A B & Ors v Department of Trade & Industry s/a British Coal Corporation [2005] EWCA Civ 1737

A2/2005/0688; A2/2005/0689; A2/2005/0690

[2005] EWCA Civ 1737

IN THE SUPREME COURT OF JUDICATURE

IN THE COURT OF APPEAL (CIVIL DIVISION)

ON APPEAL FROM THE HIGH COURT OF JUSTICE

QUEEN'S BENCH DIVISION

ADMINISTRATIVE COURT

(SIR MICHAEL TURNER)

Venue Royal Courts of Justice

Date Wednesday, 21 December 2005

Strand

London, WC2A 2LL

B E F O R E:

SIR ANTHONY CLARKE

(Master of the Rolls)

LORD JUSTICE BROOKE

(Vice-President of the Court of Appeal, Civil Division)

LORD JUSTICE NEUBERGER

Between

A B and OTHERSRespondent

-v-

Between

DEPARTMENT OF TRADE & INDUSTRY s/aAppellant

BRITISH COAL CORPORATIONAppellant

(Computer-Aided Transcript of the Stenograph Notes of

Smith Bernal Wordwave Limited

190 Fleet Street, London EC4A 2AG

Tel No: 020 7404 1400 Fax No: 020 7831 8838

Official Shorthand Writers to the Court)

MR MICHAEL SPENCER QC and MR JOHN COOPER (instructed by Messrs Nabarro Nathanson) appeared for Appellants

MR JAMES GOSS QC and MR BRIAN GRIFFITHS (instructed by Brm Solicitors) appeared for Respondent UDM

MR DAVID ALLAN QC and MR IVAN BOWLEY (instructed by Irwin Mitchell) appeared for NUM

J U D G M E N T

SIR ANTHONY CLARKE:

Introduction

[1]These are appeals, brought with the permission of Rix LJ, are against three orders made by Sir Michael Turner in group litigation which is known as the British Coal Corporation Respiratory Disease Litigation or BCRDL. The orders were made on 18 November 2004, 28 January 2005 and 16 February 2005. They arise out of, or in connection with, the assessment of costs in cases in which fast track offers (or FTOs) are or were accepted by claimants in respect of claims against the British Coal Corporation ("BCC") and the Department of Trade and Industry ("the DTI") which has as I understand it accepted the liability of BCC. For convenience I shall refer to the defendant in the litigation and the appellant in these appeals as the DTI.

[2]There are two groups of claims. The first, which have been called the live claims, are claims by claimants who are still alive and the second, which have been called the deceased claims, are claims in respect of miners who have died. All the claims are by former miners or their widows or estates in respect of respiratory disease caused by inhalation of mine dust.

[3]In the first order Sir Michael Turner assessed the costs to be paid to each claimant in respect of FTOs in live claims in the sum of £1,478 plus VAT. The second and third orders arise out of the deceased claims. In the second order he refused an application by the DTI to adjourn the assessment of the costs in respect of the deceased claims. In the third order he assessed the costs payable in respect of the deceased claims in the sum of £1,675 plus VAT plus disbursements per claim.

The procedural history

[4]The BCRDL began on 21 December 1995 when 127 plaintiffs were brought together to bring claims for personal injury, loss and damage arising out of their exposure to mine dust and fumes at various collieries operated by BCC. The litigation has throughout been conducted before and directed by Turner J, who is of course now properly referred to as Sir Michael Turner and whom I shall simply call the judge. It has been a mammoth responsibility.

[5]Eight lead actions were chosen to reflect the diversity of issues raised by the litigation and to give rise to the widest determination of issues affecting the litigated cases. The trial lasted from 29 October 1996 to 2 October 1997. Judgment was given in the case of Griffiths & Others on 23 January 1998. The judge held that BCC was in breach of duty on a generic basis for the excessive exposure of workers to coal and dust and liability was established in respect of such exposure from 4 June 1954 to 1987. It was further determined that BCC had failed on a generic basis to encourage the use of respiratory protection from 1965 onwards. Damages in respect of all of the conditions identified were subject to apportionment to take account of the relative effects of smoking and dust exposure.

The scheme

[6]The DTI inherited the liabilities of BCC on 1 January 1998 by way of a restructuring scheme made under section 12(2) of the Coal Industry Act 1994. After giving judgment and resolving the issues in the lead cases on 6 February 1998 the judge directed that a framework for the disposal of outstanding claims be prepared. At that stage there were 10,729 cases outstanding. The DTI was left to manage the BCRDL and the further cases that followed the widespread publicity after the judgment.

[7]There was no appeal by either side. The process of managing the outstanding claims and the identification of claims required the creation of a structure sufficient to meet huge volumes of cases. It was plainly impracticable for there to be any processing of such large numbers of claims through the usual procedures of the court system. The DTI set about instructing contractors capable of being able to satisfy the likely claims handling and medical assessment requirements of the claimants.

[8]As a result, in 1999 the parties entered into a claims handling agreement known as the CHA. As stated in paragraph 6 of the introduction to the CHA, the parties sought to agree a procedure for the "Fair, consistent and expeditious assessment of claims and for the payment of damages where appropriate." In order that the claims already identified on the claims register did not proceed other than by an agreed process, the court imposed a stay so that all claims would have to be entered on the register and thereafter proceeded through the CHA. The intention was to create a scheme whereby settlements made would as far as possible meet the claimants' likely result at common law.

[9]It was agreed between the parties that no claim should need to seek a litigated solution until after it had been processed through the CHA. To this end a disputes procedure was devised to seek to iron out potential grievances. However it was agreed that recourse to the court by way of seeking removal of the stay (followed by conventional unitary litigation) once the claim was processed through the CHA was a right that could not be removed by agreement and accordingly it is preserved by an order made by the court in July 1999.

[10]The CHA is an agreement to which changes are made on an ongoing basis to reflect changes in the law and experience of the process. For all of the claims on the register the terms of the CHA govern the way that claims are processed. The process up until the stage of making an "expedited offer" is shortly as follows. After registration the claim is prioritised in live cases according to age, date of receipt of claim and short life expectancy (where applicable). In deceased cases priority is given to widows and co-habitees over "estate" cases. In both cases a points system to determine priority is applied. In live cases the claimant undergoes a spirometry test to measure his lung function as against predicted values. The screening spirometry procedure enables claimants to be further prioritised for the medical assessment process or MAP, interim payments to be made as the claimant awaits MAP and expedited offers of settlement be made on a risk basis. Schedule 10 of the CHA sets out the basis upon which such expedited offers (or risk offers) are made.

[11]Essentially, the claimant has to establish at least five years' underground work for BCCI, together with an FEV1 percentage of predicted that is less than 90 per cent, which is the average level in the average man. FEV1 is a lung function test carried out at spirometry which indicates loss of lung function. A sliding scale for each percentage level of increasing disability is offered at 20 per cent or below.

[12]The nature of the risk involved in the offer will vary from case to case. However in all cases the claimant will know that he suffers from loss of lung function and that, absent any co-morbid condition that may be known to him (but not yet determined at MAP), he would receive damages after MAP. The claimant will be able to have a good idea as to the likely effect of apportionment upon any later award. His legal adviser will have the dust model and can use the smoking history given by the claimant together with his work history and knowledge of respirator usage to assess the likely apportionment level. In the case of a non-smoker the predictability of any future apportionment figure is greater.

[13]These risk offers accounted for 30,156 cases in the scheme as at 31 January 2005, and as at that date 19,487 had accepted the risk offer, which was approximately 12.8 per cent of all settlements. Where offers were made the take-up rate was just under 65 per cent.

[14]A claims questionnaire or CQ has to be filled out in order to enable the claim to be progressed through the scheme. The CQ involves the compilation of a work history by the claimant providing information (among other matters) relating to the collieries at which the claimant or deceased worked, the nature of jobs undertaken, the extent (if any) of respirator usage, the circumstances of ceasing or transferring work and smoking history. The information provided in the CQ is then checked against records retained by BCC and the work history is agreed between the claimant's solicitor and the DTI's claims handlers. The agreed work history is used post-MAP as part of the apportionment process.

