Michelle Quinn (plaintiff) v South Eastern Health Board (defendant)
Taxation - Review of decision of the Taxing Master - Whether s. 27(1) of the 1995 Act is a substitute for O.99 RSC - Effect of s.27 on the procedure for review of taxation by the court - Whether allowances made by the Taxing Master in respect of the brief fee for counsel were inadequate - Rules of the Superior Courts O.99, r.37(18), O.99, r.37(22)(ii), - Courts and Court Officers Act 1995 ss 27(1), (2), (3).
The High Court (Mr Justice Peart); judgement delivered on November 30th, 2005.
Section 27 has not replaced the provisions of O.99 but has conferred additional powers on the Taxing Master, including the power to examine the extent of work actually done by counsel, and to allow only such fee as is fairly and reasonably incurred for the attainment of justice or for enforcing or defending the rights of any party. The court can intervene where it is satisfied (1) that the Taxing Master has erred as to the amount of the allowance or disallowance and (2) that the error is such as to amount to being unjust. Pursuant to a review of the decision of the Taxing Master under section 27(3) of the 1995 Act, the court found that the Taxing Master did not give sufficient weight to, inter alia, pre-trial work undertaken by counsel.
The High Court so held in finding for the plaintiff in that the Taxing Master erred in principle.
James Salafia SC and Barbara Seligman BL for the plaintiff; Eileen Barrington BL for the defendant.
Mr Justice Peart commenced his judgment by outlining the background to the case. By notice of motion the plaintiff sought to have the court review the decision of the Taxing Master on the ground that allowances made by the Taxing Master in respect of the brief fee for senior and junior counsel were inadequate. The brief fee for senior counsel was claimed at €47,615.18 and that for junior counsel was claimed at €31,743.45.
Mr Justice Peart referred to the report of the Taxing Master in which the Taxing Master concluded that the brief fee claimed was "excessive and exceptionally high". The Taxing Master considered that brief fees of €26,000 and €17,333 respectively would be fair and reasonable, and a fee which "more accurately represented the going value for such an action". The circumstances in which the claim arose were that when the plaintiff was 14 she suffered from appendicitis which resulted in an appendectomy being performed in November, 1993. She was discharged from hospital after about ten days, but after a short time she began to experience pain in her right thigh.
Subsequently, another surgeon diagnosed that she was probably suffering from a form of meralgia parasthetica. Although injections gave her some temporary relief, surgery was later advised and performed in August, 1994, and subsequently her condition regressed to the extent that she was worse off than before the operation.
She was then referred to a neurologist and it appeared that as a result of the operation which had been performed it was not possible for that neurologist to determine what nerve or nerves might be implicated in the plaintiff's then condition. The case came on for trial on July 11th, 2001, and was heard over a period of three days. Judgment was reserved until March 22nd, 2002, when the plaintiff succeeded in her claim and was awarded damages in the sum of €300,000. By order of the learned High Court judge, the plaintiff was, in addition to her damages, awarded her "costs of this action when taxed and ascertained, to include reserved costs and costs of issues". Mr Justice Peart stated that it was clear from the report of the Taxing Master dated October 21st, 2004, that having considered all submissions he concluded that the claimed brief fee for senior counsel was excessive and exceptionally high and after reconsideration of the matter had considered €26,000 to be fair and reasonable, and a fee which "more accurately represented the going value for such an action".
Counsel for the plaintiff (who was not the counsel for the plaintiff in the action itself) submitted that the reduction of counsel's fees by the Taxing Master was an interference with the intention of the court which had awarded the plaintiff "her costs". He submitted that an experienced and competent plaintiff's solicitor had agreed a certain fee with the senior counsel of his choice and that the decision of the Taxing Master had the effect now of depriving the plaintiff of a significant portion of her damages unless either her solicitor or counsel themselves accepted a fee less than that marked and agreed. Counsel relied on Order 99 r.37(18) of the RSC where it is provided that the Taxing Master shall allow all such costs, charges and expenses as appear to him to be necessary for the attainment of justice. Counsel referred to the judgment of Gannon J. in Heffernan v Heffernan (High Court December 2nd, 1974) to the effect that the onus is on the defendant to establish that the fee marked is the result of factors such as over- caution, negligence, mistake, or that it is unreasonable an amount or unreasonably incurred. Counsel submitted that unless it is shown that the fee marked comes within any of these terms, it should not be interfered with. He also referred to the practice which had grown up over many years where counsel's fee had been based not on actual work done but rather on some "going rate" basis or hypothetical basis of assessing what might have been done, whether it was done or not. It was submitted that under s.27(1) of the 1995 Act the Taxing Master may now have regard to the actual work done by counsel in the case, but that, given the opening words "on a taxation of the costs" the provisions of O. 99 RSC still apply and that, accordingly, the discretion permitted to the Taxing Master under the Rules is still applicable and not removed by the provisions of s.27(1) of the 1995 Act. The Taxing Master cannot simply substitute his own opinion of a proper fee, but must form the view that the fee marked or agreed with counsel is a fee which no reasonably careful, experienced and prudent solicitor would agree.
