SOLICITORS WHO ARE REPRESENTED AT COURT TO PROTECT LEGAL PROFESSIONAL PRIVILEGE ISSUES ARE ENTITLED TO THEIR COSTS

One other aspect of the decision in  Addlesee & Ors v Dentons Europe LLP [2019] EWCA Civ 1600  that is worth looking at is the appeal in relation to costs. The Court of Appeal rejected the appellants argument that the solicitors, who were the respondents to the application, should not have attended court to contest it.  Those solicitors were entitled to their costs.

it is the lawyer’s duty to assert privilege. If, in order to fulfil that duty, they incur costs (including costs in resisting an application for disclosure) they are doing no more than fulfilling that duty”

THE CASE

The appellants had been unsuccessful in overturning an appeal on the issue that legal professional privilege remained attached to a company that had been dissolved. They also appealed the decision as to costs – arguing that the solicitors need not have attended the application at all.

THE JUDGMENT ON COSTS

The Court of Appeal dismissed the appellants’ arguments as to costs.  It was reasonable, on the facts of this case, for the respondent solicitors to attend and they should recover their costs.

The costs appeal
  1. Master Clark decided that Dentons had been the successful party overall, but had failed on some of the issues argued before her. She therefore ordered the investors to pay 80 per cent of Dentons’ costs of the application. Mr Grant argues that even if Dentons are to be regarded as the successful party, the investors should not have to pay their costs. The reason for that conclusion is that Dentons did not need to appear on the application. Having purported to assert privilege on behalf of their non-existent client, they should simply have left it to the court to decide what to do in the light of submissions made on behalf of the investors. They ought not to have actively contested the application; and if they did, they did so at their own risk as to costs, whatever the outcome of the application. The same principle would apply equally to the costs of this appeal.
  2. I reject that submission. As Blackburne J held in Nationwide and Lord Hoffmann held in Morgan Grenfell it is the lawyer’s duty to assert privilege. If, in order to fulfil that duty, they incur costs (including costs in resisting an application for disclosure) they are doing no more than fulfilling that duty. That was also the view taken by HHJ Simon Brown QC in Mortgage Express v Sawali [2010] EWHC 90181 (Costs), [2011] 2 Costs LR 288. It may well be that they will be unable to recoup their costs from their client (or former client) but that is a matter for them.
  3. In addition, Dentons were the only named party to the application notice (as well as the only defendants in the main action); and the relief sought included a mandatory order against them. It would, to my mind, be extraordinary if a person served with an application notice claiming mandatory orders against them was not entitled to appear before the court to contest the orders sought. It is perfectly true that there are circumstances in which a person is unwilling to release information without a court order; and requires the court order as a form of protection against any complaint by the person whose information is sought. In such cases the person holding the information may choose not to defend the application. But that is a matter of choice. I do not say that solicitors must always participate in contested proceedings for disclosure; merely that they may do so without overstepping the limits of their duty. If they do so in the absence of indemnity from their client or former client, they will be personally at risk as to costs if they are unsuccessful.
  4. In my judgment the Master was perfectly entitled to regard Dentons as the successful party and to award them the proportion of their costs that she did.