APPLICATION FOR EXTENSION OF TIME FOR DETAILED ASSESSMENT PROCEEDINGS REFUSED:

There are many lessons that litigation lawyers can learn from the judgment of Master Leonard in  Rattan v Carter-Ruck Solicitors [2019] EWHC B9 (Costs).  It is a case where a client agreed to a settlement and then, essentially, sought to recover the costs that had been paid to the solicitor.  The claimant then delayed for several years in the conduct of assessment proceedings. The court refused to grant the claimant an extension of time to apply for a hearing.

“The Claimant’s application for an extension of time to apply for a detailed assessment hearing must be refused. He has delayed in doing so for a period of over three years”

THE CASE

The defendant solicitors had acted for the claimant in a financial mis-selling claim. That claim had settled on the basis of payment of $500,000 to the claimant and £360,000 in costs. The claimant was paid his damages and the costs paid directly to the defendant solicitors.  The claim settled in December 2014. The claimant issued Part 8 proceedings for assessment of the bills delivered by the defendant.   The claimant has also issued proceedings in the High Court alleging negligence in relation to the settlement.

THE DEFENDANT’S BILL

The bill served by the defendant  in response to the Part 8 application for assessment totalled £627,641.50 (more than the £360,000 that the defendant had been paid).   The claimant complained about this.  That complaint was misplaced.

22.               The Points of Dispute start with a complaint about the inclusion in the Claimant’s breakdown of the Defendant’s success fee, given that the Defendant had agreed to waive it. This misses a fundamental point about detailed assessment between solicitor and client.  A solicitor is (subject to the permission of the court to amend) bound by the bill rendered and cannot ask for payment beyond what has been billed. On the assessment, however, the solicitor’s breakdown is not limited to the costs actually billed. The breakdown may demonstrate the reasonableness of a bill by showing that a higher charge could have been justified.

THE CLAIMANT’S DELAY

The court gave directions, these included an order that either party could request a hearing by 23rd July 2015.

THE DEFENDANT’S APPLICATION

The defendant sought to strike out the application on (i) grounds of delay; (ii) they were an abuse of process.  The claimant sought an extension of time for requesting a detailed assessment hearing.

