The Supreme Court Costs Office
No.1 of 2007
Angel Airlines SA v Dean & Dean
15 January 2007
McKay J (Sitting with Assessors)
These long running proceedings between the liquidators of Angel Airlines and the company’s former solicitors, Dean & Dean, culminated in an assessment of the solicitor’s bill to their former clients. The Master found that the retainer and terms of business had in fact been assembled from different documents, and that the client was not aware of the terms of business. Accordingly each item in the bill which was challenged had to be proved by the solicitors as having been undertaken on the client’s instructions, as well as being reasonable.
Angel Airlines was a Romanian company, and a representative of the solicitors visited Romania on a number of occasions, staying for several days on each visit. The agreed rate was said to be £4,000 per day and expenses. The Master found that there was no such arrangement, and, in respect of those visits which he allowed, he allowed 8 hours per day at £275 per hour (rather than the £500 per hour claimed).
At the assessment, which lasted ten days, Counsel for the solicitors argued that the matter should proceed under CPR 48.8, and that rule 48.8(2) should be applied (the presumptions) but that rule 48.8(2)(c) should not apply – ie, failure to warn the client that certain costs might not be recovered from another party – since there was no other party. Counsel for the liquidators also argued that CPR 48.8 should apply.
At the hearing the Master did apply rule 48.8, including 48.8(2)(c). There was a certain amount of discussion as to whether the proceedings were “contentious” or “non contentious”. The Master found that they were “litigious”.
The solicitors appealed. Counsel appeared ex parte before Penry-Davey J to apply for permission, and informed the Judge that on 28 March 2006 Holland J had already made an order for a complete rehearing of the assessment of an earlier bill before a different Costs Judge, relying on different grounds. Penry-Davey J gave permission to appeal. Subsequently on 24 October 2006 the Court of Appeal revoked the permission given by Holland J, on the basis that the Judge had been seriously misled [2006] EWCA Civ 1505. The Court of Appeal also set aside rulings of Treacy J on 17 July 2006 permitting Dean & Dean firstly to put forward on their proposed appeal, a draft amendment of their Points of Dispute and secondly, refusing Angel permission to obtain a second expert opinion on Romanian law. As a result, the appeal listed before Gloster J as a rehearing over four days was vacated and the appeal notice struck out in respect of that bill.
On the hearing of the appeal, for which permission had been given by Penry-Davey J, McKay J dismissed the appeal:
Because the Appellant now argued (contrary to what their advocate had submitted before the Master) that the Master was incorrect to have applied CPR 48.8, and that the matter should have been conducted under the Solicitors (Non-Contentious Business) Remuneration Order 1994. McKay J would not allow the Appellant to present a completely different case.
It was argued by Counsel for Dean & Dean that the Master had made a finding that the matter was non contentious. McKay J, having analysed the relevant passage from the Master’s judgment, could find no such meaning in his words.
Penry-Davey J had been misled – albeit unintentionally – by Counsel, and had he known the full position would not have granted permission.
Even if the appeal were to succeed, and the issue of the trips to Romania re-opened, given the unassailable finding of the Master in relation to the original retainer, the paucity of the attendance notes and the lack of other evidence, there was no likelihood of there being any significant improvement in the amount recovered by the Appellants.
The solicitor’s original bill had been reduced by some 75%, as a result of which the facts had been reported to the Law Society. As a result of these protracted proceedings the liquidators were now owed something in the region of £440,000. The solicitors entitlement to costs was in the region of £120,000. McKay J made an order for payment out of the money in court (approximately £220,000 agreed damages) at the end of January, unless by that time the solicitors had obtained an order from another Judge, or the Court of Appeal, staying that order.