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

IN THE HIGH COURT OF JUSTICE
SENIOR COURTS COSTS OFFICE
FROM BARNET COUNTY COURT

		SCCO Reference CL1201221 Thomas Moore Building Royal Courts of Justice LondonWC2A 2LL
		21/08/2012

Master Leonard :

1. This is the assessment of Second Defendant's costs, payable by the First Defendant. The case arose from a road traffic accident on 30th October 2008. The Second Defendant was driving the Claimant's motor vehicle which collided with the First Defendant's vehicle. Liability for the collision was disputed between the First Defendant and the Second Defendant, as was the Second Defendant's claim for damages. After a certain amount of confusion and delay, including the issuing of claims in different courts, directions were given for allocation of a consolidated action to the Fast Track and for split trial of liability and quantum. A liability-only trial was listed for 21 July 2011.
2. The First Defendant and his witness did not attend the hearing and the trial judge, Mr Recorder Hochhauser QC, refused Counsel for the First Defendant's application to adjourn to another date. After a short adjournment for counsel to take instructions, liability was conceded on behalf of the First Defendant. The learned Recorder gave judgment for the Claimant against the First Defendant, dismissed the claim against the Second Defendant and ordered the First Defendant to pay the costs of both the Claimant and the Second Defendant following quantification or agreement of damages. The Second Defendant's claim for damages was settled on 22nd November 2011 and a quantum hearing (listed for 1 December) vacated.

The Issue

3. The Second Defendant's solicitors (first Dunne and Gray, then Pollard Bower) acted under conditional fee agreements. They claim a fixed success fee of 100% by reference to the provisions of CPR Part 45 part III, which sets success fees for Road Traffic Accident claims. The First Defendant argues that they are entitled to a success fee of 12.5%.

The Material Provisions of CPR 45

4. CPR 45.16 provides that: ' ... the percentage increase which is to be allowed in relation to solicitors' fees is:

(a) 100% where the claim concludes at trial; or

(b) 12.5% where:

(i) the claim concludes before a trial has commenced; or

(ii) the dispute is settled before a claim is issued. '

5. CPR 45.15(6) provides that:

'...(b) a reference to 'trial' is a reference to the final contested hearing or to the contested hearing of any issue ordered to be tried separately;

(c) a reference to a claim concluding at trial is a reference to a claim concluding by settlement after the trial has commenced or by judgment…'

6. In short the rules provide for a 100% success fee where a claim concludes, whether by settlement or judgment, at or after a contested hearing, whether that hearing is final or of any issue ordered to be tried separately. It is common ground that the provisions of CPR 45.16 do not allow any discretion to be exercised by a court as to which percentage increase is to apply; Lamont v Burton [2007] EWCA Civ 429.

The Transcript

7. I have been provided with a transcript of the proceedings on 21 July 2011. Based on that transcript I will set out events in a little more detail than I have above.
8. The case was called on for trial. Counsel for all the parties appeared before Mr Recorder Hochhauser Q.C. Counsel for the Claimant started the opening of the Fast Track trial by briefly introducing the parties' representatives before giving way to Counsel for the First Defendant's application for adjournment. The learned Recorder expressed his dissatisfaction with the First Defendant's purported reasons for non-attendance before giving a short judgment refusing the application.
9. Counsel for the First Defendant then sought a short adjournment to take instructions as to the First Defendant's position. The learned Recorder noted the non-attendance of the first Defendant's supporting witness before stating 'I will adjourn for 5 minutes. I will start this case at quarter to.' After that short adjournment, Counsel for the First Defendant confirmed her instructions to consent to judgment being entered against the First Defendant on liability only.
10. Mr Recorder Hochhauser summarised: 'So, by consent, judgment as to liability against the First Defendant. Claim dismissed against the Second Defendant.'

Decided Cases

11. Both parties have of necessity departed from the strict requirements of the Practice Direction (Citation of Authorities) [2001] 1 WLR CA in order to assist me in considering the proper approach to whether a trial has commenced for the purposes of CPR 45. These are the decisions to which I have been referred.
12. In Dahele v Thomas Bates & Son Ltd. [2007] EWHC 90072 (Costs), Master Haworth, considering the provisions of part V of CPR 45, governing employer's liability disease claims, found (at paragraph 24) that a case settling on the day and after the time fixed for trial did conclude at trial. Given that he was addressing the particular facts of Dahele, the findings of the learned Master are of limited assistance in this case.
13. In any case, in Sitapuria v Khan (unreported, 10th December 2007), a Road Traffic Accident claim to which Part III of CPR 45 applied, HHJ. Stewart Q.C. took a different view. In that case an order settling the claim and costs was presented to the court and approved by the Circuit Judge prior to the case being opened. Summary assessment of costs was deferred to another date. The learned Circuit Judge (considering the success fees of both solicitors under CPR 45.16 and Counsel under CPR 45.17) rejected the submission that settlement on the day of (but before the opening of) the trial was such as to give rise to 100% fee increase, stating (at paragraph 10):

