Mr Justice Burnett:
- On 1 June 2010 Costs Judge Campbell allowed the appeal of McLarty and Co ('the solicitors') against the refusal of the Legal Services Commission ('LSC') to admit a substantial claim for special preparation in connection with their representation of two defendants in a multi-handed drugs case at Kingston Crown Court. The Costs Judge also allowed an uplift or enhancement of 100% of the fee that he had determined by reference to an hourly rate. This is the Lord Chancellor's appeal brought pursuant to Article 31 (5) of the Criminal Defence Service (Funding) Order 2007 ('the 2007 Order'). It raises a short point of statutory construction relating to the meaning of paragraph 1(2) of Schedule 2 of the 2007 Order and its impact on the availability of 'special preparation fees' under paragraph 15 of that Schedule. The subsidiary point concerns the availability of a power to enhance a fee paid for special preparation, assuming the fee itself is properly payable.
Background
- The solicitors represented two defendants in the trial. The prosecution was based substantially on the product of a covert listening device which, over a period of many months, recorded the conversations of those defendants and others. The prosecution transcribed parts of the audio product and served those transcripts in the usual way. Those transcripts covered 2250 pages or thereabouts. The prosecution also disclosed as prosecution evidence a hard drive on which the entirety of the audio evidence was stored. The solicitors understandably took the view that it was necessary to listen to the entirety of the audio product. That exercise occupied 155 hours and 54 minutes of time.
The Statutory Scheme
- The 2007 Order provides a complete statutory scheme for the remuneration of litigators engaged to represent defendants in criminal proceedings in the Crown Court. It covers graduated fees and the Very High Cost Cases scheme ('VHCC'). It brought with it a fundamental change in the way in which litigators were paid. The previous scheme, which was founded upon specified hourly rates, was superseded by one which calculated remuneration based upon the category of the offence in question, the length of the trial, and the number of pages of prosecution evidence. Article 6 (1) of the order provides:
"6 - Claims for fees and disbursements by litigators – Crown Court
(1) Claims for fees by litigators in proceedings in the Crown Court must be made and determined in accordance with the provisions of Schedule 2 to this Order."
- Paragraphs 4, 5, 7 and 8 of Schedule 2 to the order between them identify the fee payable to the litigator depending upon category of offence, the number of pages of prosecution evidence and the length of the trial. Paragraph 1(2) of Schedule 2, as in force when the solicitors made their claim for fees, defines pages of prosecution evidence for the purposes of the order in these terms:
"For the purposes of this schedule, the number of pages of prosecution evidence served on the court includes all -
(a) witness statements;
(b) documentary and pictorial exhibits;
(c) records of interviews with the assisted person; and
(d) records of interviews with other defendants
which form part of the committal or served prosecution documents or which are included in any notice of additional evidence, but does not include any document provided on CD-ROM or by other means of electronic communication."
- Paragraph 15 of Schedule 2 provides for fees for special preparation. At the material time, paragraphs 15 (1), (2) and (3) provided as follows:
"15(1) This paragraph applies where, in any case on indictment in the Crown Court in respect of which a fee is payable under part 2, any or all of the prosecution evidence, as defined in paragraph 1(2), is served in electronic form only, and the appropriate officer considers it reasonable to make a payment in excess of the fee payable under part 2.
(2) Where this paragraph applies, a special preparation fee may be paid, in addition to the fee payable under part 2.
(3) The amount of the special preparation fee must be calculated from the number of hours which the appropriate officer considers reasonable to view the prosecution evidence, and using the rates specified in the table following paragraph 22."
The Legal Services Commission Assessment
- The LSC considered the solicitors' application for a fee for special preparation in connection with listening to the audio product, but rejected it. The solicitors were remunerated in respect of the 2250 pages of the audio product which had been transcribed. That material formed part of the PPE which went into the calculation of the fee payable under part 2. However, the appropriate officer at the LSC concluded that the statutory definition of pages of prosecution evidence referred to documentary evidence. The recording of the audio product, to the extent that it had not been transcribed, was not documentary evidence. Listening to it could not be remunerated as special preparation under paragraph 15. The solicitors sought a review of that decision by the LSC, but the original decision was affirmed. Further reasons were provided which reiterated the LSC view that the audio evidence did not fall within the definition of PPE in paragraph 1(2) of Schedule 2 to the Order. The LSC continued:
"That definition expressly refers to "pages" of prosecution evidence and "documents" provided by way of electronic communication. It is therefore impossible to equate audio evidence to documents or pages of evidence.
