Oral Contraceptive Group Litigation XYZ & Ors v Schering Health Care Ltd & Ors

This is an appeal from a decision of Master Campbell, the costs judge, of 22 May 2003 in relation to the fees of Lord Brennan QC, the leading counsel for the unsuccessful claimants in the Oral Contraceptive Pill litigation which gave rise to a judgment by MacKay J on 29 July 2002. By an order of that date, he directed that the claimants’ costs of the action be assessed in accordance with regulation 107 of the Civil Legal Aid General Regulations 1989.

There is no agreed transcript of the decision of Master Campbell. The note made by the solicitors of the relevant parts of the assessment which took place over a five day period at the solicitors offices in Hereford is not one which the Master was prepared to approve. The Master’s own manuscript note on the solicitor’s note read thus:

“The detailed assessment took place in the solicitor’s office to save the expense of transporting the documents to London. For that reason there was no tape recording made of what I said. Unfortunately, the solicitor’s note is not an accurate record of what I said and, given the time that has elapsed, it is not possible to settle a note that I can approve. However, I summarised my reasons in the judgment I handed down when granting permission to appeal. That judgment contains as accurate a record as can now be produced.” [Quote unchecked]

I do not therefore need specifically to determine the points raised in relation to the solicitor’s note of the judgment, but deal with this matter on the basis of the judgment given by the costs judge when giving permission to appeal.

The claimants were a group of 135 legally aided women who alleged that they had suffered side effects and damage as a result of taking one of the third generation of oral contraceptive pills manufactured by the various defendants. They claimed that they had contracted very significant health problems as a result of using the defendants’ third generation products, which were thought to have twice the risk of venous thrombosis embolism when compared to the second generation of contraceptive pills.

By the date of the trial, which began on 4 March 2002, there were 99 claims in being, of which seven had been chosen as lead claims in group litigation against the three defendant drug companies. The trial lasted 42 days until 28 May 2002 when judgment was reserved. On 29 July 2002 Mackay J handed down his judgment, which ran to 345 paragraphs, plus appendices. He concluded his judgment by saying this:

“For these reasons therefore these actions fail. I am fully aware that this result will come as a serious disappointment to all the Claimants involved in this case. It may or may not be any comfort to them to know that this trial was almost certainly the most exhaustive examination that this question has yet received and that their case could not have been more effectively put forward than it was by the highly skilled and dedicated legal team who acted for them.”

The team to which the judge referred was coordinated by Mrs Houghton, the principal of Houghton & Co, under the terms of a generic contract between the Legal Services Commission and her firm dated 30 January 1996. She was assisted by Leigh Day & Co from about December 1997 pursuant to an authority given by the Board. A further authority was also obtained to instruct leading counsel and three juniors. Lord Brennan QC was briefed as leading counsel, with Mr William Edis, Mr Richard Hermer and Mr Robin Oppenheim of counsel as his juniors. For the three defendants there were three leading counsel and four juniors, two of whom had taken Silk by the time the hearing before the judge concluded.

This appeal arises in relation to fees on the brief and other fees claimed for the period after the brief had been delivered on 3 January 2002. Fees incurred before then were the subject of some deduction on assessment, but no complaint is made in respect of this. The claimed brief fee was £250,000, with a daily refresher of £2,500. These fees, it was accepted, would encompass all work done after the trial had begun, whether by way of preparation of written submissions or meetings with experts, or any other work out of court on non-sitting days.

The trial was scheduled to run for some six months from March onwards to the end of August or thereabouts, and a detailed timetable was drawn up, with the period up to the end of May taken up with the issues of epidemiology and biological plausibility after two days for opening the case. At that point, at the end of May, the court was to decide on the future conduct of the case because it was recognised that if those issues were determined against the claimants, that would be fatal to their whole case. The schedule provided for the further issues of development risk defence, lipids, side effects, prescribers and for the particular lead cases to be dealt with thereafter. The actions had to be prepared for trial on the basis that all of these were matters to be explored and determined.

As matters transpired the judge decided at the end of May that he could determine the actions on the basis of the evidence heard thus far. Agreement had been reached by the end of the third week on the issues of biological plausibility and the judge therefore determined the dispute on the basis of that and the epidemiological evidence, in particular the Cox Regression Analysis that had been carried out.

It is plain from any reading of the judgment and the submissions that this was a highly complex case involving technical medical issues. There were 26 experts involved, all of whom served two reports and in some cases as many as four or five reports.

