Kelly v Hays Plc & Anor

This costs appeal arises out of personal injury litigation conducted by the respondent claimant against the appellant defendant. The respondent was employed by the appellant for a period of over 30 years between 1977 and 2011. At the commencement of this period she was employed as a secretary whilst by the end of it she was one of its regional directors.

On 9 February 2012 the respondent commenced proceedings against the appellant in the High Court claiming damages for personal injuries arising out of her employment. The basis of the claim was that for a significant period of years the appellant had failed to provide her with a safe place of work and/or safe working conditions, as a result of which she had suffered personal injuries involving spinal and upper limb disorders.

The claim was couched in terms of alleged breaches of various statutory health and safety regulations and/or negligence. The proceedings were defended by the appellant. Liability was denied as was causation and a limitation issue was pleaded. In the course of the proceedings medical reports were provided by both parties and although the claim form had originally sought damages limited to £150,000, which was subsequently amended to £300,000 on 31 May 2012, the claimant’s eventual schedule of loss and damage sought a total of £433,000.

At a later stage the appellant served an amended defence which disclosed that the respondent had been under surveillance, it being claimed by the appellant that such was the level of activity exhibited by the respondent during the course of the surveillance that she had either not suffered any personal injuries or not to the extent claimed by her in the course of the proceedings.

On 18 November 2013, following negotiations between the parties, the proceedings were stayed by Master Fontaine on the basis of an agreed Tomlin Order, the relevant terms of which provided for the appellant to pay to the respondent £50,000 in full and final settlement of her claim, and the appellant agreed to pay the respondent’s costs of the action to be the subject of detailed assessment on the standard basis if not agreed. Thereafter the respondent’s solicitors served a schedule of costs in the total sum of £263,152.70.

The parties were not able to reach agreement as to the appropriate amount of costs which were to be payable by the appellant to the respondent, and so the matter came before Master Campbell sitting in the Senior Court Costs Office for a hearing on 27 August 2014. Although originally a two day hearing had been set aside, the parties had requested a preliminary issue to be decided, namely the reasonable hourly rate upon which any agreement or order as to costs should be based.

It is apparent from the skeleton arguments and the transcript of the hearing that the main issue between the parties centred upon the appropriate starting point for consideration of the various fee earners’ hourly charging rate. The respondent had instructed the City firm of Leigh Day. On behalf of the respondent it was argued that this was a reasonable decision by her and that accordingly the respondent was entitled to recover costs on their hourly rates of: £450 for grade A; £320 for grade B; £250 for grade C; and £160 for a grade D earner.

On behalf of the appellant it was argued that, bearing in mind the nature and extent of the respondent’s claim, it was unreasonable for her to have instructed a City firm of solicitors, and that the appropriate starting point for the assessment of the reasonable hourly rate for the fee earners was that for a national one firm of solicitors the guideline rates for which provided for an hourly rate of: £217 for a grade A; £192 for a grade B; £161 for a grade C; and £118 for a grade D earner.

In the course of the hearing Master Campbell was referred to the factors to be taken into account in deciding the amount of costs under CPR 44.43 and, inter alia, Wraith v. Sheffield Forgemasters Limited; Truscott v. Truscott [1998] WLR 132.

In his judgment provided on 27 August 2014 Master Campbell stated:

“In reaching my decision I remind myself that the test is whether it was objectively reasonable for the claimant to instruct the particular solicitors retained...”

Thereafter, he determined that:

“In my judgment it was not objectively reasonable for this client to instruct a City of London firm. I reach this conclusion for the following reasons: firstly, this case, as Mr Moriarty for the defendant has pointed out, is an employers’ liability claim. There is no international element which would require a round the clock service by a team of solicitors working across international time zones. There are no linguistic difficulties and accordingly, I am not persuaded that this case justified the retaining of a firm of solicitors on the grounds that the level of expertise required could only be found in the city. In my view, the case could have been effectively and completely run by a firm that offered expertise outside the city.

