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England and Wales High Court (Queen's Bench Division) Decisions |
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You are here: BAILII >> Databases >> England and Wales High Court (Queen's Bench Division) Decisions >> Mount Eden Land Ltd v Speechly Bircham LLP [2014] EWHC 169 (QB) (05 February 2014) URL: http://www.bailii.org/ew/cases/EWHC/QB/2014/169.html Cite as: [2014] 2 Costs LR 337, [2014] EWHC 169 (QB) |
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QUEEN'S BENCH DIVISION
Strand, London, WC2A 2LL |
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B e f o r e :
with Master Haworth sitting as Assessor
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Mount Eden Land Limited |
Appellant |
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- and - |
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Speechly Bircham LLP |
Respondent |
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Mr S Browne QC (instructed by Speechly Bircham LLP) for the Defendant
Hearing dates: 22 January 2014
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Crown Copyright ©
Mr. Justice Teare :
i) Mount Eden is the owner of a large number of properties in London and retained Speechlys to undertake transactional and litigation work between 1994 and 2011. Following the termination of the retainer Mount Eden applied on 25 March 2011 for a detailed assessment of certain invoices. 19 were rendered on 25 February 2011 and total £17,445. They had been paid. Other older invoices which had been paid were also challenged. Mount Eden was only given leave to challenge 31 of these with a total value of £87,893. Thus the detailed assessment concerns 50 invoices totalling some £105,000, all of which had been paid.ii) On 5 September 2011 Master Campbell gave directions which included an order that Mount Eden serve Points of Dispute. The parties would have understood that those Points of Dispute were required to comply with the Costs Practice Direction which required Mount Eden to state concisely the nature and grounds of the dispute and where practicable to suggest a figure to be allowed for each item in respect of which a reduction is sought (see paragraph 35.2 of the Costs Practice Direction pre 1st April 2013.)
iii) Points of Dispute were served.
iv) After two adjournments (one at the behest of the court and the other because of a failure to disclose certain documents by Speechlys) the detailed assessment commenced on 29 November 2012. The Points of Dispute had been supplemented following the further disclosure by Speechlys.
v) During the course of the hearing the Master gave a ruling on three issues of general application which arose out of the Points of Dispute. He then proceeded to the detailed challenges. One item, worth £325.19, was considered and, after three pages of transcript, was allowed. The second item, worth £8,690.05, was considered. Soon after the debate commenced Speechlys costs lawyer, Mr. Dean, noted that Mount Eden were "straying off piste from the points of dispute…" and added that "if we start embarking on examining every item in detail which has not specifically been raised in the points of dispute we will be needing significantly longer than the three days that we were discussing earlier." The Master said a little later that "if we do this for every item it is going to take weeks." Mr. Dean said that "all of these points are being raised for the first time today and they are beyond the scope of the points of dispute……..we must be given some notice of the points that are being made and be given some time to respond adequately to them." The Master asked Mr. Bishop, Mount Eden's costs draftsman, "is it your intention to go though this as you have been all the way through just picking out ten minutes here, half an hour there ?". Mr. Bishop replied "Those are my instructions." He accepted that the Points of Dispute were "not specific to a particular date" and he took the point that "they are not individual to each item." He said he was "within the generality of the points of dispute." The Master said that there were several options; one was not to permit Mount Eden to challenge the costs "line by line" because the points of dispute had not been fully particularised, another was to give the parties time to try to narrow the issues and thereafter to come back to the court with "amended points of dispute". He said that "as things stand at the moment they are pretty general. Generally the time claimed in these invoices is excessive. It is very difficult to see from Speechly Bircham's point of view how they can address that when the challenge is so general". The Master opted for the second option.
vi) On 29 November 2012 the Master made an order which required the parties to meet in order to narrow the issues and said:
"If it is the intention of the Claimant to challenge individual items in the breakdown of the Defendant's bills on an item-by-item basis, any disputed item should be identified and attempts made at the meeting to resolve that item. Absent any resolution, the Claimant must set out as briefly as possible in a schedule, those items that remain in dispute (which should be served on the Defendant and a copy filed at court). For the avoidance of doubt, the Claimant's objections are to be limited to those items in the schedule and in the existing Points of Dispute."vii) Mount Eden provided a schedule on 16 January 2013. It was in an unorthodox form. Instead of identifying the items challenged by reference to the breakdowns of Speechlys bills (where such breakdowns had been requested and provided) the items challenged were identified by reference to Speechlys time sheets. In relation to the time sheets no more than two objections were taken. One was that the item was excessive, the other was that there was no supporting evidence. The letter explained those terms as follows:
" 'Excessive' – this includes our recurring theme that the work often described should only, reasonably, be one unit, rather than the two or more units often charged.'No supporting evidence' – this includes where either the file is silent as to the work claimed for that particular day, or there is no file note of document supporting the time claimed.Some items carry ticks in both columns. Here we take the view that both heads apply……."viii) On 17 January 2013 Speechlys wrote to Mount Eden's solicitors complaining that they relied on two broad headings "but provide no further details as to the particular concerns in relation to each of the entries which are challenged."
