BACKGROUND:

When the Access to Justice Act 1999 (‘the act’) was implemented, the rules and regulations concerning payment from the legal aid fund were altered. Whether costs were payable by the Legal Aid Agency (LAA) and how much any such costs would be, became subject to a number of formalities. These were originally set out in section 11 of the act and the Community Legal Services (Costs) Regulations 2000, principally regulations 9-10.

These rules and regulations have now been superseded by the Legal Aid, Sentencing & Punishment of Offenders Act 2012(LASPO) (section 26) and the Civil Legal Aid (Costs) Regulations 2013 (primarily sections 10-16) but the principles remain constant.

COSTS ORDER:

Special/specific provisions need to be included within the final order for where costs are to be payable by the LAA. The award for costs from LAA will generally be made prior to matter reaching costs and as such is not something that is specifically covered by this article.

The determination of costs is initially considered by the ‘trial court’ (the court making the costs order following conclusion of the substantive proceedings) and when considering whether to make an order under section 26, the court must consider whether:

• a)but for cost protection, it would have made a costs order against the legally aided party; and
• b)if so, whether, on making the costs order, it would have specified the amount to be paid under that order

APPLICATION:

As stated above, there are 2 options when an order for costs from the LAA is made; either the amount of costs is specified or it is not. The latter is almost always applicable. In such cases, the primary point to note is that the receiving party, i.e. the non-funded party, has 3-months to seek recovery of its costs from the LAA.

The rules to be followed are also set out within the Civil Procedure Rules (CPR), principally rule 47.18, which states:

• 1)Where the court is to assess costs of a LAA (LSC) funded client, an assisted person or a person to whom legal aid is provided which are payable out of the Community Legal Services Fund or by the Lord Chancellor under Part 1 of the Legal Aid, Sentencing and Punishment of Offenders Act 2012, that person’s solicitor may commence detailed assessment proceedings by filing a request in the relevant practice form.
• 2)A request under paragraph (1) must be filed within 3 months after the date when the right to detailed assessment arose.

For a non-funded party, the particular process to be followed is set out in section 10 (3) (b) of the costs regulations which states that the non-legally aided party must make a request for payment by the LAA:

• i.under regulation 16(2), within three months of the date on which the section 26(1) costs order is made; or
• ii.after the expiry of the time limit under regulation 16(2), where there is a good reason for the delay in the request being made;

Therefore, the 3-month deadline is mandatory although it may be possible to extend the deadline if a ‘good reason’ is shown; whilst not strictly applicable, this approach is similar to the doctrine set out in Denton. It is incredibly difficult to show a ‘good reason’ and is very rarely allowed; the [very] odd occasion in which a ‘good reason’ has been shown, an event has occurred that was not reasonably foreseen as being possible.

However, it must be noted that in the case of Jacqueline Floyd & S & LSC [2010], it was set out that the court has no discretion to extend the 3-month time limit.

There is one possible exception to the 3-month deadline but this is only applicable where there is an appeal to the original decision. Rule 10(5) of the 2013 costs regulations states:

Where a court decides any proceedings in favour of a non-legally aided party and an appeal lies (with or without permission) against that decision, any order made under this regulation must not take effect:

• a)where permission to appeal is required, unless the time limit for an application for permission to appeal expires without such an application being made;
• b)where an application for permission is made within the time limit, unless the application is refused; or
• c)where permission to appeal is granted or is not required, unless the time limit for appeal expires without an appeal being brought.

In such a scenario, it can be submitted that the original order does not take effect until the date of the conclusion of the appeal proceedings.

The application made to the court is for a hearing for the court to assess the amount payable by the claimant/LAA. When making the application, the receiving party must file:

• a)It’s bill of costs
• b)A statement of resources (unless not in a court of first instance)
• c)Written notice that a costs order against the LAA is sought

The rules dictate that once the application is made, the claimant/funded party must file/serve a statement of resources within 21 days. However, general practical experience dictates that the court will set a number of deadlines including a date by which the claimant/funded party is to file/serve a statement of resources.

