Julian Reed v Woodward Property Developments Ltd & Anor

A receiving party may recover only costs liabilities actually incurred under the indemnity principle. A solicitor’s certificate will ordinarily be accepted unless there is a real, evidenced reason to doubt it; speculative challenges are insufficient. A retainer may be oral or implied by conduct, and a conditional fee agreement may have retrospective effect where its wording clearly provides for that result. Where common costs relate to separate defendants, they should generally be divided on an evidence-based basis. A costs budget covering several defendants without distinguishing their individual costs may provide good reason to depart from the budget under CPR 3.18(b). The recoverable costs must then be assessed in the usual way.

The judgment concerned the detailed assessment of costs payable by the claimant to the second defendant under orders made after the claimant’s underlying claim against two defendants. The claimant challenged the second defendant’s retainer with DAS Law, alleged that some costs had been incurred for the first defendant, and argued that the approved costs budget should substantially restrict recovery.

The first defendant had entered liquidation and took no active part in the proceedings. The underlying claim against the second defendant had been dismissed, while judgment had been entered against the first defendant. The central issues were the validity and funding basis of the second defendant’s retainer, the division of common costs, and the effect of the undifferentiated costs budget.

1. Retainer and indemnity principle. The claimant’s challenge to the retainer was rejected. The indemnity principle required the claimant to indemnify the second defendant only for liabilities actually incurred. The solicitor’s certificate on the bill could properly be relied upon unless there was a real reason to doubt it. The evidence that DAS had acted for the second defendant over several years, with his knowledge and authority, was sufficient to establish a pre-CFA retainer, whether written or not.
2. Conditional fee agreements. The authorities did not establish that a retrospective CFA required a prior valid retainer. Forde v Birmingham City Council confirmed that retrospective CFAs were not prohibited. The contractual wording could give a CFA retrospective effect even where no prior contractual relationship existed.
3. Division of costs. The principles in Haynes v Department for Business Innovation and Skills and Dyson Technology Ltd v Strutt required non-specific costs to be distinguished from specific common costs. Costs relating exclusively to the first defendant were irrecoverable by the second defendant. Specific common costs had to be divided on an evidence-based basis, subject to proportionality. The close relationship between the claims did not merge two distinct cases against two distinct defendants.
4. Budget. The approved budgets incorporated the costs of both defendants without identifying the amount allowed for the second defendant alone. That provided good reason to depart from the budget under CPR 3.18(b). The budget was otherwise irrelevant to assessment, which had to proceed on the usual principles without treating the budget as a cap or applying an arbitrary percentage reduction.
5. The assessment would continue, including division of costs incurred while DAS acted for both defendants and assessment of later costs without reference to the budget. Directions were to be given to secure a proportionate conclusion.

The judgment describes the underlying proceedings, including an appeal which restored the claim against the second defendant and a later appeal dismissed by Mr Justice Bourne. Those decisions formed part of the litigation history but were not the subject of this detailed assessment judgment.