England and Wales High Court (Queen's Bench Division) Decisions

IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
AT BIRMINGHAM CIVIL JUSTICE CENTRE

		17th February 2011

Mrs Justice Slade:

1. Mr Mullings, the First Defendant in a road traffic accident claim, and his insurers, the Second Defendant, appeal from the judgment of Mr Recorder Willetts on 29^th October 2010 that the Defendants do pay an uplift of 100% to the First and Second Claimants' solicitor's and counsel's fees pursuant to CPR 45.16(1)(a) and 45.17(1)(a) ('the costs judgment'). The Defendants were ordered to pay the Claimants' costs of the claim assessed in the sum of £22,256.12 including VAT and 100% uplift in fees. The parties had entered into Conditional Fee Agreements ('CFA') providing for a success fee. I will refer to the parties by their titles below and, as did the Recorder, collectively as 'the Claimant' and 'the Respondent' save where it is relevant to distinguish between First and Second Claimant or Defendant.
2. Section III of CPR 45 provides for a fixed percentage by which the amount of a legal representative's fee can be increased in accordance with a conditional fee agreement which provides for a success fee. Section III deals with road traffic accident claims. Sections IV and V contain provisions for increases in legal representatives' fees in employer's liability claims.
3. The issue on appeal is whether the learned Recorder erred in holding that the claim concluded at trial because the Claimant's claim because settlement of the claim was reached on the day fixed for the trial. Accordingly he held that the Claimant was entitled to recover a 100% uplift in counsel's and solicitor's fees. If the Recorder erred in so holding, the Claimant sought to uphold the 100% increase in fees on the basis that the claim was concluded at trial because the quantum of the Defendant's counterclaim was determined at a hearing and the claim and counterclaim together formed the claim which was concluded at trial.

Relevant Facts

4. The First Claimant claimed damages for personal injury sustained on 29^th January 2008 in a road traffic accident when he was driving the Second Claimant's car. The Second Claimant claimed in respect of damage to his car and related expenses. The Second Defendant was the insurer of the First Defendant who was the driver of the car which collided with the Second Claimant's car which the First Claimant was driving.
5. The First Defendant counterclaimed against the First Claimant damages including financial loss incurred in hiring an alternative vehicle since his was damaged beyond repair.
6. The First Claimant and the First Defendant each blamed the other for the collision.
7. By 15^th September 2010, as appears from paragraph 7 of the Claimants' Reply of that date, the quantum of the First Claimant's claim had been agreed in the sum of £2,450 and that of the Second Claimant in the sum of £4,950.
8. The case was allocated to the fast track and was to be heard on 29^th October 2010. Mr Recorder Willetts noted at paragraph 1 of his judgment on quantum of the counterclaim ('the quantum judgment') that:

"Although the matter was listed for trial today on all the matters liability has been compromised on a 50/50 apportionment. I am told that of the heads of damage claimed by both parties to their respective claims, Mr Mullings having counterclaimed for his losses, have been resolved save for the outstanding matter of hire of vehicles by Mr Mullings pending payment of his write-off value for his vehicle."

9. Apart from the question of the rate of uplift of fees which is the subject of this appeal, the only issue to be determined at the hearing on 29^th October 2010 was the level of damages counterclaimed by the First Defendant in respect of hiring alternative vehicles. The Recorder noted at paragraph 3 of the quantum judgment:

"The need for hire it seems is not challenged. However, I am asked by counsel for the Claimant to consider the period of hire and the rate of hire, certainly for the first few vehicles at £90 per day."

10. After a hearing to determine the level of damages to be recovered in the counterclaim, the Recorder gave judgment for the First Defendant in the amount counterclaimed less £411.25 and reduced by 50% to reflect the apportionment of liability agreed between the parties.
11. Although paragraph 2 of the Order made by the learned Recorder states that there was 'judgment for the Claimant on the claim' it is not in dispute that the order on the Claimant's claim was made by consent. The quantum of damages to be recovered by the Claimant and the 50/50 apportionment of liability for the accident and consequent adjustment to damages were agreed between the Claimant and the Defendant.

The relevant provisions of the CPR

12. CPR 20.2 provides:

"20.2(1) This Part applies to-

(a) a counterclaim by a defendant against the claimant or against the claimant and some other person;

…

20.2(2) In these Rules-

(a) "additional claim" means any claim other than the claim by the claimant against the defendant;

20.3(1) An additional claim shall be treated as if it were a claim for the purposes of these Rules, except as provided by this Part.

