BAILII Citation Number: [2010] EWHC B24 (QB)

Case No: LS390189

IN THE HIGH COURT OF JUSTICE

QUEENS BENCH DIVISION

LEEDS DISTRICT REGISTRY

 

The Court House

Oxford Row

Leeds LS1 3BG

 

Date: 14 October 2010

 

Before:

 

His Honour Judge Behrens (sitting as a Judge of the High Court in Leeds)

together with

District Judge Robert Hill and Deputy District Judge Paul Miller (as assessors)

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Between:

 

 

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Simon J Brown (instructed by Halliwells LLP of City Plaza, Pinfold Street, Sheffield, S1 2GU) for the Defendant/Appellant

John Foy QC (instructed by Irwin Mitchell of Riverside East, 2 Millands, Sheffield, S3 8DT) for the Claimant/Respondent

 

Hearing dates: 7^th and 8^th July 2010

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Judgment

Judge Behrens:

 

1       Introduction

1.      This is a costs appeal against a number of decisions made by DJ Bedford, the Regional Costs Judge for Leeds during the course of a detailed assessment of the Claimant’s costs following the settlement of his personal injury claim.

2.      The claim arose out of a road traffic accident on 27^th February 1997 involving the Claimant’s mother who was then pregnant with the Claimant. The Claimant was born prematurely one month later. It was the Claimant’s case that he suffered a number of visual behavioural and motor balance deficits as a result of the premature birth.

3.      Proceedings were issued on 30^th April 2003 by which time breach of duty had been admitted. Judgment was entered on liability (subject to causation) on 9^th October 2003. On 29^th April 2004 judgment was entered in respect of causation.

4.      Following a contested hearing on 3^rd August 2004 an interim payment of £180,000 was ordered. At a settlement meeting on 28^th June 2008 the claim settled for £2.4 million plus costs.

5.      The Claimant’s claim was initially funded by legal expenses (BTE) insurance. However, after that funding ceased the Claimant’s litigation friend entered into a Conditional Fee Agreement (“CFA”) with his solicitors Irwin Mitchell.

6.      The Bill of Costs claimed £664,942.20 including a success fee of £158,085. The detailed assessment took place over 6 days (30^th November 2009 to 2^nd December 2009 and 12^th to 14^th January 2010). During the course of the hearing DJ Bedford made a number of rulings. As a result the sum allowed on the Bill was £435,698.50 together with the costs of the detailed assessment assessed at £55,698.50.

7.      There are 14 grounds of appeal. The first 4 grounds of appeal relate to compliance with regulation 4 of the Conditional Fee Agreement Regulations. In summary the Defendant contends that DJ Bedford ought to have found that there was a material breach of the regulations and that there was an effective cover under the existing BTE insurance. It also complains that DJ Bedford refused to order disclosure of attendance notes relating to advice given to the Claimant's litigation friend.

8.      Ground 5 of the appeal is an alternative challenge to the CFA. DJ Bedford should have held that it was unreasonable to enter into the CFA.

9.      Grounds 6 to 8 relate to the success fee awarded by DJ Bedford. In his judgment DJ Bedford reduced the success fee on Irwin Mitchell’s profit costs to 33.3% and on Counsel’s fees to 10%. The Defendant contends that DJ Bedford’s knife was too blunt. Irwin Mitchell’s success fee should have been reduced to 12.5% and Counsel should not have received a success fee at all.

10.    Grounds 9 – 12 are detailed grounds relating to travel time, duplication and hourly rates. The travel time should have been reduced; there were multiple fee earners resulting in excessive times spent on documents. The hourly rates in general were too high and should have been reduced especially in respect of travel time.

11.    Grounds 13 relates to the costs of funding. In the course of his submissions Mr Brown abandoned this ground as the sums involved did not justify the argument.

12.    Ground 14 challenged the costs of the detailed assessment. In the course of his submissions Mr Brown advanced no submissions on this as he recognised that it depended on the outcome of the remaining grounds of appeal.

13.    The Claimant does not accept that there is any merit in any of the grounds of appeal. It is, however convenient to deal with the Claimant’s arguments when considering the grounds of appeal in more detail below.

14.    Before considering the grounds it is right that I should acknowledge the very considerable assistance I have had both in form of detailed submissions from Counsel and advice from the assessors. In this highly complex area of law I am greatly indebted to all of them. This is, of course, my judgment but as will appear below it accords with the views of the assessors.

2       Grounds 1 to 4 – breach of CFAR

2.1           The CFA policy with Irwin Mitchell

15.    As already noted the Claimant's litigation friend had the benefit of BTE Insurance with Direct Line. The policy with Direct Line is not in evidence. It is common ground between the parties that the BTE Insurance provided cover for the costs of the Claimant up until 20^th November 2003. It is also common ground that by 3^rd February 2004 the Claimant's litigation friend entered into a CFA with Irwin Mitchell. The CFA is in evidence. A number of features were referred to in Argument:

1.     It was signed by the Claimant's litigation friend on 25^th January 2004 and by Irwin Mitchell on 3^rd February 2004.

