England and Wales High Court (Senior Courts Costs Office) Decisions

IN THE HIGH COURT OF JUSTICE
SENIOR COURTS COSTS OFFICE

		Clifford's Inn, Fetter Lane London, EC4A 1DQ
		19 November 2009

Master Gordon-Saker :

1. This is an appeal by Wolferstans, a firm of solicitors in Plymouth, against a decision made by Mr Emery, an authorised court officer, on the assessment of their bill.
2. The solicitors acted for 224 claimants in the Sabril group litigation against Aventis Pharma Limited. The claimants had the benefit of public funding. 164 claims were successful. The remaining 60 claims were discontinued and the costs of the discontinued claims fell to be paid by the Legal Services Commission. Bills in respect of 43 of the discontinued claims were assessed by the court in 2006. Bills in respect of the remaining 17 discontinued claims, of which this case is one, were lodged with the court for provisional assessment in April 2009. As I understand it, the provisional assessment of the bills in relation to the other 16 discontinued claims is awaiting the outcome of this appeal.
3. The issue that arises on this appeal is whether the solicitors should be allowed profit costs in respect of work done to sort and summarise the Claimant's medical records by Medical Clerical Bureau (MCB). MCB charged the solicitors £841.75 plus value added tax for doing this work which, according to their invoice, is calculated by multiplying 22.75 hours by an hourly rate of £37. In their bill the solicitors claimed 22.8 hours as part of their profit costs at the prescribed hourly rate of £75 together with enhancement of 50 per cent. The total sum claimed in the bill for this work is therefore £2,565 (excluding value added tax). If that sum is allowed as claimed the solicitors would therefore make a profit of £1,723.25.
4. Mr Emery took the view that this work should not be allowed as part of the solicitors' profit costs, but should be claimed as a disbursement. Accordingly he disallowed the 22.8 hours claimed in the documents schedule (£2,565) and added in the amount of MCB's invoice (£841.75) as a disbursement.
5. In the 43 bills which were assessed in 2006 the solicitors claimed for the work done by MCB as disbursements. However, following the decision of the Court of Appeal in Crane v Canons Leisure Limited [2007] EWCA Civ 1352, they considered that they could properly claim for this work as part of their profit costs even though the work was carried out by a third party. There is a similar claim in each of the other 16 bills awaiting assessment.
6. The issue before the court in Crane was whether the claimant's solicitors could recover as base costs the costs of work done by independent costs consultants in relation to the detailed assessment of the claimant's bill. If those costs were recoverable as base costs, the solicitors would be entitled to a percentage success fee under their conditional fee agreement with the claimant, to which they would not be entitled if the costs were recoverable only as a disbursement. Master Wright, on appeal from an authorised court officer, held that these costs were a disbursement and disallowed the success fee claimed.
7. The work done by the independent costs consultants in Crane involved the preparation of an initial schedule of costs, the preparation of a detailed bill and the conduct of the detailed assessment proceedings. May LJ noted that this work could have been done within the claimant's solicitors' firm by their own staff and apprehended "that, if they do the costs work themselves in house, the cost of doing so would be legitimately charged as profit costs" (paragraph 6). At paragraph 14 he continued:

If [the solicitors] properly choose to delegate their own work, they remain entitled to charge on their own account and the proper amount of the charge is not necessarily the same as the amount which they agree to pay their subcontractor. It could be more or it could be less. In my view the appellants are right to concentrate on whether the work is solicitors' work; and Master Hurst was right to say [in Claims Direct Test Cases Tranche 2] that a characteristic of such work is whether the solicitor remains responsible to the client for its proper conduct. Intrinsically, it might be said that profit costs should be limited to work which the solicitors do themselves, because if they delegate it, the subcontractor is making a profit as well. But, since the solicitor remains entitled to the proper amount which he, not the subcontractor, would charge, there is in theory only one amount of profit …

15. In my view, Costings Limited in the present case were doing work which Rowley Ashworth had themselves undertaken to their client to do. It was solicitors' work for which Rowley Ashworth were entitled to make their own direct charge. In theory, they remained liable for it, although in reality it was done entirely for their own benefit, since poor Mr Crane had no interest in this costs squabble and was never going to be affected by it one way or the other. I do not think that the classification of the cost of this work can sensibly depend on whether Rowley Ashworth did the work themselves, whether they delegated it to another solicitor or whether they delegated it to costs draftsmen who were not solicitors.

8. At paragraph 35 Hallett LJ said:

… to construe these particular provisions and determine whether or not these costs are properly described as base costs or disbursements, one must focus on the nature of the work done (whether it is solicitors' work) and where responsibility for the work lies.

36. In my view, the work done by Costings was undoubtedly solicitors' work. It was the type of work Rowley Ashworth were retained to do: Rowley Ashworth may have chosen to delegate their work, but they never relinquished control of it and responsibility for it. At every stage of the process Costings' work was under Rowley Ashworth's supervision.

