COUNSEL’S FEES ARE RECOVERABLE ON A CASE THAT LEAVES THE PORTAL: WHEN A TRAIL OF BREADCRUMBS LEADS NOWHERE
In the judgment today in Finsbury Food Group Plc v Dover  EWHC 2176 (QB) Mrs Justice Lambert rejected the defendant’s arguments that counsel’s fees were not recoverable.
“I do not accept that leaving the legal costs of valuing a claim which has fallen outside the Protocol unfixed and subject to assessment in the usual way, is an absurd outcome.”
The claimant was injured in an accident at work. The claim was initially valued at less than £25,000. A CNF was loaded online. The defendant failed to respond within 30 days and the claim exited the portal. The insurer requested (twice) that the matter be re-submitted, but the claimant declined.
Counsel advised soon after the claim left the Portal. The claim eventually settled for £70,000.
THE DEFENDANT’S ARGUMENTS: COUNSEL’S FEES NOT RECOVERABLE
When costs came to be assessed the defendant argued that, as the matter had been in the portal, counsel’s fees were not recoverable. Alternatively they were limited to £150.00.
“Following settlement, the Claimant submitted a Bill of Costs in which Counsel’s fee for the advice in conference was claimed in the sum of £650 plus VAT. In its Points of Dispute, the Defendant disputed any entitlement to payment of Counsel’s fee on the basis that no such fee was payable under the relevant provisions in a claim which had exited the Protocol and when incurred after the claim had left the Protocol as those costs were subsumed within the fixed fees. Alternatively, it was submitted that, if Counsel’s advice was a recoverable item of cost, then the costs of such advice were limited to £150 plus VAT. The Costs Officer rejected these arguments holding that the relevant provisions permitted recovery of counsel’s fee for advising in conference as a disbursement. He however assessed the costs of counsel’s fee down from £650 plus VAT to £500 plus VAT”
THE JUDGMENT OF THE MASTER
The Master rejected the defendant’s arguments.
“In a detailed and thoughtful judgment, the Master ruled against the Defendant on each of these points. In respect of the argument concerning CPR 45.29I(2)(c) he found that CPR 45.23B and Table 6A did not apply to ex Protocol claims, it being clear from CPR 45.16 and 45.17 that the fixed costs regime in CPR 45 Section III applied only to claims which have been or should have been started under PD 8B, the Stage III procedure or where a party had not complied with the Protocol, and not to claims which had for any reason left the Protocol. He rejected the submission that 45.23B applied by virtue of the Protocol (and the reference in CPR 45.29I to the Protocol). He concluded that paragraph 7.41 of the Protocol was concerned with proceedings under the Protocol and not with claims which had fallen out of the Protocol for any reason. He granted permission to appeal to the High Court on the basis that the argument “may have the potential to apply to a significant number of cases” even though, in his view, the meaning of the section was clear and that he doubted that an appeal would have any real prospects of success.”
THE JUDGMENT ON APPEAL
The appeal confined itself to one point – an argument that counsel’s fees were confined to £150.00 plus VAT – as set out in Table 6A – “Fixed Costs in relation to the EL/PL Protocol”. The judge dismissed the Defendant’s appeal.
I start with some general and uncontroversial observations concerning my approach to the interpretation exercise. The objective of any exercise of statutory interpretation is to determine the intention of the legislature and the starting point for that exercise is the natural and ordinary meaning of the words used. In Pinner v Everett  1WLR at 1266, Lord Reid observed: “In determining the meaning of any word or phrase in a statute, the first question to ask always is what is the natural and ordinary meaning of that word or phrase in its context in the statute? It is only when that meaning leads to some result which cannot reasonably be supposed to have been the intention of the legislature, that it is proper to look for some other possible meaning of the word or phrase.” It follows that where the meaning is clear on the face of the provision in issue, there is no need to resort to other canons of statutory construction unless the construction produces a result which is so startling that it could not have been intended. In considering the natural and ordinary meaning of the words used the court must take into account not just the dictionary definition of each word but also the syntax of the expression used and its context. As Viscount Simonds said in AG v Prince Ernest Augustus  AC 436 at 461 “For words and particularly general words, cannot be read in isolation: their colour and content are derived from their context.“
Against this short and uncontentious introduction, the first question for me therefore is the grammatical meaning of CPR 45.29I(2)(c), taking the provision in context. I accept Mr Mallalieu’s submission that viewed linguistically the meaning is clear and unambiguous: the phrase in subsection 2(c): “as provided for in the relevant Protocol” is not referring to the cost as provided for in the relevant protocol, but is referring to the type of disbursement there provided. The reason for this is simple: subsection 2(c) must be read in conjunction with subsections (1)(a) and (b). Those earlier paragraphs permit the court to allow a claim for a disbursement “of the type mentioned in paragraphs 2 or 3” but prohibit a claim for a disbursement of a type which is not there mentioned. The function of subparagraph 2 is therefore, as set out in its opening sentence, to list those types of disbursement “referred to in paragraph 1” in respect of which the court will allow a claim and, if not mentioned, the type of disbursement in respect of which there can be no claim. This meaning is plain from a straightforward and natural construction of the paragraph as a whole.
