Lord Chancellor v Rees & Ors [2008] EWHC 3168 (QB)

[2008] EWHC 3168 (QB)Case No T2002/7230; T2003/7049;T2003/7164; T2003/7169; T2003/7170
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
Venue Royal Courts of Justice, Strand, London, WC2A 2LLDate 19 December 2008
Before
SIR CHARLES GRAYSitting as a Judge of the High Court
Between
The Lord ChancellorAppellantJohn Charles Rees QC and othersRespondents
Mr Clive Lewis QC & Mr Vikram Sachdeva(instructed by Treasury Solicitors) for AppellantMs Clare Montgomery QC & Mr Andrew Post(instructed by Irwin Mitchell) for RespondentsMr John Rees QC in person for in personHearing Hearing dates: 12-13 November 2008
JudgmentSir Charles Gray:Introduction
[1]This is an appeal by the Lord Chancellor against decisions of Costs Judge Rogers dated 28 January 2008 in relation to the basic fees allowed to fifteen counsel (who are the Respondents to the appeal). The Respondents acted for defendants in criminal proceedings arising out of a large Missing Trader Intra Community VAT fraud.[2]The Respondents were all instructed under public funding pursuant to the Criminal Defence Service (Funding) Order 2001 (2001 SI No. 855) (“the 2001 Order”). The basic fees payable to the Respondents were subject to ex post facto assessment, that is, the basic fees fell to be assessed retrospectively.[3]In the view of the Lord Chancellor these appeals raise questions of very significant public importance in relation to the manner in which Determining Officers should assess criminal lawyers’ fees on an ex post facto assessment and in particular whether and, if so, to what extent it is appropriate for reference to be made to the general market in criminal lawyers’ fees as a cross-check that the fee proposed is not out of kilter with market forces.[4]I was told that, although ex post facto assessment of basic fees was phased out pursuant to the Criminal Defence Service (Funding) Order 2007 as of 30 April 2007, there remains potentially up to £100,000,000 worth of ex post facto claims on behalf of counsel which remain to be determined.

Is permission to appeal required?

[5]I should deal first with a preliminary point which arises, namely whether the Lord Chancellor requires permission to appeal in this case. I can deal with it briefly because neither Miss Clare Montgomery QC, who appears on behalf of the Respondents with Mr Andrew Post, nor the first Respondent, Mr John Rees QC, who has made submissions on his own behalf, has sought to contest the Lord Chancellor’s right to appeal.[6]Ordinarily permission to appeal from a decision of a Costs Judge under the 2001 Order would be required because such an appeal falls under the regime of Part 52 of the Civil Procedure Rules 1998. However, as I read paragraph 22(5) of the CDS Order 2001, the Lord Chancellor may appeal to the High Court against the decision of the Costs Judge without permission. I am fortified in that view by the fact that the Senior Costs Judge, Master Hurst, arrived at the same conclusion in Frieze v Lord Chancellor, 15 March 2007, unreported.[7]That said, it appears to me to be incumbent on the Lord Chancellor in any appeal to the High Court to identify some question of law or of principle which arises, since the High Court would be slow to differ from the assessment of a costs judge on an issue of fact or judgment: see Sharratt v London Central Bus Company [2004] EWCA Civ 575, per Buxton LJ at [46].[8]I also bear in mind that an appellate court should only interfere when they consider that the judge of first instance has not merely preferred an imperfect solution but has exceeded the generous ambit within which a reasonable disagreement is possible: Tanfern v Cameron-Macdonald [2000] 1 WLR 1311, per Brooke LJ at 1317D-F. See also the observations of Buckley J in Mealing McLeod v Common Professional Examination Board [2000] 2 Costs L.R. 223.

The criminal trials

[9]I can deal quite shortly with the criminal trials in which the Respondent counsel were instructed. The VAT fraud was split into two trials by order of Leveson J. There was a series of preparatory hearings which commenced on 28 July 2003. The first trial was due to start on 3 May 2004 but that and two succeeding fixtures were broken. The first trial eventually started on 4 April 2005 but the jury in that trial was discharged on 5 April 2005. A second jury was sworn in but that jury was also discharged on 5 May 2005. The trial re-commenced on 9 May 2005 and ran until 28 August 2005 when the jury was again discharged because of allegations of jury tampering. The trial re-commenced on 26 September 2005 and ran until 12 June 2006. There were three sentencing hearings. The second trial was originally fixed to commence on 10 September 2004 but that date and three later dates were broken. The second trial eventually started on 4 September 2006 and the jury returned its verdict on 4 April 2007.[10]The sequence of events in both trials is of importance because it demonstrates that the proceedings were frequently disrupted and unusually lengthy. It is also important to note that the case was complex and document heavy. The Crown relied on documents running to 50,000 pages. A further 89,000 pages were provided to the Defence as voluntary disclosure. There was a three-day abuse of process hearing.[11]It is also to be noted that in the first trial there were five effective defendants, of whom one was acquitted and the other four convicted. They received sentences ranging from ten years six months to six years. In the second trial there were eight effective defendants who received sentences ranging from eight years to four years six months. I mention these sentences because they give some indication of the seriousness of the fraud in which the convicted defendants had been engaged.

