Rayner v The Lord Chancellor

The Respondent to this appeal, Mr Nicholas Rayner, was the defendant in an action brought against him by Mrs Kumari Murphy, who became his carer after he suffered a serious stroke. Part of her claim in the action was for a share in his flat and in his investments, title to which was vested in two off-shore companies which he owned and controlled and which were accordingly also defendants in the action. Mr Rayner counterclaimed for money and other valuables misappropriated by Mrs Murphy.

Mrs Murphy’s legal representation was – subject to the hiatus referred to below – funded by the Legal Services Commission (“the Commission”) under Part I of the Access to Justice Act 1999 (“the 1999 Act”).

The claim and counterclaim were heard by Mr Jeremy Cousins QC, sitting as a Deputy High Court Judge, in the Chancery Division. The trial started on 19 July 2010, was adjourned at the end of the month and was resumed in September, with a further hearing in November. By a judgment handed down on 18 January 2011 Mrs Murphy’s claim was dismissed and an account was ordered: following the taking of that account she was ordered to pay Mr Rayner just under £1m. Mr Rayner was awarded the costs of the proceedings on the indemnity basis. There is thought to be no realistic prospect of recovery of any substantial sums from Mrs Murphy.

There are two features of the legal aid system under the 1999 Act, and the predecessor legislation at least as far back as the Legal Aid Act 1964, which are central to this appeal. In summary:

The regime established by the 1999 Act was altered by the Legal Aid Sentencing and Punishment of Offenders Act 2012, and the 2000 Regulations have been replaced with effect from 1 April 2013 by the Civil Legal Aid (Costs) Regulations 2013 (though it appears that the replacement provisions are in substantially identical terms). At the same time the Commission was abolished (see section 38 of the 2012 Act), with responsibility for civil legal aid passing to the Lord Chancellor (who discharges his functions through the Legal Aid Agency). All the Commission’s surviving liabilities have been transferred to the Lord Chancellor: see paragraph 7 of Schedule 4 to the 2012 Act.

Mr Rayner made a claim against the Commission under regulation 5 of the 2000 Regulations for the totality of the costs awarded against Mrs Murphy: the sum claimed is over £700,000. The Lord Chancellor accepts that Mr Rayner is in principle entitled to an order, but he does not accept liability for the full amount claimed. The issue arises from the fact that there was a period in the course of the proceedings during which Mrs Murphy was represented by solicitors who were not named in the funding certificate issued by the Commission. The facts can be sufficiently summarised as follows:

On 18 July 2011 Master Haworth, sitting in the Senior Courts Costs Office, ruled that Mrs Murphy did not have cost protection during the hiatus period: I refer to this as “the 2011 decision”. I need not set out the Master’s reasoning in detail, but the essential point was that “during [the hiatus] period … [Mrs Murphy] did not have the benefit of funded proceedings” because she had ceased to instruct Ismail & Co, who were the only solicitors whose work the Commission had agreed to fund.

The Commission contended, and the Lord Chancellor now contends, that it follows from the 2011 decision that no order could properly be made against it under regulation 5 in respect of the costs incurred by Mr Rayner during the hiatus period: since the proceedings were not funded during that period, such costs were not “attributable to [a] part of the proceedings which [were] funded proceedings”. Mr Rayner disputes this: his case is that the costs incurred during that period were “attributable to” the earlier stages in the proceedings, during which Mrs Murphy was funded, because they had to be incurred in response to the steps taken by her in that period. In a nutshell, the Lord Chancellor’s case is that the relevant criterion is purely temporal – costs are attributable to the period of the proceedings when they were incurred – whereas Mr Rayner’s case is that the criterion is one of causation – costs are attributable to the part of the proceedings which resulted in them being incurred.

That issue came before Master Haworth on 28 February 2013, in the context of an application by Mr Rayner for disclosure of papers held by the Commission about the work funded by it: this was said to be necessary in order to enable him to identify to what extent his own costs were “attributable” to the funded part of the proceedings. (There was also an issue about the extent to which costs claimed by him had in fact been incurred by the corporate defendants; but that is not before us.) The Master upheld the Commission’s contention. His order records his finding that:

Mr Rayner appealed against that decision, with the permission of the Master. The appeal was heard by Mr Nicholas Strauss QC, sitting as a Deputy High Court Judge, on 10 October 2013. At the hearing Mr Rayner was represented by Mrs Teresa Rosen Peacocke and the Lord Chancellor by Mr John Gimlette; but when, following the hearing, the Judge asked for further written submissions on the part of the case with which we are concerned the submissions on behalf of the Lord Chancellor were drafted by Mr Guy Mansfield QC. The same counsel appeared before us.

