England and Wales High Court (Senior Courts Costs Office) Decisions

IN THE HIGH COURT OF JUSTICE      

		SCCO Ref:  06/A/115 Clifford's Inn, Fetter Lane London, EC4A 1DQ
		30th October 2006

Master Rogers:




The Issue

1. The short but important issue for decision in this case is the date from which the three month period for making an application that the Legal Services Commission should pay the costs of a successful non-legally aided opponent, specified in Section 11(1), of The Access to Justice Act 1999 pursuant to Regulation 10(2) of the Community Legal Services (Costs) Regulations 2000, runs. In short, does the three month time limit run from the date when the order is pronounced by the Court of Appeal, or by the necessarily later date upon which it is entered?

The Background

2. The Claimant, a minor, contracted polio with disastrous consequences, as a result of the alleged clinical negligence of the Defendant.  After a four day trial in November 2004, for which the Claimant was covered by a public funding certificate, he was successful, but the Defendant obtained permission to appeal against that judgment, and the appeal was heard on 6 and 7 October 2005.  On 24 November 2005, the parties' solicitors were confidentially circulated with a copy of the draft judgment of the Court of Appeal, indicating that the Defendant's appeal had been successful.
3. In accordance with the modern practice in the Court of Appeal, this judgment was accompanied by a standard letter indicating that the parties should submit an agreed order to the Court, so that when the judgment was formally handed down, there would be no need for attendance by either side.
4. In compliance with that letter, the parties did agree on the consequential directions, which flowed from the decision of the Court of Appeal, with one significant exception.  That was that the Claimant wanted the Court of Appeal to grant permission to appeal to the House of Lords, whereas of course, the Defendant strongly resisted any such application.
5. The formal judgment was handed down by the Court of Appeal on 29 November 2005, in the absence of any representative from either party, when the Court decided, having considered the written representations made by both sides, to refuse permission to appeal to the House of Lords.
6. The Claimant however, was determined to try to obtain such permission direct from their Lordships, and duly petitioned accordingly.  In order to facilitate such a petition the parties agreed a letter, of which I have seen a copy and which is dated 24 February 2006, from the Defendant's solicitors to the Claimant's solicitors:

"24 February 2006

Dear Sirs

Patient:                                   Hamish Thompson

MPS Member:           Dr Hugh R Bradford

Please confirm that you agree to the following proposal by placing your signature at the bottom of this letter.

It has been agreed that neither the respondent/claimant nor the Legal Services Commission will take any issue with regard to possible delay (beyond the 3 month period) in the appellant/defendant's application under Regulation 5 of the Legal Services Commission (Costs Protection) Regulations 2000 in respect of the Section 11(1) Order dated 6 November 2005.

Signed ............................................................

Berrymans Lace Mawer – for the appellant/defendant

Signed ............................................................

Leigh Day & Co – for the respondent/claimant

Signed .............................................................

The Legal Services Commission (provide funding to the respondent/claimant)

Yours faithfully".

7. The copy letter which I have seen, has written on it in ink, the following addition:  "Interest on costs to accrue only from the date of final determination of the matter" (that addition is initialled).  Also, the copy which I have seen, is only signed on behalf of the Defendant, but it appears to be common ground that is was also signed on behalf of the Claimant.
8. Unfortunately however, it was not received by the Legal Services Commission until 1 March, and of course, it referred to the wrong Regulation; it should have referred to Regulation 10 of the Costs Regulations.

The Section 11 Application

9. The Defendant launched his application under Section 11, for an order that the Legal Services Commission should pay his costs in the Court of Appeal, on 3 March 2006, on which date it was sealed by this office and sent out to all parties including the Legal Services Commission.
10. However on the same day, the Legal Services Commission had written to the Defendant's solicitors, the relevant paragraphs of which read as follows:

"The applicable procedure is contained in regulations 9 – 13 of the CLS (Costs) Regulations 2000.  You would have needed to in accordance with regulation 10 of the CLS (Costs) Regulations 2000 have made an application to the Supreme Court Costs Office for an order for costs against the Commission.  This application would need to have been made pursuant to section 18 of the Legal Aid Act 1988 not Regulation 5 of the CLS (Costs Protection) Regulations 2000 – please see regulation 5(1)(c) and 8(3) of The Access to Justice Act 1999 (Commencement No.3, Transitional Provisions and Savings) Order 2000.  Putting it simply as the certificate was one granted under the authority of Part IV of the Legal Aid Act 1988 the old law (including section 18) continued to apply. The only difference is that as of the 5^th June 2000 the new procedure applies.

