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	England and Wales Court of Appeal (Civil Division) Decisions
You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> Malkinson v Trim [2002] EWCA Civ 1273 (13 September 2002) URL: http://www.bailii.org/ew/cases/EWCA/Civ/2002/1273.html Cite as: [2003] WLR 463, [2003] CPLR 99, [2002] EWCA Civ 1273, [2003] 2 All ER 356, [2003] 1 WLR 463, [2003] CP Rep 11, [2002] NPC 116, [2002] 3 Costs LR 515

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		Neutral Citation Number: [2002] EWCA Civ 1273
		Case No: 2001/2629

IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE SUPREME COURT COSTS OFFICE
(Costs Judge Rogers)

		Royal Courts of Justice Strand, London, WC2A 2LL
		13th September 2002

B e f o r e :

LORD JUSTICE POTTER
LORD JUSTICE CHADWICK
and
MR JUSTICE WALL
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	MALKINSON	Appellant
	- and -
	TRIM	Respondent

____________________

(Transcript of the Handed Down Judgment of
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____________________

Mr Simon Jonathan Brown (instructed by Messrs Ashton Bond Gigg, Solicitors for the Claimant/Appellant)
Mr Alexander Hutton (instructed by Messrs Crusts, Spalding for the Respondent)
____________________

HTML VERSION OF JUDGMENT
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Lord Justice Chadwick:

1. This is an appeal from an order made on 21 September 2001 by Costs Judge Rogers. It raises a point of some general importance: is a solicitor who has been represented by his own firm in the successful defence of proceedings brought against him personally, entitled (under an order for costs in his favour) to the profit costs of his firm in defending those proceedings?

The underlying facts

2. The appellant is the son of the late Mr Bertram Malkinson and his wife, Mrs Marjorie Malkinson. Mrs Marjorie Malkinson died on 10 April 1985. By her will dated 8 August 1984 she left her home and the residue of her estate to her husband. Probate of her will was granted on 11 October 1985 to the executors named therein, Mr Eric Christie and Mr Sydney Malkinson. Mr Bertram Malkinson died on 24 March 1986. By his will, also dated 8 August 1984, he left the residue of his estate to his three children. Probate of his will was granted on 12 February 1987 to Mr Christie and Mr Sydney Malkinson. At the relevant time Mr Christie was in practice as a solicitor in partnership under the firm name Tinn Thimbleby & Co. As one of the residuary legatees under his father’s will the appellant was beneficially interested both in his father’s estate and in his mother’s estate (which had not been fully administered at the date of his father’s death). He was dissatisfied with the way in which the estates of his parents had been administered.
3. These proceedings were commenced by the appellant in October 1993 by the issue of a writ in the Chancery Division of the High Court. By that date it appears that Mr Christie was insolvent, being subject to an interim order made on 1 June 1992 under section 252 of the Insolvency Act 1986. The claim in the proceedings against his former partners in Tinn Thimbleby & Co – who are named as the second to sixth defendants in the writ - was for reinstatement of monies which, it was said, had been wrongfully paid out of the two estates in respect of solicitors’ charges for administration; and to a firm of accountants for accountancy services.
4. The fifth named defendant, Mr Christopher Trim, who is the only respondent to this appeal, had ceased to be a partner of Tinn Thimbleby on 31 December 1987. In November 1988 he became a partner in the firm of Crusts. In November 1993 Crusts acknowledged service of these proceedings on the respondent’s behalf; and went on the record as his solicitors. On 22 May 2000 – following settlement negotiations in which the respondent had declined to participate but which, it seems, had led to a compromise of the claims against the other defendants – the appellant served notice of discontinuance of the proceedings against him. The effect of a notice of discontinuance, under CPR 38.6(1), was that, unless the court otherwise ordered, the appellant was liable for the costs which the respondent had incurred in the proceedings on or before the date of service. A bill of costs in the total amount of £15,246.95 (including value added tax) was lodged by Crusts for assessment.
5. The partnership deed into which the respondent had entered on 22 November 1988 contained a clause – clause 13 – in these terms:

“Provision of Legal Services for Partner and Connected Person

If any of the parties hereto or any office of the practice shall act as solicitor or solicitors for any partner or for the wife or any child or children or the parents of any partner or his or her personal representatives or trustees then no charge shall be made by the partnership practice for the provision of such services except in respect of out of pocket expenses and of costs recovered from other parties in any proceedings or out of any estate or property the subject of any such proceedings and any costs so recovered shall belong to the practice.”