The procedural history

[12]The Determining Officer in the case of each Respondent was Mr A.E. Hoyles of the National Taxing Team. His written reasons included a brief case summary of the VAT fraud and the resulting loss of tax to the Inland Revenue which was estimated to be in the region of £20,000,000. He noted that the fraud lasted between the beginning of September and the end of November 2000. He described the roles played by the various defendants in the fraud. He summarised the central theme of the defence case as being that the prosecution had misunderstood the nature and extent of the fraud which, according to the defendants, was likely to have been controlled by other individuals and companies who were not before the court.[13]The Determining Officer gave an account of the numerous pre-trial hearings and the numerous fixtures which were broken. He referred to the fact that, as the case expanded, it was referred to the Very High Cost Cases (“VHCC”) Unit but that the Unit declined to contract the case because, as we understand it, the Unit was still in the process of being set up.[14]Thereafter the Determining Officer gave reasons for his conclusion that the basic fees claimed by each of the Respondents should be reduced to figures allowing reasonable amounts for all the work actually and reasonably done by them. In arriving at his conclusion the Determining Officer took some account of both the fees paid to prosecuting counsel and the rates which would have been payable to the Respondents if the case had been accepted by the Legal Services Commission under the VHCC Scheme (which it was not). The Determining Officer did not include in his reasons any reference to the Graduated Fee Scheme (“GFS”) as being a comparator.[15]The overall conclusion of the Determining Officer in the cases of all of the Respondents was that the basic fees claimed by them were “wholly unsupportable”.

The judgment of the Costs Judge

[16]In paragraph 30 of his judgment the Costs Judge identified the four issues of principle as being: a) the relevance of the Appellate Committee of the House of Lords Report on the Clerk of the Parliament’s Reference regarding criminal legal aid taxation [2000] 1 Costs L.R. 7 (“The House of Lords Report”); b) the guidance which a Determining Officer may gain from a comparison with prosecution fees; c) the extent to which a Determining Officer may take account of payments that might have been made under the VHCC Scheme or GFS and d) the issue of “lost work”.[17]I shall have to return in due course to the judgment which is the subject of the present appeal. For present purposes it will suffice if I summarise the way in which the Costs Judge dealt with those four issues as follows: a) He held that the House of Lords Report related solely to the proper quantification of brief fees for appeals to the House of Lords in criminal cases and doubted whether the House was purporting to lay down any general principles. He rejected the submission that the House of Lords Report should be used as a cross check and concluded that such a comparison was not of any value. He did not believe that the House was directing its mind to the sort of case with which the appeals before him were concerned. b) As regards the submission on behalf of the Lord Chancellor that the fees payable to the Respondents should be compared with the fees paid to the Prosecution as another cross check, the Costs Judge pointed out that prosecuting counsel’s fees are almost invariably agreed on the basis of an hourly rate multiplied by whatever number of hours is considered to be reasonable. He concluded that, whilst he could not say that no comparison can ever be made between prosecution and defence counsel’s fees, a true comparison might well only be possible in a “one on one situation”. c) In regard to the submission that the Respondents’ basic fees should be compared with fees payable under the GFS and the VHCC Scheme, the Costs Judge accepted the submission of counsel for the Respondents that neither scheme was relevant or of any assistance. d) Finally the Costs Judge, whilst accepting that he could not depart from the proposition that counsel can only properly be paid on the brief for the work that he has undertaken in relation to the case in question, expressed the view that this consideration does not preclude a Determining Officer in an appropriate case from taking into account the disruption to counsel’s professional practice which constant postponements and the premature termination of the first trial had involved.[18]The Costs Judge went on to deal with the individual appeals of the Respondents. In each case he increased the basic fee payable by significant amounts.

The legislation and guidance

(a) The legislation and guidance

[19]It is common ground that the legislation in force at the relevant time was the Criminal Defence Service (Funding) Order 2001 (2001 SI No. 855) (“the 2001 Order”). Schedule 1, paragraph 1(2) states the general principles applicable to determination by the appropriate officer: In determining costs, the appropriate officer, subject to the provisions of this Schedule,(a) take into account all the relevant circumstances of the case, including the nature, importance, complexity or difficulty of the work and the time involved; and(b) allow a reasonable amount in respect of all work actually and reasonably done.[20]Paragraph 15(1) provides that the appropriate officer shall consider the claim, any further particulars and information submitted by an advocate under paragraph 14 and any other relevant information and shall allow such work as appears to him to have been reasonably done.[21]Provision is made for an appeal by a representative who is dissatisfied with the decision of the appropriate officer to appeal to a Costs Judge (paragraph 21(12)). An appeal against the decision of the Costs Judge lies to a High Court Judge who sits with Assessors, as I have done in the present case (paragraph 22). The Judge’s decision is final.[22]The Taxing Officer’s Notes for Guidance 2002 (“TONG 2002”) list at paragraph 1.11 the factors relevant in every case in determining the reasonable amount within Schedule 1 paragraph 1(2)(b) of the 2001 Order as follows: a) the importance of the case, including its importance to each defendant in terms of the consequences to his livelihood, standing or reputation even where his liberty may not be at stake; b) the complexity of the matter; c) the skill, labour, specialised knowledge and responsibility involved; d) the number of documents prepared or perused with due regard to difficulty and length; e) the time expended; and f) all other relevant circumstances, including hotel and travelling expenses, where appropriate.