[15]In live cases the MAP involves the claimant undergoing full lung function testing (a clinical investigation which involves what is more extensive than spirometry) under the supervision of a laboratory technician. The results of the test are given to a respiratory specialist or RS, who will see the claimant and take a history. The RS is then tasked to fill out an MAP form that identifies whether the claimant suffers from chronic obstructive pulmonary disease (COPD or breathlessness) and the extent of his breathlessness identified in percentage terms. In addition the RS will identify any non-compensatable co-morbid conditions.

[16]The MAP will also determine whether chronic bronchitis and temporary exacerbation of asthma attributable to the work history exists. The RS will review the claimant's alleged smoking history against medical records and the extent to which an exhaled carbon monoxide level was obtained during the lung function testing. The diagnosis, assessment of past and future disability relating to COPD and estimate of life expectancy all provided by the MAP form enable a computation to be made in cases where damages are found to be due.

[17]In deceased cases the RS is confined to assessing the evidence available by way of death certificates, post mortem, hospital records, GP records, BCC medical records, employment history (as set out in the CQ) and DWP records. There may, in some cases, be evidence of chest x-rays or of lung function testing. It is the availability of records that determines the ability of the RS to make the same diagnoses and assessments as in live cases. The resultant form contains the same relevant information to enable a computation to be conducted.

[18]A medical reference panel (MRP) meets to adjudicate upon issues arising from the medical assessment process and to give guidance. The contractors are instructed to deliver the MAP process and they have MAPs checked by an internal quality assurance procedure to ensure accuracy and conformity of approach. There is also an agreed monthly audit of MAP reports by the MRP.

[19]The CHA provides for general damages to be paid by reference to an agreed table of awards based upon the age and level of disability of the mine-worker. In addition, all aspects of special damages for past and future losses are susceptible to computation by reference to agreed figures referable to age, levels of disability and other agreed factors. A computer calculator exists for the input of information to produce the final figure. The inputs depend upon information from the MAP and the CQ. Elements of discretion may be involved in calculations relating almost exclusively to loss of earnings. A separate calculator exists for what may be complex calculations relating to pension loss.

[20]The award made is apportioned to reflect the findings of the judge in relation to i) exposure prior to 4 June 1954; ii) the effects of smoking; and iii) exposure to an irreducible minimum level of dust (non-tortious dust) including the impact in an individual case of the use/non use of respiratory protection.

[21]The computer calculator has been devised so that an individual's work and smoking history can be inputted and an overall recoverable proportion of damages calculated by reference to an agreed formula. Tortious values are provided for geographical areas and job factors are applied to reflect the likely relative occupational exposure to levels of dust in different occupations underground. The smoking history is taken from the MAP. A dust reference panel or DRP advises as to the appropriate data to input into the dust model and as to any disputes arising.

[22]After the apportionment process has been conducted a final offer can be sent out to the claimant. As at the end of January 2005, 152,696 cases had been settled by going through all or part of the CHA process. By March 2003 there were 221,573 claims.

[23]It was decided by the court on 21 March 2003 with the agreement of the parties that a cut-off date should be determined and announced. Levels of disability had been seen to be consistently falling in the scheme which had been running openly for five years. A year of lead in time up to the cut-off date was approved. Extensive publicity was conducted to seek to ensure that all claims outstanding were brought before the court. At the date of the cut-off on 31 March 2004, no less than 557,000 claims had been brought. In the last year of entry to the scheme a total of over 325,000 claims were made. At the commencement of the scheme the profile of live to deceased cases had radically altered from 67 per cent live and 33 per cent deceased, to 45 per cent live and 55 per cent deceased. Since the closure date only two claims have been received.

[24]On 22 September 2004 the judge attended a workshop, the purpose of which was to review the position as to likely scheme closure dates given the nature of the CHA and to try and identify ways to speed up the process. It had become clear that given the huge influx of cases, a means of achieving an early disposal of cases was required. If the CHA route was left to run its course it was estimated that the closure date in live cases would be 2009 and in deceased cases 2011. That timescale was unacceptable to the parties and to the court. Accordingly significant changes were required to enable progress to be made outside the CHA route.

[25]The DTI submitted a position paper entitled "Proposals for speeding up the respiratory disease scheme" dated 15 October 2004. The DTI's approach was to seek to remove cases from the MAP (a process which was perceived to be limited in its capacity by reason of the availability of RS) by identifying from past scheme data those cases least likely to require MAP analysis. The option to go to MAP, if chosen, was, however, to be preserved.

[26]In the live cases after hearing the parties the judge gave a ruling by way of response to a series of questions posed by the parties. In short, the court approved a proposal that risk offers in live cases be made to four classes of case based upon the spirometry results but before the claimants attended for MAP. These cases would therefore receive a risk offer at the same point in the process as those in receipt of expedited offers under the CHA.

[27]In the deceased cases the DTI's approach was to seek to make FTOs tailored to those claimants least likely to be suited to the MAP process. This would involve two simple flat offers to widows and to estates in "category 3" cases (cases where there was no mention of COPD on the death certificate and the likely absence of medical records imposed a very high reliance on RS discretion). This class of case was expected to represent about 60 per cent of the remaining deceased cases. Trends from past scheme data established that levels of COPD disability were falling significantly in deceased MAP assessments and instead levels of CB only and levels of denials were rising sharply. The judge approved the DTI's approach in respect of deceased cases on 22 December 2004.

[28]The FTO scheme can to my mind best be seen, albeit in a simplified form, by two flow diagrams, one for live claims and one for deceased claims, which are appended to this judgment as appendix A and B respectively. The assessment of costs

[29]The dispute which has given rise to these appeals relates to the assessment of costs to be paid to those accepting the FTOs, or their solicitors. It was agreed between the parties that the DTI would pay the claimants' costs and that the basis of the assessment of those costs would be determined by the judge.

[30]It is common ground between the parties that such an agreement was made, although any such agreement was not made in writing and it is not easy to identify precisely when the agreement was made. It is, however, common ground that no express terms were agreed between the parties as to how the costs should be assessed, so that, as I see it, the basis of the agreement has to be derived from the circumstances or context in which it was made. The context

[31]The context in which the judge was asked to assess the basis upon which costs were to be assessed is to my mind of considerable importance. An essential part of the context was the procedural history to which I have referred in some detail. In particular, the FTOs grew out of the parties' agreement that the procedure envisaged by the CHA must be speeded up. As explained earlier, the FTO scheme was both agreed by the parties and approved by the judge #after detailed consideration of it.

[32]The FTOs were arrived at after a different process from that set out in detail in the CHA. Thus the process was different from both the two processes identified in the CHA which contemplated settlement either by expedited payments or after full MAP assessment. I will return so far as necessary to the differences in a moment. However it is, I think, important to have the provisions of the CHA in mind in considering the issues in these appeals.

[33]Clause 60 of the CHA provides that:

"Costs and disbursements will be paid in accordance with schedule 17."

Schedule 17 sets out the costs and disbursements on the express basis that the costs were to be subject to RPI figures from 1 April 2004. The issues in dispute have related to live claims for COPD (including CB and temporary exacerbation of asthma) and to deceased claims for COPD. I therefore focus only on the parts of schedule 17 which relate to those claims. They are as follows. In the case of live claims the figures were £1,009 plus VAT and reasonable disbursements in respect of claims settled by expedited payment and £1,961 plus VAT and reasonable disbursements in respect of claims settled following full MAP assessment. In the case of deceased claims the figure was £1,961 plus VAT and reasonable disbursements, although there were other figures to which I should refer. The first was a figure of £1,401 plus VAT and reasonable disbursements in respect of claims where the award was discounted in accordance with particular provisions of the CHA. The second is a figure of £561 plus VAT and reasonable disbursements where the claim was limited from the outset to CB only. In the remainder of this judgment I shall for the most part refer only to the base figures and not to the VAT or disbursements, because none of the arguments focused on either VAT or disbursements. It is I think common ground that any figure fixed by the judge would be plus VAT and disbursements, if appropriate.

