Higgins v Ministry of Defence

The Defendant (“MoD”) appeals from the order of Master Campbell made on 9 June 2009 by which he dismissed MoD’s appeal from the decision of the Principal Costs Officer O’Riordan. On the detailed assessment of costs made pursuant to an Order dated 9 July 2008 Mr O’Riordan decided (so far as is material to the present appeal):

“My decision is that I am going to rule in the circumstances of the case it was a reasonable and objective decision by Mr Higgins to instruct Field Fisher Waterhouse [“FFW”]. Even if I am wrong on that, having looked at the amount of costs incurred by [FFW] in terms of the economy of time and effort in this case, I would in any event say that the costs of £10,000 or thereabouts would in itself be a reasonable figure to have incurred in a case of this type, even had [he] gone to a local solicitor”

The one ground of appeal relevant to the present appeal is para 1 of the Notice of Appeal dated 3 March 2008:

“Decision to allow hourly rates applicable to Central London firm of solicitors – the Costs Officer was wrong to allow as reasonable the instruction of [FFW], when the Claimant could have instructed local solicitors of equal competence who would attract far lower hourly rates under guideline rates”.

The main grounds of appeal before this court are that Master Campbell allowed an hourly rate that was excessive and that he wrongly held that certain factors weighed in favour of Mr Higgins when he should have held that they favoured MoD. Such factors included the urgency of the case, the availability of the Fast Track procedure, that Mr Higgins did not take advice as to which solicitor to instruct, and the availability of other solicitors in Kent and Outer London who were competent to conduct this case. There is a Respondent’s notice which I have not had to consider. At the end of the hearing I gave my decision to dismiss the appeal, and these are the reasons I stated I would hand down at a later date.

Mr Higgins was born on 20 September 1925. He served in the RAF, and subsequently worked for MoD, including time spent at Devonport. His work brought him into contact with asbestos. He eventually settled in Broadstairs. He sought medical advice in November 2007, when he was aged 82, complaining of breathlessness. Lung cancer was suspected. On 10 December 2007 he saw Dr Malamis, a Consultant in Respiratory Medicine at a hospital in Margate. Dr Malamis advised that asbestosis was the main pathology causing his breathlessness, and that he probably had cancer. He told Mr Higgins that the condition was advanced and there was no treatment. Dr Malamis mentioned the name of FFW. By this time Mr Higgins was able to walk very little, and his daughter had moved in to care for him.

The next day, 11 December 2007, his daughter contacted FFW. That firm accepted the instructions to act for him. On 17 December 2007 the solicitor attended Mr Higgins at his home and dictated a witness statement in his presence. Having spoken to Mr Higgins’s daughter, he recorded that Mr Higgins would want to pursue the claim as quickly as possible. He did not then propose entering into a CFA, because he needed to investigate whether Mr Higgins was covered for such a claim under an insurance policy. He recorded 3 hours and 48 minutes for the attendance, plus five hours for the travel. On 18 December and 11 January 2008 FFW wrote to MoD. On 11 January 2008 Mr Higgins signed the witness statement. On 5 February 2008 Mr Higgins entered into a Conditional Fee Agreement with FFW. The hourly rate for a Grade 1 Fee Earner was entered at £345. On 19 February 2008 Dr Rudd gave his report. His prognosis was the Mr Higgins’s life expectancy was by then “less than six months”.

On 28 February 2008 FFW sent to MoD a letter before action including the witness statement, the medical report and the fully completed Schedule of Loss. FFW asked MoD to deal with the claim as a matter of urgency in view of Mr Higgins’s very limited life expectancy. On 12 March an offer of settlement was made in the sum of £100,000. Amongst other points raised, MoD contended for a reduction in respect of contributory negligence in the light of Mr Higgins’s history of smoking. FFW replied that he had stopped smoking in 1961, long before it was known to be dangerous. A settlement was agreed in the sum of £112,500 subject to deduction of benefits, but exclusive of costs which were to be paid by MoD. The parties were unable to agree costs. On 9 May 2008 Mr Higgins died.