2.     It covers

The work done in pursuing your claim against [the Defendant] for damages for personal injury suffered in the course of an accident on 27/02/1997 including all work undertaken by Irwin Mitchell … prior to formal signature of this Agreement and after expiry of the indemnity limit in relation to the legal expenses insurance policy.

3.     It contains a section headed in Bold type headed explanation of the Agreement which states that before the Agreement was signed Irwin Mitchell explained to the Claimant's litigation friend orally the effect of the Agreement and in particular 5 matters including

(c)   whether we consider that your risk of incurring liability for costs in these proceedings is insured under an existing contract of insurance

(d)   whether other methods of financing costs are available and if so, how they apply to you and these proceedings.

Immediately above her signature the Claimant's litigation friend confirmed that the matters referred to in subparagraphs (c) and (d) were explained to her orally.

4.     The Agreement contained a number of terms. Included amongst them were terms which:

1)     Provided that the Claimant's litigation friend was primarily liable for the payment of Irwin Mitchell’s basic charges, a success fee disbursements and ATE insurance premium if the Claimant won.

2)     Stated that if the Claimant won all the legal costs would be recoverable from [the Defendant] if they were reasonable.

3)     Contains detailed provisions about the effect of a Part 36 Offer.

5.     It provided for a two tier success fee: 50% of the basic charge assuming the case settled more than 3 months before the trial date; 100% if the case settled at any time thereafter.

6.     It contained a risk assessment. 7 items were assessed as low risk, 6 were assessed as medium risk and one as high risk. The high risk item was identified as Part 36 offer because the Defendant is likely to want to settle early. The Medium Risk items included the Claimant’s evidence, Independent Witness Evidence, Causation, Quantum, Expert Evidence and Available Documents.

2.2           The Need for a CFA

16.    Throughout the costs proceedings the Defendants have been concerned to discover why the Claimant could not have relied on the BTE Insurance and thus avoided the necessity of paying a success fee.

17.    Accordingly on 15^th July 2009 the Defendant submitted a Part 18 Request. Amongst the questions the Claimants were asked why the BTE Insurance ended and what investigations were made with Direct Line as to the possibility of continuing to fund the litigation. The Request was eventually answered on 27^th November 2009. In the reply Irwin Mitchell referred to correspondence between Irwin Mitchell and Direct Line between 12^th November 2003 and 4^th December 2003. That correspondence was disclosed at the hearing before DJ Bedford and is central to the Defendant’s argument in the appeal.

1.     In a letter dated 3^rd June 2003 Irwin Mitchell asked Direct Line to confirm the level of indemnity applicable to the Claimant.

2.     On 5^th November 2003 Irwin Mitchell repeated the request and asked Direct Line to confirm the indemnity limit on the claim as soon as possible.

3.     On 7^th November 2003 Irwin Mitchell sent 2 letters to Direct Line. In each Direct Line was invited to confirm that it would indemnify the case up to and including an important conference with Counsel due to take place on 20^th November 2003.

4.     On 12^th November 2003 Irwin Mitchell sent a 2 page letter containing a summary of the then position in the case. After summarising the facts relating to the premature birth of the Claimant, and the persons who would be present at the forthcoming conference the letter made the following points:

1)     The estimate of costs incurred at that time was £50,000 in solicitor costs and £6,000 in disbursements. The costs of the conference would be of the order of £8,000.

2)     At that time causation was still technically in issue. However it had been informally indicated that the issue would not be pursued to trial. Interim payments of £35,000 had been made.

5.     On 13^th November 2003 Direct Line replied to the letter of 12^th November 2003. In the second paragraph Direct Line confirmed that it would extend indemnity to cover the cost of the conference on 20^th November 2003. It asked for a detailed note following the conference. The next paragraph of the letter included the following

Once we have the conference note and medical evidence we will review the indemnity limit further and may suggest (depending on the evidence) that this may be a case best dealt with by a CFA.

6.     On 27^th November 2003 the Defendant conceded the issue of causation. Accordingly, on 28^th November 2003 Irwin Mitchell notified Direct Line of this development and that the need for a trial on causation in February 2004 had gone. The letter went on:

1)     To confirm that at that time there were no offers in respect of quantum and no money in court. At that time this was a “no risk” case.

2)     To invite Direct Line to confirm that it would indemnify the Claimant's litigation friend under the terms of the BTE Insurance policy. It stated that Irwin Mitchell would notify Direct Line of any offers made and the risk attached to such offers.