Mr Strauss handed down a reserved judgment on 2 December 2013 ([2013] EWHC 3878 (Ch)), now reported at [2014] 1 WLR 677. He allowed Mr Rayner’s appeal on the issue of principle, though he held that it remained necessary for him to show in respect of any costs incurred during the hiatus period that they “were caused by the [Commission’s] funding of the earlier stages of the proceedings” and that that issue would require to be decided by the Costs Judge as part of his detailed assessment. He summarised his decision near the start of his judgment, saying at para. 9 (p. 680 H):

The appeal is allowed in that it is determined that the costs are not so limited.

The Lord Chancellor appeals against the decision of Mr Strauss with the leave of Christopher Clarke LJ given on 24 April 2014.

In addition to that appeal there is, at least potentially, an application before us from Mrs Peacocke. I explain it more fully at paras. 57-63 below; but in bare outline it arises as follows. At a very late stage in the proceedings before the Judge Mr Rayner sought permission to appeal out of time against Master Haworth’s 2011 decision. The decision on the primary appeal meant that the Judge did not have to reach a decision on that application, and he declined to do so. By an Amended Respondent’s Notice Mr Rayner belatedly applied for permission to appeal against that refusal. That application came before Christopher Clarke LJ on the papers on 6 August 2014. He refused permission. He also directed that if the application were to be renewed it should be decided at the full hearing, with the appeal to follow if permission were granted. No formal renewal application has in fact been made, but Mrs Peacocke has made it clear in her skeleton argument that she wishes to pursue the application.

The relevant provisions are distributed between the 1999 Act and the 2000 Regulations in a manner which is rather clumsy and involves a good deal of cross-reference. (The predecessor provisions were rather more straightforwardly arranged, but there is – subject to one submission which I will need to consider in due course – no reason to suppose that it was intended that the 1999 Act should substantially alter the law in the respects with which we are concerned.) Although the primary issue before us concerns the liability of the Commission, it is convenient to start with the provisions about cost protection.

Section 11 (1) of the 1999 Act reads as follows:

More detailed provision in relation to cost protection is made in regulation 3 of the 2000 Regulations. For present purposes I need only refer to paragraphs (3) and (4), which read as follows:

The phrase “funded proceedings” which appears in paragraph (3) is defined in regulation 2 (1) of the 2000 Regulations as “proceedings … in relation to which the client receives funded services or, as the case may be, that part of proceedings during which the client receives funded services”. “Funded services” is defined as “services which are provided directly for a client and funded for that client by the Commission as part of the Community Legal Service under sections 4-11 of the [1999] Act”.

The “certificate” referred to in both paragraphs is defined in regulation 2 (1) as “a certificate issued under the Funding Code certifying a decision to fund services for the client”. The Funding Code is a code issued by the Commission under sections 8 and 9 of the 1999 Act: Part C of the Code Procedures requires the certificate to specify the essential terms of the funding, including the identity of the solicitor supplying the funded services.

The liability of the Commission for the costs of a non-funded party is not dealt with in the 1999 Act but in regulation 5 of the 2000 Regulations, which reads (so far as material) as follows:

A “section 11 (1) costs order”, as referred to in paragraph (2), is defined in regulation 2 (1) as “a costs order against a client where cost protection applies”. “Cost protection” is defined as “the limit on costs awarded against a client in section 11 (1) of the [1999] Act”.

Since the issue is one of pure law, it is most convenient to begin not with the judgments below but with the rival contentions of the parties. I take the Lord Chancellor’s case first.

The Lord Chancellor’s core submission is, as I have said, that the test of whether the costs of a non-funded party are “attributable to the part of the proceedings which are funded proceedings” is whether they were incurred during the period that the proceedings were funded – and in this case it has already been held, by the 2011 decision, that the proceedings were not funded during the hiatus period. Mr Mansfield submitted that that was the natural reading of the words as a matter of language and having regard to the scheme of the Regulations; but he also relied on a number of authorities.

