McEwan v National Taxing Team

This is an application for judicial review in which the claimant seeks to challenge a decision of the defendant National Taxing Team. The claimant had been acquitted at the Magistrates Court and the District Judge had awarded him his costs from central funds. The National Taxing Team decided to disallow certain amounts of the legal fees he claimed and it is that decision he seeks to review.

The claimant was one of the founders and was the general secretary of a very small trade union, UDW, based in Yeovil, Somerset. In 2013 UDW was removed from the list of certified unions under the Trade Union and Labour Relations (Consolidation) Act 1992 when its membership and funds had substantially declined. JL became involved in the administration of the Union and there was dispute between the claimant and him as to the use of Union funds. The claimant was removed from office in 2010 – he later succeeded in an unfair dismissal claim at an Employment tribunal – and made allegations against JL by posting entries on a website and in emails and correspondence. JL complained to the Metropolitan Police, who declined to pursue the matter. When he went to the Somerset police, however, they charged the claimant with harassment over the period 28 March 2010 to 29 February 2012. The case was listed for a case management hearing on 2 August 2012.

The claimant had found a solicitor through the internet, based in Havant, Hampshire, almost a hundred miles from Yeovil. He charged £500 for a court appearance in August 2012 and advised the claimant to plead guilty. The claimant declined to adopt this course and pleaded not guilty. He then found a link on the internet to a firm of solicitors in Bexleyheath, south-east London, Aletta Shaw, and to a barrister, Simon Connolly, who appeared for the claimant before us. Aletta Shaw was about 30 minutes from where the claimant lived; Yeovil was 160 miles away.

A defence case statement was filed with extensive requests for disclosure. The prosecution failed to provide proper disclosure and the trial date of 9 November 2012 was vacated. The case was listed on 10 December 2012 for directions and the court ordered further disclosure on the terms agreed between counsel. On 27 February 2013 the case was listed for further directions. Disclosure had not occurred mainly, on the claimant’s account, because JL had been obstructive. The prosecution and defence agreed further directions for disclosure. The trial was then listed for 18 March 2013 for 3-4 days.

The defence case was that the claimant was entitled to make the allegations as a matter of genuine public interest. JL, it was said, posted a number of false allegations against the claimant but shut down the relevant site the week prior to reporting his own complaint. The defence asserted that the allegations against JL were true: he had usurped and eventually destroyed the Union and had fraudulently appropriated its funds. The comments which the claimant had posted were true and were to inform the membership of JL’s activities and in an attempt to regain control of the Union. He had provided a detailed explanation in his police interview. He invited the police to interview his brother who was similarly mistreated by JL, but they never did so.

The defence intended to make good its case that JL was stealing monies received from Union members, whom he represented at disciplinary hearings, by a cross check of his admitted attendances on behalf of various clients with the payments made to the Union bank account. In order to demonstrate the irregularities within the Union, four Union officials were to be called to give evidence. There was also the claimant’s successful claim for unfair dismissal; a hearsay application was made for it to be admitted in evidence. The claimant’s police interview was almost 4 hours long, had not been transcribed and was due to be played at the trial.

On the first day of the trial, 18 March 2013, disclosure directions had still not been fully implemented. The court decided to proceed with the case with the disclosed material being assessed by the claimant’s solicitor who was in attendance. The claimant made an application to stay the proceedings as an abuse of process that had to be dealt with. On the second day of trial, 19 March, the case collapsed when JL was still giving evidence in chief. The prosecutor, concerned about JL’s evidence, abandoned the case with the agreement of the District Judge. The District Judge commented that in his view if the case had been reviewed, and properly investigated, it would never have been brought. He expressed sympathy for the claimant.

The court then made an award of defence costs from central funds. The District Judge observed, in the terms of a note taken at court: “Why need a solicitor and counsel in Court – not overly complicated case”. Counsel offered to make representations on the point but the District Judge declined to hear them, saying that he was not going to make any enquiry because it was a matter for the National Taxing Team.

On 15 June 2013 the claimant submitted an itemised bill for costs for £17,630.30 to the National Taxation Team. In its letter of 15 July 2013 the National Taxing Team allowed a total of £7,981.20. That included all the time claimed in relation to preparation, telephone calls and correspondence, but with a reduction to the rates recommended in the Guide (see below). The letter noted the District Judge’s comment (“not overly complicated”) and that Yeovil was served by “a local advocate centre at Exeter”. The solicitor’s attendance at court was disallowed, Mr Connolly’s fee was reduced and his travel expenses disallowed.

The claimant’s solicitor made further representations on 2 August explaining the late disclosure and that it had been necessary to have a solicitor to deal with it at court on the final day of trial. It continued that the case was especially important to the claimant’s career and that he wanted Aletta Shaw because of their experience with a previous similar case. A local solicitor had advised that the case was hopeless. Mr Connolly had experience with this type of case and it was not appropriate to brief more junior counsel. There was significant preparation involved.

