Source: http://www.familylawweek.co.uk/site.aspx?i=ed360
Timestamp: 2017-12-11 03:53:23
Document Index: 459162680

Matched Legal Cases: ['EWCA ', 'EWCA ', 'arts 43', 'art 43', 'art 47', 'arts 44', 'art 47', 'art 2', 'art 2', 'EWCA ', 'arts 44']

Family Law Week: B (Children) [2005] EWCA Civ 779
B2/2005/0132
Neutral Citation: [2005] EWCA Civ 779
(CIRCUIT JUDGE BELLAMY)
MR ANDREW POST (instructed by R N Williams & Co, Wolverhampton WV1 4DJ) appeared on behalf of the First Respondent
1. LORD JUSTICE THORPE: Mr Justice Toulson will give the first judgment.
2. MR JUSTICE TOULSON: This appeal is about the proper interpretation of the provisions which apply for assessing costs where the paying party has had public funding for part but not all of the proceedings. The case concerns a costs order made nearly four years ago in the Wolverhampton County Court. The proceedings were under section 8 of the Children Act 1989. It is unnecessary to say anything about the details.
3. The proceedings began with an application by Mr Barry, dated 15 February 2001, and were disposed of by an order made on 21 September 2001. That order included this paragraph, which I will refer to as the "costs order":
"The applicant father [Mr Barry] shall pay the respondent's costs of and occasioned by the Applicant's application ... dated 15 February 2001 subject to a detailed assessment of the costs of the Applicant being a person who is in receipt of services funded by the Legal Services Commission. The court finds that it has insufficient information to fix a reasonable amount for the Applicant to pay in accordance with Access to Justice Act 1999 s11(1)."
4. At the date of the costs order both parties were funded by the Legal Services Commission ("LSC"). However Mr Barry had not been publicly funded for the whole of the proceedings; he was publicly funded only for the period from 26 July 2001.
5. Mrs Barry's solicitors were agonisingly slow in taking steps to enforce the costs order. So much so that when they tried to do so they were out of time under the relevant regulations as regards the period for which Mr Barry was publicly funded.
6. The question before this court is whether Mrs Barry is still in time to enforce the costs order as regards the period before Mr Barry became publicly-funded.
7. To answer the question, it is necessary to look at a number of rules and regulations. CPR Parts 43 to 48 deal with costs in civil proceedings. Most, but not all, of those parts apply to family proceedings. The Family Proceedings (Costs) Rules 1991 as amended by the Family Proceedings (Miscellaneous) Proceedings Rules 1999 provide that CPR Part 43, 44 (except for parts of it), 47 and 48 shall apply in family proceedings. CPR Part 47 sets out the procedure for detailed assessment of costs. Detailed assessment proceedings are begun by the receiving party serving on the paying party a notice of commencement in the relevant form and a copy of the bill of costs (CPR 47.6). The period for doing this is three months from the date of the judgment or order for costs (CPR 47.7). If the receiving party begins detailed assessment proceedings after that period, the court may disallow all or part of the interest otherwise payable but it must not impose any other sanction except in cases of misconduct (CPR 47.8). The receiving party may put in detailed objections within 21 days (CPR 47.9). If he fails to do so, the receiving party may apply for a default certificate. If the paying party puts in objections, the receiving party may request a detailed assessment hearing (CPR 47.14). The period for doing this is six months from the original order. If the receiving party makes a later application, the court may again disallow interest but may not impose any other sanction except in cases of misconduct (CPR 47.14(5)).
8. Different rules apply if and to the extent that the person against whom the costs order is made was funded by the LSC at the time when the costs were incurred. Here, the trail begins with CPR 44.17. This provides that Parts 44 to 48:
"... do not apply to the assessment of costs in proceedings to the extent that: (a) section 11 of the Access to Justice Act 1999, and provisions made under that Act ...
9. make different provision."
These words are followed by a note, which states:
"(The costs practice direction sets out the procedure to be followed where a party was wholly or partially funded by the Legal Services Commission)."
It is to be noted that the first words have legislative force, that is to say the provision that Part 47 does not apply to the assessment of costs to the extent that section 11 of the Administration of Justice Act 1999 (AJA section 11) and provisions made under that Act make other provision. The passage which follows in brackets is in the nature of a signpost. It is not a statement which has legislative force on its own; it is informing interested persons where they may look.
