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	England and Wales Court of Appeal (Civil Division) Decisions
You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> Joseph, R (on the application of) v Manches & Co [2002] EWCA Civ 188 (29 January 2002) URL: http://www.bailii.org/ew/cases/EWCA/Civ/2002/188.html Cite as: [2002] EWCA Civ 188

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IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
(Mr Justice Eady)

		Royal Courts of Justice Strand London WC2 Tuesday, 29th January 2002

1. LORD JUSTICE MANCE: This is an application for permission to appeal by Mr Joseph, following a judgment against him at a trial before Eady J. The judgment was in favour of solicitors Manches & Co, who acted on his instructions for him and a company, European Journal of Clinical Hypnosis (EJCH) in libel proceedings which were brought against the two of them, as well as against a third person, Miss O'Keefe, by a Mr McKenna between 1996 and 1999.
2. I start by recording that Mr Joseph filed his appellant's notice on 26th November 2001 and was therefore three days out of time. He explains that delay on the basis that he did not receive a copy of the court's order until late on 23rd November 2001 -- and indeed the order appears to be stamped 22nd November 2001. I therefore extend time for the period necessary to validate this application. Mr Joseph also asked for a stay of execution of the judgment pending any appeal for which he gets permission.
3. Mr Joseph is a hypnotherapist. He is the majority shareholder in EJCH, which publishes a journal of the same name. He is, or may have been held out to be, the publisher, but at the relevant times he left day-to-day control of the journal to an editor. That was an important part of his personal defence to the proceedings for libel.
4. In 1996 the journal published a trenchant letter from Miss O'Keefe, which criticised the activities of Mr McKenna, who is a stage hypnotist. Mr McKenna, through solicitors Schilling and Lom, brought libel proceedings against the three parties mentioned. For his defence, as I have said, Mr Joseph, the applicant, instructed Manches & Co, the relevant partner there being a Mr John Rubinstein. The respondents acted for the applicant until October 1998, when he decided to act for himself. They acted for EJCH until January 1999, when they applied to come off the record, making an application which Mr Joseph has alluded to, because it involved breach of confidentiality; but that aspect is not one which I see as presently material, though of course it might conceivably have some relevance on any assessment of costs.
5. During the period up to January 1998 the applicant paid on behalf of himself and the company some four interim bills amounting to £17,220, but further bills, submitted in August 1998 and August 1999, amounting to £29,383, remained unpaid and the present action by Manches & Co was brought for their recovery.
6. The most substantial contributor to those bills appears to have been a strikeout application made on behalf of Mr Joseph and EJCH by the respondents in February 1998. The basis on which it was brought was the case of Grovit v Doctor [1997] 1 WLR 640 in the House of Lords, which it was thought might support an argument of abuse of process. The application was issued after there had been a period of just over a year's delay by Mr McKenna but in fact also just after he had broken that delay by serving a reply and a lengthy request for further and better particulars of the pleadings served on the applicant's and EJCH's behalf by the respondents.
7. The judge held that the applicant was advised from the outset that the application was unlikely to succeed. However, if it had been successful, it would have brought a quick end to the action at a time before sections 8 to 10 of the Defamation Act 1996 or part 24 of the Civil Procedure Rules were in force. Other perceived advantages of a successful application included, for example, avoiding the costs of answering the lengthy requests for further and better particulars, and possibly flushing out more of the case mounted by Mr McKenna.
8. The matter came before Master Tennant ultimately on 17th June 1998. By then there had been introduced into the application certain video tape evidence which the applicant had obtained in the United States, which he informs me and the documents indicate was regarded as extremely detrimental to Mr McKenna, putting his activities in a possibly pornographic light. I am also told by the documents that the scope of the application was increased by the other side's treatment of it as a more conventional application to strike out for want of prosecution, under the principles in Birkett v James. It was not intended or presented as such, since those principles would hardly have assisted in the context of a year's delay well within the limitation period or in an action brought, and probably still remaining, within the limitation period. Master Tennant made an order which, in retrospect at any rate, was unfortunate and probably inappropriate, namely that Mr McKenna be cross-examined. The reason for the order appears to have been that Mr McKenna's representatives had sought to put in on his behalf a draft affidavit, unsworn, explaining or asserting that he genuinely intended to pursue the action to judgment and always had done. Mr McKenna appealed the order and swore his affidavit in order to do so. Mr Justice Thomas overturned the order at a further substantial hearing on 17th July 1998.
9. Thereafter, in August 1998 a bill of costs was rendered for over £20,000 by the respondents to the applicant, which caused him, as he puts it, considerable shock and horror, and he then took over the conduct of the case himself, not without success. Initially, he continued the strikeout application to a hearing before Morland J but withdrew it in the light of comments from the judge at the hearing. Ultimately he was successful in obtaining the conclusion of the action with a payment of a fixed amount, some £5,000, I think, in costs by Mr McKenna to him.
