APPEAL AGAINST DISPROPORTIONAL COSTS FAILS: REASONABLE TO USE LEADING COUNSEL IN A £25,000 CLAIM

In East Sussex Fire And Rescue Service v Austin [2019] EWHC 1455 (QB) Mrs Justice Lambert dismissed the defendant’s (paying party) appeal. The defendant argued that costs were disproportional, that the use of leading counsel was unreasonable  – as was their brief fee. All of the defendant’s arguments on this point failed before the Master and failed on appeal. (The court was considering the pre-2013 test for proportionality).

THE CASE

The claimant was a fire officer injured in a fire at a fireworks factory where two firefighters were killed and others injured..  Complex litigation ensued in relation to liability for the deaths and injuries.  Because of a potential conflict of interest Mr Austin required separate representation to other claimants in the action.  The matter proceeded to a 9 day trial on liability with three expert witnesses on liability.   After judgment was established the claimant accepted an offer of £25,000.

 

THE ASSESSMENT OF COSTS

    1. The detailed assessment of Mr Austin’s costs came before Master Gordon-Saker (“the Master”) in March 2018. The base costs were £275,000. Gross of success fees, insurance premium, the costs of preparation of the bill of costs itself and VAT, the bill of costs was £798,554.
    2. It was common ground between the parties that, as the claim had commenced before April 2013, the assessment should be undertaken by reference to the Civil Procedure Rules before the rule changes enacted following Jackson LJ’s Review of Civil Litigation Costs.
    3. During the course of the assessment, the Master made a series of ex tempore rulings which included the following decisions which are now the subject of appeal:
a. that the base fees, viewed globally, were not disproportionate;
b. that the instruction of leading counsel was reasonable; and
c. that leading counsel’s brief fee (of £50,000) was reasonable.

THE APPEAL

The defendant appealed against each of these findings.  The appeal on each ground was rejected.

 