ix) The parties met but no agreement was reached.
x) On 7 February 2013 the parties returned to the Master. Mr. Dean said that Mount Eden's schedule was inadmissible because it did not comply with the Master's order. Mr. Bishop said that the schedule complied with the court's order. The Master said that he would examine the schedule and decide whether Mount Eden was entitled to rely on it or not. There was little debate about what would happen if it were determined that Mount Eden was not entitled to rely upon it though at one point Mr. Dean envisaged that in that event the assessment would proceed on the existing Points of Dispute but at another asked whether in that event the assessment could not proceed on the line by line basis, to which the Master replied that he could not give an answer until he had seen the schedule.
"9. .…..it was obvious from the slow progress made at the hearing that the assessment could not proceed in a way which was proportionate to the court time allotted to it, unless the Claimant put its arguments with more clarity. What the Defendant needed to know was what, precisely, was the case being taken against the firm in the invoices. That was certainly not as clear as it should have been from the Points of Dispute which had been served in order to comply with paragraph 4 of my Order of 5 September 2011. Specifically, the Points had been general in nature…."
"10. ….In my opinion, the Points of Dispute, as they then stood, were unfocussed and discursive. For that reason I stood over the assessment after the short adjournment on the first day of the hearing on 29 November 2012 so that the very experienced costs lawyers for the parties could meet in order to narrow the issues and report back to the court on 7 February 2013. In the event that it did not prove possible at the meeting to resolve their differences, I directed that the Claimant must serve a schedule setting out those items that remained in dispute "as briefly as possible"…."
"11. The intent behind that wording was that the Points (as amended) should not be prolix. That said, it was my belief also that the parties knew full well what was required and that the revised Points should identify precisely what was in issue in the bills. They would have known that not only from the course of the arguments that had taken place before me but also due to the difficulty the court had experienced with the bill that had been assessed through the absence of a focussed set of Points of Dispute."
"21. …….in asserting hundreds of times in relation to items of work that each is "excessive" and that there is "no supporting evidence", the objections fail to comply with the Practice Direction, still less do they enable the Defendant to understand the complaint being made against the work undertaken in anything more than the most general terms, even though the Claimant has had access to all the Defendant's papers. If that were not enough, in most cases no attempt has been made to suggest an alternative figure."
"27. …….The Points of Dispute as originally served and as amended will not enable a detailed assessment to be carried out at proportionate cost without loss of fairness to the defendant. Were the matter to continue, a line by line assessment with hundreds of issues limited to "excessive" or "no supporting evidence" is not a just exercise which could be undertaken at proportionate cost, in my judgment."
"25. To begin with, the parties had accepted that the detailed assessment could not continue based upon the original Points of Dispute as amended. This is plain from what Mr Bishop told me on 29 November 2012 that his instructions were to proceed by way of a line-by-line assessment [18/194F and 196E]. At that point, one bill had been assessed with difficulty and the assessment of the next bill had ground to a halt as it had proved impossible to complete the task line-by-line, because the Points of Dispute were incapable of permitting this to be done [Mr Bishop 18/194B: Mr Dean 18/194 C-E]. It was against that background that I gave directions for the Costs Lawyers to meet and for the schedule to be served. Thus the parties and in particular Mount Eden were, or ought to have been, fully aware of the consequences were the schedule not to be admitted. It would mean that the Points of Dispute had not been particularised in the way required by the Court, that the original Points remained defective and that the detailed assessment could not be advanced any further on a line-by-line basis. Since I had already decided that a "broad brush" approach could not be adopted [judgment 29 November 2012 paragraph 5 and [transcript 18/196D-E] and that the line-by-line assessment Mount Eden wanted was now impossible, the only consequence was that described by Mr Browne – "The detailed assessment was effectively at an end" [see his skeleton argument paragraph 9(c)]. For that reason, the stay was not imposed of the court's own initiative. It simply reflected the reality of the situation which had been reached in the proceedings. It follows that even if Mr Carpenter is right to the extent that "foreshadowing" meant "you know what will happen if you don't get the schedule right, don't you?" and the consequence was not spelt out to the parties on 7 February, I do not accept that this means I stayed the assessment of my own volition. Once the schedule was excluded, the detailed assessment had run its course and could not be taken any further.
