Mendes v Hochtief (UK) Construction Ltd

INTRODUCTION

This was originally fixed as an oral hearing for permission to appeal only but, since the issue was a short but potentially important point of interpretation of the CPR, it seemed sensible to deal with it by way of a rolled-up hearing. Mr Lewis, on behalf of the defendant, helpfully indicated that, although he did not object to that course, he reserved the defendant’s right to provide further written submissions during the time that it took for the preparation of this reserved Judgment. That is what has happened. I am very grateful for his cooperation.

The claimant suffered personal injuries after a motor accident on 7 August 2014. A claim was notified under the Pre-Action Protocol for Low Value Personal Claims in Road Traffic Accidents (“the RTA Protocol”) on 26 August 2014. The RTA Protocol operates electronically via a portal operated by the Ministry of Justice. The defendant denied liability, which meant that the claim automatically exited the portal process.

Proceedings were issued on 12 January 2015. Because the claim had started under the RTA Protocol after 31 July 2013, the costs were subject to the fixed costs regime set out in Part IIIA of CPR Part 45, starting at r.45.29A.

On 4 March 2015, a defence and counterclaim was filed and on 15 May 2015 the case was allocated to the fast-track. On 22 October 2015, the parties were notified that a one-day trial had been listed for 11 December 2015. The parties attended for trial on that day at Swindon County Court. Both sides were represented by counsel. They twice indicated to the learned recorder who was to hear the trial that, if granted a little more time, they might well be able to settle the case. That is what happened. They therefore attended before the recorder with a consent order, pursuant to the terms of which the claimant was awarded damages of £20,000 plus costs.

The recorder was then invited to assess costs in accordance with Part IIIA. In so doing, he awarded two elements of the fixed costs in accordance with the CPR: £2,655 and 20% of the damages. But he refused to award the fixed trial advocacy fee. He concluded that, because the case was settled before the final contested hearing had commenced, no such sum was recoverable. It is that decision which the claimant now seeks to appeal. Both counsel agreed that the point in issue – is a trial advocacy fee recoverable under the fixed costs scheme if a case settles on the day of trial but before the trial actually commences? – was of wider significance. It was for that reason that I reserved this Judgment.

THE RELEVANT RULES

Rule 45.29A identifies the circumstances in which the Part IIIA rules apply. There is no doubt that they apply in this case because it is a claim which began under the RTA Protocol but which did not then continue under that Protocol because liability was denied. The proceedings which followed were issued under Part 7.

Rule 45.29C provides as follows:

“(1)

Subject to paragraph (2), the amount of fixed costs is set out in Table 6B.

(2)

Where the claimant—

(a)

lives or works in an area set out in Practice Direction 45; and

(b)

instructs a legal representative who practises in that area, the fixed costs will include, in addition to the costs set out in Table 6B, an amount equal to 12.5% of the costs allowable under paragraph (1) and set out in Table 6B.

(3)

Where appropriate, VAT may be recovered in addition to the amount of fixed recoverable costs and any reference in this Section to fixed costs is a reference to those costs net of VAT.

(4)

In Table 6B—

(a)

in Part B, 'on or after' means the period beginning on the date on which the court respectively—

(i)

issues the claim;

(ii)

allocates the claim under Part 26; or

(iii)

lists the claim for trial; and

(b)

unless stated otherwise, a reference to 'damages' means agreed damages; and

(c)

a reference to 'trial' is a reference to the final contested hearing.”

TABLE 6B

Fixed costs where a claim no longer continues under the RTA Protocol
A. If Parties reach a settlement prior to the claimant issuing proceedings under Part 7
Agreed damages	At least £1,000, but not more than £5,000	More than £5,000, but not more than £10,000	More than £10,000, but not more than £25,000
Fixed costs	The greater of— (a) £550; or (b) the total of— (i) £100; and (ii) 20% of the damages	The total of— (a) £1,100; and (b) 15% of damages over £5,000	The total of— (a) £1,930; and (b) 10% of damages over £10,000
B. If proceedings are issued under Part 7, but the case settles before trial
Stage at which case is settled	On or after the date of issue, but prior to the date of allocation under Part 26	On or after the date of allocation under Part 26, but prior to the date of listing	On or after the date of listing but prior the date of trial
Fixed costs	The total of— (a) £1,160; and (b) 20% of the damages	The total of— (a) £1,880; and (b) 20% of the damages	The total of— (a) £2,655; and (b) 20% of the damages
C. If the claim is disposed of at trial
Fixed costs	The total of— (a) £2,655; and (b) 20% of the damages agreed or awarded; and (c) the relevant trial advocacy fee
D. Trial advocacy fees
Damages agreed or awarded	Not more than £3,000	More than £3,000, but not more than £10,000	More than £10,000, but not more than £15,000	More than £15,000
Trial advocacy fee	£500	£710	£1,070	£1,705