10. The proceedings by the present respondents to recover their unpaid fees led the applicant to make a number of allegations about their conduct of the proceedings. These can be summarised as follows. Mr Rubinstein should not have advised the applicant to issue the strikeout application or to contest a hopeless appeal against the Master's order. Mr Rubinstein had insisted on basing the defence on the weak ground that stage hypnosis was dangerous and had generally ignored Mr Joseph's suggestions and instructions, resulting in unnecessary work. Mr Rubinstein had failed to obtain and use evidence establishing that Mr Joseph, the applicant, had no prior knowledge that the journal was to publish Miss O'Keefe's letters. That absence of prior knowledge meant that the applicant was not liable for the publication and also negated any allegation of malice, according to the applicant. Such evidence, once he obtained it in the form of affidavits after taking over conduct of the action himself, was very much a dominant factor in persuading Mr McKenna to settle. Then, it is said, Mr Rubinstein failed to instruct counsel. Further, when they came off the record the respondents disclosed confidential information. Finally, Mr Rubinstein failed to make adequate use of the videos. A number of other criticisms are made. On that basis the applicant denied liability for the bills and counterclaimed for fees already paid and/or for unspecified damages.
11. In his judgment on the action Eady J made a number of observations to the effect that he could not fit the applicant's complaints into any viable cause of action or of complaint. However, having done that, he passed on to consider the substantive matters complained about, and it seems clear from his judgment and especially from paragraph 35 that he applied the appropriate test of whether the solicitors and the respondents had acted in a way that no other reasonable solicitor would or should have acted. (See Bolam v Friern Hospital Management Committee [1957] 1 WLR 582.)
12. He reviewed in considerable detail the criticisms of the conduct of the litigation and the tactical decisions involved in the case. He pointed out that, although Mr Joseph's lack of involvement in the publication should have given him a complete defence, that did not apply to the company EJCH, which the respondents were also defending, and, as the applicant himself said in a letter, he was not willing to just let the company go.
13. Then Eady J said that, while fair comment was the obvious defence, that depended upon the evidence of Miss O'Keefe, whom Mr Rubinstein regarded as unreliable. It was also open to the danger that her accusations might be regarded as facts rather than comments. Therefore, it was reasonable for Mr Rubinstein to prepare a defence of justification as well.
14. He reviewed the whole story of the abortive strikeout application. He concluded that the applicant was made aware of the reasons for bringing the application and its speculative nature and agreed to the step being taken. The Judge pointed out that it was obvious that time and money might have been saved if the application had not been brought or had been conducted differently, but that was with hindsight. He clearly felt that Mr Rubinstein could not be criticised for failing to abandon it, once the Master had made an order which was on its face advantageous to the applicant.
15. He rejected the suggestion that Mr Rubinstein had "churned" work to earn money, referring in particular to the fact that he had waived any charge for appearing before Thomas J on 17th July and had returned from his holiday to do so. He considered that other complaints had no foundation.
16. He did not consider quantum, save to say in paragraph 5 that Mr Joseph, the applicant, did not challenge the respondent's charging rates or the time spent. Ultimately, he awarded not only the full sum claimed but enhanced interest, to run from 23rd May 2001, because the claimants had beaten a part 36 offer of some £17,000 plus costs, which they had offered to accept in settlement of the litigation to that date. As a result, the applicant now finds himself faced with a bill of some £37,143.69, plus no doubt further costs.
17. The grounds of appeal which the applicant has settled are supported by a skeleton, which makes certain further points. In summary, they are as follows. Firstly, the applicant relies on Cook on Costs to submit that there should have been ordered an assessment of costs by a costs judge, rather than simply the amount of the unpaid bills. Secondly, he asserts that there was an agreement that the level of fees would initially be limited to £2,500 and couples that with an assertion that the respondents should have kept him informed of the escalating level of costs in 1998. Thirdly, he suggests that, given the unnecessary costs incurred in the strikeout application as a result of Master Tennant's decision (of his own motion apparently, rather than on application by either side) to order cross-examination of Mr McKenna, the respondents, as officers of the court, should bear some share of the unnecessary costs incurred. Fourthly, he attacks the judge's comment that the claim or defence and counterclaim could not be fitted into any viable cause of action or of complaint, pointing out that he was claiming repayment of fees paid and damages or sums equivalent to fees claimed.
18. Fifthly, he raises a raft of points relating to the strikeout application, such as that the judge had no evidence for his finding that the decision to pursue the application was driven by Mr Joseph; and that the judge should have held that Mr Rubinstein was negligent in pursuing it or allowing its pursuit, especially when Mr McKenna's request for further and better particulars had, as the applicant puts it, "entirely militated" against this. The applicant asserts that the judge's finding that Mr Rubinstein advised that Mr McKenna's appeal would fail was contrary to the evidence. Finally, he states that the judge was wrong to refer to the appellant's own pursuit of the appeal in person after July 1998 as of any relevance since, by late 1998/early 1999, the appellant really had no option, in view of all the costs incurred, but to go on with it.