The issues arising on this appeal

[23]It is plain that the obligation of the Determining Officer is to allow a reasonable amount for all work actually and reasonably done by the legal representative. No-one doubts that that is his obligation. The broad question which arises on this appeal is how he should set about that task and more particularly whether it is appropriate for the Officer to carry out checks for determining whether the sum envisaged as the basic fee payable to the legal representative is within a reasonable range of fees by cross-checking that sum against(i) VHCC rates,(ii) prosecution fees and(iii) graduated fees.[24]The contention advanced by Mr Clive Lewis QC, who appears on this application with Mr Vikram Sachdeva for the Lord Chancellor, is that the need for cross checks is inherent in the concept of a “reasonable amount”, otherwise there can be no assurance that the figure which an individual Determining Officer has arrived at is within the range of reasonable fees. In support of his contention that such cross checks are not only legitimate but necessary, Mr Lewis relies on the House of Lords Report referred to at paragraph 16 above. He submits that the Costs Judge was wrong to decline to consider as comparators VHCCs, prosecution fees or the GFS. He was further in error when he described the assessment of ex post facto fees as requiring a “value judgment” on his part. As to the question whether “lost work” is to be taken into account, Mr Lewis argues that no allowance can legitimately be made for other work which could have been done by the legal representative concerned but which was not done by him or her. Lost work is merely part of the background factual matrix.[25]Miss Montgomery accepts that the reasonable basic fee under the 2001 Order is, to quote the words of Pennycuick J in Simpsons Motor Sales v Hendon Corp [1965] 1 WLR 112 at 118E, the fee that “an hypothetical counsel capable of conducting the particular case effectively but unable or unwilling to insist on the particularly high fee sometimes demanded by counsel of pre-eminent reputation, would be content to take on the brief, but there … is no precise standard of measurement”.[26]Miss Montgomery identifies the issues in this case as being whether and, if so, to what extent the following factors are relevant: a) the level of fees paid to criminal counsel under the graduated fee scheme; b) the fees paid under VHCC Individual Case Contracts and c) the level of fees paid to prosecution counsel.[27]As to the relevance of graduated fees, Miss Montgomery points out that the GFS was confined to cases involving a relatively short court commitment that will be completed within a finite period. She argues that no comparison can be made between that type of work and serious, complex fraud work such as that involved in the instant VAT fraud case. The type of work which experienced fraud counsel, such as the Respondents on this appeal, would undertake would not include graduated fee work. A more reliable comparator for such work would be the complex fraud work which often involves private funding.[28]Miss Montgomery suggests that the argument advanced on behalf of the Lord Chancellor on the present appeal is an attempt to impose the GFS by stealth on the Bar in circumstances where unprecedented cuts to the levels of graduated fees have already been forced through by the Lord Chancellor. It is submitted that it is obviously inappropriate to seek to make a comparison with a scheme that makes no or limited payment for many of the most significant elements in preparing for a long trial. Graduated fee work, like appellate preparatory work, takes place over a comparatively compressed time span. The period of professional commitment for advocates carrying out such work is correspondingly abbreviated. It is submitted that the Lord Chancellor has utilised the provisions of the Access to Justice Act, 1999 and the Legal Aid Act, 1988 to drive down the fees payable under the GFS. The present appeal represents an attempt to effect a similar reduction in fees in ex post facto cases.[29]As to the suggestion that the VHCC scheme is an appropriate comparator, Miss Montgomery says that the effect of the criteria and rates contained in the scheme has been to deliver a reduction of up to 60% to defending advocates and a reduction of up to 40% to prosecuting advocates conducting cases within the scheme. She points out that the instant cases were identified to the Complex Crime Unit at the Legal Services Commission but in the event were not contracted. That being so, it would be wrong now to impose the unilaterally reduced VHCC rates. Had the cases been contracted, many of the respondents would have refused the work. Moreover the Respondents have not enjoyed any of the benefits of the VHCC scheme, including for example the early and regular payment for work done and certainty as to what is required by way of preparation.[30]Miss Montgomery accepts, in the light of authority, that the regulations do not preclude a comparison being made between the Respondents’ basic fees with the fees payable to prosecuting counsel in the case but she contends that this should be subject to a number of caveats. The basis upon which prosecuting counsel are generally remunerated is by multiplying the number of hours worked by an hourly rate. Furthermore, whilst the task of a prosecutor may be more onerous in cases where there are multiple defendants, prosecuting counsel (unlike defending counsel) generally has the assistance of a large team of professional investigators as well as support lawyers. Moreover, according to the Respondents’ argument, there is no reason why the level of fees payable in the private sector for serious or complex fraud cases should not be taken into account when assessing costs payable in the publicly funded sector.[31]In regard to lost work Miss Montgomery maintains that, in the unusual circumstances surrounding the trials in the present case, which included several aborted trials and counsels’ diaries being blocked out for a substantial period before the first trial eventually commenced, it was legitimate for the Costs Judge to take these factors into account as a relevant factor.[32]Finally, Miss Montgomery suggests that her clients had a legitimate expectation that the Lord Chancellor would consult the Bar before making the significant changes to the basis on which criminal barristers and advocates are remunerated. The case advanced on behalf of the Lord Chancellor on the present appeal, if upheld, would constitute such a significant change and the Bar has not been consulted about it. Whilst Miss Montgomery does not suggest that her clients would be able to seek judicial review, she does submit that this is a further reason why the Lord Chancellor should not be permitted to achieve a significant reduction in the basic fees payable to defence counsel in publicly funded ex post facto cases.