THE RECORDER’S DECISION

The recorder was in a certain amount of difficulty because, as he pointed out, he did not have an up-to-date White Book at court and no authorities were cited to him. He recited the rule noted above and stressed the definition of the word “trial” as being “a reference to the final contested hearing”. He then set out the facts and concluded that the trial had not commenced when he was informed that it had settled. Before me, Mr Lewis confirmed that he and trial counsel had agreed that that was the case, and Mr Bacon QC does not resile from that agreement.

The recorder ordered that the £2,655 and the 20% were recoverable, but did not specify whether this was under section B or section C of Table 6B. Then, at paragraph 11 of his judgment, he set out his reasons for concluding that the trial advocacy fee under section C was not recoverable:

“In those circumstances, has the claim been disposed of at trial, or was the case settled before the final contested hearing? The fact, in my judgment, is that the case had not been called on for the trial hearing. It is not suggested by Mr Bellis [counsel then instructed for the claimant] that those previous discussions between counsel and myself amounted to the hearing starting. Has the trial been settled before the final contested hearing? It seems to me, as a matter of simple English, the answer to that question has to be Yes, it was settled before, in effect, the commencement of the final contested hearing. The addition of the word ‘commencement’ is not mere elaboration, it is an expansion of what the final contested hearing must consist of. The final contested hearing has a start, a middle and an end. We had not reached the start and that start had not occurred.”

THE SUBMISSIONS

On behalf of the claimant, Mr Bacon QC argued that the learned recorder was wrong to reach this conclusion. He referred to Section B of Table 6B (paragraph 7 above) which dictated precisely what was to be paid at each of the three pre-trial stages. The first was if the case settled “on or after the date of issue, but prior to the date of allocation under part 26”. The second was if the case settled “on or after the date of allocation under part 26, but prior to the date of listing”. The third and final stage for Section B was if the case settled “on or after the date of listing but prior [to] the date of trial”.

Mr Bacon QC said that the settlement which occurred in this case could not be said to have arisen under any of those three stages. The settlement did not occur prior to the date of trial. Thus, he said, section B of Table 6B was inapplicable and the court had to deal with the costs under section C instead. In any event, he said, the claim had been disposed of at trial so, in addition to the other two elements of fixed costs, the relevant trial advocacy fee was also recoverable.

Mr Lewis submitted that the trial advocacy fee was only recoverable under section C of Table 6B if the trial had commenced. He prayed in aid the definition of trial at r.45.29C(4)(c), arguing that, since a trial meant “the final contested hearing”, it could not be said that this claim had been disposed of at a final contested hearing. Thus he said the relevant trial advocacy fee was not recoverable.

Counsel are agreed that there is no authority on this point. Mr Lewis referred to authorities on an earlier rule, which has now been superseded and which is worded differently, in support of his submission. Accordingly, I set out my analysis based on first principles in Section 5 below, and come to consider the other authorities on the superseded rule, and whether they make any difference to my conclusion, in Section 6 below.

ANALYSIS

I start with section B of Table 6B. The first point to make is that the final column heading in section B contains an obvious typographical error. I am in no doubt that the relevant heading ought to read “on or after the date of listing but prior to the date of trial”. Each of the other two column headings in section B uses the expression “prior to the date of…” That is plainly what the third and final column was also intended to say. No other suggestion for a single missing word was made.

Although Mr Lewis was not prepared to concede that point, this appeared to be because he wanted to re-write the headings of each of the three columns in section B to chime with the (very different) descriptions in Sir Rupert Jackson’s Final Report on Costs. There the phrases ‘post-issue, pre-allocation’, ‘post-allocation, pre-listing’, and ‘post-listing, pre-trial’ were used. The suggestion that, although the subsequent rules used different headings altogether, this was somehow an error and the court should revert to the phrases in Sir Rupert’s Report, seemed to me to be wholly illegitimate.

In my view, Mr Bacon QC was right to say that a consideration of the fixed costs in this case could not have arisen under section B. This case did not settle prior to the date of trial. Even allowing for the definition of “trial” as a reference to “the final contested hearing” the point remains the same: this settlement did not occur prior to the date of the final contested hearing. That was always 11 December 2015. The case did not settle prior to 11 December. On that basis, as a matter of interpretation, the three stages in section B of Table 6B must each be taken to have been completed by the time the recorder came to deal with costs. That necessarily points the way to the costs being dealt with under the next section, section C.

