if the appropriate fee earner was an assistant solicitor (grade 3) in the Croydon area the inter partes rate in 2002 would be £130 per hour. If that rate was discounted to 1998/1999 the average rate would be £120. The two-thirds figure would be about £80 maximum. These rates would be the maximum amount allowable to reflect the fact that Websters were not solicitors.

Mr Bacon then referred to the rates claimed by the assistant solicitors at Richards Butler. To put this submission into context I now set out the rates claimed by all the fee earners of Richards Butler on page 4 of their bill.

Mr Morgan set out his two initial submissions:

Mr Morgan referred to the rates claimed by Richards Butler’s assistant solicitors and pointed out that £175 was about the mid-point of the work carried out by JPWG which covered a similar period to that of Mr Sharma. If that approach was too broad, Mr Sharma’s rate should be based on the assistant solicitor’s rates as a comparator.

Mr Morgan conceded that if Mr Sharma was a solicitor whose bill was being assessed he would be in considerable difficulty in substantiating his bill because records had not been kept. There were other professionals such as doctors, accountants and others whose charging methods were determined by the market and not by any other internal proof requirement. It was unfair to judge the fees of these people by the internal professional standards of the legal profession. The assumption for solicitors’ charging rates were different from the assumptions of others. There was a scientific basis before mark-up was added. Where that was applied to a profession where that did not happen, the inference was that something dodgy was going on. Solicitors exercised judgment when adding a mark-up based on the ‘seven pillars of wisdom’. It was inappropriate to apply the standards of one profession to another. The agreed statement of facts had produced a market range of £40 to £175. It has been accepted by Cresswell J because it had been agreed. The Expense of Time was a useful tool. It was not the only way to determine matters. The difficulty lay in determining how to apply it to a business where a varying but significant proportion of the work was carried out on a contingency fee basis, i.e. one not based on rates with a percentage mark-up as in a CFA.

Mr Morgan submitted that the passages to which Mr Bacon had referred in which the judge commented on the lack of independent evidence was not a criticism of Mr Sharma. What the judge was saying was that he could not accept biased evidence where expert evidence was due. The comment related to Mr Sharma giving evidence where he had a financial interest in the outcome. His evidence concerned international market practices.

Mr Bacon had referred me to the 14 December 1998 bill and noted that there was insufficient information from which to determine what hourly rate had been applied. Mr Morgan invited me to take judicial notice that many solicitors’ bills contained insufficient information as to what hourly rates had been applied. The introduction and enforcement of Rule 15 was a recent development.

When considering the rate, it was necessary to consider the nature of the man and the nature of the work. The type of work undertaken by Mr Sharma was set out in the time and trouble bill dated 14 December 1998. It was work which was in part the subject of a detailed assessment. It reflected that Mr Sharma was highly experienced in some very tricky areas of law and practice. To equate his experience to a paralegal in the City of London or in Croydon was unreasonable. Mr Sharma had set out the work involved in paragraphs 12–14 of this third witness statement (pages 563-566).

It was necessary to understand work descriptions outside the legal profession. For example, a partner undertook strategic direction and management of the company. A manager had the day-to-day operational management of a department. Websters had some 200 employees. A case handler was in effect a fee earner. Mr Sharma’s workload was set out in the transcript of his evidence at page 154. I summarise it as follows:

In summary, Mr Morgan relied upon the following in support of the claim that £175 was reasonable:

Mr Morgan disagreed fundamentally with Mr Bacon’s submission that it was appropriate to apply guideline rates for solicitors and discount them by one-third because claims agents were effectively litigants in person, and then discount further for a solicitor’s firm in Croydon or Bromley. Mr Morgan referred to the statement of the second preliminary issue at page 259 in the Piper judgment which reads as follows:

Mr Morgan pointed out that Richards Butler became involved after Websters had been instructed. He posed two questions, namely:

Mr Morgan noted that Mr Bacon was submitting that Potter J was equating anyone other than a solicitor as a litigant in person. Mr Morgan did not agree. The reference to Order 62, Rule 18 was probably of some assistance (and must have been based on the submissions before the judge) in reaching a conclusion that it should not be more expensive to instruct a claims consultant than a solicitor. Potter J did not refer to the deduction of one-third in that connection at all. He did not deal with a submission that claims consultants should be allowed at solicitors’ rates less one-third. That was clear from the paragraph on page 267 in the sentence ‘by analogy … costs recoverable’. Any such reduction would be discriminatory and unreasonable. The one-third reduction for litigants in person was aimed at the reduction of the profit costs in a solicitor’s bill. A litigant in person should not profit from the litigation. It would be surprising if others involved in litigation should not make a profit. They were involved on a fee-paying basis with a view to making a profit.

Mr Morgan also disagreed with Mr Bacon’s geographical location argument on structure grounds. Solicitors acted for clients both locally and further away. City solicitors had offices in the City especially for clients based there. Firms like Websters had no need to be located in the City but being located outside the City did not mean they were undertaking the equivalent work of a suburban solicitor. Websters, as one of the top firms undertaking this work, would have to pay appropriate salaries for high calibre staff.