7.     On 4^th December 2003 Direct Line replied to the letter of 28^th November 2003. The letter included the following paragraph:

Strictly speaking the policy cover is limited to £25,000 for unrecovered costs however as causation is now seemingly conceded perhaps you can approach the Defendants to see whether they are prepared to pay disbursements, costs or both on an interim basis. If they are happy to do this then this will solve any issues with the indemnity limit.

18.    Irwin Mitchell approached the Defendant’s solicitors (James Chapman & Co) with a consent order including a request for the payment of £45,000 on account of costs. On 20^th January 2004 Irwin Mitchell wrote to James Chapman & Co with details of the costs to that time. The estimate was £75,000 based on 290 hours work and disbursements of £15,000. £45,000 was said to be two-thirds of the then estimate. On 29^th January 2004 Irwin Mitchell threatened to draw a bill and make an application to court if the £45,000 was not paid. On 19^th February 2004  the cheque for £45,000 was sent.

19.    Thus, as at the date of the CFA James Chapman & Co had neither paid nor agreed to pay the £45,000.

2.3           Regulation 4 of the Conditional Fee Agreement Regulations 2000 (CFAR)

20.    Under regulation 4(1) of CFAR the legal representative is required to inform the client about a number of matters before the CFA is made. These include:

(c) whether the legal representative considers that the client’s risk of incurring liability for costs in these proceedings is insured under an existing contract of insurance

(d)   whether other methods of financing costs are available and if so, how they apply to the client and these proceedings.

21.    Mr Brown submitted both before DJ Bedford and in the appeal that Irwin Mitchell was in breach of regulation 4(1)(c) and (d). He further submitted that the breach was material with the result that the CFA should have been held to be void.

22.    In essence he submitted that the proper inference from the correspondence with Direct Line was that any concern over exceeding the indemnity limit could be allayed by an agreement by the Defendant to pay the relevant costs. Accordingly Irwin Mitchell should have advised that BTE insurance provided a reasonable ongoing funding option avoiding the need to enter into a CFA. He also submitted that DJ Bedford was wrong to have refused to order Irwin Mitchell to disclose the attendance notes of any advice it gave to the Claimant's litigation friend.

23.    At the hearing[1] before DJ Bedford on 1^st December 2009 there was discussion about the interpretation of the letter of 4^th December 2003. Mr Brown submitted that the Court should infer from the letter was that the client was given no advice on the possibility of continuing with the BTE insurance and it was on that basis that he called for disclosure of the attendance notes. Mr Foy QC offered to call Miss Horton (the partner at Irwin Mitchell) as to her interpretation of the letter and as to whether Direct Line would have increased the indemnity on the policy. Mr Brown objected to this evidence and it was not called. DJ Bedford decided that it was not necessary for there to be disclosure of the attendance notes and gave a ruling on the correspondence. After summarising the correspondence he said:

I am satisfied that as at that point Direct Line were stating that the policy cover is £25,000 for unrecovered costs and that the inference from the letter is that given the admission of liability that the future funding should be achieved not through Direct Line and the suggestion is that the Defendants are approached to see whether they would pay the disbursements, costs or both on an indemnity basis.

24.    Mr Foy QC submitted that that inference from the letter was correct. There was nothing in the letter to suggest that Direct Line would increase the indemnity and there was no reason why it should. There was a contractual obligation under the BTE Insurance to indemnify up to a limit of £25,000. That limit had been well exceeded. In the result there was no longer any subsisting cover under the BTE Insurance. It follows that Irwin Mitchell were not obliged to advise the Claimant's litigation friend that there was BTE Insurance for future costs

25.    I agree with both DJ Bedford and Mr Foy QC both as to the proper inference from the letter and the realities of the situation. Direct Line was not offering to increase the funding. Mr Brown complains that DJ Bedford did not specifically refer to the last sentence in the letter of 4^th December 2003. To my mind that sentence adds nothing to what has gone before. It is not to be construed as an offer to increase the indemnity on the BTE Insurance.

26.    As Mr Foy QC pointed out it is plain that Irwin Mitchell did discover about the BTE Insurance. They relied on it until 2003. Furthermore the CFA Agreement contains express reference to it.

27.    Equally in my view DJ Bedford was correct not to order disclosure of the attendance notes. His order was in accordance with the guidance given in paragraph 81 of the judgment of the Court in Hollins v Russell [2003] EWCA Civ 718. The material before him was sufficient to enable him to come to the correct conclusion on the offer an increased indemnity by Direct Line. Equally there is no reason to suppose that Irwin Mitchell did not advise the Claimant's litigation friend that the BTE Insurance had been exceeded and that there was no other source of funding available. As already noted she confirmed she had received the advice in the CFA and Irwin Mitchell confirmed that it had been given.

28.    In my view there was no breach of regulation 4 and I reject Grounds 1 to 4 of the Appeal.

3       Ground 5 – Reasonableness of entering into a CFA

29.    As is well-known under CPR 44.5 the court is to have regard to all the circumstances in deciding whether costs were proportionately and reasonably incurred. Furthermore in an assessment on the standard basis the court must resolve any doubt it may have as to whether the costs were reasonably incurred in favour of the paying party.