In their written submissions, the defendant’s solicitors take the point that the date on which the trial is listed to be heard may not be the date of the final contested hearing: the trial may, for example, be adjourned. But that potential complication does not arise on my interpretation, because the date of the final contested hearing is not the date the trial was listed to be heard, but the date the final contested hearing took place, or would have taken place, but for the settlement on that date. If a trial is adjourned or relisted, it will be the adjourned or relisted date that matters for these purposes. In any event, there is no dispute on the facts here that, but for the last-minute settlement, the date of the final contested hearing in this case was 11 December 2015.

Whilst the court should always be cautious about supplying alternative wording in support of its own construction, it seems to me that, if the intention had been to use the last column in section B of Table 6B to cover all costs up to the commencement of the final contested hearing itself, and not just the date of that hearing, then that could easily have been stated, and in those simple terms. As we shall see, the old (superseded) rules about success fees say exactly that. But these rules do not say that. Thus the essence of the submissions from the defendants, both oral and written, to the effect that what matters is when the trial actually commenced, is based on a distinction which is not stated in the applicable rules.

If I am right, and the costs do not fall to be assessed under section B, then there are two alternatives when a case settles on the date of trial but before the trial itself has commenced. One is that there is a lacuna in the CPR and the question of which, if any, elements of the fixed costs are recoverable if the case settles on the date of trial, but before the trial has commenced, has not been dealt with in the CPR at all. The other is that the costs fall to be assessed under section C.

In my view, there is not a lacuna in the rules. As Mr Bacon QC said, if neither sections B nor C applied, nothing at all would be recoverable by way of fixed costs if the case settled on the date of trial but before the commencement of the contested hearing. That is plainly not what the rules intended. In my view, the rules were intended to be a comprehensive guide to what was recoverable and when. A purposive construction is required in order to achieve that intention.

In any event, I consider that section C applies on the facts of this case. It was the date of the trial. Counsel twice asked the learned recorder for more time which he granted and in consequence the settlement occurred. I do not believe that it strains the language of the rule to conclude that this was a case where the claim was ‘disposed of at trial’, albeit by way of settlement rather than judgment.

Similarly, I reject the defendant’s argument that this element of the fee is for trial ‘advocacy’ which did not occur, so cannot be recoverable. That seeks to make an artificial distinction between preparation of advocacy and attendance at trial, on the one hand, and actual performance of advocacy, on the other. And what if the trial goes ahead and the judge does not call on counsel or the solicitor advocate for the claimant because the other side’s case is so poor? He or she would not perform any advocacy in such circumstances so, if the defendant is right, he or she would not be entitled to be paid. That would be an absurd result.

Policy arguments were put forward by both sides in support of their respective positions. Mr Bacon QC submitted that it would be counter-productive as a matter of policy if the rules were interpreted to mean that the advocate would lose out if the case settled on the day of the trial. He said this would have the effect of reducing the number of settlements. Mr Lewis, for his part, argued that his position – that a trial advocacy fee was not payable unless the trial itself commenced – had the virtue of certainty. His instructing solicitors went further and suggested that the claimant’s argument would lead to counsel ‘skimming off’ the trial advocacy fee when it was not properly recoverable.

As to policy matters generally, I agree with Simon J (as he then was) in Nizami v Butt [2006] 1 WLR 3307 that the intention of a fixed recoverable cost regime:

“…was to provide an agreed scheme of recovery which was certain and easily calculated. This was done by providing fixed levels of remuneration which might over-reward in some cases and under-reward in others, but which were regarded as fair when taken as a whole.”

Having said that, I agree with Mr Bacon QC that there are sound policy reasons for concluding that the interests of justice would be better served if the advocate was not penalised financially for negotiating a settlement at the door of the court. Nor do I think that my interpretation leads to uncertainty; indeed, in my view, confusion is much more likely to arise on the alternative construction, with arguments – which might have arisen here – about precisely when the trial could be said to have commenced. Those sorts of arguments have caused considerable uncertainty under the rules I address in Section 6 below. They do not seem to me to represent any sort of advertisement for certainty.

I reject absolutely the suggestion of ‘skimming off’. The fact that the trial advocacy fee is recoverable by the barrister or solicitor advocate for their preparation for, and attendance at trial, which would not otherwise be recoverable, hardly amounts to some sort of windfall.

Accordingly, for these reasons, and untrammelled by authority, I conclude that the learned recorder was wrong in the conclusion he reached. In my view, the trial advocacy fee was recoverable in this case.

