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You are here: BAILII >> Databases >> England and Wales High Court (King's Bench Division) Decisions >> The Scout Association v Kemp [2023] EWHC 2575 (KB) (17 October 2023) URL: https://www.bailii.org/ew/cases/EWHC/KB/2023/2575.html Cite as: [2023] EWHC 2575 (KB), [2023] Costs LR 1803, [2024] 4 All ER 148, [2025] WLR 1231, [2025] 1 WLR 1231 |
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KING'S BENCH DIVISION
ON APPEAL FROM THE SENIOR COURTS COSTS OFFICE
COSTS JUDGE LEONARD
Strand, London, WC2A 2LL |
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B e f o r e :
____________________
THE SCOUT ASSOCIATION |
Appellant |
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- and – |
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BOLT BURDON KEMP |
Respondent |
____________________
Mr Roger Mallalieu K.C. (instructed by Bolt Burdon Kemp LLP) for the Respondent
Hearing date: 12 June 2023
Draft judgment sent to the parties: 29 September 2023
____________________
Crown Copyright ©
MR JUSTICE FREEDMAN:
I Introduction
II The facts
"8. The Claimant claimed against the Defendant damages for personal injury. On 22 August 2017, without proceedings being issued, the Claimant accepted the Defendant's Part 36 offer of £29,500.
9. The Claimant served a schedule of costs in August 2017. In September 2017 the Defendant, on the basis of that schedule, offered to settle the claim for costs at £22,500. That offer was rejected.
10. On 20 November 2017, on the Claimant's Part 8 application, the Senior Costs Judge made a "costs-only" order under CPR 47.14 providing, at paragraph 2:
"The Claimant's costs of the claim arising from the cause of action described in the claim form in respect of which terms of settlement have been agreed shall be paid by the Defendant and be the subject of a detailed assessment hearing in this Court."
11. The Claimant served a bill of costs on 23 November 2017. The bill came to £42,118.58. The Claimant's bill was provisionally assessed by Costs Officer Kenny at £22,868. Excluding the time for drafting the bill, the figure was £21,357.80, less than the Defendant's September 2017 offer. The Claimant sought, under CPR 47.15 (7)-(9) , an oral review on the issue of hourly rates and document time only.
12. At the oral review on 15 August 2018 before Costs Officer Kenny the Claimant conceded the document time point and only the hourly rates were reviewed. They were slightly increased, the bill being assessed at £23,626.28. Deducting again the costs of drafting the bill, the Claimant's costs were assessed at £22,096.28. This was still less than the Defendant's offer of September 2017.
13. As a result, the Claimant was ordered to pay the Defendant's costs of the Part 8 proceedings, the provisional assessment and the oral review, which were assessed at £3,290.11. Interest on the Claimant's assessed costs was disallowed.
14. That is the first costs order to which this application relates: the order made by Costs Officer Kenny on 15 August 2018.
15. The Claimant then filed an Appellant's notice under CPR 47.21 .
16. The Grounds of Appeal stated:
"… the Claimant seeks a de novo detailed assessment hearing so that all issues and costs not agreed are heard afresh and assessed in the usual manner. Therefore all decisions made by Costs Officer Kenny at the provisional assessment and subsequent oral hearing are appealed…"
17. The Grounds of Appeal went on to identify preliminary issues including the argument that the appeal hearing would, effectively, be a new detailed assessment on the standard basis and an argument (not subsequently pursued) to the effect that a costs officer does not have jurisdiction to summarily assess costs.
18. The appeal was listed before me on 14 February 2019. On the day, the Claimant raised a new argument to the effect that a costs officer did not have jurisdiction to conduct a provisional assessment at all. The hearing was adjourned, so that two issues could be argued before me: whether the appeal was limited to the issues actually considered by Ms Kenny on 15 August 2018, and whether Ms Kenny had had jurisdiction to undertake the provisional assessment.
19. I heard argument on those issues on 3 May 2019 and handed down judgment on 30 July 2019. I found that there was no viable argument to the effect that costs officers have no jurisdiction to conduct provisional assessments; that there is no appeal from a provisional assessment, only from an oral hearing, if requested; and that any such appeal would be limited to decisions made at the oral hearing.