19. Let me leave aside for the moment the first ground, namely that the judge ought to have remitted the assessment of costs to a costs judge. Let me go straight to the second point, the suggestion that the initial reference to £2,500 worth of fees was of relevance. So far as I can see, it was not pleaded that the level of the fees would initially be limited to that sum and the grounds of appeal do not present this as a point by itself; nor could they, sensibly, in view of the fact that by the end of 1997 at the latest the applicant had already paid over £17,720 costs without demur. The reference seems to me and is, as I understand it, no more than background. The reference to this initial understanding or agreement appears in the applicant's witness statement before trial and in his skeleton before me. Not only is it clear that the applicant paid without demur very much greater sums, as I have mentioned, but also the terms of his retainer, signed by him, provide that matters outside the respondent's control might affect costs and tactical decisions might have costs implications.
20. It is clear that this litigation developed and expanded far beyond anything that can have originally been anticipated. It did so quite independently of any possible negligence. The strikeout application was one cause. Another cause, which the applicant has mentioned before me today, was the plea to the effect that stage hypnosis, as conducted by Mr McKenna, was generally unsafe, unsound, or even dangerous. The applicant says that he never wished to pursue that. That accords with his case, which he lost emphatically before the judge, that he did not really approve of the defence. Certainly at a much later stage, at the end of 1998, he has shown me in an attendance note a reference to his wish not to pursue that defence, but that is quite a different matter at that stage.
21. It is clear that, in 1996, the applicant did for a time, conscious of the increasing costs, withdraw the respondent's instructions to act for him personally, but he later reinstructed them. So far as the present costs are concerned, the judgment accepts generally that the respondents and Mr Rubinstein were conscious throughout of the need to minimise costs and were intending to do so. Mr Rubinstein explained his acting himself as advocate in that context and, as I have said, did so before Thomas J free of charge.
22. The judge rejected any suggestion of churning or unnecessary duplication of effort. That comment is of course made without prejudice to a more detailed assessment by a costs judge, since the judge did not undertake such an assessment. One cannot at this stage know what that might reveal, if the respondent's charging were examined more closely than it has been so far.
23. The applicant's main specific complaint is that he was not kept properly informed about the increasing costs, particularly in the context of the strikeout application. I will deal with that complaint in that context when I come to it.
24. Taking the third ground, which I have summarised -- that is the suggestion that the burden of Master Tennant's order should not be borne exclusively by the applicant but the respondents should carry some of it -- that has no weight as between the applicant and the respondents. It is true that solicitors are officers of the court but I am afraid that does not mean that they bear responsibility for court orders which are later regarded as inappropriate and set aside.
25. The fourth point, attacking the judge's comments that the claims could not be fitted into any viable cause of action or complaint, has to my mind some force. The judge did make comments at the end of paragraphs 2 and 3 and in paragraphs 5 and 6, which seem to me, if I may say so, to strike an odd note. His comment regarding a total failure of consideration appears to take too literally the applicant's own metaphor regarding an order for the repair of a roof which was met with the building of a wall. The comment that the applicant's case was neither fish nor fowl because the only damage suggested was put as co-extensive with the costs incurred seems to me not to follow. If costs have been unnecessarily incurred due to the fault of the solicitor, then the damage suffered will equate with or include at least part of the costs incurred. Having said that, however, it does seem to me, as I have previously indicated, that the judge thereafter did examine all aspects of the applicant's claim in an appropriate and conventional manner. It seems to me that he gave reasons in the later paragraphs which indicate that the claim failed basically because the judge was not satisfied that there had been any breach of professional duty or negligence in the respects alleged, not because any of the conceptual problems, which the judge suggested or seems to be suggesting, in paragraphs 2, 3, 5 and 6 existed.
26. So I come to the main point, the fifth point, relating to the strikeout and its pursuit. The applicant complains, referring to paragraphs 42 and 43 of the judgment, that there is no or no sufficient evidence that the decision to pursue strikeout proceedings was "driven by the applicant", that the evidence was overwhelmingly to the contrary and that this was a central finding in the judgment. However, as I read those paragraphs, the judge did not find that the application was "driven by the applicant". It is true that he says at paragraph 42 that it was not in Mr Joseph's nature to sit idly by but rather to take the fight to Mr McKenna. As a general psychological observation, it seems to me, so far as I have read into the matter, that there may be something to be said for that, without intending any disrespect. (I do, on the contrary, consider that Mr Joseph has presented the matter very fairly, helpfully and clearly in front of me.) But he does obviously feel strongly about the matter and, so far as the documents show, has felt strongly about it throughout. What the judge seems to have been saying is that that was something which Mr Rubinstein appreciated. What Mr Rubinstein appears to have conceived is something which might bring the matter to a successful conclusion quickly. That it was he who conceived it seems to me clearly stated by the judge in paragraph 43, where he says:

"This is how it came about that Mr Rubinstein canvassed the possibility of making what he called a Grovit v Doctor application. He realised that this would be a speculative cause of action, but there was a possibility at least that matters might be brought to an early conclusion. Mr Joseph decided that he would go along with this proposal, although I am quite satisfied that the advice he was given on prospects of success was very cautious."

27. In reality, therefore, as Mr Rubinstein himself accepted, it was he who conceived the idea of the application. He may well have done so because he thought that the applicant wanted to dispose of the whole action as forcefully and quickly as he could. I do not see anything unfair or wrong about what the judge said.
28. Whether the judge's comments about the applicant's nature or Mr Rubinstein's perception of it were right or wrong only goes to Mr Rubinstein's motivation in suggesting the application. What really matters is how he suggested it and in what terms. The judge found that it was suggested in very cautious terms. Further, it was the applicant who, in words which the judge quoted, thought it:

" ... worth a gamble and gave ... the go ahead."

29. The judge's findings, therefore, appear to me in that respect to reflect the applicant's own case and not to be challengeable.
30. The applicant then criticises the judge for failing to take any or sufficient account of the fact that Mr McKenna's request for particulars:

" ... entirely militated against an application to strike out."

31. One can, at least with hindsight, have sympathy with this criticism. However, as the judge found, the applicant was advised from the outset that the application was speculative, a gamble. In its favour, on the other hand, there was not just a relatively limited period of just over a year's delay until the service of the reply and the request for particulars, but there was also the important background factor of Mr McKenna's defence of other litigation brought by Mr Gates and the possibility that his real wish in the present action was to suppress public debate about his practices as a hypnotist, rather than to bring the present action to trial.
32. That was the basis (combined of course with the delay), which was supported evidentially, and on which it was intended to submit that the process of litigation and his conduct of it should be viewed as an abuse of process within the principle in Grovit v Doctor. When one reads Grovit v Doctor, as I have done prior to this application, one sees that the present applicant's case was not so strong as Grovit v Doctor by any means. On the other hand that is not the issue. The issue is whether there was negligence in suggesting it in the terms in which it was suggested, which were, as I have said and as the judge found, very cautious.
33. Further factors supportive of the prospects of the application were the videos obtained by the applicant showing Mr McKenna's activities, as I have said, as having a potentially pornographic aspect. These were intended to be used to reinforce the submission that Mr McKenna could not be believed when he expressed a desire to go to trial. One can add that before Master Tennant the application must have seemed to have had at least some appeal or the Master would not have ordered a cross-examination of Mr McKenna following the production of the draft, unsworn affidavit, which denied that the proceedings were being brought to suppress debate and asserted that they were being brought to clear Mr McKenna's reputation. Eady J rejected the applicant's contentions that the application was one which no reasonable solicitor could advise and that it was an instance of churning (see paragraph 46 of his judgment). He regarded them as unreal. Having thought about it, I can see no real prospect of a contrary finding on appeal.
34. It is fair to say that the focus of Mr Joseph's submissions before me this morning seems to be on later events, particularly the events in mid-1998, rather than upon the original decision to issue the application. In this connection he challenges the judge's finding that Mr Rubinstein was of the opinion that the judge in chambers -- in the event Thomas J -- would on appeal overturn Master Tennant's order for cross-examination. The applicant submits that that finding was contrary to the evidence and again says it was of central importance to the judge's exoneration of the respondents. Mr Rubinstein did, however, give evidence in his witness statement at paragraph 44 that he did:

" ... specifically warn Mr Joseph ... that the odds were against him if Mr McKenna swore his Affidavit and pursued an appeal against the Order from Master Tennant that he attend court for cross examination on his sworn Affidavit as a preliminary issue."

35. At around the same time, on 22nd June the applicant sent a fax, which he has shown me, saying, amongst other things:

"I am writing to review our case as it stands and to consider the next move. It is my firm belief that McKenna will not sign his affidavit ..."

36. There is then a reference to the video tapes:

"Can he appeal without signing his affidavit? If he can, would a judge require him to sign it before giving judgment and, if he does sign it before going before the appeal judge, would the judge be obliged to view the videos in view of his paragraph 5.2 above?"

37. Paragraph 5.2 was an assertion in the draft affidavit about Mr McKenna's aims in conducting hypnotherapy and stage hypnosis on television. The letter of 22nd June went on:

"In any event I think that we should go for the 'kill', so to speak, by attacking McKenna and his legal advisers on every front. I know that it will involve extra costs, most of which will be recoverable, should we win. The chance of McKenna going bankrupt is one that I am willing to take."

38. There are then further paragraphs, all, I have to say, in an activist spirit, pursuing or suggesting various lines of enquiry or action.
39. Further, according to Mr Rubinstein's witness statement, paragraph 45, and as the applicant has confirmed this afternoon, although the letter deals with other subjects, it does say that the respondents were not to enter into any verbal negotiations with Schilling and Lom regarding a settlement and that the applicant would not accept any "on the steps of the court negotiation" and believed that he would receive a "better deal from the judge". He has told me this afternoon that those statements were made because of knowledge about Schilling and Lom's conduct in another context but, whatever the basis for them, the fact is that they indicated an uncompromising attitude towards the present litigation. By this date the applicant was aware that Mr McKenna had sworn his witness statement and was appealing. The applicant points out before me that there is no specific attendance note in which the respondents record the advice said, and now found by the judge, to have been given to him that the odds were against him. However, the judge had to assess the evidence as to whether something along those lines was said or not, and the correspondence was, as I have indicated, certainly consistent with the applicant taking a very robust line, whatever advice he was given.
40. The applicant also points out to me that the judge does not deal specifically with the contrary evidence which he and Miss Ursula James gave in her witness statement, namely that Mr Rubinstein advised that Mr McKenna would be foolish to appeal. Both he and she relate this advice to the immediate aftermath of the hearing before Master Tennant and, in Miss James's case, the advice is related specifically to the situation if Mr McKenna appealed "against being cross-examined on his still unsigned witness statement". That appears in paragraph 8 in her witness statement. When the advice was given, the applicant did not believe that Mr McKenna would ever sign his witness statement. He did, however, believe that, if the applicant did, this would open up use of the videos, which he evidently also believed would be highly beneficial. (See his letter of 22nd June 1998.)
41. It seems to me in the circumstances that there is nothing in the documentation which is inconsistent with the judge's finding. Indeed, there was evidence to support his finding. He was the judge of both the witnesses and the facts. This court would only intervene if satisfied he was clearly wrong in his conclusion, having heard witnesses and the facts. I think it would be very, very difficult indeed to seek to suggest that in the light of the material put before me.
42. The judge commented in paragraph 53 that, after ceasing personally to instruct the respondents, the applicant decided to continue to pursue the strikeout, despite the risks. The applicant says that he only did so because by then he had no option. It is true that by then the issue of costs had come very much further to the fore and, if the applicant had simply withdrawn, as was at one stage suggested to him, then he would undoubtedly have ended up paying all the costs. As it is, by pursuing the application and withdrawing at a later stage, he did fortunately manage to extricate himself from a difficult situation with some considerable success, using material he had himself gathered. So I am quite prepared to accept that there was no real option by late 1998 to going on, at least for a period, in the hope of applying further pressure which might lead to some resolution of the matter, although I am not satisfied that the judge placed any material reliance on the statement he made in paragraph 53 in the context of his earlier findings of fact on the evidence. It seems to me clear, on the contrary, that that statement was not a decisive part of his reasoning nor a critical reason for his earlier findings of fact regarding the circumstances in which a strikeout application was pursued and the appeal on cross-examination later resisted. There is, as I have said, quite enough other material as to the applicant's attitude consistent with the judge's earlier finding, and the judge also, as I have said, had evidence to support his earlier finding from Mr Rubinstein.
43. So I come back to the issue of costs and the complaint that the judge did not address the failure to advise regarding costs in 1998. This was certainly pleaded and the applicant tells me that it was to some degree argued, although, without a transcript, very fairly he cannot indicate how far. I would comment that the material before me makes clear that it cannot be right to suggest that there was a complete silence on the subject of costs during 1998 prior to August. The material which I have been given to read out of court by the applicant at my request, contains, for example, the letter of 25th February 1998, in which the respondents specifically pointed out that there had been an increase in the estimated length of the striking out application from one to two and a half hours, which would increase the costs of the application. Then, at some point, according to Mr Rubinstein, there was reference to an estimate for the respondents costs of £10,000. It seems to cover the whole of the strikeout application. It is certainly consistent with Mr Rubinstein's suggestion in his letter of 19th August 1998 --

