1. This is an application to review the certificate of the Taxing Master. On the 18th September 1914, the plaintiff filed this suit against the Sections Wartenfels then lying in Bombay harbour to recover the price of coal, supplied to her before she left Bombay in July 1914. The vessel was the subject-matter of certain proceedings in Prize in the Court of the Resident at Aden and had been handed over to the Bombay Government by an order of that Court, dated the 4th September. The Secretary of State, therefore, became defendant on intervention in the suit which was eventually dismissed as against him and the plaintiffs were ordered by the decree to pay his costs of the suit when taxed. The defendant, accordingly, brought in his bill of costs for taxation. On such taxation the plaintiff contended that only such sums as had been disbursed by the defendant's solicitor on his behalf should be allowed and that as the defendant employed a solicitor on a fixed salary and also paid a fixed monthly sum to the Advocate-General, who was expected to conduct all Crown cases on the Original Side of the High Court, all profit costs and brief fees to the Advocate-General should be disallowed.
2. It is unfortunate that no evidence was placed on the record to show the exact terms of the arrangement which existed between the defendant and his legal advisers with regard to their remuneration, but it was admitted during the argument before me that the question for decision was whether the defendant was entitled to have his bill of costs taxed without reference to any such arrangement or whether only actual disbursements should be considered on taxation and the remaining charges disallowed altogether. The law to be applied is the common law of England.
3. The identical question arose in Azimulla Saheb v. Secretary of State for India 15 M. 405 confirmed on appeal in the case of Muhammad Alim Oollah Sahib v. Secretary of State for India 17 M. 162; and it was decided that an arrangement between Government and their solicitor, whereby the latter receives a fixed salary and in addition the costs awarded to Government in any litigation, would not affect a party condemned to pay costs to Government. It cannot be disputed that at common law costs are awarded to a successful party as an indemnity for the expenses legitimately and reasonably incurred in fighting the action. As stated by Bramwell, B., in Harlod v. Smith (1860) 5 H. & N. 381 : 29 L.J. Ex. 141: 6 Jur. (N.S.) 254 : 1 L.T. 556 : 8 W.R. 447 : 120 R.R. 648, costs as between party and party are given by the law as an indemnity to the person entitled to them; they are not imposed as a punishment on the party who pays them nor given as a bonus to the party who receives them. Therefore, if the extent of the damnification can be found out the extent to which costs ought to be allowed is also ascertained.
4. It would, therefore, follow that a successful party cannot recover anything beyond expenses actually incurred or for which he is liable.
5. No doubt in Raymond v. Lakeman (1865) 34 Beav. 584 : 145 R.R. 682 : 55 E.R. 761, where the purchaser's solicitor received a fixed salary, there is a dictum of the Master of the Rolls to the effect that a party who has to pay costs is not entitled to the benefit of a private arrangement between his opponent and his solicitor as to costs, but it does not appear that the solicitor was to get the costs recovered in addition to his salary. In Gundry v. Sainsbury (1910) 1 K.B. 645 : 79 L.J.K.B.713 : 102 L.T. 440 : 54 S.J. 327 : 26 T.L.R. 321 that dictum was not even referred to. The plaintiff's solicitor agreed with his client to conduct his case in the County Court without charging him anything. The plaintiff was awarded 15 damages but in the course of his evidence he admitted that he had arranged with his solicitor not to pay the costs of the action, consequently Counsel for the defendant asked the County Court Judge to enter judgment for the plaintiff for 15 but without costs, on the ground that under the proviso to Section 5 of the Attorneys and (Solicitors Act, 1870, the plaintiff was not entitled to recover from the defendant more costs than were payable by the plaintiff to his solicitor under his agreement. It was contended by the plaintiff that as the agreement was verbal the proviso to Section 5 had no application. The learned County Court Judge held that the agreement need not, he in writing and gave judgment for 15 without costs. The Divisional Court upheld this decision. Before the Appeal Court it was contended for the respondent that the proviso to Section 5 of the Act of 1870 simply re-affirmed the common law doctrine. It was held that it was only when the agreement was set up by the solicitor that the Statute required it to be in writing, and that the case would be decided under the common law. Buckley, L.J., remarked:
Suppose the Act of 1870 does not apply. Then the client comes to the Court and says: 'This is a matter in respect of which I am entitled to get costs because I have been put to expense, and the law as administered in this Court allows me in that state of things to be indemnified by the defendant to the extent of party and party costs.' But he having come to assert that right, the Court says: 'True, you are entitled to such indemnity, but inasmuch as you have nothing to pay by reason of your agreement with your solicitor there is nothing for which to indemnify you.
