Summary

In a hearing to assess the costs to be paid by an unsuccessful defendant, where the evidence showed no sufficient reason to believe that the claimant had retained his solicitors under a contingency fee agreement, the costs judge was under no obligation to enquire into the terms of that retainer by allowing cross-examination of witnesses.

Facts

The appellant (K) appealed against a decision of a district judge to refuse to permit cross-examination of witnesses at a costs hearing.

K had been ordered to pay the costs of the respondent (C) in relation to K's unsuccessful counterclaim in a neighbour dispute. At the subsequent costs hearing the district judge had queried the terms of C's retainer with his solicitors and required proof that C was liable for their fees. C had, by fault of his solicitors, failed to comply and the judge struck out the costs assessment. C subsequently succeeded in his substantive claim in the boundary dispute and was awarded further costs against K. At the subsequent costs hearing K argued that it could be inferred from various matters, including the waiver by C's solicitors of part of their fees following the striking out of the earlier costs assessment, that C had retained his solicitors under a contingency fee arrangement. The district judge dismissed K's argument, rejecting a suggestion from C's counsel that if necessary C's witnesses could be cross-examined to clarify why the fees had been waived. Permission to appeal was granted on the ground that K had been denied a fair hearing in not being allowed to cross-examine C's witnesses.

K submitted that the waiver by C's solicitors of part of their fees was not in response to the particular embarrassment of the striking out, but rather it evidenced a prior understanding between C and his solicitors that C would never have to pay more than could be recovered from K.

Held

(1) It was appropriate to dispose of the appeal by re-considering not only the narrow point submitted by K but the entire indemnity principle point decided by the judge, with the benefit of cross-examination of the witnesses. On the evidence, C's initial instruction of his solicitors had been on an ordinary basis, in which C had accepted liability for their charges whatever the outcome, and had no element of a contingency fee. Accordingly, the costs order against K had not breached the indemnity principle. (2) The judge had in any event not been obliged to conduct an enquiry into the terms of C's solicitors retainer or to hear cross-examination on it because no sufficient reason had been shown to believe there was a point worth investigating, Times Newspapers Ltd v Burstein (Costs: Champertous Retainer) [2002] EWCA Civ 1739, [2003] 1 Costs L.R. 111 applied. Although the judge did not appear to have considered his ruling on cross-examination fully, he had clearly read the witness statements and was familiar with the history of the case, he would have expressed himself more fully if he had been responding to an explicit application from K, and in any event his conclusion would have been the same.

Appeal dismissed