So far as the Truscott factors are concerned, it is common ground that the matter was important to the claimant and that there was no well founded dissatisfaction with other solicitors that she had instructed, they (Davies Arnold Cooper) were simply dealing with the redundancy aspect. As to advice that had been sought about who to consult, that seems to me link in also with what, if anything, the claimant might reasonably have expected to know about the fees likely to be charged by Leigh Day as compared with the fees of other solicitors who she might reasonably be expected to have considered. Here, the claimant was the national sales manager. She lives in Oxted. She earned £120,000 a year. This, as Mr Moriarty submits, was a sophisticated client and in my judgment, it could reasonably be expected of her that she would know that instructing a firm in the City of London would be much more expensive than retaining solicitors in Croydon or indeed in the central London area. It follows for the reasons I have given that I consider the instructing of Leigh Day was objectively unreasonable.”

Master Campbell continued:

“The issue I have to decide next is which firm would it have been objectively reasonable for the claimant to have instructed?”

He answered that question in the following manner:

“The claimant is not required to approach the cheapest solicitor. The test is, as I have said, one of objective reasonableness. In my judgment, it would have been objectively reasonable for the claimant to have approached a central London firm.”

Master Campbell proceeded to identify that the guideline rates for such firms of solicitors as being: £317 for a grade A; £242 for a grade B; £196 for a grade C and £126 for a grade D earner. He considered that the guideline rates were of assistance to him as a starting point in determining the appropriate reasonable hourly rate. He noted, however, that there were a number of factors, which in his judgment, determined that there ought to be a measure of uplift in those rates including: this was a multitrack case; there was some degree of complexity, namely a limitation point being taken; the denial of liability by the respondent; the stage at which settlement was reached; and the instruction by the appellant of surveillance techniques. Master Campbell determined that taking these factors into account there should be a 20 per cent uplift in the rates applicable to a central London firm and determined the reasonable hourly rates as follows: £380 an hour for a grade A; £290 for a grade B; £235 for a grade C; and £140 for a grade D fee earner.

The appellant seeks to appeal against the order made by Master Campbell. It is submitted that whilst the Master was correct to conclude that it was unreasonable for the respondent to instruct a City firm, Master Campbell fell into error when he determined that the appropriate starting point for the assessment of the hourly rate was that applicable to a central London firm. It was submitted in its skeleton argument that the Master erred in his reasoning in that he was not entitled to select the rates applicable to a central London firm as a starting point, as opposed to a national one firm of solicitors, and that in doing so he had wrongly used a top down approach to the selection of the appropriate starting point, rather than looking at the overall reasonableness of selecting a national one firm of solicitors.

In his oral submissions Mr McDonald of counsel argued that the Master had in fact asked himself the wrong question on this issue and in any event failed to provide the reasons for reaching his conclusion upon it. Further and in the alternative, having selected a central London firm he was not thereafter entitled to uplift the guided hourly rates to take into account the factors which he had identified.

On behalf of the respondent it was submitted in its skeleton argument that the judgment provided by Master Campbell disclosed no error of law or reasoning and should be maintained. In particular there were a number of factors which justified the judge’s conclusion, including, inter alia, the importance of these proceedings to the respondent, their complex nature, advice which she had received that specialist solicitors were required to conduct the proceedings and the proximity of central London to her home in Oxted and her place of work, namely Croydon.

It is pointed out that although the claim ultimately settled for £50,000 it had been litigated on the basis of a far higher claim in excess of £400,000. In his oral submissions Mr Astor of counsel submitted that the Master had asked himself the correct question, and if there was any lack of expression of reasons provided by him for reaching his conclusion upon it, these were implicit from the remainder of his judgment.

I remind myself that this is an appeal by way of a review rather than a rehearing, therefore, this court may only allow an appeal against Master Campbell’s order on well known principles: it being plainly wrong; there is a defect in reasoning, the Master either having taken into account a matter which was irrelevant or that he failed to take into account a matter which was relevant to his determination; a failure to provide reasons; or that serious procedural or other irregularity in the proceedings rendered it unjust. Moreover, I also remind myself that the Master had a wide discretion as to costs in this case, provided he properly took into account those factors under CPR 44.43, such that I should be astute not to substitute my own opinion for his judgment on the matter.