Additionally, the pre-enactment history of the order makes it clear that the intention was expressly to exclude additional payment for work such as listening to audio evidence. Payment for this work is included in the initial fee payable pursuant to paragraphs 7 and 8 of the order. In addition the new litigator fee guidance issued in September 2009 has been specifically amended to highlight this intention and you will now see that section 1.7 states that listening to audio evidence is modelled into the litigator fee. It has always been the case that special preparation claims can only be made by viewing electronic evidence that is defined as PPE; therefore it is specifically restricted to evidence that can be put into pages i.e. statements, pictorial exhibits etc, in effect any evidence that is audiovisual is excluded."
- The pre-enactment history referred to by the LSC is substantially contained in a consultation paper issued by the LSC in June 2007, entitled "The Litigator Graduated Fee Scheme". In her foreword to the consultation paper, the chief executive of the LSC noted that the paper develops the response to the proposals set out by Lord Carter in his review of legal aid and built upon an earlier consultation paper and the government's response to it. She went on:
"We are now able to put forward proposals, which take account of the responses to the previous consultation, and the introduction of a fixed and graduated fee for solicitor remuneration in all Crown Court cases ... These proposals aim to further improve value for money and sustainability through a shift from paying for inputs, such as time spent and letters written, to outputs such as completed cases."
The consultation document then proceeded to set out in detail the proposals the LSC was making, which subject to the consultation responses, would be introduced by way of amendment to the 2007 Order. Paragraph 3.25 of the consultation paper was in these terms:
"Other factors identified following the consultation process and examined by the LSC include exceptional levels of unused or third-party material, tape footage and confiscation hearings. These possible uplifts were put forward due to the amount of preparation time it can take to address exceptional levels of this type of material. The following findings were made:
- Tapes: Tapes served with the prosecution material occur in approximately 28% of cases. There was little data on the volume of tapes in each case. These cases also have a higher proportion of PPE, averaging approximately 100 pages more than cases without the tapes. However, because of the percentage of cases affected by this potential uplift, it was felt that the 'swings and roundabouts' rule would adequately cover this aspect."
The question asked in the consultation paper on this matter was:
"What is your view of our proposal not to model an uplift for served tapes?"
Exceptional levels of third party material and confiscation hearings were covered in a separate part of the consultation paper.
- Of the 25 respondents to the consultation who expressed a view on this question, all bar one considered that an uplift should be available because 'many believe that they can be crucial to the defence case and they take time to listen to and examine'. There is no suggestion in the consultation response that those objections to the proposal had moved the LSC.
- An Explanatory Memorandum was prepared by the Ministry of Justice to accompany the proposed amendments to the 2007 Order designed to implement the changes which had been the subject of consultation. They were laid before Parliament in December 2007. That memorandum included the following:
i) By introducing a graduated fee scheme for litigators the Lord Chancellor was seeking to give effect to the recommendations made by Lord Carter in his independent review of legal aid procurement.
ii) Lord Carter's recommendation was that the introduction of a graduated fee scheme would assess fees based on the complexity of the case rather than on the number of hours worked.
iii) The graduated fees provided by the scheme had been calculated with reference to proxies for case complexity and contain uplifts that appropriately reflect and remunerate differences in both costs and complexity.
iv) The Legal Services Commission (LSC) undertook consultation on detailed proposals for the Litigators' Graduated Fee Scheme in June 2007 (with amongst others, the General Council of the Bar and the Law Society) and published the results in October 2007.
