THE “CHORLEY PRINCIPLE” CONSIDERED: SOLICITORS NOT ENTITLED TO RECOVER COSTS OF ASSISTANT SOLICITOR WORKING ON HER OWN CASE

In  JH v CH & SAP (Costs: the Chorley principle, Litigants in person) [2020] EWCOP 63 HHJ Evans-Gordon considered the “Chorley principle”, the principle that allows a solicitor personally involved in litigation to recover their costs.  The judge held that it did not extend to a case where a solicitor is working as a “litigant in person” within their own firm.

The fact that SAP asserts that she was a litigant in person, had not instructed KSN and was never under any obligation to pay them anything, together with KSN’s position that they were not acting for SAP is, in my view, fatal to the claim to assessment under the Chorley principle which applies only where the solicitor litigant has instructed, expressly or impliedly, a firm, including their own firm, to act for them.”

THE CASE

This was a case about the applicant’t power to revoke an enduring power of attorney. The first respondent was the applicant’s daughter. The daughter was a solicitor and, at the time, employed by KSN solicitors.  The daughter did not instruct KSN, but did the relevant work during office hours with their knowledge and consent.

THE JUDGMENT ON THE CHORLEY PRINCIPLE

The judge found that the Chorley principle did not apply on the facts of this csae.
    1. As far as the second respondent’s costs between April 2019 and 8 August 2020 (including any costs arising out of the latter hearing) are concerned, as a matter of principle, she is entitled to her costs. The second respondent was a party to the proceedings and she had an interest in the outcome in that she was the nominated attorney under the disputed LPA. I cannot see that her conduct was so unreasonable or unnecessary as to take it outside the usual rule.
    2. However, the real issue is whether SAP is entitled to recover her costs on the same basis as if she had instructed KSN to act for her notwithstanding the fact that she positively did not instruct them but acted in person. At paragraph 23 of her witness statement, prepared for this hearing, [Bundle/p.215], she states in terms that “I did not instruct KSN solicitors as attorney or in any other capacity”.
The Chorley Principle
    1. The second respondent relies on the Chorley principle as set out in
London Scottish Benefit Society v Chorley [1884] 13 QBD 872. In that case three principal solicitors successfully defended themselves and were permitted to recover their profit costs of so doing. The principle, as stated by the Court of Appeal, provides that a solicitor who uses his professional skills in his own cause ought to recover those costs because, otherwise, he would always employ another solicitor: it would be wrong in principle to permit an unsuccessful opponent to obtain a benefit from the solicitor acting for himself. However, such costs could not include matters such as a consulting or attending on himself: that case involved, I believe, sole practitioners and, at least prior to 2002, the principle appears to have been applied only to solicitors or partners who carried out their own litigation either personally or through their clerk.
    1. In Malkinson v Trim [2002] EWCA Civ 1273 the principle was extended to cover work done by other members or employees of the firm, not just the relevant litigant partner/sole practitioner or his clerk. It is important to note that the partner was acting through his firm. In his judgment, Chadwick LJ considered the effect of the CPR which, at the time, was in different terms to the current CPR 46.5. He concluded that the effect of the CPR was that “the position of a practising solicitor who chooses to represent himself in his firm name, or (where in partnership) to be represented by his firm, remains unaltered by the provisions of the CPR r.44.8.6”. He pointed out that such a person was not a litigant in person within the meaning of the CPR and concluded as follows:
“A partner who is represented in legal proceedings by his firm incurs no liability to the firm; but he suffers loss for which under the indemnity principle he ought to be compensated because the firm of which he is a member expends time and resources which would otherwise be devoted to other clients. The only sensible way in which effect can be given to the indemnity principle is by allowing those costs. And, as I have sought to explain, that is a solution which, for over a hundred years, the courts have adopted as a rule of practice.”
    1. In such cases, said Chadwick LJ, the CPR preserved the Chorley principle for the benefit of partners or principals and permitted them to recover the costs of the work done by their fellow partners and other employees of the firm. Chadwick LJ drew a distinction between the solicitor litigant who provides, in his own litigation, skill and knowledge in the course of his practice and the solicitor litigant who provides skill and knowledge in his own time and, typically, outside the office: the latter being a litigant in person. If this was an extension of the Chorley principle, in my judgment, it was a very small extension and may be said merely to have updated the principle in light of the realities of modern legal practice.