Mr Morgan also took issue with the rates relied upon by Mr Bacon. They were expense rates and therefore with the mark-up of 50% would be £120/£140. For Grade 2 (4-8 years) they would be £150. Grade A (over 8 years) would be £170. The current 2003 figures were as follows:

Prior to Richards Butler’s participation Mr Sharma had negotiated security (with a partner) which was the alternative to taking proceedings against the charterers. It also involved dealing with jurisdiction. Bills of lading provided for jurisdiction in Korea or Japan. The port of destination was Mozambique. Mr Sharma achieved a settlement where English jurisdiction was accepted. It determined the court and the set of rules to be applied. That affected the amount of limitation sums. That was relevant to the type of vessel, the tonnage involved and package limitations, i.e. cargo and its size and nature. The choice of forum was important for package limitation. The security jurisdiction agreement made by Mr Sharma was, in the view of the claimants, very advantageous. Mr Sharma had negotiated the package with a senior partner with Hill Dickinson Taylor. That contrasted with the paralegal status argued for by Mr Bacon.

Where there was a casualty all the general average and salvage would be conducted in the Casualty Department. If work was done by the Casualty Department it would be done on a time and trouble basis. If there was no casualty but a loss the work was done by the Recovery Department. A line had to be drawn between salvage and recovery work. Here Allianz agreed to a no cure, no pay arrangement. It was necessary for me to assess a notional charge on a basis on which it was not charged. There was a further submission which he would develop later on the percentage mark-up of 100%. This was a notional contract by the Casualty Management Department which Allianz had paid from the beginning on a fixed hourly rate without a success fee mark-up. It was necessary to exclude that it was contingent at this stage but an uplift should be brought into account at a later stage. Websters would be paid on an hourly basis (i.e. basic costs plus mark-up) to which a further mark-up should be added for the contingency fee element. Mr Bacon interposed to refer to paragraph 12 of Mr Sharma’s second statement where he accepted the fee should be dealt with on a time and trouble basis on a notional rate agreed from the beginning.

In reply, Mr Bacon contrasted Mr Morgan’s submissions to the effect that the claimants were prepared to apply the comparison of the grades of fee earner used by solicitors but declined to accept the geographical basis of charging used by solicitors and the courts. The court was asked to determine an appropriate rate for Mr Sharma. Mr Sharma’s claim to £175 an hour had been unsupported by any evidence. In the absence of such evidence the court should have regard to other fee structures for charging, such as those in solicitors’ offices or by other professionals. Mr Bacon took issue with Mr Morgan’s submission on the test to be applied, namely that if it was not cheaper for the work to have been carried out by Richards Butler then Mr Sharma’s rates should be allowed. If it was cheaper to have used Mr Sharma, no difficulty arose. That submission ran counter to the express view of Cresswell J, who expected that the amounts that were going to be allowed would be lower than the amounts that would be charged by the solicitors. Mr Bacon again relied on paragraph 30(1) where Cresswell J had said:

Mr Morgan had submitted that the test was not between the cost of work carried out by Mr Sharma and the cost of work carried out by Richards Butler. It was necessary for me to determine a rate for Mr Sharma in the absence of any documentary evidence of expense rates of Websters. Cresswell J held that the rates varied from £40 to £175 an hour and had made the point that, although the hours would vary, they would certainly be less than City of London solicitors’ fees for doing the same work. The only evidence was by Mr Sharma that he would have charged £175 on a time and trouble basis. He appeared to have picked the highest figure from the bracket of agreed rates. Mr Morgan at this stage noted that the point had not been put to Mr Sharma and it was inappropriate to draw an adverse inference.

Mr Bacon submitted that experts usually produced a fee sheet indicating an hourly rate and the number of hours. The 1990 Code required solicitors to explain the basis of their charging.

Mr Bacon responded to Mr Morgan’s point on the nature of the work carried out by Mr Sharma. Hourly rates only reflected in part the work undertaken. The other part reflected the overheads apportioned to that worker. The nature of the work was largely irrelevant to that issue. Salaries, the location of the firm and rents, lighting and technology were largely not dependent upon the nature of the work undertaken. A solicitor in Birmingham might undertake the same work as a City solicitor but his charging rate would not be the same. In the absence of any documentary evidence, consideration of the work done by Richards Butler revealed that the majority of work had been undertaken by assistant solicitors and trainee solicitors rather than partners. In the schedule of duplication of work, there was much work undertaken by trainees. If that was correct, Mr Bacon queried why Mr Sharma should be paid at £175 for such work. Richards Butler’s trainee solicitors were charging £130 per hour. On the location submission Mr Sharma’s rate for such work should reflect the Croydon rate. The court could not be assisted by the number of cases he handled.

Mr Bacon understood Mr Morgan to accept that Mr Sharma should not recover £175 per hour for the period during which Richards Butler’s assistant solicitors charged less, namely up to 31 October 2002. Cresswell J had clearly expressed the view that Mr Sharma should not recover more than City solicitors. A reduction could be achieved by the one-third reduction under the Piper judgment or where Mr Sharma’s rate exceeded the City rate. Mr Bacon reminded me that where doubt existed it must be exercised in favour of the paying party.

Mr Bacon submitted there was no evidence before Cresswell J that Websters were one of the top firms in their profession. He submitted that the reason why City solicitors’ rates were higher than, for example, Croydon or Manchester, was not because they employed solicitors at the top of their profession but because they were located in London where the rates and running costs were higher. Solicitors at the top of their profession were employed in other centres.

Mr Bacon submitted that claim loss adjusters located outside London was because it was cheaper to do so. That precluded them from claiming rates as if they were located in the City of London. Although there was not much recourse to them, Mr Sharma was subject to the supervision of two other members of the firm. Some of the work on security was the subject of the costs of Websters which were being assessed. It was a relatively straightforward matter. There was limited correspondence and exchanges over the telephone without protected negotiations. Some of Mr Sharma’s work was at a level undertaken by trainee solicitors. His work was basically getting information and sorting it out.