6. The appellant, through his solicitors, served points of dispute in respect of the bill of costs. They contended, as a preliminary point, that:

“The 5^th Defendant and Crusts entered into a contingency fee agreement contrary to Rule 8(1) of the Solicitors’ Practice Rules 1990, and the retainer (if any) of Crusts is contrary to public policy and unenforceable, and the 5^th Defendant has not incurred costs recoverable from the Claimant.”

The point was rejected by Costs Officer Worthy, in a ruling on 6 July 2001. The appellant appealed, as he was entitled to do under CPR 47.20. The appeal came before Costs Judge Rogers in September 2001. He dismissed the appeal; but gave permission to appeal against his own order and directed, under CPR 52.14(1), that the appeal, which would otherwise have gone to the High Court, should be transferred to this Court.

The decision of the costs judge

7. The costs judge in a careful written judgment handed down on 20 September 2001, identified three issues for decision: (i) whether clause 13 of the Crusts partnership deed of 22 November 1988 constituted a contingency fee agreement; (ii) whether, if so, that agreement was unenforceable, either by virtue of the Solicitors’ Practice Rules or under the common law; and (iii) whether the respondent was entitled to recover costs in any event under the principle in London Scottish Benefit Society v Chorley Crawford and Chester (1884) 12 QBD 452, (1885) 13 QBD 872 (CA). He held, on the first of those issues, that the effect of clause 13 of the partnership deed was that the respondent incurred no liability to the firm, save in respect of disbursements, unless and until a costs order was made in his favour. He rejected the submission that the agreement was unenforceable under the Solicitors’ Practice Rules, as in force in 1992 (which he held to be the relevant date); but accepted the alternative submission that it was unenforceable at common law. He reached that conclusion on the basis of the decision of this Court in Awwad v Geraghty & Co [2000] 1 All ER 608. His findings on those issues would have led to the conclusion that the respondent’s costs (other than disbursements) were not recoverable in the present case. But he did not reach that conclusion because he accepted that the principle in the London Scottish Benefit Society case had survived the introduction of the Civil Procedure Rules, and was applicable. He held that, under that principle, the respondent should be allowed his firm’s costs, subject to assessment.

The issue on this appeal

8. The only issue on this appeal is whether the costs judge was right to hold that the respondent’s costs were recoverable under the principle in the London Scottish Benefit Society case. There is no cross-appeal challenging his conclusions on the other two issues. But, as I shall explain, that issue turns on two distinct questions: (i) whether, in a case where the solicitor litigant carries on practice in partnership, the principle extends to work done on his behalf by the partnership and (ii) whether the principle has survived the introduction of the Civil Procedure Rules.

The principle to be derived from the London Scottish Benefit Society case

9. The principle for which the London Scottish Benefit Society case has long been treated as authority is that set out in the headnote of the report of that case in the Divisional Court, at (1884) 12 QBD 452:

“Where an action is brought against a solicitor who defends it in person and obtains judgment, he is entitled upon taxation to the same costs as if he had employed a solicitor, except in respect of items which the fact of his acting directly renders unnecessary. ”

The principle was confirmed, on appeal, by this Court - see (1884) 13 QBD 872, 876. It was incorporated, in substantially those terms, into the County Court Rules, 1903-1908, as Order LIII, rule 25 – and, as such, was applied by this Court in H Tolputt & Co Limited v Mole [1911] 1 KB 837. It was treated as “well established” by this Court in Buckland v Watts [1970] 1 QB 27, 35G-H, 37F.