'…the definition section, under 45.15(6)(b) clearly refers to the words "contested hearing". Of course, if the trial commences - by which, in any normal sense of the word, it means that the case has been called on and has at least begun to be opened as a contested hearing - and the parties then settle the matter, then the trial has commenced and either that settlement which takes place after the case has been called on, and therefore has commenced, or judgment of the court in those circumstances entitles both solicitors and counsel to 100 percent. However, it seems to me that the trial has not commenced in the sense that there is no contested hearing which has commenced, if the parties conclude a settlement prior to the case being called on as a contested hearing and the opening has commenced of such a contested hearing.'

14. In Thenga v Quinn [2009] EWCA Civ 151, the county court hearing originally fixed to determine the quantum of damages in a Road Traffic Accident claim was instead (liability and damages having been agreed) used for the summary assessment of the claimant's costs. On the claimant's unsuccessful application for permission to further appeal from the circuit judge, who had awarded a success fee of 12.5%, Wilson LJ declined the claimant's invitation to address the 'mischief' (failure to settle all matters) that the regulations were designed to obviate. He stated (at paragraph 17) that:

'I fear that, particularly where the differential increase is as wide as the rule-makers have provided in Rule 45.16, there is bound to be the most unfortunate jockeying for position in order to be on one or other side of the line which they have drawn. So, tempted as I am to ... rise above the words and look at mischief, I feel that in the end the court is required to see where the rule-makers have drawn this important line and ... to see whether there can be any real argument about it…My view is that it is plain beyond serious argument that, in drafting rule 45.15 (6)(b), the rule-makers have not thrown the conventional notion of a 'trial' to the winds and that the 'final contested hearing' relates to the substantive claim…'

15. Permission to appeal was refused.
16. In Gandy v King [2010] EWHC 90177 (Costs), a case not governed by CPR 45, trial having been adjourned until 2pm on 3 November, the date fixed, the trial judge was then told that the claim had been compromised. He approved a settlement order on 7 November. Solicitors' and counsels' success fees depended upon whether the case had concluded at trial.
17. Sitapuria and Dahele were both cited to Master Haworth, who distinguished them because they had concerned 'the question of what constitutes a 'trial' for the purpose of CPR Part 45. At paragraph 28 he stated:

'The first question to be determined is whether on the basis of the solicitors' CFA, this claim had concluded at trial. To my mind the word 'trial' denotes an examination and determination of issues between the parties by a Judge, or some other tribunal. I accept that the date fixed for a quantum trial had been reached…however it is clear from the transcript…that the trial did not start. Mr Martin was not ready to start and sought an adjournment until 2.00 pm on the day fixed for trial. At that time Mr Martin…told the court that the parties had compromised the claim. In my judgment, the trial did not commence on that day. On 7th November 2008, Mr Justice Blake approved the compromise agreement reached by the parties several days before ... An approval settlement in my judgment does not meet the criteria of a trial and in those circumstances I find that the … claim did not conclude at trial.'

18. In Amin & Anr. v Mullings & Anr. [2011] EWHC 278, another case governed by Part III of CPR 45, quantum of the Claimant's claim had been agreed subject to liability. Liability was compromised at the door of the court. Trial proceeded only because quantum of the first defendant's counterclaim remained in dispute. Awarding a solicitor's success fee of 12.5%, approving Sitapuria and declining to follow Dahele, Slade J. (at paragraph 33) said:

'The language of 45.16(1) dealing with the percentage increase in solicitors' fees is clear. The entitlement to a 100% uplift arises when a claim concludes after the trial as defined, meaning the hearing, of the relevant claim has commenced by settlement or judgment. If settlement is achieved before the hearing has commenced, whether on or before the day fixed for the hearing, there is an entitlement to a 12.5% uplift.'

