England and Wales High Court (Administrative Court) Decisions

IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
DIVISIONAL COURT

		Royal Courts of Justice Strand London WC2A 2LL
		25th June 2009

1. LORD JUSTICE RICHARDS: This is a case about the taxation of costs in the Magistrates' Court. Following an incident in February 2004 in which a customer allegedly slipped on a magazine insert on the floor of the claimant's supermarket in Battle, seven informations were laid against the claimant by a Health and Safety Inspector acting on behalf of Rother District Council. The informations alleged various breaches of the Health and Safety at Work Act 1974, the Management of Health and Safety at Work Regulations 1999, the Provision and Use of Work Equipment Regulations 1998, and the Workplace (Health, Safety and Welfare) Regulations 1992. In December 2006, after a hearing extending over three days in the Hastings Magistrates' Court, the claimant was acquitted of all charges. The District Judge who heard the case gave a detailed written ruling setting out his reasons for dismissing each of the informations.
2. The claimant then applied for, and was granted, a defendant's costs order pursuant to section 16(1)(c) of the Prosecution of Offences Act 1985.
3. On 6th March 2007 the claimant's solicitors submitted their bill of costs in the sum of £63,704.99. By letter of 13th June, Mr Andrew Gill, a legal adviser and costs taxation officer of the court, responded with a provisional taxation in the sum of £22,951.65. Almost every item of the bill of costs had been reduced in amount or disallowed altogether. The provisional assessment included the general statement:

"Where amounts have been disallowed or the time allowed has been reduced, this has been following my overall consideration of the task involved, the other person involved, and the amount of other claims allowed in the course of the case."

There was also a statement, to which I will return, about the disallowance of all costs relating to work done by the firm of solicitors originally instructed by the claimant.

4. There followed some exchanges in which more time was sought for making detailed representations and an interim payment was requested and agreed. In a letter of 16th July, Mr Gill said that the case was "undoubtedly complex" and that he had no problem in allowing until 10th August for representations. By email of 26th July, the claimant's solicitors stated it was not possible to provide properly directed representations without detailed reasons for each item or amount disallowed. Such reasons were requested. Mr Gill responded on 27th July stating that it would take time to provide detailed reasons for the items disallowed or queried; some might be self-evident and others might require more details. He said he would endeavour to get his reasons to the solicitors before he commenced his holiday on 13th August, to facilitate their considering them while he was away.
5. In the event, he sent a letter dated 9th August stating that he had had a chance to look over the provisional costs taxation schedule again. He found it difficult to be much more specific. In two paragraphs he gave a brief general explanation of what he had done, amounting to little more than an indication that items with a nil figure in the "Allowed" column had been disallowed in full using the tests in the regulations (to which I will come), whereas items with a positive figure in the "Allowed" column, but a figure lower than the claim, had been disallowed in part on the basis that the time claimed was assessed as more than was reasonable.
6. There was then a gap in the exchanges, until the claimant's solicitors sent Mr Gill a letter dated 15th January 2008 enclosing a substantial body of documentation comprising representations on the provisional assessment, representations in relation to individual timesheets, and numerous supporting documents. The gist of the representations was that the provisional assessment failed to give credit for the work necessarily and reasonably done on the preparation of the defence case.
7. On 19th March 2008 Mr Gill provided a written response to those various representations. He observed that many pages of the representations contained matters which he considered unhelpful. As to the substance of the matter, he provided a six page schedule, essentially indicating the extent to which an increase was allowed over the amounts in the provisional assessment. The total increase was a sum just over £2,000. The grand total allowed by this decision was £25,134.80; that is to say about 40 per cent of the sum claimed in the solicitors' bill of costs.
8. By the present application for judicial review, brought with permission granted by May LJ and my Lord Maddison J, the claimant contends that the decision was Wednesbury unreasonable. The case for the claimant has been advanced by Mr Frederick Philpott, who was the claimant's counsel in the proceedings in the Magistrates' Court. In addition to Mr Philpott's written submissions, the court has had the benefit of written representations from Mr Andrew Gill himself on behalf of the defendant court, which has not however appeared or been represented at the hearing.
9. As regards the legal framework, it is helpful to set out regulation 7 of the Costs in Criminal Cases (General) Regulations 1986, which provides in relation to an order for payment of costs out of central funds:

"(1) The appropriate authority shall consider the claim, any further particulars, information or documents submitted by the applicant under regulation 6 and shall allow such costs in respect of --

(a) such work as appears to it to have been actually and reasonably done; and

(b) such disbursements as appear to it to have been actually and reasonably incurred

as it considers reasonably sufficient to compensate the applicant for any expenses properly incurred by him in the proceedings.

