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	England and Wales High Court (Senior Courts Costs Office) Decisions
You are here: BAILII >> Databases >> England and Wales High Court (Senior Courts Costs Office) Decisions >> Owens & Ors v Biffa Waste Services Ltd [2004] EWHC 9004 (Costs) (22 April 2004) URL: http://www.bailii.org/ew/cases/EWHC/Costs/2004/9004.html Cite as: [2004] EWHC 9004 (Costs)

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IN THE HIGH COURT OF JUSTICE
SUPREME COURT COSTS OFFICE

		Clifford's Inn, Fetter Lane London, EC4A 1DQ
		22 April 2004

Master O'Hare

1. In this case I must give directions for the detailed assessment of the Claimants' bill of costs herein. The bill covers generic costs only. Bills claiming individual costs have also been served but these have not yet been referred to this office. A directions hearing, convened by me, took place on Thursday 1 April 2004. The draft directions sought by the Claimants appear as an exhibit to the witness statement of Gareth Morgan, who is a partner in the firm of solicitors instructed by the Claimants. The draft directions sought by the Defendants are attached to their application herein which bears the SCCO reference 04/A/221. The Directions hearing lasted all day and I reserved judgment. I also adjourned the Claimants' application for an interim costs certificate to the date upon which I shall give this judgment. This application bears the SCCO reference 04/A/112.
2. The Claimants' bill of costs relates to the claim for nuisance caused by a waste tip operated by the Defendants in Merthyr Tydfil. Proceedings first began in 1996. At that stage there were eleven Claimants all legally aided. In early 2001, because of approaches made by other residents who wished to become claimants, an application for a group litigation order was made. This was heard in October 2001 at which the Claimants' solicitors were appointed as lead solicitors and directions were given for the issue of a new claim form. Over 250 Claimants' names were added to the group register. Altogether 36 Claimants later discontinued proceedings but the claims of over 200 Claimants were successfully mediated. The matter had been proceeding as a Technology and Construction Court case in the Cardiff District Registry. The nominated Judge was His Honour Judge Graham Jones. By a consent order sealed on 11 August 2003 His Honour Judge Jones dismissed the proceedings "on the terms agreed between the parties" with an order that the Defendants do pay the Claimants' reasonable costs of the proceedings. He also permitted two particular Claimants to discontinue their claims with an order for costs in favour of the Defendants, and adjourned to the Costs Judge the issues as to what order for costs should be made for or against 34 other Claimants who had previously discontinued.
3. Since late 2001, if not before, many of the claims have been described as being funded by CFA agreements. A narrative to the bill refers to CFA agreements being entered into up to 6 September 2001. I am told that, in most if not all cases, each relevant Claimant signed two documents, a CFA agreement and some "Terms and Conditions" given in the name Hugh James Ford Simey. In most if not all cases both of those documents bear the same date, usually a date in 2001.
4. The Defendants allege that, in most if not all cases, the dates given are false, that therefore the documents are forgeries, and that their use in claiming costs in these proceedings amounts to an attempt to defraud the Defendants. I am assured by both leading counsel who appeared for the Defendants that these allegations are made following full consideration of the professional conduct rules binding upon counsel which concern the making of allegations of fraud.
5. By his witness stated dated 29 March 2004 Mr Gareth Morgan submits that the CFAs are enforceable and valid in law. In view of the gravity of the allegations being made I think it appropriate that I should set out in full paragraphs 5 to 9 of that statement.

"5. It is agreed that all the Claimants in the original Owens action had the benefit of public funding. It is also the case that the Claimants in the second Davis actions did not have the benefit of public funding and, therefore, their claims proceeded by way of conditional fee agreements.

6. I would make clear now that the Claimants accept that the dates which the CFA's bear are not the dates on which they were signed. The date on the CFA's reflect the dates on which the individual's file was opened at our offices and this would have been within a very short time of the initial consultation with the individual claimant when they first instructed this firm to represent them in the Action.

