London Borough of Hounslow v A Father & Mother (Costs in the Court of Protection - Disproportionate litigation)

This decision concerns the costs of these proceedings.

The proceedings concern a young man, whose name has been removed to protect his privacy. The Applicant is the London Borough of Hounslow and the Respondents are the young man’s father and mother.

Ms Whittaker of Scott-Moncrieff and Associates Ltd and Ms Susanna Rickard (Counsel) acted for the father and Ms Hellier acted for the local authority. The mother was unrepresented.

The young man lives with his father. He has a severe learning disability and it is common ground that he lacks capacity to manage his property and affairs.

His financial means are modest. According to the Form COP1A his income consisted only of Disability Living Allowance and Income Support although in fact he also receives Employment Support Allowance. He does not own a property and has no significant savings.

When the proceedings were issued, the father was the DWP appointee responsible for administering the young man’s state benefits. Although separated from the father, the mother assisted the father with their son’s financial arrangements and the son’s Disability Living Allowance was paid into her account.

Historically therefore, the son’s benefits have been managed under a DWP appointeeship as one would expect. Furthermore, one would normally expect the suitability of an appointee, and the need to replace them, to be dealt with by application to the Secretary of State.

The relevant social security arrangements do provide that a deputy appointed by the Court of Protection automatically becomes the relevant person’s appointee for the purpose of administering their benefits. However, good grounds will be required to justify deputyship in preference to appointeeship, because of the additional time and expense generated by the former arrangement, and they will also be required to justify a deputyship application as a means of replacing an unsuitable appointee.

In this case, the local authority considered that the protective framework of deputyship was appropriate because of financial safeguarding concerns. According to an email dated 26 January 2017, the local authority’s strategy was to apply to the DWP to be appointed as the son’s appointee in place of his father ‘as an interim measure until the local authority can apply to the Office of Public Guardian [sic] for deputyship to manage his finances’.

On 6 February 2017 the court issued an application filed by the London Borough of Hounslow in which it asked the court to appoint the Director of Children’s and Adult Services as the Deputy for Property and Affairs of the son.

The grounds of the application were set out on page 4 of Form COP1:

An Acknowledgment of Service opposing the application was filed by the father on 1 March 2017. He stated at page 3 that,

The father also stated that the London Borough of Hounslow had refused to provide him with a copy of the application ‘saying it is confidential’. He said that the local authority ‘had informed the mother that they are conducting a safeguarding investigation into an anonymous allegation that she is using a substantial amount of [our son’s] DLA for herself. They have not given her any more details of evidence and have not written to me about it at all or raised any issue about my management of [my son’s] finances even though I am his appointee and it is my decision to use [his mother’s] assistance to support [our son]. There had been a failure to explore alternatives and the application was unnecessary, detrimental and contrary to the son’s best interests.

Also on 1 March 2017, Samimah Garrib from the local authority’s Community Learning Disability Team visited the son and his parents, noting that ‘Overall, my impression was that [their son] is a very happy young man whose needs are met’.

On 6 March 2017, the local authority wrote to the mother stating that it had carried out a safeguarding inquiry under section 42 of the Care Act 2014 and that it would not be sharing the contents of the enquiry on the ground that the information was exempt under the Data Protection Act 1998.

The matter was set down for a Dispute Resolution Hearing on 2 May 2017.

On 28 April 2017, the local authority made an application in Form COP9 seeking ‘Public Interest Immunity over aspects of the safeguarding investigation, on this basis the LA seeks permission to speak to the Judge in the absence of the other parties’.

On 2 May 2017, Senior Judge Hilder conducted the Dispute Resolution Hearing. No resolution was reached. The judge gave 4½ pages of comprehensive directions for the filing of evidence and position statements, meetings and separate hearings regarding the trial of the substantive matter before another judge whilst reserving further directions and the PII matter to herself.

The Senior Judge gave further directions on 13 July 2017 which included setting down the PII/redaction issue before herself for a half-day hearing on 29 September 2017.

On 8 September 2017, Senior Judge Hilder set aside her order of 13 July 2017, stayed the PII/redaction issue and directed that any application to dismiss the substantive application should be filed and served by 2 October 2017. That application was made and the matter then came before me.

On 2 October 2017, I emailed the parties as follows:

I then made an order on 13 November 2017, setting out my concerns and giving the following directions:

In due course, the mother provided the bank statements together with her notes regarding withdrawals and items of expenditure. The final hearing then took place on 2 February 2018 at the commencement of which the local authority withdrew its application without oral evidence being heard. That only left the matter of costs to be determined.

Why didn’t the matter settle at an earlier stage? The substantive application was founded on alleged misuse of benefits but the prolonged and wholly disproportionate nature of the litigation increasingly turned not on this issue but on costs. The son had no savings and so the usual rule regarding costs ─ that the costs be paid from his estate ─ was not an option unless his solicitor and counsel were willing to waive their by then substantial costs. Despite the father’s solicitor’s attempt to persuade me otherwise, costs was the stumbling block and became the reason why the case did not settle. The correspondence recently copied to me makes that crystal clear. On 10 August 2017, Scott-Moncrieff & Associates Ltd wrote to the local authority stating, ‘We will seek payment of our costs by Hounslow as a condition of the application being withdrawn’. On 22 September 2017, the local authority stated that, ‘The LA has indicated that it may be willing to withdraw the application, on the basis the respondents are in agreement to another [sic, presumed to be ‘a number’] of conditions’. The first condition was financial monitoring. ‘The second condition is that the application [sic] will not agree to pay the first respondents costs’. Thus, the litigation continued and the litigation costs continued to rise.