(2) In determining costs under paragraph (1) the appropriate authority shall take into account all the relevant circumstances of the case including the nature, importance, complexity or difficulty of the work and the time involved.

(3) When determining costs for the purpose of this regulation, there shall be allowed a reasonable amount in respect of all costs reasonably incurred and any doubts which the appropriate authority may have as to whether the costs were reasonably incurred or were reasonable in amount shall be resolved against the applicant."

10. Mr Gill referred in correspondence to regulation 7 as laying down, in effect, "a double reasonableness test". Mr Philpott has suggested that this was a mistaken characterisation of the regulation, but I consider Mr Gill's reference to a "double reasonableness test" to have been an acceptable shorthand, and I would reject any contention that he approached the taxation of the claimant's bill on the basis of a mistaken understanding of the effect of the regulation.
11. It is unnecessary to give any detailed consideration to the authorities relating to the taxation of costs. We have been referred to the helpful summary in Hurst and Keogh, Criminal Costs: A Practical Guide, at paragraphs 18.07 to 18.13. In terms of general approach, paragraph 18.12 reflects the requirements of regulation 7 in stating as follows:

"In assessing the bill the Determining Officer is required to take into account all the relevant circumstances of the case, including the nature, importance, complexity, or difficulty of the work, and the time involved. This may be more fully stated as --

(a) the importance of the case, including its importance to each defendant in terms of its consequences to his livelihood, standing, or reputation, even where his liberty may not be at stake;

(b) the complexity of the matter;

(c) the skill, labour, specialised knowledge, and responsibility involved;

(d) the number of documents prepared or perused with due regard to difficulty or length;

(e) the time expended;

(f) all other relevant circumstances . . . "

12. In his submissions, Mr Philpott relies in part on the lack of reasons for the taxation officer's decision, and it is certainly the case that both the provisional assessment and the final decision are very thinly reasoned. But this is not advanced here as a stand-alone ground of challenge. The point about the reasons argument, as I understand it, is that a complete or partial disallowance should more readily be held to lack a reasonable basis if detailed representations have been made in support of the item claimed but there is an absence of reasons to justify the disallowance of that item. By reference to a number of specific examples, Mr Philpott invites the court to conclude that the disallowances are indeed unreasonable.
13. The first example he gives concerns a conference with the claimant's expert on 5th April 2006, dealt with on Timesheet 3. The conference lasted three hours, but the amount allowed in the provisional assessment was only 1.5 hours. The detailed representations in respect of the provisional assessment gave the precise timings of the conference, described it as a vital meeting to discuss the written draft report, and listed in some detail the matters discussed, all of which appear to have been relevant. On the face of it, this is a legitimate item of claim, especially in the context of what was a relatively complex prosecution with seven separate charges engaging different sets of regulatory provisions. Yet the final decision gave no increase over the 1.5 hours in the provisional assessment, without any reason why the full three hours of the conference had not been allowed.
14. A similar point arises in relation to a meeting on 23rd May 2006 with the client and the expert which lasted five hours and 42 minutes, also on Timesheet 3. In respect of this item, 2.5 hours was allowed on the provisional assessment. Again, the detailed representations included the precise timings and a detailed summary of the matters covered at the meeting, all of which appear to have been relevant. In this case too, however, there was no increase in the amount allowed in the final decision, and still no reason was given for the disallowance of the balance.
15. Another example concerns the preparation of the proof of evidence of the store manageress, the major lay witness, which took a total of six hours and six minutes on 5th and 6th June 2006. In relation to this item, two hours was originally allowed. Following the further representations, which set out the matters covered, that was increased in the final decision to three hours. No reasons were given at any point for the amounts disallowed, and there is no evident reason why it should have been thought that the work was not actually or reasonably done.
16. Mr Philpott gives further examples relating to the disallowance of amounts for the preparation of instructions to counsel, and the solicitor's hourly rate for attendance at court. But I propose to pass over those and to move straight to an example which the claimant described as of particular relevance, namely the amount disallowed, in its entirety, in respect of the work done by the firm of solicitors who originally handled the matter on behalf of the claimant. As already mentioned, this is one of the few matters in respect of which a reason was given in the provisional assessment. What was stated in that document was as follows:

"I have made no allowance for the work done by the previous firm of solicitors. From the file of papers it is clear that the case virtually started afresh when your firm took over conduct. Budgens must be financially responsible for all work carried out prior to your involvement."

17. In their detailed representations, the claimant's solicitors drew attention to the work which had in fact been done by the original set of solicitors. That included the taking of initial instructions, applying for two adjournments, attending on witnesses and taking statements from them, and preparing a written report for the client. The work done by that firm was said to have assisted the new solicitors. It is not evident, on the face of it, that the work that had been done was simply duplicated thereafter by the new solicitors, yet the final decision merely repeated, in exactly the same terms, what had been said in the provisional assessment, without seeking in any way to address the information on this topic provided as part of the detailed representations.
18. In addition to focussing on those particular examples, Mr Philpott has drawn attention to schedules provided with the detailed representations which set out the extent of costs recovery from central funds in previous cases conducted by Mr Hetherington, the partner who had conduct of the claimant's case. They give a consistent picture of recovery in or close to the full amount claimed. Whilst, as Mr Philpott accepted, these earlier cases are of no strict precedent value, they do add to the concern that something very strange seems to have happened in the present case, where so much smaller a percentage of the bill has been allowed without any proper explanation of why this has come to pass. Reference has also been made to a particular earlier determination by the same officer which is said to have been inconsistent with the present decision, but I do not think that anything is to be gained by that kind of comparison.
19. It will be apparent that the matters advanced by Mr Philpott create, in my judgment, a strong case as to the unreasonableness of this assessment. I have looked carefully at what is said in response on behalf of the court, and in particular by Mr Gill in his written representations.
20. Mr Gill draws attention to the fact that this was a large claim which needed and received more time than usual for the assessment to be made. He describes it, correctly, as a large and detailed bill of costs in relation to a three day trial at a Magistrates' Court. He goes on to say that the law and facts in the case, for a firm of solicitors and a barrister who specialised in such areas of law, were not overly complex. That may be so, but there were seven different charges and consideration of the District Judge's reasons for dismissing those charges shows that this was a far from straightforward case. In any event, if Mr Gill was disallowing items on the basis that the work in question was not reasonably done for the purposes of the defence or the disbursement was not reasonably incurred for that purpose, it was, in my view, incumbent upon him to give some explanation of that, however brief. But no such explanation is to be found in the contemporaneous documentation.
21. A matter raised in the solicitors' detailed representations to which Mr Gill takes understandable exception is the suggestion that the taxation officer's approach had been affected by what was described as the politicisation of the legal system and the loss of independence of Magistrates' Courts from central government. I need say nothing about the detail of that. It was, in my view, a bad point for the solicitors to make. It has not been taken up by Mr Philpott in his written skeleton argument. I fully accept that Mr Gill has sought to operate within the framework of the regulations governing costs from central funds and to discharge his duties responsibly and fairly. Whether, in the event, the disallowances were reasonable is a different issue which, it should be stressed, does not reflect on Mr Gill's integrity or fairness.
22. Mr Gill refers to the fact that he visited the National Taxing Team (Costs) Office at Maidstone for an informal policy check on his provisional taxation in this case. Again, this shows the responsible approach adopted by him, but does not help to establish the reasonableness of the various disallowances.
23. As regards reasons, Mr Gill repeats something stated in one of his letters, that it is difficult to be more specific. As taxation officer he felt that the amounts which were disallowed either failed the statutory test for allowance or left him in doubt as to whether they passed, doubts which he was required to resolve against the claimant.
