Meretz Investments NV & Anor v ACP Ltd & Ors

On an appeal from a detailed assessment, the presumption that a solicitor on the record acts for and may charge the client is rebutted only by showing that the solicitor could never look to that client for payment. Where solicitors act for several clients without an express agreement dividing their costs, equal division is a general rule of thumb, subject to adjustment where work is attributable exclusively to one client or equal division would cause injustice. Costs of a solicitor employed as a factual witness are generally not recoverable for preparing evidence, but work performed in a solicitor’s professional capacity may be recoverable. A bill must be broken down sufficiently to separate those activities.

The claimants appealed three preliminary rulings made by Master O’Hare in the detailed assessment of costs following the underlying property litigation. The issues were whether solicitors on the record for four defendants were retained by each of them, whether the defendants’ costs should be divided equally, and whether costs relating to Mr Hawkins, a solicitor who also gave factual evidence, were allowable.

The claimants challenged the findings on retainer and equal division. The defendants challenged the disallowance of costs relating to Mr Hawkins. The central issues were the rebuttal of the retainer presumption, the proper allocation of common and individual costs, and the distinction between legal work and a factual witness’s preparation of evidence.

1. Retainer. The appeal against the 18 June Order was dismissed. Where solicitors are on the record for a party, a presumption arises that the party is liable to pay them. Payment by another person does not rebut that presumption unless the evidence shows that the solicitors could never look to the client for payment. The evidence did not make Master O’Hare’s conclusion clearly wrong, and the court would have reached the same conclusion. The retainer therefore extended to all four defendants.
2. Apportionment. The appeal against the 1 May Order was dismissed. In the absence of an express agreement, equal division is a general rule of thumb, not an inflexible rule. Costs attributable exclusively to one client should fall on that client. The court must also avoid injustice where the real contest is between particular parties. Master O’Hare was entitled, on the material before him, to find that most of the work was common to all four defendants and that equal division was fair. It was not necessary to redraw the bill merely to achieve minute accuracy.
3. Mr Hawkins’s costs. The defendants’ appeal against the 19 June Order succeeded in part. Costs of work assisting the litigation in a solicitor’s professional capacity, and attendance at trial to give evidence, were in principle allowable. Work done by him as a factual witness in preparing his own evidence was not allowable. The bill had to distinguish that work from work properly performed as a solicitor, such as supervising the final draft. The matter was remitted to Master O’Hare for further assessment; if a proportionate breakdown was not provided, the relevant preparation costs were to be disallowed.
4. The costs of the hearing concerning Mr Hawkins were costs in the detailed assessment.

• High Court (Chancery Division): appeals from the Supreme Court Costs Office were heard together. The appeals concerning retainer and apportionment were dismissed. The appeal concerning Mr Hawkins’s costs was allowed to the stated extent.
• Underlying proceedings: Lewison J’s judgment is reported at [2007] Ch 197. The present proceedings concerned costs assessment after that judgment.