Submissions of Mr John Rees QC

[33]In his submissions Mr John Rees QC was understandably concerned with the amount of the fees to which he claims to be entitled. In his case the claim was for a basic fee of £550,000 for the 1,343 hours which, as was accepted, Mr Rees spent on the case. Costs in his case were assessed by the Determining Officer at £225,000. The Costs Judge increased the appropriate level of basic fee to one of £300,000.[34]Mr Rees contends that the amount allowed by the Costs Judge was on any view reasonable and that the appeal in his case should be dismissed forthwith. He pointed out that lost work had never been part of his claim and that the number of hours worked was accepted.[35]Mr Rees adopted the submissions made by Miss Montgomery. Both in his helpful written skeleton argument and in his oral submissions Mr Rees elaborated on some of the submissions previously made. He contended that, if comparison were to be made to VHCC fees, there should be an uplift of 40% in those fees to take account of the fact that costs have been driven down, as he put it, by the Lord Chancellor by that percentage amount. He also pointed out that if one multiplies the number of hours spent by him (1,343) by £221.25 (being the hourly rate allowed to prosecution counsel), the resulting figure of £297,146 comes close to the figure awarded to him by the Costs Judge. His fee was not, he maintained, out of kilter with the fees he would have received under the comparators sought to be relied on.

The requirement of reasonableness

[36]As Mr Lewis rightly emphasises, the overriding requirement is that the fees payable to counsel should be reasonable. I have already set out in paragraph 19 above, the general principles applicable to the determination of costs by the appropriate officer: he is required, having taken into account all the relevant circumstances of the case, to allow a reasonable amount in respect of all work actually and reasonably done. Paragraph 15(1) of the 2001 Order requires the appropriate officer to allow such work as appears to him to have been reasonably done: see paragraph 20, above.[37]Further guidance as to the factors which are relevant in deciding what is the reasonable amount are to be found in paragraph 1.11 of TONG 2002, which I have quoted in paragraph 22 above. Those are the factors which the Determining Officer should take into account in every case. Part II addresses specifically counsel’s ex post facto fees. Paragraph 2.2 reiterates the criterion of reasonableness both in relation to the amount of work undertaken by counsel and in relation to the fees appropriate to counsel of the standing reasonably necessary to have undertaken the case in question. Paragraph 2.6 of TONG 2002 deals with assessing the basic fee which commences with the following words:
“Knowing the facts and circumstances of the case and having assessed the weight of the case, the basic fee is assessed by reference to similar cases and the fees allowed thereon, the number of hours (if accepted) spent in preparation and by reference to the limits allowed by the Legal Aid Regulations…”
[38]Paragraph 2.7 of TONG 2002 requires the Determining Officer, in the exercise of his discretion, to determine a sum which, with the refreshers and any subsidiary fees he considers proper, would provide “reasonable remuneration”. Paragraph 2.8 adds that, whilst the duration of a trial may reflect the weight of the case, it does not follow that “the longer the trial, the bigger the brief fee”. If the elements of weight and complexity normally inherent in a longer trial are absent, a lower basic fee may be appropriate.

