A SOLICITOR LLP IS NOT A LITIGANT IN PERSON (AND CAN CLAIM FULL COSTS)

NB on 1st March 2018 Litigation Futures reported that the Supreme Court had refused permission to appeal  in this case. The Court noted ““This is an important point of principle which would be better considered by the Civil Procedure Rule Committee.”

In Halborg -v- EMW Law LLP [2017] EWCA Civ 793 the Court of Appeal upheld the earlier decision that a solicitor LLP is not to be treated as a litigant in person when seeking to recover costs in an action in which it is a  party. The appellant’s arguments were – roundly and robustly – rejected.

“That is a slavishly literal interpretation which would produce an absurd and plainly unintended result. Mr Marven offered no policy rationale for such a distinction between, on the one hand, a solicitor litigant in sole practice who represents himself and, on the other hand, a solicitor litigant who is represented by the firm of which he is one of a number of partners.”

THE CASE

The appellant (Mr Halborg)  was a solicitor who retained the respondent (EMW) to act as his agent in litigation.   The defendant acted under a conditional fee agreement in these proceedings, described as the “main proceedings”. The main proceedings were  compromised by a substantial payment with costs to be assessed. EMW gave details of their costs to be included in the bill.  However the costs liability in that action was compromised, on undisclosed terms, which did not result in payment of any costs to EMW.

EMW issued proceedings under CPR 67 for an assessment of costs using the Part 8 procedure. They also issued a claim for damages in the Chancery Division for breach of contract.

Mr Halborg, applied to strike out the action as embarrassing. The Master declined to strike out the action. The defendant appealed. That appeal was refused. The decision on appeal was discussed in detail in an earlier post.

Mr Halborg was ordered to pay EMW’s costs.

THE GROUNDS OF THE APPEAL

Mr Halborg appealed arguing that EMW were litigants in person and  governed by CPR 46.5. They were only entitled to be paid recover costs on that basis – at a rate of £19 per hour.

THE DISMISSAL OF THE APPEAL

The Court of Appeal dismissed the appeal.  There were a number of grounds for rejecting the appellant’s construction. Sir Terence Etherton MR stated:

1. Secondly, Mr Marven submitted that a solicitor in sole practice who acts for himself in litigation is now to be treated as a litigant in person for the purposes of costs recovery, and in that regard is to be contrasted with a solicitor litigant who is represented by a firm comprising himself and one or more other partners. Mr Marven relied on the express words in parenthesis at the beginning of CPR 46.5(6)(b) for that submission: “(except where any such person is represented by a firm in which that person is a partner)”.

2. That is a slavishly literal interpretation which would produce an absurd and plainly unintended result. Mr Marven offered no policy rationale for such a distinction between, on the one hand, a solicitor litigant in sole practice who represents himself and, on the other hand, a solicitor litigant who is represented by the firm of which he is one of a number of partners. It is perfectly plain that Chadwick LJ in the Malkinson case did not consider that the CPR and Costs Practice Direction provisions under consideration in that case made such a distinction and attenuated the Chorley principle in that way. Indeed, he said (at [14]) that he regarded such a distinction as “absurd”. Paragraph 52.6 of the then Costs Practice Direction expressly treated the solicitor litigant in sole practice and the solicitor litigant in a multi partner firm identically. Further, so far as concerned the application of the indemnity principle, Chadwick LJ’s analysis was to acknowledge that the Chorley principle applied to the case of a solicitor litigant in a multi partner firm because there was no material distinction between such a solicitor and a solicitor in sole practice. Nothing has been shown to us to indicate that a conscious decision was taken by the Civil Procedure Rule Committee or the Government, in bringing into effect CPR 46.5, to create what, on the face of it, would be an irrational and indeed absurd distinction…

1. Finally, even if my interpretation of CPR 46.5(6)(a) and CPR 46.5(6)(b)(v) was incorrect, I would have concluded that EMW nevertheless falls outside CPR 46.5(6)(b) because, giving the words in parenthesis at the beginning of CPR 46.5(6)(b) a purposive interpretation, they include the situation where a solicitor member of a solicitors LLP is a litigant and the LLP is on the record as his or her legal representative as well as the situation where the solicitors LLP is both the litigant and acting as its own legal representative.

2. Any other interpretation would produce an illogical and indeed absurd contrast between the application of the Chorley principle to a solicitor partner of a partnership governed by the 1890 Act and to a solicitors LLP and its members. The Judge rejected that interpretation but I consider he was wrong on that point.