The Supreme Court Costs Office

No.27 of 2005

 Ryan v Dunscrest Ltd

 21 October 2005

 Mr Justice Lloyd Davies (Sitting with Assessors)

The defendant/appellant appealed against the order of the Costs Judge in proceedings under section 11 of the Access to Justice Act 1999. There had been protracted litigation between the parties who were respectively tenant and landlord. The claimant had sued the defendant for damages for personal injuries and had been successful in obtaining an award of £17,500 damages plus costs. The landlord had been successful in obtaining an order for the payment of outstanding service charge together with costs. The matter went to the Court of Appeal where the claimant's appeal was dismissed with costs, the court indicating that it found that the claimant had acted dishonestly in the proceedings.

The defendants made an application to the SCCO in June 2004 for an order that there be a determination under section 11 of the Access to Justice Act 1999. Prior to this the defendant had to make an application to have the time extended beyond the normal three months because of the delay caused owing to the proceedings in the Court of Appeal. The application was finally heard by the Costs Judge on 7 December 2004, following the hearing of oral evidence from the claimant (who was cross-examined). On 14 January 2005 the Judgment was handed down. The Costs Judge ordered set-offs between the costs awarded for and against each party. By far the majority was owed to the defendant.

The personal injury damages of £17,500 had been paid by the defendant and were held by the LSC as being subject to the statutory charge. The Costs Judge found that the damages plus interest would have to be repaid to the defendant having established that the statutory charge would not apply.

The issue of whether the claimant was entitled to cost protection under section 11(1) AJA and what order as to the costs of the section 11 proceedings should be made, was put over until 3 May 2005. On that date having heard argument, the Costs Judge declined to make any further order for costs against the claimant. He was persuaded to do this after it was argued that regulation 120 of the Civil Legal Aid (General Regulations 1989), since revoked, had, under the previous regime, provided costs protection in "any proceedings under regulations 113-119", which were deemed to be proceedings to which the assisted person's certificate relates, whether or not this had been discharged or revoked and the costs of such proceedings would be paid out of the fund. The Costs Judge stated "it cannot be right that Parliament could have intended that an assisted person could have public funding to conduct the assessment of his bill if he is awarded costs, but not to have public funding himself against the other side's claim for costs if an order for costs is made against him". He went on to carry out a purposive interpretation of the substituted regulation 113(1) so that that regulation provided costs protection.

The Costs Judge stated that regulation 113(1) should be read as follows:

"Subject paragraph (2) detailed assessment proceedings and proceedings where the amount to be paid under section 11(1) costs order or an application for a costs order against the Commission is to be determined under regulation 10 of the Community Legal Services (costs) Regulations 2000 shall be deemed to be proceedings to which the client's certificate relates, whether or not it has been discharged or revoked and the costs of such proceedings shall be paid out of the fund unless the court otherwise orders".

On appeal the Judge held that section 11 AJA and the regulations made under it set up an entirely new and different regime for the determination of costs payable by an assisted party, although the assessment under those regulations might very well come to the same result as a detailed assessment between the parties. They were in fact separate and distinct proceedings. There was no evidence that any detailed assessment proceedings had been commenced, at least insofar as the period in the proceedings when the claimant had been an assisted party.

The Costs Judge, at a later point in his Judgment, decided that the personal injury damages of £17,500 "had nothing to do with the section 11 application". The Judge held this was an incorrect view and that the only way in which the defendant could recoup that money was by using the section 11 route. The damages could not be the subject of set-off since they had already been paid and belonged to the claimant, albeit subject to the LSC statutory charge.

In those circumstances the appeal was allowed and the defendant awarded its costs of the section 11 application. Those costs were decided by summary assessment.

The defendant/appellant also sought its costs of the appeal, but there was some confusion as to the extent of the claimant/respondent's legal aid cover. He had apparently been granted legal aid for the purpose of an appeal to the Court of Appeal. The parties agreed a figure for the costs and the Judge indicated that normal costs principles would apply, i.e. costs should follow the event. However he adjourned the question of costs, giving liberty to apply to each side and requiring the claimant to clarify with the LSC within 28 days the true extent of the legal aid certificate. If the appellant is satisfied that the respondent has LSC funding it is unlikely that any further application will be made. If, on the other hand, he has no such funding, there will be an application that the respondent should be ordered to pay costs in the agreed sum.