30.    Paragraph 11.8 of the Costs Practice Direction provides:

11.8(1) In deciding whether a percentage increase is reasonable relevant factors to be taken into account may include:

(a) the risk that the circumstances in which the costs, fees or expenses would be payable might or might not occur;

(b) the legal representative's liability for any disbursements;

(c) what other methods of financing the costs were available to the receiving party.

31.    Mr Brown submits that it was not reasonable for the Claimant's litigation friend to enter into the CFA in February 2004. He points out that at that time both liability and causation had been admitted and there was no Part 36 offer or payment into court. It was, as Irwin Mitchell pointed out in the letter of 28^th November 2003 “a no risk case”. He pointed out that the CFA had retrospective effect in that it applied to liabilities between the date of the conference (20^th November 2003) and the date of the CFA. Furthermore at that time the Defendant was willing to make a payment on account of costs and in fact made a payment of £45,000 shortly after the CFA was entered into.

32.    Mr Foy QC accepted, of course, that by February 2004 liability and causation had been admitted. Thus, at that stage, the Claimant could expect to recover his costs from the Defendant. There was, however, no other source of funding for the Claimant. As already noted the limit on the BTE Insurance had been exceeded. It was a complex case with a number of complex issues in relation to the Claimant’s symptoms and whether they were caused as a result of the premature birth. In those circumstances the Claimant should not be expected in effect to rely on the Defendant for its costs and it was perfectly reasonable to enter into a CFA in respect of the costs that were not covered by the BTE Insurance.

33.    I was referred to paragraph 18 of the judgment of Moore Bick LJ in C v W [2008] EWCA Civ 1459:

18.   Considerations of that kind prompted the court in the course of argument to raise the question whether it can ever be reasonable for solicitors to enter into a CFA when first instructed in a case where liability has been admitted. It must be borne in mind, however, that the legislation does no more than render it lawful to enter into an agreement for litigation services which provides for fees to be paid only in specified circumstances. The legislation does not define what those specified circumstances may be or how the success fee may be calculated; those are matters which are left to the parties. However, when it comes to the detailed assessment of costs the receiving party must normally be able to justify as reasonable any success fee he seeks to recover from the paying party. In my view the Costs Judge cannot refuse to award a success fee simply on the grounds that the difficulty of assessing the risks made it unreasonable to enter into a CFA at all; but if the receiving party cannot show that the success fee has been calculated in a way which reasonably reflects the risks that have been assumed, he will not be able to satisfy the Costs Judge that it is recoverable. Having said that, I should make it clear that there is nothing unreasonable in my view in entering into a simple CFA at a time when liability has been admitted provided that the parties make a proper assessment of the inevitably much reduced risk of failure.

34.    It will be necessary to return to the decision in C v W in considering Grounds 6 to 8 of this appeal. For present purposes it is sufficient to note that the final sentence supports Mr Foy QC’s submission.

35.    DJ Bedford in effect decided that the question of reasonableness was determined once he had determined that there was no breach of regulation 4 and no continuing indemnity under the BTE policy. In my view he was right. Once it is established that there is no continuing indemnity under the BTE policy it is in my view reasonable for the Claimant's litigation friend to enter into a CFA. In the light of the well-known decision in Campbell v MGN Ltd (No 2) [2005] 1 WLR 3394 CFAs are open to everyone irrespective of means. It is equally reasonable for that Agreement to come into effect when the indemnity under the BTE Insurance was exhausted.

36.    It follows that I agree with the decision of DJ Bedford as to reasonableness and Ground 5 is dismissed.

4       Grounds 6 to 8 – the success fee

4.1           Irwin Mitchell’s success fee.

37.    It will be recalled that under the terms of the CFA Irwin Mitchell were entitled to a two stage success fee – 50% if the case settled more than 3 months before the trial; 100% if the case was won at a later date. On 1^st December 2009 DJ Bedford decided that the success fee was too high. He assessed it 33.3%. The judgment of DJ Bedford does not contain any detailed analysis of how he reached the figure of 33.3% but it does make the following points:

1.     Liability was admitted, causation was admitted, there was means to pay, and no contributory negligence.

2.     There was a whole range of opinion as to the extent of the injury and the disability the Claimant would face as he grew up and this plainly affected issues on quantum.

3.     The complex issues on quantum gave rise to a risk in relation to Part 36 offers. However on the facts of this case he did not accept that this was a high risk. This was not a case that could settle early because there would have been insufficient information available early on for Irwin Mitchell to be able to advise the Claimant's litigation friend to accept an early offer.