10. In London Scottish Benefit Society v Chorley, Crawford and Chester the defendants Crawford and Chester were solicitors. They were sued, as such, for money had and received to the use of the plaintiff society. They conducted their own defence, were successful and obtained an order that the plaintiff pay their costs. The Divisional Court held that, on taxation, they were entitled to be reimbursed for the time and skill which they had expended in defending the claim. It was in that context that the principle for which the case has become established authority was enunciated. The first question raised by the appellant on this appeal is whether the principle applies where (a) the defendant, although a solicitor, does not expend his own time and skill in defending the claim – because the defence is undertaken by one of his partners or by others within the firm of which he is member - and (b) the claim in the action is not a claim which is, or could be, brought against that firm – that is to say, it is not a claim in respect of anything done by the defendant while a partner or employee of that firm.
11. In order to resolve that question it is necessary to analyse the reasoning – both in the Divisional Court and in this Court - which underlies the decision in the London Scottish Benefit Society case. There are, I think, six elements in that reasoning. First, that a person wrongfully brought into litigation ought to be indemnified against the expense to which he is unjustly put – see the observation of Sir William Brett, Master of the Rolls, (1884) 13 QBD 872, at page 875. Second, the need is for indemnity, not punishment or reward – see the reference in the judgment of Mr Justice Denman, (1884) 12 QBD 452, at page 455, to the general rule, laid down by Baron Bramwell in Harold v Smith (1860) 5 Hurlestone & Norman 381, that costs are allowed only by way of indemnity, in the sense that a party cannot be allowed to recover by way of costs expenditure which he has not incurred. As Baron Bramwell put it in the earlier case, ibid at page 385: “Costs as between party and party are given by the law as an indemnity to the person entitled to them: they are not imposed as a punishment on the party who pays them, nor given as a bonus to the party who receives them.”. Third, application of those two principles leads to the conclusion that a person can recover the cost of employing a solicitor to assist him in the litigation – see per Sir William Brett, Master of the Rolls, at (1884) 13 QBD 872, at page 875, and per Lord Justice Bowen, ibid at page 877. Fourth, an ordinary litigant – that is to say, a litigant who is not a solicitor – cannot recover, as costs, compensation for the expenditure of his own time and trouble. That is because “it is impossible to determine how much of the cost is incurred through his own over anxiety” – per Sir William Brett, Master of the Rolls, at (1884) 13 QBD 872, at page 875; or, as it was put by Lord Justice Bowen, ibid at page 877, because “. . . private expenditure of labour and trouble by a layman cannot be measured. It depends on the zeal, the assiduity and the nervousness of the individual.”. Fifth, those considerations are of no weight where the litigant is himself a solicitor. “Professional skill and labour are recognised and can be measured by the law.” – per Lord Justice Bowen, ibid at page 877. And, sixth, a rule of practice which enables a litigant who is a solicitor to recover, as costs, compensation for his own time and trouble is beneficial, because it is likely to lead to a reduction in the amount which the unsuccessful opponent will pay under an order for costs: “if the rule were otherwise a solicitor who is party to an action would always employ another solicitor, and whenever he is successful he would recover full costs; whereas under the rule of practice laid down by us, a solicitor who sues or defends in person will be entitled, if he is successful, to full costs, subject to certain deductions [costs of taking instructions from, and attendances upon, himself], of which his unsuccessful opponent will get the benefit.” – per Lord Justice Fry, ibid at pages 877-8, and see, also, the observations of Sir William Brett, Master of the Rolls, ibid at page 875, and, in the Divisional Court, Mr Justice Manisty and Mr Justice Watkin Williams at (1884) 12 QBD 452, at pages 457 and 460.
12. The scope of principle is not in doubt in the simple case where the solicitor “acts for himself”. The point is made by Mr Justice Denman, at (1884) 12 QBD 452, 455, that:

“The solicitor’s time is valuable: he applied his skill to the suit or action in which he is obliged to spend his time and exercise his skill in consequence of the wrongful act of his opponent; and therefore it is not an unreasonable view that the word “costs”, in the sense of an “indemnity”, should be held fairly to include a reasonable professional remuneration for that work which, if he did not do it himself, would have had to be done by another solicitor and paid for by his unsuccessful opponent.”

The same point was put in much the same terms by Mr Justice Manisty, ibid at page 457:

“Time is money to a solicitor; and why should he not be as much entitled to his proper costs, if he affords the time and skill which he brings to bear upon the business where he is a party to the action as he is where he is not a party.”

13. Nor is there any doubt that the principle extends to costs attributable to work done for the solicitor by his clerk. Indeed, it may be thought that that case is a fortiori within the indemnity principle. It was accepted by this Court in the London Scottish Benefit Society case that:

“If a solicitor does by his clerk that which might be done by another solicitor, it is a loss of money, and not simply a loss of time, because it is work done by a person who is paid for doing it.”

per Sir William Brett, Master of the Rolls, at (1884) 13 QBD 872, 875; and, to the same effect, the observation of Lord Justice Bowen, ibid at page 877, that:

“. . . it would be absurd to permit a solicitor to charge for the same work when it is done by another solicitor, and not to permit him to charge for it when it is done by his own clerk.”

Does the principle extend to the firm’s costs?