[34]The CHA did not set out the basis upon which the agreed figures were arrived at and no evidence was put before the court on that question. It is however common ground that the figures in the CHA were arrived at after detailed negotiations between the parties.

[35]The CHA was entered into in 1999. It appears from the extracts to which I have referred that the figures were agreed on the basis of a lump sum per particular type of claim. The solicitors' remuneration did not depend on establishing how much work was done, how many hours were worked or what advice was given to a particular claimant. Moreover the fixed figures were agreed in advance with the CHA and, as I understand it, were not subsequently varied except to reflect inflation or by agreement.

[36]In 1999 no one knew had how many claims there might be. We were told that it was anticipated that there might be some 100,000 claims. In the event, as I have indicated, there proved to be over 575,000 claims before the scheme was closed in March 2004. The claimants were represented by their unions, some by the NUM and some by the UDM. Indeed there were two CHAs for what might be called NUM and UDM claims respectively. For present purposes there is no material difference between the two CHAs so that I shall refer to only one of them.

[37]The claims were essentially advanced on behalf of the individual claims by solicitors who formed part of a group or groups. One such group is known as the CG or CSG, which represented a number of solicitors, who in turn represent NUM claimants. They are represented by Mr David Allan QC and Mr Ivan Bowley. The UDM interests are represented by Mr James Goss QC and Mr Brian Griffiths. Subject perhaps to the terms of particular retainer or retainers, we were told that the scheme set out in the CHA contemplated from the outset that the DTI would pay the solicitors' costs and that, even if a claimant failed, he would not personally be liable for costs.

[38]It can thus be seen that (save perhaps in particular exceptional cases) the individual claimants had no interest in the outcome of these appeals. Both the hearings before the judge which led to the appeals and the appeals themselves are concerned with how much money the DTI must pay the solicitors. I shall therefore for the most part describe the claimants and the respondents in these appeals as "the solicitors".

[39]Very large sums have already been paid. We were told that before March 2004 over 100,000 claims were settled of which about 60 per cent were live claims and 40 per cent deceased claims. Of the total some 12 per cent were expedited claims. We were also told that since the FTO's scheme became operative in about February 2005 there have been about 63,400 FTOs in live cases, of which 95 per cent or about 57,500 have been accepted. It is anticipated that the live claims will be resolved by about March 2006. In relation to the deceased claims the position is somewhat different because the claimant has to ask for an offer. We were told that there have been some 15,500 such requests and that they continue at the rate of about 1,900 a week. It is anticipated that the deceased claims will be resolved by about February 2007, and that the whole process is expected to come to an end in 2009.

[40]I turn to consider the live and deceased cases. I take the live cases first because the parties agree that their costs should be considered first, with the costs of the deceased cases to be heard and decided later. Live claims The parties' cases

Live claims

[41]The DTI's primary case before the judge was that the figures in schedule 17 of the CHA were irrelevant, whereas the solicitors' case was that the amount of work involved was or would be indistinguishable from the work involved in the case of settlement following full MAP.

[42]The judge considered both written submissions and oral argument. He announced his decision orally on 18 November 2004 when he gave short reasons on the basis that they would be developed in the ruling he would give on 3 December. He rejected both the parties' primary cases, held that the figures in the CHA were relevant but not decisive and held that the costs should be assessed at £1,478.

[43]Before considering the reasons given by the judge for rejecting the parties' primary cases and for fixing the figure he did and before identifying the issues raised in these appeals I should I think set out the case of each party as put before the judge.

[44]The DTI, through their solicitors, Nabarro Nathanson, put forward a paper which identified changes in work to be done by the claimants' solicitors since a costs model prepared on 14 May 1999 which had set out the work involved but not attributed costs to it. The DTI's paper identified work it said would be required in FTO cases. It did so under the heading "Live claims up to spirometry", assessing the time involved at 4 hours 42 minutes. It then assessed a fee rate of £105.80 per hour based upon the work being done by a Grade D fee earner outside London and supervised by a Grade C solicitor outside London. That gave a figure which the DTI rounded up to £500 plus VAT. It did the same exercise for "live claims up to MAP appointment" and arrived at 7 hours, which was assessed at £740.60. On that basis, for the cases in which the claimant had already elected for MAP but who accepted an FTO under the new scheme, the DTI proposed a mid-figure of £650. The paper concluded that no disbursements should be necessary in either case.

[45]The DTI's case was supported by an unsigned document dated November 2004 prepared by "costs advocates". The figures in that document were similar but not identical to those prepared by Nabarro Nathanson to which I have just referred. Their figures were £580 in the first case and £640 in the second. It was again said that disbursements should not be necessary.

[46]The CG produced a skeleton argument in response. Their argument can be summarised in this way:(1) The starting point should be the level of costs allowed under schedule 17 of the CHA, which it was agreed after long negotiation and formed part of the CHA approved by the court.

(2) The level of costs which provided the most useful guidance as from 1 April 2000 was the figure for £1,009 plus VAT and reasonable disbursements. That figure related to settlement by expedited payment and was said to be settled following spirometry, which was at the same stage as most fast-track claims would be settled.

(3) In both cases the most important and demanding role for a solicitor was to advise the claimant on the advantages and disadvantages of accepting an expedited payment or FTO, as against going through the MAP. Reliance was placed on a decision of Smith J in Pavylo v Watson Burton (unreported) 26 June 1997. The claimants' submission set out the steps which the solicitors would have to take to give appropriate advice.

(4) The DTI paper ignored the advice element just described.

(5) Account should be taken of the fact that the parties contemplated (and indeed subsequently agreed) that one costs figure should be determined for each class of case which could apply to all claimants and to all solicitors in whatever part of England and Wales they practised.

(6) Reliance was placed on the guide to the summary assessment of costs which was attached, And it was submitted that it would be reasonable for category A and B fee earners to undertake some of the work as well as category C and D fee earners, especially in giving the necessary advice. On that basis the analysis in the DTI's paper which was based exclusively on category C and D fee earners was flawed.

(7) The time allowed in the DTI's paper for "obtaining of necessary information”, the assessment of that information, the assessment of the likely value of the claim and the giving of advice to the claimant was "woefully inadequate".

(8) Account must be taken of the fact that some issues had arisen since fixing the figures in schedule 17 which had properly increased costs and, by contrast, that the effect of the FTO scheme would make both office space and some staff redundant.

(9) A comparison with the costs tariffs appended to the paper which had been produced for road traffic cases with a value up to £10,000 showed that the DTI's figures were too low.

(10) The proposed figure of £510 was only half that agreed for expedited settlement cases following spirometry and was inadequate. Indeed if the £1,009 figure was taken as a starting point and allowance was made for (a) more structured advice and disbursements, (b) the additional work where FTOs were not accepted, (c) the fact that work already undertaken was not included in the original costs model, (d) the costs of the introduction of FTOs, and (e) the fact that the basis of investment in the infrastructure for advising claimants would change a reasonable approach was to take the same figure as for MAP settlements, namely £1,961.

[47]The UDM also produced a paper which analysed the DTI's paper and argued, among other things, that on its own case, but taking the CHA figures, the DTI's MAP stages 1 and 3 were the same as stages 1 and 3 of the FTO scheme, that the only difference was the removal of stage 2, that stage 2 would take 2.8 hours and that it followed that on the DTI's best case only the value of 2.8 hours should be deducted from the figure of £1,961. The UDM said that on the DTI's figures stage 2 equated to £296.24 so that on the DTI's best case the correct figure was £1,961 less £296.24, namely £1,664.76.

[48]The DTI produced a skeleton argument in response. Its case is there set out and can be summarised thus:(1) It was unrealistic to take the same rate from an FTO case as for a full MAP case.

(2) The CG failed to specify what additional steps were required or the hourly rate which the work should be charged at or how long each step would take.