38.    Mr Brown submitted that DJ Bedford’s assessment should have led him to a significantly lower figure than 33.3%. He adopted all the points made by DJ Bedford in his judgment. He pointed out that a success fee of 33.3% was (in arithmetic terms) equivalent to a 25% chance of getting no costs at all[2]. He made the point that there was no risk at all in respect of the period between the date when indemnity ceased under the BTE policy and the date of the CFA. He made the point that the medical evidence made it clear that it would not be possible to settle the case until the Claimant was 10 or 11 because of the uncertain prognosis before then. Thus there was no realistic possibility of an effective Part 36 offer before then. The Claimant was both a minor and a patient and it would not have been possible to obtain approval for a settlement before then. Thus the risk from a Part 36 offer was in fact quite low. He drew my attention to the two tier success fee. One feature of that was that if a Part 36 offer was refused and the case proceeded to trial Irwin Mitchell would be entitled to a 100% success fee on all work done prior to the Part 36 offer even if the Part 36 offer was not exceeded. This was a case where very substantial costs would be incurred before any effective Part 36 offer could be made.

39.    At the suggestion of DJ Hill Mr Brown also referred me to CPR 45 rr 15 to 19. It was common ground that these provisions had no application to this case because the date of the accident pre-dated 6^th October 2003. However under the regime for post October 2003 road traffic accidents there is a fixed success fee of 12.5% where the claim concludes before trial and a success fee of 100% where it concludes at trial. In cases (such as this) where damages exceed £500,000 there is power to apply to Court for a greater or lesser success fee.

40.    In the light of all the circumstances of this case Mr Brown invited me to say that DJ Bedford’s assessment of 33.3% was clearly wrong and that the success fee should be 12.5%.

41.    Mr Foy QC did not seek to justify the figure of 50% contained in the CFA. He accepted that DJ Bedford was entitled to find that it was too high. He however submitted that the figure of 33.3% was within the broad range of figures that were open to DJ Bedford and thus submitted that I should not interfere.

42.    He pointed out that there were considerable uncertainties in the case. He pointed to the application for the interim payment in 2004 (when the Claimant was 7 and, as Mr Foy QC acknowledged, the prognosis was too uncertain for a final judgment). At that time the Defendant felt able to submit that the claim might be worth no more than £150,000. He contrasted this with the ultimate settlement figure of £2.4 million in 2008.

43.    He pointed out that the case was expensive and a lot of costs were at risk. The uncertainties were such that a Part 36 offer could present a real risk. There were a number of other risks including the risk of a special costs order. The assessment was made by an experienced costs judge after reading the whole file. He took into account the correct issues and the court should not interfere with his assessment.

44.    I was referred to the decision in C v W. In paragraph 8 of his judgment Moore-Bick LJ pointed out that the purpose of a success fee under a CFA is to compensate solicitors for the risk on not recovering any fee at all. He pointed out that under paragraph 11.8(1) of the Costs Practice Direction normally the most significant factor is the risk that the circumstances in which the costs, fees or expenses would be payable might or might not occur. It is clear (and was common ground before me) that the court must take into account the facts and circumstances reasonably known to the solicitor at the time of entering the agreement. If therefore DJ Bedford based his assessment on the reading of the file, as Mr Foy QC suggests, it would be arguable that he was taking advantage of hindsight.

45.    Mr Foy QC particularly drew to my attention paragraph 23 where Moore-Bick LJ said:

23.   As I have already said, the real difficulty in a case of this kind lies in assessing the risk of the solicitors’ failing to recover part of their fees as a result of the client’s failure to beat a Part 36 offer at trial and in translating that into a risk of failure in the action so that the resulting success fee can properly be applied to their profit costs of the whole proceedings. That involves the analysis and assessment of a number of different risks which interact with each other and I doubt very much whether any solicitors are well placed to undertake it. The best they can hope to do, in my view, is to make a broad assessment based on their own experience. Provided the resulting success fee falls within a reasonable bracket, however, I should not expect the costs judge to reject it.

46.    This is, of course, a case where DJ Bedford has rejected Irwin Mitchell’s assessment. Thus the question I have to decide is whether his subsequent assessment is wrong.

47.    I have discussed this point at length with my assessors. We are all of the opinion that there is considerable force in Mr Brown’s arguments. This was a case where the risk to Irwin Mitchell was very limited indeed. Although there are other minor risks the principal risk is the risk involved in a Part 36 offer. For the reasons given by DJ Bedford and enlarged on by Mr Brown this was very low.

48.    It is true, as Mr Foy QC pointed out, that this is a complex case and to some extent the complexity can add to the risks involved in considering a Part 36 Offer. However, as Mr Brown pointed out in his reply it is important not to confuse complexity with risk. The complexity of the case may justify a higher hourly rate. It does not necessarily justify a higher success fee.

49.    We are all agreed that a success fee of 33.3% is very substantially in excess of the risk taken by Irwin Mitchell. We take some comfort in this assessment from the success fee that would have applied if the accident had occurred after October 2003 though we recognise that this is a claim worth more than £500,000 and the 12.5% success fee which would have applied could have been varied by the Court.