14. If a solicitor can charge for his own time, and for the time of those he employs (who may include an assistant solicitor), should the position be different if some or all of the work is carried out by one or more of his partners, or by employees of the firm. For my part, I can see no reason why it should be. The time of one partner is of value to another partner, because each partner contributes to the profits of the firm. The time of employees of the firm has to be paid for out of the profits in which each partner is interested. To adopt and adapt the observation of Lord Justice Bowen which I have just set out, I would think it absurd to permit a solicitor to charge for work in the litigation when done (a) by another solicitor (or a solicitor in another firm), or (b) by his clerk (or an employed solicitor in his own sole practice) or (c) by himself; but not to permit him to charge for the same work when done (d) by employees of the firm of which he is a partner or (e) by one or more of his partners. The reasoning which led this Court to the conclusion which it reached in the London Scottish Benefit Society case must lead to the same conclusion in a case where the solicitor litigant carries on his practice as a solicitor in partnership. The successful litigant is entitled to an indemnity; there is no difficulty in measuring the cost of legal professional time and skill; and there is likely to be some saving of costs if the work is done within his own firm rather than if he is encouraged, in practice, to instruct another firm.
15. Support for the view that the reasoning which led this Court to the conclusion which it reached in the London Scottish Benefit Society case must lead to the same conclusion in a case where the work is done by the partner of the solicitor litigant can be found in the decision of Mr Justice Stirling, some three years later, in Bidder v Bridges (1887) WN 208. It appears from the short report in the Weekly Notes that the dispute between the plaintiff and the defendant related to their respective titles to land; it was not a dispute which involved the defendant in a professional capacity as a solicitor. Nevertheless, the defence was conducted on his behalf by the firm of which he was a partner: “the action was entirely managed by one of his partners with the assistance of managing clerks.” The defendant succeeded in his defence to the action and was awarded his costs. The plaintiff took objection to the costs charged in relation to the perusal of the defendant’s title deeds by his partner and members of his firm. Mr Justice Stirling upheld the master’s decision to overrule the objection. He said this, ibid at page 209:

“The rule was laid down in London Scottish Benefit Society v Chorley (13 QBD 872-875), and the principle upon which the Court of Appeal went in that case was, that when a solicitor appeared in person, he was not to charge for things which did not exist – he could not attend upon himself. But the Court of Appeal recognised to the full extent, that a solicitor might employ the services of other people – his clerk, and be paid, not for his loss of time, but for the loss of money he would have earned. Was a solicitor’s partner in a different position? The partner attended upon various parties at various places, and certain things had been done by him. All this fell within the principle laid down in that case, and these costs ought to be allowed.”

Mr Justice Simon Brown expressed a similar view (albeit obiter) in R v Stafford Stone and Eccleshall Magistrate’s Court, ex parte Robinson [1988] 1 All ER 430, at page 432h-j:

“From one line of cases it is perfectly plain that over a great many years a solicitor who successfully defends himself in civil litigation on taxation may properly recover his own profit costs, and that is the case whether or not the work is done by partners or clerks within the firm or done by the solicitor himself. That is established by London Scottish Benefit Society v Chorley (1884) 13 QBD 872, . . .”

Has the principle survived the Civil Procedure Rules

16. I turn, therefore, to the second question raised by the appellant on this appeal: whether the principle in the London Scottish Benefit Society case has survived the introduction of the Civil Procedure Rules. In order to see that question in context, it is necessary to have in mind that the harshness of the common law rule that an ordinary litigant in person could not recover, as costs, compensation for the expenditure of his own time and trouble – recognised in the London Benefit Society case and affirmed in Buckland v Watts [1970] 1 QB 27, 35H, 38B – was alleviated by rules of court made under the Litigants in Person (Costs and Expenses) Act 1975. Order 62 rule 18 of the Rules of the Supreme Court 1965, as it was immediately before the introduction of the Civil Procedure Rules, provided (so far as material) that:

“(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 the disbursements to which the costs relate had been done or made by a solicitor on the litigant’s behalf . . .

(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.

. . .

(6) For the purposes of this rule a litigant in person does not include a litigant who is a practicing solicitor.”

17. Sub-rule (6) excluded solicitor litigants from the ambit of Order 62 rule 18. They did not benefit from the power to allow costs conferred by sub-rule (1); but, conversely, the costs which could be allowed to them were not subject to the restrictions imposed by sub-rules (2) and (3). It is, I think, clear that the rule making body intended that the position of a litigant who was a solicitor (or, more accurately, a practising solicitor) should remain unaffected by the rule; that is to say, it should continue to be governed by the principle, or rule of practice, established in the London Scottish Benefit Society case. That that was the view of the editors of the Supreme Court Practice appears from Note 62/B/139 in the 1999 edition:

“Where a practising solicitor sues or defends in person he is entitled on taxation of his costs to the same costs as if he had employed a solicitor, except as to such charges as are rendered unnecessary by his acting in person (London Scottish Benefit Society v Chorley (1884) 13 QBD 872) and the same principle applies where a solicitor acts by the firm of which he is a partner (Bidder v Bridges [1875] WN 208).”

