Appeal court bolsters costs judges

The Court of Appeal has told costs judges to take firm action in preventing costs litigation being dragged out by unfounded allegations over claimant solicitors' retainers.

In Times Newspaper v Burstein, Lord Justice Latham said: '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.'

The Master of the Rolls, Lord Phillips of Worth Matravers, also sat in the case, which concerned a libel action brought by musician Keith Burstein against The Times, in which he obtained judgment for 8,000 plus costs.

An appeal failed, and in the subsequent detailed assessment, The Times argued that Mr Burstein's claim for costs offended against the indemnity principle on the grounds that he was impecunious and had in effect never been liable to pay the costs of his solicitors, London firm David Price Solicitors and Advocates.

Mr Burstein was initially signed up by David Price on a normal retainer, but entered into a conditional fee agreement (CFA) shortly before trial.

Deputy Costs Judge Jefferson found there was no evidence to back The Times's argument and refused to order a full hearing into the retainer.

The appeal court said the 'mere fact that the issue has been raised is not of itself sufficient' to order a full hearing; there must be reason to believe it will achieve something.

Lord Justice Latham added: 'While the client's impecuniosity may be relevant to determining what the true nature of the agreement was, the mere fact that the solicitor may have been conducting the action on credit or continuing an action in the knowledge of his client's lack of means does not justify a conclusion that he was unlawfully maintaining the action.'

The Times was refused permission to appeal, but head of legal Alastair Brett said they would petition the House of Lords for leave.

He claimed the failure to hold a hearing breached the right to a fair trial under the European Convention on Human Rights.

Mr Brett argued that the ruling was more of a policy decision.

'The Court of Appeal simply doesn't like satellite litigation involving solicitors' costs,' he said.

He added that at the time the retainer was entered into, David Price knew 'perfectly well' that his client could not afford the fees, and the solicitor should have acted to 'regularise' the situation, whether through a CFA, by acting pro bono, or by receiving assurances that others would pay.

Mr Price responded: 'That argument was dealt with by the court and found to be without merit.'

Neil Rose