6. The Assistant Taxing Master has distinguished that case, on the ground that the plaintiff's solicitor was only employed for that particular case. The Taxing Master has referred to the cases of Attorney-General v. Shillibeer (1849) 19 L.J. 115 : 6 D. & L. 236 : 4 Ex. 606; Galloway v. Corporation of London (1867) 4 Eq. 90 : 36 L.J. Ch. 978 : 16 L.T. 407 : 15 W. R 1032 and Henderson v. Merthyr Tydfil Urban Council (1900) 1 Q.B. 434 : 69 L.J.Q.B. 335 : 48 W.R. 332, but in all those cases the arrangement with the salaried solicitor was that he should get a fixed salary and nothing more, so that the costs awarded to the party employing a salaried solicitor went into the pockets of that party in reduction of the salary paid to the solicitor. By 18 & 19 Vic., c. 90, it is expressly provided that costs awarded to the Crown are to be paid into the consolidated fund, and it is possible, though extremely improbable, that in any one year the Crown or any Corporation or individual employing a salaried solicitor might receive, as the result of successful litigation, profit costs exceeding that salary. But as remarked by Channell, J, in Henderson v. Merthyr Tydfil Urban Council (1900) 1 Q.B. 434 : 69 L.J.Q.B. 335 : 48 W.R. 332 it would be impossible in ordinary cases for a losing party to show that an actual profit was being made.
7. In Attorney-General v. Shillibeer (1849) 19 L.J. 115 : 6 D. & L. 236 : 4 Ex. 606 Baron Parke remarked:
It is perfectly clear that the Crown incurred expenses about this suit; and unless the Crown is to be compensated by the payment of the ordinary fees, there would be no mode of compensating it at all, because it is impossible for the Crown to say what proportion the expense of conducting this particular suit must bear to the entire salary for the year until the end of the year, when all the suits are known, and when the expense of each would be calculated, which at the time the costs are taxed it is impossible to know, and, therefore, it is impossible, if the Crown is to be compensated at all, that it should be compensated except in the way of payment of the ordinary fees.
8. The decision in Gundry v. Sainsbury (1910) 1 K.B. 645 : 79 L.J.K.B.713 : 102 L.T. 440 : 54 S.J. 327 : 26 T.L.R. 321 was foreshadowed by Page Wood, V.C., in Galloway v. Corporation of London (1867) 4 Eq. 90 : 36 L.J. Ch. 978 : 16 L.T. 407 : 15 W. R 1032 where he says:
The argument which struck me most was that with regard to the indemnity; but I cannot apprehend that the Court can investigate agreements of this nature with respect to such a question. Mr. Bagshawe cited a case Hockley v. Bantock (1833) 2 My. & K. 437 : 3 L.J. E.R. 1001 which tended to support his view, with reference to the principle of indemnity, where a person is ordered to pay costs; and, for ought I know, if an agreement has been entered into by a client with a solicitor that he shall pay no costs, it may be a question whether or not the opposite party can avail himself of that agreement, and say to the client, you do not require indemnity.
9. This case differs from all the English cases cited in that it is admitted that the costs, if allowed, will not go to Government to compensate them in part for the expenses they incur annually in employing a salaried solicitor but will go to the solicitor himself in excess of his salary.
10. It is suggested that if this arrangement did not exist and the solicitor had not the chance of recovering profit costs in suits by or against Government in which costs might be awarded to Government, he would have to be paid a higher salary and that, therefore, as such costs are allowed by Government to be paid to their solicitor, they are really compensation for such excess salary as they otherwise would have to pay.
11. I doubt whether this is a satisfactory argument apart from the fact that, there is no evidence to show that if the above-mentioned arrangement did not exist Government would pay their solicitor a higher salary.
12. But as stated by Baron Parke in Attorney-General v. Shillibeer (1849) 19 L.J. 115 : 6 D. & L. 236 : 4 Ex. 606 the Government have incurred expenses, although no particular portion of the salary of their solicitor can be allocated to the work done in this suit, and, therefore, they are entitled to be compensated by receiving costs from the losing party. If they choose, instead of setting off their costs against the salary they have to pay, to hand them over to their solicitor as a bonus, can the plaintiffs object? I think they could only object if the solicitor depended entirely on his remuneration for costs recovered from opposite parties. If, for instance, a party agrees with his solicitor to pay him a fixed sum, say 100, for the costs of a suit and pays him that amount, then, if he wins, whatever his costs, when taxed, may amount to, he is not entitled to recover more than 100 from the losing party. But the latter can have no voice in the spending of that money by his opponent, even although there may be an agreement to pay the solicitor the balance of his taxed costs.
13. The question of the fees of the Advocate-General stands on the same footing, but there is further a decision in Lord Advocate v. Stewart (1899) 63 J.P. 473 cited with approval by Lord Halsbury (in Laws of England), Volume XXVI, page 804, that a losing party must pay the fees of Counsel for the Crown even though he be paid a fixed salary.
14. In my opinion, therefore, the decision of the Taxing Master was right and the application for a review mast be dismissed.