ASSESSMENT OF COSTS CAN BE IN PRIVATE: DECHERT DECISION CONFIRMED BY THE COURT OF APPEAL
In Dechert LLP -v- Eurasian Natural Resources Corporation Ltd  EWCA Civ 375 the Court of Appeal upheld a decision that an assessment of costs could be in private.”
“The issue is clearly of importance for both parties. On the hearing of this appeal, Dechert was represented by Mark Howard QC, Simon Browne QC leading Tony Singla, and ENRC was represented by Lord Pannick QC, leading Richard Lissack QC, Benjamin Williams QC and Tamara Oppenheimer.”
Eurasian (ERNC) had applied for an order for the assessment of costs delivered by its former solicitors, Dechert LLP. The total amounted to £16.3 million. The work was done in relation to enquiries by the Serious Fraud Office.
In response to the application Dechert filed detailed evidence with 14 witness statements and 13 lever arch files of exhibits. Much of this evidence was described as “a mass of otherwise confidential and sensitive information which had come into its hands. Most of it would be covered by legal professional privilege.
However the SFO enquiry had developed into an active criminal enquiry. It was clear that if the assessment were heard in public the SFO would attend to gather information to assists its inquiry. ERNC made it clear that it was so concerned that, rather than allow the assessment to proceed in public it would withdraw its application.
An application before the Master that the assessment be heard in private was refused. Roth. J. allowed an appeal. That decision was upheld by the Court of Appeal.
THE DECISION IN THE COURT OF APPEAL
It was common ground that the basic principle was that the assessment of costs take place in public. The issue was whether the defendant, in disputing the bill of costs of their former solicitor, had waived privilege. The Court of Appeal held that it was not necessary to decide that issue, but held that the decision to order an assessment in private was an appropriate use of the court’s discretion.
Lady Justice Gloster
Likewise, in the present case, and irrespective as to whether ENRC has waived LPP absolutely, or merely to a limited extent, I take the view that the judge was right to exercise his discretion pursuant to CPR rule 39.2(3) to order that the hearing of the costs application, and any subsequent assessment pursuant to section 70 of the 1974 Act, should be heard in private in the interests of justice for the reasons which the judge gave in paragraphs 65 to 69 of his judgment. His conclusion that putting the material (whether subject to continuing LPP or not) into the public domain would prejudice ENRC as against the SFO in its criminal investigation cannot be faulted. There can be no doubt that the hearing “involves confidential information … and publicity would damage that confidentiality;” and that a hearing in private was “necessary, in the interests of justice,” to preserve ENRC’s entitlement to rely upon the presumption of innocence. Simply because there has, or might have, been an implied waiver of LPP does not mean that ENRC should be deprived of all protection for its previous confidential dealings with its solicitor. That is particularly so, where, despite Mr Howard’s submissions in relation to the seriousness of the allegations raised by ENRC against Dechert, in my judgment Dechert has no substantial legitimate interest in having the section 70 proceedings heard in public that could possibly outweigh ENRC’s entitlement not to incriminate itself through disclosure of confidential communications with its solicitor. Moreover, in my view, the fact that, if LPP had been lost, the SFO might theoretically have been able to obtain an order against ENRC for production of all relevant documents, would not have been an answer to the need to protect ENRC’s confidentiality or right to the presumption of innocence.
56. Nor can I accept Mr Howard’s submission to the effect that, if the judge were right, the consequence would be that in all detailed assessment proceedings a hearing in private could invariably be obtained by a client (as in most cases reference would be made to privileged documents), and such a result “would be to turn the general rule in the CPR on its head.” The CPR expressly allow for hearings in private whenever that is justified. Moreover there are all kinds of alternative procedures available which the court might adopt, rather than deciding to have the whole proceedings heard in private. For example, the court might decide to hear the case in public but to hear certain aspects of the proceedings (i.e. those parts concerning privileged documents) in private; further, or alternatively, if it heard the case in public, it could nonetheless make an order under CPR Part 31.22(2) restricting or prohibiting the use of a document which had been disclosed, even where the document had been read to or by the court, or referred to, at a hearing which had been held in public. As Lord Pannick submitted, and indeed, as was common ground, the reality is that in the vast majority of cases only the solicitor and his client, and their respective lawyers, are present at such hearings and only in exceptional cases does a detailed assessment concern, or attract the attendance of, any person other than the solicitor and client. In my judgment we do not need to decide in this case whether the absolute nature of LPP predicates that in every case involving a detailed assessment of solicitor and own client costs the client would be entitled to insist that any reference to privileged material would have to be heard in private. In my judgment that would not necessarily be the case since the wording of CPR Part 39.2 clearly involves the exercise of an appropriate discretion by the court if the general rule is to be departed from. One can imagine many situations where there would be no necessity whatsoever for a solicitor and own client costs assessment to be heard in private, notwithstanding the deployment of legally privileged materials. But this, as I said, this is not an issue we need to decide in this case. This was a case where, because of the ongoing criminal investigations into ENRC’s operations, the judge was clearly correct to conclude that the hearing should be in private under CPR rule 39.2(c) and (g).