A costs judge was wrong to give the paying party the benefit of the doubt when she was not sure if there was an implied retainer in existence before the written agreement, a High Court judge has ruled.
He also found that a consultant at a law firm who did much of the work for a case in which he was a party was entitled to recover his costs.
Robinson v EMW Law LLP  EWHC 1757 (Ch) saw Christopher Robinson, a former partner of Milton Keynes-based EMW Law, start bankruptcy proceedings against the firm after it had sent him in October 2014 a demand for £85,000 plus interest.
This was on the basis that he was in breach of an individual voluntary arrangement entered into with EMW and other creditors, and the firm also threatened bankruptcy proceedings against him.
Mr Robinson obtained an interim injunction against EMW restraining the presentation of a bankruptcy petition.
The proceedings were finally settled by a consent order on 21 May 2015, whereby the interim injunction was made permanent, Mr Robinson was released from the cross-undertakings he gave upon obtaining the interim injunction, and EMW were ordered to pay 80% of Mr Robinson’s costs. It is those costs which were the subject of the assessment.
Mr Robinson instructed Buckinghamshire firm Fidelity Law to act for him following receipt of the letter from EMW on 7 October 2014, but there was no written agreement until 1 May 2015.
Mr Robinson acted as a consultant to Fidelity Law, and did a considerable amount of work, but not all of the work, in his own case. He and the partner at Fidelity who handled the matter charged £300 per hour, reduced to £240 under the consent order.
The total profit costs claimed were £68,632 up to 1 May 2015, and £9,270 for the period thereafter.
EMW disputed that there could be any liability in costs as between Mr Robinson and Fidelity prior to 1 May 2015, and contended that the claim for costs before then violated the indemnity principle.
Ruling on preliminary issues in a detailed costs assessment, Master James held that all costs for work done by Fidelity Law were disallowed save for those after 1 May 2015, and all costs for work done by Mr Robinson as a solicitor in his own cause were disallowed.
She found evidence on the file of an understanding that Fidelity would not charge for Mr Robinson’s time.
Mr Justice Roth, sitting with Master Haworth as an assessor, found that Master James had fallen into error by asking whether there was an implied retainer prior to the written retainer of 1 May 2015 and concluding that, as she was in doubt on this issue, she would find in favour of EMW as the paying party.
“Just because Mr Robinson could not positively establish that there was an implied agreement to pay, that does not leave the matter at large so that the court can then give the benefit of the doubt to the paying party,” he said.
Giving the paying party the benefit of the doubt – the approach when assessing costs on the standard basis – “has no relevance to the prior and more fundamental question of whether there is any liability at all in costs by the receiving party to his or her own solicitor, and ignores the role of the presumption”.
Rather, he continued, the relevant question was whether it was agreed between Mr Robinson and Fidelity that he would under no circumstances be liable for their costs.
Roth J said there was no express or implied term to this effect. “Just because the parties sought to set out an agreed position on fees on 1 May 2015 in terms which, when properly construed, are not retrospective, does not mean that they had agreed that there should be no liability for costs incurred prior to that date.”
Though Mr Robinson’s costs were not encompassed within his liability to Fidelity, Roth J found that he could recover them on the basis of the Chorley principle of a practising solicitor doing work in his own case.
That he was a consultant, rather than a partner of the firm, made no difference. “It seems to me that the rationale of the principle should apply equally 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.”
Roth J said the rate for assessment would be the reasonable rate for the litigation services which were carried out by Mr Robinson instead of being carried out by Fidelity.