Not only does this construction make grammatical sense, it is also the only logical construction of r. 45.29I. As Mr Roy accepted, neither the Protocol nor the rules fix the cost of obtaining medical records or of obtaining an expert medical report, nor fix the cost of other disbursements referred to in (2), save for subparagraph (g) where the upper limit of the claim is expressly set out. Mr Roy’s trail of breadcrumbs would not, when applied to other sub-paragraphs of the same provision, lead him anywhere. Mr Roy seeks to defend his approach to the construction of this provision on the basis that, whilst there may be vigorous debate over the level of counsel’s fees (justifying them being fixed) no such vigorous objection is likely to be taken to, say, the cost of obtaining an expert medical report. I cannot accept this. No evidence was before me concerning the range of fees charged by experts for providing medical or non-medical reports which would enable me to conclude that Mr Roy’s anomalous construction of 2(c) is justified on such a basis. Nor is it a matter of common sense that experts charge such uniformly low rates that no objection would be taken by the defendant.
There are two further problems associated with Mr Roy’s submission. First, his trail of breadcrumbs takes him to paragraph 7.44 of the Protocol. It is this paragraph which refers to “a sum equal to the Type C fixed costs to cover the cost of the advice.” From here, by cross reference to Table 6A, he arrives at his figure of £150 plus VAT. However, paragraph 7.44 is concerned with costs recovery in a claim which has settled at Stage 2 of the Protocol, not a claim which has fallen out of the Protocol for some reason. Paragraph 7.44 falls within a section of paragraphs concerning Stage 2, including the obtaining of evidence, interim payments and submission of the Stage 2 settlement pack. The subheading of paragraph 7.44 is “settlement” obviously referring to settlement at Stage 2 and providing for the defendant paying any unpaid Stage 1 fixed costs under 45.18 [7.44(2)] and the Stage 2 fixed costs under 45.18 [7.44(3)]. As Mr Mallalieu observed, paragraph 7.44 of the Protocol is therefore inapt when considering a claim which has fallen out of the Protocol.
Second, Mr Mallalieu makes the point that Part 45 expressly fixes the cost of the disbursement when counsel’s advice is obtained in a claim which remains within the Protocol and settles at Stage 3. Section III of rule 45 includes 45.23B which fixes the cost at an amount equivalent to Stage 3, Type C fixed costs, that is, £150 plus VAT. No such similar provision exists in Section IIIA for claims outside the Protocol. Likewise, CPR 45.29I(2A), which relates to whiplash claims, started under a different protocol (the road traffic accident protocol) fixes the costs of various medical reports. Mr Mallalieu’s short but important point here (which I accept) is that, had the drafter intended to fix the costs of legal advice for a claim outside the Protocol, then the drafter could easily have included a similar provision.
Having therefore dealt with the grammatical (plain wording) meaning of the provision, I then go on to consider whether the meaning leads to an absurd outcome or an outcome which the drafter could not reasonably have intended. Again, and notwithstanding Mr Roy’s careful submissions, I do not accept that leaving the legal costs of valuing a claim which has fallen outside the Protocol unfixed and subject to assessment in the usual way, is an absurd outcome.
I accept all that Mr Roy says concerning the impetus for the fixed costs regime and the underlying rationale of certainty and proportionality. However, claims which have fallen out of the Protocol are a mixed bag. Some small straightforward claims may fall out of the Protocol as a result of the failure by the defendant to respond to the CNF. But there are other reasons for a claim falling out of the Protocol including notification by the claimant that the claim has been revalued at more than the upper limit; where liability remains in dispute and where contributory negligence is alleged. As Stewart J recognised in Ferri v Gill  Costs LR 367, these factors are likely to be associated with a much greater level of complexity, so making quantification of the claim all the more difficult. I see nothing absurd in the costs of such an advice on valuation not being fixed in those circumstances. Indeed, it might be said that the converse is true. It would be odd if the same fixed fee were to be recovered for valuing a straightforward claim worth £15,000 as for a claim which, as it turns out, includes a high claim for loss of earnings or handicap on the labour market the quantification of which may involve considerable skill and expertise. Further, the costs allowed will not be unchecked. Just as in this case, they are subject to assessment and may be reduced on assessment.
I accept Mr Roy’s submission that leaving costs to the discretion of the court may lead to costs bills being subject to detailed assessment. However, as Mr Mallalieu points out, the fact that 45.23B fixes the level of fees for claims which settle at Stage 3, does not mean automatically that the fee will be recovered. That provision makes plain that the fee will only be recovered where the advice is reasonably required to value the claim and so, even within the fixed costs regime of Section III, there is a basis for challenge which may require resolution by the costs judge. I also accept Mr Mallalieu’s point that the drafting of Part IIIA suggests a greater degree of flexibility generally to costs in claims which have fallen out of the Protocol: Rule 45.29J permits claims for an amount of costs exceeding fixed recoverable costs where there are “exceptional circumstances.” Even though Stewart J established that the bar to recovery under 45.29J is set high, the fact that the provision exists in relation to claims which have fallen out of the Protocol, but no similar provision exists in relation to those which are resolved under the Protocol or at Stage 3, suggests a different and more flexible policy generally to claims which have fallen out of the Protocol.
For these reasons, I reject Mr Roy’s approach to the construction of the provision and reject his conclusion. I turn back briefly therefore to the judgment of Master Brown. Although the argument was deployed before him in a rather different way, he reached a similar conclusion for similar reasons. He concluded that CPR 45.23B and Table 6A applied to claims which settled at Stage 3 under PD 8B, and as such had no application to claims which had exited the Protocol. He concluded that the Protocol did not expressly incorporate CPR 45.23B nor was it implicitly incorporated by CPR 45.29I. He found that paragraph 7.41 and 7.44 of the Protocol were referring to claims which settled at Stage 2 and had no application to claims which were outside the Protocol. I agree with all of these conclusions; none were, in my judgement, wrong.