The Decision of the Costs Judge
- At the hearing before the Costs Judge, the solicitors contended for fees for special preparation pursuant to paragraph 15(1) of the 2007 Order for listening to the audio product on the basis that the material to which they listened was capable of being transcribed. The Costs Judge concluded:
"… I consider that the [LSC] ought not to have disallowed the claim for special preparation in its entirety. The written reasons contend that it has always been the case that special preparation claims can only be made for viewing electronic evidence, that is defined as PPE; therefore it is specifically restricted to evidence that can be put into pages and that, in effect, any evidence that is audiovisual is excluded. In my view, that is not the situation here. No audio-visual evidence is being relied on. On the contrary, the Crown simply transcribed some but not all of the audio evidence obtained by the probe. Had the entirety of the probe evidence been transcribed, this would have formed part of the page count because the claim for those items was paid by the LSC ... In short therefore, I start from the proposition that because the audio probe evidence could be put into pages (and indeed in part, that was done), it is capable of attracting a fee for special preparation."
The Costs Judge then assessed the amount of time spent listening to that part of the audio product which had not been transcribed at about 75 hours. He allowed that time at the Grade A rate found in the table following paragraph 22 of Schedule 2 of the 2007 Order. He gave an uplift of 100% on the rate found in that table because he believed that the LSC had allowed enhancement on other aspects of the preparation. It is now agreed that his belief was erroneous. No enhancement had been allowed.
Submissions
- Mr Sheldon, who appears for the Lord Chancellor, advances three submissions in support of the appeal against the finding that a special preparation fee was payable. First, that an audio recording does not fall within the definition of prosecution evidence found in paragraph 1(2) of Schedule 2, which is concerned only with documents which are provided in 'pages'. Subject to paragraph 15, that definition excludes any document provided by electronic means. Paragraph 15 is confined to prosecution evidence as defined in paragraph 1(2) which has in fact been served in electronic form only. It is thus concerned with documents that have been reduced to an electronic medium and not printed off. Paragraph 15 does not provide a general power whereby time spent considering electronic material may be claimed for. Secondly, that the pre-enactment history shows a conscious decision to exclude tape recordings (the content of which has not been transcribed) from the definition of 'prosecution evidence' in calculating the fees payable. Thirdly, that the distinction drawn by the Costs Judge between 'tapes' the content of which is capable of transcription, and 'tapes' the content of which is not, is a distinction with no warrant in the legislation. Furthermore, such a distinction is inconsistent with the decision of Penry-Davey J in Lord Chancellor v Michael J Reed Ltd [2010] 1 Costs LR 72.
- Mr Sheldon submits that even if a fee for special preparation was properly payable under the statutory scheme in this case, the Costs Judge was wrong to enhance it. He submits there is no statutory basis for enhancing a fee for special preparation. In support of this submission Mr Sheldon cites a decision of Costs Judge Gordon-Saker in R v Brandon SCCO Ref: 07/11. Additionally, he submits that it is clear that the Costs Judge enhanced it on what is now accepted to be a wrong factual basis.
- Mr McNally supports the decision of the Costs Judge and in particular submits that paragraph 15 of the 2007 Order is apt to give a discretion to allow fees for special preparation whenever the evidence served in electronic form is capable of being reduced to documentary form. But his submission goes further. The essence of the argument advanced by Mr McNally is that the whole content of the audio product was 'prosecution evidence' and that a purposive interpretation of paragraph 15, read with paragraph 1(2), is required to ensure that litigators are paid for work reasonably and necessarily done for the purposes of representing their clients. He gives an example of another environment in which litigators would lose out. In a prosecution in connection with unlawful images on a computer, the data may comprise downloaded video clips or whole films. Such things no longer have 'frames' which can be printed out one by one. The prosecution would ordinarily extract a range of still images from those clips or films in respect of which the page count fee would be payable. Yet the litigator may need to view the moving images. The only way to remunerate that activity would be through a fee for special preparation paid pursuant to paragraph 15. He submits that the basic fee could not adequately cover this type of work, and, on behalf of the solicitors, was sceptical of the 'swings and roundabouts' argument. He submits that to hold otherwise would result in injustice because in cases of this nature solicitors would go unremunerated for a substantial amount of work. Mr McNally draws attention to the decision of Davis J in The Lord Chancellor v Alexander Johnson and Co. Solicitors [2011] EWHC 2113 (QB). In that case the judge adopted a purposive approach to the interpretation of different aspects of the 2007 Order. He also points to the decision of Saunders J in The Lord Chancellor v Nicolas Haggan QC [2007] EWHC 1212 (QB). In that case the parties accepted that a significant drafting error had crept into an earlier Order governing this area of activity. In the result, the judge had to redraft a small part of it to enable sense to be made of one provision. However, Mr McNally accepts that the circumstances in those cases are not directly analogous to those in this appeal. Mr McNally submits that paragraph 3.25 of the consultation paper (see paragraph [7] above) was difficult to understand in its own terms because the reference to 'tapes served' was ambiguous. If it included tape recordings of interviews of suspects, which are routinely served in Crown Court proceedings, then a surprisingly low percentage of cases was identified. The reference to 'tape footage' suggests that it was focussed on visual material, rather than audio. Maybe it did not include interview tapes because interviews are routinely transcribed and are therefore remunerated through the page count. If it related only to other types of tape (audio or visual or both) the paragraph itself identified the poor quality of the data available in support. In a detailed note provided after the hearing in this case, Mr McNally emphasised the point that the sample of cases used to extract the figures in paragraph 3.25 was small, and its reliability uncertain.