"I had hoped that it [that is, the costs] would have been £10,000 profit costs, although in fact costs were over £20,000" --

even though that letter does not specifically refer to earlier advice.

44. The applicant's own letter of 1st June 1998 also contains a reference to costs in these terms:

"I am writing for us to consider our next move in the above case. It is my belief that the above action [that is the action between Mr McKenna and the applicant and the company] is all about Gates' case. Therefore, McKenna must not be given any opportunity to claim any kind of 'victory' against the EJCH, myself or Tracie O'Keefe. Should Tracie make an offer and McKenna accept with a statement to open court and should we lose on the 19th, he can with confidence maintain at the Gates trial that everything written in the EJCH was untrue. It is in his interests either to settle or claim his 'victories'.

"As you so rightly said at our last meeting, this action will cost a fortune if the case proceeds to trial. I agree and in the last resort I can always defend myself. However, the EJCH either has legal representation or it dies. Losing on the 19th, as we almost certainly will, will cost around £10,000, with a sizeable sum going to Schilling and Lom. In my opinion it would be better to keep the EJCH going, with the above sum going to your firm over period of time.

"Incidentally, there is no way that I could come up with any more funds in this current year. It follows then that we must reconsider if we should go ahead on the 19th. Incidentally, I do not believe for a moment that McKenna has any intention to go to trial.

"I am going to Holland this evening and I will call you on my return on Friday to discuss our options."

45. Again, that shows discussion of costs. Before me the applicant maintains that the £10,000 did not relate to the respondents' costs but covered both their costs and Schilling and Lom's costs. I must say that that is not how I would necessarily read the letter. It says:

"Losing on the 19th, as we almost certainly will, will cost around £10,000, with a sizeable sum going to Schilling and Lom."

46. That seems on the face of it to suggest an extra or some unknown additional sum going to Schilling and Lom, but that is of course not a matter that I can finally resolve today. Whatever the position, it is clear that the matter did not stop with the hearing on the 19th. On the contrary, that hearing was not only far longer than can have been envisaged previously but also led to further proceedings because of the order for cross-examination, which, as I have said, the Master unexpectedly initiated of his own motion.
47. After Master Tennant's order for cross-examination, when an appeal was in the offing, there is then the fax dated 22nd June, which I have already read, in which the applicant said that he appreciated that going for the "kill" and "attacking Mr McKenna and his legal advisers on every front" would involve extra costs. It is, of course, true that, when the applicant was informed in August 1998 that the costs had now exceeded £20,000, this led to him withdrawing instructions from the respondents to act for him personally. That of itself does not seem to me particularly surprising because, even on 1st June, he was indicating that he could not come up with any more funds that year, but he also describes himself as:

" ... shocked and dismayed by these sums bandied about for what I still perceived as a simple strikeout application."

