England and Wales Court of Appeal (Civil Division) Decisions

Case No: B1/2000/2428

IN THE SUPREME COURT OF JUDICATURE

COURT OF APPEAL (CIVIL DIVISION)

ON APPEAL FROM BLACKBURN COUNTY COURT

Royal Courts of Justice

Strand, London, WC2A 2LL

Wednesday 20^th December 2000.

LADY JUSTICE HALE:

1. The issue raised in this appeal is what, on a legal aid assessment in family proceedings, a solicitor may claim for preparing the bill of costs. The sum claimed in this case was only £59. Considerable sums however are at stake annually, both for solicitors practising in family law and for the Legal Services Commission. The case also raises a question of some constitutional interest on the status of the Practice Directions accompanying the Civil Procedure Rules.

The facts

2. Farleys in Blackburn, through their partner Kathryn Hughes, acted for a child in care proceedings. Legal aid was granted on 4 Feb 1999. The proceedings were completed on 4 May 1999 with the usual order for legal aid assessment. In due course a bill was submitted to the county court to be assessed pursuant to that order and in accordance with the Civil Legal Aid (General) Regulations 1989, regulation 107. It contained two relevant items:

'20. Checking and verifying bill (Partner) prior to signing

51.75

21. Preparation of bill (inhouse Costs Draftsman) at prescribed legal aid rates pursuant to Part 43, para 2.16 of Civil Procedure Rules 1998 (1 hour)

59.00'

The Bill was provisionally assessed by a deputy district judge, who allowed both items but reduced item 20 by £25.00."

3. On 2 August 1999 Miss Hughes appeared before District Judge Ashton on an assessment hearing. He restored item 20 in full, but indicated that he proposed to disallow item 21. She wrote making representations: the Civil Procedure Rules applied to the assessment of costs in legally aided family proceedings just as they did in any other proceedings, and under the Costs Practice Direction a claim for the reasonable costs of preparing the bill was now allowed. District Judge Ashton affirmed his decision on 17 September 1999, explaining his reasons in a memorandum dated 16 September 1999: in summary, the bill had been prepared under the Legal Aid in Family Proceedings (Remuneration) Regulations 1991 (the 'Remuneration Regulations'), which did not allow for this item. He could see no basis for suggesting that the Civil Procedure Rules allowed items to be included which did not appear in the regulations or, as in this instance, charged twice.

4. The solicitors appealed to the circuit judge. On 9 June 1999 His Honour Judge Gee delivered a written judgment. He held that solicitors could charge for preparation of the bill, but limited to the maximum amount specified in the 1991 Remuneration Regulations, namely £51.75. Hence he restored item 21 for that amount. He also held that a solicitor could charge as a separate matter for checking and signing the bill before taxation. (It is not clear either from his judgment or from his order how much he allowed for that item, £51.75 having been charged in the bill.)

5. Hence, the solicitors now appeal to this Court against the limitation of the costs of preparation to £51.75. The actual sum in issue is only £7.25, but His Honour Judge Gee would have given permission to appeal. He was unable to do so because it is a second tier appeal for which only the Court of Appeal can give leave (see Access to Justice Act 1999, section 55(1)). Permission was granted by Thorpe LJ on 8 August 2000.

6. The Legal Services Commission cross appeal, with the permission of this court, against the award of a separate sum for checking and verifying the bill.

The legal aid legislation

7. It is convenient to refer to the legislation in force at the relevant time in the present tense. The Legal Aid Act 1988, in section 6(1), provides for the establishment of the legal aid fund. Section 6(2) then provides:

'Subject to regulations, there shall be paid out of the fund -

(a) such sums as are, by virtue of any provision of or made under this Act, due from the Board in respect of remuneration and expenses properly incurred in connection with the provision, under this Act, of advice, assistance, mediation or representation;

Section 15(6) provides that it is not, apart from any contribution he is required to make, for the assisted person to pay for his representation ' . . and it shall be for the Board to pay his legal representative.' Section 15(7) then provides:

'The Board's obligation under subsection (6) above is -

(a) in the case of representation provided in pursuance of a contract between the Board and the legally assisted person's legal representative, to make such payments as are due under the contract; and

(b) in the case of representation provided otherwise than in pursuance of such a contract, to make such payments as are authorised by regulations.'

Section 36 of the 1988 Act provides that any power to make regulations under the Act is exercisable by statutory instrument, some such regulations (including these) being subject to annulment by negative resolution in either House of Parliament, others requiring positive approval in each House.

8. The Civil Legal Aid (General) Regulations 1989, SI 1989 No 339 as amended, provide in regulation 107A:

'(1) This regulation applies on any assessment, review or taxation of the costs of an assisted person in proceedings where the costs are, or may be, paid out of the fund.