Mr Morgan responded on three points:

Mr Bacon reiterated that Mr Sharma did not keep any records at all. His evidence on the time and trouble bill dated 14 December 1998 was to flick through the files after the event and arrive at a guestimate of the time spent. It had been retrospectively constructed by estimation with the benefit of a costs draftsman’s input. He submitted that the Frascati judgment (2 December 1994) was superseded by Johnson v Reed Corrugated Cases Ltd [1992] 1 All ER 169 at page 187 and by Brush v Bower Cotton & Bower CLR Core Vol 223 at page 234. That reads as follows:

Mr Bacon explained that he was approaching his submission by reference to the practice of solicitors especially the modern practice of computer time recording. He accepts that Websters were not solicitors.

Mr Morgan accepted that in relation to most of the costs of Websters they were being assessed on the standard basis and the Claimants must establish their claim. Adverse inferences should not be drawn from the fact that time had not been recorded. Solicitors knew how important it was to record time in order to support claims for costs. Other professions such as Websters were not subject to similar practices laid down by professional bodies for the conduct of their business. At page 158E Mr Sharma explained in relation to time and trouble bills that it was necessary to take into account the commercial reality of raising fee notes. He had raised hundreds of them and had maybe two queries. That commercial practice was accepted by their clients. It was necessary to consider the papers one would expect to find in a claims recovery file rather than on a solicitors file.

Mr Bacon responded that there were no specific rules for experts, for example accountants. However they would be expected by the court to produce detailed information which was usually derived from contemporaneous computer records. Where sufficient information was not provided, doubt would arise. In the absence here of records there must be doubt about the time estimation. I pointed out to Mr Bacon that the Bar had failed to provide backup information fees but had been required to do so by Practice Direction No.2 of 1992 (para 1.12). I also pointed out that an expert would know that if the party retaining him was successful he would have to justify his fees. That is not what happened in this case. Most cases settle and very few involve solicitors. Mr Bacon reminded me that the Claimants sought these costs as damages and they proceeded with the claim in the absence of supporting documents. I referred Mr Bacon to the judgment in Tate & Lyle v GLC [1981] 3 All ER 716 where there had been a claim for managerial and supervisory expenses. I noted that the claim was made by analogy with the admiralty practice. However, as Mr Bacon surmised, there were insufficient records to support that particular claim.

Mr Bacon noted that Websters (effectively as clients) instructed Richards Butler whose bill was a disbursement in Websters bill. There was parity in comparison of a client instructing a solicitor. There was much client work being undertaken by Websters. It was work covered by the judgment of Bingham J (as he then was) in Richards & Wallington (Plant Hire) Ltd v Monk & Co Ltd Costs Law Reports Core Vol 79. It was fact finding material and the sifting of and production of information. It was important to distinguish that it was Websters not Allianz who introduced Richards Butler. It was also necessary to consider the work carried out by Websters. That was set out in paragraph 25 of the judgment. Mr Bacon then commented on examples which he set out in paragraph 22 of his skeleton argument, namely:

Mr Bacon submitted that the client should undertake the necessary work and pass on the result of that work to the solicitors to then analyse. The work referred to was background research and not recoverable by solicitors.

It was agreed between counsel that it was more appropriate to make compendious submissions at this stage and for detailed decisions to be taken at the detailed assessment.

Mr Bacon referred to the judgment of Stanley Burnton J. in Admiral Management Services Ltd v Para-Protect Europe Ltd & Ors [2002] 1 WLR 2722 which was the most recent case on the Wallington Plant Hire judgment. He referred to the headnote and the paragraph headed "Held" which reads as follows:

Mr Bacon submitted that paragraphs 40, 41 and 43 under the heading "Were the Claimants’ staff experts and did their work qualify as expert work?" reiterated what Bingham J said in the Richards & Wallington judgment. The work of digging out and presenting background factual information for the claim (namely work customarily done by the client) for solicitors to work on must be disallowed as being irrecoverable. I asked Mr Bacon whether under this judgment the expertise of the employees was still not recoverable. He referred to paragraph 44 of the judgment in which the Judge left over the issue. It reads as follows:

Mr Bacon submitted that the Judge there was providing the building blocks for the subsequent analysis of the work undertaken. He submitted that unless one was an expert at doing expert work instructed by solicitors, the work was irrecoverable. The client did not recover doing such work which was to be handed over to solicitors. That was what Websters were doing. By reference to paragraph 41 of the judgment, Mr Bacon submitted that it was necessary to ascertain whether it was expert work undertaken in the Nossens case or was it fact finding work for which a costs order was refused in Richards & Wallington. Mr Bacon conceded that where work could have been carried out by Richards Butler, it was likely to be recoverable. But work, for example, of sifting through chassis numbers and bills of lading was clients work. None of Websters time had been claimed in Richards Butler’s bill for the first trial when that would have been possible.

Mr Bacon also relied upon the reference in Richards Butler’s bill for the costs of the first trial where they described themselves on page 3 as the insurer’s "agent". That description was repeated in paragraph 16 of Mr Sharma’s third witness statement (page 566). He also relied upon paragraph 13 of Mr Sharma’s third witness statement (page 566) which reads as follows:

Mr Bacon submitted that the cost of solicitors corresponding with insurers was recoverable. The costs of insurers conducting the correspondence with solicitors was not recoverable.

