1 March 2018Print This Post

Supreme Court urges rule committee to clarify status of law firm LLP acting for itself

Supreme Court: Application to appeal refused

The rule committee should look at clarifying whether a law firm LLP which acts for itself in legal proceedings is a litigant in person for the purposes of the CPR, the Supreme Court has said.

It refused permission to appeal in Halborg v EMW Law LLP [2017] EWCA Civ 793 – which held that the common law principle established in 1884 that a solicitor who acts for himself can recover his profit costs, continued to hold good.

This was because the application “does not raise a point of law which ought to be considered at this time”.

But the Supreme Court panel of president Lady Hale, Lord Hodge and Lord Briggs said: “This is an important point of principle which would be better considered by the Civil Procedure Rule Committee.”

Though not explicit, this seems likely to mean that the common law rule should be codified.

In the Court of Appeal, the Master of the Rolls, Sir Terence Etherton, traced the history of the issue to the Court of Appeal decision in The London Scottish Benefit Society v Chorley, Crawford and Chester (1884) 13 QBD 872.

He summarised this as saying that a solicitor who acted for himself as a party to litigation could recover not only his out-of-pocket expenses but also his profit costs, but he could not recover for anything which his acting in person has made unnecessary.

“The reason is not because of some special privilege but on the purely pragmatic grounds that (a) there has actually been an expenditure of professional skill and labour by the solicitor party, (b) that expenditure is measurable, (c) the solicitor party would otherwise employ another solicitor and, if successful, would be entitled to recover the costs of that other solicitor, and (d) 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.”

Sir Terence said the Chorley principle was applied after the introduction of the CPR in Malkinson v Trim [2002] EWCA Civ 1273.

What was then rule 48.6(6)(b) said: “For the purposes of this rule, a litigant in person includes… (b) a barrister, solicitor, solicitor’s employee or other authorised litigator (as defined in the Courts and Legal Services Act 1990) who is acting for himself.”

In Malkinson, Lord Justice Chadwick said this had to be read subject to paragraph 52.5 of the Costs Practice Direction, which said that a solicitor who, instead of acting for himself, was represented in the proceedings by his firm or by himself in his firm name, “is not, for the purposes of the CPR, a litigant in person”.

Sir Terence said: “The current CPR provision governing the assessment of costs awarded to a litigant in person is CPR 46.5…

“It is not in identical terms to the former CPR 48.6 which was the subject of the Malkinson case, but its derivation from that earlier rule and paragraph 52.5 of the then Costs Practice Direction is clear, as is the intention to continue to apply the Chorley principle as applied in the Malkinson case.”

The MR continued: “There is no discernible reason why the Chorley principle, and the rationale underlying it, should be applicable to a traditional partnership but inapplicable to an LLP.”

He went on to dismiss the submission that EMW was a LiP as defined by CPR 46.5(6)(a) – “a company or other corporation which is acting without a legal representative”.

Giving that provision “a purposive interpretation”, he said EMW should be regarded as acting with a legal representative.

By admin


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