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Agassi v Robinson (HMIT) [2005] EWCA Civ 1507

The Court of Appeal ruled that a taxpayer who successfully appealed against an assessment was not entitled to recover costs incurred in respect of work done on his behalf by a specialist tax adviser who was not a solicitor which would normally have been done by a solicitor, although the taxpayer might be able to recover part of the cost if and to the extent that the work could be categorised as work of an expert.

Facts

The taxpayer was a well known professional tennis player. Through his company, he entered into endorsement contracts with two manufacturers of sports clothing, Nike Inc and Head Sports AG, neither of which was resident or had a tax presence in the UK. A question arose whether the taxpayer, being at all material times resident in the US, could be assessed to income tax under ICTA 1988, s. 556 in respect of payments connected with his activities in the UK as a sportsman. The special commissioners decided that he was assessable to tax and that decision was upheld by Lightman J. However, his appeal was allowed by the Court of Appeal. The question of costs was adjourned because an issue of principle was raised by the Revenue. They disputed the taxpayer's claim that he was entitled to the costs he had incurred in retaining the services of experts in the field of tax law (‘Tenon’). The taxpayer's tax adviser at Tenon was a member of the Chartered Institute of Taxation (‘CIOT’) and in that capacity he was licensed to instruct counsel under the Bar's Licensed Access Scheme (previously known as ‘BarDIRECT’). Tenon had acted for the taxpayer for many years and briefed counsel in relation to the hearing before the special commissioners and on appeal.

Issues

Whether the taxpayer was a litigant in person within the meaning of CPR, r. 48.6; whether Tenon's fees were irrecoverable by the taxpayer because they were in respect of services supplied in breach of the Solicitors Act 1974, s. 20, 22 or the Courts and Legal Services Act 1990, s. 70(1); and whether the fees were recoverable in principle as costs under the Supreme Court Act 1981, s. 51 and CPR, r. 44.3(1) or as a disbursement under CPR, r. 48.6.

Decision

The Court of Appeal (Brooke, Dyson and Carnwath LJ) (ruling accordingly) said that there was no reason why a party should not be a litigant in person for the purpose of conducting litigation (under s. 28(1)(d) of the 1990 Act), even if rights of audience on his behalf (under s. 27) were exercised by an authorised advocate.

Litigant in person

Where a member of the CIOT instructed a barrister under the Licensed Access Scheme, the presence of the barrister did not prevent the party on whose behalf the barrister had been instructed from being a litigant in person. In the circumstances, unless the member of the CIOT was also a solicitor, any litigation had to be commenced on the basis that the litigant was a litigant in person. Therefore, the taxpayer was a litigant in person within the meaning of CPR, r. 48.6 (Jonathan Alexander Ltd v Proctor-[1996] 1 WLR 518 considered).

Acting as a solicitor

A person who was not an authorised litigator might not exercise the right to conduct litigation within the meaning of the 1990 Act and might not act as a solicitor within the meaning of s. 20(1) of the 1974 Act and might not draw or prepare an instrument contrary to s. 22(1) of the 1974 Act. If he purported to do any of those things, he would not be entitled to recover his costs for doing so. A person who did not have a current practising certificate and who was not an authorised litigator within the meaning of the 1990 Act acted as a solicitor in breach of s. 20(1) of the 1974 Act at least if he issued proceedings, performed any ancillary functions in relation to proceedings or drew or prepared an instrument relating to legal proceedings contrary to s. 22(1) of the 1974 Act.

However, in the present case, there was nothing to indicate that any of the work carried out by Tenon had involved any breach of those provisions (Piper Double Glazing Ltd v DC Contracts [1994] 1 WLR 777 and R (Factortame Ltd & Ors) v Secretary of State for Transport, Local Government and the Regions (No. 8) [2003] QB 381 considered).

Disbursements

In the circumstances, the taxpayer was not entitled to recover costs as a disbursement in respect of work done by Tenon which would normally have been done by a solicitor who had been instructed to conduct the appeal. That meant that the taxpayer was not entitled to recover for the cost of Tenon providing general assistance to counsel in the conduct of the appeals. But it did not necessarily follow that the taxpayer was not entitled to recover costs in respect of the ancillary assistance provided by Tenon in the appeals. The particular adviser was an accountant who had expertise in tax matters, especially in the kind of issues that arose in the present case and it might be appropriate to allow the taxpayer at least part of Tenon's fees as a disbursement. It might also be possible to argue that the cost of discussing the issues with counsel, assisting with the preparation of the skeleton argument, etc. was allowable as a disbursement, because the provision of that kind of assistance in a specialist esoteric area was not the kind of work that would normally be done by the solicitor instructed to conduct the appeals. It might be possible to characterise those specialist services as those of an expert, and to say for that reason that the fees for those services were in principle recoverable as a disbursement (United Building and Plumbing Contractors v Malkit Singh Kajila [2002] EWCA Civ 628 followed).

In principle, it was obviously desirable that members of organisations such as the CIOT who were responsible and skilled persons should be encouraged to use the Licensed Access Scheme. The advantages of these arrangements were clear. Those persons had specialist expertise in the field of tax law, often far exceeding that of solicitors. There was nothing in this decision that would prevent the taxpayer employing Tenon in future in the way he had done, nor prevent other members of the CIOT from taking advantage of the Licensed Access Scheme. It simply limited the extent to which it could be done at the expense of the opposing party. In effect that brought the position in the High Court closer to the position before the special commissioners, where the winning party would normally bear his own costs in any event.

The obvious solution to the problems raised by this case was for an organisation such as the CIOT to become an ‘authorised body’ within the meaning of s. 28(5) of the 1990 Act, and for those members who wished to conduct litigation to become authorised litigators and thereby ‘legal representatives’ within the meaning of CPR 2.3(1). Section 28 would permit the CIOT to limit its application to a right to conduct a particular category of litigation, such as litigation falling within the scope of the permission granted by the Bar Council under the Licensed Access scheme. The reasonable and proportionate fees of any such litigator would be recoverable by a litigant in person as legal services under CPR 48.6(3)(b).

Court of Appeal (Civil Division).

Judgment delivered 2 December 2005.