It is apparent from the judgment of Master Campbell that he gave very careful consideration to the issue of whether or not it was objectively reasonable for the respondent to have instructed Leigh Day. As I have set out in the course of this judgment, he provided clear and cogent reason as to why he considered it was objectively unreasonable for the claimant to have instructed Leigh Day. Indeed, it is notable that the respondent has not sought to cross-appeal this aspect of his decision.

In my judgment there can be no criticism of the Master’s observation that the respondent was not required to approach the cheapest solicitor. Moreover, I do not accept the submission which has been made on behalf of the appellant, that the Master was faced with a binary choice of either selecting the rates relevant to a City firm of solicitors, or those rates applicable to a national one firm of solicitors, as the appropriate starting point for considering reasonable hourly rates in this case. As I have observed the Master had a wide discretion and was, of course, well qualified and experienced in reaching a conclusion as to the appropriate hourly rate.

Although I am concerned that in posing the question in the manner in which he did, namely to ask himself, “...which firm would it have been objectively reasonable for the claimant to have instructed” the Master may have fallen into error, in that the Court of Appeal specifically endorsed the approach which Potter J, as he then was, had expressed in the Wraith case, namely “...the question of ‘reasonable amounts’ will fall to be assessed on the notional basis of the costs reasonably to be allowed in respect of a solicitor or counsel of the status or type which should have been retained” (my underlining), if this had been the only criticism which could have been made of the decision, then it may be that given the experience of this senior costs judge I would have been minded to have considered it to be merely a lack of felicity on his part.

However, the difficulty which compounds the matter is that not only did Master Campbell fail to provide any reasons as to why he had selected the rates applicable to a central London firm of solicitors, but given the way that the matter had been presented to him by the parties, it was, in my judgment, incumbent upon him to provide his reasons for why he was rejecting the primary submission made on behalf of the appellant, namely that the appropriate starting point if not the end point, was the rate applicable to national one solicitors. In my judgment, the absence of reasons on these important aspects of his determination has resulted in this court being unable to be satisfied either that he asked himself the correct question, namely that when determining the reasonable amount, what was the category of solicitors which should have been retained, or indeed to be satisfied as to the reasons why he may have reached his conclusion as to the reasonableness of instructing central London solicitors. In this regard I do not, with respect, consider that the reasons can be divined from the remainder of the decision.

In the course of the hearing of the appeal I raised with counsel as to what course they wished me to follow if I reached this conclusion, whether to remit the matter to Master Campbell for him to provide his reasons, or in the alternative for me, assisted as I am with the expertise of Master Haworth as an assessor, to reach my own determination. The parties have sought to persuade me to the latter course; one which I consider proportionate in terms of the overriding objective in CPR 1.1 and will proceed to follow.

In any event, even if the correct question had been posed, in my judgment, the ultimate conclusion which the Master reached in relation to the issue of the reasonable hourly rate was not one which it was properly open to him to reach on the material before him. In that even if he had been entitled to conclude that the type of solicitors which the respondent should have instructed was a central London one, a conclusion which as will become apparent I do not consider he was entitled to have reached, he thereafter uplifted their guideline rates to such an extent that in reality, there was little difference between the reasonable hourly charging rates which he allowed in respect of the grade B – D fee earners, and those which had originally been claimed by the respondent as applicable to the City firm of Leigh Day. Those being rates which he considered it was unreasonable for the respondent to recover.