20. I reserved to the detailed assessment hearing the costs of the issues addressed by my judgment. The Claimant sought (and I granted) permission to appeal only on the issue of whether, following an oral hearing under CPR 47.15 (7)-(9) , a party's rights of appeal extend not only to decisions made at the oral hearing but to decisions made on the provisional assessment that preceded it.
21. The Claimant's appeal from my judgment of 30 July 2019 was dismissed by Stewart J on 12 December 2019. The Claimant was ordered to pay the Defendant's costs of the appeal, summarily assessed at £8,091 net of VAT.
22. That is the second costs order to which this application relates.
23. On 16 January 2020 I heard and dismissed the substantive appeal from Costs Officer Kenny, ordering the Claimant to pay the Defendant's costs of the appeal. I gave directions for the determination of those costs in a hearing listed for 3 July 2020, which was adjourned by consent to await the judgment of the Supreme Court in Ho v Adelekun [2021] UKSC 43 .
24. It is not, as I understand it, in dispute that because the Claimant has accepted a Part 36 offer from the Defendant, there is no order for damages in favour of the Claimant against which the Defendant could enforce an order for costs without the permission of the court (see Cartwright v Venduct Engineering Limited [2018] 1 WLR 6137, at paragraph 44 ). The effect of the decision in Ho (handed down on 6 October 2021) is that the Defendant is also unable to recover its costs by way of set-off against the damages or costs payable to the Claimant.
25. It follows that, without the permission of the court, the Defendant has no means of recovering from the Claimant the costs which the Claimant was ordered to pay by Costs Officer Kenny on 15 August 2018 (£3,290.11); by Stewart J on 12 December 2019 (£8,091 net of VAT, the recoverability of which is a bone of contention between the parties); and by me on 16 January 2020 (which have yet to be assessed but which I understand will be claimed in the sum of £28,499.07 inclusive of VAT).
26. The Defendant has stated in correspondence that it has no intention of attempting enforcement against the Claimant and instead seeks an order that BBK pay all of those costs."
III The essence of the rival submissions
IV QOCS
"…there is only one sensible way to give effect to that social policy, namely by introducing one way costs shifting. The advantage of this solution is that costs protection can be targeted upon those who need it, rather than offered as a gift to the world at large".
"A one way costs shifting regime for personal injuries litigation (including clinical negligence) needs to have the following elements:
(i) Deterrence against bringing frivolous claims or applications.
(ii) Incentives for claimants to accept reasonable offers".
"(1) Subject to rules 44.15 and 44.16 [which have no application in the instant case], orders for costs made against a claimant may be enforced without the permission of the court but only to the extent that the aggregate amount in terms of such orders does not exceed the aggregate amount in money terms for damages and interest made in favour of the Claimant."
"(2) Orders for costs made against the claimant may be enforced up to the full extent of such orders with the permission of the court, and to the extent that it considers just, where –
(a) the proceedings include a claim which is made for the financial benefit of a person other than the claimant…
(3) Where paragraph (2)(a) applies, the court may, subject to rule 46.2, make an order for costs against a person, other than the claimant, for whose financial benefit the whole or part of the claim was made."
12.2
Examples of claims made for the financial benefit of a person other than the claimant… within the meaning of rule 44.16(2) are subrogated claims and claims for credit hire.
12.5
The court has power to make an order for costs against a person other than the claimant under section 51(3) of the Senior Courts Act 1981 and rule 46.2. In a case to which rule 44.16(2)(a) applies (claims for the benefit of others) –
(a) the court will usually order any person other than the claimant for whose financial benefit such a claim was made to pay all the costs of the proceedings or the costs attributable to the issues to which rule 44.16(2)(a) applies, or may exceptionally make such an order permitting the enforcement of such an order for costs against the claimant.
(b) the court may, as it thinks fair and just, determine the costs attributable to claims for the financial benefit of persons other than the claimant."
