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	England and Wales High Court (Queen's Bench Division) Decisions
You are here: BAILII >> Databases >> England and Wales High Court (Queen's Bench Division) Decisions >> Lord Chancellor v Haggan Q.C. & Ors [2007] EWHC 1212 (QB) (22 May 2007) URL: http://www.bailii.org/ew/cases/EWHC/QB/2007/1212.html Cite as: [2007] EWHC 1212 (QB), [2007] 5 Costs LR 722

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IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION

		Royal Courts of Justice Strand. London. WC2A 2LL
		22/05/2007

The Honourable Mr. Justice Saunders:

1. This is an appeal from a decision of Master Rogers when he allowed appeals by the Respondents from the Determining Officer's assessment of their graduated fees. I am grateful for the considerable contribution made by my Assessors in helping me reach my conclusion.
2. It is common ground that the fees were to be assessed under Schedule 4 of the Criminal Defence Services (Funding) Order 2001, as amended in 2004.
3. These Regulations should provide a formula which can be applied to cases within the scheme requiring only the insertion of non-controversial figures to reach the appropriate fee known as a graduated fee.
4. Unhappily, because of mistakes in the drafting of these Regulations, the process in this case is far from the straightforward exercise it was intended to be. Between them, Counsel have come up with 5 alternative formulae based on the Regulations which provide, in the case of Nicholas Haggan Q.C., the first named Respondent, graduated fees ranging from £58,597.30 to £209,535.26, depending on which of the 5 formulae are adopted.
5. It is a matter of regret that the graduated fee scheme which was meant to provide for simplicity and speedy payment, has in this case caused complexity and delay.
6. Because the outcome of this appeal depends on the proper construction of the Regulations, the factual background is of little significance. The claims for graduated fees relate to the case of R. -v- Matthews and others which was tried at Bournemouth Crown Court between 9^th January 2006 and 11^th April 2006. The Defendants were charged with Money Laundering. At a PCMH on 10^th October 2005, a trial estimate of 5 – 6 weeks, or 25 – 30 days was agreed by Counsel and accepted by the Judge. In fact the case lasted for 61 days. Some cases can overrun because the parties do not deal with the issues at trial as expeditiously as they could. That is not the case here. The delay was caused by factors outside anybody's control, in particular the ill-health of jurors.
7. The graduated fee allowed by the Determining Officer for Mr. Haggan Q.C., on her interpretation of the Regulations was £92,913.60. Mr. Haggan Q.C. appealed on the basis that her interpretation of the Regulations was wrong and that the correct graduated fee in his case should be £209,024.26 on a proper construction of the Regulations. Although other Counsel in the case also appealed, I shall treat Mr. Haggan's case as representative.
8. The Costs Judge agreed with the Respondents' interpretation and allowed the appeal.
9. Both sides agree that the analysis of the Graduated Fee Scheme and the Statutory Framework set out by Gray J. in Secretary of State for Constitutional Affairs -v- Stork [2005] EWHC 1763 is both accurate and helpful. I gratefully adopt it. The important points as far as this case is concerned are:

a) that the aim of the scheme was to simplify the calculation of the amount of an advocate's fee and ensure prompt payment thereby reducing the administrative costs of taxation.

b) the scheme was designed to provide 'cost neutrality' between the new scheme and the old 'ex post facto' method of payment.

c) in order to achieve cost neutrality, compromises were made resulting in swings and roundabouts. That means that under the Graduated Fee Scheme, sometimes the advocate would recover more than he would under the 'ex post facto' assessment and sometimes less.

10. Over the years the scheme has been expanded to encompass more cases. When the Criminal Defence Service (Funding) Order 2001 was first introduced, the scheme only covered shorter cases lasting up to 10 days.
11. A further version was introduced in 2001 which brought into the scheme cases lasting up to 25 days, but also included cases which were estimated to last 25 days but overran and lasted up to 30 days.
12. The scheme was further enlarged in 2004 to extend it to cases lasting up to 40 days, but also covered cases estimated at PCMH to last under 40 days but which in fact exceeded 40 days. Unlike the previous scheme there was no limit on the length of time by which the trial length could exceed 40 days in order for it to come within the scheme. As I understand it, when a case was estimated as lasting more than the 40 days, the case came under the ex post facto scheme unless the Legal Services Commission agreed to it coming within the 'Very High Costs Case regime'.
13. The relevant parts of Schedule 4 of the Criminal Defence Service (Funding) Order 2001, as amended in 2004, read as follows:-

"2(1) Subject to the following sub-paragraphs of this paragraph and to paragraph 4 this case applies to every case

on indictment …

(2) This Schedule does not apply to a case which goes to trial where the trial exceeds 40 days, unless:

(a) it was accepted by the court at the pleas and directions hearing that the trial would not exceed 40 days but it did; or

(b) the Commission was notified and accepted that the trial would not exceed 40 days but it did; or

(c) the Commission has made an election under article 9A to apply this Schedule to the whole or any part of a Very High Costs Case.