24. On the specific issue of disallowance of all work done by the previous solicitors, he says that the decision taken, having looked at all the files, was that the defence case started afresh once the new solicitors was instructed. None of the work carried out by the previous firm was adopted. Fresh viewing and consideration of the papers was carried out, as claimed in Timesheet 1, and different advice was given as to the plea and likelihood of success. It is correct that adjournments were obtained while documents and pleas were considered, but once the new firm was instructed the case was again adjourned to allow time for advice before plea. Nothing done by the previous firm had addressed the case and it effectively started afresh once the new firm was instructed. It is submitted by Mr Gill that the conclusion so reached was not unreasonable.
25. More generally, he asks the court to look at the reasons given at all stages of the procedure and to consider whether it can conclude that the decision taken by the taxation officer was so unreasonable that the court should intervene.
26. What Mr Gill has said about the disallowance of the original solicitors' costs has given me cause for hesitation in relation to that matter, since it suggests that he went into the matter in greater detail than is apparent on the face of the contemporaneous documents. I am very conscious of the need to distinguish between a finding of unreasonableness and a different view on the merits. But I remain concerned about that matter, the total disallowance of the original solicitors' costs, and nothing said by Mr Gill deals with the concerns arising out of the other examples to which I have referred, examples that cast doubt on the assessment as a whole. The conclusion I have reached is that the claimant has satisfied me that the final assessment decision was unreasonable.
27. In the circumstances, the right course must be to quash the entire assessment and to direct a fresh assessment, either by a taxation officer other than Mr Gill or, as appears now to be the correct position, by the National Taxing Team, to which the case will fall to be referred. For those reasons, I would allow the claim for judicial review and grant the relief as I have indicated.
28. MR JUSTICE MADDISON: I agree. I wish to echo the observation of my Lord, Richards LJ, that the decision of this court is not intended to suggest that Mr Gill acted otherwise than with integrity, fairly and independently.
29. MR PHILPOTT: Thank you, my Lords.
30. LORD JUSTICE RICHARDS: So the order should be: the claim for judicial review is allowed, the decision of the defendant Magistrates' Court dated 19th March 2008 is quashed.
31. MR PHILPOTT: The matter be remitted for reconsideration by --
32. LORD JUSTICE RICHARDS: Do we need to specify by whom?
33. MR PHILPOTT: No, because it will fall to be carried out by the appropriate authority, which is now defined as the National Taxation Team.
34. LORD JUSTICE RICHARDS: By the appropriate authority. Should one say in brackets, "to exclude, for the avoidance of doubt, Mr Gill".
35. MR PHILPOTT: No, my Lord. It will go to the National Taxation Team.
36. LORD JUSTICE RICHARDS: Reconsideration by the appropriate authority. Is there any further matter?
37. MR PHILPOTT: Yes, my Lord. Costs of this application be paid from central funds.
38. LORD JUSTICE RICHARDS: It is a claim for costs from central funds, is it?
39. MR PHILPOTT: Yes, because one could seek costs against the Magistrates' Court but that would, in effect, be costs against the Magistrates' Courts Service and therefore it would merely be a matter of which budget the costs come out of at the national level.
40. LORD JUSTICE RICHARDS: I can assure you that the word "merely" is inappropriate in this context because budgets matter very greatly. There is power for us to make an order for costs from central funds in respect of this aspect of the case?
41. MR PHILPOTT: Yes, because it is a criminal matter brought by judicial review in the Administrative Court.
42. LORD JUSTICE RICHARDS: We have got quite a long way away from the criminal substance when we are dealing with an argument as to the appropriate level of costs in a central taxation of costs . . .
43. MR PHILPOTT: It is a Magistrates' Court taxation in a criminal matter, which remains a criminal cause or matter. For example, if I had failed and was unwise enough to seek leave to appeal, it would have to be to their Lordships' House, because it would remain a criminal cause or matter.
44. LORD JUSTICE RICHARDS: Yes. Very odd. On that basis, yes, costs from central funds. We are very grateful to you for your clear and, as you will have seen from the judgment, cogent written submissions.
45. MR PHILPOTT: I am obliged, my Lords.