The National Taxing Team undertook a discretionary review. As it put it in its letter of 17 September, having considered the matter carefully, it was persuaded that it was ‘(just about) reasonable’ to have counsel attended by a solicitor at trial, but not a solicitor who had to incur £1,152 in travel costs. The solicitor’s hotel and travel expenses were still disallowed but a solicitor’s attendance at trial was allowed at local B grade rates. The amount allowed was assessed on the basis of actual time at court, not the anticipated time. (The solicitor who travelled from London was in fact a C grade solicitor). Counsel’s fees were reduced and no allowance was made for travel expenses. The letter said that if the claimant wanted to engage counsel of 30 years experience in a harassment case that was its decision, but the public purse would only remunerate him to the level of what was necessary and reasonable. Overall the amount to be paid was increased by £1,911.60. That meant that in total £9,892.80 was allowed.

At the relevant time Section 16 of the Prosecution of Offences Act 1985 (“the 1985 Act”) provided:

“16.

(1) Where

…

(c)

a magistrates’ court dealing summarily with an offence dismisses the information; that court … may make an order in favour of the accused for a payment to be made out of central funds in respect of his costs (a “defendant’s costs order ”).

…

(6)

A defendant’s costs order shall, subject to the following provisions of this section, be for the payment out of central funds, to the person in whose favour the order is made, of such amount as the court considers reasonably sufficient to compensate him for any expenses properly incurred by him in the proceedings.

(7)

Where a court makes a defendant’s costs order but is of the opinion that there are circumstances which make it inappropriate that the person in whose favour the order is made should recover the full amount mentioned in subsection (6) above, the court shall—

(a)

assess what amount would, in its opinion, be just and reasonable; and

(b)

specify that amount in the order.” (Footnote: ¹)

The Costs in Criminal Cases (General) Regulations 1986, SI 1986 No 1335 are made under section 20 of the 1986 Act (“the 1986 Regulations”). Under these the appropriate authority must consider the claim, any further particulars, information or documents submitted by the applicant and must allow such costs in respect of (a) such work as appears to it to have been actually and reasonably done; and (b) such disbursements as appear to it to have been actually and reasonably incurred: regulation 7(1). In determining costs in this way, the appropriate authority must take into account all the relevant circumstances of the case including the nature, importance, complexity or difficulty of the work and the time involved: regulation 7(2). Any doubts which the appropriate authority may have as to whether the costs were reasonably incurred or were reasonable in amount are to be resolved against the applicant: regulation 7(3). (Footnote: ²)

In addition to the statutory material the Chief Taxing Master has issued “The Taxing Officers Notes for Guidance” (“the TONG”). There is also “The Digest of Taxing Masters’ Decisions” (“the Digest”) and “The Guide to Allowances under Part V of the Costs in Criminal Cases Regulations 1986” (“the Guide”). Paragraph 1.12(b)(iii) of TONG states that any observations or directions of the trial judge relevant to taxation must be considered. In relation to travel time, paragraph 2.50 of TONG provides:

“Counsel’s fees should not be increased to reflect time travelling to and from court … Counsel should not be paid to attend “distant” courts where there is an adequate local bar unless counsel can justify his attendance. When, however, it is necessary for a particular counsel to travel to a distant court then his brief fee, refreshers and attendance fee should include a reasonable amount for any actual travelling and hotel expenses necessarily and exclusively attributable to the case or cases in question.”

These provisions in the 1985 Act and the 1986 Regulations have given rise to a number of decisions of this court. The seminal decision is R v Dudley Magistrates’ Court, ex parte Power City Stores Ltd & Another (1990) 154 JP 654, where the defendant had employed senior counsel. The justice’s clerk, in disallowing senior counsel’s fees, said that the matters alleged against the defendants could more than adequately have been dealt with by a senior solicitor/junior counsel. This court held that consequently the justice’s clerk had not posed the correct question and that the matter had to be re-determined. Woolf LJ said this (at p 4):

“It appears to me that subsections (6) and (7) [of section 16 of the Prosecution of Offences Act 1985] presuppose that, in properly assessing the amount of costs which are to be allowed in respect of a defendant's cost order, the appropriate taxing authority will carry out a two-stage exercise, first of all, consider what amount will be reasonably sufficient to compensate the defendant for any expenses properly incurred by him in the proceedings. That is stage one. In order to fulfil the requirements of stage one he has to ask himself, first of all, whether the expenses are ones which are properly incurred by the defendant.