Mr Morgan submitted that it would be extraordinary if no costs were recoverable under Cresswell J’s order. There had been a hearing lasting some 3½ days during which he heard from Mr Sharma in great detail. He heard what Mr Sharma had been doing and the role of marine recovery agents and had had the benefit of an agreed statement about recovery agents. If there was doubt as to recoverability, he would not have passed the issue to a Costs Judge. That would be disproportionate under CPR. The Claimants therefore proceeded on the basis that there would be recovery. Mr Morgan accepted that the claim was novel. It had not been contemplated when the work was done. It was easier to claim as damages rather than costs. The Judge had taken a contrary view and ordered the costs to be the subject of a detailed assessment.

Mr Morgan submitted that the cases of Nossens and Richards & Wallington had been overtaken by the Civil Procedure Rules. He relied upon the judgment of Judge Anthony Thornton in Amec Process & Energy Ltd v Stork Engineers & Contracts(No.3) [2002] All ER (D) 48 (April). The case concerned the claim by a litigant for time expended by his own staff. He relied upon paragraphs 112 and 113 under the heading "The cost of time spent in preparation by Amec’s own personnel":

The finding that CPR had overtaken previous cases was in accordance with the correct approach to be adopted under CPR. The finding that costs of necessary work should be allowed if it had been incurred at less expense than would have been involved if done by solicitors was of such common sense that it had great force. Mr Morgan noted that Mr Bacon had submitted that the judgment carried less weight that the Admiral judgment which was a decision on appeal. He submitted that such a proposition had no basis in law. Both were High Court decisions of equal status. The contrary was not argued in the Admiral case. Mr Morgan relied upon paragraphs 12-14 and 27 in the Admiral judgment which read as follows:

In Nossen’s case, the respondent, United Kingdom Atomic Energy Authority, had had experiments conducted by its expert. The judgment in Amec said that CPR had changed everything. That was not argued in the Admiral case. At this stage I mentioned the judgment by Lord Woolf as Master of the Rolls in which he held that CPR cases were of little assistance. That was a reference to the Biguzzi judgment on which Mr Morgan subsequently relied. Mr Bacon accepted at this stage that in procedural issues under CPR, for example striking out, it was desirable to have less regard to pre CPR cases. He also referred to the Reid Minty judgment by the Court of Appeal which concerned indemnity costs.

Mr Morgan noted that Mr Bacon had relied upon the old fashioned categories of recoverable work, for example solicitors, counsel, experts and litigants in person (in another context). He submitted that these categories were too narrow for modern litigation because they ignored the trend which had taken place in the real world towards diversity and specialism. That must be taken into account in order to avoid having to retain the former rigid rules which were "swept away" by judgments such as Brush v Bower Cotton & Bower. An example of this development was reflected in the Factortame (No.8) judgment which was argued before Cresswell J. He would therefore have had a clear expectation of what sort of work would be recoverable. In Factortame Grant Thornton were engaged by the clients and not by the solicitors Thomas Cooper. Before Master Wright it was accepted that there was a risk that the agreement with Grant Thornton might be found to be champertous. If that was so would it taint Thomas Cooper’s retainer. A critical point was that the agreement was directly between Grant Thornton and Thomas Cooper. The solicitors had written a letter confirming the instructions. The nature of the services rendered by Grant Thornton were found in the judgment at page 398 paragraph 28 which was an extract from Thomas Cooper’s bill. It reads as follows:

As counsel in the case Mr Morgan explained that the collection of the documentary evidence had been undertaken by Grant Thornton rather than Thomas Cooper. There was a group of Spanish fishermen forming part of the English fishing fleet for the purpose of the Merchant Shipping Act. Many were based physically in Spain. Grant Thornton took a van down, which was driven around the various offices in Northern Spain, to collect documents and bring them back. That was a service of benefit to the case generally and provided support to the solicitors. The documents included books of account which were also relevant to the solicitors for the damages claimed. That work was litigation support which does not fall conveniently into any of the categories referred to by Mr Bacon. The work led to a saving of cost. The judgment referred to the saving of costs at paragraph 86. That reads as follows:

The accountants performed many tasks including management of large amounts of material rather than pure accountancy work. There were no concerns that their work was actually recoverable subject to the champerty point.

Mr Morgan submitted that the Amec case, which allowed the client to recover costs of time spent by its own staff on "litigation support" was reflecting the modern trend of what was a reasonable recovery of costs. Judge Thornton made the point in his Amec judgment that things have changed under CPR. (See paragraph 74 above.). Mr Morgan submitted that it was necessary to take into account the overriding objective. He relied upon Rule 1.1(2)(b) and (c) which read as follows:

Mr Morgan submitted that if there is a category of costs which saves expense and deals with the case in a way which is proportionate according to the overriding objective such a category should be encouraged. Interpreting "costs" included imparting to costs the meaning attributed to it by Judge Thornton. That included taking into account the overriding objective. In Amec Judge Thornton, sitting as a Judge in High Court, held that the old pre CPR cases did not apply. It was the only authority on the impact of CPR on the interpretation of "costs". The decision should be followed. The judgments of High Court Judges effectively bound Masters in the absence of exceptional reasons to the contrary. The only equivalent judgment was Admiral where the point had not been argued.