48. That is a quotation from his defence. By August 1998, however, I do not really think that the strikeout application could by any means be described as a "simple" strikeout application. It had in fact taken a most unusual course. It had expanded enormously in length. A whole day had been expended before the Master. It had involved contentious video evidence. It had involved an order for cross-examination of Mr McKenna. It had then led to the swearing and filing of Mr McKenna's affidavit and another lengthy hearing on appeal before Thomas J, when the order for cross-examination was set aside, although, as Mr Rubinstein said and the applicant accepted before Eady J, Mr Rubinstein appeared free of charge on this occasion for both the applicant and the company.
49. Looking at the matter overall, the respondent's charging rates were identified in the original retainer. They were substantial. The fact that very large costs on any view were being incurred must have been obvious. I certainly accept that the absence of any estimate, save for the reference in one form or another to £10,000, could have relevance and should be taken into account on any assessment of the respondent's costs by a costs judge, but that is far from saying or showing that the costs incurred were negligently incurred or that the applicant would have acted differently at any stage if he had been given any further warning. The present application does not appear to me to have been mounted on the basis that he would have done, although the point was to some extent developed before me, when I asked questions about it. The applicant at one point before me complained about the loss of the opportunity to avoid the costs of the appeal to Thomas J on 17th July and failure to abandon that appeal after the judge had indicated his initial adverse reaction to the Master's order right at the outset of the appeal, but, as far as Mr Rubinstein was concerned -- and he was no doubt the major costs charger on the applicant's side -- he appeared free of charge during his holiday. That is the case, whatever the reason, whether it was kindness, or consciousness of the substantial costs already incurred, or embarrassment, as the applicant would suggest.
50. The applicant says that there were three other representatives of the respondents there and that their costs were incurred, or at any rate increased, by the failure to drop the appeal earlier. It seems to me that whether it was necessary or appropriate to have three other representatives of the respondents there might very well be a matter which it would be appropriate to consider on an assessment of costs, but is not a matter which otherwise is shown to arise.
51. The applicant complains about the risks in respect of the other side's advisers' costs, which he was caused to suffer because of the failure to advise him of the level of the increasing costs. Again, that does not seem to me the way in which the matter has been previously presented, but if one looks at that as a complaint, the reality is that the applicant avoided paying Mr McKenna's advisers' costs by disposing satisfactorily of Mr McKenna's action after the respondent ceased to act for him. He may therefore have been exposed to risks, but they did not materialise.
52. I have considered seriously whether I should take the course which I mentioned in argument this morning to the applicant, namely that of reserving the application in respect of the strikeout and its associated costs or simply of the appeal and its associated costs to the full court. I have further reflected on the matter out of court and, in the light of the documents which the applicant has put before me and for the reasons which I have attempted to set out, I have come to the conclusion that the applicant faces no real prospect and that the appropriate course is to dispose of the matter now by refusing permission to appeal.
53. For all those reasons, I see no real prospect of any success on any of the grounds which I have included compositely as the fifth ground and I refuse appeal on them.
54. That brings me back to the very first ground. The applicant's argument rests on decisions in this court summarised in Cook on Costs, which he has helpfully set out in his skeleton. It is the quoted passage from Cook on Costs, 2000 edition, page 42, paragraph 9(a)(v):

"In A v BCD [5 June 1997, unreported QBD] the court held that, whether payment in full had been made under protest or not, s.70(4) [Solicitor's Act 1974] put an absolute bar on obtaining an order for taxation after the expiration of 12 months after payment. However, in Thomas Watts & Co. v Smith (16 March 1998, unreported) [(1998) 2 Costs LR 59] the Court of Appeal held that even 12 months after payment all was not lost. Where the solicitors sued for their costs they could not simply ask the court, without any further investigation, to underwrite the amount they had chosen to claim. In such a case, where solicitors are applying for payment of their bill, the situation is analogous to one in which a claimant is applying for an unquantified sum which has to be quantified by a judicial process before judgment can be awarded for the appropriate amount. Judgment for damages to be assessed is a very common form of order under an application for summary judgment. In a quantum meruit claim for work done, the benefit of which has been obtained under a contract, where the contract sum has not been agreed, there may be an order for judgment to be entered for the claimant with the quantum to be assessed. If the court is to be asked to make an order for payment by the client of the amount claimed by the solicitors, a process of judicial assessment must first take place. The judicial assessment should be carried out by a costs judge. It is the costs judges who have the requisite expertise for that purpose. The court should not simply leave the client liable to pay the sum the solicitors have chosen, perhaps rightly chosen, but which has not been tested, to include in their bills. The defendant should have leave to defend by making representations on quantum as to the amount claimed in the solicitor's bill. In Watts the court ordered that the amount that ought to be paid by the defendant client to the claimant's solicitors was to be assessed by a costs judge and judgment entered for the amount so assessed. Paloma SA v Turner & Co (1999) Times, 30 August, CA was an attempt to obtain a declaration that Watts was wrongly decided. It back-fired. The court continued the decision and held that the prohibition of a detailed assessment in s.70 did not take away the need for a solicitor suing for his fees to prove that they were reasonable if challenged, in the absence of any express agreement as to what they should be. If the hourly rate is agreed, the solicitor must still prove the reasonableness of the hours spent. Although the procedure provided by the Act is convenient and advantageous for the client, perhaps for both parties, it does not take away the client's common law rights to raise the unreasonable amount of charges as a defence if the solicitor sues on his bill. The bill was ordered to be sent for assessment (but not detailed assessment) by a costs judge."

55. In summary, what is said is that the normal order in a case such as this, where a claim is for an unquantified sum by way of costs, is, despite the lapse of any period which might have expired under the Solicitor's Act for an order for taxation or assessment, nonetheless an order for detailed assessment.
56. In Paloma v Turner the court held that:

" ... the prohibition of a detailed assessment in s.70 did not take away the need for a solicitor suing for his fees to prove that they were reasonable if challenged, in the absence of any express agreement as to what they should be. If the hourly rate is agreed, the solicitor must still prove the reasonableness of the hours spent."