(3) This litigation was unlike ordinary litigation such as Ochwaf for a number of reasons, including that the solicitors could not give their clients advice. The DTI relied on the terms of a draft letter which

the judge at that time intended to send to each solicitor, which stated:

"Your solicitor will be unable to advise you what course of action you should best follow, hence, the offer which you have been made in described as a risk offer." (4) In any event the DTI's analysis included nearly two hours to consider the offer and discuss and confirm instructions from the claimant which it said was generous "in the circumstances where it [ie the amount of the offer] is simply a calculation and no advice can be given as to its appropriateness as compared to a full MAP assessment figure." (5) The scheme was a simple one relating to miners who had FEV1 results greater than 90 per cent, where there was thus no or no significant disability. It involved the simple translation of information into a computer which produced a figure. (6) That is to be compared with the full MAP assessment and also with the provision for expedited payments which (unlike the FTO scheme) concerned miners with significant COPD. (7) The FTO procedure is different from both the expedited offer and the full MAP procedure so that it was necessary and sensible to analyse afresh the position in relation to "this wholly new procedure and see what work is actually unreasonably required and how long it should reasonably take and at what rate."

This was the argument, as the judge thought somewhat inelegantly, known as the bottom-up approach. (8) The DTI's figure was based on grade C and D fee earners, as stated above, which was reasonable in the circumstances.

[49]So far as can I see no-one suggested either before or at the hearing of 18 November that no final decision should be made as to the costs of the live claims until the judge had heard the evidence and submissions relating to the deceased claims.

The hearing and decision on 18 November

[50]In summary, the position at the beginning of the hearing before the judge on 18 November was that the solicitors had made no attempt to justify the figures arithmetically other than by taking the CHA figures and asserting that the work done under the FTO scheme would not in many respects be significantly different from the work done in a MAP case and, in so far as it involved less work, that that fact was compensated for by the advice which was required in an FTO case and not in a MAP case. The DTI said that the work involved would be substantially less and would not involve advice, or at any rate advice of the kind envisaged by the solicitors. It identified the work and time involved and asserted that the work could be done by C and D grade fee earners. Indeed it asserted that the vast majority of the work being done under the CHA was being done by grade D fee earners, although it did not have direct evidence of that. Its primary case was that the CHA figures were irrelevant. It did not, however, refer to the burden of proof.

[51]The solicitors responded by saying that the times were unrealistic and that important parts of the work, notably the advice, would or could reasonably be done by A and B grade fee earners. They did not seek to justify the figures by reference to the cost of the work to be done under it. Nor did they seek to justify the figures in the CHA. On the other hand, the DTI did not ask for details of the solicitors' actual costs for work done under the CHA.

[52]We have seen a transcript of the hearing before the judge on 18 November. The parties maintained their respective positions as set out in the written material to which I have referred. It is, however, fair to say that in the course of oral argument Mr Cooper, who was counsel for the DTI, did assert that the burden of proof was on the solicitors to establish the amount and reasonableness of the figures relied upon. The DTI's argument was that the court should start afresh without regard to the figures in the CHA and adopt a bottom up approach, which involved using figures based on actual work to be done, time spent and costs to be incurred.

[53]As indicated earlier, the judge briefly expressed his conclusions at the end of the argument on 18 November. He rejected the DTI's primary case that the CHA was irrelevant, saying that his reasons would be developed in "the ruling" he would then deliver on 3 December. As to the solicitors' case, he rejected the submission that the fair figure for costs would be the same as the MAP figure in the CHA. He said:

"The premise to this approach has to be that an indistinguishable quantity of billable work will be performed in a fast-track case as a case with a settlement following full MAP. Intuitively this approach should also be rejected. However, the CHA cannot and should not be ignored as providing the governing basis for assessment of fair and reasonable remuneration for solicitors and other claimants' representatives when performing work under the fast-track scheme, which, it must be remembered, is a development or modification of the CHA itself. I have not been persuaded that the work content in fast-track cases is the same as those cases settled under a full MAP, but should be something less."

[54]The judge then said that he had decided that the appropriate figure was £1,478 but the only explanation he gave of the figure and the way he arrived at it was the following:

"Analysis of the figures specified in the claimants' handling agreement suggests a work content of about six hours in expedited settlement cases and eleven hours in MAP settlements. My decision is that fast-track offer cases should attract costs of £1,478 plus VAT, on a notional estimate that there will be an average saving in two hours work in these cases."

The judge described his decision as a "preliminary ruling".

[55]The problem with that paragraph is that none of the parties has been able to ascertain where the judge's figures came from or to work out how he arrived at this figure of £1,478. Thus it is not clear what were the sources in the evidence of the figures of six hours for expedited settlement cases and of eleven hours for MAP settlements. Nor is it clear what was the origin of the idea of an average saving of two hours' work in FTO cases. The judge does not say whether the saving was from the eleven hours or the six hours, although it was presumably from the former because the figure of £1,478 is lower than the figure in the CHA for MAP settlements of £1,961 (or indeed of £1,911 in an earlier version of the CHA) but higher than the figure of £1,009 for expedited settlements. Unfortunately, it does not appear to be possible to start with a figure of £1,961 or £1,911 and make a deduction in respect of two hours' work and arrive at a figure of £1,478, at any rate arithmetically. It appears that the judge was using these figures, wherever they came from, as a broad cross-check on the figure which he arrived at by an instinctive, or qualitative, approach in order to satisfy himself that it was about right.

Reasons given on 3 December

[56]Thereafter the judge prepared written reasons which he was to deliver on 3 December. Before he did so the DTI asked him to postpone giving a full reasoned judgment on the live claims in order to await evidence which would be put before the court on the deceased claims. The judge declined to do so. He held that his ruling on 18 November was, as he put it, an actual ruling and not an indicative ruling and that it was not open to him to revisit the issue. He expressly recognised that the ruling was given in the absence of "further or better evidence" and that there was a risk of inconsistency between his decision on the live claims and a future decision on the deceased claims, although he observed that the inconsistencies would be more apparent than real. In so far as there turned out to be inconsistencies, it would be because any decision on costs in relation to the deceased cases would be better informed by more complete evidence than was available on 18 November. The judge said that the reason for any differences would be "a necessary consequence of the way in which the arguments and evidence were presented in the court" in the two cases.

[57]I will return to the differences between the two classes of case and to those reasons below. For the present, I note that in the vast majority of cases the judge's approach to an earlier ruling would undoubtedly be correct. However, it is clear that he had indicated on 18 November that he would give a ruling on 3 December and that his ruling on 18 November was a preliminary ruling. Moreover, there is a close relationship between the correct approach to the live claims and to the deceased claims and, for reasons given below, I have reached the conclusion that, if it is right to reconsider the deceased claims, it is appropriate also to reconsider the approach to the live claims. I should add that, as appears below, to my mind the problems in this part of the case essentially arise from failings of the parties and not of the judge.

[58]To return to 3 December, the judge then set out his reasons for making his ruling on the live claims. A striking feature of his reasons is that, while he gave what in my opinion are convincing reasons for rejecting the qualitative arguments made before him on both sides, he again does not explain how he arrived at his figure of £1,478.

[59]The judge set out the submissions of the parties and included a short history of the CHA. It is an important feature of this case and of this appeal that the judge has been in charge of this litigation from the outset and thus knows a very great deal about it. That includes the provenance and operation of both the CHA and its subsequent operation in practice. He was in a significant way responsible for the fact that an FTO was introduced in order to speed up the settlements and there is, in my judgment, no reason to think that he was other than very familiar, both with the way in which the CHA operated, and with the way in which the FTO was both intended and likely to operate.

[60]The judge's reasons may be summarised in this way:(i) Having pointed out that the CHA was negotiated between the parties and set out the figures now advanced on behalf of the DTI for FTO settlement cases, he said that it was clear "from a short glance" that the suggested basis for remuneration was significantly to the disadvantage of CG by comparison with the agreed method of charging under the CHA.

(ii) It was too late to attempt to rewrite the costs regime embodied in the CHA, even if there were grounds for doing so.

(iii) At no stage during the discussions for the new fast-track scheme was it ever envisaged that the scheme should be treated as a process that was separate and distinct from the assessment of compensation under the CHA. Indeed, as the judge put it, the FTO was only available to claimants who had registered their claims under the CHA and undergone spirometry in accordance with its provisions. What was now proposed under the FTO was that the claimant should be provided with an option whether to accept the relatively modest sum offered by way of FTO or proceed to full MAP. The fact that the FTO scheme was limited to four particular classes meant that there were unlikely to be men with any disability attributable to COPD.