Mr Morgan also relied upon the Court of Appeal judgment in Biguzzi v Rank Leisure Plc [1999] 1 WLR 1926 which concerned a case on striking out.The relevance of old cases was dealt with on page 1930 in the judgment of Lord Woolf under the heading "The Decision of the Judge". The relevant part reads as follows:

To support this submission Mr Morgan also relied upon the judgment of Hart J in Nat West Lombard Factors Ltd v Arbis, The Times Law Reports, 29 October 1999. It concerned the application of Ladd v Marshall Rules under CPR. In the second column of the report reads:

Mr Morgan noted that Mr Bacon’s view was that one could ignore all that because the Biguzzi judgment concerned procedure whereas the issue here was costs. That submission ignored the near binding judgment of Amec. There were various arguments in earlier decisions as to whether provisions about costs were procedural or not. They concerned appeal rights on the rules which applied in the 19^th century. The Civil Procedure Rules were designed to provide for a new regime not just for procedure but to whatever was within the ambit of Civil Procedure Rules. If a matter was covered by CPR it was subject to the new order. Wing mirrors were not needed to interpret it. Accordingly Amec should be followed. In Nossens and Richards & Wallington in effect the client was seeking to charge for work done by his staff in preparing the factual side of the case. Websters were not the same as the client.

Mr Morgan explained the factual basis for his submissions. Allianz the insurer client had one relatively inexperienced employee dealing with the matter in the South African office. Mr Bacon’s point had been that if the work had not been done by Websters, the insurer would have had to do it. Mr Morgan explained that if the insurer had not done the work Richards Butler would have done so. No one could have complained in principle. The work would have involved Richards Butler assembling documents or assembling the information and going through the disclosure. On Mr Bacon’s submission, where there was a small client who did not have the resources or a disorganised client it was possible to instruct a solicitor and the work was recoverable. By contrast where there was an efficient client who did the work at lower cost than a solicitor it would not be recoverable.

Websters were not the client and therefore not within the strict test of Richards & Wallington and Re Nossens. With regard to Amec Mr Morgan submitted that Websters were neither the client nor the solicitors. They were a professional skilled marine recovery agent. The test was not: is this solicitor’s work; or is it clients work but whether the instruction of these recovery agents in this case reduced the legal work required. If so it was recoverable in principle subject to reasonableness and proportionality. Websters work led to a reduction in the legal assistance required.

Mr Morgan considered the item identified by the Defendants as not being recoverable which were set out in paragraph 22 of the Defendants’ skeleton argument. Mr Morgan submitted that the first three all related to evidence. If done by a solicitor they would be recoverable in principle. He preferred to leave detailed submissions of these categories to the detailed assessment. He also submitted that paragraph 22.9 illustrated the utility of Websters. The issue arose during trial. The location and nature (whether diesel or petrol) of vehicles was relevant to the cause of the fire, for example the refuelling of a car. That work was recoverable in principle. It might not be recoverable through the application of some artificial rule which bore no relation to modern practice. In paragraph 25 of his judgment Cresswell J set out work said to have been done by Websters. Mr Morgan submitted that the list of work undertaken reflected the application of considerable professional skill, for example on package limitation, security and title documents.

Mr Bacon responded to Mr Mogan’s point that Richards & Wallington and Nossens should be ignored. The bill covered pre CPR and post CPR work. On Mr Morgan’s analogy there might be two different tests. He disagreed with Mr Morgan’s submission that the court should disregard the practice which had been adopted in regard to the recoverability of costs of the sort being dealt with here and in Richards & Wallington. It was important to distinguish issues of practice and procedure under the new rules and the development of the common law in the assessment of the reasonableness of the recovery of costs. Practitioners relied upon pre CPR cases such as Brush and Frascati on which Mr Morgan was also relying. Both parties here were entitled to rely upon pre CPR cases because they went to the development of the common law on recoverability and not post CPR procedure and practice. Mr Bacon relied upon paragraph 6 of the Amec judgment in connection with Mr Morgan’s submission that the point had not been argued in the Admiral case. It reads as follows:

Mr Bacon submitted that Judge Thornton appeared to be approaching the issue on the basis that neither party was contending that different approaches should apply. Mr Morgan had relied upon paragraph 11 in that judgment which reads as follows:

Mr Bacon also referred to the recent Court of Appeal cases on the recoverability of additional liabilities and insurance premiums. In preparation for those hearings it was necessary to conduct extensive research into previous cases. That research was relevant to the submissions. He invited me to reject the submission that Amec was the only leading case in relation to the application of the Richards & Wallington principles. Richards & Wallington was a case heard on appeal and carried more weight than Amec. Richards & Wallington was supported by the Admiral judgment.

Mr Bacon reiterated the point made in paragraph 2 of his skeleton argument in reply, namely:

Work was only recoverable if it was capable of being recovered if done by the solicitors and was done more cheaply. It could be performed by a third party agency. In Amec v Stork the work carried out was described in paragraph 112 (see paragraph 74 above). It referred to Amec staff:

It had always been the case that the preparation of visual aids, etc, were recoverable in principle. The work described in paragraph 112 did not fall into the category of work with which Richards & Wallington and Nossens were concerned. That was a better reason for the Judge allowing the work than to distinguish the other cases (Nossens and Richards & Wallington).