(i) Cartwright v Venduct Engineering Ltd [2018] 1 WLR 6137 to the effect that compromises by way of damages (e.g. a Tomlin order or a settlement pursuant to a part 36 offer or a settlement without court order) are not an "order for damages" and so are not available to pay the Defendants' costs. (That has application in the instant case, where the settlement of the damages was pursuant to a part 36 offer).
(ii) Ho v Adelekun [2021] UKSC 43,the Supreme Court held that QOCS rules did not permit a set off of the defendant's costs against costs payable to the claimant. (This has application because the costs incurred by the Appellant in resisting the applications for costs in the unsuccessful attempts to obtain higher costs could not be set off against the costs in the action.)
(iii) In University Hospitals of Derby and Burton NHS Foundation Trust v Harrison [2022] Costs LR 1823, the Court of Appeal held that an order permitting and dealing with the consequences of late acceptance of a Part 36 offer is not an 'order for damages' and effectively that all damages payable under a settlement are protected from enforcement. Nothing short of a court order following a trial would suffice to enable the defendant to obtain payment of its costs.
V Policy behind QOCS
"It should be emphasised that one of the principal purposes of QOWCS [sic] is to provide some assistance to claimants with personal injury claims. It is not to penalise their prospective defendants. So I disagree with para 22 of Mr Hogan's skeleton argument, that a central feature of the regime is that defendants 'would have to stand their own costs in unsuccessful claims'. That might be a common outcome of the QOWCS regime, but it is not its principal purpose or intent. If a defendant can bring itself within rule 44.14(1) , then it can recover its costs."
"The central rationale behind QOCS was that the burden falling on defendants and their insurers would be less if they were to forego costs recovery from claimants when the claim was dismissed than the burden they were forced to bear when they had to pay claimants not only their costs but also recoverable success fees and ATE premiums when the claimants were successful." (para. 3)
. "The means by which this was to be achieved, however, was precisely by preventing defendants recovering costs from personal injury claimants in those circumstances so prescribed under the rules. There was a broad and imprecise financial equivalency intended – Defendants would be out of pocket due to costs non recovery in the circumstances specified under the rules, but at the same time they would be in pocket by virtue of not having to pay success fees and ATE premiums."
"Any other result would give a claimant carte blanche to commence proceedings against as many defendants as he or she likes, requiring those defendants to run up large bills by way of costs, whilst remaining safe in the knowledge that, if the claim fails against all but one defendant, he or she will incur no costs liability of any kind to the successful defendants, despite the recovery of sums by way of damages from the unsuccessful defendant. That seems to me to be wrong in principle, because it would encourage the bringing of hopeless claims."
VI Non-party costs orders ("NPCO's")
"(1) Subject to the provisions of this or any other enactment and to rules of court, the costs of and incidental to all proceedings in… the High Court… shall be in the discretion of the court.
(2) Without prejudice to any general power to make rules of court, such rules may make provision for regulating matters relating to the costs of those proceedings…
(3) The court shall have full power to determine by whom and to what extent the costs are to be paid."
VII Grounds of appeal on behalf of the Appellant in outline
(i) The Costs Judge wrongly failed to take into account that BBK was the real party in respect of the costs proceedings, which they funded and controlled and from which they stood to benefit, to the complete exclusion of their client.
(ii) The Costs Judge erred in failing to consider and apply properly the case of Myatt v National Coal Board (No 2) [2007] 1 WLR 1559 which supported the making of an NPCO, and wrongly interpreted Flatman v Germany [2013] 1 WLR 2676 prohibiting the making of an NPCO.
(iii) He failed to consider that the making of an NPCO would not have contravened the policy underpinning QOCS and indeed would have been supported by that policy.
(iv) He should have considered that not making an NPCO would substantially reduce the incentives on solicitors in the position of BBK to accept reasonable offers in respect of costs and could encourage undesirable litigation behaviour.
(v) In all the circumstances, the justice of the case was for the party who sought to gain out of the proceedings to be liable to pay the costs of the other successful party.