50.    In those circumstances I am satisfied that the decision of DJ Bedford was outside a permissible bracket. In my view the success fee should be close to the 12.5% now provided in the rules. To my mind that figure more properly reflects the facts that there is an admission of liability and causation, that the Claimant was an infant patient and that there could be no early settlement thus reducing the risk of an early Part 36 offer.

51.    I would, however, acknowledge that the wide range of possible outcomes did increase the risk somewhat with the result that I would assess the success fee at 15%.

4.2           Counsel’s success fee

52.    Irwin Mitchell entered into a CFA with Miss Elizabeth Gumbel QC on 22^nd June 2004. The agreement provided for a success fee of 100% (“a one stage success fee”). The prospects of success were estimated by Counsel to be 50% which justified a 100% mark up. There was a risk assessment by Counsel but it had been lost and thus was not produced to DJ Bedford.

53.    The provision for payment of Counsel’s fees is contained in clauses 19 – 21 of the Agreement in the event the Agreement is not terminated and clause 23 in the event that it is terminated.

54.    There are many circumstances in which Miss Gumbel QC is entitled to her normal fees. Thus if a Part 36 offer is not beaten when Counsel advised its rejection Counsel is still entitled to normal fees for the work done after the Part 36 Offer (see paragraph 20(2)).

55.    There are, however, only 2 circumstances where Counsel gets no fee – under clauses 21 and 23(2). Clause 21 applies if the case is lost or, on Counsel’s advice ends without success. In a case where liability and causation are admitted there is no chance of this happening. Clause 23(2) applies where Counsel terminates the agreement where the solicitor, client or litigation friend rejects advice that the case is likely to be lost. Again, that cannot apply in this case. It follows that there were no circumstances in which Miss Gumbel QC would not receive her normal fee.

56.    In paragraph 20 of the judgment DJ Bedford acknowledged that Miss Gumbel QC’s fees were to be paid by Irwin Mitchell in any event. Thus he said that her loss and risk was far less than that which Irwin Mitchell faced. He thus fixed her success fee at 10%.

57.    Mr Brown submits that even 10% was too high. As there was no risk there should have been no success fee. In answer to this Mr Foy QC makes two points. Miss Gumbel QC was subject to the normal risks that occur in any case such as the case not being proceeded with, death of the Claimant. The purpose of the success fee is to pay for losing cases and thus Miss Gumbel QC was entitled to her fee – albeit a the reduced rate.

58.    In my view Mr Brown’s submissions are again to be preferred. As Moore Bick LJ pointed out the purpose of the success fee is to compensate Miss Gumbel QC for the risk of receiving no fees at all. It is not, as Mr Foy QC suggests, to pay for losing cases; nor is it to compensate for the normal risks that occur in any case. In my view Miss Gumbel QC was not at risk of not receiving payment for her normal fees. There should accordingly be no success fee.

5       Hourly Rates

59.    Using the figures contained in Mr Brown’s skeleton argument I have prepared a table showing the hourly rates allowed by DJ Bedford for various periods whilst the claim was progressing:

Date	Fee Earner	Rate allowed	Guideline	Increase
1/3/03 - 30/4/04	Partner	246.00	175	40.57%
	Associate	195.50	155	26.13%
1/5/04 - 30/4/05	Associate		175
	Trainee		155
1/5/05 - 30/4/06	Partner	255.00	184	38.59%
	Associate	204.00	163	25.15%
	Associate	204.00	163	25.15%
1/5/06 - 30/4/07	Partner	259.00	184	40.76%
	Associate	212.50	163	30.37%
	Assistant	170.00	137	24.09%
	Trainee	114.50	100	14.50%
1/5/07 -	Partner	263.00	195	34.87%
	Assistant	174.25	145	20.17%
	Associate	216.75	173	25.29%
	Trainee	114.75	106	8.25%

60.    It will be seen that the rate allowed was very considerably above the published Guideline Rates used for the summary assessment of costs for a solicitor practicing in Leeds. The biggest differential is the amount allowed for the Partner but there are quite significant increases over the Guideline Rates both for Associate and Assistant Solicitors.

61.    The rates allowed were some 15% less than the rates claimed in the bill. They are the same rates as DJ Bedford had allowed Irwin Mitchell in an assessment of another large personal injury case shortly before the assessment in this case. In the light of that assessment Mr Foy QC did not press for the full rate claimed. In his judgment DJ Bedford did not set out in detail how he arrived at the figures he was assessing.

62.    He did however make a number of points about the case. This was a case where there were 11 experts, the case took over 5 years, the involvement of a litigation friend and a child. The difficulties faced by the Claimant were ongoing and developing. It was a case that needed constant attention. In his view the amount of attention that the case was given was reasonable.