In Factortame the work of Grant Thornton was again different to the work carried out by Websters. The work carried out by Grant Thornton was described in the headnote to the judgment at page 381 which reads as follows:

Mr Bacon submitted that the work was not the same as the work undertaken by Richards & Wallington in Nossens or by Websters. Websters had not made savings to the costs that would otherwise have been incurred. Websters had conceded some 86-90 hours as having been duplicated with Richards Butler at £175 per hour. That ran contrary to Mr Morgan’s submission that costs had been saved. On the contrary costs had been increased through this duplication. He developed this point by reference to the entry for 17 July 2001 in the Defendants Points of Dispute at page 46 in the detailed assessment bundle which reads as follows:

Mr Bacon noted that Mr Morgan had made the point that Websters had double checked documents and they were skilled intermediaries with the client. Richards Butler’s bill had been settled. The Defendants had paid for them to correspond with Websters. The Defendants should not have to pay for Websters (or their client) corresponding with Richards Butler. That was not consistent with or conducive to saving costs. Allianz were sophisticated insurers who could understand advice given by Richards Butler without the need for an intermediary to explain it to them. Websters were not the client but were intermediaries between solicitors and client for the client’s benefit. They were described in Richards Butler’s bill on page 3 as agents. In Mr Sharma’s third witness statement at paragraph 16 (page 566) they were described as being agents. Websters work was largely at paralegal status charged at £175 per hour which was more than Richard Butler’s assistant solicitor’s rate for the initial period.

Mr Bacon submitted that it was not appropriate at this stage to consider in any detail the work actually carried out by Websters. However it was important to understand what they were really doing. He offered as one example an entry which reads:

Mr Bacon submitted that I may wish to consider resolving the issue on the basis that Websters were saving money (which they did not appear to be doing) or on the basis that the category of work undertaken by them fell within Richards & Wallington or Nossens Patent.

Mr Morgan responded to Mr Bacon’s submissions on paragraph 6 of the Amec judgment where he had referred to the fact that neither party had contended for a different approach on the facts of that case to costs incurred before and costs incurred after CPR. He was not submitting that neither side had contended that things had been changed by CPR. The judgment showed that the Judge found that they had. All that was being said was that there should not be a two part bill so that there could be a different treatment for pre CPR to post CPR. There was not a laxity on the part of the Applicants. That was the correct reading of the law. Firstly Biguzzi said so in the passage already referred to (see paragraph 82) above. It said the Judge at first instance must apply the CPR regime but must bear in mind when considering the conduct of parties that they were doing so under a different regime and tests to be applied under CPR. Secondly, the transitional provisions Practice Direction under CPR Part 51 paragraph 18 provided as follows:

Mr Morgan submitted that a party could not get less money under CPR than was possible pre CPR. The approach adopted by the Claimant was consistent with the transitional provisions. Mr Morgan also observed that the Defendants did not accept that the involvement of Websters saved money for Allianz or for the paying party. The contrary occurred.

Mr Bacon explained there would be a forensic analysis of the work done. Mr Morgan noted that it was facts based and should be dealt with at detailed assessment.

Mr Bacon submitted that uplift was the most extraordinary claim. It appeared at page 18 of the bill and read as follows:

Mr Bacon then referred to paragraph 45(iii) and paragraph 47(3) of Cresswell J’s judgment which reads as follows:

Mr Bacon submitted it was an hourly rate detailed assessment. There was nothing in the judgment or anything said by Cresswell J which indicated an uplift of 100% could be added. Mr Bacon submitted there was no proof that a 100% uplift had been agreed between Websters and Allianz. No evidence had been produced. He relied upon Mr Sharma’s evidence at page 196 where he said that it would be "very very rare that we would uplift the invoice but it is more likely we would discount the invoice for reasons I described before." On that basis he submitted it was all the more important to make the position clear to the client.

Mr Bacon submitted that uplift can reflect the care and conduct element of an hourly rate. That was not the case here because Mr Morgan had invited me to find a composite rate, namely a figure which included the B figure. The uplift referred to here was not an uplift B figure but some other uplift. Uplift also arose in success fees in CFA cases. It reflected a percentage of the base cost to reflect the risk to the solicitor not being paid, that is to say not winning the case. A fully compliant CFA was required under Section 58 Courts & Legal Services Act before the success fee was recoverable. The present fee was not such an agreement. This uplift was a third wholly unknown category of uplift. The Defendants understood it to be Websters greedy attempt to recover even more costs than they had claimed at an hourly rate in order to get them closer to their cap. In any event it was supporting a claim for the equivalent of a paralegal at £350 per hour which was a fee which exceeded the hourly rate of all the fee earners at Richards Butler. Mr Bacon referred to Mr Sharma’s evidence at pages 177-178, 189 & 195 where he said his hourly rate was £175 per hour to which he would not expect to add any uplift or mark-up but rather might offer a discount if the claim was small (see para 104 above). At page 196 Mr Sharma had said it would be "very very rare" that there would be any mark-up on his £175 hourly rate for time and trouble work. At page 195 Mr Sharma agreed that uplift would be very rare and, at the top whack, especially at £175, was going to be the hourly rate. At page 197/98 he said the invoices were rendered on a time and trouble basis with, so far as he could recall, no uplift or up-push. In summary Mr Sharma’s evidence was that he would not expect to render an uplifted fee on the hourly rates for a bill such as the 14 December 1998 bill. Mr Bacon drew comfort from an exchange between Cresswell J and Mr Priday (counsel for the Claimant) in which the Judge declined to express a view as to whether or not the Costs Judge would be entitled to take into account the fact that services were rendered on a contingency fee basis. That was an issue included in the provisional draft order. The final order (excluding that reference) was the order dated 18 October 2002 giving rise to the detailed assessment. Cresswell J had said (page 448):

Mr Morgan submitted that it was clear from the exchange between counsel and Mr Priday that the matter of costs was one for me and not for the Judge. The order set out the background in paragraphs 2 and 3. Paragraph 4 referred to an hourly rate only in relation to the obligation of Allianz to identify the hourly rate in the bill. Paragraph 5(b) directed the Costs Judge to determine what was the appropriate [reasonable and proportionate] amount to allow in respect of Websters’ properly recoverable services.

