Times Newspapers Ltd. v Burstein

A solicitor’s knowledge that a client is impecunious does not, by itself, make the solicitor’s continued conduct of litigation unlawful maintenance or champerty. The central question is the true nature of the retainer. A client incurs solicitors’ costs where the client is legally liable for them, even if payment is deferred, supported by a third party, or may never be enforced in practice. Impecuniosity may be relevant evidence, but it does not determine liability.

In detailed costs proceedings, a paying party must show a genuine and reasoned basis for challenging the receiving party’s liability for costs before extensive disclosure or cross-examination is ordered. Case-management powers should be exercised proportionately, and satellite litigation based on unsupported allegations should be curtailed.

The respondent obtained judgment in a libel action against the appellant and was awarded costs subject to detailed assessment. The appellant repeatedly challenged the respondent’s liability to pay his solicitors, alleging that the retainer was a sham or champertous because the respondent was impecunious.

A Deputy Costs Judge rejected the appellant’s application for further disclosure, a preliminary trial of the issue and cross-examination of the respondent’s solicitors. The appellant appealed to the Court of Appeal. The central issues were whether continued representation of a client known to be unable to pay costs was unlawful, whether the retainer was genuinely one imposing liability on the client, and whether further investigation was required for a fair determination.

1. Appeal dismissed. The Deputy Costs Judge had jurisdiction to order disclosure and cross-examination, but the mere raising of an issue did not require those steps.
2. The authorities established that the court must determine the true nature of the contract of retainer. A client who instructs solicitors is presumed to be personally liable for their costs. That presumption may be rebutted by an express or implied agreement that the client will never be liable.
3. The wider proposition that a solicitor unlawfully maintains proceedings whenever he knows that the client cannot pay his costs was unsupported. Conducting litigation on credit, or deciding not to enforce fees if the client loses, does not itself create champerty where the client remains contractually liable.
4. The principles discussed in Awwad v Geraghty & Co (A firm) [2001] QB 570 supported that conclusion. The statutory regime governing conditional fee agreements did not establish the broader rule advanced by the appellant.
5. On the evidence, the retainer letter clearly imposed liability on the respondent. The solicitors’ evidence, attendance notes and correspondence were consistent with that arrangement. There was no material suggesting that the agreement was a sham or had later been varied so that the respondent ceased to be liable.
6. Further disclosure and cross-examination would therefore have no realistic prospect of undermining or materially elucidating the evidence. Refusing the application was proportionate and fair, both under domestic law and under Article 6(1) of the European Convention on Human Rights.
7. The appeal was dismissed with costs as agreed. Permission to appeal to the House of Lords was refused.

• Court of Appeal (Civil Division) [2002] EWCA Civ 1739: dismissed the appeal from the decision of Deputy Costs Judge Jefferson.
• Supreme Court Costs Office: rejected the appellant’s application for further disclosure, a preliminary hearing and cross-examination concerning the respondent’s liability for solicitors’ costs.