Masterman-Lister v Brutton & Co

LORD JUSTICE CHADWICK: These two appeals having been dismissed it is not in dispute that we should order the appellant to pay the costs of the respondent to each appeal, with a direction for detailed assessment of those costs if not agreed on a standard basis. Nor, in the circumstances that the defendant has been funded by the Legal Services Commission, is it in dispute that the determination of the amount of those costs which it is reasonable for the appellant to pay should be referred to a costs judge in accordance with Regulation 10 of the Community Legal Services Costs Regulations 2000 - see Section 11 (1) of the Access to Justice Act 1999 and paragraphs 1, 2 (b) and 5 of Regulation 9 of the Costs Regulations.

Funding by the Legal Services Commission replaced, with effect from 1 April 2000, funding by the Legal Aid Board under the Legal Aid Act 1988. Under Section 18 of the 1988 Act (now repealed) a court, in proceedings to which a legally assisted person was party and which had been finally decided in favour of an unassisted party, was empowered to make an order for the payment of the whole or any part of the unassisted party's costs in the proceedings. That power was replaced by a corresponding power in Regulation 5 (2) of the Community Legal Services Costs Protection Regulations 2000. That power, also, is exercisable where the proceedings have been finally decided in favour of a non-funded party. Those Those regulations came into force on 1 April 2000. With effect from 5 June 2000 any application for an order under the provisions in Section 18 of the 1988 Act is to be determined by the Costs Regulations - see Article 8.3 of the Access to Justice Act 1999 Commencement Number 3 Transitional Provisions and Savings Order 2000 (SI 2000/774). The regime therefore is the same whether the power is exercised under Section 18 or under Regulation 5 (2).

The effect of our decision on these appeals is that the action brought by the appellant against Mr Jewell and Home Counties Dairy Ltd was finally disposed of by a compromise in 1987. The second action, against Brutton & Co, may continue. Brutton & Co are the respondents to appeal number 0691. They wish to preserve their right to apply for an order for payment by the Legal Services Commission of their costs of that appeal.

Prima facie, Brutton & Co would have the right to set off their costs of the issue and this appeal against any damages or costs awarded against them in the proceedings. But that right will be of no avail if the proceedings are discontinued, or if the amount eventually awarded to the claimant in the proceedings is less than the amount of costs of the preliminary issue and this appeal. Their concern, in those circumstances, is that they must meet the requirement that any application to the costs judge under Regulation 10 (2) of the Costs Regulations, following an order made in this court for the payment of costs ("a Section 11 (1) costs order") must be made within three months after that order. That period cannot be extended - see the observations of this court in Gunn v Secretary of State for the Home Department [2001] 1 WLR 1634 at 1645 paragraph 31 (ii). If a Section 11 costs order is made today it is unlikely that the respondents will know whether they need to seek an order against the Legal Services Commission within the next three months.

Further, it is feared that the effect of the requirement, in Section 18 of the Legal Aid Act 1988 and in Regulation 5 (2) of the Costs Protection Regulations, that the proceedings should have been finally decided in favour of the unassisted party could be that the costs judge would have no power to make an order against the Legal Services Commission because the main proceedings were still continuing. In order to meet that difficulty it is suggested by counsel on behalf of Brutton & Co that the Section 11 (1) costs order should be made by this court on the basis that the costs judge can and should adjourn the determination of both the appellant's liability to pay the costs of this appeal and any application by the respondents for an order of the payment of those costs by the Legal Services Commission until after the underlying action has finally been disposed of.

Alternatively, it is suggested that an appropriate solution might be to adjourn the issue of costs of this appeal with permission to apply so that a Section 11 (1) costs order could be made once the underlying action has been finally resolved.

For my part I am not at all attracted by the suggestion that the question what order should be made in relation to the costs of this appeal should be adjourned for what may be a lengthy and indefinite period while these proceedings work their way through to final disposal. I can see no reason why a Section 11 (1) costs order should not be made at this stage in the form of paragraph 3 of the draft order that has been put before us; that is to say, an order that the determination of the appellant's liability, if any, to pay costs and any application by the respondent for an order for payment of such costs by the Legal Services Commission be referred to a costs judge in accordance with Regulation 10 of the Community Legal Services Costs Regulations 2000. I would amend the paragraph so that it covers not only an application for an order under Section 18 of the Legal Aid Act 1988 but also an application under Regulation 5 of the Costs Protection Regulations 2000. The effect of an order in that form, as it seems to me, will be that any application for payment of Burtton & Co's costs by the Legal Services Commission will have to be made within three months of the date of the order. If, on such an application, the Legal Services Commission takes the point that the application is premature the costs judge will have power to adjourn the matter until there has been a final resolution of the proceedings; or, if he thinks it necessary, to refer the point for guidance by an appellate court.

My present view is that further guidance is unnecessary. To my mind the point is covered by the observations of Lord Denning MR in General Accident Car and Life Assurance Corporation Ltd v Foster [1972] 3 All ER 877. At page 880B, by reference to the comparable provisions then in the Legal Aid Act 1964, he said this:

The only proceedings in relation to which we are asked to make an order for costs are the proceedings in this court. Those proceedings have been finally determined; and I can see no difficulty in the exercise by a costs judge of the jurisdiction conferred by the statute and the regulations in relation to the costs of those proceedings.

It is suggested by counsel that some doubt might be thrown upon that proposition by observations of Lord Justice Neil in R v Greenwich London Borough Council ex p Lovelace [1992] 1 QB 155; in particular at page 164, where he indicated, in the context of that case, that the word "proceedings" should be -

The point cannot be determined in the absence of the Legal Services Commission. To provide for the possibility that the Commission might wish to take the point - and to ensure that Brutton & Co are protected in that event - I would add to the minute of order a liberty to apply, exercisable by Brutton & Co and by the Legal Services Commission, in the event that an application for an order under Section 18 or Regulation 5 (2) is refused on jurisdictional grounds.

LORD JUSTICE POTTER: I agree.

LORD JUSTICE KENNEDY: I also agree.