(2) Costs to which this regulations applies shall be determined on the standard basis subject to - . . .

(b) the Legal Aid in Family Proceedings (Remuneration) Regulations 1991 in proceedings to which those Regulations apply.'

9. The Legal Aid in Family Proceedings (Remuneration) Regulations 1991, SI 1991 No 2038 as amended, provide in regulation 3:

'(1) The sums to be allowed to legal representatives in connection with family proceedings shall determined in accordance with these Regulations, Part XII of the General Regulations, the Family Proceedings (Costs) Rules 1991 and [certain paragraphs of Schedule 1 to those Rules].' . . .

(2) Subject to the following paragraphs, the amounts to be allowed on determination under this regulation shall be -

(a) in accordance with Schedule 1 where the certificate was issued in relation to care proceedings; . . . '

In fact, regulation 3(4)(bb) substitutes the rates in Schedule 1A for certain items if the work was done under a franchising contract with the Board, as this work was. Schedule 1A contains two relevant items:

'17. Preparing the bill (where allowable) and completing the taxation (excluding preparing for and attending the taxation).

[County court] £32.50-51.75

18. Preparing for and attending the taxation (including travelling and waiting). [County court] Discretionary'

Judge Gee explained that '[h]istorically, solicitors have not, on taxation [now assessment] of costs, been able to claim for the preparation of their bills of costs.' This was because the 'costs of preparing a bill were always regarded as part of a solicitor's overheads and thus reflected in the charging rate allowed. Such costs were only allowed in exceptional circumstances. See Johnson v Reed Corrugated Cases Ltd [1992] 1 All ER 169.' Hence they were not allowed in assessments under the 1991 Remuneration Regulations: the view taken was that 'where allowable' in item 17 excluded them unless there were exceptional circumstances. The solicitor's time in checking and verifying the bill prepared by the costs draftsman could, however, be charged.

The Civil Procedure Rules and Practice Directions

10. The advent of the Civil Procedure Rules 1988 (the CPR) brought about a fundamental change in the general practice. Parts 43 to 48 of the CPR deal with costs, but only Parts 43, 44 and 47 are relevant here. Part 43 is headed 'Scope of Costs Rules and Definitions', Part 44 'General Rules about Costs, and Part 47 'Procedure for Detailed Assessment of Costs and Default Provisions'. There is a 'Practice Direction about Costs', subheaded 'Supplementing Parts 43 to 48 of the Civil Procedure Rules' and continuing with Directions relating to each Part (it is all one document in the official version published by the Lord Chancellor's Department). The 'Directions relating to Part 43 - Scope of Costs Rules and Definitions' deal in Section 2 with the 'Form and Contents of Bills of Costs.' This contains the crucial paragraph:

'2.16 A claim may be made for the reasonable costs of preparing and checking the bill of costs.'

11. The costs rules in the CPR apply to legal aid (or public funding) assessment as well as to inter partes assessments. The CPR generally do not apply to family proceedings. However, the costs rules have now been applied in family proceedings (with exceptions immaterial for this purpose) by the Family Proceedings (Miscellaneous Amendments) Rules 1999, SI 1999 No 1012, which revoked the Family Proceedings (Costs) Rules 1988, SI 1988 No 1328. The President's Practice Direction of 22 April 1999, reported at [1999] 3 All ER 380, and issued with the approval and concurrence of the Lord Chancellor, directed that, when the CPR came into force on 26 April 1999, the Practice Direction about Costs, Supplementing Parts 43 to 48 of the Civil Procedure Rules should apply to all proceedings to which the Family Proceedings Rules 1991 apply, as they did in this case, and to proceedings in the Family Division.

12. The conclusion drawn by His Honour Judge Gee was that, as a matter of principle, the costs of preparing a bill of costs were now to be regarded as generally 'allowable' in family proceedings. But in legal aid cases this was subject to the limits laid down in the Remuneration Regulations. He did, however, regard the partner's time in checking and verifying the bill as 'part of what the court requires before it will assess.' Hence a discretionary amount was allowable under item 18 in schedule 1A to the Remuneration Regulations.

The appeal

13. The argument of Mr Burrows on behalf of the solicitors is that the Practice Direction has the same force in law as the 1991 Remuneration Regulations and impliedly amends or repeals them so far as they are inconsistent. He further argues that the sum fixed by the 1991 regulations is inconsistent with the concept of a 'reasonable' sum in paragraph 2.16 of the Practice Direction. This requires a consideration of the vires for and status of the CPR and the Practice Directions which accompany them.