(iv) However, there were a significant number of men who might be well advised to proceed to full MAP, so that it was the duty of solicitors to give appropriate advice. The judge recognised the importance of this, in part because of the risk that, if proper advice was not given, the solicitor might be exposed to satellite litigation. For this reason the judge rejected the DTI's argument, which was based on his draft letter to the claimants, that it would not be possible for the solicitor to advise other than in general terms. The judge recognised that the letter was in need of redrafting and set out in his reasons the terms of a redraft, which was now to be sent by each solicitor and which stated that the solicitor would be able to give the claimant advice, albeit limited by the fact that he would not have undergone a full medical assessment.

(v) The judge said in his reasons that in reality, when the results of the spirometry became known, the solicitor would have to obtain all the information which would be required to complete a claims questionnaire, so far as he could, and then to perform a calculation based on the information as to the collieries at which the claimant was employed, how much of his work was underground, how much he smoked, how much he wore a respirator and, if he did, for what proportion of that time he was underground. An endeavour to ascertain the likelihood of the existence and extent of respiratory disability and any co-morbid condition would also have to be made. Only then would it be possible for the solicitor to give advice to his client.

(vi) The judge said that none of the necessary enquiries was straightforward and could not fairly be compared with the exercise of checking the settlement offer after a full MAP. He accordingly rejected the DTI's submission that the solicitor simply had to make a calculation and that no advice could be given as to its appropriateness as compared to a full MAP assessment figure.

(vii) In these circumstances the judge rejected the DTI's submission that all that was required was a largely mechanical exercise that could be done by C and D grade fee earners. He therefore rejected the submission that a fair figure would be only half the amount paid in respect of claims which were settled on an expedited basis.

(viii) The judge recognised I think that the work in connection with a full MAP assessment would be greater than in the case of an FTO but balanced that, both against the need to give particular advice in the latter case, and against the fact that the reduction in work would mean that solicitors' overheads would be spread among fewer cases without compensation and that the fast-track scheme would require some retraining which would not give rise to a separately costed overhead.

(ix) The judge then referred to a further matter which was particularly criticised on behalf of the DTI. It was the conflict of interest which the solicitor faced or would face if the FTO fees were fixed at a much lower figure than the fee which he would be paid if the FTO were rejected. On a comparison between the parties' respective cases, the DTI's figure of about £500 would be only a quarter of that contended for by the solicitors. The judge said that it could not be right to place solicitors in a position in which there it was or would be such a naked conflict of interest.

[61]In paragraph 34 of his reasons the judge said that in reaching the decision he had announced on 18 November he had taken account of the reasons which I have summarised. So far as the relevant principles were concerned he added this:

"It has to follow that in reaching my decision it was in the context that there was no law involved in that process, and that what I was concerned to do was to reach a decision which was as fair as the circumstances would permit, and which would not put either side at an unnecessary disadvantage in relation to the other, while, at the same time, furthering the objects of a fast track scheme."

[62]It is right to say, as I have already indicated, that in the reasons which he gave on 3 December the judge did not refer to the figure of £1,478 or the reasons which led him to choose that particular figure. It follows that, subject to what he said later in connection with the deceased claims, the only explanation he gave for his figure, save in instinctive, or qualitative terms, was the passage referring to it on 18 November which I have quoted above.

[63]Before discussing the points which arise on the appeal against the judge's decision to choose £1,478 for the live cases it is appropriate to refer to the decisions made by the judge in relation to the deceased cases, partly because the reasons he gave in that regard seem to me to throw light upon his approach to the live cases and partly because, as appears below, the conclusions which I have reached with respect to the deceased cases have affected my approach to the appeal on the live cases. The deceased cases Introduction

The deceased cases

[64]One of the reasons for the costs' hearing relating to the live claims taking place before that relating to the deceased claims was that the issues were clear and written submissions were exchanged. In the case of the deceased claims there remained some questions to be determined by the judge as to how the scheme would operate. Although none of them related to the question how costs should be assessed, they were determined by the judge on 22 December 2004. Some time in December the date was fixed for the hearing of the issues on costs in the deceased claims. The date fixed was 28 January 2005.

[65]The deceased claims naturally give rise to different problems from the live claims. Except where spirometry took place before the miner died, the parties did not of course have the information as a result of spirometry. Moreover, before the FTO scheme there was no mechanism for an expedited offer. Under schedule 17, the CHA provided for deceased cases which settle after the full MAP process. The equivalent fees to those he set out above in respect of live claims are £1,961 where the claim is not discounted under paragraphs 15, 16, 17 or 18 of schedule 8, £1,401 where the claims are so discounted and £561 where the claim is limited from the outset to CB only.

The application for an adjournment

[66]So far as fixing of costs in FTO cases was concerned, no steps were taken inter partes until 18 January. On that date Nabarro Nathanson wrote to 20 firms of claimants' solicitors on behalf of the DTI asking for further information. As I understand it, they wrote in particular to the solicitors who represented the largest numbers of claimants. In each case they asked for information about ten cases which had settled under the CHA. One such letter was written to Beresfords, who were dealing with the largest numbers of outstanding deceased claims. As at December 2004, their outstanding deceased claims numbered 44,727. The total number of deceased claims handled by the 20 firms was 199,732, of which 36,287 were widows' claims and 163,445 were estate claims. I am not sure how many of those would be likely to be fast-track cases but it can be seen that, whatever the outcome of this appeal, the sums earned by Beresfords are likely to be enormous. As to the financial importance of the FTO costs fixing exercise and the potential importance of this appeal, both to the solicitors and the DTI, it is pertinent to note that the judge awarded £1,675, as compared with the £861 which the DTI was contending for. The numbers of cases are so large that a difference of, say, £800 between the parties in the FTO cases is itself likely to amount to a very large sum of money.

[67]The same was true in respect of the live cases. Yet it was not until 18 January, after the live cases had been disposed of and only ten days before the date fixed for the hearing to fix the costs of the deceased claims, that the DTI made a request for further information. There are examples of such a letter before the court. One of them was sent to a firm of solicitors called Avalon. In relation to ten of their clients, it asked the name and grade of each fee earner and the time he or she had spent on the claim. It also asked for the total number of fee earners employed on COPD claims and their grades. Finally it asked whether they separated their teams between live and deceased claims and, in the case of deceased claims, whether they had different teams engaged on widow and estate claims and, in each case, if so, how much fee earners there were in each grade in each team. Mr Spencer complains on behalf of the DTI that many solicitors did not reply to such a letter because the CG told them not to do so.

[68]The CG had replied by letter dated 21 January, which asserted that the requests raised a number of issues including the following: whether the requests were validly made under Part 18 given that they related to settled cases which did not qualify for an FTO; the requests were made only six days before the hearing and could not be complied with before the hearing; to make six requests in relation to 200 cases was not proportionate; how the costs of answering the requests were to be met; the answers would not help to answer the question what work is required to advise a claimant whether to accept an FTO; and the relevance of some of the questions was unclear.

[69]Nevertheless, some solicitors, including Avalon, did provide some information. Other solicitors said that they did not operate a time recording system because it had been agreed under the CHA that the costs would be paid on a fixed fee basis so that there was no need to do so. Nevertheless a good deal of information was provided.

[70]On 25 January the DTI issued an application, dated 24 January, for an order that 20 named firms of solicitors, including Beresfords and Avalon, provide specific information, which I think was that requested in the letter of 18 January, within 28 days. If this application succeeded, the hearing fixed for 28 January would plainly have to be adjourned. The application was supported by a statement of Ms Nicola Loadsman, who is a partner in Nabarro Nathanson, the DTI's solicitors. The statement is to my mind of some importance.