So far as the language and the scheme of the Regulations are concerned, Mr Mansfield’s submissions can be summarised as follows:

I turn to the authorities on which Mr Mansfield relied. He referred us to S v S [1978] 1 WLR 11; Turner v Plasplugs Ltd [1996] 2 All ER 939; Burridge v Stafford [2000] 1 WLR 927; and Mohammadi v Shellpoint Trustees Ltd [2009] EWHC 1098 (Ch). However, he accepted that Turner did not assist him as directly as Burridge, and that Mohammadi, which is a decision of Briggs J at first instance, did not in any material respect take matters further. I will accordingly confine myself to S v S and Burridge.

S v S arose out of an application made by a wife for the custody of her children. At the material time the statute governing the provision of legal aid was the Legal Aid Act 1974. Under the 1974 Act legal aid was granted by the Law Society, out of the legal aid fund. The provisions entitling a successful non-assisted party to recover costs from the fund were contained in sections 13 (1) and 14 (5) of the Act. Section 13 (1) read:

The husband was not legally aided, but the wife was granted legal aid on, literally, the eve of the hearing. The husband successfully resisted the application. It was not in dispute that he was entitled to an order under section 13 (1), but the issue was whether that order should cover counsel’s brief fees and the costs of pre-trial preparation incurred prior to the grant of legal aid. Latey J held that they should. He believed that “attributable to” must have been intended to mean something more than “during” (see p. 16H). His essential reasoning appears at p. 17 E-F, as follows:

That decision was reversed by this Court (Stamp and Ormrod LJJ). The reasoning of Stamp LJ, giving the judgment of the Court, is at pp. 20-22. It is quite lengthy, but I think I need to set it out in full (I have added paragraph numbers for ease of reference):

Mr Mansfield acknowledged that the specific question in S v S was not the same as that in the present case, because it was concerned with costs incurred before the grant of legal aid rather than during a hiatus period. But he submitted that the Court’s reasoning was nevertheless equally applicable in such a case. The question of principle which it addressed was what was meant by “attributable” in a provision which is the predecessor to regulation 5 (4) and in which the key words are identical. The Court explicitly rejected Latey J’s broader interpretation (see para. [10]) in favour of one which depended on whether the costs had been incurred before the grant of legal aid: that is, it applied a temporal criterion (see paras. [12]-[13]). It went on to explain why such an approach was fair (paras. [14]-[15]) and made the same point as Mr Mansfield about the practical difficulties to which the alternative approach would give rise (para. [16]).

This case in fact covers two appeals – Burridge v Stafford and Khan v Ali – which were heard together because, as Lord Woolf MR put it at the start of his judgment (p. 929 C-D), they both raised the question of “when a person ceases to be a legally assisted party for the purposes of sections 17 and 18 of the Legal Aid Act 1988”. He continued:

I should set out the relevant parts of those two sections of the 1988 Act. Section 17 (1) read:

The procedural histories in both cases are a little complicated, but for present purposes the way the question identified by Lord Woolf arose can be sufficiently summarised as follows:-

In Burridge the unsuccessful defendant had been granted legal aid to defend proceedings but her solicitors had come off the record, because she had rejected their advice that she should accept a settlement offer, and she had continued to defend the claim in person; her legal aid certificate was not, however, discharged. The issue was whether she was entitled to cost protection for the period after the solicitors ceased to act.

In Khan Mr Khan had been granted legal aid for an appeal. Before the hearing, however, his solicitors came off the record. He pursued the appeal in person and lost. Again, however, his legal aid certificate had not been discharged. The issue was whether the respondent to the appeal could recover from the Board in respect of costs incurred after the date on which his solicitors came off the record.

At paras. 26-30 of his judgment (pp. 933-5) Lord Woolf, with whom Butler-Sloss and Robert Walker LJJ agreed, reviewed a number of possible points in time at which – to quote from the heading to this part of the judgment – “a party cease[s] to be an assisted party for the purpose of sections 17 and 18 of the Act”. He rejected (following Turner v Plasplugs) the argument that he remained legally assisted until the legal aid certificate was discharged. He was reluctant to accept the Board’s submission that the crucial date was when the solicitor named in the certificate ceased to act, partly because that would be something of which the other party was unaware. But he held that, on the facts of the two cases before the Court, the date could be no later than the date on which the previously assisted party started to act in person: “[f]rom that date onwards he loses the protection of section 17 and the board ceases to be liable for him under section 18” – see para. 30 (p. 935 B-D).