A Claim Form was issued to obtain the order made on 9 July 2008. In their bill FFW claimed £15,976.13, being £12,695.78 for profit costs and £2,221.80 for disbursements, the balance being VAT.

There is no dispute as to the law by which Master Campbell directed himself. In accordance with CPR44.4(2) the court will allow only costs which are reasonable and proportionate to the matters in issue, and will resolve any doubt which it may have as to whether costs were reasonably incurred or reasonable and proportionate in amount in favour of the paying party.

Master Campbell also referred to the law as set out in Wraith v Sheffield Forgemasters Ltd; Truscott v Truscott [1998] 1 WLR 132. In that case there were two appeals to the Court of Appeal on a single issue:

“whether the liability of the unsuccessful party ordered to pay costs should be restricted to what a reasonably competent solicitor practising in the area of the court, or in the area where the successful party lived, might have been expected to charge, or whether the successful party should be entitled to recover the sums claimed by the solicitor who was in fact instructed to act on his behalf”.

In Wraith’s case, the claim was in respect of an industrial accident that happened at the claimant’s place of work in Sheffield. His trade union instructed London solicitors. The Defendant, based in Leeds, contended that the claimant should only be entitled to recover what would have been charged by a Sheffield firm. The District Judge and, on appeal Potter J, had held that the London rates were allowable. In Truscott’s case the matter was in respect of his former wife’s claim for maintenance. He lived in Tunbridge Wells and initially instructed solicitors in East Grinstead. After becoming dissatisfied with them, he instructed a firm in London. The District Judge allowed the London rates. On appeal the judge had held that it was not reasonable to have instructed London solicitors. In the Court of Appeal both decisions were reversed. Kennedy LJ noted at p140 that it was accepted on all sides that Judges were in no way fettered by the taxing officer's decision. Their obligation was to determine the rights of the parties as though the matter came before them without any determination having already been made.

Dealing first with Truscott’s appeal, Kennedy LJ said at p 141:

“Judge Coltart fell into error because he said: ‘I am not satisfied that it can be regarded as reasonable for Mr. Truscott to have instructed A.T.C. on this matter if their rates are higher than would be found locally’.

So that was the sole reason for concluding that the burden of proof had not been discharged…. Judge Coltart made the same error that was made by the clerk to the justices in the Dudley case. Instead of asking himself whether Mr. Truscott had acted reasonably when he instructed A.T.C. and seeking to answer that question having regard to all relevant considerations the judge answered it by applying one simple and in my judgment inappropriate test, namely a comparison between the rates charged by A.T.C. and the rates charged by firms in the locality of the court and the locality in which Mr. Truscott lived. The following are matters which, as it seems to me, the judge should have regarded as relevant when considering the reasonableness of Mr. Truscott's decision to instruct A.T.C. (1) The importance of the matter to him. It was obviously of great importance. It threatened his home. (2) The legal and factual complexities, in so far as he might reasonably be expected to understand them. Due to the incompetence of M.F.C. the matter had taken on an appearance of some complexity. (3) The location of his home, his place of work and the location of the court in which the relevant proceedings had been commenced. (4) Mr. Truscott's possibly well-founded dissatisfaction with the solicitors he had originally instructed, which may well have resulted in a natural desire to instruct solicitors further afield, who would not be inhibited in representing his interests. (5) The fact that he had sought advice as to whom to consult, and had been recommended to consult A.T.C. (6) The location of A.T.C., including their accessibility to him, and their readiness to attend at the relevant court. (7) What, if anything, he might reasonably be expected to know of the fees likely to be charged by A.T.C. as compared with the fees of other solicitors whom he might reasonably be expected to have considered”.