The Use of Comparators

[39]The touchstone in assessing basic fees payable to counsel in ex post facto cases is, as one might expect, reasonableness. Guidance is given both in the 2001 Order and in TONG 2002 as to how a reasonable amount is to be arrived at. The broad question which arises on this appeal is whether it is permissible for a Determining Officer, having arrived at what he considers may be a reasonable figure for counsel’s basic fee, to take into account by way of a cross check comparators, that is the costs figures payable to advocates in cases other than ex post facto cases.[40]The contention on behalf of the Lord Chancellor is that it is not only legitimate but also necessary, at least in many cases, for a Determining Officer to take into account as comparators the fees payable to counsel in other classes of criminal cases, namely VHCC rates, prosecution fees and graduated fees payable under the GFS. The argument on behalf of the Respondents is that the reasonable amount to be paid to counsel by way of basic fees in ex post facto cases falls to be determined by reference solely to the provisions of the 2001 Order and more particularly the factors mentioned in TONG 2002. The position of the Respondents is that the use by the Determining Officer of any of the proposed comparators is illegitimate and impermissible. The Respondents say to do so would not be comparing like with like.

The House of Lords Report

[41]In support of his contention that comparators may be used by Determining Officers by way of cross checks, Mr Lewis relies on the House of Lords Report referred to at paragraph 16 above. There was some debate in the course of the argument as to the exact status to be accorded to a Report of the Appellate Committee of the House to Parliament. It is obviously not binding in the same way that a decision by the Appellate Committee in a particular case would be binding. But it is not necessary to dwell on the point because it is, I believe, common ground that it is legitimate for reference to be made to the terms of the Report and that weight should be attached to the contents of the Report because of the standing of its authors. I shall have to return later in this judgment to the question whether the contents of the House of Lords Report have in effect been overtaken by subsequent events.[42]Miss Montgomery maintains that the Report should not be read as having any application to ex post facto fees and that the comparators considered in the House of Lords Report are both inapposite and apt to mislead.[43]Whether that submission is correct must depend in large part on the language used in the House of Lords Report. But in my view it is necessary also to take account of the circumstances under which it came into existence. In their recent book entitled “Criminal Costs – A Practical Guide”, published in 2007, Senior Costs

Judge Hurst and Mr Andrew Keogh say:

“In spite of the authorities’ steadfast acknowledgement of the tax - payer’s interest in legal aid cases, and a widening gap between and publicly and privately paid fees, the perception grew that, in the larger cases above all, criminal barristers’ legal aid earnings had become excessive. ... Matters came to a head in 1998 with the publication of a report by the Appeal Committee of the House of Lords in which fees allowed to barristers for conducting appeals to the House – self-evidently important and difficult work – were critically reviewed…”
[44]Having considered the terms of the House of Lords report, I have come to the clear conclusion that the observations made in the report were not intended by the authors to be confined to appeals in criminal cases to the House of Lords or for that matter to the Court of Appeal. My conclusion is based on the following considerations. Firstly, the authors say in paragraph 11 that they agree that the principles applicable in other courts under the regulations are equally applicable to criminal legal aid taxation in the House of Lords. It is made clear in paragraph 21 that the purpose of the Report is to give general guidance to the Taxing Officer and the Clerk of the Parliaments. However the authors add: “…but it may indirectly affect the approach to taxation of such costs in the lower courts, since it is common ground that the principles applicable in this House are the same as in the lower courts”.[45]Rejecting the submission of counsel for the Bar Council that the Appellate Committee should not give guidance, the Report refers to public concern about the cost of legal aid and in particular about the rate at which counsel were being remunerated out of public funds. The authors say that there are certain matters of basic approach which can usefully be addressed.[46]Having noted that the test is one of “reasonableness”, the Appellate Committee observe that it is manifest that widely differing views are entertained as to what is “reasonable”. At paragraph 29 of the Report they say: “…there is, therefore, a real need to seek to find some clearer and more objective test of what could constitute ‘reasonable remuneration’. In the words of the written submission by the Law Society what is needed is to ‘identify a bench mark, that is an objective and rational criterion or set of rational and objective criteria according to which the actual rate payable can be determined’ ”.[47]The Appellate Committee rejects the submission that the “reasonableness” of fees in the public sector should be fixed by reference to(a) fees obtainable by counsel in the private sector,(b) a reasonable annual income or(c) a remuneration paid out of public funds to e.g. doctors. However, the authors state that in the course of the hearing, various other ways of assisting in fixing “reasonable” remuneration were considered and expressed the opinion that some of these are of considerable importance (see paragraph 31). Reference is then made to the system of graduated fees introduced by amendments to the 1989 Costs Regulations, 1996 and 1997. Observing that everybody accepts that in making the Regulations the Lord Chancellor complied with the statutory duty of taking into account the general level of fee income which would be produced by the fees to be allowed, the Appellate Committee concludes that there was for the first time a quantification of what constitutes reasonable remuneration for the purposes of legal aid in respect of the work which is covered by the GFS.[48]In relation to the GFS, the Appellate Committee expresses the view that the figures for 8-10 day trials did give some guidance as to the type of fee to be considered “reasonable” in moderately heavy and responsible cases. Therefore, the graduated fees provide a general indication of the range of appropriate fees. But the authors emphasised that in no way do the graduated fees provide the full answer but the graduated fee does provide helpful guidance as to what, in the context of legal aid, is reasonable remuneration for counsel (see paragraphs 35 and 36).[49]It appears to me from the passages which I have quoted that the Appellate Committee was not confining itself in its recommendations to the way in which costs should be assessed in the comparatively few criminal cases which come before the House of Lords. I think the Appellate Committee was addressing an issue which was at the time one of widespread public concern and that it was indicating authoritatively various ways of dealing with that problem, namely the use by taxing authorities (including Determining Officers) of comparators including fees payable under the GFS and in VHCC cases and fees payable to prosecutors.