Mr Mansfield relied on Lord Woolf’s statement, quoted at para. 29 above, that “ while [my emphasis] a party is legally assisted … an unassisted party has certain rights to recover costs from the Legal Aid Board” and on the fact that the entire analysis in paras. 26-31 was conducted in temporal terms, as regards section 18 just as much as section 17.

As already noted, Mrs Peacocke sought permission to challenge the 2011 decision – that is, Master Haworth’s decision that Mrs Murphy was not entitled to cost protection in respect of costs incurred during the hiatus period. I consider that application below, but at this stage I will proceed on the basis that the Master’s decision stands.

Mrs Peacocke’s primary submission in support of a causal approach is that as a matter of ordinary English the word “attributable” connotes a relationship of causation. It is not apt to a relationship based simply on things happening during the same period. If the draftsman had meant what the Lord Chancellor contended it would have been very easy for him to say so. He could for example, have referred to “so much of those costs as were incurred during the part of the proceedings which are funded proceedings”.

Mr Mansfield’s submissions to the contrary depend on the illegitimate importation of temporal language used in other provisions for different purposes. Specifically, taking the points which I have enumerated at para. 23 above, her submissions were:

More generally, and importantly, Mrs Peacocke emphasised the unfairness to which the temporal approach could lead. There is an inevitable lapse in time between the taking of a procedural step by a funded claimant – most obviously, the issue of proceedings – and the steps which the non-funded defendant is obliged to take in response. If the Commission has enabled an unfounded claim to be brought, the justice of requiring it to meet the defendant’s costs of responding to it is the same whether or not funding has ceased in the interval before those costs are incurred. The present case is not a bad example, but still starker instances can be posited. For example, where a funded claimant serves a claim form with elaborate particulars requiring an expensive and fully-pleaded defence but ceases to be funded before that work is done, it would be arbitrary and unfair for the defendant not to be able to recover his costs of drafting that defence from the Lord Chancellor – and the need for the defence is, on any natural use of words, “attributable to” the funded part of the proceedings. She submitted that the importance of ease of application relied on by the Lord Chancellor could not outweigh the interests of justice and fairness.

As regards S v S, Mrs Peacocke’s primary submission was that it was, as indeed Mr Mansfield accepted, concerned with a different situation from the present case. At the time when the costs in question had been incurred the wife had not been legally assisted: what the husband was trying to do was to treat them as “attributable to” the subsequent part of the proceedings following the grant of legal aid. It was unsurprising that the Court had held that, as she put it, “causation does not operate backwards”. The present case was the reverse. But she also submitted that the scheme of the 1999 legislation was materially different from previous versions of the legislation: see para. 36 (4) above.

As regards Burridge, Mrs Peacocke submitted that the observations of Lord Woolf relied on by Mr Mansfield were not binding. The case proceeded on the assumption that the criteria required both for cost protection and for the liability of the Commission were temporal – that is, were the costs incurred during a period when the plaintiff was legally assisted ? – and thus that the only issue was how that period was to be defined. There was no argument about the meaning of “attributable” in section 18. She submitted that in such a case the reasoning could not be regarded as authoritative. She referred to the decision of this Court (Schiemann and Buxton LJJ and Jacobs J) in R (Kadhim) v Brent London Borough Council Housing Benefit Review Board [2001] QB 955. (Footnote: ¹ ) The relevant part of the judgment of the Court (given by Buxton LJ) is sufficiently summarised in the headnote, as follows:

The Judge’s principal reasoning on this issue appears at paras. 80-103 of the judgment (pp. 703-9). But I should refer first to his review of the authorities, which is at paras. 58-79 (pp. 690-703). At paras. 67-70 (pp. 693-5) he considers whether he is bound by Lord Woolf’s observations in Burridge . He rejects a submission by Mrs Peacocke that they were distinguishable because they were concerned with the 1988 Act. He says, at para. 67 (pp. 693-4):

Turning to the Judge’s principal reasoning, his starting-point, after some preliminary observations about the principles of statutory construction, is to conclude that the phrase “attributable to” is, as a matter of language, capable of bearing either of the meanings contended for by the parties: para. 83 (p. 703 F-H). At para. 84 (p. 704 A-B) he describes as “telling” Mrs. Peacocke’s point that it would have been easy for the draftsman to use language explicitly adopting a temporal criterion.