10. AJA section 11 provides:
"(1) Except in prescribed circumstances, costs ordered against an individual in relation to any proceedings or part of proceedings funded for him shall not exceed the amount, (if any) which is a reasonable one for him to pay having regard to all the circumstances including -
(2) In assessing for the purposes of subsection (1) the financial resources of an individual for whom services are funded by the Commission as part of the Community Legal Service, his clothes and household furniture and the tools and implements of his trade shall not be taken into account, except so far as may be prescribed.
(3) Subject to subsections (1) and (2), regulations may make provision about costs in relation to proceedings in which services are funded by the Commission for any of the parties as part of the Community Legal Service."
Subsection (4) goes on to set out specific matters about which such regulations may make particular provision.
11. It is clear, in my view, from the wording of subsection (1) that where a person is publicly funded for part of proceedings, but not the whole proceedings, the provisions of the section apply only to the part of the proceedings for which he is funded. Since CPR 44.17 disapplies the ordinary procedure for detailed assessment of costs only "to the extent that AJA section 11 and provisions made under it make different provision", the ordinary procedure for detailed assessment of costs continues to apply to that part of the proceedings for which the paying party does not have public funding.
12. Two sets of regulations have been made under AJA section 11: the Community Legal Service (Costs) Regulations 2000, as amended by various later regulations, and the Community Legal Service (Costs) Protection Regulations 2000, as similarly amended. Together they provide a self-contained code of substantive and procedural law governing costs against a publicly funded client and the LSC. For present purposes we are concerned only with the first of the two sets of regulations, which I will call the CLS (Costs) Regulations.
13. Assessment of costs against publicly funded clients is dealt with in Part 2 of the LSC (Costs) Regulations, comprising Regulations 5 to 13. Their ambit is defined by Regulation 5, which says that Regulations 6 to 13 apply only where "costs protection applies". "Costs protection" is defined in Regulation 1 as meaning the limit on costs awarded against a client set out in AJA section 11(1). The scheme was explained by Lord Phillips MR in R (on the application of Gunn) v Secretary of State for the Home Department [2001] 1 WLR 1634, and in guidance notes issued by the senior costs judge, revised February 2005. The scheme involves a two-stage process. At stage 1 the court considers whether it would make an order for costs against the client if he were not publicly funded. If it decides that it would, it decides whether it is in a position to specify the amount which he should pay. This involves considering not only what would be a reasonable amount if the client were not publicly funded, but also what it would be reasonable for the client to pay, taking into account the client's means and the other matters specified in AJA section 11.
14. In the present case the judge at the end of the hearing in September 2001 decided to make a costs order against Mr Barry, but concluded that he had insufficient information to fix a reasonable amount for Mr Barry to pay in accordance with AJA section 11. In those circumstances, the scheme provides for a second stage at which the court will determine the amount to be paid. The way in which the second stage is initiated is dealt with by Regulation 10 of the LSC (Costs) Regulations. This provides:
"(2) The receiving party may, within three months after a section 11(1) costs order is made, request a hearing to determine the costs payable to him.
(3) A request under paragraph (2) shall be accompanied by:
(a) if the section 11(1) costs order does not state the full costs, the receiving party's bill of costs, which shall comply with any requirements of relevant rules of court relating to the form and content of a bill of costs where the court is assessing a party's costs."
If the receiving party fails to make such an application within the three months prescribed, Regulation 12(3) provides:
"Where the court has not specified the amount to be paid under the section 11(1) costs order, and the receiving party has not, within the time limit in regulation 10(2), applied to have that amount determined in accordance with regulation 10, the receiving party may, on any of the grounds set out in paragraph (4), apply for a determination of the amount that the client is required to pay."
The grounds set out in Regulation 12(4) are that:
"(a) there has been a significant change in the client's circumstances since the date of the order; (b) material additional information as to the client's financial resources is available, and that information could not with reasonable diligence have been obtained by the receiving party in time to make an application in accordance with regulation 10; or (c) there were other good reasons justifying the receiving party's failure to make an application within the time limit in regulation 10(2)."
15. In R (on the application of Gunn) v Secretary of State for the Home Department, Lord Phillips MR at paragraph 31 of his judgment took the opportunity to emphasise the mandatory nature of the time limit, which he commented was not generally appreciated. This case may serve a useful purpose if it provides a further reminder.