[71]The statement set out the relevant terms of the CHA, identifying the fact that a COPD claim in respect of a deceased miner which was settled following a full MAP, which involved a complex special damage calculation and where it was necessary for the claimant's solicitor to obtain either a grant of probate or letters of administration, would amount to £2,747 plus VAT and reasonable disbursements. By contrast, there being no mechanism for an expedited claim in a deceased claim, the FTO scheme involved the introduction of an entirely new concept. The statement compared the various types of claim and exhibited a statement made by Mr Kenneth Brown of Cost Advocates in support. Mr Brown analysed the work done and time spent on deceased claims through full MAP up to and including acceptance of an offer with the time to be spent on FTO cases. He arrived at a time of 14 hours 18 minutes in the first case and 5 hours 18 minutes in the second.

[72]In the light of that material, Ms Loadsman pointed out that the firms making up the CG totalled about 500 throughout England and Wales and that they varied in size and resources. Since it was agreed that one fee should be arrived at to cover every case, that fee should reflect that fact. She suggested a fee of £861. She observed that in reality the bulk of the work is done under the CHA by non-solicitors and paralegals and exhibited the Supreme Court Costs Office's guide for the summary assessment of costs in support of her figures. She said that the reason for the request for information was that the DTI did not have access to information as to the organisation and staffing of the principal claimants' solicitors.

[73]In the light of its requests for information, on 26 January, at the end of a hearing before the judge which was concerned with many other matters, the DTI applied for an adjournment of the hearing fixed for 28 January in order to enable the solicitors to provide the information. The parties had prepared skeleton arguments which were before the judge. The thrust of the application was that it was relevant, indeed important, to know who was doing the work on CHA cases so as to gauge who would be doing the work in FTO cases in order to fix a fair fee for such cases. It was said that, although there was evidence in Ms Loadsman's statement that the overwhelming majority of the fee earners in the firms of solicitors were grade D fee earners, who are not qualified, it would be far preferable to base a decision on the actual position, which was known only to the solicitors. That was especially so since it appeared that, in the absence of evidence, it appeared that the judge had based his decision on the live claims on the bulk of the work being done by grade A fee earners. The DTI submitted that, since a number of solicitors had said that they needed more time to apply to the requests, the appropriate course was to grant an adjournment of the hearing on 28 January.

[74]Oral submissions were made on behalf of the DTI on 26 January. At the end of that day the judge did not hear submissions from the other parties but adjourned the matter until 28 January. However, he asked Mr Allan and Mr Goss, who appeared for the CG and the UDM respectively, whether there was any reason why de bene esse, their clients should not respond by then in similar terms to the way in which Avalon had responded. Avalon had given a reasonably full response to the request for information. They said they would.

[75]As a result some further information was available just before (and just after) the hearing on 28 January began. I note in passing that at the outset Mr Allan made the point (which he also made to us) that it is in a sense misleading simply to approach grade C and D fee earners as if they were ordinary fee earners in those grades because by this time many of them had very considerable expertise in the issues in this exceptional litigation. There is undoubted force in that point.

[76]Mr Cooper submitted on behalf of the DTI that the evidence was not relevant only to the bottom up approach, which he recognised had been rejected by the judge in November, but also to a fair fixing of the costs even taking the CHA as a starting point. On that basis, recognising that some further information was available but not as much as was desirable, he submitted that the matter should be adjourned in order to enable Mr Brown to analyse it in detail. As I read his submissions, Mr Cooper wished on the one hand to use the material in evidence and on the other hand to use it to cross-examine Mr Marshall who was to be called on behalf of the solicitors. In the course of the argument the judge naturally expressed his concerns about the lateness of the requests for further information.

[77]The solicitors objected to an adjournment. In the course of Mr Allan's submissions the question arose whether the DTI was going to call Mr Brown of Cost Advocates. Although there was some confusion, it appears to me that Mr Cooper indicated that the DTI would wish to rely upon the evidence of Cost Advocates, although he also said that his primary concern was, as he put it, to be effective in cross-examination of Mr Marshall. I note in passing that in the course of the argument the judge expressed doubt as to how much of Ms Loadsman's evidence was evidence and how much argument. However that may be, it seems to me that at the end of the argument on the adjournment the judge was left with the impression that the DTI intended to adduce evidence from the cost advocates, and perhaps Ms Loadsman, and that it intended to rely upon the documentary material both exhibited to Ms Loadsman's statement and subsequently disclosed by the solicitors.

Refusal of an adjournment

[78]The judge refused the application and gave oral reasons for doing so. He recited the history of the matter and in the course of doing so provided some further insight into the reasons for his decision on 18 November. He confirmed that he had rejected the bottom up approach, saying that the reason they were all there was because of the CHA. He said that he had made a rough and ready check or analysis of the sort of work content involved within the figures contained in schedule 17 of the CHA. When he made his ruling it was contemplated that there would be a later hearing with regard to the deceased claims. He referred to the letter of 18 January asking for further information, which he noted would be relevant to a bottom up approach. However, he noted that Mr Cooper wished to rely upon the evidence even if it were held, as he had held in the live cases, that the bottom up approach was wrong.

[79]In that regard the judge said this, as I read it on the assumption that the bottom up approach would again be held to be wrong:

"There is, however, another aspect to it, which is that, if I were to reject that basic argument [ie the bottom up argument] and approach costs in deceased fast track offer cases on the basis that the claims handling agreement, costs agreement, is a highly material circumstance taking into consideration when determining this question, the information which has become, and may yet become, available in relation to time spent and fee earners involved in presenting these cases for compensation, to the extent that there may be a saving, as compared with work envisaged in the agreed costs schedule, such would be relevant. If the court has the means to proceed in an evidence-based fashion, rather than on the basis of intuition and hypothesis, it should plainly do so, subject to the necessary qualification that in making its decision on that the parties are now going to be disadvantaged one as against the other."

[80]Pausing there, it appears to me that the judge was of the opinion that the evidence upon which Mr Cooper wished to rely was relevant to the question for decision, even on the assumption that the bottom up approach was wrong and that the CHA must be taken as a starting point. As I read his ruling, his reason was that the alternative would be what he called "intuition and hypothesis" which should not be resorted to, or at any rate only solely resorted to, if it were possible to proceed "in an evidence based fashion".

[81]On that basis, one might have thought that the judge would have received the evidence upon which the DTI wished to rely and, indeed, would have granted an adjournment to that end. The reason he did not grant the adjournment can I think be seen from the next passage from his ruling, which was in these terms:

"It is relevant but not decisive, that this application (by which I mean the Part 18 application dated 18 January 2005) was made some six weeks or so after the date of the reasons underpinning my ruling which was made almost exactly two months ago. I have not been persuaded by Mr Cooper that the reasons for that delay are valid. ... As follows from what I have just said, we are two months on from the date of my original ruling. If the matter does proceed to an appeal, further inevitable delay will occur. If the appeal should be successful then it would necessitate a re-hearing or a continued hearing in order to arrive at a proper quantum of recoverable costs which hearing would necessitate yet further time elapsing. The whole purpose of fast track offers is to advance rather than retard the settlement of all outstanding claims insofar as the fast track offers can do so. Mr Cooper's application for an adjournment today I therefore reject."

[82]The judge added that the court should now embark upon the substantive application in relation to the decision in relation to FTOs in deceased cases. He then said:

"Having looked at the material which has been made available thus far, I can see that it can have relevance; that is to say, in assessing the quantum of work and the fee earners engaged on the work, by way of saving in comparison to the costs agreed in the claims and in the agreement. I do not exclude the possibility Mr Cooper may succeed in persuading me that even if his original bottom up approach to costs is not accepted, he may nevertheless persuade me that costs in the fast track deceased cases are of such a different nature that the court should approach this matter not inhibited by its approach in the live cases."

[83]On what remained of 28 January and on 2 February the judge then heard both evidence and argument on the question what would be a fair fee to fix for the deceased claims. Mr Cooper cross-examined Mr Marshall, apparently to some effect because the judge was not impressed by his evidence. The DTI did not use the statements of Ms Loadsman or of the Cost Advocates in cross-examination of Mr Marshall, nor did it put them in evidence. Indeed it expressly disavowed reliance on both. The transcript shows some confusion as to the reason for adopting that approach. It appears to have been a recognition that the available information was not enough to enable the DTI to advance a bottom up argument, even if it were held to be valid in principle. What is not clear, at any rate to me, is why the DTI did not rely upon such material as it had in connection with its argument that, even starting with the CHA figures, the actual work and the actual rates paid supported the figure for which it was contending. However, that said, all parties relied upon the material produced by the solicitors in response to the letter of 18 January and in response to the judge's request, in so far as it assisted their respective cases.