VIII The law relating to appeals challenging an exercise of discretion
"V. Appealing discretion
48. At this stage it is important to restate some basic principles concerning appellate challenges to the exercise of a discretion at first instance.
49. I base my summary on a number of well-known cases including G v G [1985] 1 WLR 647 (HL), Tanfern Ltd v Cameron-MacDonald [2000] 1 WLR 1311 (CA), Chief Constable of Greater Manchester Police v Carroll [2018] 4 WLR 32 (CA), and Kimathi & Ors v Foreign and Commonwealth Office [2018] EWCA Civ 2213 (the latter two cases being concerned specifically with section 33 of the LA 1980).
50. An appellate court will only interfere with a discretionary evaluation where an appellant can identify one or more of the follows errors:
(i) a misdirection in law;
(ii) some procedural unfairness or irregularity;
(iii) that the Judge took into account irrelevant matters;
(iv) that the Judge failed to take account of relevant matters; or
(v) that the Judge made a decision which was "plainly wrong".
51. Error type (v) requires some elaboration. This means a decision which has exceeded the generous ambit within which reasonable disagreement is possible.
52. So, even if the appeal court would have preferred a different answer, unless the judge's decision was plainly wrong, it will be left undisturbed. Using terms such as "perversity" or "irrationality" are merely likely to cause confusion. What is clear is that the hurdle for an appellant is a high one whenever a challenge is made to the outcome of a discretionary balancing exercise. The appellate court's role is to police a very wide perimeter and it will be rare that a judge who has exercised a discretion having regard to relevant considerations will have come to a conclusion outside that perimeter. I would add that an appellate court is unlikely to be assisted in such challenges by a simple re-argument of the points made to the judge below. It needs to be underlined that an appellate court in an appeal such as the present is exercising a CPR 52.21(1) "review" power. It is also well-established that the weight to be given to specific factors is a matter for the trial judge and absent some wholly unjustifiable attribution of weight, an appellate court must defer to the trial judge."
IX The jurisdiction to make an NPCO
"Although costs orders against non-parties are to be regarded as 'exceptional', exceptional in this context means no more than outside the ordinary run of cases where parties pursue or defend claims for their own benefit and at their own expense. The ultimate question in any such 'exceptional' case is whether in all the circumstances it is just to make the order. It must be recognised that this is to some extent a fact-specific jurisdiction and that there will often be a number of different considerations in play, some militating in favour of an order, some against".
"Where, however, the non-party not merely funds the proceedings but substantially also controls or at any rate is to benefit from them, justice would ordinarily require that, if the proceedings fail, he will pay the successful party's costs. The non-party in these cases is not so much facilitating access to justice by the party funded as himself gaining access to justice for his own purposes. He himself is 'the real party' to the litigation, a concept repeatedly invoked throughout the jurisprudence … Nor indeed, is it necessary that the non-party be 'the only real party' to the litigation in the sense explained in the Knight case, provided that he is 'a real party in … very important and critical respects".
"A person who is not a party to proceedings can be ordered to pay costs in those proceedings if he has made himself a quasi-party, for example, by being a party to separate proceedings which have been heard together with the proceedings in which the costs order is sought, or by funding the proceedings or by initiating them for some purpose of his own and it is reasonable and just to make the order. The legal representative who acts as a legal representative does not make himself a quasi-party and no jurisdiction to make an order for costs against him under section 51(1) and (3) arises. However, a legal representative who goes beyond conducting proceedings as a legal representative and behaves as a quasi-party will not be immune from a costs order under section 51(1) and (3) merely because he is a barrister or a solicitor". (emphasis added)
(i) (at 1065G) that acting under a lawful CFA did not render a solicitor any more exposed to an NPCO.
(ii) (at 1066H)"This is a jurisdiction which cannot arise where a legal representative is acting only in that capacity in the context of legal proceedings".
(iii) (at 1067H) "What we intend to make clear is that lawyers acting under CFAs are at no more risk of paying costs personally than they would be if they were not so acting."
X The case of Myatt v National Coal Board (No 2) [2007] 1 WLR 1559 ("Myatt").