THE MASTER’S JUDGMENT

The Master refused the claimant’s application.
61.               The first question to be decided is whether to grant the Claimant the extension of time he seeks for requesting a detailed assessment hearing. If an extension is not granted the Claimant will lose his challenge to the Defendant’s bills. The Defendant’s strike-out application will be otiose.
62.               With regard to the extension of time, I agree with Mr Newman that the provisions of CPR 3.9 are more to the point than the authorities relied upon by the Claimant.
63.               That is first because, as he says, an application for an extension of time to request a hearing (albeit made many years after the relevant time limit has expired) does not engage CPR 44.11.  A refusal is likely to have have costs consequences, but that is true of all applications.
64.               That is one crucial distinction between this case and Haji-Ioannou v Frangos & Ors and Less & Ors v Benedict . There are others, common to both parties’ applications. The first is that both of those cases were decided years before the Civil Procedure rules were amended, in April 2013, to place much more emphasis upon the importance of complying with rules, practice directions, and court orders, and before the Court of Appeal, in Denton , gave its guidance upon the relevant principles.
65.               Another, almost as important, is that those cases concerned delay in pursuing detailed assessment proceedings between opposing parties in litigation, not between solicitor and client. The receiving parties in Haji-Ioannou v Frangos & Ors and Less & Ors v Benedict had the benefit of an order for costs. The position was broadly comparable to the delayed enforcement of the judgment, rather than the delayed pursuit of a claim. As between solicitor and client, the issues may (as in this case) be quite different.
66.               Further, the court in Haji-Ioannou v Frangos & Ors and Less & Ors v Benedict was considering the effect of CPR 47.8 and CPR 47.14. Both provisions fall within the part of CPR 47 that apply, expressly, to costs payable by one party to another, meaning costs recoverable under an order. They prescribe the remedies available to a paying party where a receiving party  fails in good time to serve a notice of commencement of detailed assessment proceedings or request a hearing. They are inconsistent with, and have no  application to, a solicitor/client  assessment governed by CPR 46.
67.               As to whether it is right to treat the Claimant’s application for an extension of time as if it were an application for relief from sanction, in this case it seems to me that it is. I have also concluded that even if it were not, it would still be wrong to grant the quite exceptional extension of time sought by the Claimant.
68.               In Mark v Universal Coatings & Services Ltd [2018] EWHC 3206 (QB) Spencer J found that the “implied sanction” doctrine does not apply the principles of CPR 3.9 to every instance where the rules provide that something “must” be done. The question will turn upon the significance of the consequences of non-compliance. On that basis, it seems to me that it is right to apply the doctrine in this case.
69.               The Claimant is challenging costs that have already been paid to the Defendant. He is, in effect, seeking money from the Defendant. He has obtained an order from the court that allows him to do so provided that certain criteria are met, including that a hearing of the issues be requested within three months.
70.               His position is comparable to that of a party suing for a sum of money, who knows that the court has ordered that an application must be made for the hearing of his claim within a specified period. It is for him to protect his position either by applying for a hearing within the period prescribed by Master Simons’ order, or by making a timely application for an extension of time. He has done neither.
71.               I turn to the Denton criteria. The Claimant’s delay over a period of over three years is self-evidently serious and significant.
72.               It is wrong to say that the case is ready for hearing. The Defendant is quite right to say that the criticisms of the Defendant’s conduct, as set out in the Points of Dispute, are in a number of ways prolix and unclear. There are also significant concerns about their merits, which I will come to. However, if they were to be heard directions would be required, for example, for witness evidence and they would probably have to be determined as preliminary issues. The assessment would have to be heard over a number of days.
73.               Further, the Defendant is quite right to say that it is highly unsatisfactory that the Claimant now seeks to determine the same issues, simultaneously, in two different courts. If it were right for the detailed assessment, at this very late stage, to proceed at all it would probably be right to order a stay until the QB claim had concluded. That could add years to the process, and even without a stay it would take many months to resolve.
74.               The Claimant has given no good reason for his delays. Whilst I am sorry to note that he has had family difficulties, they would not come close to explaining his inaction even if he had not taken it upon himself, during that period of delay, to instruct solicitors to pursue a different claim against the Defendant.
75.               I do not accept that the Claimant’s status as a litigant in person has any bearing upon the matter. It would not furnish any justification for ignoring an order of the court in any event. Requesting a detailed assessment hearing requires only the completion of a form, the filing of some papers and the payment of a fee.  On the evidence the Claimant could have done that at any time, just as he could have instructed solicitors if he needed to. He did not act until he was effectively forced to do so.
76.               It was not  incumbent upon the Defendant to file the required papers and pay the required hearing fee in order to allow the Claimant to pursue his claim. Nor do I accept that the Claimant expected the Defendant to do so. That is not credible.
77.               As for the importance of enforcing compliance with court orders, even if the conduct of the Claimant did not demonstrate a deliberate decision not to pursue the costs proceedings (and in my view it does) his delays, in the absence of good reason and both before and after the Defendant challenged his failure to act, would be wholly unacceptable.
78.               If it is not right to treat this application as if it were an application for relief from sanction, then it seems to me that the simple question is this. Leaving aside the Denton criteria, is it consistent with the overriding objective to allow the Claimant the very exceptional extension of time he seeks? It seems to me that the answer must be “no”. That is partly because of the conduct of the Claimant to which I have referred and partly because of the force of the Defendant’s submissions (duplication of proceedings aside) in relation to abuse of process.
79.               In order to consider those submissions it is necessary for me to take a broad, preliminary view on the merits of  the Claimant’s case. Even on that basis it is clear that he faces major, if not insurmountable obstacles to reducing the Claimant’s chargeable costs and disbursements to a figure below the sum billed.
80.               The first, and biggest obstacle in that respect is that the Claimant wishes to use the detailed assessment proceedings to reduce the Defendant’s costs below a sum authorised by him in an agreed arrangement from which he benefited by some US $500,000 and avoided a potential bill from the Defendant for a much larger sum than has actually been billed. The Claimant’s complaint about the inclusion of the Defendant’s success fee in its breakdown (albeit misconceived) shows that he himself, rightly, understands that arrangement to be binding.