…

7(1) The amount of the graduated fee for a single trial advocate representing one assisted person being tried on one indictment in the Crown Court shall be calculated according to the following formulae:

(a) for trials not exceeding 10 days and trials lasting 26 to 40 days –

G = B + (d x D) + (e x E) + (w x W) + (d x R); and

(b) for trials lasting 11 to 25 days –

G = B + (d x D) + (e x E) + (w x W) + (d x R) + d x (D x (d – 9) x g)

(2) In the formulae in sub-paragraph (1):

G is the amount of the graduated fee;

B is the basic fee specified in paragraph 8 as appropriate to the offence for which the assisted person is tried and the category of trial advocate instructed;

d is the number of days or parts of a day by which the trial exceeds one day;

e is the number of pages of prosecution evidence excluding the first 50 up to a maximum of 10,000;

w is the number of prosecution witnesses excluding the first 10;

D is the length of trial uplift specified in paragraph 8 as appropriate to the offence for which the assisted person is tried and the category of trial advocate instructed;

E is the evidence uplift specified in paragraph 8 as appropriate to the offence for which the assisted person is tried and the category of trial advocate instructed;

W is the witness uplift specified in paragraph 8 as appropriate to the offence for which the assisted person is tried and the category of trial advocate instructed;

R is the refresher specified in paragraph 8 as appropriate to the offence for which the assisted person is tried and the category of trial advocate instructed;

g is the length of trial gradient specified in paragraph 8 as appropriate to the offence for which the assisted person is tried and the category of trial advocate instructed.

8. For the purposes of paragraph 7 the basic fee, refresher, length of trial gradient, length of trial uplift, evidence uplift and witness uplift appropriate to any offence shall be those specified in the Table below as appropriate to the Class within which that offence falls according to paragraph 5, the length of trial and the category of trial advocate instructed.

…

26. Where a trial exceeds 25 days the trial advocate shall receive:

(a) a graduated fee calculated in accordance with the formula in paragraph 7(1)(b) as if the trial had lasted 25 days; and

(b) the refresher specified in paragraph 8 as appropriate to the offence increased by:

(i) forty per cent for each of the days by which the trial exceeds 25 days but does not exceed 50 days; and

(ii) fifty per cent for each of the days by which the trial exceeds 50 days."

