Kerry Underwood

SOLICITOR LLP CAN CLAIM SOLICITOR’S COSTS AND IS NOT A LITIGANT IN PERSON

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In Halborg v Emw Law LLP [2017] EWCA Civ 793, 23 June 2017

the Court of Appeal upheld the lower court’s decision that a firm of solicitors operating through the medium of a Limited Liability Partnership is not to be treated as a litigant in person when seeking to recover costs in an action where it is a party.

Thus the longstanding rule that a firm of solicitors, when acting for itself, can recover costs as solicitors and not as litigants in person, applies also to LLPs.

The paying party relied on CPR 46.5(6)(b), which declares a solicitor to be a litigant in person, except where he or she is represented by a firm in which that person is a partner.

Thus the paying party relied on the fact that a solicitor in such circumstances is not represented by a firm in which that person is a partner.

The court held that the principles set out in

the London Scottish Benefit Society v Chorley Crawford and Chester [1884] 12 QBD 872 (CA) applied to LLPs as much as to firms of solicitors.
In Malkinson v Trim [2002] EWCA Civ 1273

the Court of Appeal confirmed that that principle also applied where the work was done by others within the solicitors’ firm and not by the solicitor herself or himself and that it also applied where the action could not have involved the firm because it related to matters that took place when the solicitor was a partner in a different firm.

If the wording was applied literately, then it would mean that a sole practitioner, not being a partner could only recover costs as a litigant in person.
The Court of Appeal had this to say about that concept:

“34. That is a slavishly literal interpretation which would produce an absurd and plainly unintended result. Mr Marven offered no policy rationale for such a distinction between, on the one hand, a solicitor litigant in sole practice who represents himself and, on the other hand, a solicitor litigant who is represented by the firm of which he is one of a number of partners. It is perfectly plain that Chadwick LJ in the Malkinson case did not consider that the CPR and Costs Practice Direction provisions under consideration in that case made such a distinction and attenuated the Chorley principle in that way. Indeed, he said (at [14]) that he regarded such a distinction as “absurd”. Paragraph 52.6 of the then Costs Practice Direction expressly treated the solicitor litigant in sole practice and the solicitor litigant in a multi partner firm identically. Further, so far as concerned the application of the indemnity principle, Chadwick LJ’s analysis was to acknowledge that the Chorley principle applied to the case of a solicitor litigant in a multi partner firm because there was no material distinction between such a solicitor and a solicitor in sole practice. Nothing has been shown to us to indicate that a conscious decision was taken by the Civil Procedure Rule Committee or the Government, in bringing into effect CPR 46.5, to create what, on the face of it, would be an irrational and indeed absurd distinction.

  1. I consider, therefore, giving the words in parenthesis at the beginning of CPR 46.5(6)(b) a purposive interpretation in the light of Malkinson case and the history of the Chorley principle, that the word “firm” includes a solicitor in sole practice and “partner” includes a case where there is only one principal in the firm.

 

  1. That then leaves the issue whether a solicitors LLP within the Limited Liability Partnerships Act 2000, and the members of it, are to be treated differently, for the purposes of CPR 46.5(6), to an ordinary partnership firm of solicitors within the Partnership Act 1890 and the partners of such a firm. No sensible policy reason has been given on behalf of Mr Halborg for such a distinction. There is no discernible reason why the Chorley principle, and the rationale underlying it, should be applicable to a traditional partnership but inapplicable to an LLP.

 

  1. The fact that former has no separate legal personality and the partners have unlimited liability whereas the latter is a body corporate (pursuant to section 1(2) of the 2000 Act) and its members enjoy limited liability (pursuant to section 1(4)) does not bear on the rationale for the Chorley principle.”

The court also endorsed the observations of the High Court in R(Sword Services Limited) v HMRC [2016] EWHC 1473 (Admin)

that “in ordinary parlance the terms “partnership” and “partners” cover both general and Limited Liability Partnerships and their members.

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Written by kerryunderwood

June 29, 2017 at 8:56 am

Posted in Uncategorized

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