I am not going to write a lengthy judgment, or give lengthy reasons, because in my view these proceedings have already taken up a wholly disproportionate amount of court time and been conducted with insufficient proportionality. The initial allegation was misuse of DLA by the partner of the DWP appointee. All that was required was that the mother provide the local authority with the relevant bank statements showing payments of DLA and out-going expenditure on the account. The local authority could then ask questions about particular items of expenditure and, if appropriate, question the mother on the expenditure at a short hearing. The outcome would either be that the applicant could prove misuse of funds on the

What happened instead was that the local authority’s legal department and Scott-Moncrieff & Associates Limited on behalf of the father bombarded each other with hundreds of pages of unnecessary and often tetchy or bad-tempered correspondence, witness statements, position statements and emails into which the court was often copied. By the time they had finished litigating an alleged misuse of Disability Living Allowance benefit that could have been resolved by looking at bank statements and asking questions, the amount of claimed costs incurred amounted to approximately £50,000 + VAT in respect of Scott-Moncrieff’s costs and £15,000 in respect of the local authority’s costs. That is an astronomical figure and in my view wholly out of step with the following provisions of the Court of Protection Rules 2007 and 2017.

The 2007 Rules imposed similar requirements with regard to the overriding objective.

When considering the proportionality of costs, I take into account the decisions and guidance given in Cases A and B (Court of Protection: Delay and Costs) [2014] EWCOP 48 and A Local Authority v ED [2013] EWHC 3069 (COP).

With regard to the payment of costs in respect of property and financial affairs applications, Rule 19.2 provides that ‘Where the proceedings concern P’s property and affairs the general rule is that the costs of the proceedings, or of that part of the proceedings that concerns P’s property and affairs, shall be paid by P or charged to P’s estate.’

Rule 19.5 then deals with departures from the general rule:

In terms of the conduct of the applicant, an allegation of dishonesty was made based on an anonymous report. In my view, the respondents did not have a fair opportunity to deal with that allegation at the time, within the safeguarding investigation. The local authority was so concerned to protect the identity of its anonymous informant that it decided not to share the minutes and ‘aspects’ of the safeguarding investigation with the respondents (Local Authority Position Statement, 7 July 2017, para 5). This made it difficult for them to provide a satisfactory response or explanation. The local authority then sought to rely on Public Interest Immunity in the proceedings, which was incorrect. When the bank statements were made available, the local authority was bound to conclude that it could not prove the alleged dishonesty and withdrew its application.

The local authority therefore did not succeed with its case and, for the reasons given, the manner in which the application and pursued was unsatisfactory.

Having regard to the fact that an allegation of dishonesty was made, which in my view a citizen is entitled to defend vigorously if unsubstantiated, the manner in which the application was pursued and the fact that the application was only withdrawn at the beginning of the hearing, my starting point would be that the local authority should pay all of the reasonable costs of the application.

However, I also find that the way in which the litigation was conducted on behalf of the First Respondent was unsatisfactory. In my view, the litigation was conducted disproportionately by both sides and there was a failure to focus on the simple central issue of whether the bank statements into which the DLA was paid evidenced any misuse of funds. The amount of claimed costs incurred of approximately £50,000 + VAT is, to my mind, a staggering sum given the relative simplicity of the central issue and the son’s lack of means. Counsel’s position statement dated 27 September 2017 on behalf of the First Respondent is in general terms, in particular the financial tables at (internal) pp.10-12, and involved giving evidence rather than merely setting out a position based on evidence. The correspondence is full of generalised assertions, of applications being misconceived, requests for summary judgment, etc, and both legally-represented parties made basic procedural errors (filing lengthy documents electronically despite what the rules say and including references to discussions at a DRH).

I accept that Senior Judge Hilder directed the filing of a considerable amount of evidence and the reasonable costs incurred in meeting those obligations should be fully recoverable. However, the key word is ‘reasonable’ and that only partly explains the level of costs claimed in this case. Costs are at the discretion of the court and I do not believe that the costs incurred by the First Respondent were proportionate to the issues, the complexity of the case and the son’s circumstances.

Initially, I had in mind that the local authority be ordered to pay two-thirds of the respondent’s assessed costs, with the view that this would reflect the court’s finding that the manner in which the First Respondent responded to the application was unsatisfactory (rule 19.5(2)(c),

However, I now think that it is necessary to separate out a reduction which is intended to reflect these conduct issues and the proportionality issue.

