QUEEN'S BENCH DIVISION
Strand, London, WC2A 2LL |
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B e f o r e :
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JACQUELINE FLOYD -and- S |
Appellant in Costs Appeal Claimant in original proceedings Defendant in original proceedings |
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- and - |
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LEGAL SERVICES COMMISSION |
Respondent in Costs Appeal |
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Jeremy Morgan QC (instructed by Legal Services Commission) for the Respondent
Hearing dates: 14 April 2010
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Crown Copyright ©
Mrs Justice Cox :
The Facts
The Costs Proceedings
"Further you had three months in which to make your applications. Regulation 5(3)(c) of the CLS (Costs Protection) Regulations 2000 (as amended) states:
'(3) An order under paragraph (2) may only be made if all the conditions set out in sub-paragraphs (a), (b), (c) and (d) are satisfied:…
(b) unless there is a good reason for the delay, the non-funded party makes a request under regulation 10(2) of the Community Legal Service (Costs) Regulations 2000 within three months of the making of the section 11(1) costs order;…'
The various orders were made on 31/10/06 and 18/03/08 (there was no order for costs in the House of Lords). Hence you had until 31/01/07 and 18/06/08 to issue your respective applications. Even if your N252s can be construed as applications (which for the avoidance of any doubt I say they cannot) they were all out of time. You have not shown any good reason for the delay and were you to issue your applications properly now they will be doomed to failure for this reason alone."
Cost Judge's Decision
(1) Accepted the LCS's submission that he had no discretion to extend time unless there was a good reason for the Claimant's non-compliance with the three-month time limit in the rules;
(2) Decided that the Costs Practice Direction merely described the relevant practice and that the relief from sanction provided by the CPR did not apply to assist the Claimant in this case; and
(3) Decided that no good reason had been shown by the Claimant for extending time so that, notwithstanding the harshness of the result in the circumstances, the application should be dismissed.
The Appeal
(i) CPR 44.17, dealing with the application of the costs rules, only excludes those rules from applying to the assessment of costs in proceedings, to the extent that different provision is made in the relevant legislation (Section 11 of the 1999 Act and regulations made under the Legal Aid Act 1988). It does not have the effect of excluding the rules more generally, or of excluding the Court's case management powers under CPR 3. The rules will therefore apply to questions such as that arising in the present case: i.e. whether the Claimant should be permitted to proceed with her application for costs to be paid by the LSC.(ii) CPR 44.17 refers to the Costs Practice Direction, paragraphs 21-23, which "sets out the procedure to be followed" where a party was wholly or partially funded by the LSC, as here.
(iii) Paragraphs 21.16 and 21.18 refer expressly to regulation 5 of the Community Legal Service (Cost Protection) Regulations 2000, which states when and how a non-funded party's costs can be awarded against the LSC. S. 21.18 refers to the criteria to be satisfied before the LSC can be ordered to pay any costs, the second of which is that:
"(2) Unless there is good reason for delay the non-funded party provides notice of intention to seek an order against the LSC within three months of the making of the Section 11(1) costs order;"(iv) That appears to be a strict timetable to be followed by a non-funded party unless a good reason for delay can be shown. However, a strict timetable is also applied to the funded party in relation to applications by a receiving party under regulation 10, dealt with at paragraph 23 of the Practice Direction.
(v) Paragraph 23.5 however provides that, on being served with a receiving party's application,
"… the LSC funded client must respond by filing a statement of resources and serving a copy of it on the receiving party (and the Regional Director where relevant) within 21 days. The LSC funded client may also file and serve written points disputing the bill within the same time limit. (Under Rule 3.1 the Court may extend or shorten this time limit.)"(vi) Thus the CPR, through the Costs Practice Direction para. 23.5, expressly permits the Court to exercise a discretion under CPR 3.1 and to extend time, whether or not a good reason has been shown for delay by the funded party on responding to the application.