- On the question of whether, having determined that a fee for special preparation was payable, the Costs Judge was entitled to uplift it by 100%, Mr McNally relies upon an earlier decision of Costs Judge Campbell in R v Browne SCCO Ref: 11/10 in which he had relied upon paragraph 24 of the 2007 Order to do just that. He recognises that the basis upon which the Costs Judge enhanced the fees was wrong, but submits his decision should be upheld because the work was of importance.
Discussion
The Interpretation of Paragraphs 1(2) and 15 of the 2007 Order
- Michael J Reed was a case in which a very modest fee for special preparation was allowed by the Costs Judge to cover time spent by the solicitors concerned in watching a DVD served by the Crown which showed the stretch of road in relation to which the defendant had been charged with causing death by dangerous driving. In considering this matter Penry-Davey J set out a short explanation of the background to the legislative scheme.
"3. The Criminal Defence Service (Funding) Order 2007 as amended ("the Order") provides a detailed and formulaic scheme for the calculation of fees payable to the representatives of defendants in criminal cases. The graduated fee scheme, the current version of which is set out in the Order was first applied to advocates by way of the Criminal Defence Service (Funding) Order 2001. The scheme was updated in the version of the Order which came into force on 30 April 2007. In particular, Schedule 1 of the Order which was entitled "Advocates' Graduated Fee Scheme" contained the detailed provision by which advocates' fees were to be calculated with regard to the length of trial, the nature of the offence and the number of pages of prosecution evidence (PPE). Schedule 2 to the original version of the Order was entitled "Litigators' Fees in the Crown Court" and contained a simpler version by which (in short) the fees of solicitors engaged in representing defendants in the Crown Court were to be calculated by reference to specified hourly rates. Pursuant to the Criminal Defence Service (Funding) (Amendment) Order 2007 a replacement Schedule 2 was inserted in the Order which came into force on 14 January 2008. It extended to litigators the same model of graduated fee scheme that had previously applied to advocates. In particular, litigators' fees were now to be calculated pursuant to formulae based upon category of offence, length of trail and pages of prosecution evidence. "
In paragraph 9 of his judgment Penry-Davey J said this:
"In my judgment the appeal must be allowed and the special preparation fee of £25.44 awarded by the costs judge must be set aside. My reasons are as follows:
(a) the wording of para 15 incorporating the definition in para 1(2) does not and cannot include DVD footage of the relevant section of road in this case. Indeed the wording clearly excludes such material.
(b) the costs judge's expressed reason for his conclusion, namely that the DVD was "central to the charge against the defendant" and as such important for the solicitor to study, did not explain the basis on which he concluded that the DVD was within the definition, and was in itself no reason for such inclusion.
(c) his decision although expressed to be "on the facts of this case" is contrary to the clear wording of the Order.
(d) although it is clear from the background material put before me by the appellant that express consideration was given to electronic material in the consultation process which preceded the Order and that the intention was to exclude from para 15 electronic material of this kind, I have not found it necessary in considering the construction of the Order to seek assistance from that background material because the meaning is clear. However, it is the position that the expressed intention is reflected in and entirely consistent with the wording and meaning of the Order
(e) The clear effect of para 1(2) is to exclude from the calculation of prosecution pages of evidence any DVD, CD-ROM, audio, or video tape or other electronically served material. The definition excludes or, to use the wording of the Order, "does not include any document provided on CD-ROM or by other means of electronic communication". There is a limited saving for "any document" so served in para 15; but any material served electronically which does not come within the definition of "any document provided on CD-ROM or by other means of electronic communication" for example a DVD of moving footage is outwith the definition in para 1(2) and outwith para 15. The result is that such material is not part of the fee calculation at all save as part of the basic/initial fee. That result also reflects the intention of the authors of the Order.