Addressing Wraith’s case at p142 Kennedy LJ approved the following statement of the law by Potter J:

“… in relation to the first question 'Were the costs reasonably incurred?' it is in principle open to the paying party, on a taxation of costs on the standard basis, to contend that the successful party's costs have not been 'reasonably incurred' to the extent that they had been augmented by employment of a solicitor who, by reason of his calibre, normal area of practice, status or location, amounts to an unsuitable or 'luxury' choice, made on grounds other than grounds which would be taken into account by an ordinary reasonable litigant concerned to obtain skilful competent and efficient representation in the type of litigation concerned . . . However, in deciding whether such an objection is sustainable in practice, the focus is primarily upon the reasonable interests of the plaintiff in the litigation so that, in relation to broad categories of costs, such as those generated by the decision of a plaintiff to employ a particular status or type of solicitor or counsel, or one located in a particular area, one looks to see whether, having regard to the extent and importance of the litigation to a reasonably minded plaintiff, a reasonable choice or decision has been made.... In either case, solicitors' hourly rates will be assessed, not on the basis of the solicitor's actual charging rates, but (in a case where the decision to retain was reasonable) on the basis of the broad costs of litigation in the area of the solicitor retained or (in a case where the choice made was not reasonable) of the type or class of solicitor who ought to have been retained.”

But the Court of Appeal took issue with the way Potter J had applied that principle. The Court of Appeal held that the union’s practice of sending all its work to London was of limited relevance. Kennedy LJ said:

“… no doubt there were firms of solicitors in Sheffield and Leeds well qualified to do the work… it is the duty of [litigants] in each individual case to keep down the costs of litigation, and that may well mean that if they go to London solicitors who charge London rates for a case which has no obvious connection with London, and which does not require expertise only to be found there, they will, even if successful, recover less than the solicitors have charged”.

The list of relevant factors quoted in para 11 above was a list given in Truscott’s case. It is also set out in the notes to the White Book (2009) 47.14.6. This list may be of help in other cases, but it must be read as applying to the case in which it was drafted, and not as a comprehensive or exclusive list applicable to all cases.

Master Campbell set out that list, and at para 25 of his judgment he recorded what was common ground, and his own conclusions:

In considering the last factor, Master Campbell also took into account a further additional factor. He noted the public concern that exists that in the case of CFAs the litigant is unlikely ever to pay the solicitor’s fees and so has little incentive to negotiate such matters (Callery v Gray [2002] UKHL 28 [25]).

The discussion of fees of local solicitors was against the background of information provided to Master Campbell concerning solicitors out of London. It was not suggested that there were any solicitors in Broadstairs with the relevant expertise, or that the case had a greater link with any location other than with London. Other solicitors who were identified were in other towns in Kent, including Tunbridge Wells and Maidstone. It was even suggested that solicitors should have been chosen from Essex and Wimbledon. Mr Brown submitted that according to the Guidelines for Summary Assessment the recoverable hourly rate would have been up to £200 for Kent and up to £250 for Outer London firms. These figures are not based on any information derived from any identified firm. Thus it is submitted that the total bill in the present case should be reduced by a figure of the order of £4,000 plus VAT. That is what is at stake in this appeal.

Mr Brown repeats before this court the submissions he made below. He noted that there is a Fast Track procedure for asbestos related claims (Edwards v Rolls Royce (unreported 9 March 1999, Master Whitaker)). He accepted that FFW have the necessary expertise, but so do many other solicitors, including those about whom information had been submitted to Master Campbell.

At the forefront of Mr Brown’s argument was the point made by Teare J in A v Chief Constable of South Yorkshire [2008] EWHC 1658 (QB) at [34]. In that case the claimant made a claim against the police arising out of his detention by them. It was agreed in that case that the difference between London rates and Sheffield rates would be £50,000, the difference between £195,000 and £145,000. The claimant had initially instructed a solicitor in Sheffield for criminal proceedings, but for the civil proceedings he instructed a London firm. The Deputy Costs Judge held that in that case a reasonable litigant would have instructed a solicitor in Sheffield. Teare J dismissed the appeal. He said at [34], in the context of that case, that “the reasonable litigant would make himself aware of the comparative charges by consulting the Sheffield firm and the London firm”.