"8. In my judgment, the third category described by Rose LJ in the Tolstoy-Miloslavsky case should be understood as including a solicitor who, to use the words of Lord Brown in Dymocks Franchise Systems (NSW) Pty Ltd v Todd is 'a real party … in very important and critical respects' and who 'not merely funds the proceedings but substantially also controls or at any rate is to benefit from them'. I do not accept that the mere fact that a solicitor is on the record prosecuting proceedings for his or her client is fatal to an application by the successful opposing party under section 51(1) and (3) of the Supreme Court Act 1981, that the solicitor should pay some or all of the costs.
9. Suppose that the claimants had no financial interest in the outcome of the appeal at all because the solicitors had assumed liability for all the disbursements with no right of recourse against the clients. In that event, the only party with an interest in the appeal would be the solicitors. In my judgment, they would undoubtedly be acting outside the role of solicitor, to use the language of Rose LJ."
"19. Those observations do not, and did not purport to, set out in definitive terms exactly what is the borderline between the case where a solicitor acts purely as such in the ordinary way on behalf of a client and is therefore immune from the jurisdiction of the court under sections 51(1) and (3), and on the other hand a case where the solicitor's acts are such that he is within the scope of that jurisdiction. Although the court in Count Tolstoy noted the enactment of the conditional fee provisions of the Courts and Legal Services Act 1990, it did not have occasion to consider the implications of those provisions in detail."
"24. At any given stage in the course of the appeal, if one had asked in what role the solicitors were acting, even looking beyond their necessary role of conducting the litigation, [counsel for the solicitors] said the answer would have to be that they were representing the claimants and their interests, even if they were also furthering their own interests. Like my Lord, I do not consider that this is a sufficient answer to the arguments of Mr Morgan for the respondents. In the very different context of CFA funded litigation, which was not at issue in Tolstoy, it seems to me that the criteria indicated in that case must be considered and applied with as clear an understanding as the court can have of the reality of the issues at stake in the litigation and their economic context and also, of course, with the benefit of later developments in the law as regards the circumstances in which it is possible, and if so proper, to make an order under subsections (1) or (3) of section 51."
"23. Accordingly, although I would accept that a decision in favour of the respondents and against the solicitors in the present case is of wider relevance, it seems to me that its relevance is limited to cases where the litigation is funded by a CFA and where the issue is as to the enforceability of the CFA."
...
26."…it is correct to regard Ollerenshaw in the present case in relation to the conduct of the appeal as having acted in part for the sake of their own benefit in a respect which was of no interest or concern to their clients, and as having acted as a matter of business to seek to establish their right to be paid, not by their own clients in practice, the profit costs on these four cases and all the others of which these were representative.
27In those circumstances, which could be common in relation to cases where the enforceability of a CFA is at stake but would be most unusual in any other situation, it seems to me proper to regard the solicitors as having acted in respect of the appeal in a dual capacity; acting for their clients, certainly, and with a real interest of those clients to protect, but primarily acting for their own sake" (emphasis added). In terms of what Lord Brown said later in paragraph 25 in Dymocks, I agree with my Lord in saying that Ollerenshaws were a real party to the litigation at the stage of the appeal, albeit that the claimants were also. On that basis it seems to me that the case is materially different from the Count Tolstoy case and the court has jurisdiction to make an order under subsection (1) and (3) of section 51 against the solicitors."
XI The case of Flatman v Germany [2013] 1 WLR 2676 ("Flatman")
"…they may become more acute if defendant's insurers can undermine the principle of one-way costs shifting…by pursuing solicitors acting for the claimant who fails".
"Putting the issue on a wider canvas, the Law Society, on the other hand, submits that a solicitor who funds disbursements on behalf of a client on the basis that the costs will be recovered from the other side in the event of success but will not be recovered from the client if the claim fails (at least in cases, such as these, of moderate complexity in which the disbursements are modest) is not acting in circumstances which are outside the ordinary run of cases. Neither can it be said, it is submitted, that the solicitor is either 'the real party' to the litigation, the person 'with the principal interest' in its outcome, or is acting 'primarily for his own sake'. Thus, without more, the solicitor should not be made liable to a third party costs order."