Counsel submitted that in his examination of the work done by counsel for the purposes of determining whether the fee is appropriate in all the circumstances, the Taxing Master must look at the work done by counsel from the time of first involvement, consider what difficulties were encountered at that time and how these difficulties were addressed and resolved over the years between commencement and conclusion of the action. Counsel submitted that here the Taxing Master was in error by looking at the judgment of the learned High Court judge and deciding that the case was simply won on the basis of a single expert medical witness and that this approach did not do justice to the amount of work required to be done in order to bring about the situation where the trial judge was persuaded that the defendant was negligent. It was submitted that none of the criteria under O.99, r.37(22)(ii) RSC were addressed by the Taxing Master in his consideration of counsel's fee. O.99, r37(22)(ii) provides as follows:
"in exercising his discretion in relation to any item, the Taxing Master shall have regard to all relevant circumstances and in particular to:
(a) the complexity of the item or of the cause or matter in which it arises and the difficulty or novelty of the question involved;
(b) the skill, specialised knowledge and the responsibility required of, and the time and labour expended by the solicitor;
(c) the number and importance of the documents (however brief) prepared or perused;
(d) the place and circumstances in which the business involved is transacted;
(e) the importance of the cause or matter to the client;
(f) where money or property is involved, its amount or value;
(g) any other fees and allowances payable to the solicitor in respect of other items in the same cause or matter but only where work done in relation to these items has reduced the work which would otherwise have been necessary in relation to the item in question."
It was also submitted that while the taxation process is one by which the defendant in this case could be protected in the matter of what costs were payable, it was also the case that the defendant had had power to limit the extent of the case and the fact was that this action was fought on all issues raised and no concessions or admissions were made. It was therefore necessary for the plaintiff's legal team to be fully briefed. It was submitted also that the instructing solicitor must have regard to what the appropriate fee is giving regard to what he referred to as "the market place" and in this regard counsel suggested that the market place is not judged by what is allowed on taxation in other cases, but rather by what is marked by counsel and that in this regard, it was relevant to the question as to what constitutes "the market place".
In relation to the use of comparators, counsel submitted that the cases considered by the Taxing Master were irrelevant and misleading, because there were meaningless unless it could be show that they involved the same amount of work in the context of similar issues, and that that work was actually done in those cases. Reference was made to the fact that in many cases the fee actually marked by counsel is withdrawn by counsel on the basis that he or she cannot show working papers or provide evidence as to the work actually done so that the fee can be justified and this was in contrast to the present case where counsel's notes and other material were provided to the Taxing Master in order to show the work actually done by senior counsel.
On behalf of the defendant, it was submitted that before the court should interfere with the decision of the Taxing Master it would be necessary for the plaintiff to identify some error in principle in his consideration of counsel's fee and none such had been identified in the case put forward on behalf of the plaintiff. Counsel submitted that s.27(1) of the 1995 Act fundamentally changed the manner in which fees are considered and that it gave the Taxing Master greatly increased powers to delve into and consider the actual work done by counsel in a case so that the appropriateness of the fee charged can be assessed. Counsel submitted that the market place to which counsel for the plaintiff referred was more correctly described by reference to what a plaintiff's solicitor and a defendant's solicitor would agree was the reasonably appropriate fee for the work involved. Counsel submitted that these changes had resulted in the Taxing Master becoming a specialist tribunal and that the court's review of the taxation is now in the nature of a judicial review and that the court should interfere only if there is an error shown which would lead to injustice. In respect as to what might be sufficient to constitute an injustice to the plaintiff reliance was placed upon the dicta of Kearns J in Superquinn Ltd v Bray UDC 1 IR 459 who considered that for such an error to constitute an injustice would have to be of the order of 25 per cent and that translating that formula into the instant case, the court would have to be satisfied that the brief fee for senior counsel in July, 2001, should have been at least €32,500 (i.e. €25,000 plus 25 per cent). Counsel submitted that there had been no error of principle identified by the plaintiff in these proceedings. Counsel submitted that in the conduct of the taxation the Taxing Master must, as found in Best v Wellcome Foundation 3 IR 378, adopt the standard of the practising solicitor who is reasonably careful and reasonably prudent, and that the court should be careful not to deal with the review on the basis of an appeal on the merits.