Three areas of complaint were raised against the cost judge’s decision. First, Lord Brennan contended that a fee of £750 should have been allowed for a case management conference which took place on 1 February 2002 where issues relating to expert evidence were aired and which took most, if not all of the day in court. Secondly he argued that the conferences which he held with experts on 18 January, 11 February, 12 February, 15 February, 19 February and 20 February with fees totalling £17,237.50 should have been allowed as additional preparation for the trial. Thirdly, he contended that the brief fee, originally claimed at £250,000, should not have been reduced to £199,500 by the costs judge, although he accepted that he deduction of £500 in relation to the need for solicitors to incur fees in chasing fee notes from his clerk, was justified.

In paragraph 7 of his judgment relating to permission to appeal, the costs judge referred to the direction which he had applied in the following way:

“Legal Aid costs are assessed on the standard basis: see regulation 107A(2) Legal Aid in Criminal Proceedings (Remuneration) Regulations 1994 (Footnote: ¹). Accordingly, the court will only allow costs which are proportionate to the matters in issue and resolve any doubt in favour of the paying party, here the Board: see CPR 44.4(2). The court will not allow costs which have been unreasonably incurred or are unreasonable in amount: see CPR 44.4(1).” [Quote unchecked]

In deciding the amount of costs, the court is directed by CPR 44.5(3) to a number of factors which should be taken into account. These are set out in sub-paragraphs (a) through to (g) as the following:

“(a)

the conduct of all the parties …

(b)

the amount or value of any money or property involved;

(c)

the importance of the matter to all the parties;

(d)

the particular complexity of the matter or the difficulty or novelty of the questions raised;

(e)

the skill, effort, specialised knowledge and responsibility involved;

(f)

the time spent on the case; and

(g)

the place where and the circumstances in which work or any part of it was done.”

Lord Brennan QC says that the costs judge did not take factors (b) to (f) adequately into account in his approach to any of the three disputed categories or items. In particular he failed, it is said, to have sufficient regard for the particular complexity of the matter and the difficulty and novelty of the medical questions raised in this litigation. Nor, it is said, did he take sufficient account of the skill, effort, specialised knowledge and responsibility involved on Lord Brennan’s part, nor the time which had to be spent on the case.

In order to determine these matters, it is necessary first to refer to the principles set out in Loveday v. Renton (No.2) [1992] 3 All ER 184 on which there is, in my judgment, no room for argument. Hobhouse J (as he then was) said this at page 190 at B:

“In assessing a brief fee, it is always relevant to take into account what work that fee, together with the refreshers, has to cover. The brief fee covers all the work done by way of preparation for representation at the trial and attendance on the first day of the trial. But in heavy litigation, particularly where there is a team of barristers and experts, additional work is involved in ensuring that the client is properly represented and his case fully developed beyond simply appearing in court. In this litigation, counsel had to meet together to consider their strategy and tactics and prepare material. They also had to have meetings with their experts, including meetings with experts from abroad prior to their going into the witness box to give evidence. Some of these meetings were lengthy and took place at weekends.

Then there was the work involved in the preparation of final submissions. Each counsel has said that between the time the court rose on 18 December 1997 and the start of final submissions on 1 February 1998, he expended a very substantial number of hours working on this case and preparing the written submissions for which the judge had asked …

I consider that in principle the approach of the taxing master was correct. Counsel are only entitled to charge for work which they have been instructed to do and where the work is done on legal aid, which has been authorised by a legal aid certificate, instructing counsel on legal aid is governed by the legal aid regulations which, among other things, require that any instructions delivered to counsel should include a copy of the certificate or other authority to instruct counsel. There is no need for counsel to be unaware of the extent to which work is or is not authorised. In the present context, the authorisation was for representation at the trial and the relevant instructions were the delivery of the brief. It follows that counsel had to base their claim to remuneration upon the delivery of the brief and what was required for the representation of the assisted party in court. The remuneration should therefore be the brief fee and the daily refreshers. The daily refreshers are calculated by reference to the time during which the trial is proceeding and certainly cannot be charged for days the court is not sitting.

This conclusion does not mean that counsel should not be remunerated for necessary work which is an incident of the proper representation of their client, it means that in a privately funded case, a barrister must negotiate a brief fee that is sufficient to cover such work or make some other special agreement for the delivery of supplementary instructions and/or the agreement of an additional fee, and in legal aid work the barrister may, on the legal aid taxation require that the brief fee and the refresher rate properly reflect the amount of work that actually had to be done.

