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It all seemed so simple

09 October 2020
Nicola Critchley and Simon Fisher explain the findings behind the decision in Finsbury Food Group Plc v Dover (2020), that the cost of counsel's advice was not fixed and that the court can assess the fee to allow a sum that is considered reasonable.

Over the past several years we have seen the introduction and the expansion of the Pre-Action Protocol for Low Value Personal Injury Claims in Road Traffic Accidents, followed by the equivalent Protocol for low value employers’ and public liability claims. After some tweaking, these now provide a relatively efficient process for resolving a high volume of claims valued at up to £25,000, with fixed costs. 

Inevitably there are still claims that start off in the Claims Portal (the Portal) under one of these Protocols but, for a variety of reasons, fall out of the process and are then dealt with on the Fast or Multi Track. To cater for these cases, a fixed costs regime was introduced, providing the parties with a seemingly straightforward methodology for calculating the costs payable, by reference to the stage reached in the claim and its value at the point of settlement or trial. This approach to working out the costs due was somewhat broad brush, but reflected the opinion of those who designed it that it would promote efficiency. It also acknowledged that while the receiving party might make a healthy profit on one occasion, it might not do so well on the next: ‘swings and roundabouts’.

What the rule makers did not achieve was total clarity as to how the rules were to be interpreted in a number of scenarios when cases exited the Portal. While some gaps in the rules were perhaps inevitable, many are surprised by the volume of satellite litigation that they have created, with a number of references to the Court of Appeal.

The latest decision in this saga is Finsbury Food Group Plc v Dover (2020). Nicola Critchley and Simon Fisher explain the findings behind the decision that the cost of counsel's advice was not fixed and that the court can assess the fee to allow a sum that is considered reasonable.

The issue

This appeal from the order of a Master of the Senior Courts Costs Office, heard by Mrs Justice Lambert raised a single and narrow issue: whether CPR 45.29I(2)(c) fixed the quantum of counsel's (or a specialist solicitor's) fee for an advice on the valuation of the claim at £150 plus VAT in accordance with CPR 45.23B (read with Table 6A), or whether the fee for such an advice fell outside the fees fixed in CPR 45 and was subject to assessment. 

Background 

The claim arose from an injury which the claimant sustained during the course of his employment with the defendant. Initially, the claim was valued at less than £25,000. As such, it fell to be dealt with by the parties under the Pre-Action Protocol for Low Value Personal Injury (Employers' Liability and Public Liability) Claims ("the Protocol"). 

In accordance with the Protocol, the claims notification form (CNF) was uploaded to the Portal. However, the defendant failed to provide a response within the requisite 30 days and the claim therefore exited the Portal. The claim was not resubmitted to the Portal but liability was admitted and the claim eventually settled for £70,000. 

After the claim had exited the Portal but prior to settlement, the claimant obtained counsel’s advice on quantum (in conference).

Following settlement, the claimant submitted a Bill of Costs in which counsel's fee for the advice was claimed at £650 plus VAT. The defendant disputed any entitlement to payment of counsel's fee on the basis that no such fee was payable under the relevant provisions in a claim which had exited the Portal and the fee was incurred after the claim had left the Portal, and as such those costs subsumed within the fixed fees. Alternatively, it was submitted that, if counsel's advice was a recoverable item of cost, then the costs of such advice were limited to £150 plus VAT. The costs officer rejected these arguments holding that the relevant provisions permitted recovery of counsel's fee for advising in conference as a disbursement. However, he assessed the costs of counsel's fee down from £650 plus VAT to £500 plus VAT.

Appeal findings

On appeal, Mrs Justice Lambert began by observing that the objective of any exercise of statutory interpretation was to determine the intention of the legislature, and the starting point for that exercise was the natural and ordinary meaning of the words used. It followed that where the meaning was clear on the face of the provision in issue, there was no need to resort to other canons of statutory construction unless the construction produced a result which was so startling that it could not have been intended. Against this short and uncontentious introduction, the first question therefore was the grammatical meaning of CPR 45.29I(2)(c), taking the provision in context. Viewed linguistically the meaning was clear and unambiguous: the phrase in subsection 2(c): "as provided for in the relevant Protocol" was not referring to the cost as provided for in the relevant Protocol, but was referring to the type of disbursement there provided. 