At para. 85 (p. 704 B-E) the Judge identifies the rationale behind regulation 5 (4) and its predecessors as being that “if the [Commission] funds proceedings by an impecunious person, from whom it is unlikely that the other party could recover costs, it is only fair that the other party should have a remedy against [it]”, supporting that proposition by reference to the judgment of Lord Phillips MR in R (Gunn) v Secretary for State for the Home Department [2002] 1 WLR 1634 (see at para. 50) (Footnote: ² ) . At paras. 85-87 (pp. 704-5) he draws an analogy with the policy behind the jurisdiction to make orders against third party funders of litigation under section 51 of the Senior Courts Act 1981 and points out that in the case of such orders it is recognised that “a causal link is an essential or at least important ingredient”. (It is convenient to note at this stage that I do not regard this as a pertinent point. It is hard to see how a court exercising the general discretion conferred by section 51 could hold a third party liable for a party’s costs unless he had caused or contributed to those costs being incurred. (Footnote: ³ ) But on both parties’ approaches in the present case the Commission will, by its funding, have caused the non-funded party to incur the costs in question: the issue is whether that is only the criterion for liability.) (Footnote: ⁴ )

At paras. 88-90 (p. 705 A-F) the Judge rejects the Lord Chancellor’s argument that the criteria for identifying the costs in respect of which an assisted party enjoys cost protection and those in respect of which the Commission is potentially liable must be the same. He describes the argument as “at first sight persuasive” and as being supported by Lord Woolf’s observations in Burridge , but he had already held that those observations were not authoritative: see para. 40 above. He continues:

At paras. 90-95 (pp. 705-6) the Judge considers what he describes as “the question of uncertainty”, which he analyses as covering two points –

There follows a long passage (pp. 706-8) in which the Judge explains why he regards Mr Rayner’s approach as producing a fairer result than the Lord Chancellor’s. I think I should reproduce it in full:

At paras. 100-102 (p. 708 A-H) the Judge considers how the issue might arise in other factual situations. In that context he considers S v S. He observes (para. 100) that

The Judge summarised his decision at para. 103 (pp. 708-9) as follows:

I agree with the Judge that the authorities relied on by Mr Mansfield are not binding on us, essentially for the reasons given by him (which adopt some but not all of the points made by Mrs Peacocke). In my view the ratio of S v S goes no further than that costs incurred by an unassisted party prior to the grant of legal aid to another party cannot be regarded as attributable to the part of the proceedings subsequent to the grant. But that is not inconsistent with applying a causal criterion. Causation is necessarily temporal to the extent that events cannot be caused by a state of affairs that has not yet occurred; but Mr Rayner’s claim involves attributing his costs to a past state of affairs. As for Burridge, the argument relied on by Mr Rayner was simply not run, and the case falls squarely within the principle explained in Kadhim.

It is accordingly necessary to consider the parties’ arguments apart from authority. There are powerful points to be made on both sides, and I have not found deciding between them straightforward. I agree with the Judge that the phrase “attributable to”, taken in isolation, is capable of bearing either of the constructions contended for. I feel the force of Mrs Peacocke’s argument that the Lord Chancellor should as a matter of straightforward fairness be liable for costs which Mr Rayner was required to incur as a result of the Commission’s funding of Mrs Murphy’s case. But I have, on balance, come to the conclusion that Mr Mansfield’s case is to be preferred. My reasons are essentially threefold.

First, I think that the phrase “costs … attributable to the [funded] part of the proceedings” does more naturally mean costs incurred during that part. I agree that it does not necessarily follow from the fact that a “part” of the proceedings is defined in temporal terms that the criterion for attribution is also temporal (see para. 36 (1) above). But the phrase does still seem to me to point in that direction. I take the point that the draftsman would have made life easier for us if he had simply referred to “costs incurred during the funded part of the proceedings”. But he could also very easily have said “costs incurred as a result of the funded services” or “as a result of steps funded by the Commission”. The fact that he used ambiguous language is the problem; it does not help in reaching the solution.