Further, the recent Court of Appeal decision of R – v – Sec. of State for the Home Dept. ex parte Gunn (14/06/01) clarifies the matter even further by confirming that the application for costs must be made to the Costs Judge/District Judge as the case may be.

You will note that as per regulation 10(2) of the CLS (Costs) Regulations 2000 you had three months from the date the order was made in which to make the application.  The order was made on the 29^th November 2005 and hence you had until 1^st March 2006 to make your application.  No such application has been made.  Except for the limited power contained in regulation 12 (which only applies to an application against the assisted person) the court has no power to extend time as regards an application against the Commission. The failure to file within that time is an absolute bar in this case". 

11. The matter then remained in abeyance, pending determination by the House of Lords of the Claimant's petition for permission to appeal.  That permission was refused on 13 July 2006, and the stay on the Section 11 proceedings, which I had imposed by consent, was accordingly lifted, and it was agreed that a preliminary point should be argued before me, as to whether or not the Defendant's Section 11 application was in time.
12. That application came before me on 13 October, at the end of which I indicated to the parties that I would dismiss the application, and find in favour of the Legal Services Commission, for reasons which I would give later in writing, and it is these reasons which now follow.

The Legal Service's Argument

13. The Claimant through Mr Bagri, both in a written submission and as amplified by him at the oral hearing before me, argued simply that the wording of paragraph 10(2) of the Costs Regulations could only be construed as meaning that the three month period ran from the date when the order was made by the Court of Appeal, and that in this case that order was "made" on 29 November.
14. Paragraphs 10(2) and (3) of The Community Services (Costs) Regulations 2000 read as follows:

"(2)        The receiving party may, within three months after a section 11(1) costs order is made, request a hearing to determine the costs payable to him.

(3)         A request under paragraph (2) shall be accompanied by:

(a)      if the section 11(1) costs order does not state the full costs, the receiving party's bill of costs, which shall comply with any requirements of relevant rules of court relating to the form and content of a bill of costs where the court is assessing a party's costs;

(b)      a statement of resources; and

(c)      if the receiving party is seeking, or, subject to the determination of the amount to be paid under the section 11(1) costs order, may seek, a costs order against the Commission, written notice to that effect".

15. Mr Bagri submitted that paragraph 31(ii) of the judgment of the Master of the Rolls in R v Secretary of State for Home Department ex p. Gunn [2001] 3 ALL ER 481, supported that submission.  That of course is the leading case on Section 11 applications, and the paragraph in question reads as follows:

"We wish to take this opportunity to emphasise a fact that we understand is not generally appreciated.  The three month time limit for seeking an order against the Commission is mandatory – there is no power to extend it".

16. That of course, is no longer the case in respect of applications made pursuant to Regulation 5 of the Community Legal Services (Costs Protection) Regulations (Amendment No. 2) Regulations 2001, which gives the Court a discretion in an appropriate case, to extend that three month time limit.  It is clear however, and accepted by both parties before me, that Regulation 5 of the Amendment Regulations only applies to certificates applied for on or after 3 December 2001.  The Certificate in this case, was of course, granted well before that cut off date.    