[84]The judge reserved judgment and on 16 February gave a written ruling with detailed reasons. He decided that a fair figure would be £1,675. In his reasons he referred first to the history of the matter and to his rulings and reasons on 18 November and 3 December. He referred to the fact that the DTI disavowed the evidence which it said it wished to call and said that, save on one point, he found the evidence of Mr Marshall of no assistance.

[85]The judge again held that the starting point must be the CHA and the figures agreed in it. In particular, he said that the FTOs represented a modification of the CHA under the auspices of which the solicitors had made their engagements with the client, with the result that, at any rate unless the claimant was unsuccessful, the solicitor would recover no costs from the client. Schedule 17 is non-specific with regard to work content. It would have been impracticable to have other than a fixed fee system. That inevitably led to a situation in which the fee would sometimes be an overpayment, sometimes an underpayment and sometimes, as the judge put it, "about right". It was not for the court to determine whether, in terms of costs, the CHA was advantageous to the solicitors or not. The parties had reached agreement for better or worse. In short, the judge again rejected the bottom up approach and took the CHA as the starting point.

[86]It followed that it was necessary to try to compare the work done in an FTO case with that done under the unamended CHA. In carrying out that exercise the judge considered submissions made on behalf of the DTI based upon some of the information produced by the claimants, notably a Mr Gaskin. He found the exercise of no real assistance. In paragraphs 3, 13, and 14 the judge compared the work done in the two classes of cases. He held that the work done in fast-track cases was broadly analogous to the work which the solicitors had to perform under the CHA. He recognised on the one hand that there was some work which would not be done but again expressed the view that in order to ensure that the claimant took a properly informed view in deceased cases, the solicitor would be likely to have to make more widespread enquiry and tailor the advice accordingly.

[87]In the end the judge observed that, looking at the schedule 17 costs regime, it was possible to detect a pattern. This was that £1,401 was all but 2.5 times £561 and £1,961 was 3.5 times the same figure. The judge said:

"In my judgment, which is again based on intuition, a figure of £1,640 which equates to about 3 times [£561] is a fair figure for the work which solicitors will, on average, be required to perform consistent with their duty to their client. If what I am required to perform in this exercise is to achieve a result which takes into account the competing interests which I have identified above, such represents the result of the exercise of the discretion exercised in me."

The judge added that in addition the solicitors could add the cost of obtaining a grant of probate or letters of administration but not the obtaining of medical records. He rejected the latter because the whole point of the FTO scheme was to speed up the compensation process. Finally, I should note that the judge said that he sought to avoid the misunderstanding which led to the suggestion that in the live cases he had sought to attribute a specific number of hours to a fee earner of a given grade.

The appeal

[88]It was common ground between the parties that this court should not interfere with any of the decisions reached by the judge unless he had erred in principle or reached a conclusion that he could not properly reach. It was also not in dispute that he correctly directed himself in the passage from paragraph 34 of his reasons of 3 December quoted above, namely that he should fix a figure that was as fair as the circumstances would permit, and which would not put either side at an unnecessary disadvantage in relation to the other, while, at the same time, furthering the objects of a fast-track scheme.

[89]Mr Spencer submits on behalf of the DTI that the fees fixed by the judge's decisions are spectacularly large. He submits that the whole purpose of the FTO scheme was, as its name suggests (and as is common ground), to speed up compensation by making fast track offers and that the figures arrived at by the judge, namely £1,478 and £1,675, are startlingly close to the figures in the CHA for cases which go through the whole process. He also submits that, in the case of the live claims, no good reason has been given to explain why the figure should be greater than the figure of £1,009 for expedited offer cases. He submits that the judge has nowhere justified the actual figures at which he arrived.

[90]The solicitors submit, on the other hand, that the judge, who has unrivalled experience of this litigation which cannot possibly be matched by this court, has properly used the figures in the CHA as a starting point and, in the case of both live and deceased claims has compared the work which would be done under the unamended CHA and the work involved in considering an FTO and arrived at a fair figure in each case. In particular, in both classes of case he has taken account, not simply of the amount of work done, but also of the necessity to give appropriate advice to the claimants with all the responsibility that the giving of such advice entails. They submit that it was not possible to arrive at a fair figure on an arithmetical basis and that it was essentially a matter for judgment in circumstances in which the judge was in the best position to make a judgment. They say that it was in this sense that the judge used the word "intuition". It was not a guess but a qualitative evaluation of the various factors applied to the agreed figures in the CHA.

[91]There is in my opinion very considerable force in the solicitors' submissions. The judge was right to reject the submission that he should have assessed a figure on a bottom up basis without reference to the figures in the CHA. Those figures had been negotiated between the parties on a broad brush basis in 1999 and still had contractual effect in 2004, as they do today. It is not for the court to say that the bargain reached in 1999 was a good or bad bargain from the point of view of one side or the other. The judge was entitled to place considerable reliance on the agreed figures for the reasons he gave. The FTO was an amendment or a variation of the CHA. All the claimants had registered under the CHA before the cut-off date in March 2004. The solicitors had been engaged under the CHA and many of them had already done work under it. It has been famously said that in law context is everything. Here the broad context of the FTO was the BCRDL and its immediate context was the CHA, which was varied by the new scheme. In these circumstances the underlying approach of the judge was in my judgment correct.

[92]Were it not for one feature of the case, I would find it difficult to reach any conclusion different from those reached by the judge. However, that one feature is the reasons he gave for refusing the DTI's application for an adjournment of the deceased claims in order to enable more information to be provided and considered so that the court could be as fully appraised of the facts as possible.

[93]Mr Spencer submits that the judge erred in principle in refusing the application in that, having correctly held (on the assumption that the bottom up approach was wrong) that the information which the DTI sought was relevant or potentially relevant to the fixing of a fair figure, he wrongly held that the claimants would suffer prejudice by an adjournment on account of delay in circumstance where the claimants' claims would have been wholly unaffected by any delay. Mr Spencer points to the events which have occurred. He submits that in the absence of prejudice to the solicitors or claimants, the application of the overriding objective that cases should be dealt with justly should have led him to grant the application for the adjournment in order to enable the information and evidence to be collated and presented in a proportionate manner.

[94]I would accept the submission that delay would cause no injustice to the claimants. There was no reason why the claims themselves should not proceed. There was no suggestion that the solicitors would not process the FTO scheme before the costs were settled and they have indeed done so, notwithstanding these appeals. The solicitors themselves would not be prejudiced by delay which could not be compensated in costs. In these circumstances I have reached the conclusion that the judge misdirected himself in this regard.

[95]It appears to me much more likely than not that, but for the conclusion on prejudice, the judge would have viewed the matter differently. He was entirely right to criticise the DTI for failing to seek further information before 18 January but that failure could be met by an appropriate order for costs. If he was right to hold, as he did, that the information was potentially relevant to the fixing of a fair fee on the assumption that the exercise was not to arrive at a figure on a bottom up basis but using the CHA as a starting point, it seems to me that, notwithstanding the failings on the part of the DTI, the just course was to grant the adjournment.

[96]Moreover, in my opinion he was right to regard the actual facts as potentially relevant. Although the starting point was the figures in the CHA, the CHA had been negotiated in 1999 and this new work was to be done in 2005 and thereafter. The parties did not specify the basis on which the fees should be fixed. They were at large. In these circumstances the court should in my view in principle consider all the circumstances of the case, including what grades of fee earners would be likely to be used and their costs. The answers to these questions could properly be informed by what the solicitors had actually done under the CHA and who had carried out the work. To my mind the information sought in the letter of 18 January was not unnecessarily burdensome, or at least it would not have been if the solicitors had been given enough time to obtain it. It could then have been collated and presented to the court, so that the court would have a proportionate amount of evidence to assist in it arriving at a fair figure.