16. I have mentioned that CPR 44.17 refers to the Costs Practice Direction as setting out the procedure to be followed where a party was wholly or partly funded by the LSC. Section 21.2 of the Costs Practice Direction provides that:
"Rule 44.17(a) also excludes the procedure for the detailed assessment of costs in cases to which Section 11 of the Access to Justice Act 1999 applies, whether it applies in whole or in part."
In those excluded cases the procedure for determination of costs is set out in section 22 of the Costs Practice Direction. It will be necessary to consider later the meaning and effect of this paragraph.
17. Sections 22 and 23 of the Costs Practice Direction summarise the provisions of the CLS (Costs) Regulations for seeking costs against a publicly funded client and the LSC. Section 23.4 emphasises the importance of the application being made within the prescribed time limit. In sections 22 and 23 there are two paragraphs on which Mr Barry places particular reliance. They are as follows:
"22.8 Where an order specifying the costs payable is made and the LSC funded client does not have cost protection in respect of all of the costs awarded in that order, the order must identify the sum payable (if any) in respect of which the LSC funded client has cost protection and the sum payable (if any) in respect of which he does not have cost protection.
23.9 Where the LSC funded client does not have cost protection in respect of all of the costs awarded, the order made by the costs judge or district judge must in addition to specifying the costs payable, identify the full costs in respect of which cost protection applies and the full costs in respect of which cost protection does not apply."
The only difference between these paragraphs, which appear to say much the same thing, is in their context rather than their content. From the surrounding paragraphs it appears that they are looking respectively at a stage 1 determination and a stage 2 determination of the amount of costs to be paid by a client with LSC funding.
18. In this case the procedural history is lengthy and depressing, but it can be summarised shortly for present purposes.
19. On 19 December 2001, just within three months from the date of the costs order, Mrs Barry's solicitors served on Mr Barry a notice of commencement of assessment of her bill of costs, together with a copy of the bill. This complied with requirements of CPR 47 in so far as Mr Barry was not publicly funded; but he was publicly funded for the period from 26 July 2001, and Mrs Barry's solicitors did not make an application under Regulation 10 of the LSC (Costs) Regulations within the mandatory three-month period. The history after that is a sorry story of confusion and delay, first by Mrs Barry's solicitors and then by the court. Various abortive steps were taken, but it was not until 5 September 2003 that Mrs Barry's solicitors made an application for an order determining the amount which Mr Barry should pay under the costs order applying the provisions of AJA section 11. This application was over 20 months late. There were then further delays for which the court was responsible. Eventually, on 16 November 2004, District Judge Anson gave permission for Mrs Barry to proceed with an application to determine the amount of the costs payable to her under the costs order, but adjourned the proceedings in order for the bill of costs to be redrawn differentiating between the periods for which Mr Barry had and did not have public funding.
20. Mr Barry appealed against that order. The appeal came before HHJ Bellamy on 7 January 2005. He gave a written judgment on 10 January 2005. He allowed Mr Barry's appeal in so far as it related to the costs for the period when Mr Barry had been publicly funded. The judge found that Mrs Barry's solicitors had not shown any good reason under Regulation 12(4) of the LSC (Costs) Regulations for failing to request a hearing to determine the costs to be paid by Mr Barry within three months from the original costs order, and he held that in these circumstances the court had no power to entertain an "out of time" application.
21. It would be impossible to challenge that part of the judgment and Mrs Barry has not attempted to do so.
22. The judge did not accept Mr Barry's further argument that Mrs Barry had lost the right to proceed with the assessment of her bill for the period when Mr Barry was not publicly funded. He described it as a somewhat surprising proposition. The basis of the argument was that it followed from the wording of section 23.9 of the Costs Practice Direction that the entirety of Mrs Barry's claim for costs had to be assessed at the same time. Accordingly, if Mrs Barry lost the opportunity to ask the court to determine the costs payable for the period when Mr Barry was publicly funded, she therefore also lost the opportunity to ask the court to assess her costs for the other period. Rejecting this argument, the judge said:
"Whilst it is clear that the respondent's bill of costs will now have to be re-drawn to show the amount of party and party costs incurred up to and including 25 July 2001, the fact that she is not now able to seek to recover from the applicant any costs incurred after that date in no way impedes her entitlement to seek to recover the costs incurred before that date. To find otherwise would be to fly in the [face] of the very idea of 'costs protection' since, as s.11(1) itself makes plain, that concept only arises for the benefit of those who are publicly funded and for the period that they are publicly funded."