…

20.7(1) This rule applies to any additional claim except –

(a) a counterclaim only against an existing party…"

13. CPR 45.15 provides:

"45.15(1) This Section sets out the percentage increase which is to be allowed in the cases to which this Section applies.

(6) In this Section –

(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;

45.16(1) Subject to rule 45.18, 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.

45.17(1) Subject to rule 45.18, the percentage increase which is to be allowed in relation to counsel's fees is –

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

(b) if the claim has been allocated to the fast track –

(i) 50% if the claim concludes 14 days or less before the date fixed for the commencement of the trial;

…

(4) Where a trial period has been fixed and the claim concludes –

(a) on or after the first day of that period; but

(b) before commencement of the trial,

the percentage increase in paragraph (1)(b)(i) or (1)(c)(i) shall apply as appropriate, whether or not a trial date has been fixed within that period.

(5) For the purposes of this rule, in calculating the periods of time, the day fixed for the commencement of the trial (or the first day of the trial period, where appropriate) is not included."

The costs judgment

14. It was not in dispute that the Claimant pay the Defendant's costs of the counterclaim with a 100% uplift to solicitor's and counsel's fees. The Recorder noted at paragraph 1 of the costs judgment:

"1.The question that remains live, is the percentage uplift for the additional liability in respect of the CFAs that the Claimant has conducted the litigation in respect of both claims and the Defendant has conducted in respect of its counterclaim. Although it is common ground that the Defendant's uplift on its additional liability should be 100 per cent having concluded the matter 'at trial' and by application of the rule 45.16 and 45.17 of the CPR.

2. What is however, in dispute, and remains an area in issue, is what the uplift should be for the Claimant's additional liability, because it is clear that the Claimant's claim on behalf of Mr Amin and Mr Hussain was settled in its entirety at court following negotiation before the matter was called in before me. The settlement on liability was apportioned equally between the parties and quantum of the Claimant's claims were agreed following those negotiations this morning."

15. The Claimant was contending for a 100% uplift to both solicitor's and counsel's fees and the Defendant, 12.5% on solicitor's and 50% on counsel's fees.
16. Having referred to CPR 45.16(1)(b)(i) and 45.17(1)(b)(i) the Recorder observed at paragraph 4 of the costs judgment:

"It seems to me that the issue turns on how one defines a 'trial'."

17. The Recorder held:

"8. It seems to me that the definition of "at trial" must include the time or date when the trial is fixed to take place, when parties attend, as they have done in this case expecting to give evidence at a trial, when lawyers and advocates attend expecting to present their respective cases before a judge for hearing. As night follows day, in my judgment, it must also include the negotiations that will inevitably take place and quite rightly should take place on the day of the trial to either settle the matter outright or narrow the issues and assist the court in that regard.

…

10. It seems to me that rule 45.16(1)(a) must include settlement being achieved on the day that the trial is due to take place, at trial, including, in my judgment, negotiations on the day and parties attending prior to the matter actually being heard before the judge. It seems to me that to find otherwise would, as I have indicated, fly in the face of the overriding objective to deal with the matter fairly. Accordingly, it is my judgment that the Claimant is entitled to a 100 per cent uplift on the additional liability and I find that the Claimant's claims did conclude at trial. Accordingly, the Claimant is also entitled in respect of counsel fees under CPR 45.17(1)(a) to a 100 per cent uplift on counsel's fees for the same reasons."