In the present case I consider that the brief fee should be assessed and allowed having regard to the full history of the trial as now known. It thus should take into account the need for counsel to have meetings with each other and with experts out of court hours and to prepare final submissions, but it should also take account of the fact that all heavy trials include such a need to a greater or lesser extent. The preparation by counsel of his examinations in-chief and cross-examinations and of his final submissions are an ordinary part of his conduct of a trial on behalf of his client. It is all part of the work which he accepts an obligation to perform by accepting the brief and for which he is remunerated by the brief fee and the agreed refreshers.” [Quote unchecked]

It is plain from this decision that there is no basis for charging as separate items meetings with experts which are part of the preparation for trial after delivery of a brief. No matter what limited opportunity there has been beforehand to meet with experts and to understand the contents of their reports, this is preparation for the trial which should be included in the brief, which itself should be fixed at a sum which is sufficient to include all such matters. It is only in a very exceptional case that there would be scope to depart from this principle. If the whole shape of a case were to change by reason of an amendment to pleadings or a fresh expert report was adduced which fundamentally changed the nature of the dispute, then it may be possible to say that there is work which falls outside the ambit of the original brief.

In these circumstances, however, in privately funded litigation, the brief would fall to be renegotiated. In civil legal aid where the fees fall to be assessed subsequently, this matter can equally be taken into account at that stage. In the ordinary way, however, there is often change and development in a case, and in the particular areas upon which argument and evidence is focused, which cause additional work. Such additional work falls within the ambit of the brief as part of what is to be expected in litigation of this kind.

The present case is not, in my judgment, an exceptional case at all in this sense, but an example of a case where additional work was involved within the ambit of the Brief. Here there was disclosure of material relevant to an expert’s report which, although arriving ten days before trial on 20 February and requiring additional work, is one of the incidents of litigation of this kind. It is not a development of a kind which is not encompassed by the brief, but is part and parcel of the changing nature of an action which may reasonably be anticipated in a complex dispute involving technical expertise. The earlier conferences would not, in any event, fall into the category of those which arose following the delivery of the fresh disclosure.

In my judgment, therefore, there is no basis for allowing fees for meetings with experts after delivery of the brief, whether those were incurred prior to or after the additional disclosure, as separate charges.

So far as concerns the case management conference, it seems to me in this case that this falls into the same category of trial preparation covered by the brief fee.  There may be cases where a case management conference is not part and parcel of the preparation for trial and may therefore justify a fee separate from the brief fee, and I am not laying down any general principle here for CMCs as such. If, however, the CMC in question or any pre-trial review, or indeed any other application after delivery of the brief is, in truth, part and parcel of the trial preparation envisaged when the brief was delivered, or which could reasonably be anticipated as part of that preparation, then on principles analogous to those set out in Loveday v. Renton (No.2) no separate sum falls to be charged.

The real issue in the present case, in my judgment, is the brief fee. In this connection the costs judge referred to the judgment of Pennycuick J in Simpson Motor Sales v. Hendon Corporation [1964] 3 All ER 833 where he said this:

“One must envisage an hypothetical counsel capable of conducting the particular case effectively but unable or unwilling to insist on the particular high fees sometimes demanded by counsel of pre-eminent reputation. Then one must estimate what fee this hypothetical character would be content to take on the brief … There is, in the nature of things, no precise standard of measurement. The taxing master, employing his knowledge and experience, determines what he considers the right figure. The judge in his turn must, I think, consider whether upon his own knowledge and experience the figure adopted by the taxing master falls above the upper or below the lower limit of the range with which in his view the proper figure would come. If, and only if it does fall above or below those limits, he should substitute his own figure.” [Quote unchecked]

The costs judge held that the fee of £250,000 reflected the pre-eminence of Lord Brennan in this field. He said that legal aid costs fall to be paid on the standard basis with the benefit of any doubt being given to the paying party. Essentially, therefore, he appears to have thought that other counsel of sufficient competence and skill could have undertaken the case for less and that this meant that a lower fee was payable than the fee which Lord Brennan wished to charged. The costs judge said that if the brief fee was calculated on the basis of an hourly rate of £350 as he was told it was, that reflected an element for Lord Brennan’s pre-eminence which he considered should fall to be deducted on a legal aid assessment. His conclusion was that a rate of £300 per hour was appropriate.