23. Mr Barry appeals against that part of the judgment. He has represented himself. He has an impressive grasp of all the relevant provisions and has argued his case with skill. He prepared his argument in an immaculate fashion, making sure that the court had in advance all the necessary documents in convenient order, and he furnished a well-reasoned skeleton argument. That enabled the court to consider the arguments before he developed them further this morning. In his oral submissions he was succinct, and I would like to express my appreciation of the admirable way in which he has presented his appeal. It raises a serious point which merits the court's careful consideration. His argument is founded principally on the Costs Practice Directions, sections 21.2, 22.8 and 23.9, but he relies in addition on part of the LSC (Costs) Regulations to which it will be necessary to refer.
24. To follow the argument, it will be helpful to repeat sections 21.2 and 23.9 of the Costs Practice Direction. There is no need to repeat section 22.8 because, as previously noted, its terms are very similar to section 23.9. Section 21.2 provides:
"Rule 44.17(a) also excludes the procedure for the detailed assessment of costs in cases to which Section 11 of the Access to Justice Act 1999 applies, whether it applies in whole or in part." In these excluded cases the procedure for determination of costs is set out in Section 22 of this Practice Direction."
Section 23.9 provides:
"Where the LSC funded client does not have cost protection in respect of all of the costs awarded, the order made by the costs judge or district judge must in addition to specifying the costs payable, identify the full costs in respect of which cost protection applies and the full costs in respect of which cost protection does not apply."
25. Mr Barry argues that the effect of these provisions is that where a bill covers a period for which the paying party is partly, but only partly, funded by the LSC, the procedure for detailed assessment of costs under CPR 47 is entirely excluded and the whole assessment is to be carried out under the mechanism provided by the LSC Costs Regulations. Mr Barry submits that this follows from the wording of section 21.2, which he interprets as meaning that the detailed assessment procedure under CPR 47 is excluded in those cases where AJA section 11 applies, even if it only applies to part of the case. In such cases the entire procedure is as set out in section 22. This interpretation is reinforced, he submits, by the requirement in sections 23.9 and 22.8 that under that procedure the court must specify the costs for which costs protection applies and the costs for which costs protection does not apply. In other words, it expressly contemplates that the procedure will include the assessment of costs for which there is no costs protection.
26. Looking only at the parts of the Cost Practice Direction on which Mr Barry relies without regard to the relevant parts of AJA section 11, the LSC Regulations and the CPR, I would accept that Mr Barry's argument would have, on its face, considerable apparent force. But I do not believe that it is consistent with the true interpretation of the provisions of AJA section 11, the LSC Regulations and the CPR.
27. The first sentence of Costs Practice Direction section 21.2 reads:
28. The phrase "whether it applies in whole or in part" is ambiguous. It could mean that the procedure for detailed assessment of costs under the CPR is wholly excluded where AJA section 11 applies to any part of the costs, and this is how Mr Barry reads it. However it could mean that, where AJA section 11 applies, the detailed assessment procedure under CPR 47 is excluded, and that section 11 may apply in whole or in part. For what it is worth, I would accept that Mr Barry's reading is the more natural reading of the words on their face; but that is not the critical question. The critical question is what is the true meaning of CPR 44.17 and AJA section 11. Here, there is, in my view, no room for ambiguity. As I already said, I consider it to be clear from the wording of AJA section 11(1) where a person is publicly funded for part of the proceedings, but not the whole proceedings, the provisions of the section apply only to the part of the proceedings for which he is funded. The same is true of the LSC Costs Regulations.
29. It is necessary for Mr Barry's argument that the costs for the period when he was not publicly funded were capable of assessment within the AJA section 11 scheme, but I am unable to see how this can be so. Mr Barry relies in support of the proposition that they can be dealt with under the AJA section 11 scheme on paragraph 9(5) of the LSC Costs Regulations. To set that in context it is necessary to refer first to Regulations 9(2)(b) and 9(3)(b). Those Regulations provide that where a court considers that it would have made a costs order against a party, but is not in a position to specify the amount to be paid having regard to the provisions of section 11(1), it is not to specify the amount. There is then the stage 2 procedure under which the court will assess the amount to be paid. Regulation 9(5) in this context states:
"The amount (if any) to be paid by the client under an order made under paragraph 2(b) or paragraph 3(b), and any application for a costs order against the Commission, shall be determined in accordance with regulation 10, and at any such determination following an order made under paragraph 2(b), the amount of the full costs shall be assessed."