Has the House of Lords Report been overtaken by events?

[50]The House of Lords Report is itself undated but it is accepted that it was published in 1998. Miss Montgomery submits that even if (which she does not accept) the House of Lords Report is authority or justification for the use of comparators, it should no longer be so regarded. As Mr Rees graphically put it, the Report was buried for some ten years before being resurrected on behalf of the Lord Chancellor for the purpose of effecting a further reduction in fees payable to the Criminal Bar. The Appellate Committee itself has said and done nothing to indicate that the contents of its Report are no longer to be followed. That, I readily accept, is by no means conclusive. I am not in a position to say how often the House of Lords Report has been referred to by Determining Officers or by Costs Judges since it appeared in 1998. I am not persuaded that events since 1998 are such as to render the guidance given by the Appellant Committee obsolete. I was told in the course of the hearing that the total cash spending on advocates in all Crown Court cases (including very high cost cases) increased by 78% from 1997-1998 to October 2005. It may well be that that substantial increase is at least in part the product of increasing numbers of long cases being prosecuted and the greater burden imposed on lawyers by reason of the ever-expanding volume of documentation and the proliferation of legal issues and tasks. But the concerns mentioned in the House of Lords Report seem to me to continue to be real ones.[51]Accordingly, I reject the submission that the House of Lords Report has been overtaken by events. It follows that in my opinion it is in principle legitimate to have regard to comparators as a means of cross-checking what amounts should be payable to counsel by way of ex post facto fees in criminal cases.

VHCC Cases

[52]I have concluded that it is “in principle” legitimate to have regard to comparators because I accept that there will be cases, perhaps many cases, where one or other, or perhaps all, of the comparators proposed on behalf of the Lord Chancellor will in the particular circumstances be inappropriate or even on occasion misleading. It is therefore necessary for me to consider the individual comparators, starting with fees payable in VHCC cases.[53]It so happens that this case was identified to the Complex Crime Unit as being suitable for a VHCC but was rejected. I am told that the reason for the rejection was that at that time the Unit was in the process of being set up and so was not in a position to accept this case. That fact of itself appears to me to afford some justification for using VHCC rates as a comparator.[54]The basis on which Miss Montgomery objects to a comparison being made with the fees which would have been payable under the VHCC scheme is founded upon the fact that the effect of the case categorisation criteria and the accompanying rates structure had the effect of delivering a reduction of up to 60% in the remuneration payable to defending advocates and a reduction of up to 40% in the remuneration payable to prosecution advocates. The consequence was that a decision was taken by the Bar Council that individual barristers should be free to decline work on VHCC cases. She tells me that if this case had been accepted as a VHCC, several of the silks whom she represents would have refused to act. In these circumstances the case for the respondents is that it would be unfair to permit the Lord Chancellor to apply the reduced rates now payable under the VHCC scheme in ex post facto cases, where the work was done between 2004 and 2007.[55]I am unable to accept that argument. In the first place it is not said and cannot be said that the trials which have given rise to these appeals were different in kind from cases which qualify for inclusion within the VHCC scheme. Moreover it has to be borne in mind that by virtue of Section 34(9) of the Legal Aid Act, 1988, the Lord Chancellor, in making regulations about legal aid work, was bound to have regard amongst other things to the cost to public funds of any provision made by the regulations. In addition the Access to Justice Act, 1999, provides by Section 25(3) that, when making any remuneration order relating to the payment of remuneration to barristers, the Lord Chancellor shall have regard to not only the need to secure the provision of such services but also the cost to public funds and the need to secure value for money. If, as I must assume, those considerations led to the introduction of the VHCC scheme, it might be thought to be anomalous that VHCC scheme cases should be disregarded when it comes to the assessment of basic fees payable in ex post facto cases.[56]As I have already said, however, a comparison with the fees payable in cases within the VHCC scheme may be inappropriate by reason of the particular circumstances of the ex post facto case under consideration. Furthermore, I repeat that the purpose of using a comparator such as fees payable under the VHCC scheme is to act as no more than a cross-check on a figure provisionally considered appropriate by the Determining Officer. The VHCC scheme remains separate and distinct from the category of cases where costs are assessed on an ex post facto basis.