Mr Morgan submitted that I must undertake a notional exercise which did not reflect an agreement made between any party in the real world. I must notionally assess costs which were charged on a contingency percentage basis. In effect I was being invited to do so by analogy with solicitor’s costs. On that basis there was no reason why that analogy should not reflect what happened to solicitor’s costs when they acted on a contingency basis. The Claimants drew an analogy with a CFA under which a percentage addition was added to whatever hourly rate was determined. A solicitor on a contingency basis risked not being paid or under an Aratra Potato agreement being paid less than he would otherwise be paid. That risk was covered by the uplift. In this case Websters undertook to perform a considerable amount of work for potentially little reward. They put in (and continued to put in) considerable work for a period of over 4 years under a percentage agreement. The more work they did, the less the return would be. Websters obtained a good return for Allianz particularly because the jurisdiction agreement gave them a very good limitation set of rules. Websters were taking a risk which was what contingency fees was about. They were entitled to recover an additional element to reflect the risk in the same way that solicitors could.

Mr Morgan relied upon Mr Sharma’s evidence at page 189A-C where it was clear that he was asked whether there would be a mark-up on a time and trouble basis, that is to say a responsibility type mark-up not a contingency fee uplift. On time and trouble (an old style contractual basis with mark-up) there was no contingency element. It was not a contract where Websters were allowed to charge at £175 per hour but on a contingency basis. That approach was supported by Mr Sharma’s replies in re-examination at page 365 where he dealt with the effect of an hourly rate when acting on a contingency basis. He said it would be necessary to increase the rates substantially to reflect the value of the risk Websters were taking. It was irrelevant that Websters contingency arrangement did not comply with the statutory scheme under the CFA Regulations since they applied to those with a right of audience and a right to conduct litigation. That was a reference to the judgment in Factortame.

Mr Bacon explained that Websters’ bill included the costs of the trial in September and October 2002. Paragraph 9of the order dated 18 October 2002 reserved those costs to Cresswell J because it was dependent on offers which had been made and the outcome of the detailed assessment. In addition to the claim for time in attending four days of trial there was also a claim for preparation time which Mr Bacon had not yet analysed. All this work should be excluded. The bill also claimed work on the limitation point which also fell outside the scope of the order. After the first trial the First Defendant commenced a limitation action in the English Admiralty Court which was necessitated as a consequence of the findings in the first trial. It was settled by order dated 8 November 2002. Under paragraph 1 the action was stayed upon the terms of the agreement (6 November 2002) a copy of which was annexed to the order. Under paragraph 6 there was no order as to costs subject to Clause 6 of the agreement. That clause provided that there should be no order for costs in the limitation action save for a contribution of £6,595 towards the costs of Hyundai Merchant Marine Co Ltd (see tabs 11 and 12, pages 743-755). Mr Bacon referred to page 11 of the bill and page 6 of the document schedule where there was a reference to the limitation action. The entry on page 6 read:

Mr Morgan explained that many of the items in the bill referring to the limitation point had been conceded. The principle still had to be dealt with. He relied upon paragraphs 2-5 of the order dated 18 October 2002. Cresswell J was there deciding what element of the services provided by the contingency fee agreement dated 14 September 1998 (page 580-81) were to be allowed. The focus was on the following elements:

The focus was therefore on the agreement for Websters’ services and what should be allowed in respect of that agreement. It was not tied up to an entitlement to costs under particular orders which post dated the agreement. Paragraph 9 of the order dated 18 October 2002 reserved the costs of the legal representatives. The provision of Websters’ services under a single agreement which pre-dated any costs order distinguished them from, for example, an expert. The issue here was whether Allianz were entitled to anything in respect of Websters’ services. The Defendants had argued they were entitled to nothing. Allianz in reliance upon 14 September 1998 agreement maintained they were entitled to be remunerated in respect of work done under the agreement for the costs to which they had been put. In answer to that point the Judge was directing what should happen. That was distinguishable from looking at later work the charge for which varied in the course of litigation. If it was a one off they were entitled to their basic entitlement with their 5%. The issue was what compensation should be given to Allianz for that 5% which they had incurred. The response under which the contingency agreement dated 14 September 1998 was actioned was found in paragraph 18 of the judgment. In the fax dated 9 December 1998 Allianz acknowledged by conduct that Websters were acting on a no cure no pay basis. The Judge referred in paragraph 19 to an acknowledgement of acceptance rather than of the terms.

Mr Bacon submitted that the second trial was the determination by the trial Judge as to whether Websters could recover, by way of damages or costs, their fees in respect of the work undertaken in recovery for the first trial. Cresswell J had found that if they were recoverable at all they were recoverable in principle as costs not damages and he ordered Websters to set out what those costs were so that a Costs Judge could work out what was payable. In addition to that Websters had included the costs of the second trial, namely the costs of working out whether or not the costs were recoverable. That was a quantum leap beyond what the Judge intended. He had not yet made an order for the costs of the second trial. The arguments about the September agreement might be relevant depending on the outcome of this detailed assessment. The point might be taken that Websters were not entitled to the costs of the second trial because the September agreement did not make provision for it. The fee agreement related to the costs of recovery not a hearing where Websters were trying to determine whether or not they could recover their own costs. Cresswell J had reserved the costs of the second trial until he knew the outcome of the quantum of Websters first trial costs. All costs after the first trial should be excluded.