26. Mr Carpenter asserts (skeleton argument paragraph 41(a)) that there was no hint of the Court's criticism of the form of the original Points of Dispute in the hearing of 29 November 2012, that it was never suggested that Mount Eden was in breach of an order of 5 September 2011 and that the Court had been clear that Mount Eden should be permitted to make line-by-line challenges. I disagree. The passages from the transcript I have mentioned in paragraph 22 above demonstrate that the Court was extremely concerned about the Points of Dispute and that Mr Bishop had accepted that the assessment could not proceed line-by-line as his client wanted unless they were amended. In my opinion, a fair reading of the transcript can lead only to one conclusion, that this was "the last chance saloon" for Mount Eden and if the Points could not be particularised in a form which permitted Speechly Bircham to understand the case being made against the firm at proportionate cost, the assessment could not proceed further and would effectively be at an end.
27. In reaching this conclusion, I have not ignored what Mr Carpenter has said on instructions about the conduct of Speechly Bircham. If additional costs have been incurred due to late provision of material, that is a point which may weigh in Mount Eden's favour, but in so far as it may do so, I consider its effect will sound only in the costs of these proceedings. So far as conduct more generally is concerned, I accept Mr Carpenter's submission that this is not a relief from sanctions matter. The reason for that is that the hearing on 7 February 2013 was to deal with the admissibility of the schedule. The fact that I ruled against Mount Eden on that point did not impose or implement a sanction. Accordingly, CPR 3.9 is not engaged.
28. Mr Carpenter also submits that the wholesale prevention of any detailed assessment is itself disproportionate to the Court's concern that the parties must conduct these proceedings at proportionate cost and that the stay operates in breach of Mount Eden's rights to a fair trial under Article 6 ECHR. Again, I disagree. He contends that the worst position that Mount Eden can find itself placed is to have a detailed assessment by reference to the existing Points of Dispute - the amended pleadings analogy.
29. The reality of the situation is that the trial began, but could not be completed because of the manner in which Mount Eden wished it to proceed. Detailed assessment either adopting a "broad brush" or line-by-line proved impossible due to shortcomings in Mount Eden's Points of Dispute. Therefore a fair trial has not been frustrated by the court, but, on the contrary, by Mount Eden's instructions to Mr Bishop that it take place line-by-line, only to be followed by its failure to particularise its complaints in a way which would enable the Court to deal with the case fairly and at proportionate cost. Indeed, the proof has been very much in the eating in this respect: one small bill assessed and another not completed, due to the inadequacy of the Points of Dispute both as originally drafted and subsequently amended. For these reasons, the ECHR point fails. The amended pleadings analogy suffers a similar fate. Here there are no Points of Dispute to fall back on. Those served are obsolete for the line-by-line assessment Mount Eden has insisted upon.
30. Mr Carpenter also expresses concern that if the detailed assessment ends now, his client will not benefit from the reductions he has achieved already, nor from those which would be won on the line-by-line assessment. He also advances the proposition that the Court appears to have pre-judged the outcome of the assessment and has been unduly favourable to Speechly Bircham in treating the risk of the excessive costs that the detailed assessment might involve if it is permitted to proceed, as a point which has weighed against Mount Eden. Again, I disagree. Under the CPR, this assessment proceeds on the indemnity basis so any doubt will be resolved in favour of Speechly Bircham, not Mount Eden. That puts Mount Eden at a disadvantage from the outset. Moreover, it is a fact that I have already decided the five minute unit point against Mount Eden, likewise the recovery of costs from third parties point. Against that factual background, explaining to Mount Eden the realities of the situation which it now faces is, in my opinion, a matter that it is appropriate for the court to raise in furthering the overriding objective. Put differently, the expense of another five days' detailed assessment (even assuming that the Points of Dispute are in order, which they are not) would extinguish any saving that Mount Eden might achieve in reductions to the bills many times over. As Mr Browne has correctly pointed out, proportionality includes both the costs as between the parties and the needs of other Court users (see the speech of Lord Dyson MR 22 March 2013 to the Judicial College). I agree with him that having regard to the facts and circumstances I have described, a stay is appropriate.