Prosecution Costs

[57]The Appellate Committee in the House of Lords Report expressed the view at paragraph 37 that in appeal cases the fees paid to the prosecution ought to provide guidance as to the proper fee for defence counsel. The authors could see no reason why in general the fees paid to both sides in the same appeal and both out of public funds should be very different. Those words seem apt to apply also to trials.[58]In Lord High Chancellor v Wright [1993] 1 WLR 1561 the central issue was whether or not, when determining the fees of counsel under the Legal Aid Regulations, regard might be had to the fees paid to counsel for the opposing party to the proceedings, that is prosecuting counsel. Garland J having referred to the matters relevant in the assessment of costs, held that the Regulations did not preclude an appropriate authority or Determining Officer from looking at the fees paid to prosecuting counsel. He said that prosecuting counsel’s fees were part of the material upon which the exercise of Judicial discretion was based in determining reasonable remuneration or a reasonable amount. The Judge approved the approach that the Officer should first assess a reasonable fee in accordance with the Regulations and then have regard to the fees payable to prosecuting counsel and consider whether there is such disparity for which there is no explanation that it would be fair and reasonable to reconsider the assessment. Miss Montgomery accepts, as she must, this authority but contends that it is subject to several caveats. Firstly prosecuting counsel’s fees are invariably calculated by multiplying the number of hours used by an hourly rate. As is pointed out at paragraph 41 of TONG 2002, this will seldom be useful in taxing counsels’ fees. It is accepted on behalf of the Respondents that a prosecutor may have a more onerous task in a multi-handed case than do defending counsel representing individual clients but this is compensated for by the fact that prosecuting counsel in heavy fraud cases generally has the assistance of several professional investigators and supporting lawyers.[59]I think it will be legitimate in many cases for the Determining Officer to take account of the fees payable to prosecuting counsel. There are obvious differences between the role of a prosecutor and a defender, including the fact that the prosecutor may have the more onerous task in cases involving many defendants. There is also the consideration that as between defence counsel in multi-handed trials, the onus will generally be greater for those representing defendants at the top of the indictment. There is also a potential problem arising out of the fact that in some instances it will not be known how the prosecutor’s fees have been arrived at, for example because the number of hours taken is unknown. But, as it appears to me, these factors do not, either individually or cumulatively, amount to a good reason for rejecting the use of prosecuting counsel’s fees as a comparator. If in the particular case under consideration the Determining Officer feels that he cannot derive assistance from the amount paid to prosecuting counsel, then he can put it out of his mind. But there will also be cases, not in my judgment limited to one-on-one trials, where it will be useful for the Determining Officer to use the fees of prosecuting counsel as a comparator.

Graduated Fees

[60]At the time when the trials in the present case took place the GFS scheme extended only to trials of up to 25 days. This means that the usefulness of GFS fees as a comparator is very limited.[61]Now that the GFS covers all criminal work in trials of any length, the usefulness of that scheme as a comparator has increased somewhat. Whilst I cannot accede to the submission of Miss Montgomery that fees payable under the GFS should be disregarded by Determining Officers when carrying out their cross-checks, I do accept that considerable care will need to be used before placing any reliance on them as comparators. I say that because nowadays many fraud cases (including the present one) are exceedingly complex and accordingly take far longer to try. I also accept that the kind of counsel who are regularly engaged in serious and complex fraud trials are less likely to conduct short criminal work. Sometimes – and this may be a case in point – the differences between a GFS case and an ex post facto costs case will be so great as to be valueless as a comparator. But as I have said, there will be other cases where this does not hold true.

Privately-funded cases

[62]Notwithstanding the rejection by the House of Lords of the use of privately-funded cases as comparators, at least in the context of appeals, the second to fifteenth Respondents contend that it is appropriate to make a comparison between ex post facto fees and privately-funded work. Such a comparison would, it is true, be comparing like with like because it is accepted on behalf of the Lord Chancellor that similar problems of complexity, weight of documents and number of defendants arise in privately funded criminal defence work. I also accept that for various reasons the amount of such private work is on the increase.[63]I am nonetheless unpersuaded that it is legitimate to use privately funded cases as comparators in the assessment of publicly funded work. The reason is a simple one: privately funded criminal work is market-driven and is the subject of negotiation between the barrister’s clerk and those instructing him, whether they be privately instructed solicitors. By contrast publicly funded work is closely regulated and, as has been seen, the Lord Chancellor is constrained by the requirements contained in the Access to Justice Act, 1999. This appears to have been the view taken by the authors of the House of Lords Report: see paragraph 30. For these reasons I do not accept that privately-funded fees should be used as comparators.

