The new Regulations and court rules expressly reserved to a costs judge the decision about whether a costs order should be made against the Legal Services Commission. The former practice of the trial judge making this decision must no longer apply. The new rules did not operate to remove the power of the court to make similar costs orders in favour of public bodies. The test of whether such an order should be made remained whether it was just and equitable to do so. The court summarised the Cost Protection Regulations.
Lord Phillips MR said: ‘The new regulations introduce a two-stage process in relation to the recovery of costs in cases to which s 11(1) of the 1999 Act applies. The procedure to be followed is primarily to be derived from the costs regulations. The scheme is as follows.
The first stage involves the court dealing with the substance of the dispute, which we shall call the trial court. The role of the trial court is as follows. (i) To decide whether to make an order for costs against a funded litigant (the client) (reg 9(1)). (ii) To decide whether it is in a position to specify the amount, if any, to be paid by the client (reg 9(2)). (iii) To make a costs order against the client which either (a) specifies the amount, if any, to be paid by the client and states the amount of the full costs, or (b) does not specify the amount to be paid by the client (reg 9(3) and (4)). The order is described in the regulations as a s 11(1) costs order and is defined in both sets of regulations as a ‘costs order against a client where cost protection applies’. ‘Cost protection’ means ‘the limit set on costs awarded against a client set out in s 11(1) of the Act’. (iv) Where the order does not specify the amount to be paid by the client, to make, if it sees fit, findings of fact, as to the parties’ conduct in the proceedings or otherwise, relevant to the determination of the amount (reg 9(6)).
Stage 2 consists of the procedure to be followed to ascertain the amount of costs to be paid by the client against whom the trial court has made an order that does not specify the amount. Stage 2 also includes the procedure for determining whether an order for costs should be made against the Commission (reg 9(5)). The regulations in relation to Stage 2 allocate certain functions to ‘the Court’. Regulation 10(10) provides that in relation to proceedings in the Court of Appeal, High Court or county court the court’s functions ‘may be exercised’ by a costs judge or a district judge. While it is arguable that the High Court and the Court of Appeal also enjoy jurisdiction to exercise these functions, we think it plain that the scheme does not envisage that they should do so.
Regulation 2 provides that ‘Costs Judge’ has the same meaning as in the CPR. CPR 43.2(1)(b) provides that ‘Costs Judge’ means a taxing master of the Supreme Court.
The procedure under Stage 2 is as follows. (i) The party in whose favour the costs order has been made (the receiving party) may, within three months of the making of the costs order, request a hearing to determine the costs payable to him (reg 10(2)). (ii) The receiving party may, at the same time, seek a costs order against the Commission. (reg 10(3)(c)). We wish to take this opportunity to emphasise a fact that we understand is not generally appreciated. The three-month time limit for seeking an order against the Commission is mandatory-there is no power to extend it. (iii) The receiving party must, when making the request, file with the court and serve on the client and the regional director of the Commission (if an order is sought against the Commission): (a) a bill of costs; (b) a statement of resources; and (c) a written notice that a costs order is sought against the Commission (reg 10(3) and (4)). (iv) The client must file a statement of resources and serve this on the receiving party and the regional director (where a claim is made on the Commission) (reg 10(6)). (v) The court sets a date for the hearing (reg 10(9)). (vi) The court conducts the hearing, assesses the costs (if any) to be paid by the client and, where appropriate, makes a costs order against the Commission.
The costs regulations do not, in fact, expressly provide that the costs judge shall carry out the functions set out under (vi) above, but it is plainly implicit that he should. That this is part of his role is confirmed by the explicit provisions of the cost protection regulations.
The cost protection regulations set out the circumstances in which the costs judge or district judge may make a costs order against the Commission. Regulation 5(3) makes it plain that it is for the costs judge or district judge to be satisfied that it is just and equitable that provision for the costs should be made out of public funds and, in respect of proceedings at first instance, that the non-funded party will suffer severe financial hardship unless the order is made. In considering these matters the costs judge or district judge is expressly required to have regard to the resources of the non-funded party and of his partner – reg 5(6).
We have set out the new regulatory scheme in detail because we have concluded that it is not compatible with the current practices of the trial court. The function of deciding whether or not a costs order can and should be made against the Commission is now expressly assigned to the costs judge or district judge. He cannot make such an order unless and until the prescribed formalities have been completed. It is not open to the trial court to rule that it is just and equitable to make the order or to direct that the order is to be made before the prescribed formalities have been completed. Regulation 9(6) of the costs regulations permits the trial court, when making a costs order, to make findings of fact relevant to the determination of the amount to be paid by the client. We consider that it must also be open to the trial court to make any findings in relation to the conduct of the parties or facts that have emerged in the course of the proceedings that have relevance to the task to be performed by the costs judge or district judge. Beyond this the trial court should not go. It follows that, in the cases before us, this court should not have usurped the function of the costs judge-in these cases the taxing master-in deciding that it was just and equitable to make a costs order against the Commission and to direct that such an order be made. This practice must no longer be followed, whether in the county court, the High Court or the Court of Appeal.
Lord Phillips MR, Pill and Keene LJJ
Times 20-Jun-2001, Gazette 05-Jul-2001,  EWCA Civ 891,  1 WLR 1634,  CP Rep 107,  3 All ER 481,  2 Costs LR 263
Community Legal Services (Costs) Regulations 2000 (SI 2000 No 441)
England and Wales
See Also – Regina v Home Secretary ex parte Gunn CA 2000
A challenge under article 5 to decisions about a prisoner’s treatment were misconceived in the context of the Secretary of State’s refusal to transfer a prisoner to open conditions with a view to improving his prospects of release: ‘[Article 5(4)] . .
Cited – D and D W v Portsmouth Hospital NHS; in re W (A Child) CA 3-May-2006
The claimants had sought court orders against the hospital to secure continuing life-supporting treatment for their daughter who had been born very severely disabled. The Trust now sought their costs from the various actions.
Held: The parents . .
Cited – Floyd and Another v Legal Services Commission QBD 28-Apr-2010
The claimant had succeeded in an action against her legally aided opponent, but then delayed in making her claim for costs against the respondent. The costs judge said that the CPR did not apply, and that he had no discretion to extend the time . .
Cited – Leeds City Council v Price and Others QBD 4-Apr-2011
The council had successfully defended a case brought by the defendant under legal aid. The parties now disputed whether it could recover the costs from the Legal Service Commission. The LSC answered that it had not been given proper notice of the . .
Lists of cited by and citing cases may be incomplete.
Legal Aid, Costs
Updated: 25 May 2022; Ref: scu.136149