Hurst & Anor v Denton-Cox

A signed bill or costs schedule ordinarily permits the court to assume that the indemnity principle has been observed, unless evidence justifies rejecting the certification. A costs order for the “costs of the action” may include reasonably incurred pre-action costs; the words “and incidental to” are not essential. A litigant should not bear costs caused by an undisclosed potential conflict arising because the opposing firm acts for the judge. A pro bono costs order requires representation provided without expectation of fee, gain or reward at the time of representation. An unenforceable conditional fee arrangement does not retrospectively become pro bono representation.

The claimants appealed decisions made during the detailed assessment of costs payable following the striking out of Mrs Hurst’s professional negligence claim against Mr Denton-Cox. The appeal concerned the indemnity principle, the recoverability of pre-action costs, costs wasted by an adjournment caused by a judge’s undisclosed connection with the defendant’s solicitors, and the appropriate rate and source of costs for Mr Hurst’s representation of his wife.

The court also considered whether the assessment judge could make a costs order under the Legal Services Act 2007 where an oral conditional fee arrangement was unenforceable.

1. Indemnity principle. The appeal was dismissed on the challenges concerning the January 2013 costs schedule and the alleged limitation of the recoverable costs to £9,255. The signature of the defendant’s solicitors on the bill was evidence that the indemnity principle had not been infringed. The explanation that travel costs were charged to one client and hotel costs to another did not establish that the certification was false. The schedule was not deployed and the claimant was not asked to pay those costs. In any event, the assessment judge had a discretion under CPR 44.14(2), and its exercise was open to him.
2. Pre-action costs. An order for the “costs of the action” is capable of including costs incurred before issue, including reasonably incurred pre-action protocol costs, where they are sufficiently connected with the proceedings. The absence of the words “and incidental to” does not exclude them. Whether particular costs fall within the order is ordinarily a matter for assessment.
3. Conflict and wasted costs. The defendant’s solicitors should have alerted the claimants before the hearing that the allocated costs judge was one of the firm’s clients. The claimants were entitled to seek an unconflicted judge without being exposed to a costs penalty. The assessed costs were reduced from £15,000 to £10,000, and the defendant’s solicitors were to pay the wasted costs caused by the adjournment.
4. Representation of a spouse. An oral arrangement under which Mr Hurst expected payment if the claim succeeded was not representation “free of charge” within section 194(10) of the Legal Services Act 2007. The assessment judge could not make a new section 194 order while assessing costs under an earlier order. The appeal on this issue was dismissed.

The claimants appealed decisions made by Master Rowley during the detailed assessment of costs ordered after Proudman J struck out Mrs Hurst’s claim. The High Court allowed the appeal only to reduce the assessed costs from £15,000 to £10,000 and dismissed the remaining grounds.