A B & Ors v Department of Trade & Industry s/a British Coal Corporation

Where a fast-track process varies an existing contractual claims-handling scheme, the negotiated costs figures remain a highly material starting point. The court should not replace them with a purely bottom-up assessment based only on tasks, time and hourly rates.

Because the parties left the basis of assessment unspecified, the court could consider all relevant circumstances, including the work actually performed, likely fee-earner grades and costs. Where potentially relevant evidence is available, the assessment should proceed on an evidence-based footing. A solicitor’s financial conflict of interest arising from different fees was irrelevant to the fair assessment. Assessments unsupported by intelligible reasons or reached after refusing a proper adjournment should be remitted.

These were three appeals by the Department of Trade and Industry against orders made by Sir Michael Turner in the British Coal Corporation Respiratory Disease Litigation. The orders fixed costs payable to solicitors for fast-track offers at £1,478 plus VAT in live claims and £1,675 plus VAT and disbursements in deceased claims. The judge also refused an adjournment sought to obtain further information about the work performed and fee earners involved.

The parties had agreed that the Department would pay the claimants’ costs, but had not agreed the basis on which fast-track costs should be assessed. The central issues were the relevance of the existing claims-handling agreement, the use of a bottom-up approach, the refusal of the adjournment and the adequacy of the judge’s reasons.

The appeals were allowed unanimously. The costs assessments for both live and deceased claims were remitted to Sir Michael Turner for determination after consideration of appropriate evidence. The court did not decide that the figures previously fixed were themselves wrong.

1. The judge was right to reject a purely bottom-up assessment which disregarded the existing claims-handling agreement. The agreed figures had been negotiated between the parties and still had contractual effect. The fast-track offer scheme was an amendment or variation of that agreement, and the existing figures were therefore a highly material starting point. The court was not required to decide whether the original bargain was advantageous to either side.
2. The parties had left the precise basis of assessment at large. The court was therefore entitled, and in principle required, to consider all the circumstances. That included the likely grades and costs of fee earners, the work actually undertaken under the existing scheme and the work required under the fast-track process. Where relevant evidence was available, the court should proceed in an evidence-based manner rather than rely solely on intuition or hypothesis.
3. The judge accepted that the information sought by the Department was potentially relevant, even on the correct contractual approach. He nevertheless refused an adjournment because of delay. That was an error of principle. The delay caused no injustice to the claimants or solicitors which could not be compensated in costs, and the Department’s lateness could be addressed through an appropriate costs order. There was a real prospect that the evidence could affect the result.
4. The live-claim figure was also inadequately explained. The judge’s arithmetic and cross-check could not be understood, and he had taken into account the alleged conflict of interest faced by solicitors if fast-track fees were much lower than fees for cases proceeding to full assessment. That was an irrelevant consideration in law and further flawed the decision.

The Department conceded the costs below. There was no order as to the costs of the appeals.

1. High Court of Justice, Queen’s Bench Division, Administrative Court: Sir Michael Turner made orders on 18 November 2004, 28 January 2005 and 16 February 2005 fixing costs for live and deceased fast-track claims and refusing an adjournment.
2. Court of Appeal (Civil Division): in [2005] EWCA Civ 1737, the appeals were allowed and both costs assessments were remitted for reconsideration.