"45. In my judgment, therefore, the legislation does visualise the possibility that a solicitor might fund disbursements and, in that event, it would not be right to conclude that such a solicitor was 'the real party' or even 'a real party' to the litigation. As for the policy imperative argued by Mr Brown, after the event insurance is not a pre-requisite of bringing a claim on a CFA (see King v Telegraph Group [2005] 1 WLR 2282 at paragraph 100 and Floods of Queensferry Ltd v Shand Construction Ltd (supra) at paragraph 37). The fact that a litigant can (or cannot) afford an expert report or the court fee says nothing about his or her ability to fund the costs incurred by opponents in an unsuccessful claim and, indeed, Eady J (at paragraph 25 of his judgment) recognised that the solicitor could advance disbursements with a technical (albeit improbable) obligation for repayment.
That much is also clear from the fact that solicitors are entitled to act on a normal fee or conditional fee for an impecunious client whom they know or suspect will not be able to pay own (or other side's costs) if unsuccessful (see Sibthorpe v Southwark BL [2011] 1 WLR 2111 at paragraph 50; Awwad v Geraghty [2001] QB 570 at 588; Dophin Quays Developments Ltd v Mills [2008] 1 WLR 1829 at paragraph 75.
In those circumstances, contrary to the submissions of Mr Brown, I agree with the issue of principle advanced by the Law Society (and Mr Carpenter) that payment of disbursements, without more, does not incur any potential liability to an adverse costs order…"
"(1) The starting point in any case must be the first principle stated by Lord Brown in Dymocks, namely that the ultimate question is whether in all the circumstances it is just to make a non-party costs order, that this is a fact-specific enquiry, and that it must be recognised that in a particular case the court may have to balance a number of different considerations, some of them conflicting.
(2) The starting point when considering the position of a solicitor is that it must be shown that he has in some way acted beyond or outside his role as a solicitor conducting litigation for his client to make him liable for a non-party costs order.
(3) The starting point when considering the position of a solicitor acting under a CFA is that the fact that he stands to benefit financially from the success of the litigation, in that otherwise he will not be able to recover his profit costs or his success fee, does not of itself mean that he has acted in some way beyond or outside his role as a solicitor conducting litigation for his client.
(4) The starting point when considering the position of a solicitor acting under a CFA who has agreed to fund disbursements under the CFA should be no different from the case of a solicitor who has not, since both arrangements are permitted and are regarded as meeting a recognised legitimate public policy aim. The position is no different where the solicitor knows that the client is impecunious and that there is no ATE policy in place; that is because acting for clients who are impecunious does not take the solicitor outside his role as such and, indeed, it is consistent with the recognised public policy aim of promoting access to justice, and because there is no obligation on a solicitor acting under a CFA to ensure that ATE insurance cover is in place when his client is impecunious.
… It follows, in my judgment, that there must be something beyond this combination of factors by themselves which would render it just to make a non-party costs order in such circumstances. Whilst it is unrealistic to seek to identify what will or will not be sufficient in any individual case, I do consider that in the majority of cases there will be present either some financial benefit to the solicitor over and above the benefit which he can expect to receive from the CFA, or some exercise of control of the litigation over and above that which would be expected from a solicitor acting on behalf of a client, or some combination of both."
XII Submissions of the Appellant
(a) Grounds 1 – 3 – the Legal Framework and the Real Party
"1. He wrongly considered that the line of authorities including Flatman v Germany [2013] 1 WLR 2676 prohibited the making of an NPCO when those cases were concerned only with the situation where a defendant sought its costs of a failed substantive claim, in which the claimant had an interest. In the situation where BBK had the sole interest in the costs proceedings, the governing authority was Myatt v National Coal Board (No 2) [2007] 1 WLR 1559, which permitted and indeed strongly supported the making of an NPCO.
2. He wrongly considered that it was a relevant factor that BBK were acting under a lawful CFA and doing no more than any solicitor might do to recover costs under such a retainer.