(f) Paragraph 15 also excludes any special preparation fee being awarded in respect of such material unless the material is within the definition in para 1(2). If (and only if) such material is served in electronic form only, and it consists of "any document" can the additional material so served qualify for a special preparation fee in excess of the fee payable under Part 2 if the appropriate officer considers it reasonable to make such a payment. The words "any document" in my judgment in context mean a still image rather than moving footage (whether in the form of a DVD, CD-ROM or video or audio tape or some other electronic form) not intended for conversion to still images or which can not be so converted.
(g) I am fortified in my conclusion as to the meaning of para 1(2) by the decision of Walker J in Goodman and Farr v Secretary of State for Constitutional Affairs [2007] 3 Costs LR 366. He concluded that the words "pages of prosecution evidence" did not encompass the DVDs and inlays in that case, which constituted real evidence and had not been copied, photographed or converted in to the form of electronic documents as distinct from a hard document. They did not constitute such pages. He said this at para 45 "The schedule has chosen to work by reference to pages of prosecution evidence. That connotes to my mind something which is on a page." He left open the question of whether a page might take the form of a an electronic document. The definition in the Order at that time did not contain the words subsequently added referring to documents provided on CD-ROM or otherwise electronically. The additional words considered together with para 15 resolve the question which Walker J left open to the extent explained in this judgment."
- The submission advanced before Costs Judge Campbell on behalf of the solicitors (to distinguish Michael J Reed) was that the audio product could have been transcribed (as about half of it was) and thus it was capable of conversion into pages. That submission took up the language of Penry-Davey J in paragraph 9(f) of his judgment. That submission was accepted by the Costs Judge, as is clear from the extract of his judgment quoted above.
- Mr McNally supported that conclusion but also submitted that Michael J Reed was wrongly decided. He pointed out that the respondent to that appeal did not attend.
- In paragraph 9(f) of his judgment Penry-Davey J was doing no more than recognising that documents (whether pages of writing or pictures) may be provided electronically. Indeed, increasingly documents are circulated in all walks of life only by electronic means. Books may be downloaded onto various commercial devices. The Crown Prosecution Service are working on a scheme to enable trials to be conducted by prosecution, defence and judge without any paper but with all material being provided and used electronically. In all these examples, which could be multiplied, the recipient of the electronic material has undoubtedly been provided with documents with an identifiable page count. That is not to say that a recording of speech which could be transcribed can properly be described as a document, any more than could an audio book, nor that it can be equated with pages of prosecution evidence. Penry-Davey J was content to interpret the 2007 Order without recourse to the pre-legislative history of the consultation process because he considered the interpretation to be clear. I respectfully endorse that view. Whilst as a matter of legal theory it would be possible to depart from the interpretation of the Paragraph 15 arrived at by Penry-Davey J, on the basis that he heard only one side of the argument, in my judgment his reasoning is unassailable. Paragraph 15 is concerned with documentary material that has been served upon the defendant in electronic form only. The solicitors' submission that it provides a wide discretion to remunerate litigators in respect of time spent dealing with any electronic evidence is inconsistent with the plain language of the 2007 Order.
- The consultation document is a proper aid to construction. Despite the criticisms advanced by Mr McNally of the data set which led to the proposal in paragraph 3.25 of the consultation paper (some of which echo those made in response to the consultation paper) it is clear that the proposal being made excluded additional payment for considering 'taped' material. The legislative history thus reinforces the conclusion arrived at by reference to the language of the Order itself.
The Enhancement or Uplift
- The conclusion on the construction point determines this appeal in favour of the Lord Chancellor. Nonetheless, out of deference to the arguments advanced, I shall deal with the enhancement issue. It is recognised by the solicitors that the factual premise upon which the Costs Judge enhanced the fees he allowed under paragraph 15 of Schedule 2 was mistaken. But there is a more fundamental issue: namely whether enhancement is available in respect of a fee properly payable pursuant to paragraph 15 of Schedule 2. There are conflicting decisions in the SCCO, referred to in paragraphs [12] and [14] above.