14. Section 1(1) of the Civil Procedure Act 1997 provides that there are to be rules of court governing the practice and procedure to be followed in the civil division of the Court of Appeal, the High Court and county courts. Section 1(2) provides that Schedule 1 is to have effect. Section 2 provides for the rules to be made by the Civil Procedure Rule Committee and either allowed or disallowed by the Lord Chancellor. If allowed, section 3(1)(b) provides that they are to be contained in a statutory instrument as if made by a Minister of the Crown and section 3(2) that they are subject to annulment by negative resolution of either House of Parliament.

15. Significantly for the purposes of this case, section 4 contains what was formerly known as a 'Henry VIII clause'. Section 4(1) allows the Lord Chancellor by order to amend, repeal or revoke any enactment in consequence of sections 1 and 2 and the CPR themselves; this power is to be exercisable by statutory instrument and subject to annulment by negative resolution: see section 4(3),(4). Section 4(2) also allows him by order to amend, repeal or revoke any enactment passed or made before the section came into force, in order to facilitate the making of Civil Procedure Rules. Orders made under this wider power have to receive the positive approval of each House of Parliament: see section 4(5).

16. Section 5 of the 1997 Act is headed 'Practice Directions'. Under section 5(1), 'Practice Directions may provide for any matter which, by virtue of paragraph 3 of Schedule 1, may be provided for by Civil Procedure Rules.' Paragraph 3 of Schedule 1 allows the CPR to deal with 'Removal of Proceedings' within the High Court and between county courts. This would not normally be done by rules of court, still less by practice directions. Mr Burrows speculates in his skeleton argument that the reference to paragraph 3 may be a misprint. Misprints in Acts of Parliament are extremely rare. In my view, the express grant of a power to do this by Civil Procedure Rules and by Practice Direction was deliberate, as otherwise there might be doubt about whether it was a matter of 'practice and procedure' which could properly be dealt with in that way.

17. Section 5(2) inserts a new section 74A in the County Courts Act 1984 dealing with practice directions in county courts. Section 74A(1) gives power to the Lord Chancellor to make directions as to the practice and procedure of county courts. Section 74A(2) forbids anyone else to make such directions without his approval. Previously, all courts had an inherent power to regulate their own practice and procedure: see Langley v North West Water Authority [1991] 1 WLR 697. Local county court protocols, such as that upheld by this Court in Langley, now require approval. Section 74A(4) allows the Lord Chancellor to delegate his powers under the section.

18. Commenting on section 74A, the editors of the White Book 2000, Civil Procedure, volume 2, paragraph 9A-840, point out that 'In the High Court, practice directions are issued by the heads of division in the exercise of inherent power.' The development of the use of such practice directions despite the existence of statutory rule making bodies is discussed by Professor Jolowicz, in 'Practice Directions and the Civil Procedure Rules' [2000] CLJ 53, to which we were helpfully referred.

19. Finally, paragraph 6 of Schedule 1 to the 1997 Act provides that 'Civil Procedure Rules may, instead of providing for any matter, refer to provision made or to be made about that matter by directions.' This tells us nothing about who may make such directions or what they may contain. Section 9(2) defines "practice directions" as 'directions as to the practice and procedure of any court within the scope of the Civil Procedure Rules' thus taking the present matter no further.

20. It seems clear, therefore, that there is no separate category of practice direction for which new vires are given by the 1997 Act (as opposed to the extension in section 5(1) of what may be done by existing categories of practice direction). The civil procedure practice directions are made for the county courts under section 74A of the County Courts Act 1984 and for the High Court under the inherent power of the Heads of Division. The Lord Chancellor has delegated his powers under section 74A, at first to Sir Richard Scott VC (as he then was), as Head of Civil Justice, and subsequently to May LJ, as Deputy Head of Civil Justice. Thus the Civil Procedure Practice Directions are in fact made by the Lord Chief Justice, the Master of the Rolls (so far as they affect civil appeals), the Vice Chancellor and the Head or Deputy Head of Civil Justice. It is perhaps unfortunate that this process is not made clear, as it is in other practice directions, in the official versions published by the Lord Chancellor's Department and reproduced in the textbooks. A good example is the President's Direction about costs in family proceedings, mentioned in paragraph 11 above, which is signed by the President and states that it has the approval of the Lord Chancellor and can thus apply in county courts as well as the Family Division of the High Court.