AUTHORITIES

As noted above, Mr Lewis referred to the old rules relating to the payment of success fees at what used to be CPR 45.16 and 45.17. Although these rules are no longer applicable (because success fees have been prohibited), they remain in force to deal with success fees that were agreed prior to the relevant cut-off date.

Rule 45.16 provided as follows:

“Percentage increase of solicitors’ fees

45.16

– Subject to rule 45.18, the percentage increase which is to be allowed in relation to solicitors’ fees is –

(a)

100% where the claim concludes at trial; or

(b)

12.5% where –

(i)

the claim concludes before a trial has commenced; or

(ii)

the dispute is settled before a claim is issued.”

Rule 45.17(1) provided as follows;

“Percentage increase of counsel’s fees

45.17

– Subject to rule 45.18, the percentage increase which is to be allowed in relation to counsel’s fees is –

(a)

100% where the claim concludes at trial;

(b)

if the claim has been allocated to the fast track –

(i)

50% if the claim concludes 14 days or less before the date fixed for the commencement of the trial; or

(ii)

12.5% if the claim concludes more than 14 days before the date fixed for the commencement of the trial or before any such date has been fixed;

(c)

if the claim has been allocated to the multi-track –

(i)

75% if the claim concludes 21 days or less before the date fixed for the commencement of the trial; or

(ii)

12.5% if the claim concludes more than 21 days before the date fixed for the commencement of the trial or before any such date has been fixed;

(d)

12.5% where –

(i)

the claim has been issued but concludes before it has been allocated to a track; or

(ii)

in relation to costs-only proceedings, the dispute is settled before a claim is issued.”

In Amin and Hussain v Mullings and Royal Sun Alliance [2011] 3 Costs LR 485, Slade J dealt with a dispute about when a particular element of the success fee became due under old r.45.16. She referred to a decision of HHJ Stewart QC (as he then was) in Sitapuria v Moorzadi Khan (unreported) 10, December 2007, Liverpool County Court, in which he held that, for the purposes of these rules, “a trial had not commenced for the purposes of the uplift in solicitor’s fees if a settlement is reached before the hearing of the case has started.” Following that guidance, Slade J concluded that the recoverable uplift in the case before her was 12.5% because the case had settled before the trial had commenced, and it was immaterial whether the case settled on the date fixed for the trial, but before it commenced, or some earlier date.

In the subsequent written submissions provided by the solicitors acting for the defendant, they referred to the more recent judgment of Slade J in James v Ireland [2015] 3 Costs LR 511. Again that is concerned with the old rules; again it deals with when, in particular circumstances, a trial may be said to have commenced. That case was about the recoverability of a success fee when a trial was stood out on the appointed day and subsequently settled. Again the judge concluded that the trial had not commenced at the hearing when case management directions were given and the trial was adjourned.

On the face of it, these authorities may appear to be contrary to the view that I have reached about the new Table 6B within r.45.29C. But, on analysis, I do not believe that there is any discrepancy. First, old r.45.16 is obviously a different rule to the one with which I am concerned. Secondly, it has been superseded. But thirdly, and much more importantly, the critical wording of the two rules is different. In the old r.45.16 it provided expressly that the 12.5% was recoverable “where the claim concludes before a trial has commenced”. In the light of that wording, it seems to me that the decisions of Slade J (and HHJ Stewart before her) make complete sense, because what mattered in each case was when the trial could be said to have “commenced”. Indeed, on that wording, it is difficult to see how any other conclusion was possible in any of those cases.

Accordingly, the old r.45.16 about success fees provides, in express terms, what the new rules on fixed costs might have said (see paragraph 18 above), but which they manifestly do not say.

Table 6B of r.45.29C is dealing with, not the recoverable percentage of a success fee, as Mr Bacon QC put it, which might be regarded as ‘the icing on the cake’, but the basic remuneration for the work done in preparing for trial. Significantly, the phrase “the commencement of the trial” does not occur in the rule or the Table. Because, for the reasons I have given, section B does not apply, because this case settled after all of the dates noted in that section, the only issue is whether it is caught by Section C or not caught at all, which is the point that I have previously addressed.

Accordingly, I have concluded that Sitapuria, Amin and James are unremarkable decisions on different provisions of the CPR which do not affect my analysis of Table 6B on first principles. Indeed, in one sense, they support it, because they show that the express words ‘before the trial has commenced’ are required in order for the alternative submission to succeed.

CONCLUSIONS

I grant permission to appeal and, for the reasons noted above, I allow the appeal. It seems to me that, on first principles, the learned recorder was wrong to reach the conclusions he did. The trial advocacy fee is recoverable on the facts of this case.