81.               The Claimant’s answer to that is that the Defendant was, in recommending that arrangement, in breach of duty, and effectively preferring its own interests over his. That contention does not stand up to examination, for reasons I will come to. The only real concern I have been able to identify in the September/October 2012 correspondence between Mr Pepper and the Claimant was Mr Pepper’s early attempt to incorporate into the settlement arrangement confirmation from the Claimant that he would not pursue a complaint about the Defendant’s failure to include in his Precedent H, or the figures used for negotiation purposes, the £144,822 incurred by him in pre-action costs before instructing the Claimant.
82.               Mr Pepper’s attempt to mix the resolution of that issue with advice on settlement might well have given rise to a conflict of interest, but he did not pursue the point. The arrangements approved by the Claimant did not incorporate any agreement to abandon his complaint about pre-action costs.
83.               The Claimant was not forced into approving those arrangements. The Defendant was not threatening to cease to act. On the contrary, Mr Pepper made it clear that if advice on settlement was not accepted the Defendant would continue to pursue the case on his behalf. The Claimant had already expressed his reservations about the Defendant’s view of the merits of this case, and his complaints about its management of recoverable costs. If he did not agree with Mr Pepper’s advice or the settlement arrangements proposed on the basis of that advice, he did not have to accept either of them. He could have carried on with the litigation, and gone to other solicitors if he wished.
84.               He did, however, agree. In consequence, it seems to me that by far the most likely outcome of any detailed assessment between the Claimant and the Defendant is that the Defendant’s costs would be assessed at the amount freely agreed to by the Claimant in October 2012.
85.               If that proves not to be the case, then I believe that the Defendant is right in saying that the Claimant is still unlikely to achieve any significant reduction in the Defendant’s billed costs. I say that for these reasons.
86.               First, as I have observed, the Claimant does not seem to have understood that detailed assessment is not simply a process of reducing the Defendant’s billed costs. It is aimed at establishing a reasonable chargeable figure, which may be substantially above the billed figure. The Claimant’s task in this case is to show that a claimed costs and disbursements figure of £883,313.84 should be reduced below £340,000. That looks unlikely, particularly given that most of his complaints about the Claimant’s conduct of the proceedings against the bank are manifestly weak and/or misconceived.
87.               His assertion, for example, that the costs budget limits imposed by Males J on 7 March 2014 limited the Defendant’s capacity to recover costs is entirely wrong. It did not limit the Defendant’s capacity to recover costs from the Claimant. It limited the Claimant’s capacity to recover costs from the bank. That he does not understand the difference is reflected in his remarkable complaint, made in the QB claim, that he lost the opportunity to have his budgeted, recoverable future costs reduced by Males J. The proposition that the Defendant lost interest in pursuing the case as a result of limitations on the Claimant’s cost budget is, for the same reason, insupportable.
88.               The claim that the bank had set a fixed reserve for of the claim, from which costs and damages were to be divided, (or more accurately, that that is what the Defendant thought), is not only speculative but at odds both with the specific correspondence I have seen, which shows that they were, in accordance with established principles, considered and quantified separately. The suggestion that the Defendant deliberately advised him to settle at an undervalue, based as it is upon that proposition, appears to me to be both unfair and, again, insupportable.
89.               Of the other criticisms levelled at the Claimant’s management of the claim against the bank only the Defendant’s omission of full pre-action costs from Precedent H and costs negotiations has any evident substance, but it has no bearing on recoverable costs.
90.               His complaints about the weight attached by the Defendant to the issue of document forgery are, on the evidence, also weak. Documents disclosed by the bank showed that a note of a meeting prepared by the Defendant cannot have been accurate. It cannot be right to say that the Defendant should have realised the full significance of the problem as soon as it was pleaded. The Claimant’s vague allegations to the effect that the Defendant misjudged or in some way invented the problem are, notably, not repeated in the QB claim, which would be the obvious place to make them in support of his claim for a loss of opportunity to continue with the litigation. The obvious implication is that the Claimant has no confidence in them. In any event the issue would affect only a fraction of the Defendant’s total costs.
The Interaction Between the QB Claim and the Detailed Assessment
91.               The Claimant’s solicitor, Mr Smart, has said that the Claimant has been advised that in order to make a claim in negligence or breach of contract, he first needs to have the Defendant’s costs assessed. No explanation is given of the basis for that advice. However I think that the point must be that his complaint that the Defendant should have recovered from the bank up to another £144,822 from the bank by way of pre-action costs, may be met by the response that  any more costs recoverable from the bank would just have gone to pay the costs and disbursements payable to the Defendant, above the £340,000 the Defendant was willing to accept within the settlement arrangement which the Claimant approved. So, he wants to use the detailed assessment proceedings to identify the extent to which that might be the case.
92.               If that is the point, I disagree with the Claimant’s approach, for two reasons. The first is that the Claimant could (and should) have brought these detailed assessment proceedings to a conclusion years ago. He seems rather to have abandoned the detailed assessment in favour of the QB claim, only to be told that he needs to pursue the assessment after all. That is not a good reason for requesting an extension of time.
93.               The second is that it that the issues arising in the QB claim can, and should, be addressed by the court in the QB claim  without the parties duplicating costs in two sets of proceedings. That is all the more so given that these detailed assessment proceedings are likely to end with the court certifying that the Defendant’s costs should be assessed at a figure already agreed by the Claimant. The court would not, in that event, undertake a hypothetical assessment of what the Defendant might have been able to charge above the agreed amount.
Summary of Conclusions
94.               The Claimant’s application for an extension of time to apply for a detailed assessment hearing must be refused. He has delayed in doing so for a period of over three years. On the evidence he chose to do that, giving priority to other matters including the conduct of litigation against the Defendant in another forum. Were I to grant the extension of time he seeks, the consequences would most probably be to extend these proceedings for months, and possibly years, in order to accommodate several days of hearings from which it is highly unlikely that the Claimant will derive any material benefit.
95.               It follows that the outcome of these detailed assessment proceedings must be that the Defendant’s costs will be assessed as billed.
96.               Under the circumstances, it is not necessary to address the Defendant’s strike-out application, although for the reasons I have given that application would have been likely to succeed.