Lost work

[64]A further point which arises is whether counsel in criminal cases subject to ex post facto assessment can recover additional remuneration for other professional work lost as a result of his or her involvement in the instant case. As is pointed out on behalf of the Respondents, counsels’ commitment of time in the present case was very significant because of the numerous abortive trials as well as the length of the eventual effectual trials.[65]It is common ground between the parties that the answer to this question turns on the correct interpretation of Loveday v Renton (No.2) [1992] 3 ALL ER 184. In that case Hobhouse J had to deal with an appeal by way of review of a taxation by the Master of the bills of solicitors and counsel who had acted for the plaintiff in a civil action under legal aid certificates. The basis of taxation was that “there shall be allowed a reasonable amount in respect of all costs reasonably incurred”: see RSC O 62r 12(1). When considering the brief fees in the case, the judge pointed out that counsel had correctly argued that they were retained from an early date and were originally expecting a trial in 1986 or early 1987 and consequently suffered as a result of the successive adjournments of the case. He added: “But the brief fee can only remunerate counsel for the work done on the brief delivered and lost opportunities can only be taken into account as a general background fact to the level of barristers’ fees overall in the same way as their overhead expenses and lost time. It is however legitimate for counsel, once his brief has been delivered and accepted, to point to the commitment of time that it involves both for preparation and in the reservation of time for the trial. In assessing the brief fee one also has to take into account what will be earned by way of refreshers and what will be the totality of the work that will be required from counsel in the proper discharge of their obligations to protect the interests of their client and the extent to which that work will not be separately remunerated”.[66]Miss Montgomery in her submissions emphasised the judge’s reference to “lost opportunities” being taken into account “as a general background fact”. As it appears to me, however, those words must be considered in the context of the entire paragraph quoted above. The judge states clearly that the brief fee can only remunerate counsel for the work done on the brief delivered. I do not think that the judge’s words can be taken to mean that lost opportunities can be taken into account as an additional and separate item to be added on to compensate counsel for briefs which he has had to return or briefs which he might have been offered but for his prolonged involvement in the present cases.[67]I would only add that calculating the value of lost time would be a formidably difficult task and would represent a not insignificant additional burden for the Determining Officers.[68]Moreover in my judgment it is plain from the wording of paragraph 1 of Schedule 1 to the 2001 Order that the costs to be determined are the costs of “work done” under the relevant representation order and that the appropriate officer is confined to taking into account all the relevant circumstances “of the case” and that the amount to be allowed must relate to work “actually and reasonably done” in that case.

Legitimate Expectation

[69]I turn to the contention on behalf of the Respondents, that there was a legitimate expectation that the Lord Chancellor would consult the Barbefore makingsignificant changes to the basis on which criminal barristers and advocates are remunerated. I accept that there has been no consultation with the Bar; nor has there been any announcement heralding the changes.[70]R (on the application of Bhatt Murphy and ors) v The Independent Assessor and ors [2008] EWCA Civ 755 is authority for the proposition that the doctrine of legitimate expectation will apply in circumstances where a proposed change of policy or practice by a public decision – maker is held to be unfair or an abuse of power; see paragraph 28 of the judgment of Laws LJ. The question therefore arises whether the Lord Chancellor is changing an established policy or practice by reason of the arguments advanced on his behalf on the hearing of this appeal.[71]I would answer that question in the negative. The general principles applicable to the determination of fees are still to be found in the 2001 Order. The factors relevant in determining the reasonable amount of such fees remain those contained in TONG 2002. The contention advanced on this appeal by Mr Lewis is that it is both legitimate and necessary for certain checks to be carried out to ensure that each figure arrived at by the Determining Officer is within the range of reasonable fees. It cannot in my judgment be said that the exercise of carrying out a cross-check by reference to comparators amounts to a change of policy or practice such as to engage the doctrine of legitimate expectation. The remuneration payable to Mr Rees QC.[72]I have hitherto been addressing the submissions of Miss Montgomery which were adopted by Mr Rees. I have referred at paragraph 35 above to the additional submissions made by him and to his invitation to me to dismiss the appeal in his case.[73]I have come to the conclusion that I must decline that invitation. My reasoning is as follows: I have accepted that it is legitimate for a Determining Officer to carry out cross-checks against certain comparatorswhen deciding the reasonable remuneration payable in a particular case. The Costs Judge in the present case declined to take that course in the case of Mr Rees just as he declined to do so in the case of the other Respondents.[74]I do not feel able to say in the case of Mr Rees that the increase in his fees allowed by the Costs Judge was justified in circumstances where I have held that the Judge’s approach was an erroneous one. I therefore allow the appeal in the case of Mr Rees. I make clear, however, that I accept that it may well be that, when his remuneration comes to be re-considered on a proper basis, the level of the basic fee payable to Mr Rees as determined by the Costs Judge may be upheld.

Conclusion

[75]It will be apparent from what I have already said that I have concluded that the Costs Judge in the present case fell into error in the way he dealt with the four issues enumerated in paragraph 16 above. It inevitably follows that this appeal must be allowed in the case of all the Respondents including, for the reasons I have given, Mr Rees.[76]I direct that all the assessments be remitted to a Costs Judge for determination of the appropriate fees payable in each case. There was discussion in the course of the hearing as to the alternative possibility of directing, pursuant to CPR 35.15 (3)(a), that the Senior Costs Judge prepare a report as to the fees payable. My provisional opinion is this is not a satisfactory course but the issue can, if desired, be raised again when this judgment is handed down.

Cited in 2 later judgments