3. He failed to consider that BBK were the real party in respect of the costs proceedings, which they funded and controlled and from which they stood to benefit, to the complete exclusion of their client."
"76. None of these policy objectives, says Mr Carpenter, are imperilled in any way by an order that BBK pay the Defendant's costs of the assessment process. The Claimant remains fully protected. It is no part of the policy behind QOCS that claimants' solicitors should be allowed a "one-way bet" when it comes to assessment of their costs, so that challenges and appeals can be pursued which, if successful, would result in an increase in the recoverable costs and payment of their costs by the Defendant, but in the event of failure cost them nothing except their own outlay.
77. Claimants' solicitors should be encouraged to accept reasonable offers on costs just as their clients are encouraged to accept reasonable offers on damages. To free BBK from the risk of an adverse costs order would put them in a better position than their own client. Had the Claimant rejected the Defendant's Part 36 offer on damages and received less at trial, under the QOCS rules the Defendant would have been entitled to set off any costs awarded to it against the damages awarded at trial. BBK claim the right to reject the Defendant's offer on costs free of any penalty whatsoever.
78. BBK do not require special protection. They are not in an asymmetric relationship with the Defendant and its solicitors. They are perfectly capable of judging for themselves what is a reasonable level of costs recovery and weighing up the risks and benefits of rejecting an offer or challenging the result on detailed assessment."
(b) Ground 4 – the Relevance of the pre-QOCS position
"4. He wrongly failed to consider that the fact that, in the absence of qualified one way costs shifting ("QOCS"), BBK would have borne a de facto liability for the Appellant's costs, demonstrated the justice of making an NPCO against BBK when that would not have contravened the policy underpinning QOCS and indeed would have been supported by that policy."
(c) Ground 5 – the relevance of public funding
"5. He wrongly considered that the position of a solicitor acting with public funding (which is subject to a specific and distinct statutory regime) was relevant to disposal of the application. Insofar as it was relevant, it in any event supported the application, since, in the absence of QOCS, a solicitor under a public funding certificate would have a de facto liability for any adverse costs of detailed assessment by operation of set off."
(d) Ground 6 – exceptionality
"6. He was wrong to consider that granting the application would contravene the requirement that NPCOs be "exceptional", since they would "become routine" in similar situations. The concept of exceptionality in this context is not concerned with a head count or a proportion of cases. A case such as this is exceptional because BBK were ostensibly acting on behalf of their client, but in fact acting entirely in their own interests in proceedings which they funded and controlled and from which they stood to benefit."
(e) Ground 7 – Causation
"7. He approached the issue of causation in the wrong way. The question was not whether the Appellant would have incurred the same costs even if BBK's client had had an interest in the costs proceedings. Causation was established simply by virtue of BBK pursuing the costs proceedings – and thereby causing the Appellant to incur costs – when it was the real party to those proceedings."
(f) Ground 8 – Access to justice
"8. He was wrong to conclude that granting the application would discourage firms such as BBK from offering their services to clients under similar retainer terms. There was no evidence to that effect and it was inherently unlikely given that such retainers exposed solicitors who used them to liability for adverse costs of detailed assessment prior to the introduction of QOCS."
(g) Ground 9 – Incentivising desirable litigation behaviour
"9. He should have considered that not making an NPCO would substantially reduce the incentives on solicitors in the position of BBK to accept reasonable offers in respect of costs and could encourage undesirable litigation behaviour."
(h) Ground 10 Justice
"10. He should have concluded that it was not just for BBK to be able to pursue a claim for costs in excess of the amount offered by the Appellant and to fail in that endeavour and thereby cause the Appellant to incur significant costs, when that endeavour was for BBK's sole benefit, without being liable for the Appellant's costs thereby occasioned. The learned Costs Judge should have considered that, in that situation, justice demanded that BBK pay those costs."
(i) Other points
XIII Discussion
(a) Grounds 1 – 3
(i) They were in the context of the facts of the case involving issues as to whether the CFAs in the instant 4 cases, and in a whole slew of other cases were compliant CFAs.
