Article taken from the January 2019 issue of the Liverpool Law Magazine. View the complete magazine here.

Andi Barnes of Complete Counsel examines recent costs cases and the recoverability of agent fees

The costs world no doubt hoped, following the Supreme Court decision in Crane v Canons Leisure Centre Limited [2007] EWCA Civ 1352, for a definitive binding precedent on the issue of recoverability of external agents’ fees as a base cost whether with or without a pre-LASPO success fee. Indeed, a plethora of costs case law was cited and the matter carefully considered with May LJ proclaiming his distaste for the unsavoury flavour of “satellite costs of assessing those costs in the Part 8 proceedings begun for that purpose” and Hallett LJ carefully addressing any potential breach of the indemnity principle and finding none.

However, it appears that the battle goes on with paying parties continuing to dispute recoverability of external agents’ fees as a base cost and/or recoverability of a pre-LASPO success fee. The problem appears to have arisen having regard to the starting point cited by May LJ in Crane; the definition of base costs given in the Collective Conditional Fee Agreement (CCFA). The Supreme court held the external agents’ fees of Costings Limited was work that a solicitor would have been retained to undertake and amounted to base costs suitably incorporated within the CCFA as “charges for work done by or on behalf of the solicitor which would have been payable if this agreement did not provide for a success fee”. Furthermore, the Supreme Court allowed a pre-LASPO success fee on such costs.

In Guy v Morpeth Borough Council (2006) Case 4ML01218, 9 December 2006 (cited in Crane) HHJ Hewitt held the issue turned “on the terms of the CFA and its proper construction” and considered not only the wording of the CFA but also any other terms and conditions that were said to be to be incorporated into that agreement on the definition of basic charges. He held that costs draftsman’ work was not recoverable as a base cost as it did not fall within the definition of “solicitor agent” in the CFA and therefore a pre-LASPO success fee was disallowed.

In Ahmed v Aventis Pharma Limited [2009] EWHC 90152 (Costs), Master Gordon- Saker, in the detailed assessment of costs to be paid by the Legal Services Commission, considered whether work done by a medical records agency, Medical Clerical Bureau (MCB), could be recovered as a base cost or disbursement. He was satisfied that, work done by MCB sorting and summarising medical records was solicitor’s work and therefore recoverable at a higher rate than the sum charged to the solicitor on the basis that “the work done by MCB to sort and analyse the medical records was solicitors’ work”. In Ahmed it was accepted that pagination was not fee earner work and photocopying was a disbursement with charges for photocopying recoverable where they held to be exceptional. The issue of whether a success fee was recoverable did not arise.

The matter of recoverability of MCB’s fees was further explored in CM (as
Dependent and Administratrix of the Estate of JM, Deceased) v a NHS Trust (2018) Case SCCO Ref: BRO 1801402, 5 December 2018 where I appeared for the Defendant paying party; a detailed assessment of costs concerning recoverability of MCB’s work as a base cost together with a pre-LASPO success fee. The matter was initially listed for detailed assessment on 12 June 2018 with the success fee having been assessed at 60% but was adjourned, part-heard, by Order of Master Brown for further evidence and skeleton argument “as to recoverability of sums claimed in respect of the work undertaken in respect of medical records by ‘MCB’ as profit costs and in particular as to whether such work may be charged as if undertaken by a fee earner and, further, as to whether a success fee is recoverable in respect of the same work”.

The Defendant put the Claimant to strict proof that MCB’s work was a base cost properly recoverable under Shoosmiths solicitor’s CFA. The Master was asked to consider, in essence, three questions; 1) Was the work undertaken by MCB a base cost or disbursement? 2) If any of the work was held to be a base cost, could a success fee be recovered on such costs? and, in the event that the work was considered to be a base cost, 3) What hourly rate should such work be recoverable if incorporated into the CFA? Such questions were framed against the background of whether there was breach of the indemnity principle and having regard to the new test of proportionality; MCB having been instructed after the implementation of LASPO.

The Master considered the wording of the CFA; in particular the definition given under various sections of that CFA including ‘paying us’, ‘basic charges’, how charges are calculated in particular with the use of the words “and other staff ” and under charges for advocacy. The Master approached the issue effectively in two parts. First, whether the MCB work could be considered as a base cost recoverable within the terms of the CFA and second, whether there was breach of the indemnity principle. In giving an extempore judgment whilst he considered some of the work undertaken by MCB could be considered to be solicitor work that on consideration of the terms of the CFA and its proper construction, having regard to the indemnity principle, he could not be satisfied that the wording of the CFA incorporated MCB’s work as a base cost. He was not therefore satisfied that such work could be recovered as a base cost within the terms of the CFA and therefore a pre-LASPO success fee could not be recovered on such work. The Master did not find pagination and photocopying solicitor’s work but held that sorting and analysing records was solicitor’s work.

It appears therefore that the battle goes on, however, against the backdrop of the Supreme Court having already expressed a marked distaste for such satellite costs on costs.

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