The Submissions of the Parties

18. Mr Compton for the Defendant contended that the learned Recorder erred in that he failed to distinguish between the hearing of the counterclaim which related to the trial of the Defendant's claim, and the Claimant's claim, which had been completely compromised before the case was called on and about which the court was required to make no adjudication. He was wrong to find that the claim had concluded at trial.
19. Mr Compton submitted that the Recorder erred in his definition of 'trial' for the purpose of considering whether the Claimant's claim concluded at trial for the purposes of entitlement to a 100% uplift in solicitor's fees by operation of CPR 45.16(1)(a) and in counsel's fees by operation of CPR 45.17(1)(a). He pointed out that the costs judgment contains no reference to the definition of 'trial' in CPR 45.15(6)(b).
20. Mr Compton also relied upon the treatment of a counterclaim as an additional claim for the purposes of the CPR. An additional claim is a claim within the meaning of the rules. It was the Defendant's counterclaim which was a claim concluded at trial. The Claimant's claim was concluded by settlement before trial.
21. Further Mr Compton submitted that some importance must be attached to the use of the singular 'claim' in CPR 45.16 and 45.17. The percentage uplift depends upon when the particular claim to which the fees relate is concluded not upon when all claims between the parties are concluded.
22. It was said on behalf of the Defendant that this appeal is indistinguishable from the case of Deepak Sitapuria v Moorzadi Khan unreported 10^th December 2007 in Liverpool County Court.
23. In Sitapuria HH Judge Stewart QC held in relation to the equivalent provisions in the CPR dealing with uplift of fees in employer's liability cases that a trial has not commenced for the purposes of the uplift in solicitor's fees if a settlement is reached before the hearing of the case has started. As for the rule applicable to counsel, if a case settles on the day of a hearing but before it starts, the claim concludes within a period the start of which is the specified number of days before the date fixed for the commencement of the hearing and not 'at trial'.
24. HH Judge Stewart QC disagreed with the judgment of Master Haworth in Dahele v Thomas Bates & Son Ltd [2007] EWCA 90072 (costs) in which he decided that a case 'concludes at trial' for the purpose of the rule relating to uplift in counsel's fees if it settles on the day fixed for trial. He also disagreed with adopting this construction to interpret 'at trial' in the rule relating to solicitors as meaning on the day fixed for the hearing.
25. Mr Compton also relied upon the dictum of Master Haworth in Steven Gandy v Peter King 25^th June 2010 in which the Master held at paragraph 28:

"The first question to be determined is whether, on the basis of [the] solicitors' CFA agreement, 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."

26. Mr Compton submitted that the use of the two terms 'at trial' and 'before a trial has commenced' in CPR 45.16(1) demonstrates that the draughtsmen distinguished between the two: the first attracting an uplift of 100% and the second, 12.5%.
27. Mr Hughes for the Claimant referred to the conclusion reached by Master Haworth in Dahele and submitted that 'at trial' in CPR 45.17(1)(a) must mean on the day fixed for the hearing. Thus if a claim is settled at 12.01am on the day fixed for the hearing he contended that the claim concludes at trial for the purposes of both CPR 45.17 and CPR 45.16.
28. Mr Hughes fairly recognised that if, as was held in Dahele, there was a lacuna in the provision relating to the uplift in counsel's fees in the event of a settlement on the day of but before the start of a hearing it is difficult to fill that lacuna with an entitlement to a 100% uplift.
29. Mr Hughes submitted that in the light of the similar provision in the rule relating to solicitors, the court should be reluctant to find a lacuna in the rule relating to the uplift in counsel's fees. CPR 45.17(5) excluded from the calculation of periods of time, the day fixed for the commencement of the trial. Thus the 50% uplift which was to be applied to counsel's fees if a claim concludes 14 days or less before the date fixed for the commencement of the trial did not apply to claims settled on the day of the hearing. He submitted that 14 days ending on the day before the date fixed for the hearing provides an end point as well as a start point. An uplift in counsel's fees if settlement is reached on the day fixed for but before the start of a hearing must have been intended. Since the 50% uplift only applied up to the day before the date of the hearing, 'at trial' in CPR 45.17(1)(a) must mean 'on the day of the hearing'.
30. If I were to find that the learned Recorder erred in holding that 'at trial' means 'on the day the trial is due to take place' Mr Hughes contended that 'the claim' in CPR 45.16 and 45.17 comprises the entire proceedings between the parties: the claim and the counterclaim. Thus 'the claim' was concluded at trial when there was a judgment on the counterclaim.

Discussion and Conclusion

31. The Recorder concluded that the Claimant was entitled to recover a 100% uplift in both solicitor's and counsel's fees of the claim because the claim was settled on the day the hearing was due to take place. He interpreted the term 'trial' in CPR 45 as including negotiations on the day fixed for the commencement of the hearing. In reaching such a conclusion the Recorder observed that the rules do not define what 'at trial' means. He held that to find otherwise than his interpretation of 'at trial' would:

"…fly in the face of the overriding objective to deal with the matter fairly."