9. Crane was not the first case in which the court considered whether solicitors could charge for work done by others as if they had done the work themselves. In Smith Graham v Lord Chancellor [1999] 2 Costs LR 555 a solicitor instructed in public funded criminal proceedings claimed for work done by an enquiry agent as if the work had been done by a member of the solicitor's firm. The solicitor was acting for a local councillor charged with falsely claiming expenses. The work done by the enquiry agent involved attending at the council's offices with the defendant to examine the expense claim forms. The enquiry agent billed the solicitor in the usual way but the solicitor claimed the enquiry agent's time at the hourly rate prescribed for a Grade B fee earner by the Legal Aid in Criminal and Care Proceedings Costs Regulations 1989. Hallett J (as she then was) held that the nature of the work which the enquiry agent had been instructed to do "was work which it was appropriate for a fee earner to do" and that therefore the solicitor could recover the cost of that work at the prescribed hourly rates as work "done by fee earners".
10. In Stringer v Copley [unreported; 17 May 2002] the Claimant, on the detailed assessment of her costs, claimed £519.75 in respect of solicitor's time for preparing a witness statement. In fact the statement had been prepared by a litigation support agency which had billed the solicitor £250 for the work. The District Judge disallowed the item but, on appeal, the Circuit Judge allowed it following Smith Graham.
11. The Claimant in the present case was born in 1934. She was first prescribed Vigabratin (Sabril) in 1990 when she was diagnosed as suffering from epilepsy. She continued to take the drug until 1998. She instructed the solicitors in 2004 after hearing of possible links with visual injury. The Claimant's medical records were obtained and sent to MCB for sorting, paginating and analysis. There were 1,270 pages of records and the analysis produced by MCB ran to 7 pages. The work was done by Margaret Luscombe SRN.
12. It is my experience that many solicitors undertaking personal injury or clinical negligence cases will sort and analyse the medical records themselves. Some firms who specialise in these areas employ nurses or former nurses specifically for this type of task and their work will be billed in the normal way as fee earner work usually at an hourly rate appropriate for paralegals or other non-qualified fee earners. Other firms outsource this work to agencies such as MCB.
13. I am satisfied that the work done by MCB to sort and analyse the medical records was solicitors' work. It was the sort of work which Wolferstans were retained to do. Had a fee earner at Wolferstans carried out this work, I have no doubt that – subject to the reasonableness of the time spent – the cost would have been recoverable. Had a mistake been made in the work I have no doubt that Wolferstans would have been responsible for it.
14. There is nothing in regulations 107 or 107A of the Civil Legal Aid (General) Regulations 1989 which imposes a different test in public funding assessments. Nor is there anything in the Legal Aid in Civil Proceedings (Remuneration) Regulations 1994 which prevents the recovery by a solicitor of work done by agents. I was told by Mrs Nash that while case plans were submitted to the Commission in respect of the generic costs, no case plans were submitted in respect of the individual cases. There was thus nothing agreed with the Commission in respect of the treatment of these costs; although I understand that in some cases the solicitors submitted Claim 4s seeking these costs as disbursements.
15. Accordingly, in my judgment, in principle at least, the solicitors are entitled to recover the cost of this work as profit costs as if it had been done by a fee earner in their firm. Having regard to the public purse, that is not a decision that I reach lightly or with enthusiasm. It is a decision which, to my mind, unavoidably follows the authorities to which I have referred.
16. I say "in principle at least" because it is apparent that despite MCB's invoice for "22.75 hours of work at £37 per hour" that does not reflect the work that was actually done. MCB's letter dated 27^th August 2004 explains that the bill includes £154.80 for photocopying the records twice. Apparently MCB charge half their hourly rate for pagination and paginate, on average, 600 pages per hour. To paginate 1,270 pages would take 2.12 hours. That would be equivalent to £39.23. The amount of the invoice, less the photocopying and pagination, would come to £647.72, which would be equal to 17.5 hours at £37 per hour. Mrs Nash accepted that pagination is not fee earner work and that the claim should be limited to 17.5 hours preparation and photocopying (£154.80) as a disbursement.
17. I understand that Mr Emery allowed enhancement of 50 per cent, as claimed, on non-routine items. Enhancement may only be allowed where the work was done with exceptional competence, skill or expertise or with exceptional dispatch, or where the case involved exceptional circumstances or complexity. In my judgment sorting the medical records is not work of the type which would normally justify enhancement. However analysing the medical records is work of the type which would normally justify enhancement, for it is not routine and requires specialist skill and knowledge. I anticipate that the analysis may well have been carried out during the sorting but, in any event, there is no breakdown to show the amount of time spent on each task. Doing the best I can, therefore, I think that an allowance of enhancement of 25 per cent on all of the sorting and analysing work allowed would be appropriate.
18. Accordingly a further 17.5 hours of preparation should be allowed with enhancement at 25 per cent.
19. As to the photocopying, £154.80 is claimed for copying 1,270 pages twice. That would be equivalent to about £0.06 per page produced. Photocopying charges will generally only be allowed where they are exceptional, otherwise they are considered to fall within the solicitor's overhead. To my mind what is exceptional will have to be measured by the facts of the particular case. In a case where the profit costs are less than £7,000 it would be unusual to see the generation of 2,540 photocopies. Accordingly I would view this as exceptional and allow the sum of £154.80 claimed as a disbursement.
20. The appeal is allowed to that extent.
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