19. At paragraph 41:

'In my judgment having regard to the provisions of CPR 20 and 45.15(6)(b) and (c), the meaning of CPR 45.16(1) is clear. There is a 100% uplift to solicitors' fees when the claim concludes after the commencement of the contested hearing of the claim. There is a 12.5% uplift where the claim concludes before a trial has commenced. It is immaterial whether the claim is concluded on the date fixed for trial but before it starts or on some earlier date. The only temporal provision in CPR 45.16(1)(a) and (b)(i) is by reference to the trial, not to the date fixed for trial. There is no difficulty or ambiguity in construing CPR 45.16. In my judgment the clear language of CPR 45.16 should not be given a different meaning ... '

The First Defendant's Submissions

20. Mr Sweeney for the First Defendant submits that whilst the cases referred to above are by their nature fact sensitive, the points which can be distilled from them can be put as follows.
21. A Trial occurs only once the contest on a substantive claim is opened (commenced) as a contested hearing, for an examination and determination of the (substantive) issues. It is the 'contest' that is the trigger to potential recovery of 100%.
22. Prior to that point, the rules provide for 12.5%. The rules do not say 'after the matter is called on and opened'. The words are 'contested hearing '.
23. The ordinary and purposive intention of the rule when read in context is that the 100% success fee is earned once the relevant risk arises. Success does not attenuate and the risk to the legal representative of non-payment does not increase until the court commences adjudication on the substantive issue. That is the 'contest'. Whilst the courts have commented on the wide disparity between the 12.5% and the 100% success fees it becomes acceptable (at least arguably) once the requirement of a contest of the substantive issue is met.
24. The disparity between 12.5% and 100% requires a hurdle of merit. If all that is required to trigger the 100% is that the parties open the case or the parties have an argument on what can or cannot be adduced as evidence in the substantive claim then Claimants would have a significant incentive to come before the court on all manner of interlocutory matters in order to trigger the 100%.
25. Whilst it is right that a hearing may be contested without the calling of witnesses, one would still formally put the parties' evidence (lay and/or expert) before the court. If thereafter it was to be adjourned (for whatever reason) it would be adjourned part heard (and one would expect it to be reserved). That is not what happened here. The contest never engaged.
26. Accordingly Mr Sweeney submits that the risk meriting the substantial uplift from 12.5% to 100% cannot arise unless and until the substantive issue(s) separating the parties are engaged as a contest before the Judge, by the calling of or presentation of the evidence.
27. It is not in issue that this matter did not conclude by way of a judicial decision, on evidence heard, or following a contest of the pleaded case. Thus the risk of non-payment did not incur. The contest had not begun. No evidence was called. The Success Fee is, Mr Sweeney submits, thus fixed at 12.5%.

The Second Defendant's Submissions

28. Mr Simpson for the Second Defendant submits that the common distinguishing thread in each of Dahele, Sitapuria, Gandy and Amin is that they concern a situation where the relevant claim had settled before coming before the trial judge, who was called upon (if at all) only to approve an order of settlement. In consequence CPR Part 45, Section III provided for a success fee of 12.5%.
29. Relying upon Wilson LJ's comment in Thenga about 'where the rule-makers have drawn this important line ...' Mr Simpson submits that on any proper analysis of the facts and the relevant provisions, the Second Defendant in this case is on the right side of the line drawn by the rule-makers, unlike the parties in those cases which settled before coming before a trial judge.
30. This was a Fast Track case with modest sums at large. The trial was limited to the straightforward liability issue of deciding between two competing cases as to how one vehicle struck another, where one of those accounts had the benefit of a quasi- presumption as to liability. Given the 'innocent party' status of the Claimant, the opening of the Claimant's case was always going to be properly brief. Even if the application for adjournment had not been made, it is doubtful whether anything beyond an introduction of the parties and their counsel and an enquiry as to whether the trial judge had taken the opportunity of reading the trial bundle would have been warranted (or permitted).
31. There was no settlement of the issue of liability at any stage. That issue remained live between the parties. What opened before Mr Recorder Hochhauser Q.C. was a trial of that issue. The issue remained at large when the case was called on for trial and the parties and their counsel appeared before him. The transcript plainly records that Counsel for the Claimant opened the proceedings by introducing the parties and their counsel to the trial judge and then, properly, deferred to Counsel for the first Defendant to allow her oral application to adjourn the trial to be made.
32. The oral application to adjourn was made in the context of the trial having been called on, the trial judge being present and an appropriate opening of the trial having been made. It is, submits Mr Simpson, a straining of the natural meaning of words to suggest that the application being made was other than an application to adjourn the liability trial made after the trial had been called on, before the trial judge and within the four corners of the trial process. Applying the objective test of inserting an enquiry by the officious bystander as to what was taking place makes that plain.
33. After the judgment refusing the adjournment application, the prior state of a trial called on and opened was restored. The position of the First Defendant, as one of being without his own evidence or that of his witness and thus unable to call any evidence to support his own pleaded case (or to challenge the Second Defendant's case) was then confirmed. Insofar as any further opening of the case was required, it took place then. It does not matter, says Mr Simpson, that it took place between the trial judge and Counsel for the First Defendant: it is scarcely unusual for a trial judge to have considered the trial bundle content and to engage with Counsel as to such matters in order that the remainder of the trial proceeds efficiently.
34. There was then a brief adjournment which says Mr Simpson, is quite separate from and independent of the First Defendant's application to adjourn. It was he says an adjournment of the trial in order for the First Defendant to take instructions as to the options of putting the Claimant or the Second Defendant to proof or conceding the issue of liability.
35. The fact of the First Defendant being unable to call any live evidence did not prevent the trial containing its ordinary course. The First Defendant was entitled to put both the Claimant and the Second Defendant to proof and it was entirely feasible that Counsel for the First Defendant might have been so instructed.
36. It would, submits Mr Simpson, self-evidently be wrong to conclude that, after the judgment refusing the application and the exchange with the trial judge as to the First Defendant's evidence and the availability of his witness, the hearing that had been opened then fell into some sort of procedural no-man's land or assumed some sort of indeterminate non-trial status. That is he suggests the logical extension of the First Defendant's argument. Again, the objective test of an enquiry by the officious bystander would be met with a plain response to the contrary.
37. Thereafter, on instructions, Counsel consented to judgment on the issue of liability being entered against the First Defendant. In doing so she accepted the consequences generally and in particular as to costs.
38. As Slade J. stated in Amin, the language of CPR 45.15 and 45.16 is plain and clear and those features allowed her Ladyship to hold (at paragraph 41) that '…there is a 100% uplift to solicitors' fees when the claim concludes after the commencement of the contested hearing of the claim ... ' The earlier judgment of HHJ Stewart QC in Sitapuria is Mr Simpson submits wholly consistent with that.
39. Mr Simpson invites me to adopt a 'plain and clear' approach to the consideration of the recoverable level of success fee, as Slade J. found was afforded by the language of CPR 45.15 and 45.16. The Second Defendant simply says that he is on the side of the line that the CPR rule- makers have drawn and so is entitled to a 100% success fee. His case is clear and straightforward and (in contrast, says Mr Simpson, to the First Defendant's case) requires no artificial construction of the rules.
40. Trial that had on liability. Settlement occurred at a later date. The entitlement to a 100% success fee provided by CPR Part 45, Section III is thus, says the Second Defendant, made out.

