Malkinson v Trim

A practising solicitor who successfully conducts litigation through the firm in which he is a partner may recover the firm’s profit costs from an unsuccessful opponent. The solicitor suffers a measurable loss because the firm devotes professional time and resources to his case rather than to other clients.

Under rule 48.6 of the Civil Procedure Rules 1998, a solicitor acting outside his practice is a litigant in person and is subject to the applicable restrictions. A solicitor represented by his firm, or by himself in his firm name, is not a litigant in person. His costs remain recoverable under the professional-costs indemnity principle.

The appellant discontinued Chancery proceedings against the respondent, a practising solicitor, and thereby became liable under rule 38.6(1) of the Civil Procedure Rules 1998 for the respondent’s costs. The respondent had been represented by the firm in which he was a partner. Its partnership deed provided that services for a partner would attract no charge apart from expenses and costs recovered from another party.

Costs Judge Rogers held that the respondent could recover the firm’s costs under the principle in London Scottish Benefit Society v Chorley, Crawford and Chester. He transferred the appeal directly to the Court of Appeal. The issues were whether that principle extended to work performed by a solicitor litigant’s partners or the firm’s employees, and whether it survived the introduction of the Civil Procedure Rules.

1. Appeal dismissed unanimously. Lord Justice Chadwick delivered the leading judgment. Mr Justice Wall agreed. Lord Justice Potter agreed with the dispositive reasoning and also shared Lord Justice Chadwick’s doubt concerning the characterisation of the partnership provision.

2. The costs principle established in London Scottish Benefit Society v Chorley, Crawford and Chester rested on indemnity. A successful party should be compensated for expense unjustly caused by litigation, but costs are neither punishment nor reward. A solicitor’s professional time and skill are measurable. A solicitor may therefore recover for professional work undertaken personally or through employed staff, subject to omitting work rendered unnecessary by self-representation.

3. The same reasoning applies when the work is performed by partners or employees of the solicitor’s firm. Each partner has an interest in the firm’s profits, and the firm’s employees are paid from those profits. Professional time devoted to the litigation is unavailable for other clients. Refusing recovery would also encourage the solicitor to retain another firm and increase recoverable costs.

4. Rule 48.6(6)(b) of the Civil Procedure Rules 1998, read with paragraph 52.5 of the Practice Direction about Costs, distinguishes between two situations. A solicitor who supplies professional skill outside the course of practice is a litigant in person and is subject to rule 48.6, including the two-thirds restriction. A practising solicitor represented by his firm, or by himself in his firm name, is not a litigant in person. The established professional-costs principle continues to govern the latter’s recovery.

5. A partnership has no legal personality distinct from its partners. Although a partner cannot incur a contractual liability to the partnership, the absence of such liability does not defeat recovery. The partner suffers loss because the firm expends time and resources that would otherwise be devoted to other clients. Allowing the firm’s assessed costs is the practical means of giving effect to the indemnity principle.

6. The Court did not determine whether clause 13 of the partnership deed was an unlawful contingency fee agreement. Lord Justice Chadwick doubted that the clause itself had that character. The Court also left open the position of relatives of partners receiving services without a formal retainer and solicitors represented by firms in which they were employees rather than partners.

1. Court of Appeal: The appeal was dismissed. The respondent remained entitled to the firm’s costs, subject to assessment. The appellant was ordered to pay the costs of the appeal.

2. Supreme Court Costs Office: Costs Judge Rogers dismissed the appellant’s appeal from the costs officer. He held that the respondent could recover his firm’s costs under the professional-costs principle, subject to assessment, and transferred the further appeal to the Court of Appeal.

3. Costs officer: Costs Officer Worthy rejected the preliminary objection that the respondent had incurred no recoverable costs.