31. I do not consider that any of the alternatives suggested by Mr Carpenter are realistic. In so far as sampling is concerned, this might have had some attraction earlier in the proceedings, but we are now at the end rather than at the beginning. It is also incompatible with the line-by-line assessment Mount Eden has instructed him to pursue. In short, it is too late.
32. In the result, I find that the order of 1 May 2013 was not made of the Court's own initiative, so CPR 3.3(5) is not engaged. It follows that the correct way to challenge that order is by way of appeal. If I am wrong in those conclusions, the outcome is the same: without the schedule, Mount Eden has no Points of Dispute which will enable it to mount line-by-line challenges, so the detailed assessment has proceeded as far as it can and can go no further. For these reasons, the application is dismissed.
The Master's decision that the Schedule did not comply with his order
"24……The schedule served in connection with that order predominantly takes two points- "excessive" and "no supporting evidence". They only tell the Claimant[sic] in the most general terms the nature of the challenge. In my judgment the Claimant[sic] cannot prepare for an assessment that is likely to last several days without knowing the case it must meet. Here, broad assertions about time being "excessive" and "no supporting evidence" are of little help. "
The Master's decision to stay the assessment
i) The Master held that Mount Eden was in breach of both the September 2011 and November 2012 orders: It was suggested that the finding of breach was unjustified. However, in my judgment the Master was entitled to find that both the original Points of Dispute served pursuant to the order of September 2011 and the schedule containing the amended Points of Dispute served pursuant to the November 2012 order were defective, given that Mount Eden required a line by line challenge, because they did not adequately state Mount Eden's case on such a challenge.ii) The Points of Dispute would not enable a detailed assessment to be carried out at proportionate cost without loss of fairness to Speechlys: It was suggested that the assessment could have taken place at proportionate cost on the basis of the original Points of Dispute. However, the Master made it plain that the line by line assessment which Mount Eden had instructed its costs lawyer to conduct was not possible on the basis of the original Points of Dispute. In circumstances where Mount Eden had insisted upon a line by line assessment it does not lie in Mount Eden's mouth now to back-track and say that they no longer require a line by line assessment but will accept one limited to the objections taken in their original Points of Dispute.
Mr. Carpenter relied upon the observation of Lewison LJ in Sullivan v Bristol Film Studios Limited [2012] EWCA Civ 570 at paragraphs 29 and 32 to the effect that it is only where there is no proportionate procedure by which a claim can be adjudicated that it would be right to strike it out and that the court must therefore consider carefully whether there is a means by which a claim can be adjudicated upon without disproportionate expenditure. Mr. Carpenter said that an obvious way of doing so in the present case was by way of taking a sample number of billss. I accept that this was one way in which the assessment could have been conducted at proportionate cost. But the Master said it was too late to contemplate such a procedure in circumstances where Mount Eden's case had been that Speechlys' bill should be subjected to a line by line challenge. The Master was entitled so to regard the suggestion of sampling in circumstances where Mount Eden's clear instructions at the November hearing were for a line by line assessment and the schedule provided after that hearing showed that Mount Eden's instructions had not changed.iii) Mount Eden would only achieve a "very expensive Pyrrhic victory": The Master had in mind that given the "one-fifth" rule Mount Eden would have to pay the costs of the assessment unless the reduction in the recoverable costs was more than one-fifth of the costs in issue. This was another way of emphasising the lack of proportionality in the line by line challenge upon which Mount Eden insisted upon embarking. The Master was entitled to take this matter into account.
iv) The existing Points of Dispute were inadequate to conduct an assessment: This is really the same as point (ii). I consider that the Master's conclusion that the existing Points of Dispute did not permit the desired line by line challenge to take place at proportionate cost was one he was entitled to make.
v) Mount Eden only wants a line by line assessment: It is suggested that the Master was wrong to take this matter into account because it did not follow that Mount Eden "did not want a more restricted assessment if that was all it could have." However, in circumstances where Mount Eden had made plain what its instructions were and in response the Master had permitted Mount Eden to have the opportunity to put in a schedule of its amended Points of Dispute to enable a line by line assessment to be carried out the Master was entitled to assess whether a stay of the assessment was appropriate on the basis that a line by line assessment was the type of assessment which Mount Eden insisted upon.
vi) It was too late to to decide to assess sample bills: This point has been considered under point (ii) above.
Conclusion