Conclusions

41. To my mind the most significant distinction between this case and Gandy, Thenga, Dahele, Sitapuria and Amin is that when, on 21 July 2011, the liability trial opened all issues, including the substantive issues of liability and damage between the parties to this assessment were still (not having been settled) contested.
42. The Claimant's counsel properly opened, albeit briefly, and equally properly gave way to the First Defendant's application to adjourn. That was swiftly followed by a short adjournment before the First Defendant capitulated. The question is whether, in those circumstances, a contested hearing commenced by reference to CPR 45.15(6)(b) and (c) and CPR 45.16. In my view it did, for these reasons.
43. The above provisions, read together as they must be, refer to the commencement of the substantive hearing of an issue or issues that, not having settled, are still contested. They do not refer to the stage that the hearing has reached.
44. By definition a contested hearing must 'commence' before evidence is heard or submissions made. It does not become a contested hearing only when that happens. I accept Mr Simpson's analysis of the context in which the application to adjourn was made, and of the status of the hearing – as a contested hearing on liability - before and after it was made.
45. The First Defendant was not going to attend the trial at all. In those circumstances there was no question, as in Gandy, of asking the learned Recorder to put back the opening of the trial for a short period. The only options for the First Defendant's representatives were to proceed in his absence by putting the other parties to proof, or to make an application to the trial judge for adjournment to another date. Either way they had to wait for the contested hearing to commence. There was (by that point) no other context in which the First Defendant's Counsel could make her application. The learned Recorder's reference to making a start, after the short adjournment granted for counsel to take instructions, must be read in its true context as a reference to getting under way with evidence and submissions.
46. These conclusions seem to me to be consistent with the observations and the conclusions of Wilson LJ, HHJ Stewart and Slade J. As Wilson LJ stated, my task is not (as Mr Sweeney effectively invites me to do) to look beyond the wording of the Civil Procedure Rules to address whatever mischief they may arguably have been designed to prevent, but to identify where the rule makers have drawn the line..
47. HH Judge Stewart took the view that a contested hearing commences when it opens (or just begins to open). Accordingly the line, as Mr Simpson submits, is crossed as soon as parties' representatives appear before the judge in a contested hearing.
48. Slade J did not appear to distinguish between commencement of the hearing of a claim and the commencement of the 'contested' hearing of a claim, because (I would say) there is no valid distinction to be drawn between the two. The First Defendant's suggested distinction would add an unnecessary gloss to what Slade J described as the clear language of the Civil Procedure Rules.
49. In summary, I have concluded that the hearing that started on 21 July 2011 was the contested hearing of liability. It had commenced before the claim settled. The Second Defendant's solicitors are in consequence entitled to a success fee of 100%.