63.    In paragraph 4 of the judgment DJ Bedford was satisfied that the rates he allowed were reasonable because of the complexity of the case, the number of experts and the need for more regular attention than the norm.

64.    I was referred to the decision of Fulford J in Higgs v Camden & Islington Health Authority [2003] EWHC 15. At paragraphs 22 – 50 of the judgment there is a full discussion of the issues involved in a challenge to the hourly rates. There is a discussion of the relevance of the Guideline Rates in the SCCO guide. In his conclusion at paragraph 51(i) Fulford J felt the guideline rates were only of limited assistance. On the facts of that case which he described as a heavy difficult case run expertly by an expert in the field he upheld a charging rate of £300 per hour for a partner practising from London in 1999.

65.    I have discussed the hourly rates allowed by DJ Bedford with my assessors. We are all agreed that they are on the high side. However this, too, was a high value, highly complex case requiring a lot of care and attention from an expert in the field. In those circumstances (and subject to the question of travel costs which are considered below) we are not satisfied that they are outside the permissible bracket so as to permit us to categorise them as wrong.

66.    Accordingly I propose to dismiss the ground of appeal relating to hourly rates but to consider separately the question of whether the same hourly rates should be allowed in respect of travel costs.

6       Travel Costs

67.    A significant part of Irwin Mitchell’s bill related to travel costs. In Mr Brown’s skeleton the position in respect of the Solicitors’ attendances on the Claimant is summarised thus

	Part 1 (before May 03)	Part 2 (After May 03)
Partner	23.9 hours	94.8 hours
Assistant Solicitor	23.6 hours	34.4 hours
Associate Solicitor		51.0 hours
TOTAL	47.5 hours	180.2 hours

68.    Thus a total of 227.7 hours was claimed (and allowed by DJ Bedford) for travel to and from the Claimant. If one assumes that the average rate allowed for the partner was £250 per hour, for the associate was £200 per hour and for the Assistant Solicitor was £175 per hour that means the sum allowed in respect of travel was approximately £50,000[3]. In addition Irwin Mitchell would be entitled to their success fee and VAT. Thus, as Mr Brown pointed out, this was a significant item both in itself and as a proportion of the overall profit costs.

69.    There was an argument before DJ Bedford as to whether the travel was recoverable at all. The bulk of the travel represented visits from Leeds to Edinburgh where the Claimant and the Claimant's litigation friend were living. The Claimant’s father was in the army and was moved from time to time. It was argued that the Claimant's litigation friend ought to have been able to travel to Leeds for meetings and make some form of baby sitting arrangement for the Claimant. Most of the travel consisted of travel by air from Leeds to Edinburgh by a partner together with an Associate or Assistant Solicitor. DJ Bedford heard evidence and argument on the reasonableness of the travel. He concluded[4] that it was a matter for his discretion and in the light of what he had heard he was satisfied in principle the attendances in Scotland would be allowed.

70.    He went on in his judgment:

I will however be looking at the rates, particularly the rates for travel because I know that I am being asked to give rates which are above the guideline rates and there is nothing to say that I need give a blanket rate for every piece of work and so I intend to achieve a just result of this issue by looking very carefully at the hourly rates charged for travel because travel is not so difficult as work.

71.    However when he came to give his judgment on hourly rates he said this at paragraph 15:

I am persuaded by you, Mr Green, that the decision in Higgs v Camden is persuasive if not binding. The point is covered clearly there. I do not accept it is obiter. If I had a discretion then I would approach it in this way and that would be to consider that the task of travelling is less onerous than other tasks but that this is a case that which has a character and the character dictates the hourly rates and the character of the case pervades and therefore I should not distinguish between travel and other elements of work.

72.    In my judgment the decision that it was reasonable for Irwin Mitchell to travel to Scotland is not open to a successful challenge on appeal. DJ Bedford heard the evidence and the submissions. He applied the correct test. In the end it was a matter for him as to whether the travel to Edinburgh was reasonable or not. His decision was one that was open to him. My assessors have advised me that they would probably have reached the same decision. I would accordingly dismiss this part of the challenge to the amount allowed for travel.

73.    However I take a different view on the hourly rates allowed in respect of travel. It is plain from the passages cited above that DJ Bedford changed his mind during the course of the hearing. I think that the view he expressed in his first judgment is to be preferred to the view he expressed in his second. DJ Bedford relied on the decision in Higgs v Camden. There is no reason to believe that travel formed a significant part of the costs in that case – the question of travel is not specifically mentioned in the discussion on hourly rates though there is, in paragraph 28 of the judgment, a reference to the encouragement to the use of “a single hourly rate”. It is, however correct that in paragraph 51(viii) Fulford J said:

I further accept that there is no longer a difference to be drawn as regards uplift between routine and non routine work, or between travel and waiting and other kinds of work.