14. As can be seen there is an inconsistency between paragraph 7(1)(a) and paragraph 26. If one were to take as an example a trial which lasts 30 days, then if one applies paragraph 7 then the graduated fee is paid in accordance with the formula spelt out in paragraph 7(1)(a), but if one applies paragraph 26, then a different formula is used which provides for a fee under paragraph 7(1)(b) calculated as if the trial lasted for 25 days and then enhanced refreshers. Those two calculations will undoubtedly produce different figures and there is no indication within the Regulations which should be adopted.
15. It is agreed by both Appellant and Respondents that is because of a mistake in the drafting. The parties propose and support different interpretations which they invite me to place on the Regulations. All of them involve making significant amendments to the Regulations in order to make sense of them.
16. Of the 5 alternative interpretations ('Options') of the Regulations put forward by the parties, none accords with the natural meaning of the words.
17. Before I heard the submissions of Counsel, I posed the question as to what would happen if I decided that it was impossible to make sense of these Regulations without in effect re-writing them. After all, the aim of the Regulations is to provide a straightforward formula to provide for a quick and simple form of calculating the fee. If that cannot be done without straining the limits of proper construction of the Regulations, can I simply say that the Regulations do not provide a proper formula covering cases estimated to last for less than 40 days but go beyond, and that these cases should revert to the 'ex post facto' method of payment? If that were applied, the Determining Officer would fix a fee based on what was fair and reasonable remuneration.
18. That suggestion was greeted with consternation by the Appellant, who said it would cost them a great deal of money. They did however, accept that it was a conclusion which was open to me. The Respondents, having not argued for this result in their skeleton argument, expressed themselves as being neutral on the topic but did set out the legislative route by which they said this could be achieved.
19. Although there were 5 options suggested, both parties agreed that I should not follow Option 1. Option 1 was that the Court should give effect to paragraph 26(a) and ignore paragraph 26(b). The practical effect of this would be that however long a trial went on in excess of 25 days, the advocate would only be paid as if it had lasted 25 days. It was agreed that this was not a realistic interpretation. Not only does it involve ignoring paragraph 26(b); it was inconsistent with paragraph 7(1)(a) and paragraph 8(e) and (f).
20. Option 2 is suggested by the Appellant to be the interpretation which is closest to the actual wording of paragraph 26. That interpretation involves calculating a graduated fee based on a 25 day trial and paying refreshers in accordance with paragraph 26(b) from day 25 until the end of the trial. This interpretation again is inconsistent with paragraph 7(1)(a) which provides a distinct and different formula for trials which last from between 25 and 40 days and it renders meaningless paragraph 8(e) and (f).
21. Option 3 is the one primarily contended for by the Appellant. This involves a wholesale re-writing of paragraph 26. Wherever '25' appears in paragraph 26, '40' is to be substituted; it appears on 3 occasions; and for 'paragraph 7(1)(b)' in paragraph 26 (a), shall be substituted 'paragraph 7(1)(a)'.
22. The Respondents put forward two alternative options. Options 4 and 5. Option 4 was the interpretation accepted by the Costs Judge, Master Rogers. Under this interpretation paragraph 26(a) simply means that when calculating the graduated fee for cases lasting longer than 25 days, you use the formula set out in paragraph 7(1)(b) to calculate the graduated fee. In that formula you use the normal meaning of 'd' which is the number of days by which the trial exceeds one day. So in this case, because the trial lasted 62 days, 'd' = 61. In addition, the enhanced refresher rate provided by paragraph 26(b) applies.
23. Both Options 4 and 5 adopt this basic interpretation. The difference between the two is which is the appropriate set of figures to use in the formula as provided by paragraph 8. There are 3 alternative sets of figures set out in paragraph 8: (a) and (b) for trials lasting from 1 to 10 days; (c) and (d) for trials lasting from 11 to 25 days and (e) and (f) for trials lasting from 26 to 40 days. It should be noted that no set of figures is said to apply to trials lasting beyond 40 days.
24. In Option 4, tables (e) and (f) are used, i.e. the appropriate rates for trials lasting 25 to 40 days. In the formula set out in paragraph 7(1)(b) one of the components is 'g' which is defined as 'the length of trial gradient specified in paragraph 8 for the offence for which the assisted person is tried and the category of trial advocate instructed'. Tables (e) and (f) contain no figures for 'g', so in this option 'g' is imported from tables (c) and (d).
25. Option 5 is the same as Option 4, save that Tables (c) and (d) in paragraph 8 are used instead of (e) and (f). This overcomes the difficulty of having to import a value for 'g' from a different table in paragraph 8.
26. I have concluded that Options 1 and 2 are not possible interpretations of the Regulations. They are inconsistent with paragraphs 7 and 8 which were clearly designed to provide formulas for calculating graduated fees up to 40 days. If either of these options is adopted, paragraph 26 provides an entirely different way of calculating a graduated fee for trials lasting over 25 days from that provided by paragraphs 7 and 8 for trials lasting 25 to 40 days.
27. I also reject the interpretation put on paragraph 26 by the Respondent in Options 4 and 5. Option 4 makes the words 'as if the trial had lasted 25 days' entirely redundant and the meaning given to them in Option 5, namely a directive that tables (c) and (d) are to be used in paragraph 8 to make the calculation, does not give those words their natural meaning. If that had been intended I would have expected there to be references in paragraph 8 to a table which was to be used for trials lasting beyond 40 days.
28. The objections to Option 3 argued by the Respondents are:

i) that it involves giving different values to 'd' in the formulae in paragraph 7 and Gray J. in the Stork case said that this should not be done.

ii) that it does not accord with normal principles of taxation that the daily rate of remuneration should increase the longer the case goes on.

iii) that it involves wholesale change to the words of paragraph 26.