…

Having come to the conclusion that the expenses are properly incurred the court's next task is to consider the amount which is reasonably sufficient to compensate the defendants for those costs. That is a question of quantum. If there are no untoward circumstances that is the end of the task of the taxing authority under the provisions of s. 16. However, there can be a situation where subsection (7) comes into play. That is a situation where the court is of the opinion that there are circumstances which make it inappropriate that the person … should recover the full amount …”

Pill J agreed.

R (Law Society) v Lord Chancellor [2010] EWHC 1406 (Admin); [2011] 1 W.L.R. 234 was an attack on the 1986 Regulations, as amended in 2009, which had established a scheme of rates and scales under which successful defendants were entitled to recover their costs only at legal aid rates. The Law Society was successful in its contention that the 1986 Regulations in their amended form were ultra vires, since they were inconsistent with the principle of compensation set out in section 16(6) of the 1985 Act. (Consequently, the amendments to regulation 7 of the 1986 Regulations made by the 2009 Regulations amendments were quashed and regulation 7 of the 1986 Regulations reverted to their original form). That principle was that the compensation should be such amount as was reasonably incurred for work properly undertaken, and it could only be discovered whether costs had been reasonably incurred by having regard to the prevailing market: [48]. The Lord Chancellor could not stipulate what sums he deemed to be a reasonable reward for the services of a lawyer or fix reasonable rates by reference to the resources available: [50]. In his judgment, with which Keith J agreed, Elias LJ said this:

“[52] In my judgment, the fundamental defect of Mr Eadie's analysis is that it fails to give proper weight to the statutory language in section 16(6) of the 1985 Act. The obligation is to provide a sum of money which is reasonably sufficient to compensate the successful defendant. The word “sufficient” presupposes that there is some measure to determine whether the amount paid satisfies that criterion of sufficiency or not. It must be sufficient by reference to some particular criterion or criteria. In this case the relevant measure is the principle of compensation, albeit one which is constrained by considerations of what is reasonable and proper expenditure.”

In Balchinv South Western Magistrates Court [2008] EWHC 3037 (Admin) the legal assessor had determined the claimant’s costs in the sum of £3,142, compared with the £12,000 claimed, on the grounds that the test under the 1986 Regulations for determining the reasonableness of the work done and claimed for by his solicitors was a subjective one. The legal assessor had also said that the proceedings were not complicated, no complex issues had been raised and it had not been necessary or reasonable for the claimant to have instructed counsel. Davis LJ (with whom Latham LJ agreed) held that the one reason on which the determination would be quashed was that the test was an objective one and necessity was no part of it.

Watson vHM Courts and Tribunals Service National Taxing Team[2012] EWHC 2865 (Admin); [2012] Costs L R 1129 was a case where the taxing authority had reduced the hourly rates of the solicitors who had been instructed on the ground that they were unreasonable. The claimant contended that the amount assessed was Wednesbury unreasonable as it did not reasonably compensate him for the expenses he had incurred and that the hourly rates claimed were comparable to other local firms. Silber J (with whom Laws LJ agreed) referred to regulation 7(1), that it was first necessary to consider the work which was actually and reasonably done and then, under regulation 7(5), what was considered reasonably sufficient to compensate an applicant for costs properly incurred in the proceedings. Silber J stressed that that “does not require an indemnity to be given by the taxing authority for the costs which have actually been incurred …but it must give weight to what is “reasonably sufficient to compensate the applicant”: [19]. The evidence the claimant had supplied in that case had not assisted his argument that the taxing authority acted unreasonably in reducing his solicitors' hourly rates. Silber J also said obiter that detailed reasoning is unnecessary in such cases: [26].

It seems to me that the following principles flow from these authorities:

Perhaps it is appropriate to begin with the claimant’s ground which alleges that the National Taxing Team adopted the wrong test. Instead of asking was it reasonable for the claimant to incur the costs he did, Mr Connolly submitted that the National Taxing Team determined the claim on the basis of what it thought was a reasonable rate by reference to the resources available (i.e. what was a proper amount to be met by the public purse), thereby determining what it thought the government could reasonably be expected to pay. It applied the test which had been deprecated in the Dudley Magistrates’ case: could the claimant have obtained cheaper representation? Thus the issue in this case was whether it was reasonable for the claimant to choose Mr Connolly who he could see was experienced in this type of case and had sufficient seniority to give him confidence, not whether there was an advocate of sufficient ability closer to the court who would not incur travel expenses. Moreover, it was reasonable for the claimant to enter the fixed fee agreement with the solicitor, for it provided some certainty as to the amount of expenditure he would incur. Mr Connolly also highlighted the reference in the 17 September letter that it was not necessary and reasonable to employ a counsel of Mr Connolly’s seniority in a harassment case.