This assessment of hourly rates is not, in my judgment, the right approach to brief fees. In Butterworth’s Costs Service Manual, when dealing in section J with counsel’s fees, the author, Mr Peter Birts QC, who was one of the two assessors who sat with me and for both of whose assistance I am most grateful, sets out the general principles thus:

“Although no longer required by the Code of Conduct, it is still usual for a barrister to be separately instructed and remunerated by a separate fee for each item of work he undertakes rather than for the amount of time spent on a case. On assessment, the practice of the Supreme Court’s Cost Office has always been to require solicitors to submit accounts of counsel’s fees charged on a by item basis and any ‘composite fee’ to be broken down into component parts. Thus a barrister will ordinarily be paid a brief fee, with or without daily refreshers, for appearing in a court or tribunal and a separate fee for each item of advice or drafting. Payment ‘by the piece’ i.e., without reference to the time actually spent, may be said to benefit the client or paying party because only time reasonably expended is remunerated. Unlike that of a solicitor, time actually spent by a barrister is not necessarily time to be remunerated.” [Quote unchecked]

In the report from the Appeal Committee on the Clerk of the Parliament’s Reference Regarding Criminal Legal Aid Taxation [1998] HLP 145 97/98 at paragraphs 41 and 42, the following appears:

“The use of hours worked multiplied by an hourly rate will seldom be helpful in taxing counsel’s fees … The time expended by counsel is not necessarily the time to be remunerated. Only the time reasonably expended is to be remunerated otherwise the inefficient, slow worker gets better pay for the same work than the efficient worker. Add to this the risk, not a feature of these present cases, of counsel consciously or unconsciously exaggerating the time expended and the limitation on the hours worked, the approach becomes even more apparent. When the hours worked out of court are then multiplied by an hourly rate substantially higher than that payable as refreshers for hours spent in court, the dangers of the system are very obvious. In our view, the policy that hours spent by a counsel in preparation are not generally of assistance, is a sound one and should be reaffirmed.” [Quote unchecked]

To say this is not to say that the time spent is not one of the factors to be borne into account in assessing the brief fee, because it plainly is. But it is one of the factors alongside all the other matters set out in CPR 44.5(3) to which I have already referred.

Were regard to be had to the hourly rate factor, I would not accept that, in a matter of this kind, £350 was out of the way. I was referred to the decision of Fulford J in Higgs v. Camden & Islington Health Authority [2003] EWHC 15 QB, where he held by reference to the judgment of the Court of Appeal in Wraith v. Sheffield Forgemasters Limited [1998] 1 WLR 132, that £350 an hour for leading counsel was not inappropriate for a complex, high value clinical negligence claim.

In my judgment the present case is an exceptional case falling outside the category of even the more complex clinical negligence cases. Here the experts themselves had difficulty in understanding the bio-statistical elements of the Cox Regression Analysis that had been employed and cross-examination on such topics required highly specialised skill, effort and time to master the matters raised.

The correct approach, however, is, as I have already said, not to deal with the matter on the basis of hourly rate but to assess and allow the brief fee having regard to the full history of the trial as now known, as Hobhouse J said in Loveday at page 191B. There were two months of intensive preparation for this action following delivery of the brief, and an anticipated trial of six months which in fact lasted three months on the issues which had been isolated by the judge and the parties as potentially determinative. There was a range of experts and a considerable amount of literature brought into play by them on the subjects with which the court had to concern itself. Within the three month period, 42 court hearing days were used for which refreshers were paid, but outside of that, there were many full days and weekends spent on the action which fell to be taken into account in assessing the appropriate brief fee. There was also the “lost” period of June to August to take into account, during which Lord Brennan was booked to appear in the trial but, by reason of the events which occurred, did not turn out to be earning days at the trial at all.

Comparisons can be made with other heavy pieces of litigation, including medical negligence trials, but in the end, each case turns on its own facts and this, as I have said, is a case which is somewhat sui generis. None of the matters to which the solicitor’s note of the costs judge’s ruling refers assists much in the context of this case and the assessment to which the costs judge had to come. Equally, I have to draw on my own knowledge and experience, assisted, as I am by assessors, in assessing whether the figure arrived at by the costs judge here falls outside the range in which a proper figure would come

I have come to the conclusion that it does fall outside that range, having regard to the totality of the amount of work which was required and that an appropriate figure for the brief fee was £250,000, less the deduction of £500 which Lord Brennan has accepted as appropriate.

On this basis and for these reasons this appeal is, to that extent, allowed.