Agassi v HM Inspector of Taxes [2005] EWCA Civ 1507

Tennis star Andre Agassi, having won his tax appeal, sought to recover costs paid to Tenon Media, tax specialists who instructed counsel directly under the Bar's Licensed Access Scheme. The Court of Appeal held he was a litigant in person and most of Tenon's fees were irrecoverable as disbursements.

Facts

Andre Agassi, a professional tennis player resident in the US, had successfully appealed against an assessment to UK income tax under section 556 of the Income and Corporation Taxes Act 1988 concerning endorsement payments from Nike Inc and Head Sports AG. His appeal was allowed by the Court of Appeal on 19 November 2004 (Buxton, Sedley and Jacob LJJ).

The issue of costs was adjourned. Agassi had retained Tenon Media, specialist tax advisers, rather than a firm of solicitors. Mr Christopher Mills of Tenon, a member of the Chartered Institute of Taxation, was licensed to instruct counsel under the Bar’s Licensed Access Scheme (previously BarDIRECT), and did so for the High Court and Court of Appeal hearings. HM Revenue and Customs disputed Agassi’s entitlement to recover Tenon’s fees. The court was reconstituted as the issues had wider importance for civil litigation, and the Bar Council and Law Society intervened.

Issues

The court identified three principal issues:

• Whether the appellant was a litigant in person within the meaning of CPR 48.6.
• Whether Tenon’s fees were irrecoverable because the services were supplied in breach of sections 20 or 22 of the Solicitors Act 1974 or section 70(1) of the Courts and Legal Services Act 1990.
• Whether the fees were recoverable in principle either as costs under section 51 of the Supreme Court Act 1981 and CPR 44.3(1), or as a disbursement under CPR 48.6.

Arguments

For the appellant (and the Bar Council)

Mr Way ultimately accepted that Agassi was a litigant in person. Mr Speaight QC for the Bar Council initially argued that Agassi was not a litigant in person where represented by counsel, but alternatively submitted Tenon’s fees were recoverable as disbursements under the general costs discretion or under CPR 48.6, relying on the broad definition of disbursements in Buckland v Watts.

For the Revenue and the Law Society

Mr Carr and Mr Drabble QC contended that many of Tenon’s activities constituted provision of legal advice and the conduct of litigation, not recoverable as disbursements. They emphasised the statutory objective under section 17 of the 1990 Act and the importance of regulating those who conduct litigation.

Judgment

Litigant in person

The court held that Agassi was a litigant in person within CPR 48.6. The observations in Jonathan Alexander Ltd v Proctor [1996] 1 WLR 518 did not preclude this where counsel was instructed through the Licensed Access Scheme. Under the more prescriptive scheme of the 1990 Act, a party may be a litigant in person for the purpose of conducting litigation under section 28(2)(d) even where rights of audience on his behalf are exercised by an authorised advocate.

Lawful activities

Applying the test in Piper Double Glazing Ltd v DC Contracts [1994] 1 WLR 777, approved by the Court of Appeal in Factortame (No 8) [2003] QB 381, “acting as a solicitor” under section 20(1) of the 1974 Act is limited to doing acts which only a solicitor may perform, or doing acts while pretending to be a solicitor. The court declined to adopt the wider Victorian approach in Cornall v Nagle [1995] 2 VR 188. Section 20 must be given a restricted ambit because of its penal nature.

The court construed section 119 of the 1990 Act narrowly, given the penal consequences of section 70. The “right to conduct litigation” comprises issuing proceedings and performing ancillary formal steps (such as entering appearances). Giving legal advice in connection with court proceedings does not fall within the definition, nor necessarily does correspondence with the opposing party.

The court summarised that a person who is not an authorised litigator may not: (a) issue proceedings; (b) perform ancillary functions in relation to proceedings; or (c) draw or prepare an instrument relating to legal proceedings contrary to section 22(1) of the 1974 Act.

Recoverability under CPR 48.6

The court held that the costs recoverable by a litigant in person are governed exclusively by CPR 48.6, not the broader discretion under section 51. Following United Building and Plumbing Contractors v Kajila [2002] EWCA Civ 628, CPR 48.6(3)(b) covers only services provided by or under the supervision of a lawyer, so Tenon’s fees were not recoverable as “legal services”.

As to disbursements under CPR 48.6(3)(a)(ii), the rule permits recovery only of those categories of disbursements which would normally have been made by a legal representative. Work which a legal representative would normally have done himself is not a disbursement. The court drew support from In re Pomeroy & Tanner [1897] 1 Ch 284 and R v Legal Aid Board ex p Bruce [1992] 1 WLR 694.

However, the court recognised that some of Tenon’s work (such as specialist tax input in discussions with counsel and assistance with skeleton arguments) might be characterised as expert assistance in an esoteric area rather than general legal services, and might therefore be recoverable as a disbursement. The matter was remitted to the Senior Costs Judge for detailed assessment.

Implications

The decision clarifies the position of those using the Bar’s Licensed Access Scheme. A client instructing counsel via a licensed professional (such as a member of the Chartered Institute of Taxation) remains a litigant in person for costs purposes. Such a client may recover counsel’s fees as disbursements and may recover the cost of genuinely specialist expert input, but cannot recover fees for work that a solicitor would ordinarily have performed.

The judgment confirms a restrictive interpretation of “acting as a solicitor” under section 20 of the 1974 Act and a narrow reading of the “right to conduct litigation” in section 28 and section 119 of the 1990 Act, reflecting the penal nature of those provisions. Giving legal advice is not, of itself, “acting as a solicitor” or conducting litigation.

The court indicated that the practical solution for professional bodies such as the Chartered Institute of Taxation is to seek authorised body status under section 28(5) of the 1990 Act so that their members may become authorised litigators, whose reasonable fees would then be recoverable as legal services under CPR 48.6(3)(b). Until that occurs, certain steps (such as issuing notices of appeal) remain reserved to solicitors or the litigant personally, which will disadvantage clients of non-authorised advisers in recovering costs.

The case therefore strikes a balance: it preserves the integrity of the statutory framework regulating those who conduct litigation and the established rules on recoverable costs, while acknowledging the value of specialist non-legal professionals under the Licensed Access Scheme.

Verdict: The court held that the appellant was a litigant in person within CPR 48.6. Tenon’s fees were not recoverable as ‘legal services’ under CPR 48.6(3)(b), nor were they recoverable as disbursements insofar as they represented work that would normally be done by a solicitor. However, fees attributable to genuinely specialist expert tax assistance might in principle be recoverable as disbursements under CPR 48.6(3)(a)(ii). The matter was referred to the Senior Costs Judge for detailed assessment.

Source: Agassi v HM Inspector of Taxes [2005] EWCA Civ 1507