The CPR

32. The learned Recorder erred in holding that 'at trial' is not defined in CPR 45. It is clear from CPR 45.15(6)(b) that 'at trial' means at a contested hearing. As is clear from CPR 45.17(1)(a) and (b)(i) the rules recognise a distinction between a trial and the date fixed for the commencement of the trial. Further, the rules recognise a distinction between the conclusion of a claim after and before a trial has commenced. Settlement before a trial commences and conclusion by settlement after a trial commences could both occur on the date fixed for the trial. The trigger for entitlement to a 100% uplift in fees is not a settlement on a particular date but a settlement or conclusion after a trial, defined as a hearing, has commenced. It would be straining the use of language to say that a trial has 'commenced' after the beginning of the day fixed for trial although the hearing has not yet started.
33. The language of 45.16(1) dealing with the percentage increase in solicitor's 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 by 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.
34. The structure of CPR 45.17 dealing with the uplift in counsel's fees is as follows. There is a 100% uplift where the claim concludes at trial. Concluding at trial is defined in CPR 45.15(6)(c) as the conclusion of the claim by settlement or judgment after trial, defined in 45.15(6)(b) as the contested hearing, has commenced.
35. If a claim concludes before trial has commenced there is a sliding scale of percentage uplift in fees. Settlement within different time bands triggers different percentage uplifts. The start of a particular band is reckoned in accordance with CPR 45.17(5) so that in calculating periods of time the day fixed for the commencement of the trial or the first day of the trial period is excluded. Entitlement to a higher percentage uplift is reached when entitlement to the higher percentage is triggered. The start date of but not the end date of each band of entitlement is specified.
36. CPR 45.17(4) provides that where a claim concludes on or after the first day of the trial period but before the commencement of the trial, the percentage increases in CPR 45.7 paragraphs (1)(b)(i) or (1)(c)(i) are to apply as appropriate whether or not a trial date has been fixed within that period. A claim which concluded on or after the first day of a trial period could be concluded on the date fixed for trial. In accordance with CPR 45.17(4) the settlement of a fast track claim after the start of a trial period on the date fixed for trial would attract a 50% uplift in counsel's fees. The end period for such an entitlement is the commencement of the trial after which settlement of the claim would attract a 100% uplift in legal fees.

The Authorities

37. In Dahele, decided on 17^th April 2007, Master Haworth accepted an argument that there was a lacuna in the provisions relating to the uplift in counsel's fees in the equivalent rules relating to employer's liability claims. Master Haworth held that the rules relating to counsel's fees unlike those dealing with solicitors, did not provide for a percentage uplift when a case settled on the day of a trial before the commencement of the hearing. He held at paragraph 23:

"I accept the submission made by Mr Morgan QC that in relation to counsel's success fees there is an intermediate stage, not available to solicitors, where "the claim concludes 21 days or less before the date fixed for the commencement of the trial". This is the reference referred to in Table 7 to Rule 45.25. I accept that a case which settles on the day of the final hearing cannot be a claim which concludes 21 or any other number of days "before the date fixed for the commencement of the trial". This case settled on the day of trial. Where settlement takes place on the day fixed for the commencement of the trial there is a lacuna in the Civil Procedure Rules. Counsel would get a 75 per cent success fee if the case settles up to midnight on the day before the date fixed for the hearing. Conversely, he would get 100 per cent if the judge at the commencement of the trial instructs the parties to go and settle the case as soon as it has been called into court. There would appear to be no figure prescribed by Table 7 in the period of time from one minute past midnight on the day of the trial to the time for commencement of that trial later that day."

38. Master Haworth used the perceived lacuna in the provision relating to counsel's fees to interpret 'trial' in the rule relating to solicitors. At paragraph 24 he held:

"In those circumstances I accept the submission of Mr Morgan QC that a case "concludes at trial" if it settles on the day fixed for trial and Rule 45.25(1)(a) and 45.24(1)(a) must be interpreted in that way."

39. HH Judge Stewart QC in Sitapuria, decided on 10^th December 2007, rejected the interpretation of 'at trial' adopted by Master Haworth in Dahele. He held at paragraph 16:

"…I am afraid I find that I have to disagree with the learned Master's judgment on a number of matters. Firstly, I do not accept that there is a lacuna in the rules. Nor do I accept the reasoning of the learned Master in para. 23 that a case which settles on the day of the final hearing cannot be a claim which concludes twenty-one or any other number of days 'before the date fixed for the commencement of the trial'. It seems to me that this reasoning confuses sub-rule (5) which instructs the court how to calculate periods of time with the interpretation of Rule 45.17(1)(c)(i). It seems to me that counsel, in a multi-track claim, in a road traffic case is entitled to 75 percent if the claim settles or concludes (as the wording of the rule is) in a period which commences with twenty-one days before the date fixed for the commencement of the trial. The commencement of [a] period of time - namely, the twenty-one days - must exclude the day fixed for the commencement of the trial. However, so long as the claim concludes in that period, the commencement of which is determined by sub-rule (5), at any stage up to the time when the trial commences, i.e. counsel begins to open the case, then counsel is entitled to 75 percent, and the court should not countenance any lacuna in the rules, much less should it interpret the clear provisions in relation to solicitors in a way which is affected by the rule relating to counsel. It seems to me that the proper construction of the rule relating to counsel is the one that I have put forward. If that construction is correct, then everything else falls into what might be described as 'normal order' and is entirely consistent with sub-rule 45.15(6)."

40. Master Haworth returned to a consideration of the uplift in solicitor's and counsel's fees in Gandy on 25^th June 2010. He held at paragraph 28:

"The first question to be determined is whether, on the basis of solicitors' CFA agreement, 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."

However Master Haworth distinguished both Dahele and Sitapuria from the case before him on the basis that the fixed costs regime in Part 45 did not apply to the facts of the case before him. The wording of the CFA did not mirror that of the provisions relating to success fees in Part 45 CPR.

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 solicitor's 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 the 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 to accord with a construction of CPR 45.17 in order to deal with a perceived lacuna in CPR 45.17 in relation to the uplift in counsel's fees.
42. Accordingly in my judgment the learned Recorder erred in awarding an uplift of 100% to solicitor's fees. The correct uplift was 12.5%.
43. The language of CPR 45.17(1)(a) is the same as that of CPR 45.16(1)(a). There is no reason to distinguish it from the clear meaning of that provision. A 100% uplift to counsel's fees applies where the claim concludes by settlement after the trial has commenced or by judgment. It does not apply where a settlement is reached before the trial commences even if it is achieved on the date fixed for the trial.
44. In my judgment, with respect, it is impermissible to use a construction of 'concludes at trial' in CPR 45.17(1)(a) which seeks to cater for a perceived lacuna to construe the clear words of CPR 45.16(1)(a). If there were any doubt about the construction of 45.17(1)(a), in the absence of any basis for ascribing a different meaning to the words 'the claim concludes at trial' should be construed consistently with their clear meaning in 45.16(1)(a). Since the same phrase 'the claim concluded at trial' is used in each rule in the same Section of the CPR, in the absence of reasons to the contrary, the same words should be given the same meaning.
45. Although the proper construction of CPR 45.17(1) as it applies to the conclusion of claims on the day fixed for trial but before trial commences may not be immediately apparent, in my judgment, as was decided by HH Judge Stewart QC in Sitapuria, there is no lacuna in the Rule. On its proper construction a settlement of a claim achieved on the day of a hearing but before the hearing commences gives rise to an entitlement to an uplift in counsel's fees of 50% in a fast track road traffic accident claim. The judgment in Sitapuria is approved and that in Dahele not followed.
46. As was submitted by Mr Compton, it is clear from CPR 20(7)(1)(a) that a counterclaim is regarded for the purposes of the CPR as an 'additional claim'. CPR 20.3(1) provides that, except as provided by that part, an additional claim is to be treated as if it were a claim for the purposes of the CPR.
47. Further, I accept Mr Compton's submission that regard must be paid to the use of the singular in the phrase 'the claim concludes at trial' in CPR 45.16(1)(a) and 45.17(1)(a). CPR 20 confirms the ordinary and natural meaning of 'claim' by specifying that a counterclaim is separate and additional to a claimant's claim. The Civil Procedure Rules provide that a counterclaim by a defendant is a different claim from the claim by a claimant against a defendant. Accordingly I reject the submission made by Mr Hughes on behalf of the Claimant that a claim and counterclaim together should be treated as one claim and constitute 'the claim' for the purpose of CPR 45.16(1)(a) and 45.17(1)(a). The fact that the counterclaim was determined at trial does not mean that the claim should also be regarded as determined at trial. The alternative basis for upholding the decision of the Recorder must be rejected.
48. The appeal is allowed. The 100% uplift in both solicitor's and counsel's fees in respect of the Claimant's claim is set aside and a 12½% uplift in solicitor's and 50% in counsel's fees substituted. I was told by counsel that the fees attributable to the claim and the counterclaim must have been decided. There will have to be a detailed assessment of the costs of the claim if not agreed.