- The starting point is paragraph 15(3) itself. It bears repetition:
"(3) The amount of the special preparation fee must be calculated from the number of hours which the appropriate officer considers reasonable to view the prosecution evidence, and using the rates specified in the table following paragraph 22."
- Paragraph 22 of Schedule 3 falls within a part of the Schedule dealing with confiscation (and similar) proceedings. Paragraph 21(1) identifies those proceedings. Paragraph 21 then provides:
"(2) Where this paragraph applies, the appropriate officer may allow work done in the following classes by a litigator…
(3) The appropriate officer must consider the claim … and must allow such work as appears to him to have been reasonably done in the proceedings.
(4) Subject to sub-paragraph (3) the appropriate officer must allow fees under this paragraph in accordance with paragraph 22.
(5) The appropriate officer must allow fees in accordance with paragraphs to 22 to 24 appropriate to each of the following grades of fee earner as he considers reasonable …"
Paragraph 22 opens with these words:
"Subject to paragraphs 23 and 24, for proceedings in the Crown Court to which paragraph 21 applies the appropriate officer must allow fees for work under paragraph 21(2) at the following prescribed rates -"
The table then sets out hourly rates payable for different types of work and different levels of fee earner. Paragraph 23 permits the appropriate officer to allow lower figures than those set out in the table, in certain circumstances. Paragraph 24 permits the appropriate officer to allow enhanced fees in certain circumstances. Paragraph 24 (1) begins:
"Upon a determination the appropriate officer may, subject to the provisions of this paragraph, at more than the relevant prescribed rate specified in paragraph 22 for preparation, attendance at court where more than one representative is instructed, routine letters written and routine telephone calls, in respect of offences in Class A, B, C, D, G, I, J or K in the Table of Offences."
The reference to the various classes is to one of the components that informs the fee payable for representing the defendant in the underlying criminal proceedings which has given rise to confiscation proceedings. It is fair to observe that the list includes types of case that are very unlikely to generate confiscation proceedings.
- The contrast between the type of case in which a special preparation fee is payable, and the type of case to which the table following paragraph 22 applies is important. A special preparation fee is payable in a case which is otherwise remunerated without reference to hourly rates. Confiscation proceedings are remunerated by reference to hourly rates. A mechanism was thus needed to quantify the special preparation fee. The route adopted was to use the hourly rates set out in the table.
- In Browne the Costs Judge allowed an enhancement of the fee payable pursuant to paragraph 15 on the basis that paragraph 24 could be applied to such a payment. With respect to the Costs Judge I am unable to agree that conclusion. By contrast Costs Judge Gordon-Saker in Brandon concluded that the enhancement powers in paragraph 24 had no application to a special preparation fee allowed under paragraph 15. In my judgment his conclusion is correct.
- Paragraph 24 is concerned with a 'determination' of fees which arise under paragraph 21, that is to say for confiscation proceedings. It is not concerned with a determination under paragraph 15. Paragraph 15 makes no reference to paragraph 24. Indeed, it is carefully drafted to apply the rates in the table following paragraph 22, rather than to incorporate a special preparation fee under paragraph 15 within the general scheme of payment for confiscation proceedings. That is what the solicitors seek to do. The draftsman could have achieved that end very easily by adding a reference to paragraph 15 into paragraph 22 itself, or by adding a reference to paragraph 22 into paragraph 15. He did neither. In my judgment, there is no power conferred by the 2007 Order to enhance a special preparation fee beyond the rates set out in the table which follows paragraph 22. It follows that there is no power to reduce it under paragraph 23 either.
Conclusion
- For the reasons I have set out I conclude that the decision to pay a special preparation fee in this case was contrary to the terms of the 2007 Order. The appeal is therefore allowed. In the event that the parties are unable to agree an order consequent upon this judgment I will receive representations on disputed matters in writing. Finally, I should like to record my thanks for the assistance provided by Senior Costs Judge Hurst and Robert Carter who have sat as assessors on this appeal.
