COSTS WHERE CLAIMANTS ARE REPRESENTED BY MORE THAN ONE FIRM OF SOLICITORS: IT CAN GET DIFFICULT

In Ong -v- Ping [2015] EWHC 3258 (Ch) Mr Justice Morgan considered the relevant order to make as to costs when the claimants in an action had been represented by separate solicitors.

THE CASE

Four claimants had been successful in an action in an action relating to a trust as to ownership of a house.  The claimants had separate representation.

KEY POINTS

  • It was possible for the court to order a defendants to pay the costs of two sets of solicitors when claimants were separately represented.
  • On the facts of this case separate representation was only reasonable up to a certain date.
  • After that date separate representation was not reasonable and it was not reasonable that the defendant and it  was not and the defendant should pay the costs of two solicitors.
  • The costs judge was to assess the reasonable costs if the claimants had been represented by one firm of solicitors.
  • Which firm should receive those costs, and the impact upon the conditional fee agreements, was to be determined after the inter-partes assessment.

THE JUDGE’S REVIEW AS TO THE PRINCIPLES RELATING TO SEPARATE REPRESENTATION

The judge reviewed the law and authorities relating to separate representation in detail. He concluded that, after a key date, it was not reasonable for the claimants to be separately represented.

  1. The first question I need to determine is whether the decision in Lewis v Daily Telegraph Ltd (No. 2) requires me to hold that the Claimants should be restricted to one set of costs only. I do not consider that it does. The decision did not directly deal with the costs consequences of separate representation on the part of claimants. However, when I consider what order to make in relation to the costs of the separate representation in this case, I will take into account the following:
(1) the separate representation of the Claimants was probably irregular;

(2) the Defendant waived that irregularity, so far as it was a matter for him;

(3) the separate representation did not create any difficulties for the court;

(4) if the Claimants had applied for the permission of the court to enable them to be separately represented, the court would probably have refused to grant that permission.

  1. The next question is whether I should determine anything about the appropriateness of separate representation or whether I should leave that question to the costs judge. I have decided that I should determine certain matters in relation to the appropriateness of separate representation. The principal reason for doing so is that the matter has been fully argued before me. The point was raised on behalf of the Defendant on 20 July 2015 when I indicated that I would deal with the arguments on the point rather than direct them to be dealt with by the costs judge. It may be, at that time, the Defendant’s point was thought to be more in the nature of a point of law based on Lewis v Daily Telegraph Ltd (No. 2) but, on the subsequent hearings on 28 September and 5 October 2015, both sides addressed the matter by reference to the detailed circumstances of the case. In addition, having conducted the trial, I believe that I am in a better position to assess the appropriateness of separate representation than the costs judge would be.
  2. The Claimants submitted that it was appropriate for Jane and the children to have separate representation. They referred to the procedural history and to the origin of the dispute in the Defendant’s application in relation to Jane’s IVA and the joinder of the children to that application. It was then accepted that the interests of Jane and the children were aligned in relation to the dispute about the trust. It was said, however, that their interests might later diverge if they were to be competing creditors of Madam Lim’s estate. It was emphasised that both firms of solicitors instructed the same counsel. It was submitted that, in effect, only one set of costs had been incurred. As to that, it was said that:
“A decision was reached in 2013 whereby the costs of disclosure would be borne principally by Stephenson Harwood and those of witness statement preparation by Isadore Goldman. Additionally, Stephenson Harwood was the lead firm in dealing with the trial bundle preparation. As regards responsibility for payment of counsel’s fees, this fell to Stephenson Harwood up to May 2014 and to Isadore Goldman thereafter.”
  1. I also add the following. Stephenson Harwood’s costs up to 10 July 2015 are estimated to be some £945,000, including a success fee of some £237,000. Isadore Goldman’s fees up to the hearing on 20 July 2015 are estimated to be some £519,000 and they claim a success fee in addition to that figure. In the course of a discussion as to the possible extent of duplication of costs, I was told by counsel for the Claimants that draft documents settled by counsel on behalf of the Claimants would have been sent to both firms of solicitors acting for the Claimants and both firms would have been involved in approving such documents.
  2. I do not consider that it was reasonably necessary, after a certain point in this litigation, to have separate representation for Jane and the children. I can see that the interests of Jane and the children were not identical in the early stages of the Defendant’s application in relation to the IVA. However, on 20 July 2015, I ruled that while I would make orders for costs in relation to the Trust Issue and the Main Action, I would not otherwise deal with the costs of the litigation about the IVA, on the basis that the issues in that litigation have not been decided. The court ordered the trial of the Trust Issue on 30 October 2012. Jane and the children served a single Points of Claim in relation to the Trust Issue on 20 November 2012. Up to the point of service of that pleading, I can see that Jane and the children could justify the taking of separate legal advice but, from that point, I consider that separate representation was not reasonably necessary. As they themselves admit, their interests were aligned. There was in practice no conflict of interest as regards the arguments in relation to the Trust Issue and, later, the Main Action. That should have been clear upon service of the Points of Claim in relation to the Trust Issue. Accordingly, I conclude that the assessment of costs in this case should reflect the fact that separate representation was not justified as reasonably necessary from immediately after 20 November 2012.
  3. The next question is how to give effect to that conclusion. The Defendant submits that the Claimants should only be allowed to recover the costs of instructing Stephenson Harwood or Isadore Goldman, but not both. I do not think that can be right in view of the likelihood that not all of the work done by those two firms was duplicatory. I will not make a finding as to the extent of the duplication but in view of what I was told as to the division of the work between them, if I were to disallow the entirety of the costs charged by one of the firms, I would prevent the Claimants recovering costs which were necessary for them in order to conduct the litigation.
  4. I consider that the right order to make should distinguish between the period up to and including 20 November 2012 and the period on and after 21 November 2012. In relation to the former period, the costs judge should assess the costs of Jane and the children on the standard basis without further direction from me. In relation to the latter period, the costs judge should determine, on the standard basis, the costs which would have been incurred if the Claimants had used one firm of solicitors, rather than two. On the basis of the submissions made to me, it is likely and certainly possible, that the costs recoverable will involve the addition of some of the costs incurred by Stephenson Harwood to some of the costs incurred by Isadore Goldman.
  5. The order I will make will ultimately result in the assessment of the sum payable by the Defendant to the Claimants. I was not addressed on the separate question of which part of that sum would be paid to Jane and which part to the children. It may be that the Claimants will agree that matter as between themselves. If they do not agree, it will have to be decided. It would be better to decide it after the detailed assessment has been done. It would be wrong of me to decide anything on this point in the absence of argument but a possible preliminary approach would be to distinguish between charges for work which was not duplicated and charges for work which was duplicated. In the case of the former, it would seem right that the costs which are allowed for that work by one solicitor should be regarded as receivable by the client of that solicitor. As regards the latter category, it will be necessary to apportion that cost between the Claimants.
  6. I understand that both firms of solicitors acting for the Claimants entered into conditional fee agreements with their respective clients. The parties asked me to decide the questions as to the appropriateness of separate representation, and as to the order which I should make, without regard to this consideration. I emphasise therefore that I have not been asked to decide anything about the consequences of my decision as regards the Claimants’ ability to recover conditional fees nor how such fees should be calculated.”

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