Mr Bacon raised many issues about Websters’ bill. They included:

Mr Morgan raised many issues in reply. They included:

Websters are a long established firm of claims handlers. They are one of the largest companies of its type and are market leaders. Their offices are located in Sidcup. The experienced claims manager, Mr Sharma, has claimed a basic hourly rate at £175 per hour. However, Websters have not produced a shred of information to support that rate. Mr Sharma has provided three witness statements. As Mr Bacon rightly pointed out, the second statement was intended "to assist in the resolution of the outstanding issues between the parties in respect of quantum" and the third statements was made "in order to clarify certain issues which have arisen in relation to the claimant’s claim for the fees of W K Webster & Co." Mr Sharma revealed the fact that there was in existence a sixth or seventh draft about charging rates. It was not produced in evidence. He also explained that those responsible for managing the company (Mr Joannou, the partner, and Miss George, the general manager) were aware of the need to provide information. They did not give evidence, nor did they apparently sanction the release of relevant information. Such lack of input from them is a matter for concern and is unhelpful in identifying an appropriate hourly rate for Mr Sharma. To the extent that doubt arises, it must be exercised in favour of the defendants.

Little guidance was given at the second trial as to the method of charging on a no cure no pay basis, except that it was subject to market forces. No evidence has been given about the basis for time and trouble work charging. That is surprising, since part of Mr Sharma’s work was conducted on that basis. The provision of that information by the management of Websters would have been relatively straightforward. The case managers were informed verbally by the management of the rates which they should charge. The inference must be that some calculation, however rudimentary, would have been carried out and would have been available.

Mr Bacon has submitted that the appropriate comparison would be a firm of solicitors within the area of the Croydon or Bromley Courts. He provided hourly rate figures for assistant solicitors and paralegals. Mr Morgan submitted that Mr Sharma’s hourly rate should be £175, or at the upper end of the scale for an assistant solicitor.

Mr Bacon has submitted that there should be a discount of one-third on any hourly rate to reflect the reduction which is made to the costs claimed by a litigant in person. He compared claims consultants to litigants in person. I see no basis in law for such a submission. It is not supported by the judgment of Potter J in Piper or in the former or current Rules. I reject that submission and prefer the submission of Mr Morgan on the point. I do not understand Potter J to have put a limit on the costs recoverable by non-solicitors. The point does not call for resolution by me because Mr Morgan accepted that Websters could not recover more than City solicitors, or more than Richards Butler would have charged for doing that work. That must be a reference to the basic charging rate without the further enhancement/uplift/"success fee".

I have taken into account the submissions by Mr Morgan about the work carried out by Mr Sharma. My conclusion is that the work carried out by him was comparable to that of a senior assistant solicitor. He dealt with partners, assistant solicitors, para legals and trainee solicitors. I reject completely Mr Bacon’s submission that Mr Sharma’s work was comparable to that of a paralegal. Mr Morgan has correctly identified the level of work, responsibility and the other factors to be taken into account. Mr Bacon’s submission on the schedule of agreed duplication omitted to take into account the duplication with partner and assistant solicitors.

The parties agreed on the range of hourly rates which Cresswell J incorporated into his judgment. Mr Bacon has pressed for figures at the lower end of the bracket. Mr Morgan has pressed for the rate claimed, or something comparable. I have not been persuaded by Mr Bacon’s geographical submission. The local court rates, like the rates for summary assessment of costs in cases lasting less than a day, are for guidance. They are not written in stone. It is necessary to take into account in this case the equivalent factors of CPR 44.5. Mr Bacon submitted that the undiscounted rate for an assistant solicitor in the Croydon area would be £120 for 1998/99 and £130 thereafter. Mr Morgan submitted that the rates should be between £142 and £189 for a Grade B fee earner. My understanding is that the rates used by Mr Bacon would have contained an in-built mark up of approximately 50%. Mr Morgan referred to rates of £150 for Grade 2 and £170 for Grade 1 with a mark-up. I believe his figures are inflated.

It is not necessary for Websters’ office to be located in the City. Websters have declined to provide any information to support the rate of £175 claimed by Mr Sharma, which is the upper bracket of the range of rates. I find that it is no coincidence that Mr Sharma has elected to claim that rate in the absence of any internal documents to support his rate. I note Mr Morgan’s point that this issue was not put to Mr Sharma and that it was inappropriate to draw an adverse inference (paragraph 54). The reasonable rate for Mr Sharma, as an experienced claims manager, who is not a general manager or a partner, with offices in Sidcup, for the period September 1998 to May 2002 is above the Croydon rate of £120/£130 referred to by Mr Bacon. It is below the mid-point for an assistant solicitor at Richards Butler (£175). Websters had the opportunity to produce supporting information, but have failed to do so. In the absence of that information, and taking into account the respective submissions of Mr Bacon and Mr Morgan, I find that a reasonable hourly rate for Mr Sharma is £150 for the period during which Websters were instructed up to the date of the judgment in the first trial (September 1998 to May 2002).