There was an interlocutory dispute over the granting of an extension of time for service of the defence. The legally aided plaintiff challenged the costs orders made by the district registrar and the judge. Each ordered that the costs be the defendants’, ‘not to be enforced without leave of the court save by way of set-off as against damages and/or costs’.
Held: The plaintiff’s appeal on the costs order failed. ‘The issue in this appeal is whether, in a case where one party is legally aided, an order for costs in favour of the other party can direct that those costs be set-off against either damages or costs to which the legally aided party has become, or may in future become, entitled in the action.’
The court confirmed the right of a party to set off a costs award against a subsequent damages or costs award in favour of an assisted person. Section 16(8) simply preserved those rights of set-off that the general law would allow and protected them against the charge created by section 16(6). It did not create any new right of set-off. Its effect was to make it clear that whatever rights of set-off were available under the general law were available against legally aided parties notwithstanding the board’s charge.
Scott LJ discussed the principles applying on an application for set-off costs: ‘The broad criterion for the application of set-off is that the plaintiff’s claim and the defendant’s claim are so closely connected that it would be inequitable to allow the plaintiff’s claim without taking into account the defendant’s claim. As it has sometimes been put, the defendant’s claim must, in equity, impeach the plaintiff’s claim.
Set-off of costs or damages to which one party is entitled against costs or damages to which another party is entitled depends upon the application of the equitable criterion I have endeavoured to express. It was treated by May J in Currie and Co v The Law Society  QB 990, 1000, as a ‘question for the court’s discretion’. It is possible to regard all questions regarding costs as being subject to the statutory discretion conferred on the court by section 51 of the Supreme Court Act 1981. But I would not have thought that a set-off of damages against damages could properly be described as a discretionary matter, nor that a set-off of costs against damages could be so described.’ and ‘A set-off of costs against costs, when all are incurred in the prosecution or defence of the same action, seems so natural and equitable as not to need any special justification. I would expect a party objecting to the set-off to give some special reason for the objection. It is, in my opinion, less obvious that a set-off of costs against damages would always be justified.’
Farquharson LJ, Sir John Megaw, Scott L
 1 WLR 492,  2 All ER 589
Legal Aid Act 1974 16(8)
England and Wales
- Not Followed – Anderson v Hills Automobiles (Woodford) Ltd 1965
 CLY 3177,  1 WLR 745
- Applied – Cook v Swinfen CA 1967
The plaintiff could not recover damages for the mental distress of conducting litigation. The court found it difficult to draw the line as to where such damage could be identified. In this case the damage could not reasonably be said to have flowed . .
 1 WLR 457
- Cited – Carr v Boxall 1960
 1 WLR 314
- Cited – Currie and Co v The Law Society 1976
Set-off of costs or damages to which one party is entitled against costs or damages to which another party is entitled depends upon the application of equitable rules. May J said: ‘[T]he set-off takes precedence over the solicitor’s particular lien, . .
 QB 990,  3 All ER 832,  3 WLR 785
- Applied – Hill v Bailey ChD 25-Nov-2003
Costs orders had been made against each party in favour of the other. One was legally aided.
Held: Though the legally aided party was entitled to some protection against enforcement of an order for costs, he was not protected against the other . .
Times 05-Jan-04, Gazette 15-Jan-04,  1 All ER 1210,  EWHC 2835 (Ch),  1 All ER 1210,  CP Rep 24,  1 Costs LR 135
- Cited – Sonia Burkett, Regina (on the Application of) v London Borough of Hammersmith and Fulham CA 15-Oct-2004
The appellant challenged an order for costs after dismissal of her application for judicial review of the respondent’s planning decision. The claimant had been granted legal aid at about the time of the bringing in of the new legal aid scheme. The . .
 EWCA Civ 1342, Times 20-Oct-04
- Cited – Franses v Al Assad and others ChD 26-Oct-2007
The claimant had obtained a freezing order over the proceeds of sale of a property held by solicitors. The claimant was liquidator of a company, and an allegation of wrongful trading had been made against the sole director and defendant. The . .
 EWHC 2442 (Ch)
- Cited – Ahmad v London Borough of Brent and Others QBD 25-Feb-2011
 EWHC 378 (QB),  5 Costs LR 735
- Cited – Rybak and Others v Langbar International Ltd ChD 18-Feb-2011
 EWHC 452 (Ch)
- Cited – Waltham Forest v Maloba, The Law Society CA 4-Dec-2007
The applicant had been refused accomodation as homeless after disclosing the ownership of a family home in Uganda. He had lived and worked in the UK for 15 years. The authority did not accept that it had later been repossessed. The council now . .
 EWCA Civ 1281,  2 All ER 701,  2 Lloyds Rep 555,  1 All ER (Comm) 685,  1 WLR 2079,  All ER (D) 32, 151 Sol Jo 1597, (2007) 151 SJLB 1597,  BLGR 409,  HLR 26,  NPC 131
These lists may be incomplete.
Updated: 09 December 2020; Ref: scu.190229