THE JUDGMENT ON APPEAL

    1. An appeal lies if the decision of the lower court was wrong or unjust because of serious procedural or other irregularity under CPR 52.21(3)(a) and (b). Mr Mallalieu relies upon 52.21(3)(a) only. The error identified being the alleged misdirection by the Master at paragraph [12] of his ruling and the two observations that, although under the current regime the costs would be disproportionate, they were not disproportionate under the old regime and that the old test was gentler and more generous than the current regime.
    2. I am against Mr Mallalieu, notwithstanding his cogent submissions, for two reasons:
a. first, Mr Mallalieu’s submission requires me to consider a short section of the ex tempore ruling in isolation from the observations of the Master which came before and after.
b. Second, although it must be accepted that the meaning of the impugned section of the ruling is not immediately clear on a superficial reading, a closer scrutiny in context leads to the conclusion that the Master was drawing attention only to the fact that the global assessment of proportionality is now undertaken (typically) after, rather than before, the item by item assessment and that generally the current regime is tougher than the regime it replaced. Neither of these observations is wrong.
    1. The immediate linguistic context of the section of the ruling in issue is the Master’s consideration of each of the relevant factors set out in CPR 44.5(3) as in force before 1 April 2013 and his summary conclusions in respect of each of those factors. The Master identified the relevant factors; he considered them in turn and reached preliminary conclusions which were open to him on the basis of the information available to him. Having done so, the final paragraph of the ruling makes plain that the factors which weighed most heavily in his judgement on global proportionality were the complexity of the legal arguments which the Claimants faced at trial, that the trial was listed for several weeks and that the case was of importance to Mr Austin. The Master’s approach was correct. There is no suggestion in paragraphs 1 to 11 of the ruling or in the concluding comments of paragraph 12 that the Master took a wrong approach to the proportionality assessment.
    2. Although Mr Mallalieu challenged the Master’s views on the relevant factors in CPR 44.5(3), they amounted to no more than quibbles. For example, Mr Mallalieu sought to persuade me that the Master was wrong to find that the case was of importance to Mr Austin, submitting that whilst the case may have been important for the Second Defendant which would be concerned with issues of principle of wider application to the Service, this consideration did not apply to Mr Austin. However, the Master was entitled to find that the damages recovered were of importance to Mr Austin. He was also entitled to find that the claim was important to him for non-monetary reasons given his experiences on the day of the fire. Although not stated in the ruling, the Master was aware that Mr Austin had seen the bodies of two of his colleagues and that he had experienced at first hand the aftermath of the fire having remained on site for 2 or 3 hours to continue his duties. These were all features of the underlying litigation which the Master was entitled to take into account in assessing the importance of the case to Mr Austin.
    3. Mr Mallalieu also reminded me that the trial, although listed for 15 days, was concluded in only 9 days and that much of what happened on the day of the fire was not in dispute. I accept these points. However, the complexity of the case arose not from any factual issues but from the legal defences raised by the Second Defendant and the application of the law to the agreed facts (or such facts as found). The difficulty of the case is demonstrated by the judgment which ran to many pages and the topics covered in the judgment. Again, these were matters known to the Master and ones which he was required to evaluate as part of his judgement on global proportionality. His conclusion that the case was complex and required skill, effort and specialist knowledge was one which was open to him.
    4. I turn then to the comment in paragraph 12 of the ruling that the Master would have found the costs to be obviously disproportionate if he were applying the “new proportionality test” but not disproportionate adopting the “old test.” I agree with Mr Mallalieu that, at first blush, it is not clear exactly what the Master is here alluding to. I also agree with Mr Mallalieu (to the extent that it is necessary for me to do so) that, if the Master were stating that the factors to be taken into account under the current rules were different to the factors to be taken into account under the former CPR 44.5(3), then he would be wrong to do so. The current equivalent provision in the CPR (44.4(3)) is similar to its predecessor. Whilst the current CPR 44.3(5) gives additional guidance on proportionality and spells out that proportionality concerns the reasonable relationship between costs and the five factors listed, I agree with Mr Mallalieu that those five factors add nothing new of substance to the global proportionality assessment.
    5. However, although the Master referred to the “new test” and the “old test,” I do not find that the Master was, in using those terms, suggesting that different factors informed the global proportionality assessment under the former and current rules. Viewed in context, the Master was simply making the point that the global proportionality assessment under the former rules was undertaken at the first stage of the detailed assessment and that it preceded the item by item assessment, whereas under the current rules the proportionality assessment is typically undertaken after the item by item assessment. The Master was observing that if the figure of £275,000 had been the costs figure which was left following the item by item assessment of reasonableness then it would be disproportionate. He recognised however that under the old regime, or using the “old proportionality test,” the item by item assessment had yet to be undertaken and that the figure of £275,000 was likely to be reduced, possibly substantially. This interpretation is confirmed by the final sentence of the ruling in which the Master observed that the costs claimed were very high and that it would be open to the paying party to challenge individual costs on the line by line assessment and that the challenge could include in respect of individual items a challenge to proportionality and the need to consider necessity.