(vii) Since the Court's power to extend time applies unless the contrary is stated (r.3.1(ii)) it must follow that this power applies equally to applications made under regulation 5, as in this case.
(viii) Effectively both sets of the 2000 Costs Regulations are incorporated into the CPR via the costs Practice Direction. The Regulations must therefore be read subject to the Court's wider discretion to extend time where, for example, a substantial injustice would otherwise be caused to a non-funded party. Indeed it would be remarkable if it were otherwise, and the Court's powers to grant relief from sanction were displaced when the parties are using the Court to resolve a dispute.
(ix) The costs judge was therefore wrong to decide that he had no power to consider whether to exercise his discretion in the Claimant's favour and extend time.
(x) Applying Sayers v Clarke Walker [2002] 1WLR 3095, the Claimant's inability in this case to pursue her claim against the LSC, because the Court would not extend time, amounted to the imposition of a sanction and the provisions of CPR 3.9 therefore apply in relation to granting relief from sanction. Since this matter was not considered by the costs judge the appeal should be allowed and the matter remitted to be properly considered on the evidence.
"5 Costs order against Commission
(1) The following paragraphs of this regulation apply where:
(a) funded services are provided to a client in relation to proceedings;
(b) those proceedings are finally decided in favour of a non-funded party; and
(c) cost protection applies.
(2) The court may, subject to the following paragraphs of this regulation, make an order for the payment by the Commission to the non-funded party of the whole or any part of the costs incurred by him in proceedings (other than any costs that the client is required to pay under a section 11(1) costs order).
(3) An order under paragraph (2) may only be made if all the conditions set out in sub-paragraphs (a), (b), (c) and (d) are satisfied:
(a) a section 11(1) costs order is made against the client in the proceedings, and the amount (if any) which the client is required to pay under that costs order is less than the amount of the full costs;
(b) unless there is a good reason for the delay, the non-funded party makes a request under regulation 10(2) of the Community Legal Service (Costs) Regulations 2000 within three months of the making of the section 11(1) costs order;
(c) as regards costs incurred in a court of first instance, the proceedings were instituted by the client, the non-funded party is an individual, and the court is satisfied that the non-funded party will suffer … financial hardship unless the order is made; and
(d) in any case, the court is satisfied that it is just and equitable in the circumstances that provision for the costs should be made out of public funds.
(3A) An order under paragraph (2) may be made- …
(b) in relation to proceedings in the Court of Appeal, High Court or a county court, by a costs judge or a district judge; …
(4) Where the client receives funded services in connection with part only of the proceedings, the reference in paragraph (2) to the costs incurred by the non-funded party in the relevant proceedings shall be construed as a reference to so much of those costs as is attributable to the part of the proceedings which are funded proceedings.
(5) Where a court decides any proceedings in favour of the non-funded party and an appeal lies (with or without permission) against that decision, any order made under this regulation shall not take effect;
(a) where permission to appeal is required, unless the time limit for applications for permission to appeal expires without permission being granted;
(b) where permission to appeal is granted or is not required, unless the time limit for appeal expires without an appeal being brought.
…"
"Unlike the Lord Chancellor's orders under his 'Henry VIII' powers, the Civil Procedure Rules 1998 themselves and the 1991 Remuneration Regulations, the Practice Directions are not made by Statutory Instrument. They are not laid before Parliament or subject to either the negative or positive resolution procedures in Parliament. They go though no democratic process at all, although if approved by the Lord Chancellor he will bear ministerial responsibility for them to Parliament. But there is a difference in principle between delegated legislation which may be scrutinised by Parliament and ministerial executive action. There is no ministerial responsibility for Practice Directions made for the Supreme Court by the Heads of Division. As Professor Jolowicz says … 'It is right that the court should retain its power to regulate its own procedure within the limits set by statutory rules, and to fill in gaps left by those rules; it is wrong that it should have power actually to legislate'."
"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."