The Defendant's Submissions

17. Mr Mallalieu, on behalf of the Defendant, submitted that the matter was not as clear cut as had been submitted on behalf of the Claimant.  In his helpfully full skeleton, as amplified by his oral submissions, he referred me to a number of matters, which in his submission, indicated that I should treat the relevant date of the order of the Court of Appeal as 8 December 2005, the date upon which it was sealed, rather than 29 November 2005, the date upon which the judgment was formally handed down.
18. He referred me first to the so called Re:  Barrell jurisdiction, (this is based on the case re:  Barrell Enterprises [1973] 1 WLR 19 (CA) as approved post CPR in Stewart v Engel [2000] 1 WLR 2268).  As Mr Mallalieu's skeleton puts it succinctly in paragraph 18:

"Put shortly, this is the jurisdiction for a Court, in exceptional circumstances, to reconsider or hear further submissions on a point between the date of an oral judgment being given and the date on which the order is perfected or sealed".

19. Mr Mallalieu also referred me to the clear and sharp distinction, with regard to appeal periods, between the old RSC Order 59 Rule 4(1), which provided that a notice of appeal had to be lodged "not later than four weeks after the date on which the judgment or order of the Court below was sealed or otherwise perfected", and the wording of CPR 52.4(2)(b), which specifically refers to the time for appealing as being "21 days after the date of the decision in a lower Court that the Appellant wishes to appeal".
20. He also claimed considerable support from the latest guidance given to the profession by the Legal Services Commission themselves, the relevant section in issue 102/'04 (which was accepted as being the latest such guidance) under the heading Costs Against the Commission contains the following paragraph:

"3.5     Procedural defects in the non-funded party's claim

The time limit for an application 

1.                     This is the time limit for making a request for a hearing, and consequently for seeking an order against the Commission, cannot be extended (as Phillips MR stressed in Gunn, para 31) except under the amendments introduced to the Costs Protection Regulations by the Community Legal Service (Cost Protection) (Amendment No.2) Regulations 2001.  The amendments affect cases where the client's application for funding was received on or after 3 December 2001.

2.                     Where the decision is governed by the amended Regulations, they permit the court to extend the time for making a claim against the Commission "where there is good reason for the delay".  In Yenula Properties v Venkat Mun Swami Naidu SCCO Case 02/700 Costs Judge Campbell said that a city solicitor's pressure of work and lack of familiarity with the Regulations did not amount to "good reason" (paragraph 53).  The regional office may agree not to take a point on delay where it seems fair to do so.

3.                     The date of an order, for these purposes, may be treated as the date it was made unless it is a consent order, in which case it may be treated as that on which it was sealed.  This is the approach followed by Costs Judge Wright in Cheung (Neubert) v Regent Commodity Brokers (SCCO December 2002).  He reasoned that the three-month limit should not run from the date when the parties agreed on the terms of a consent order, because the court may not approve the terms agreed between the parties.

4.                     An order that the client pay the costs, "not to be enforced without leave of the court", is a s.11(1) Order and a determination of the client's liability to pay.  Parr v. Smith [1995] 2 ALL ER 1031 C.A. is authority for the proposition that the effect of a "football pool order" is to determine the client's liability at nil.  The non-funded party therefore had three months from the date of the order in which to apply for assessment of their costs and an order against the Commission.

5.                     Where proceedings are discontinued, the date on which the s.11(1) order is notionally made against the funded client is the date of discontinuance. See CPR Part 44.12:  "(1)         Where a right to costs arises under ...(d) Rule 38(6) (defendant's right to costs where claimant discontinues) a costs order will be deemed to have been made on the standard basis".

Failure to file and serve a statement of resources

6.                     The consequences of the non-funded party's failure to file and serve a statement of resources depend on whether court needs to know about the non-funded party's financial situation in order to apply the (severe) financial hardship test, or merely in order to make a judgment whether it is just and equitable to make an order against the Commission.

7.                     A claim will not fail because of a technical omission, but it will if the court does not have enough information to decide that the test is satisfied.  In Jones & Another v Zahedi 4 All ER [1993] 909 C.A. the court refused to make an order on the grounds of severe financial hardship as the applicant's affidavit (the equivalent of the statement of resources) did not contain all the information required by Schedule 2 to the 1989 Regulations.  The court held that the regulations were mandatory and the requirements must be strictly complied with.  The applicant failed to discharge the burden of showing that severe financial hardship would be suffered.  Sir Thomas Bingham MR said (p.913 j):

"...the court may properly overlook any technical, formal or insignificant failure to comply with the requirements of the Schedule, and it may well be that the court need not take notice of any deficiency of which the paying party does not complain".