    2. The Chorley principle was further considered by the Court of Appeal in Halborg v EMW Law LLP [2017] EWCA Civ 793 in the context of limited liability partnerships. In that case EMW had issued proceedings in the SCCO against their client (coincidentally, also a solicitor) who had not paid their bill. On an interim application the costs judge awarded EMW costs summarily assessed in the sum of £17,600. Mr Halborg appealed on the basis that the costs judge had wrongly refused to treat EMW as a litigant in person and assessed their costs in accordance with CPR 46.5(2) and PD46 3.4.
    3. In the only judgment, the Master of the Rolls (“the MR”) set out the Chorley principle in the following terms:
“a solicitor who acts for himself as a party to litigation can recover not only his out of pocket expenses but also his profit costs, but he cannot recover for anything which his acting in person has made unnecessary;”
The reason this principle applies, said the MR, is pragmatic: there has been an expenditure of professional skill and labour, that expenditure is measurable; the solicitor would otherwise employ another solicitor; and, since he cannot recover for anything which his acting in person has made unnecessary, the unsuccessful party will have the benefit of that disallowance and so would pay less than if the solicitor party had instructed another solicitor. He held that the Chorley principle extended to LLPs because the rationale underlying the principle (loss due to expenditure of time and resources which would have been spent on clients) applies equally to LLPs. Further, an LLP is a corporation which is to be regarded as acting with a legal representative in the same way in which a company acting through an in-house solicitor in possession of a practising certificate or equivalent would not be treated as a litigant in person. The principle still only applied to principals, EMW being a principal.
    1. Up until this point the relevant solicitor’s firm, whether sole, partnership or LLP had been on the record as acting.
    2. In Robinson v EMW LLP [2018] EWHC 1757, Mr Robinson was a consultant solicitor for Fidelity Law Ltd. He had instructed Fidelity in an insolvency matter and they were on the record as acting for him. There was a formal retainer entered into on 1 May 2015 and it had been held, as a matter of fact, that there was an agreement between him and Fidelity that the latter would not charge Mr Robinson for any work that he himself carried out but only for work carried out by members/employees of Fidelity and disbursements. The Chorley principle arose in relation to the work carried out by Mr Robinson himself – was he entitled to recover this notwithstanding his agreement with Fidelity that he would not be liable to them for that work.
    3. Roth J found that the principle extended to circumstances “where a solicitor in practice instructs another firm to act for him, but relieves that firm from part of the work required in his case by doing it himself.” He found support for this in a decision of Teare J. in Shackleton and Associates Ltd v Shamsi [2017] EWHC 304 (Comm) who had held that a company was entitled to recover costs for litigation work carried out by its employed solicitor advocate. Although the company did not have to pay the solicitor advocate for his work, the indemnity principle was satisfied because the company suffered a loss because the solicitor advocate was not carrying out work for other clients.
    4. In all the reported cases the solicitor litigant was acting through his own practice or firm or had instructed a third-party firm and “relieved the firm of some of the work by doing it himself”. The essential point to be drawn from them is that the solicitor party was not acting in person, was not a true litigant in person. There is no case that I have been taken to which permits a true litigant in person to recover costs at a professional rate without being able to establish personal loss.
    5. This case is very different from those set out above. SAP was neither a partner of KSN nor had she instructed it to act for her and then relieved them of work by doing it herself. A very real and, in my judgment, major extension of the Chorley principle would be required in this case.
    6. If this were a case where KSN simply acted for SAP and there was no evidence of any agreement that she would not be liable for their fees, I would have no difficulty in implying a retainer of them by her, even if she herself carried out most of the work: there would clearly have been a consensual arrangement notwithstanding the absence of a formal retainer. The presumption of liability would apply, absent evidence of a clear agreement to the contrary. It would be on all fours with Robinson and that application of the Chorley principle.