29. Dealing with these arguments individually. In Stork, one of the decisive arguments which persuaded Gray J. to find for the Appellant was that 'd' – the number of days by which the trial exceeded one day - was, on the argument of the Respondents in Stork given a different value when calculating the number of refreshers from the value when calculating the number of trial uplifts.
30. In my judgment Option 3 does not involve giving a different value to 'd'. It limits the value of 'd' to no more than 39 in the graduated fee calculation and then provides for enhanced refreshers for each day beyond the 39^th day. In the Stork case, a different value for 'd' was being given within the same formula for the number of refreshers and the daily uplifts. Here the same figure for 'd' is used throughout the formula. Additional days are then paid by enhanced refreshers.
31. The Respondents further argue that you would expect Counsel to receive higher remuneration calculated on a daily basis the longer the case goes on because the longer the case goes on the more disruption it will cause to Counsel's practice in having to return other cases. I do not accept that because, although it is a perfectly proper argument, it can also be argued that the preparation part of the remuneration is properly rewarded on the basis of the estimated length and that incentives should be built in to the Regulations to encourage advocates to complete cases within the estimated time. I repeat my earlier observations that there is no suggestion in this case that Counsel were in any way responsible for the overrun.
32. The Respondents further argue that I should not read the Regulations in the way suggested in Option 3 because it involves me in effect making the amendments to the terms of paragraph 26 in the terms set out in paragraph 21 of this Judgment. What is clear is that I should not do so unless I was satisfied that Option 3 clearly accords with the intention of the legislature. The Respondents say that no such clear intention is apparent, particularly as the draftsman did make some amendments to paragraph 26. That makes it less likely that he overlooked other necessary amendments in error.
33. Having considered all the arguments, I am quite satisfied that the intention was to draft paragraph 26 in the way set out in Option 3.
34. The legislative history in my judgment makes it clear.
35. The original Regulations were designed only to cover cases up to 10 days and made no provision for cases which overran.
36. When the scheme was extended to cases up to 25 days, provision was also made for cases which were estimated to last under 25 days but lasted as long as 30 days. Paragraph 26 was introduced to cover these cases and in my judgment clearly provided that a graduated fee based on the case lasting 25 days was to be paid with an enhanced refresher for any days beyond 25 up to the maximum of 30.
37. The explanatory notes to the Criminal Defence Service (Funding) Amendment Order 2004 say: 'the effect of the amendments are to extend the Graduated Fee payment scheme by extending the payment provisions in Schedule 4 for advocacy on behalf of assisted persons in the Crown Court, to all trials that are not individually contracted by the Legal Services Commission as a Very High Cost Criminal Case. The instrument proposes an extension of the current graduated fee scheme to cases beyond 25 days so that cases estimated as likely to last for 40 days or less would be paid for under the graduated fees scheme'.
38. The effect of that explanatory note is entirely consistent with Option 3. What was intended was to expand the same scheme to cases lasting 40 days rather than 25. Otherwise the scheme of the Regulations was to remain the same. It must have been intended that paragraphs 7 and 8 would provide for graduated fees for cases lasting up to 40 days. In order to provide for those cases which overran, the same system would be adopted as before, i.e. a graduated fee as if it had lasted 40 days and an enhanced refresher to compensate for any overrun.
39. Option 3 in my judgment clearly sets out the intention of the draftsman. It is in accordance with the scheme of the previous Regulations and the effect of the explanatory note. There is now no limit to the amount of overrun which would be provided for, because otherwise the case would come under the Very High Cost Cases regime which could not apply retrospectively.
40. Reading the Regulations in accordance with Option 3 is the only one which makes sense of the Regulations as a whole and makes Regulation 26 consistent with Regulations 7 and 8.
41. Am I entitled to read into the Regulations, the corrections required by Option 3, or does that involve me in taking a step too far so that I would be usurping the functions of the legislators.
42. This has caused me considerable concern. On the one hand a Court can correct obvious errors in the construction it gives to the Regulations, but equally it cannot simply re-write them.
43. In deciding which side of the line Option 3 came, I have considered the relevant passages in Bennion on Statutory Interpretation, and Craies on Legislation; the decisions of the House of Lords in Stock -v- Frank Jones (Tipton) Ltd [1978] 1 WLR 231, and Inco Europe Ltd -v- First Choice Distribution [2000] 1 WLR 586 and the decision of the Court of Appeal in R (Confederation of Passenger Transport UK) -v-Humber Bridge Board and another [2004] QB 310; [2003] EWCA Civ 842. The last case dealt with the power to 'add, omit or substitute words in order to correct obvious drafting errors' in secondary legislation. I am satisfied that the alterations required by Option 3 are alterations which come within the principles set out in that case.
44. It follows from that, in my judgment, Regulation 26 should be read in accordance with Option 3 and I respectfully disagree with the decision of the Costs Judge. This appeal is accordingly allowed.