Secondly, I find Mr Mansfield’s points summarised at para. 23 (2) and (3) above compelling. In my view it is reasonably clear that the draftsman proceeded on the basis that the criteria governing the qualification of the funded party for cost protection and those governing the liability of the Commission for the costs of the unfunded party should match. That would be the natural starting-point, since the two rights are essentially corollaries of one another: since cost protection is clearly defined by reference to the period during which funding is in place (see regulation 5 (3)), it would follow that the Commission’s liability was equally so defined. I accept that the draftsman might nevertheless have taken the more sophisticated view that the two criteria should differ, in order to reflect the potential mismatch which is at the heart of Mr Rayner’s case between the period when the funded party is protected and the period when the non-funded party may incur costs. But that would necessarily raise the problem of the Commission being potentially liable for the same costs as the funded party. Mrs Peacocke’s answer, as recorded at para. 36 (3) above, is that the Court would not in practice make orders which resulted in dual liability. That may be so, but the point is about the scheme of the Regulations. In my view the whole structure of regulation 5 – including but not limited to the words in paragraph (2) to which Mr Mansfield attaches importance – rests on the basis that cost protection is in place as regards the selfsame costs of the unfunded party for which the Commission is to be (potentially) liable. Having reached that point without reference to authority, I do find some support in the fact that this Court in Burridge clearly regarded the criteria governing cost protection and the potential liability of the Legal Aid Board as mirroring one another.

Thirdly, I am concerned about the nature of the exercise involved in Mrs Peacocke’s approach to “attributability”. I take by way of example a case where a claimant is funded under the 1999 Act to bring proceedings and serves a claim form; where funding is discontinued immediately thereafter; where he nevertheless pursues the claim to trial without representation, putting the defendant to enormous cost; and where he loses and an order for costs is made against him (though subject to cost protection for the initial phase). Suppose that the non-funded party claimed the entirety of his costs from the Commission up to the point of judgment on the basis that they were all attributable to, in the sense that they were the result of, the funding of the initial steps in the claim. There seem to me to be in principle two possible responses to such a claim:

I do not regard it as likely that Parliament (Footnote: ⁵ ) intended that the Court – more specifically, costs judges – would have to become involved in either of those kinds of enquiry. An enquiry into whether the costs in question (assuming them to be otherwise recoverable) would have been incurred but for the initial funding might often involve a substantial factual investigation. And even if that was acceptable, the criteria for distinguishing between those “post-funding” costs that are attributable to the initial funding and those that are not seem to me unacceptably uncertain.

I have thus far, in the interests of simplicity, been addressing the rather basic case postulated at para. 52 above. But my concerns are reinforced by a consideration of the circumstances of the present case. I am bound to say that if I were to accept Mrs Peacocke’s overall approach my initial reaction would be to regard the entirety of Mr Rayner’s costs of the immediate run-up to the trial and its first three weeks as being the result of the funding which Mrs Murphy had received up to that point, and thus to treat them all as attributable to the funded part of the proceedings. But that was not how the Judge proceeded. He remitted the claim to the Master to decide “whether there was a causal link between the funding of Mrs Murphy’s case up to [the beginning of the hiatus period] and all or any of Mr Rayner’s costs [during that period]” and ordered disclosure for that purpose (see para. 103 of his judgment – para. 47 above); and there is no Respondent’s Notice challenging that part of his order. It is not at all clear to me what kind of distinctions he was expecting the Master to draw. The nearest he comes to a criterion is at para. 94 (c) of his judgment (see para. 44 above), where he says that it would “be a question of how long the funding had a continuing effect”: that formulation, with respect, seems to me to raise more questions than it answers. I am also not persuaded by the other points that he makes in that paragraph in answer to Mr Gimlette’s submissions on this question. Specifically:

Again, although my concerns about the uncertainty which Mrs Peacocke’s approach would produce are not derived from the authorities, they do chime with the observations of the Court at para. [16] of the judgment in S v S – see para. 27 above – albeit that it did not have precisely the present point in mind.

I acknowledge that in the present case the construction of regulation 5 (4) which I prefer produces a result where Mr Rayner is unable to recover costs which he had to incur as a result of the Commission’s funding of Mrs Murphy in the earlier stages of her case. I regret that, and I have already said that I see the force of the fairness argument which appealed to the Judge. But statutes do sometimes adopt rough-and-ready criteria which from time to time fail to produce a wholly just result in a particular case. It is important to appreciate that the present case is unusual: it must be rare for funding to cease, at so critical a stage, in circumstances where – as I am prepared to assume was the case, though the point was not demonstrated to us – the non-funded party had no option but to continue to incur very substantial costs. Typically where public funding ceases part-way through a piece of litigation it will be because it has become clear that the merits are insufficient to justify its continuation; in such a case it will generally not be possible for the previously-funded party to continue to prosecute (or defend) the proceedings, as the case may be, and the non-funded party will not have to incur significant further costs and can look to the Commission for any costs already incurred. There may also be cases where the financial circumstances of a funded party improve, so that funding is no longer justified; in which case the non-funded party is in principle at no worse risk of not recovering his later-incurred costs than is, alas, inherent in the system generally. Against that background, there is nothing surprising in Parliament proceeding on the broad basis that the interests of a non-funded party are sufficiently protected by his having recourse to the Commission for his costs incurred during the period of funding; and that as regards costs incurred thereafter he has to face the same risk as other litigants. That does not make the untypical case any more palatable to the victim, but it does put the claimed arbitrary effect of the temporal approach into perspective.