Mr Justice Peart stated that it appeared to him that counsel's fees are addressed in O.99, r.37(18) which provides that the Taxing Master shall allow on every taxation "all such costs, charges and expenses as shall appear to him to have been necessary or proper for the attainment of justice or for enforcing or defending the rights of any party, but no costs shall be allowed by payment of special fees to counsel..." Counsel's fees are a disbursement of the solicitor and as such come within this rule rather than O.99, r.37(22)(ii) RSC. Thus it followed that counsel for the plaintiff could not, as he sought to do, impugn the decision of the Taxing Master on the basis that none of the criteria set forth in this rule were addressed. The discretion of the Taxing Master in relation to counsel's fees had, prior to the enactment of s.27 of the Act, been distilled down to the proposition that the Taxing Master should disallow a counsel's fee only if he was of the view that no solicitor acting reasonably carefully and reasonably prudently based on his experience in the course of his practice would have agreed such a fee.
Prior to the enactment of s. 27 of the 1995 Act, the appropriateness of the fee marked by counsel was measured to an extent by what was "the going rate" for such a case and in many instances this criterion bore little if any relationship to the amount of work done and time spent by counsel in preparing for the hearing and presenting the case to the court. Prior to the enactment of s. 27 the Taxing Master was precluded from inquiring into the amount of work actually undertaken by counsel in any particular case.
S.27 has not replaced the provisions of O.99 RSC, but has conferred additional powers upon the Taxing Master in the matters of assessing the appropriateness of the solicitor's instruction fee, counsel's fees, and the fee of any expert witnesses called or engaged in any case. Those additional powers include the power to examine the nature and extent of work actually done by counsel, and to allow only such fee or part of a fee as he "considers in his or her discretion to be fair and reasonable in the circumstances of the case".
Mr Justice Peart was of the view that the Act had made sweeping changes to the manner in which costs are taxed in that it is clear that the fees of junior counsel, which were always allowed on the basis of two thirds of those of senior counsel, can now be examined on the basis of the nature and extent of work actually done by junior counsel, and the level of the appropriate brief fee for counsel (be it senior or junior) is now not to be based simply on what a solicitor acting reasonably and reasonably prudently based on his experience in the course of his practice would have agreed, but rather on the basis of what in the opinion of the Taxing Master was fairly and reasonably necessary to be incurred "for the attainment of justice or for enforcing or defending the rights of any party".
Mr Justice Peart stated that it is the introduction of the Taxing Master's view of what is "fair and reasonable" by s.27(2) which appears to effect a change from what was previously the rule appearing in O.99, r.37(18) RSC where the Taxing Master was required to allow such fees as shall "appear to him to be necessary or proper", and which allows the Taxing Master to substitute his own views in this regard for the opinion of the solicitor who was acting reasonably carefully and reasonably prudently.
Nevertheless, it must be noted that in s.27 it provides only that "the Taxing Master shall have the power " to examine both the nature and extent of work done and to allow a fee which he considers fair and reasonable. It is not mandated by the section that the Taxing Master avails of these powers, and this is in contrast to the mandatory nature of the provisions of O.99, r.37(18) RSC. But it seems to follow that the Taxing Master will now normally need to exercise his discretion in the matter of fees by looking at the work actually done and making his own assessment as to whether the fees in question were fairly and reasonably "necessary for the attainment of justice or for enforcing or defending the rights of any party".
Mr Justice Peart said that in arriving at what he considers to be a fair and reasonable fee necessary or proper for the attainment of justice, the Taxing Master will naturally draw upon his expertise and experience in the matter of costs, and he may, and often does, have regard to what fees are allowed on taxation in what are regarded by him to be comparable cases. However, the use of comparable cases cannot be a substitute for a close examination of all the features and circumstances of a case. Even though the criteria set forth in O.99, r.37(22)(ii) RSC appeared to apply only to the question of the solicitor's instruction fee and not counsel's fee, those very same criteria seem to be matters which would have to be borne in mind and have regard to by any Taxing Master bringing his mind to bear upon the question of what is a brief fee which is fair and reasonable in order to attain justice when exercising his discretion in accordance with the provisions of s.27 of the 1995 Act.