57. One notes of course those last phrases. Here, it may well be that the respondent's hourly rate was the subject of agreement in the original retainer letter. See also paragraph 5 of the judgment, where the judge recorded that it was not challenged before him. Paragraph 5 also records that the applicant did not challenge "the time spent", but that does not indicate that the applicant accepted the reasonableness of the number of hours spent, as opposed to the fact that that number of hours had been spent. Before me the applicant has indicated that he certainly did not accept the reasonableness of the number of hours spent. His pleaded "shock and horror" on receipt of the August 1998 bills certainly suggest that he was at most accepting the number of hours spent as a fact. The applicant did not ask the judge to order assessment by a costs judge, but he says -- and I am quite prepared to accept this for the present purposes -- that he did not know that this was open to him. The judge certainly did not mention or consider it as a possibility.
58. Further, I note the terms of the skeleton which counsel for the respondents used before the judge. This fails to address the possibility identified in Cook on Costs and indeed, by implication, as I read it, paragraph 19 in that skeleton assumes that that possibility did not exist. It thus says:

"Further, MJ is now well outside the time permitted by section 69 of the Solicitors Act 1974 within which to challenge the amount of MN's fees. The claim should therefore succeed in the amounts claimed."

59. I am left, having heard the applicant, with little doubt that, if he had known of the remedy, he would have sought it, especially with regard to the reasonableness of the work done and the time spent. I also consider that the judge might very well have ordered it if requested, and if indeed he had had it in mind, which, in the light of counsel for the respondent's skeleton, he may well not have done. The fact here is that every last penny of the solicitor's bills has been awarded. That is, as far as I have direct experience, a very unusual position on any assessment of costs. I therefore consider that permission to appeal is justified on this ground and I grant it, limited to this ground accordingly.
60. I will, however, repeat the gist of something which I said this morning to the applicant. It will no doubt be borne in mind -- and I know that he has it in mind because he said so -- that the pursuit of an appeal pursuant to this permission to appeal, and, if the appeal succeeds, the assessment of costs, would itself incur costs. Indeed, at one point this morning the applicant himself volunteered the thought that perhaps it would be to his disadvantage to obtain permission to appeal because, if he lost, ultimately it would only substantially increase the costs. I am sure he will continue to have that in mind, but it is not a matter in which I am directly concerned. My task is to consider whether there is a real prospect of success on an appeal, as I have sought to do.
61. I shall repeat one further thought which I expressed during argument: perhaps on this occasion there might be some means of curtailing or limiting the incurring of such costs. I would certainly wish to encourage it. In particular, if either or both of the parties feels that the services of a mediator could assist, I would certainly encourage them to speak to the Court of Appeal's office to obtain further information about that possibility.

MR JOSEPH: Your Lordship, just one other matter. Your judgment did not make clear -- to me anyway -- if the costs to be assessed are the costs of the sum they actually sued me for, or does it include my counterclaim, which was part of the same action?

LORD JUSTICE MANCE: Your counterclaim?

MR JOSEPH: The £17,000 has also not been assessed.

LORD JUSTICE MANCE: I think, insofar as costs of the action were awarded against you -- and I have no doubt that they were ... Let us just look at the judgment, the judge's order. I would have thought that you had a right to --

MR JOSEPH: That may well bring it down to the indemnity level.

LORD JUSTICE MANCE: Yes. I think you are absolutely right about that. You should have permission to appeal in respect of the judge's decision to award the costs claimed by way of capital and also in respect of his decision to award the interest claimed, insofar as the interest claimed relates to the capital, and particularly the enhanced interest, because that followed from your failure to beat the part 36 offer. So you should have permission to appeal in respect of that. Insofar as indemnity costs were also ordered against you as a result of your failure to beat the part 36 offer, you should also have consequential permission to appeal in the event that, as a result of your other appeals, you succeed in showing that it would be right to exercise discretion differently, particularly of course, if you beat the part 36 offer, though I can imagine that, in some circumstances, if you came very close to the part 36 offer, that could also have an effect on discretion. But it is consequential, I think, on the previous permission to appeal. Is that the point you were covering?

MR JOSEPH: What is the previous permission?

LORD JUSTICE MANCE: The previous permission is the basic permission to appeal which I am giving you in respect of the decision to order the sums claimed, rather than to order an assessment of costs.

MR JOSEPH: I see.

LORD JUSTICE MANCE: As I understand it, the point you are making is that, if the assessment of costs is ordered and if it goes particularly well, then you may beat the part 36 offer or come close to doing so, and that would have had an effect on the interest ordered and on the order for indemnity costs.

MR JOSEPH: But your Lordship --

LORD JUSTICE MANCE: The permission to appeal should cover those possibilities --

MR JOSEPH: Will it cover the possibility that I can appeal against the £17,000 that I have already paid, because that has never been assessed?

LORD JUSTICE MANCE: I see.

MR JOSEPH: So, therefore, there is much more money in the pot than they claimed. At the moment we concentrate only on what they want --

LORD JUSTICE MANCE: I have not really focused on that, nor have you developed argument about it. Let us just look at your counterclaim. What were you asking?

MR JOSEPH: I have asked for the return of my £17,000 costs, plus damages.

LORD JUSTICE MANCE: I do not think you can, can you, deal with that, because you paid that long ago, without insisting on any form of assessment, and it must have related to certain costs. Obviously, the costs judge in the present case will have to work out what costs have already been covered.

MR JOSEPH: Take this away from the legal profession. If I went to a store and I paid too much, I would have recourse to the courts to reclaim that money. I am sorry if I am being --

LORD JUSTICE MANCE: Show me where it is in your counterclaim. Just show me how you put it.

MR JOSEPH: It is in the pleadings, in my defence and counterclaim, and it is right almost on the last page.