30. Mr Barry relies on the last part of that regulation that "at any such determination ... the amount of the full costs shall be assessed". This, he says, is a reference to the full amount of the costs to be paid by the client including the unfunded period.
31. The difficulty about this argument is that Regulation 9 is, as I previously said, part of Part 2 of the Regulations whose ambit is defined by Regulation 5, which states that Regulations 6 to 13 apply only where costs protection applies. Furthermore, the Regulations derive force from section 11 itself which confines its operation to the extent that a person has the benefit of public funding. The expression "full costs" is defined in Regulation 2 as meaning:
"Where a section 11(1) costs order is made against a client, the amount of costs which that client would, but for section 11(1) of the Act, have been ordered to pay."
In my judgment, the Regulations do not attempt to provide any scheme for the assessment of costs against a person who is not publicly funded, nor could they have done so under the terms of the Act. The purpose of Regulation 9(5) is that when a costs judge is making a determination of amount to be paid he must determine both the full costs which the receiving party would be entitled to recover for the relevant period - that is the period when the paying party had the benefit of public funding - and the amount which the paying party is to pay, having regard to the paying party's means and other relevant factors. The starting point is to determine what would be the full amount of costs to be paid but for the limitations imposed by section 11.
32. By contrast with the wording of section 21.2 of the Costs Practice Direction on which Mr Barry relies (and which I have indicated that I would accept are well capable of bearing the meaning that he seeks to put on them if they stood alone), CPR 44.17 does not say that the provisions for detailed assessment under CPR 47 are excluded in any case where AJA section 11 applies whether in whole or in part. It states that CPR 47 does not apply to the assessment of costs in proceedings to the extent that AJA section 11 and provisions made under it make different provision. That is not open to ambiguity. It follows, in my view, that where the client has public funding for part of the proceedings the provisions of AJA section 11 apply to that part and the provisions of CPR 47 apply to the remainder. Section 21.2 of Costs Practice Direction, which seeks to explain the effect of CPR 44.17, cannot alter its meaning and should not be interpreted so as to be inconsistent with it.
33. In KU v Liverpool City Council [2005] EWCA Civ 475 this court recently emphasised that a practice direction has no legislative force: practice directions provide guidance on matters of practice in the civil court, but if they contain statements of law which are misleading they do not carry authority.
34. Sections 22 and 23 of the Costs Practice Direction deal with procedural matters concerning orders for costs and the determination of costs under AJA section 11 and the LSC Costs Regulations. There is no mechanism under that regime for assessing costs payable by a party who did not have LSC funding at the relevant time, apart from the argument advanced by Mr Barry under Regulation 9(5), which I do not accept for the reasons which I have given. In the circumstances I interpret sections 22.8 and 23.9 of the Costs Practice Direction as reminders that the provisions for assessing costs against a person with or without LSC funding are different, and that if a costs judge is having to make both assessments the judge must identify them separately.
35. To summarise, the regime under CPR Parts 44 to 48 for assessing costs generally and the regime under AJA section 11 of the LSC Costs Regulations for assessing costs payable by a publicly funded clients are mutually exclusive. Where a client has been publicly funded for part but not all of the proceedings, the fact that the rules provide separate regimes with different procedural provisions for the assessment of costs for the different periods may sound more complicated in theory than it should be in practice. Proceedings for a detailed assessment of costs under CPR 47 in respect of the unfunded period and for a determination of costs payable under AJA section 11 in respect of the publicly funded period can and should sensibly be started simultaneously and dealt with together by the costs judge. The receiving party must break down the costs into the two periods, but this can be done in a single bill of costs divided into different parts. All the kinds of matters which are relevant to a detailed assessment under CPR 47 will be equally relevant to an assessment under AJA section 11; but there are additional matters which have to be considered under that section. In this case the judge was, in my view, right in his decision and his reasoning. The fact that Mrs Barry has lost the opportunity to recover costs from Mr Barry for the period when he had public funding does not prevent her from recovering costs for the period for which he was not publicly funded, and it would be strange if the result were otherwise.
36. The court has had the benefit on this appeal of sitting with the Senior Costs Judge as assessor. I would propose that all further costs matters in this case should now be transferred to the Supreme Court Costs Office.
37. For the reasons which I have given I would dismiss this appeal.
38. LORD JUSTICE LATHAM: I agree.
(Appeal dismissed; Appellant do pay respondent's costs).