    6. Viewed in this light, the observation that the costs claimed would fail the proportionality test under the current rules, but were not obviously disproportionate under the former rules, makes sense. Nor is there anything wrong in the observation. A Costs Master undertaking the impressionistic, or “rough and ready” global proportionality assessment at the outset of the detailed assessment under the pre-April 2013 Rules would have in mind that there was to be a detailed item by item assessment to follow which would reduce the costs by reference to reasonableness, or necessity and reasonableness if targeted items were criticised on proportionality grounds. In contrast, under the current CPR, the Costs Master will have in mind that he or she is making the proportionality assessment from “the other end of the telescope” (to use Mr Mallalieu’s analogy), and that what he or she is assessing for proportionality is the net figure following the detailed item by item scrutiny. As such, the comment is no more than a common-sense reflection upon the different point in the detailed assessment at which the global proportionality test is currently undertaken.
    7. This disposes of one of Mr Mallalieu’s challenges to paragraph 12 of the ruling. His further point is that the Master was wrong to say that the old proportionality test was “rather gentler and more generous.” I agree with Mr Mallalieu that there is nothing about the proportionality assessment itself which is substantially different under the current rules. But I find that the Master was here making the uncontroversial comment that the new regime is generally tougher than the old in that, under the current rules, necessity and reasonableness do not trump proportionality. The section of the ruling may not have been particularly clearly expressed and it would have been preferable if the Master had mentioned specifically that disproportionate costs will now be reduced so that they bear a reasonable relationship to the factors now set out in CPR 44.3(5), irrespective of necessity and reasonableness, but allowance must be made for the fact that this was an ex tempore ruling and that the Master was using the phrases “old proportionality test” and “new proportionality test” as short hand for the general approach to assessment under the old and new rules.
    8. I therefore refuse this ground of appeal. There are two sentences in the ruling which might have been expressed more clearly but, when viewed in context, they reveal no error of law.
Ground 2:
    1. I can deal with this ground shortly. The essential point made by Mr Mallalieu is that there was a community of interest between all of the Claimants in the action and that, given the heavy-weight expertise instructed on behalf of the two Claimant groups, it was not reasonable for Mr Austin to have the benefit of leading counsel. His interests could have been served by the continued instruction of Mr Heppinstall who was an experienced and highly competent junior with an excellent reputation.
    2. This ground of appeal fails also. There was no error of law in the approach taken by the Master who correctly directed himself on the Juby factors relevant to the reasonableness of the instruction of leading counsel. The Master noted his view that the case was a “heavy case” involving difficult questions of fact, expert evidence and difficult issues of law in relation to immunity and the nature and extent of the second defendant’s duty of care. He rejected the submission that Mr Heppinstall could reasonably have played “tail end Charlie” (as it was put) to the other more senior advocates acting on behalf of the Claimant groups. His view was that, if it was reasonable for Mr Austin to be separately represented, then it was appropriate for him to be represented by a legal team capable of handling the weight of the case given the issues raised by the Second Defendant. He noted that Mr Austin would have had no degree of control over leading counsel instructed on behalf of the two Claimant groups. The Master was entitled to conclude that it was, taking these factors into account, proportionate to instruct leading counsel even though the claim was of limited value. In these circumstances I do not interfere with the ruling on the point.
Ground 3:
  1. Again, I can take this ground shortly. Without intending any disrespect to Mr Mallalieu’s submissions, it seems to me that the appeal from the Master’s ruling on leading counsel’s fees is something of a make-weight.
  2. Mr Mallalieu submits that the reduction in leading counsel’s brief fee from £50,000 to £45,000 was insufficient. The basis for the appeal on this ground is that the brief fee was, when judged by the fee note, apparently calculated by reference to the number of hours’ preparation required for the trial. Therefore, having reduced the hourly rate by around 20%, the Master should have reduced the brief fee accordingly to around £40,000 (consistent with 100 hours’ work including the first day of trial).
  3. Mr Mallalieu’s difficulty here is that, although there was discussion during the hearing of the brief fee and various formulations of hours spent in preparation, the Master acknowledged that brief fees are not calculated by reference to hourly rates and that the proper measure of counsel’s fees is to estimate what fee a hypothetical but not pre-eminent counsel, capable of conducting the case effectively, would be content to take on the brief. This is a matter for the judgement of the Costs Judge using his or her knowledge and experience (see Simpsons). The Master set out the test: “effectively here we are looking at a reasonable fee for leading counsel for three weeks work, two weeks of hearing and a week of preparation.” I do not therefore accept that the Master when making his reduction in the brief fee was doing so exclusively by reference to hourly rates and the number of hours of preparation involved. For this reason, this ground of appeal also fails.
  4. I therefore dismiss the appeal.