18. The Civil Procedure Rules 1998 took effect from 26 April 1999, subject to transitional provisions in respect of proceedings issued before that date. Paragraph 18 of the Practice Direction – Transitional Arrangements which supplements CPR Part 51 requires that any assessment of costs that takes place after 26 April 1999 will be in accordance with CPR Parts 43 to 48; subject to the general presumption that no costs for work undertaken before 26 April 1999 will be disallowed if those costs would have been allowed in a costs taxation before that date. Costs allowed to litigants in person are now governed by CPR 48.6. Sub–rule (3)(a) preserves the general principle – formerly in Order 62, rule 18(1) - that costs allowed to a litigant in person shall be such costs as would be allowed if the work had been done by a solicitor or legal representative. Sub-rule (2) of CPR 48.6 preserves “the two-thirds restriction” formerly contained in RSC Order 62, rule 18(2). Sub-rule (4) – in conjunction with section 52.4 of the Practice Direction about Costs which supplements Parts 43 to 48 - preserves the restriction on the hourly rate which can be charged by a litigant in person who fails to prove financial loss. CPR 48.6(6) is in these terms, so far as material:

“For the purposes of this rule a litigant in person includes –

(b) 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.”

19. At first sight, therefore, the effect of RSC Order 62 rule 18(6) – which excluded a litigant in person who was a practicing 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 section 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.
23. The position where professional skill and knowledge in connection with litigation to which one partner alone is party is provided by other partners or employees in the firm is, on analysis, indistinguishable in principle from the position where a sole practitioner represents himself in his firm name. At the risk of stating the obvious, a partnership has no legal persona distinct from the aggregate of those who are partners – see section 1(1) of the Partnership Act 1890: “Partnership is the relation which subsists between persons carrying on a business in common with a view to profit.”. It is important to keep in mind – and the failure to do so is a flaw which underlies much of the appellant’s argument – that, although a partner can contract with his other partners, he cannot contract with the partnership of which he is a member. At paragraph 3-04 of Lindley & Banks on Partnership (18 edition, 2002), in a passage attributed to the author of the first edition, the point is put in these words:

“In point of law, a partner may be the debtor or the creditor of his co-partners, but he cannot be either debtor or creditor of a firm of which he is himself a member.”

If further authority be needed, it can be found in the speeches of Lord Radcliffe and Lord Denning in Rye v Rye [1962] AC 496, 512, 513. It was to overcome the problem that a man could not covenant with himself and one or more other persons that Parliament enacted section 82(1) of the Law of Property Act 1925.

24. It follows that an argument based on the proposition that a partner can incur liability to the firm of which he is a member – say, in respect of legal services provided by the firm – is misconceived. A partner can be required to account for the value of legal services provided by the firm by an adjustment in the partnership accounts, but that is not to say that he incurs a liability to the partnership – see Green v Hertzog [1954] 1 WLR 1309, 1312. A partner who is represented in legal proceedings by his firm incurs no liability to the firm; but he suffers loss for which under the indemnity principle he ought to be compensated, because the firm of which he is a member expends time and resources which would otherwise be devoted to other clients. The only sensible way in which effect can be given to the indemnity principle is by allowing those costs. And, as I have sought to explain, that is the solution which, for over one hundred years, the courts have adopted as a rule of practice.
25. It follows that I would dismiss this appeal.
26. I should emphasise, for the avoidance of doubt, that we have not been asked to consider the first two issues decided by the costs judge; and, for my part, I have not done so. But it will be apparent from my judgment that I doubt whether clause 13 of the November 1988 partnership deed, of itself, can be properly be regarded as a contingent fee agreement. It does not, in terms, commit the partnership or any of the partners to provide any litigation or other legal services to anyone. It merely provides for the consequences, as between the partners, in the event that such services are provided. Nothing in this judgment is to be taken as a decision on what the position would be if litigation services were provided by the partnership to the wife, child or parents of a partner, or to his, her or their personal representatives or trustees, without a formal retainer. Nor, of course, does this judgment address the position where litigation services are provided to a solicitor by a firm of which he is an employee and not a partner.

Mr Justice Wall:

27. I agree.

Lord Justice Potter:

28. I agree with the judgment of Lord Justice Chadwick as expressed in paragraphs 1-25 above, to which I have nothing to add. I share his doubt expressed in paragraph 26 that clause 13 of the partnership deed amounts to a contingency fee agreement.

Order:

29. Appeal Dismissed
30. The appeal against the order of Costs Judge Rogers dated 21^st September 2001 is dismissed.
31. The Appellant shall pay the Respondent’s costs of and caused by the appeal, to be subject of a detailed assessment on the standard basis if not agreed, such assessment taking place at the conclusion of the detailed assessment of the Respondent’s costs of the Main action
(Order does not form part of the approved jdugment)