21. Unlike the Lord Chancellor's orders under his 'Henry VIII' powers, the CPR themselves and the Remuneration Regulations, the Practice Directions are not made by statutory instrument. They are not laid before Parliament or subject to either the negative or positive resolution procedures in Parliament. They go through no democratic process at all, although if approved by the Lord Chancellor he will bear ministerial responsibility for them to Parliament. But there is a difference in principle between delegated legislation which may be scrutinised by Parliament and ministerial executive action. There is no ministerial responsibility for Practice Directions made for the Supreme Court by the Heads of Division. As Professor Jolowicz says, loc cit, p 61, 'It is right that the court should retain its power to regulate its own procedure within the limits set by statutory rules, and to fill in gaps left by those rules; it is wrong that it should have power actually to legislate.'

22. Mr Burrows relies upon the definition given to 'subordinate legislation' in the Interpretation Act 1978, section 21(1):

'. . . "subordinate legislation means Orders in Council, orders, rules, regulations, schemes, warrants, byelaws and other instruments made by or under any Act.'

He suggests that this places the Practice Directions on an equal footing with the Civil Procedure Rules. He rightly points out that the CPR are dependent upon the Practice Directions for their operation. They cannot work without the Practice Directions, which must therefore be assumed effectively to form part of the rules.

23. This is to confuse the fact that an instrument may fall within the definition of subordinate legislation because it is 'made under' an Act of Parliament with what that Act of Parliament allows it to do. Indeed insofar as the practice directions apply to the Supreme Court, they are probably not 'made under' any Act at all: the fact that the CPR 'may refer' to them does not mean that they are 'made under' the 1997 Act. In any event, there is nothing in section 74A of the County Courts Act 1984 or in the Civil Procedure Act 1997 to confer power upon those making practice directions to revoke or amend rules or regulations made by statutory instrument. Indeed such powers are not expressly conferred on the rule making body. The rules must be confined to the purposes for which the power to make them is granted. The only express power to revoke or amend other legislation in consequence of the CPR is that given to the Lord Chancellor by section 4 of the Act.

24. In my view, therefore, there is no need to consider whether or not the Practice Direction about Costs is inconsistent with the Remuneration Regulations, because the Practice Direction has no power to override the Regulations. The question of implied amendment or repeal simply does not arise. In fact, however, it is comparatively easy to reconcile them as the judge did. The costs of preparing a bill are now to be considered allowable, because the general practice has now changed, but only up to the maximum permitted by the Regulations, which is to be taken as setting the 'reasonable cost' in the context in which the Regulations apply.

25. These conclusions make it unnecessary to determine the effect of rule 44.4(5) of the CPR, which was in force at the relevant time:

"'This rule and Part 47 (detailed assessment of costs by a costs officer) do not apply to the extent that regulations made under the Legal Aid Act 1988 determine the amount payable.'

Rule 44.4 is headed 'basis of assessment'. Costs which have been unreasonably incurred or are unreasonable in amount will be disallowed. Costs assessed on the standard basis will only be allowed if they are proportionate to the matters in issue. Hence the effect of rule 44.4(5) appears to be that the amounts determined by regulations under the Legal Aid Act were by definition reasonably incurred, reasonable in amount and proportionate to the matter in issue. Part 47 deals with the machinery for detailed assessment rather than with the underlying principles. It is not, therefore, crystal clear that rule 44.4(5) would have assisted the Legal Services Commission had the Practice Direction had the effect for which Mr Burrows contends. It has since been revoked and replaced with a more comprehensive provision in rule 44.17.

The cross appeal

26. Mr Morgan argues that the 'costs of preparing the bill' in item 17 in the Remuneration Regulations covers all the costs of drawing up a bill which is fit to be presented to the paying party: that is not only the costs of the costs draftsman but also the costs of the solicitor in checking and signing the bill. This is to be distinguished from the costs of preparing for and attending the taxation hearing which are covered by item 18. This must be right. It is an essential part of preparing the bill, rather than part of the court's process of scrutinising that bill.

27. However, when there is a provisional assessment, the solicitor then has to look through the bill as provisionally assessed and decide whether to accept it or proceed to an assessment hearing. That work must be part of 'preparing for and attending the taxation' under item 18 of the Remuneration Regulations. In practice, it should be possible for the solicitor to make a fair estimate of how long this will take and add a provisional figure in respect of it. It is likely to take longer in those cases where the result of the provisional assessment is such that the solicitor is likely to want to proceed to an assessment hearing, in which case the matter can be argued there.

Conclusion

28. I would therefore dismiss the appeal, but allow the cross appeal in the expectation that the Legal Services Commission will agree that a reasonable sum in this case, not exceeding £51.75, is payable as a result of paragraph 27 of this judgment.

LORD JUSTICE LAWS:

29. I agree.

DAME ELIZABETH BUTLER-SLOSS, PRESIDENT:

30. I agree.