In making my determination it is necessary for me to have regard to the relevant factors under CPR 44.43 together with the guidance provided by Kennedy LJ in the Wraith case. Those factors which may be of relevance in this case will include: firstly, the importance of the matter to the respondent; secondly, the legal and factual complexities insofar as the respondent might reasonably have been expected to understand them; thirdly, the location of the respondent’s home, her place of work and the location of the court in which the proceedings were to have commenced; fourthly, any dissatisfaction which the respondent may have had with her previous solicitors; fifthly, any advice which she may have sought as to which firm to consult; sixthly, the location of the prospective solicitors; and seventh, what, if anything, the respondent might reasonably be expected to know of the fees likely to be charged by prospective solicitors.

I have no doubt that the proceedings which the respondent was contemplating taking against the appellant were of considerable importance to her. She had worked for the appellant for a considerable period of time, reached a senior position and was now concerned that she had, as a result, suffered some ongoing personal injuries and loss. Moreover, it would appear that the respondent did receive some advice from solicitors which she had been using in respect of a prospective redundancy claim, namely to seek advice from more specialist solicitors. However, in my judgment, although there were aspects of complexity in relation to her case, to which I will return, this was in reality a relatively straightforward claim for personal injuries against her employer. Although appropriately commenced in the High Court, I do not consider that the nature of the issues in relation to liability, causation or quantum required any particular specialisation, over and above that with which a solicitor who is experienced in handling such claims would be expected to be equipped.

Insofar as the geography is concerned, the respondent’s home was in Oxted, her base of employment was Croydon and with respect, I see no sufficient reason as to why the respondent would have been justified in seeking to instruct a central London firm of solicitors, as opposed to an appropriate national one firm of solicitors in one of those localities. In this regard it is of note that throughout the course of the litigation counsel was appropriately instructed, both to advise and draft the necessary pleadings. Moreover, as an intelligent and experienced professional woman the respondent would have been aware that solicitors in various locations in and out of London would charge differing hourly rates.

In these circumstances I do not consider it was reasonable for the respondent to have instructed a firm of solicitors either within the City or central London. In my judgment, the category of solicitors which the respondent should have retained was within national band one. Therefore, when considering the issue of a reasonable hourly charging rate to which the respondent is entitled to recover from the appellant, the starting point are those rates applicable to this category of solicitors.

However, it should be made clear that although that is the appropriate starting point, it is necessary for me to reach a judgment upon the issue of the reasonable hourly charging rates that should form the basis of the assessment of the recoverable costs in this case. The rates set out in the guidelines are precisely that, only a guide. Although they may be a starting point, I have to determine what the reasonable hourly rates are in this case.

In this regard, as I previously observed there were some aspects of complexity in the course of the litigation. In my judgment, this factor would have merited some measure of enhancement to the hourly charging rates to which the main fee earners would have been entitled. Those aspects of complexity, over and above the norm which would occur in any litigation of this nature, included, consideration of the limitation point raised by the appellant, the extent of the prospective damages and the consideration of the results of the surveillance evidence.

Furthermore, although some degree of uplift may be appropriate for the main decision taker, which is normally the grade A fee earner, a matter which is reflected in paragraph 43 of the Guide to the Summary Assessment of Costs, 2005 edition, set out at paragraph 48GP33 of the White Book, 2014 edition, this is less likely to apply the further down the pecking order of fee grades.

In my judgment, having regard to the relevant factors in this case and in order for the litigation to have been appropriately and expeditiously handled by the solicitors, it would have been reasonable for them to have selected from within its ranks, fee earners who would have been entitled to charge the following rates: £295 for a grade A fee earner; £230 for a grade B fee earner; £175 for a grade C fee earner and £120 for a grade D fee earner.

This issue being the only one raised with the court below and on appeal, the parties will now be enabled to seek to reach an appropriate agreement as to the overall costs which are to be recovered by the respondent from the appellant in accordance with the terms of the costs order set out in the Tomlin Order, or in the absence of agreement, I will order its remission back to the Senior Court Costs Office.

It only leaves me to observe that although I have been responsible for deciding this appeal, in reaching my decision as to the reasonable charging rates on which the assessment of recoverable costs should be based, I have had the immeasurable assistance of Master Haworth who has kindly permitted me to disclose that he agrees with all aspects of the judgment in this case.