Not only did this construction make grammatical sense, it was also the only logical construction of CPR 45.29I. Neither the Protocol nor the rules fixed the cost of obtaining medical records or of obtaining an expert medical report, nor fixed the cost of other disbursements referred to in (2), save for subparagraph (g) where the upper limit of the claim was expressly set out. 

CPR Part 45 expressly fixed the cost of the disbursement when counsel's advice was obtained in a claim which remained within the Portal and settled at Stage 3. Section III of rule 45 included 45.23B which fixed the cost at an amount equivalent to Stage 3, Type C fixed costs, that was, £150 plus VAT.  No such similar provision existed in Section IIIA for claims outside the Protocol.

Likewise, CPR 45.29I(2A), which related to whiplash claims, started under a different Protocol (the road traffic accident Protocol) fixed the costs of various medical reports. Had the drafter intended to fix the costs of legal advice for a claim outside the Protocol, then the drafter could easily have included a similar provision.

The judge then considered whether this meaning led to an absurd outcome or an outcome which the drafter could not reasonably have intended. She did not accept that leaving the legal costs of valuing a claim which had fallen outside the Protocol unfixed and subject to assessment in the usual way, was an absurd outcome.

Claims which had fallen out of the Portal were a mixed bag. Some small straightforward claims might fall out of the Portal as a result of the failure by the defendant to respond to the CNF. But there were other reasons for a claim falling out of the Portal including notification by the claimant that the claim had been revalued at more than the upper limit; where liability remained in dispute and where contributory negligence was alleged. Those factors were likely to be associated with a much greater level of complexity, so making quantification of the claim all the more difficult. There was nothing absurd in the costs of such an advice on valuation not being fixed in those circumstances. It would be odd if the same fixed fee were to be recovered for valuing a straightforward claim worth £15,000 as for a claim which, as it turned out, included a high claim for loss of earnings or handicap on the labour market the quantification of which might involve considerable skill and expertise.

Further, the costs allowed would not be unchecked. Just as in this case, they were subject to assessment and might be reduced on assessment.

The fact that 45.23B fixed the level of fees for claims which settled at Stage 3, did not mean automatically that the fee would be recovered. That provision made plain that the fee would only be recovered where the advice was reasonably required to value the claim and so, even within the fixed costs regime of Section III, there was a basis for challenge which might require resolution by the costs judge. 

The drafting of Part IIIA suggested a greater degree of flexibility generally to costs in claims which had fallen out of the Portal: Rule 45.29J permitted claims for an amount of costs exceeding fixed recoverable costs where there were "exceptional circumstances." Although the bar to recovery under 45.29J was set high, the fact that the provision existed in relation to claims which had fallen out of the Portal, but no similar provision existed in relation to those claims which were resolved under the Protocol or at Stage 3, suggested a different and more flexible policy generally to claims which had fallen out of the Portal.

The Master at first instance had reached a similar conclusion for similar reasons. None of his findings were wrong. The appeal was refused.

What does this mean for Insurers?

In claims that have exited the Pre-Action Protocol for Low Value Personal Injury (Employers' Liability and Public Liability), Claims, counsel's fees are recoverable in principle and can be assessed by way of detailed assessment and quantified by the court. 

Note that the claim in this instance was for a permanent hand injury where causation was not accepted, and went on to settle for £70,000. In routine low value ex Portal claims, counsel's fees should still be disputed using Aldred v Cham (2019) (see DWF update). However it is important to keep in mind the specific facts of each case particularly where the claim would have been allocated to the Multi-Track had it proceeded, and to consider if an allowance for counsel should be made, as in any case where costs are to be assessed by the court on the conventional basis. 


Please contact Nicola Critchley or Simon Fisher for more information.

Further Reading

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