Mr Brown submitted that Master Campbell was wrong to consider that point (iv) was neutral in this case.

Mr Morgan submits that the essential point in this case is as expressed by Teare J in the South Yorkshire [16], namely that the appeal is not a rehearing but a review. So the appeal can only succeed if the Judge has failed to apply the correct principles, taken into account irrelevant matters, failed to take into account relevant matters or reached a decision which no reasonable tribunal properly directed could have reached. That is the position before the court in this case. It is wrong to focus on the hourly rates to the exclusion of other factors. None of the alternative firms whose names have been put forward are markedly more accessible from Broadstairs than is London. Although all that Dr Malamis did was to mention FFW’s name, rather than give advice (or so it appears), it would have been difficult for Mr Higgins or his daughter to discover, from any list of solicitors which the Law Society or any other source might have provided, to what extent such firms were experienced in this type of claim or would do the case appropriately.

He submits that even where the factors listed in the section of Wraith dealing with Truscott’s case are the applicable ones then they are not to be treated as a checklist to be applied mechanically. I am told that Moses J has said that in an unreported case (Rana v Harrar referred to in Wicks v MoD unreported 30 July 2003, Master Campbell), and I respectfully agree.

Master Campbell considered all the points raised by MoD. Master Campbell considered the submission that Mr Higgins should have investigated, or taken advice upon, the level of fees that would be charged by FFW. He rejected it, because of Mr Higgins’s age and the urgency of the case. Neither of these matters was a factor in Wraith or in the South Yorkshire case Teare J was considering. And as Master Campbell noted in relation to point (3), for the availability of legal services, Broadstairs is not to be compared with Sheffield: there is no comparable geographical connection in the present case to a location other than London at which appropriate, but cheaper, legal advice would be available.

I reject Mr Brown’s submission in relation to point (iv). That point simply illustrates that the list given by Kennedy LJ in Truscott’s case was a list prepared in that case. It is not of general application, although it certainly is useful. A number of the points that Master Campbell considered, and rightly considered, in this case, do not appear in that list, such as Mr Higgins’s age and the urgency of the case.

I accept the submissions of Mr Morgan. What Master Campbell had to do was to exercise his own judgment on a number of relevant considerations. I can see no error in what he did.

Mr Brown submitted that this case raised a point of principle which was relevant to numerous other asbestos related claims which MoD faces. I see no point of principle. It is not in dispute that a reasonable litigant will normally be expected to investigate the hourly rates of solicitors whom he might instruct, and that he will normally be expected to consider a number of other factors, including the time and costs associated with geographical location, before choosing whom to instruct, and to take advice on these and other matters before he does so. He must keep down the costs of litigation, and that may well mean that if he goes to London solicitors who charge London rates for a case which has no obvious connection with London, and which does not require expertise only to be found there, then he may not recover costs on the basis of those rates.

Respect must be given to the view of the judge deciding the case as to the weight to be attached to the relevant factors. An appellate court conducting a review will not interfere with a decision where there is no error such as is identified in South Yorkshire [16] (para 21 above).

For these reasons the appeal is dismissed.

I would add this comment. On allowing the appeal in Wraith’s case the Court of Appeal made an order that, in default of agreement, the matter be remitted for further consideration by the deputy district judge. In that context I have considered the Principal Cost Officer’s remarks about the reasonableness of the overall figure quoted at the start of this judgment. I have also considered the advice I have received from the assessors in this case, to whom I am very much indebted for their assistance. If I had been minded to allow the appeal, it seems unlikely that the result achieved would have been proportionate to the effort and cost involved in this appeal.