Mr Justice Peart said that where a brief fee, as marked, is higher than what the Taxing Master considers fair and reasonable, having had regard to all relevant factors, the party whom he or she represented may (subject to any renegotiation of the fee which might take place) be called upon to discharge the difference on the basis of what are called the solicitor/client costs. It has always been the case that party and party costs are not calculated on the basis that the client will be fully indemnified in respect of all costs, except in exceptional cases. It is the extent of that difference which has the capacity to constitute an injustice for the purpose of a review of the taxation by this court by virtue of the provisions of s.27 (3) of the 1995 Act. Kearns J. in the Superquinn case felt it appropriate to use the same criteria for determining injustice in this regard, as had been found to be appropriate by the Supreme Court in assessing whether an award of damages was unjust - namely "unless an error of the order of 25 per cent or more has been established in relation to an item under challenge". Mr Justice Peart said he had some hesitation about such a pragmatic formula in the context of a costs item because it does not allow for the fact that the same amount of work may be required of counsel in a case where the damages award is €100,000 as in the case where the award is €300,000 giving rise to a similar level of fee. In a situation where the fee marked in each case is €30,000, and each is reduced by €10,000 on taxation, the impact on the plaintiff in the first case is to the extent of 10 per cent of the damages received whereas in the second case its impact is of the order of only 3.33 per cent. Mr Justice Peart said that the question of what is just or unjust in this regard must be viewed on a case to case basis, since different factors may be at play.
Mr Justice Peart stated the court could intervene in the instant case, only if it was satisfied (1) that the Taxing Master had "erred as to the amount of the allowance or disallowance", and (2) that this error was such as to amount to being "unjust". Mr Justice Peart added that it seemed that the subsection permitted the court to intervene in circumstances where although it was satisfied that the Taxing Master went about his task in a way that was correct in every way, taking into account properly all relevant matters and excluding irrelevant matters, including a close examination of the work done and required to be done and so forth, and in a way committing no error in principle as such, the court nevertheless may form the view that the figure actually allowed or disallowed was, by being either too high or too low, unjust to the party seeking the review.
Therefore the question before the court, presented upon a review, having regard to the provisions of section 27(3) of the 1995 Act, was simply whether the brief fee in the sum of €26,000 for senior counsel was, in this particular case, wrong to the point of being unjust to the plaintiff who may have to pay the difference of €21,615.18 out of the award of damages which she received. Such an error may well occur because the Taxing Master had erred in the manner in which he addressed the issues to be addressed in forming his view of the amount, or it may arise simply because having gone about his task correctly he had arrived at a figure which worked an injustice to the plaintiff.
Mr Justice Peart was of the view that it was no longer appropriate to have the same regard as heretofore to so-called comparable cases when attempting to arrive at the appropriate fee for the case. Some regard can be had, but its importance has been diminished by the enactment of section 27 whereby the Taxing Master can look at the extent and nature of work actually done. Having looked at the decision of the Taxing Master in the instant case where he referred to the comparator cases to which he was referred, it seemed that perhaps he allowed himself to be unduly influenced by them, in as much as while he referred specifically to the fact that they are only a guide, he added in his report that they were a "very compelling guide". Mr Justice Peart said that the reliance placed by the Taxing Master on the fact that there was only one liability witness called, and that the discovery documentation had been to hand at the Statement of Claim stage, did not give sufficient weight to the pre-trial work. Mr Justice Peart stated that the Taxing Master had undervalued the extent of that work which was necessary as part of the preparation of the case, and that this was evident from the decision itself. Mr Justice Kearns in Superquinn (supra) referred to the necessity to "set out in some detail an analysis of the work and the reasoning which leads to the determination made in respect of the solicitor's instruction fees and counsel's fees " In Mr Justice Peart's view this did not occur in the present case, and if the court was to be in a position to carry out a review in the way contemplated by section 27(3) of the 1995 Act, it must be able to do so in the light of clearly set forth findings in the Taxing Master's report. There is a greater onus upon the Taxing Master perhaps than heretofore given that he must now justify his decision on the basis that it is fair and reasonable, as opposed to being in line with the "going rate". The Taxing Master must have appropriate regard for the materials before him, particularly when making a decision to disallow almost half of the fee claimed, as in the present case.
Mr Justice Peart stated that the Taxing Master had fallen into error, and in a way that could rightly be referred to as an error of principle, although he expressed reluctance to speak of it in those terms for the reasons given. In the events which happened the plaintiff's case was won and an award of damages which is said to represent the full value of the plaintiff's claim was achieved, but not without considerable and documented hard work and effort outside the courtroom itself - ie pre-trial. Even allowing for the fact that the fee must be looked at from the 2001 stand-point, Mr Justice Peart stated that a brief fee of €37,500 would be justifiable. Since no cross-review by the defendant was before the court in relation to the two thirds basis of calculation in respect of the brief fee for junior counsel, Mr Justice Peart was satisfied that that fee should be increased by the same margin to the sum of €25,000. Mr Justice Peart was unable to discern any reason why it would be fair and just to ask the plaintiff to discharge the amount marked on the brief where is exceeded that allowed by the Taxing Master.
Solicitors: Denis O'Sullivan & Co (Cork) (for the plaintiff); Arthur Cox (Dublin) (for the defendant)
Kieran O'Callaghan, barrister.