As indicated above, Christopher Clarke LJ refused Mr Rayner permission to appeal against the Judge’s refusal to entertain a challenge to Master Haworth’s decision, in July 2011, that Mrs Murphy did not enjoy cost protection in the hiatus period, and directed that if the application was renewed it should be considered at the hearing. As also indicated, there was in fact no renewal request, but it has always been clear that Mrs Peacocke intended to take the point, and if that were the only problem with the application I would have been minded to overlook the failure to lodge a formal request.

Having heard submissions from both parties we refused the application in the course of the hearing. My reasons are as follows.

Mrs Peacocke accepted that formally any challenge to the 2011 decision should have been made by way of an appeal lodged within 28 days of the Master’s decision, and that this was not done. But she submitted that the failure to lodge such an appeal was venial. Mr Rayner was at that time seeking to persuade the Commission retrospectively to revoke the grant of funding; and indeed in September 2011 it decided to do so – though it changed its mind in August 2012 after Mrs Murphy had been given permission to apply for judicial review of the revocation decision. So long as the revocation decision stood the 2011 decision was of no practical significance. And indeed in any event a decision depriving Mrs Murphy (partially) of cost protection was, in itself, a decision in Mr Rayner’s favour. It was only when it became clear not only that Mrs Murphy was impecunious but also that the Commission was relying on the 2011 decision as an answer to his claim against it that it became in his interests to challenge it.

For myself, I see the force of all that so far as it goes; but the real problem is the way in which the point was raised thereafter. We were told by Mrs Peacocke that Mr Rayner’s solicitors intimated in correspondence in February 2013 (presumably at the time of Master Haworth’s second decision) that they wished to challenge the 2011 decision. However, no Appellant’s Notice was issued at that stage. Nor, most importantly, was the point taken during the hearing before the Judge in October 2013: Mrs Peacocke told us that she raised it with Mr Gimlette but that he pointed out that there was no Appellant’s Notice. An Appellant’s Notice, including an application for an extension of time, was eventually served, but that was not until after the conclusion of the hearing and the Judge had reserved his decision. Mrs Peacocke lodged written submissions in support of the application for an extension of time, which were answered by Mr Gimlette, who objected that it was made far too late.

The Judge dealt with the application at paras. 105-7 of his judgment (pp. 709-710) as follows:

I should give the background to what the Judge says at para. 107 (a). Mr Rayner’s case depended essentially on the fact that Mrs Murphy’s certificate had never been withdrawn – see para. 6 (3) above – reinforced by various things the Commission is said to have said about it remaining “live” throughout the hiatus period. The Judge’s point is that that was inconsistent with the ratio of Burridge, which held that the criterion was not dependent on the currency of the certificate but was, rather, the point at which the funded solicitor ceased to act, or at least when that became known to the other party (see para. 32 above).

Mr Mansfield submitted that the Judge had not in truth made a decision on this point at all and that all that he had done was to decline to decide on an application which in the context of his primary decision did not need to be dealt with; accordingly there was nothing to appeal against. I do not accept that. It is plain that the Judge refused the application: see the closing words of para. 107 (a). I agree that there may to the purist be an ambiguity about whether his only reason for doing so was that the application was redundant or whether it included also the “provisional” view expressed in para. 107. But the point is of no importance. Having overturned the Judge’s decision on the primary issue, we need to decide whether he should have allowed the appeal against the 2011 decision to proceed, and for that purpose we need to consider all the reasons which he gave for not doing so, however he labelled them.