[97]It is not possible to say how such evidence would have altered the result, if at all. However, it is in my opinion sufficient for present purposes to say that there is a real prospect that it would have done. As indicated in the course of the narrative set out above, the judge was not able to justify the figure he arrived at in either the live or the deceased cases arithmetically. It is not clear to me how the judge's view that £1,675 was about three times the figure of £561 helps. As the judge himself recognised, he had to fix the figure by intuition or (it might be put) instinctively or qualitatively. If no relevant evidence were available beyond the figures in the CHA and the nature of the work apparently required under the FTO scheme by comparison with the unamended CHA, I can well understand that he may have had no alternative; but it seems to me that it may be much easier to fix a fair figure in the light of the kind of information which the DTI sought in the letter of 18 January.

[98]I recognise that the DTI ultimately decided not to put before the court the evidence it did have from Ms Loadsman and the Cost Advocates. It appears to me that that decision was mistaken. But for the conclusion I have reached that an adjournment should have been granted, I would have regarded that as a very strong pointer against allowing the appeal but, given my view that the judge erred in principle in refusing the adjournment and, given my further conclusion that there is a real prospect that the result might have been different, I have reached the conclusion that the appeals in the deceased cases should be allowed.

[99]I should emphasise that in allowing the appeal and remitting the matter to the judge, I am not saying that the judge's figure was wrong, simply that, as he himself accepted in principle, if the court has the means to proceed in an evidenced-based fashion, it should do so. Since I have concluded that it can do so without prejudice to the claimants and without prejudice to the solicitors which cannot be compensated in costs, it appears to me that the just (and proportionate) result is to remit the matter to the judge to determine the matter after hearing appropriate evidence. In deciding whether a remission is appropriate, it seems to me to be legitimate to have regard to the very large sums that are potentially at stake in this most unusual case.

[100]The question then arises whether the appeal should be allowed in the live cases too. I entirely understand the submission that the DTI did not attempt to obtain further information of the kind which they later sought to obtain in respect of the deceased claims in their letter of 18 January and that it should not be permitted to do so now.

[101]However, I have nevertheless reached the conclusion that the just result would again be to allow the appeal and remit the live cases too to the judge for determination on the basis of similar information to that sought in the cases of the deceased claims. The reasons that have led me to that conclusion are essentially these.

[102]The issues in the live and deceased claims are not dissimilar. They both involve a similar amendment or variation of the CHA. In principle it would be appropriate for both to be determined on the basis of relevant evidence. In the live claims the type of further information would be much like that in the deceased claims. In arriving at his figure of £1,478, it appears from the transcript of 18 November that the judge used some figures. In the transcript, having referred to six hours in expedited settlement cases and eleven hours in MAP settlements, he said:

"My decision is that the fast-track offer cases should attract costs of £1,478 plus VAT on a notional estimate that there will be an average saving in two hours work in these cases."

In that sentence the judge was saying that he arrived at £1,478 "on a notional saving in two hours work". Thus on the face of it he was saying that he used that saving as an aid to the determination of his figure. It is possible that that is misreading his ruling because, as indicated earlier, no-one has been able to explain the relevant arithmetic and the judge himself said in his judgment on the deceased claims on 16 February that a misunderstanding had led to the suggestion that in his live case ruling he had sought to attribute a specific number of hours to a fee earner of a particular grade. It thus appears, as I have already said more than once, that the judge reached his conclusion by intuition or instinct or qualitatively, using the figures only as a cross-check. Nevertheless the problem remains that it is not clear from the judge's reasons what cross-check he carried out and no-one has been able to say what it was. That does not seem to me to be satisfactory in a case in which so much money is potentially at stake.

[103]There is a further curious feature to the live claims, to which I referred earlier. It is that, whereas on 18 November he said that he would give a ruling on 3 December and that his ruling on 18 November was a preliminary ruling, when he was asked to defer giving a ruling or reasons on 3 December pending the evidence which it was proposed to put before the court in respect of the deceased claims, he said that his ruling on 18 November was an actual and not an indicative ruling and declined to defer the matter. Although I am not sure that that was pointed out to the judge at the time, it can to my mind be seen from the fact that on 18 November the ruling was expressed to be preliminary that it was wrong to describe it as an actual and not an indicative ruling. If he had recalled (or been reminded) of the way he had put it on 18 December, it may well be that he would have acceded to the DTI's request, since (for the reasons given above in respect of the deceased claims) there was no necessity for the fees to be fixed for the live claims before the deceased claims.

[104]There is a further matter of concern to which I referred earlier. The judge said that the solicitors would face a conflict of interest if the FTO fees were fixed at a much lower figure than they would be paid under the CHA if the FTO were rejected. On a comparison between the parties' respective cases, the DTI's figure of about £500 was about a quarter of that contended for by the solicitors. The judge said that it would not be right to place solicitors in a position in which there was or would be such a naked conflict of interest. He said that at the end of paragraph 33 of his reasons. In the next sentence, which was at the beginning of paragraph 34, he said that in reaching his conclusion on 18 November he took into account "the reasons which I have set out above". That can only be read as including what may be called the naked conflict of interest point.

[105]It is fair to say that the judge had said in paragraph 32 that nothing he said was to be taken as a reflection adverse to solicitors in general or the CG in particular. Nevertheless, I am of the clear opinion that if, as appears to be the case, the figure he fixed was greater than it would otherwise have been because of the naked conflict of interest point, he took into account an irrelevant consideration and thereby erred in principle. Indeed I do not think that it was contended on behalf of the solicitors in this appeal that such a consideration was other than irrelevant in law.

[106]In these circumstances the way in which the judge reached his conclusion, both in refusing to defer the matter and in fixing the figure, was flawed, and the right course is to allow the appeal in the live cases too and remit the matter to the judge. I only add that it does not follow that the figure was itself wrong. What an appropriate figure will be is a matter for the judge after considering such further information as is put before him. It does appear to me that, in reaching a figure, it might be helpful to compare the work done and advice to be given in an FTO case with the position in the case, not only of an MAP settlement, but also of an expedited settlement.

Conclusion

[107]This is a most unusual case, in which I am conscious of the fact that, if the appeals are allowed, we will be interfering with the decision of a judge of very great experience, not only generally but also of this litigation and of the CHA and the FTO scheme. Nevertheless, for the reasons I have given I would allow the appeals and remit the matter to the judge.

[108]Finally, although we have not heard argument on costs, my provisional view is that, notwithstanding the fact that the appeals are allowed, we should order the DTI to pay the costs of the CG and the UDM. It was always contemplated that the DTI should pay the costs before the judge. If the DTI had prepared its case properly before the judge both in respect of the live claims and the deceased claims, it would have decided at the outset what further information it required and sought (and, in the absence of agreement, no doubt obtained) an order for it well in advance of a hearing to assess the costs of both types of claim. The whole matter would then have been resolved without the necessity for an appeal. In these circumstances my provisional view is that, exceptionally, costs should not follow the event but be paid by the DTI.

LORD JUSTICE BROOKE: I agree.

LORD JUSTICE NEUBERGER: I also agree. (Submissions on costs)

SIR ANTHONY CLARKE: As to the costs, on reflection it appears to me, and indeed to my Lords, that the provisional view expressed in my judgment is unduly unfavourable to the DTI and unduly favourable to the respondent solicitors. The reasoning in it would certainly have led to the conclusion that the DTI should pay the costs in the court below, notwithstanding the fact that the solicitors resisted the application for an adjournment. However that is not a live point since the DTI concedes that it should pay the costs in the court below.

[112]So far as the appeal is concerned, we have reached the conclusion that the same approach would be too harsh. It is true that in one sense the DTI had brought the whole problem on its head by failing, to put it colloquially, to get its act together promptly in the court below. However the appeal has succeeded and the solicitors chose to resist the appeal. We have reached the conclusion that, because of the exceptional circumstances of the case, it would not be appropriate to order the solicitors to pay the DTI's costs of the appeal. On the other hand we think that it would be wrong for the DTI to pay the costs. The fair order would be no order for costs of the appeal. Appendix A Appendix B