In my judgment the National Taxing Team cannot be said to have applied the wrong test. There is nothing in the material to indicate that its approach was to have regard to what was a proper amount to be met by the public purse. The issue before the National Taxing Team was what amount was reasonably sufficient to compensate the claimant for expenses properly incurred. Regulation 7(2) makes clear that in determining that the National Taxing Team had to take into account all the relevant circumstances of the case including the nature, importance, complexity and difficulty of the work and the time involved. That is precisely what it did: it examined the circumstances of the case and concluded, having assessed the importance, complexity and difficulty of the case, that Mr Connolly could have been substituted with counsel more junior and from the local bar. Thus, in terms of the statutory test his expenses were not properly incurred. As for the fixed fee agreed for the solicitor, the National Taxing Team again considered all the circumstances and concluded that the work reasonably done for which there would be payment did not cover a full two days when he was only present to resolve disclosure issues at the first day of trial. Looking at the letters as a whole the test being employed was whether the costs the claimant incurred were reasonable and proper; the two mentions of necessity does not detract from that.

In the claimant’s grounds Wednesbury unreasonableness was advanced as the overarching challenge on the basis that the National Taxing Team proceeded with faulty assumptions about the nature of the claim (it was a simple harassment case), the representatives the claimant engaged (he could have obtained local representation) and the conduct of those representatives (the instructed solicitor need not have attended court, and the fees agreed were not reasonable).

In developing these points before us Mr Connolly submitted that this was a complicated case because of the background facts to the offending in the history of DL’s manoeuvring within the Union and in the material to be deployed (the Employment Tribunal decision; the four hour police interview when the claimant explained his case; the bank statements and other documents disclosed; and the claimant’s own records). The claimant had approached a more local solicitor but his advice to plead guilty was plainly wrong. Quite reasonably that led the claimant to search further afield for a representative with expertise and that is how he engaged his current solicitor and Mr Connolly himself. In particular the National Taxing Team decision that there was no need for the claimant’s solicitor to attend court, and that a local agent could be engaged, wrongly assumed that a solicitor new to the case could pick things up and readily assist with the disclosure. The team also wrongly presumed that what the claimant had agreed with his representatives on fees had no relevance to their determination; he had wanted an assurance about what he was to pay. The fact that an agreed fee is higher does not mean it is unreasonable.

The threshold for Wednesbury unreasonableness is high. In my view, it is not reached in relation to these matters. The case was undoubtedly more nuanced and document heavy than an ordinary harassment case, but that did not make it a complicated case. The National Taxing Team took into account the comments of the District Judge – “not overly complicated case” – as the Guide indicated it should. It was not irrational for them to do so. It was also consistent with regulation 7(2), under which regard is to be had to all the circumstances of the case. Moreover, it could not be said to be Wednesbury unreasonable for the National Taxing Team to conclude that local and less senior counsel than Mr Connolly could be instructed. The same applies to the conclusion that the solicitor attending court could be a local agent, once the National Taxing Team accepted that, because of the late disclosure, a solicitor at court was justified. It was not irrational, in my view, to ignore the fees the claimant had agreed.

Mr Connolly also advanced the claimant’s case in terms of the National Taxing Team not taking into account a range of relevant considerations and taking into account irrelevant considerations. The relevant considerations which should have been taken into account included the importance of an adverse finding to the claimant because of his good character and the widespread interest in the outcome from Union members. There was also the fact that he had approached another solicitor, who gave bad advice, and he wanted someone independent from the local area. Moreover, he lived locally in south-east London to the solicitor he finally instructed. Under this head Mr Connolly also contended that the seriousness and complexity of the case was ignored. Instead, the National Taxing Team took into account an irrelevant factor in the form of the judge’s comment that it was not a complex case.

None of this persuades me that the National Taxing Team ignored relevant considerations. Clearly the case was important for the claimant, and he sought skilled assistance. That is understandable, but it is not unusual with many prosecutions, especially those where a person’s reputation is on the line. The statutory test is not, as I have said, a matter of the subjective perspective of a lay defendant. The claimant approached solicitors local to where he lived, but solicitors who are distant from a court where their clients’ cases are to be heard should inform them that the costs may be higher than they would be if they engaged a local firm which instructs counsel from the local bar. As to complexity, the National Taxing Team balanced the submissions about complexity against the comment of the District Judge. The District Judge’s comment was something to be taken into account: it could not be determinative, but he had heard the case into a second day and his views on how complicated the case was cannot be brushed aside as irrelevant. Mr Connolly had had success in a previous case of the same nature – which was to be replicated in the claimant’s case – but with respect to him this is not a niche area of the law, and the task of absorbing the volume of material in this case is very much an advocate’s stock in trade.

In all the circumstances I would dismiss this application for judicial review.

I agree.