(ii) The context is to be observed from the language of Lloyd LJ at paras. 19, 23, 26 and 27 above.
(iii) It is also to be seen in the light of the successful intervention of the Law Society in Flatman and the judgment of Leveson LJ in that case, especially at paras. 31 and 45 - 47, explaining or clarifying the position for the run of more general cases than Myatt.
(iv) If in fact, the words of Dyson LJ are to be conferring a more general power, as a matter of discretion the discretion ought to be exercised having regard to the matters set out above. If they were exercised in a manner such that each application was considered non-contextually, then the danger would be that the solicitors' role in providing or assisting with access to justice could become eroded or damaged because of the level of risk on the solicitor.
(i) The scheme works on the basis that solicitors are not exposed to personal risk by, without more, acting for a client on a CFA or CFA lite basis. It is all one arrangement where at the front end, the solicitor provides access to justice by offering legal services and paying disbursements and other charges, and at a later stage, recovering the same through orders for costs in the name of the client. Their ability to make the application is an incident of the arrangement with the client which in turn assists with access to justice;
(ii) The solicitor is not like a personal funder who would start on the usual premise of exposure to costs. The starting point in respect of a solicitor is not to be penalised in costs, that would be to create a burden on the solicitor which might affect a solicitor's willingness to take on such cases;
(iii) In an appropriate case, where the conduct of the solicitor may be criticised, an application can be made on the basis of improper or unreasonable conduct under CPR 44.11.
(i) The Appellant's submission does not read Myatt in its true context. It relies on the broad words of Dyson LJ instead of reading that judgment together with that of Lloyd LJ who described as "most unusual" an NPCO in cases other than where "the enforceability of a CFA is at stake". On that basis, it would not suffice without more that the solicitor had funded a case or was acting for an impecunious client and their only chance of being reimbursed was in the name of the client.
(ii) In any event, the matter has been decided by subsequent cases and especially Flatman and the decision to follow the position submitted by the Law Society as intervener. The problem recognised in Flatman case was identified by the Law Society, and the problem was resolved in the manner set out at [45-47] in that case, namely that payment of disbursements without more does not give rise to a liability to an adverse costs order. The same logic ought to apply to the provision of professional services by a lawyer for an impecunious client under a CFA or a CFA lite;
(iii) Whatever the true test, in the circumstances of this case, BBK did not act outside or beyond the role of a solicitor. The fact that there were a number of applications, and all driven by BBK (and initiated without consultation with the client) is an incident of the CFA or the CFA lite arrangement, and not that the solicitor was acting outside the role of a solicitor.
(iv) There is no suggestion that any of the applications which were made were improper or unreasonable: if such were the case, then the applications could be met with a costs application under CPR 44.11. The fact that this has not been done strongly suggests that there has been no misconduct of this kind.
(b) Ground 4: the relevance of pre-QOCS position
(c) Ground 5 – the relevance of public funding
(d) Ground 6 – exceptionality
(e) Ground 7 – Causation
"65. I have noted above how firmly the Court of Appeal in the Cormack case endorsed the requirement for an applicant under section 51 to demonstrate a causative link between the incurring of the costs sought to be recovered from the non-party and some part of the conduct of the non-party alleged to attract the section 51 jurisdiction. That requirement is in my view rightly imposed. Auld LJ regarded it as part of the exceptionality requirement. It could equally be seen as going to the justice, or otherwise, of making the order. If the costs would still have been incurred if the non-party had not conducted itself in the relevant manner, why should it be just to visit the non-party with liability for them?
….
81. Fifthly, causation remains an important element in what an applicant under section 51 has to prove, namely a causative link between the particular conduct of the non-party relied upon and the incurring by the claimant of the costs sought to be recovered under section 51. If all those costs would have been incurred in any event, it is unlikely that a section 51 order ought to be made."
(f) Ground 8 – Access to justice
(g) Ground 9 – Incentivising desirable litigation behaviour
(h) Ground 10 – Justice
XIV Appeal against exercise of discretion
XV Conclusion