7. It is our case that the CFA's are enforceable and valid in law. The Claimants had instructed us to represent them in the group action and there was an immediate oral retainer in place that confirmed that we would act for them, either under public funding, or if not, by way of a conditional fee agreement. This was evidenced in the letter that appears at tab 35, page 283 of Mr Gibson's witness statement [a witness statement relied on by the Defendants]. Once it became clear that public funding was not available we entered into the conditional fee agreements with the Claimants covering the whole period of their instructing us from their initial instructions to completion of the case as agreed at the outset.

8. Efforts were made to obtain after the event insurance but such insurance could not be obtained. This is reflected in the CFA.

9. The dates on the terms and conditions were inserted by each Claimant. I believe these dates reflect the date on which each client signed the CFA and terms and conditions but there might be instances where a Claimant has inserted a different date. "

6. The bill in this case slightly exceeds £1 million and I am told that the further bills covering the individual costs of each Claimant amount to another £1 million. As is now standard practice in bills of this size the parties are encouraged to identify discrete issues which can be determined at a preliminary stage. The resolution of such issues often avoids or minimises the need for further hearings. In this case both parties agree that six issues should be determined at a separate hearing or hearings, the first of such hearings to take place not before October 2004. Both sides also agree that I should give directions calculated to lead to an orderly and convenient disposal of those issues. However, they strongly disagree as to what those directions should be.
7. The six issues which have been identified are as follows.

(i) The validity of the CFAs: ie whether or not the retainers are rendered unenforceable by reason of backdating: and whether or not there has been compliance with Regulations 4 and 5 of the Conditional Fee Agreement Regulations 2000.

(ii) What, if any, penalties for misconduct under CPR 44.14 or otherwise should be imposed on the Claimants and/or the Claimant's solicitors.

(iii) Whether the Claimants should be held to the estimate of costs given in their allocation questionnaire dated 30 November 2001.

(iv) Whether, upon grounds of proportionality, the Claimants' base costs should be subjected to the dual test of necessity and reasonableness.

(v) What if any part of the 90% success fee claimed is recoverable in this case.

(vi) What, if any, order to make under paragraph 4 of the order sealed on 11 August 2003 (concerning orders for costs for or against the 34 Claimants who previously discontinued claims).

8. There is also a seventh issue which, logically, should be heard immediately prior to the issue on success fees: what if any relief against sanction should be granted to the Claimants pursuant to CPR 3.9 if they are shown to have failed to comply with CPR 44.15 (providing information about funding arrangements). I am told that this is a matter about which the Claimants are in the process of taking out and serving another application notice.

REFERENCE TO A HIGH COURT JUDGE

9. The Defendants request me to refer the first two preliminary issues, if not all of the preliminary issues, for determination by a High Court Judge. It is accepted that I have power to do so (see CPR 3.1(2)(m) and Practice Direction B supplementing CPR 2, para 1.2). However there is a dispute as to whether it would be appropriate so to order.
10. The Defendants make their request because of the allegations of fraud they have made. However, they readily accept that I must not attempt to try those allegations in order to determine whether I refer to a High Court Judge. They also accept that not all cases in which allegations of fraud are made are suitable for determination by a High Court Judge. In my experience allegations of fraud are frequently made, especially where the paying party is acting in person. The particular features in this case which they say makes it suitable for determination by a High Court Judge are the strength of the evidence presently available, the persons against whom fraud is alleged (solicitors, ie, officers of the court) the numbers of such people involved, the numbers of clients who, if fraud is proved, must have been advised to participate in it, and the reluctance the Claimants' solicitors have shown so far to reveal basic details about the dates of signing until compelled to do so by these proceedings.
11. Another reason given for reference to a High Court judge was that the Defendants intend to invoke the High Court's inherent jurisdiction to punish solicitors for any improper conduct proved against them. The Defendants say that my power to punish solicitors is limited to the provisions of CPR 44.14 (court's powers in relation to misconduct). They would prefer to rely upon the unlimited jurisdiction which only a High Court Judge has or, at the very least, only a High Court Judge should exercise. Reliance was placed on a case the facts of which are well known to me, Chohan v Times Newspapers Ltd. Copies of the transcripts of Mr Justice Nelson dated 27 July 1998 and the Court of Appeal (dated 17 December 1999) were produced. In that case a bill of costs, which, with interest, exceeded £1 million was taxed by Master Rogers who reduced it down below £136,000. Invoices were produced to Master Rogers which satisfied him that the receiving party had paid or was liable to pay more than the taxed sum. Both sides sought a further review by a High Court Judge who ultimately found that the invoices produced and certain other documents were bogus. References to the inherent jurisdiction appear on pages 35 and 37 of the transcript of Nelson J's decision. In the Court of Appeal the emphasis was placed on whether the findings of fraud should be upheld (see in particular page 30) and, if so, what order it was appropriate to make under the court's inherent powers (see in particular page 44). In Chohan the allegations of fraud only arose in the hearings before the High Court Judge. The Defendants argue that, had those allegations been raised earlier, Master Rogers should have referred that part of the taxation to a High Court Judge.
12. The Defendants also placed reliance upon the decision of Holland J in A B v Liverpool City Council & Ors (unreported) May 2003. That case concerned difficult questions of construction of orders for costs in group litigation brought against several children's homes. By an order dated 6 April 2000 claims against the Third Defendant were ordered to proceed "as a separate group action". That order concluded: "all issues for costs be adjourned to Mr Justice Penry Davey." On 21 or 22 May 2001 Douglas Brown J made further orders affecting the group action against the Third Defendant which defined the liabilities for costs as between Claimants and as between Claimants and Defendants "subject to any subsequent order and without fettering the discretion of the trial Judge". Those directions also included a further provision:

"the decision as to whether the Claimant is entitled to any common costs shall be reserved to the trial Judge or to be dealt with as otherwise provided for by order of the court. "

13. Subsequently detailed assessments of costs were sought in the SCCO and were assigned to Master Hurst, the Senior Costs Judge. The claims having been settled, the matter had never proceeded to a trial court and no ruling on the Claimants entitlement to common costs had been made by a High Court Judge. Questions being raised as to the jurisdiction of Master Hurst to decide these questions, the nominated District Judge expressly referred the questions to him. On an appeal from the decisions Master Hurst made, Holland J stated as follows:

"… but fairness to the Appellants demands that I record my unease over the allocation of this issue to Master Hurst, rather than to a High Court Judge, preferably myself as Trial Judge. Of course I blame nobody, least of all Master Hurst … That said, an issue involving the relationship of all parties with each other ought in hindsight to have been ventilated before the Trial Judge – or at least before another High Court Judge – more particularly because there is a need to construe the Orders of Douglas Brown J. In these circumstances with the Appeal coming before me (quite by chance), I am seizing this opportunity effectively to have a rehearing. "

14. The Defendants also draw my attention to paragraph 2.6 of the Practice Direction supplementing CPR 29. This states that claims suitable for trial in the Royal Courts of Justice include professional negligence claims and fraud or undue influence claims.
15. For the Claimants Mr Farber submits that the SCCO is the appropriate venue for determination of the preliminary issues. All of them have a distinct "costs flavour" and are issues which the SCCO deals with as a matter of course. He states (in my judgment correctly) that procedure by way of oral evidence, including cross examination and representation of parties by counsel including leading counsel have become common place in large detailed assessments in recent years. Mr Farber submits that allegations of fraud were not expressly raised by the Defendants until the date of their application notice (18 March 2004) and the skeleton argument for this hearing. If the allegations succeed the solicitor's entitlement to profit costs and unpaid disbursements will become unenforceable and therefore will not be allowed against the Defendants. Any remaining questions as to misconduct can be dealt with adequately by a Costs Judge applying CPR 44.14. In his submission that is the only jurisdiction over solicitors it is appropriate to apply in a detailed assessment. If the Defendants wish the court to exercise its jurisdiction over solicitors they should take such proceedings directly to a High Court Judge. They should not seek to exercise them in these proceedings, which are brought in the name of and on behalf of the Claimants, not the solicitors. Whilst they accept that the Defendants have raised a genuine issue as to fraud the Claimants say that issue does not by itself render a determination by a Costs Judge inappropriate. As to the suggestion that the Claimants' solicitors have been slow to reveal certain details, counsel stated that the Claimants case will be that any such slowness can be explained as having been caused by a reluctance to assist the Defendants in what was thought to be a fishing expedition. Such reluctance may also be a product of the hostile atmosphere which has characterised the conduct of this litigation from the start.
16. Whilst a High Court Judges undoubtedly has wider powers than a costs judge, in my judgment, it would not be appropriate for me to refer any part of this detailed assessment to a High Court Judge. Having considered the particular submissions made to me I am satisfied that I can adequately determine these issues and have the necessary powers to deal with the consequences of my findings. It follows that I disagree with the assertion made about Chohan. Had the fraud allegations been raised earlier in that case they would in my judgment have been properly determined by Master Rogers. Also, I do not think that the Practice Direction supplementing CPR 29 has any bearing at all on the matter now before me. The Supreme Court Costs Office is part of the High Court in London even though, at present, it is located outside the Royal Courts of Justice.