LORD JUSTICE MANCE: Let me just --

"I am claiming the return of the £17,000 already paid ... "

MR JOSEPH: It is true, your Lordship, in every other walk of life, if I have been overcharged, I have recourse --

LORD JUSTICE MANCE: I think you are wrong, for this reason, are you not, that you paid the £17,000 long ago. It may be that, before you paid it or when you paid it, you might have had a right to ask for some assessment under the Solicitor's Act. I am sure you would have done, but you did not --

MR JOSEPH: I am talking about common law.

LORD JUSTICE MANCE: You paid it. It must relate to something, those costs. The present costs assessment judge will certainly have to consider what services, what work has been covered by the previous bill because they cannot double charge, they cannot claim something that has already been covered by a previous payment, but I do not think he can go back and consider the reasonableness of time spent, for which you paid many years ago without complaint. It may be this that the judge's comment related to about the difficulty of your cause of action. I do see the difficulty in the cause of action. How can you say the previous sums paid are due to negligence?

MR JOSEPH: I understand that and I am not arguing with your reasoning. However, it is my own silly way of thinking. If in the real world I go into a store and they overcharge me, I get my money back.

LORD JUSTICE MANCE: But with solicitor's bills, I am not sure, if you pay something voluntarily, unless you discover something wrong about it -- we have not been arguing about anything being wrong before the beginning of 1998 and these sums, you tell me, were paid well before then.

MR JOSEPH: In 1996 and 1998.

LORD JUSTICE MANCE: So that at the moment I certainly have not considered any complaint you might have about them, and it does not seem to me --

MR JOSEPH: I am not complaining. What I am saying is that, if your Lordship is prepared to consider that I might have been overcharged for this bill, and since the other bills that I have paid it has become part of the same case. Surely it becomes part of the case. What I am hoping for here, your Lordship, is that, if one bill is scrutinised, why not another? Just because I paid it, that is no defence.

I am not suggesting it for one moment, but what if there is fraud? I am not suggesting for a moment that there is, but conmen get money out of people all the time. They have no recourse because they handed over the money. That cannot be right. Under no circumstances do I suggest anything like that.

I am standing here as an ordinary person, a man from off the street, and I still consider myself hard done by, but it seems to me that there is one law for the lawyers and one for the others, including the costs, your Lordship.

I never mentioned this because I was advised that you would not listen to it and that is that at one time at this trial they were seven-handed.

LORD JUSTICE MANCE: You will be able to take that sort of point on an assessment. I quite agree that there is a limit probably to the number of solicitors who are entitled to turn up on any one application. Just give me a moment.

MR JOSEPH: I get under £10 an hour for my services and they get £1,000 an hour or more. How can it be fair? And I know that it is not within the remit of this court to contemplate that, but it is important to me.

LORD JUSTICE MANCE:

"Under the Solicitor's Act 1974 the power to order taxes conferred by subsection 2 shall not be exercisable upon application after the expiration of 12 months from the payment of the bill."

This litigation --

MR JOSEPH: But the precedent has overturned that.

LORD JUSTICE MANCE: No, that is when the solicitor is suing for his bill.

MR JOSEPH: But it does also say, even if it has already been paid. I am certain I read that.

LORD JUSTICE MANCE: No, it does not say that. In Thomas Watts the Court of Appeal held that, even 12 months after payment, all was not lost, when the solicitors sued for their costs.

MR JOSEPH: And I sued for the costs. I sued for getting it back and I lost, but nevertheless that is to say --

LORD JUSTICE MANCE: At the moment I do not see that this looks at all likely, but since I have not considered it and since it seems to turn on reading these cases, what I will do is I had better look at the full text of the cases and what I can do is put some reasons in writing one way or the other. If I give you permission, then certainly you will not complain. If I refuse you permission, are you content for me to deal with it in writing?

MR JOSEPH: Certainly.

LORD JUSTICE MANCE: Do you want to come back?

MR JOSEPH: I know it is going nowhere.

LORD JUSTICE MANCE: I will give you an answer in writing, if you are happy with that.

MR JOSEPH: I would appreciate that, your Lordship. May I say that is how I ended my last words to Eady J. I said was all I wanted was justice, some kind of equality. I feel here that in front of the law I am a second-class citizen and they have all the solicitors and might be rightly and might be wrongly but they have all the privileges.

LORD JUSTICE MANCE: I think we are probably leaving the --

MR JOSEPH: I understand, your Lordship. I am just simply saying that, since the costs -- this is about costs, and my costs which I have already paid was part of the case because I countersued and, according to precedent, because 12 months has elapsed and I paid, it is no defence. That is what the judgment says. That is how I read it. So, therefore, why not?

LORD JUSTICE MANCE: I have your point. I am just seeking to see if the White Book covers the point you are making.

MR JOSEPH: If there is no precedent for it, your Lordship, I will be happy for you to give your opinion.

LORD JUSTICE MANCE: There is some authority in the White Book but it does not refer to one of the cases mentioned. I think the White Book does not seem to bear out quite what Cook on Costs says. I think the right thing to do is what I suggested a moment ago, namely, read the cases out of court and give you an answer in writing.

MR JOSEPH: I shall be happy with that. Thank you.

LORD JUSTICE MANCE: So, that part of the application will stand over to be dealt with in writing.

I am just discussing a time estimate. It certainly should not take more than two hours at the very most, I would have hoped. Unfortunately, in this case estimates have proved rather misguided.

MR JOSEPH: It is probably my fault.

LORD JUSTICE MANCE: Well, there may be something in that but I shall not comment. It is probably just as much mine, Mr Joseph.