74.    No doubt Fulford J is right that in the normal case the hourly rate is a composite hourly rate and reflects the different types of work done. However I do not read that conclusion as laying down any principle of law and certainly not a principle to the effect that a costs judge can never provide for differential hourly rates. In my view DJ Bedford was correct when in his first decision he said that, as a matter of law, it was open to him to fix a different hourly rate for the travel element. In my view the decision in Higgs is not inconsistent with that view. It would need to be an exceptional case to justify a differential hourly rate but this was an exceptional case.

75.    DJ Bedford has, in the alternative, sought to justify his decision on “the character” of the case. It is, however, not clear precisely what he means by “character” in this context. A number of points can be made. DJ Bedford allowed the same hourly rates as he had allowed in an earlier case where there was not this very significant element of travel. DJ Bedford recognised in his first judgment that “travel is not so difficult as work”. In this case the travel took place outside normal working hours either late in the evening or early in the morning. I have discussed this point with my assessors. We are all of the view that DJ Bedford’s decision cannot be justified simply by reference to “the character of the case”. No doubt this was a complex case but a significantly higher than normal element of it (the travel) was not complex. In our view DJ Bedford should either have reduced the hourly rate from that which he allowed in the earlier case to reflect the high amount of travel or to have fixed a differential hourly rate for travel.

76.    I would accordingly allow the appeal on the travel. I would assess the hourly rate for the times allowed generally in respect of travel at the Guideline rates for the relevant solicitor at the relevant time.

7       Documents

77.    As can be seen from the table below Irwin Mitchell claimed a total of 504.9 hours in respect of documents. As can also be seen DJ Bedford allowed 423.6 hours.

 

Date	Fee Earner	Hours Claimed	Hours Allowed
1/3/03 - 30/4/04	Partner	38.7	35
	Associate	127.2	115.2
1/5/04 - 30/4/05	Associate	85.2	73.2
	Trainee	68.2	48.2
1/5/05 - 30/4/06	Partner	9.9	9
	Associate	31.8	23.8
	Associate	35.4	27.4
1/5/06 - 30/4/07	Partner	12.1	11
	Associate	5.5	4.5
	Assistant	23	18
	Trainee	0.3	0.3
1/5/07 -	Partner	14.1	12.5
	Assistant	2.3	1.3
	Associate	41.3	35.3
	Trainee	9.9	8.9
	TOTALS
	Partner	74.8	67.5
	Associate	326.4	279.4
	Assistant	25.3	19.3
	Trainee	78.4	57.4
	TOTAL	504.9	423.6

78.    Mr Brown complains that DJ Bedford did not apply a sharp enough knife to Irwin Mitchell’s claims. He complains that it is not clear from DJ Bedford’s judgment which of the arguments were accepted and rejected, and that it is not clear that he applied sufficient scrutiny to the documents in what was a very large claim. In paragraph 50 of his skeleton argument he referred to the submissions of the Cost Draftsman in relation to the need for and/or the number of case management conferences, the reasonableness of the repeated file reviews, the preparation of attendance notes after rather than at the time of the activity in question, the duplication of work amongst different fee earners and the amount of time spent generally. Because of the uncertainty in interpreting DJ Bedford’s judgment he did not suggest that I was in a position to substitute a different figure for the number of hours. He submitted that I should refer the matter for a report from my assessors and to act on that.

79.    Mr Foy QC submitted that DJ Bedford’s approach was reasonable. It was a complex case that justified a team approach. He took me through the transcript both of the submissions and the judgment and submitted that it was in fact clear what DJ Bedford had done. He had deducted 51 hours in respect of concessions made by Irwin Mitchell. He then deducted a further 25 hours in respect of matters arising from time he had held was not recoverable. DJ Bedford was not invited to make an item by item approach and he had not done so. He had adopted the time periods referred to in argument and he had stated what would be allowed in respect of each. His judgment had to be read as a whole; he had the feel of the case and it would not be right for an appellate court to interfere.

80.    I have discussed the claims with the assessors as this is an area where they (and in particular DJ Hill) have far more experience than I do. We agree with the submissions of Mr Foy QC. When one looks at DJ Bedford’s judgment it is clear that he was well aware that this was a large bill. However he has taken into account the weight of the case, the constantly changing position. In paragraph 3 he made the point that he had taken care to look at what was reasonable in relation to the “pyramid structure” of Irwin Mitchell and to the case management conferences. He expressly said that he did not make vast inroads into the schedules claimed. In my view it is clear from this part of the judgment that DJ Bedford has in fact rejected many of the arguments of the Defendant’s costs draftsman.

81.    In our view DJ Bedford’s reasoning is sufficient and his conclusions are within a bracket with which an appellate court would not interfere. It follows that this ground of appeal fails.

8       Conclusion

82.    I would allow the appeal on the success fee and the travel costs. In all other respects the appeal is dismissed.