17. In my judgment the decision in A B v Liverpool City Council does not support the Defendants' application for a reference to a High Court Judge in this case. In that case, unlike this one, there were several references in orders indicating that issues of costs should be determined either by the trial Judge or another High Court Judge. No such orders have been made in this case.
18. I acknowledge that my jurisdiction to make penalty orders against solicitors in the circumstances of this case is limited to CPR 44.14, the wasted costs jurisdiction and its legal aid equivalent (Civil Legal Aid (General) Regulations 1989, reg.109). However, I am not persuaded that this is enough to warrant a reference of any part of this detailed assessment to a High Court Judge. It seems to me that the proper course for the Defendants to adopt, if they wish to bring the fraud allegations to the attention of a High Court Judge, is to commence separate proceeding in the name of the Claimants' solicitors. In my researches into case law since the hearing I have found two precedents for such proceedings: Re A Solicitor (1978) 122 Solicitors Journal 264 and Re A Solicitor [1983] CLY 3601. The latter case concerned a solicitor, Glanville Davies, who was struck off by an Order made by Vinelott J. The circumstances leading to that Order included a taxation in this office in which a bill of costs delivered by the solicitor had been heavily reduced. Several attendance notes produced in support of the bill were held by the Taxing Master to be fictitious.

DISCLOSURE OF DOCUMENTS

19. The Defendants seek disclosure of the following documents:

i. All correspondence between the solicitors and each Claimant, relevant to the execution of each CFA.

ii. All attendance notes made by the solicitors, relevant to the execution of each CFA.

iii. All correspondence passing between the solicitors and the after the event (ATE) insurers they approached in relation to these proceedings.

iv. All attendance notes made by the solicitors of discussions between them and such ATE insurers in relation to these proceedings.

20. Documents relating to the ATE insurers are relevant to questions concerning compliance with the CFA Regulations. Solicitors must consider ATE insurance and also advise clients as to their liability for costs. The correspondence and attendance notes relating to execution of the documents are relevant to the issues of backdating. They may tend to prove or disprove the improper conduct being alleged by the Defendants. In Hollins v Russell [2003] 1 WLR 2487 the Court of Appeal encouraged disclosure of CFAs but discouraged disclosure of attendance notes and other correspondence. Paragraph 220 of the judgment states:

"So far as matters of procedure are concerned, we consider that it should become normal practice for a CFA to be disclosed for the purpose of costs proceedings in which a success fee is claimed. If the CFA contains confidential information relating to other proceedings, it may be suitably redacted before disclosure takes place. Attendance notes and other correspondence should not ordinarily be disclosed, but the judge conducting the assessment may require the disclosure of material of this kind if a genuine issue is raised. A genuine issue is one in which there is a real chance that the CFA is unenforceable as a result of failure to satisfy the applicable conditions. "

21. The Defendants acknowledge that the disclosure they seek is exceptional but argue that the circumstances of this case merit an exceptional order. Reliance is placed on paragraphs 80 to 82 of the judgment and in particular a sentence in paragraph 81 which I shall reproduce below in italics:

"80. We conclude, therefore, that if, in costs proceedings, a party seeks to rely on the CFA, as a matter of fairness she should ordinarily be put to her election under the Pamplin procedure. (This procedure applies whether or not the document is privileged. It is no answer to an exercise of the discretion to contend that the document is privileged.) This is not simply because of the fact of reliance but because of the centrality of the CFA in an assessment of costs in which a CFA is relied upon. If the party does not wish to produce the CFA, she can theoretically undertake to prove the terms of the agreement in some other way. However, we doubt whether costs judges will in general be prepared to accept merely oral evidence of the existence of such an agreement and its terms. On the other hand, the court has a discretion in putting a party to his election to allow parts of it to be redacted if, for instance, those parts contain material which there is a good case for saying should not be revealed to the other party even for the purposes of the assessment only, and which it would not be unfair to the paying party to withhold. For instance, they may relate to legal advice on matters which have not been resolved by the claims in respect of whose disposal the success fee is claimed (for example, claims in separate proceedings), or further proceedings between the same parties may be anticipated. Moreover, there may be exceptional cases in which the costs judge is prepared to say that no purpose would be served by disclosure of the CFA. However, we have been unable to think of any circumstances in which this might arise, but the possibility exists.

81. The appellants in the present cases also seek disclosure of the attendance notes prepared by the receiving parties' solicitors showing compliance with regulation 4. We do not consider that these should ordinarily be disclosed. We consider that the costs judge should not require these to be disclosed unless there is a genuine issue as to whether there was compliance with regulation 4. The measure of explanation given to the client is largely a matter of fact and we consider that it is, therefore, appropriate that the paying party should have to rebut the presumption arising from the fact that the receiving party's solicitor, an officer of the court, has signed the certificate of accuracy.

82. Although the procedure envisages that the costs judge will put a party to her election as to the disclosure of the CFA, now that it is clear from our judgment in this case that this is to be the general practice, we hope that receiving parties will disclose the CFA without more ado. It would obviously lead to further costs and delay if receiving parties were to take an unreasonable view on this issue. "

22. The Defendants also rely on a passage in the judgment of Pumfrey J in South Coast Shipping Co Ltd v Havant Borough Council [2002] 3 All ER 779 which was quoted with approval in paragraph 84 in Hollins:

"This is not intended to suggest the costs judge may potentially put the receiving party to its election in respect of every document relied on, regardless of its degree of relevance. I would expect that in the great majority of cases the paying party would be content to agree that the costs judge alone should see the privileged documents. Only where it is necessary and proportionate should the receiving party be put to his election. The redaction and production of privileged documents, or the adducing of further evidence, will lead to additional delay and increased costs. "

23. The Defendants say that disclosure of documents in this case is necessary and proportionate.
24. For the Claimants, Mr Farber submits that such an order for disclosure would be inappropriate. Although, since the questions are raised, they are bound to be looked at at the detailed assessment, the proper order for me to make is to require both sides to file witness statements in advance of the hearing. The witness statements filed by the Claimants will have to cover all the points raised by the Defendants and may well exhibit documents. By seeking disclosure, the Defendants were wrongly attempting to elevate these proceedings into substantive proceedings. I was invited to bear in mind the well known dictum in Burstein v Times Newspapers Ltd [2003] Costs Law Reports 111 at 127:

"Satellite litigation about costs has become a growth industry, and one that is a blot on the civil justice system. Costs Judges should be astute to prevent such proceedings from being protracted by allegations that are without substance. "

25. The Claimants also submit that the disclosure of correspondence and attendance notes between solicitors and Claimants would be disproportionately expensive (there are over 200 claimants) and the disclosure of correspondence and attendance notes with ATE insurers would reveal sensitive information the publication of which might damage other cases.
26. Having considered these matters carefully I have come to the conclusion that it is not at present appropriate to order the disclosure sought. The decision of Pumfrey J in South Coast Shipping makes clear that, while in many respects the assessment of costs resembles ordinary litigation, it differs in important respects, among which are the lack of any provision for disclosure of documents to an opposing party (para 12). The disclosure referred to in that case and in paragraphs 80 to 82 in Hollins is disclosure to the Costs Judge not disclosure to the opposing party. Paragraph 80 expressly states that this procedure applies whether or not the document is privileged. I accept that CPR 3.1(2)(m) is wide enough to permit me to make orders for disclosure of unprivileged documents to the Defendants and that legal professional privilege may not apply where the party seeking disclosure is able to establish a strong prima facie case of fraud (see Supreme Court Practice para 31.3.22 and the cases therein cited). I also accept that the decision of Pumfrey J dwells upon the confidentiality of privileged documents not unprivileged. For example, in paragraph 31 he states:

"The familiar rule that the other party is entitled to see discloseable material even if the party which possesses it does not deploy it can have no application when the material is privileged. "

27. That sentence leaves open the possibility of applying "the familiar rule" in respect of undeployed material which is not privileged. However it is clear that in that case Pumfrey J treated privileged and unprivileged documents alike (see para 57). Also, in Hollins, the Court of Appeal plainly refers to disclosure of a CFA to the Costs Judge only in the first instance (see para 71) without deciding the question whether CFAs are privileged (see para 79).
28. At the hearing I sought to put pressure upon Mr Farber to accept that it is almost inevitable that the court will later put his clients to their election as to the documents now being sought. In doing so I had in mind paragraph 10.5 of the SCCO Guide which states as follows:

"The production of documents at a detailed assessment hearing may well cause substantial delay to that hearing … receiving parties should therefore consider in advance what voluntary disclosure to their opponents they are willing to make and, how such disclosure can be achieved before the detailed assessment hearing without substantially damaging any privilege they wish to retain. If necessary, directions can be made by consent. Directions can also be made providing split hearing dates or times so as to facilitate the orderly disposal of the points in dispute … "

29. I should also record that voluntary disclosure is frequently agreed in test cases in the SCCO (a list of which appears on the Court Service website) and that disclosure between the parties was agreed in R (Ajaelu) v Secretary of State for the Home Department, detailed assessment proceedings heard by Master Hurst in 2003 in which substantial allegations of fraud were raised against the receiving party's solicitors. Mr Farber's insistence that disclosure by way of exhibits to witness statements should suffice prompted Mr Croxford to submit that it was inappropriate and unfair to leave it to the Claimants or their solicitors to decide what to disclose. A further suggestion I made at the hearing for disclosure between the parties limited to a sample of claimants (selected by the Defendants) did not find favour with either side.
30. In all the circumstances I think that it is appropriate for me to order the Claimants to prepare and file (for my eyes only) a list of all the documents described in paragraph 19 above and at the same time to produce those documents for inspection solely by me in the first instance. The time for such list and production should be the same time as for serving their witness statements. I will fix a date for another interim hearing between delivery of witness statements and the hearing of the preliminary issues in case, after seeing the witness statements, the Defendants wish to pursue the application for disclosure they have made.

ORDERS FOR FURTHER INFORMATION

31. The Defendants also seek orders in respect of requests for further information served on the Claimants on or about 20 January 2004 and 10 March 2004. In their application they also seek some further information to be provided by affidavit made by Gareth Morgan. The justification for this information to be supported by a statement on oath rather than a simple statement of truth is said to be the seriousness of the questions being raised. The information sought is in relation to each CFA relied on and is as follows:

i. The date or approximate date upon which the CFA was sent to the client for signature.

ii. The date or approximate date upon which the "Terms and Conditions" were sent to each client.

iii. A statement whether the CFA was signed by that client and, if so, upon what date or approximate date.

iv. A statement of whether the Terms and Conditions were signed by that client and, if so, the date or approximate date of signing.

v. The name of the solicitor who signed the CFA.

vi. The date or approximate date upon which the solicitor signed the CFA.

32. For the Claimants Mr Farber submits that most of this information is likely to be supplied anyway in the witness statements which the Claimants will rely upon. Although he confirms that the Claimants have not yet supplied the information, he draws my attention again to the underlying hostility in these proceedings and the suspicion he says the Claimants have that the Defendants were launching an expensive fishing expedition. I am in no doubt that the information sought will take many days of painstaking work to supply. In many cases it may involve enquiries of the particular Claimant. I also observe that each request stated the Defendants' belief that seven days was a reasonable period for a "response" to the request. The term response is used in CPR 18.1 and the supporting Practice Direction to refer to the information the recipient is willing to supply.
33. In all the circumstances I will order the Claimants to supply the information listed above by a response to be filed and served on the same date by which they must serve their witness statements. I am not persuaded that it is necessary for that response to be by way of an affidavit. Nor am I persuaded that the Claimants' failure to supply the information within the period the Defendants specified, was in any way unreasonable.
34. By paragraph 5 of their draft directions the Defendants also seek an order for a witness statement from the Claimants solicitors:

"setting out the terms as to costs upon which [the Claimants] each agree to retain their solicitors to act for them herein, including details of any amendments to such terms, and in each case giving the date of each and any agreement made and the date of execution of each and any document in writing by which any such agreement was made and/or evidenced. "

35. Given the other directions I am making and the obvious burden placed upon receiving parties in all cases to prove their contractual obligations to their solicitors, I am not persuaded that it is appropriate to order this witness statement.

ORDER FOR CROSS EXAMINATION

36. The final direction in dispute which I must rule upon is an application for an order by the Defendants in the following terms:

"An order pursuant to CPR Part 32.7 that Gareth Morgan, Colin Powney (who signed the statement of truth … appended to the Claimant's reply to the Defendants Points of Dispute) and the maker of any other witness statement on which the Claimants wish to rely in relation to the preliminary issues, shall attend for cross examination at the trial of the preliminary issues herein unless before that time the Defendant gives notice in writing that such person is not required to attend for cross examination. If any such person shall fail to attend for cross examination when required then no claim may be pursued under the generic bill of costs without the leave of the court. "

37. The Claimants submit that I should make an order in more standard form giving timetable directions for the exchange of witness statements and should provide that the evidence at the hearing will be limited to the evidence previously disclosed and, in the case of witness statements, be further limited to those witness statements of witnesses who attend and are available for cross examination.
38. The Defendants say that an order for cross examination of Gareth Morgan and Colin Powney is appropriate in any case because the documents which will be before the court at the hearing will include evidence by them in the form of their signatures to the bill of costs (Morgan) or the reply to points of dispute (Powney). Reliance was placed upon the well known dictum of Henry LJ in Bailey v IBC Vehicles Ltd [1998] 3 All ER 570:

"RSC Order 62, rule 29(7)(c)(iii) requires the solicitor who brings proceedings for taxation to sign the bill of costs. In so signing he certifies that the contents of the bill are correct. That signature is no empty formality. … The signature of the bill of costs under the rules is effectively the certificate by an officer of the court that the receiving party's solicitors are not seeking to recover in relation to any item more than they have agreed to charge their client under a contentious business agreement … and the other side of a presumption of trust afforded to the signature of an officer of the court must be that breach of that trust should be treated as a most serious disciplinary offence. "

39. For the Claimants Mr Farber argues that no such directions should be made. It is unusual for one side to obtain orders specifying the witnesses who should attend for the opponent. It is more usual to leave each side to decide how best to put forward its case. An adverse inference may be drawn against them if they fail to rely upon an important witness.
40. I accept that, unless an amended bill and an amended Reply is subsequently filed Mr Morgan and Mr Powney will both have to attend for cross-examination. However, it is possible that those two gentlemen may part company with the Claimants or the Claimants solicitors before the hearing, either because of the allegations now made against them or because of other reasons. Recent events have caused Mr Morgan to sign a witness statement substantially qualifying what is said in the bill of costs. It is reasonable to assume that Mr Powney also will be reconsidering his position. By making their application now, the Defendants are seeking to obtain the advantage of cross examination whether or not the Claimants wish to rely on the evidence of Mr Morgan and Mr Powney at the hearing.
41. In the circumstances the proper order for me to make is to dismiss this application as premature whilst anticipating that, if the Claimants later fail to rely on witness statements from Mr Morgan and Mr Powney and also fail to amend the signatories to the bill and replies, the application may be renewed at that stage.

CONCLUSION

42. Before formally delivering this judgment I distributed a draft of the directions I am intending to make which included some hearing dates. Unless the form of directions is agreed I will hear argument as to it. I will also hear argument as to the possibility of an appeal from this decision and as to the costs of the directions hearing. My provisional view is that I should give permission to appeal my refusal to refer the first two preliminary issues to a High Court Judge but should refuse to permit an appeal as to any other decision and that I should make an order reserving the costs of the directions hearing for the time being.