At para. 107 (a) the Judge gave two reasons for his “provisional” conclusion – that the challenge to the 2011 decision was bad on the merits and in any event that it was brought too late. In my view he was entitled to treat the delay in itself as a sufficient reason. The sequence of events set out above speaks for itself. The challenge to the 2011 decision was a potentially decisive point, and if Mr Rayner wished to deploy it before the Judge it was incumbent on him to do so in proper form, with Appellant’s Notice and skeleton argument, in advance of the hearing. But I am inclined also to agree with him that the 2011 decision was right for the reasons which he succinctly gives.

For those reasons I would allow the appeal and restore the decision of Master Haworth; and I would refuse permission to the Respondent to appeal against the Judge’s refusal to entertain an appeal out of time against the 2011 decision.

I have had the advantage of reading the judgments of both Underhill LJ and McCombe LJ in draft. I agree with them that the appeal should be allowed and that the decision of Master Haworth should be restored. I would also refuse permission to the Respondent to appeal against the Judge's refusal to entertain an appeal out of time against the 2011 decision. In so far as there is a difference in approach between that of Underhill LJ and McCombe LJ, I prefer the analysis of Underhill LJ.

I am most grateful to Underhill LJ for his comprehensive recitation of the factual background to this case, the statutory provisions and the competing arguments on this appeal. I entirely agree with him that this appeal should be allowed and that it was right to refuse permission to the Respondent to appeal against the Judge’s refusal to entertain an appeal out of time against the 2011 decision. However, my reasons for agreeing with the conclusion that the appeal should be allowed are, in part, rather different from those expressed by Underhill LJ.

It seems to me that the present case turns upon the construction of a statutory phrase, which, while not entirely happily drafted, has been considered more than once by the courts over the years in the context of a number of different incarnations of the statutory code governing legal aid and in slightly differing factual scenarios. In the provision with which we are concerned in this case the phrase is, “…so much of those costs as is attributable to the part of the proceedings which are funded proceedings”: reg. 5(4) of the 2000 Regs. By reg. 2(1) “funded proceedings” are…

While I accept that we are clearly not bound by the decision in Burridge to adopt the construction of these provisions advanced by Mr Mansfield (because the point now in issue was assumed rather than decided in Burridge’s case) I am not confident that the same can be said of S v S. In my judgment, the reasoning of Stamp LJ in that case is as applicable to our problem as it was to that before the court in S v S. As Baroness Hale of Richmond put it in R (Smith) Secretary of State for Defence [2011] 1 AC at [135],

It seems to me that the reasoning of the court as to the meaning of the word “attributable” in this series of enactments applies as well to our facts as to those of S v S. To that extent, I consider that we are bound by that case to allow this appeal.

Even if I am wrong about that, it seems to me that the reasoning of Stamp LJ in S v S, as to the meaning of the word “attributable” in the context of this legislation (set out in my Lord’s judgment at paragraph 27), should be followed here unless it can be shown that either the word needs to be interpreted in an obviously different sense with regard to the different facts of our case or because that reasoning is manifestly inapplicable in our case. I do not think that that is shown. I also find the argument advanced on behalf of Mr Rayner, to the effect that the relevant test is a causative one, difficult to square with the rejection by this court in S v S of the approach of Latey J in that case: see paragraphs 26 and 27 above.

As a matter of construction of the language of reg. 5(4), I find the meaning of the word “attributable” decided upon by Stamp LJ to be applicable mutatis mutandis to the facts of that case and to those of the present case. There are differences of fact but, in my judgment, construction of the word in question must be the same in each case.

I am also persuaded that the submissions advanced by Mr Mansfield, as recited in paragraph 23 of Underhill LJ’s judgment, are correct. I agree with Underhill LJ in his endorsement of those submissions in paragraph 51 above for the reasons there set out.

It seems to me that the alternative arguments, attractively presented as they were by Mrs Peacocke, do not undermine the logic underlying the construction of the statutory language adopted by Stamp LJ. Further, Mrs Peacocke’s arguments appear to me, with respect, not to be primarily directed to the construction of the statutory language, but rather to potential anomalies of adopting a strictly temporal test to the question of whether the relevant party’s costs are attributable to funded proceedings. The temporal test has, however, long been understood to be the applicable one in this context and I am not persuaded that we should differ from it now on the basis of perceived anomaly in some circumstances.

So far as application for leave to appeal out of time against the 2011 decision of Master Haworth is concerned, I am quite satisfied that the application had to be refused. I agree with Underhill LJ that the Judge was entitled to refuse the application simply on the basis of the delay in bringing it. I am inclined also to think that the decision was correct in any event.