The proportionality of the work undertaken on behalf of the First Respondent can most fairly be assessed on an item-by-item detailed assessment of the First Respondent’s costs by the SCCO subject to the caveat that this judgment is copied to the SCCO so that the taxing officer is aware of the court’s concerns with regard to the litigation. That allows for an item-by-item detailed assessment of which items were reasonably required by SJ Hilder’s directions, the nature of the allegations and the complexity of the case and which were not. Once the SCCO has undertaken a detailed assessment of the total amount of reasonable costs incurred by the First Respondent, the local authority shall pay 90% of those costs, the 10% reduction reflecting the court’s finding on the litigation conduct of the other party.

With regard to the costs to which litigants in person are entitled, it was suggested to me that I should deal with this matter by applying CPR Rule 46.5. This is because Rule 19.6 of the Court of Protection Rules 2017 provides that:

CPR Rule 46.5 provides as follows:

This £19 per hour rate is fixed by Statutory Instrument. But this is subject to a cap: However long a litigant in person spends on their case s/he cannot recover more than two-thirds of what their legal representatives would have recovered if s/he had had a lawyer: see R (on the application of Wulfsohn) v Legal Services Commission [2002] EWCA Civ 250 and CPR Rule 46.5(2).

Further guidance was given by Chief Master Marsh in Richard Andrew Campbell v Robert Campbell [2016] EWHC 2237 (Ch). At paragraph 10, the Chief Master said that:

Having considered this submission, I find that CPR Rule 46.5 does not in fact apply. This is because Rule 19.6(7) of the Court of Protection Rules 2017 expressly states: (7) Rule … 46.5 … of the 1998 Rules do not apply’.

Given that CPR Rule 46.5 does not apply, I have then turned to the Litigants in Person (Costs and Expenses) Act 1975 to see if it is of assistance. This provides as follows:

However, according to section 1(1) of the Senior Courts Act, the Court of Protection is not one of the Senior Courts and therefore the 1975 Act also does not apply to the proceedings. I note that Schedule 6 to the Mental Capacity Act 2005 (Minor and Consequential Amendments) did not add the Court of Protection to the long list of courts to which the 1975 Act applies.

Turning next to the Mental Capacity Act 2005, section 55(1) simply states that, ‘Subject toCourt of Protection Rules, the costs of an incidental to all proceedings in the court are in its discretion’.

That allows me to award costs to the mother at my discretion unless that would be contrary to the Court of Protection Rules.

As I have already noted, the Court of Protection Rules 2017 provide a general rule in financial proceedings, which is that costs are payable from the incapacitated person’s estate, and a rule setting out when departure from that general rule is justified (Rules 19.2 and 19.5).

Rules 19.2 and 19.5 are silent as to the ‘costs’ of a litigant in person and whether their ‘costs’ constitute ‘costs’ for the purposes of these particular rules. However, the interpretation rule (Rule 19.1) states that ‘“costs” include fees, charges, disbursements, expenses, remuneration and any reimbursement allowed to a litigant in person”.

The intention appears to be that litigants in person may be reimbursed their expenses as distinct from being awarded a fee or being remunerated.

The definition of a ‘reimbursement’ is to repay or make up to a person a sum expended. The meaning of the word is made clearer by Section 19(7) of the main Act which deals with, and distinguishes between, the remuneration and expenses of deputies:

Having regard to those provisions, my view is that the intention of the rules is that a litigant in person is entitled to be reimbursed for their reasonable expenses but is not entitled to a fee or to remuneration. The intention of the rules seems to be that expenses but not fees, charges and remuneration are permitted and this is consistent with the disapplication of both CPR Rule 46.5 and the Litigants in Person (Costs and Expenses) Act 1975.

Given a general rule in financial proceedings that costs are payable from the incapacitated person’s estate, the intention underlying the rules seems to be that litigants in person such as family members who have not incurred any legal costs should not charge a fee for assisting an incapacitated person and the court, for example to cover loss of earnings for attending court, reading documents and preparation. In many cases, such as statutory Will, LPA and disputed deputyship applications, several family members may wish to participate and join the proceedings as parties without being represented. The record I have seen, in a statutory Will case, is nineteen. If all of them were entitled to, for example, loss of earnings for attending and preparing for court, the additional costs would be significant.

This is, however, an unfortunate finding in the mother’s case and one which, in my view, leads to an injustice. A serious allegation was made against her which necessarily she was bound to defend. It proved to be an unfounded allegation. Her conduct has been reasonable and I have no reason to doubt that her loss of earnings in defending her reputation is real. Naturally I am tempted to hold that section 55(1) is sufficiently broad that I have a discretion to award her costs but the section is subject to the rules and in my view the intention of Rule 19(1) is that litigants in person, like family member deputies, cannot charge or recover loss of earnings or hourly fees.

I would invite the mother to seek to agree with the local authority a sum covering her reasonable expenses. I would also invite the local authority to consider making an ex gratia payment to her and, if that cannot be agreed or done, that she gives consideration to whether

After copying my draft judgment to the parties for correction of any errors and anonymisation, I received further uninvited submissions on costs from the London Borough of Hounslow. However, the local authority has not discussed an ex gratia payment with the mother and in my view this aggravates the unfair way in which she has been treated by the local authority.