8.                     In the Court of Appeal cases the Supreme Court Costs Office assumes, if the non-funded party has failed to provide evidence of their resources, that they are able to pay their own costs.  The SCCO does not treat the application as inadmissible because of the defect.  The SCCO has consistently found, following Gunn, that although the non-funded party is assumed to be able to meet the costs of the proceedings, it is nevertheless just and equitable to make an order against the Commission.  The Commission chose not to appeal on the first occasion when a Costs Judge adopted that approach (Noor Khan, Unreported) and has not challenged it since.

9.                     In Cheung (Neubert) v Regent Commodity Brokers (SCCO December 2002) Costs Judge Wright made directions allowing the non-funded party an extension of time in which to serve a statement of resources, and dismissed the claim when the non-funded party failed to file and serve the statement within that period.

Filing and Serving a Notice of Commencement of Detailed Assessment

10.                   Under the CPR Rule 47.6, a successful party to proceedings starts the process of recovering assessed costs from their paying opponent by serving a "Notice of Commencement" on a prescribed court form, together with the bill of costs.  But the procedure under the CPR is displaced by the Costs Regulations.  CPR 44.17 provides:

44.17 This Part and Part 45 (fixed costs), Part 46 (fast track trial costs), Part 47 (procedure for detailed assessment of costs and default provisions) and Part 48 (special cases), do not apply to the assessment of costs in proceedings to the extent that –

(a)     Section 11 of the Access to Justice Act 1999, and that provisions made under that Act; or

(b)      regulations made under the Legal Aid Act 1988 make different provision.

11.         In Ross v Stonewood (SCCO 21 March 2002) Costs Judge Campbell dismissed an application for costs against the Commission where the non-funded party had served a Notice of Commencement within three months of the s.11(1) Order but did not make a request for a hearing, including notice of its intention to seek an order against the Commission, in the form set out in the Regulations, within that time.  But his colleague Costs Judge Wright declined to follow this approach in Cheung (Neubert) v Regent Commodity Brokers (SCCO December 2002) saying that a defect in the form in which a step is taken is capable of being rectified unless the relevant regulations expressly say this may not be done".

21. Mr Mallalieu did not wish me to look directly any of the cases cited, but I have in fact in the course of preparing this judgment, considered the case of Yenula Properties Ltd, and agree that it is of no direct assistance in this case.
22. Mr Bagri significantly conceded that if this was a consent order, then it was not operative until it was sealed by the Court of Appeal Office on 8 December, and therefore the application would be in time.

My Decision

23. As indicated to the parties at the end of the oral hearing, I dismissed the application.  I do not think that the Re: Barrell jurisdiction has any relevance here because this was not an oral judgment handed down, giving the parties the opportunity to suggest amendments, and therefore subject to alteration prior to sealing, but a written judgment, which had been circulated to the parties in advance of its formal handing down.
24. Nor can I accept his submission that the order made by the Court of Appeal on 29 November, was a consent order.  It is of course true that all the consequential directions with one significant exception were agreed, but the significant exception, was of course, whether or not permission to appeal should be granted.  In accordance with the Court of Appeal practice, the parties were told to make their submissions on this point in writing, but it could not be known in advance what decision the Court of Appeal would reach.  Quite clearly, they considered the written representations, and decided to refuse that permission.  What slightly surprises me about the case is it that neither side was curious enough as to the outcome of what was such an important difference between them, to either send a trainee down to Court to find out, or to telephone the Court of Appeal Office, to find out what decision had been made, but were content to wait until the formal order of the Court, as sealed, came out after 8 December.
25. The clear wording of Regulation 10(2) is a trap for the unwary, and sadly, the Defendant's solicitors have fallen into that trap in this case, and despite Mr Mallalieu's valiant efforts, in my judgment, have failed to climb out of that trap.

Conclusion

26. When this judgment is formally handed down, I will deal with the issue of the costs of the hearing, and any application on behalf of the Defendant for permission to appeal.