    7. However, in this case the evidence shows that SAP never instructed KSN to act for her and has never been personally liable for any of their fees. They agree: they do not suggest that they were acting for SAP but assert, in effect, that she was acting for the applicant in her capacity as an employee of KSN. Indeed, in their letter to the court of 20th April 2020, they assert that “the [Second Respondent] and, who while employed at KSN solicitors, carried out work as a solicitor on behalf of JH, the Applicant”.
    8. The fact that SAP asserts that she was a litigant in person, had not instructed KSN and was never under any obligation to pay them anything, together with KSN’s position that they were not acting for SAP is, in my view, fatal to the claim to assessment under the Chorley principle which applies only where the solicitor litigant has instructed, expressly or impliedly, a firm, including their own firm, to act for them. She simply believed, as did they, that her profit costs would be recoverable in the usual way. SAP did not carry out the work to relieve her solicitors from some of the work nor has she suffered any loss as she got paid throughout. It is only KSN who will suffer loss and they are neither the principal nor instructed solicitors.
    9. Mr Reed says that, as CPR 46.5 does not apply, the second respondent can recover the sums set out in KSN’s bill because she undertook all her work as a solicitor employed by KSN and if she had not been “undertaking work for P” she would have been undertaking other chargeable work for KSN and she recognises that any costs recovered by her would have to be passed on to them. That, with respect, misses the point. After the appointment of both an interim deputy and a litigation friend, SAP was not carrying out any work for the applicant but for herself qua litigant in person.
    10. Mr Reed also draws comparisons with solicitors joined to proceedings in their professional capacities. He cites examples such as a solicitor whose client loses capacity and is joined as a party to further their client’s position; a solicitor property and affairs deputy or a welfare deputy; a former solicitor deputy who is subject to allegations of impropriety. I am not aware of any case where a solicitor acting for a party who loses capacity is then joined as a party in their own right ‘to further their client’s position’. They are sometimes instructed to act by the litigation friend, indeed, they may be the litigation friend, but that does not confer party status and they are still acting as an instructed solicitor. The other cases are simply not analogous – the solicitor must be a party if he wishes to defend his position as an attorney or defend himself against allegations of impropriety but he is not then acting as P’s instructed solicitor. Further, it begs the question of whether the solicitor litigant has either instructed their firm or is a partner of their firm in which cases, I would have no difficulty in saying that the Chorley principle would apply.
    11. I can see no basis for ordering SAP’s costs incurred between 12th April 2019 and 8th August 2019 to be assessed as if they were client/solicitor costs as between the applicant and KSN. It may be that some of the work carried out by SAP in that period arose out of her role as attorney under the LPA which, one imagines, contained a clause providing for her to be paid at professional rates. However, this would be a matter between her and the applicant’s executors which would have to be referred to the SCCO if there was a dispute as to quantum. Again, I would be happy to refer these costs to the SCCO to avoid any further time and expenditure being wasted. Any other costs can only be recovered on the basis that she is a true litigant in person.
    12. I can see the apparent unfairness in this from KSN’s point of view as SAP carried out the work during her hours of her employment with KSN. She did nothing wrong in that her employers knew she was working on the case. The fault lies with, it would seem, a lack of internal communication or a failure to appreciate the changed position and rectify it or to put the work on a proper footing. However, to allow her profit costs in these circumstances would be wrong in principle as it could lead to any legally qualified person recovering profit costs in personal litigation on the basis that they did the work during office hours and their employers did not object. That would drive a coach and horses through CPR 45(6) and I cannot see why the Chorley principle should be applied differently in the Court of Protection compared with other courts, notwithstanding the disapplication of CPR 46(5) to its proceedings.
    13. For what it is worth, in my judgment, as parties can always instruct a solicitor in the Court of Protection, I see no reason why the Chorley principle should not apply to its proceedings. Indeed, excluding it may well increase costs as those for attendance on clients and consultation would be recoverable if third party firms were instructed.