ASSESSMENT:

Pursuant to section 10 (sub-paragraphs c and d) of the 2013 costs regulations, in courts of first instance, the court must be satisfied that:

• i.the proceedings were instituted by the legally aided party;
• ii.the non-legally aided party is an individual;
• iii.the court is satisfied that the non-legally aided party will suffer financial hardship unless the order is made; and
• iv.in any case, the court is satisfied that it is ‘just and equitable’ in the circumstances that provision for the costs should be made out of public funds.

The ‘just and equitable’ test of not a high threshold and can loosely be translated as meaning the LAA should pay costs if the claimant they funded loses, i.e. the LAA should stand behind their client[i] (subject to the ‘financial hardship’ test)

It was reaffirmed in R v SSHD, ex parte Gunn & Others [2001] that there is jurisdiction for costs to be awarded to a government department.

Under the rules of the 1999 act, it was practically impossible for a government department to overcome the ‘financial hardship test’ in a court of first instant (point iii). However, upon implementation of LASPO, the rules were amended slightly to include point ii above, i.e. the non-legally aided party be an individual. As such, government departments are not able to recover costs from the LAA in courts of first instance.

However, the points highlighted above, including the ‘financial hardship’ test, do not apply in the appellate courts (Court of Appeal and Supreme Court) and so government departments can successfully recover costs from the LAA in such instances.

Subject to a means test, i.e. the claimant’s/funded party’s ability to pay, the court will then determine the amount of costs payable by the claimant/LAA. When determining the amount of costs payable, the court will have regard to section 26 of LASPO which states that:

• 1)Costs ordered against an individual in relevant civil proceedings must not exceed the amount (if any) which it is reasonable for the individual to pay having regard to all the circumstances, including:
• a.The financial resources of all of the parties to the proceedings, and
• b.Their conduct in connection with the dispute to which the proceedings relate

Further, in accordance with section 10(2) of the costs regulations:

The court may make an order for the payment by the Lord Chancellor to the non-legally aided party of the whole or any part of the costs incurred by that party in the proceedings (other than the costs that the legally aided party is required to pay under a section 26(1) costs order)

In summary therefore, provided the correct procedure has been followed, the court will conduct a hearing, assess the costs (if any) to be paid by the funded party and, where appropriate, make a costs order against the Lord Chancellor/LAA, i.e. decide what proportion of the costs should be paid by the Lord Chancellor/LAA.

SUPREME COURT:

As set out in a previous article, there is a mandatory 3-month deadline for all bills within the Supreme Court. However, this deadline can generally be extended provided the correct steps are followed (see article and/or Supreme Court rules).

This extension can also be applied to the filing of the application for an assessment of the costs payable by the claimant/LAA although but any extension would need to be agreed with the LAA before notification is given to the court.

APPEALS:

Anyone with a financial interest in the assessment can appeal against an assessment under the CPR whilst the LAA can appeal the making of a costs order against the LAA and/or the amount of costs payable.

PRACTICAL EXPERIENCE:

Practical experience suggests that if a costs order against the LAA has been obtained and there is no appeal either to that order (or the substantive proceedings themselves), then the LAA may be willing to pay a ‘reasonable’ amount of costs; i.e. the LAA will not seek an assessment by the court of the amount payable by the claimant (i.e. the LAA will stand behind their client).

More often than not, costs can be agreed without the need for a prolonged application process and so efforts should be made to try and liaise with the LAA prior to the 3-month deadline.

However, parties should protect their positions and treat the 3-month deadline as mandatory with no escape, i.e. the application should be made within the prescribed timeframe if costs have not been agreed. The risks in having to evidence a ‘good reason’ why the 3-month deadline should be extended (retrospectively) are too great. It is fundamental to remember, that the relevant deadline is the date on which the order is made and not the date on which the order is sealed (if this is done on a later date).

PRACTICE TIPS:

• 1)Ensure the correct order is obtained
• 2)Establish whether the costs award is in an appellate court (and so the ‘hardship test’ doesn’t apply)
• 3)Diarise the mandatory 3-month deadline
• 4)Instruct A&M Bacon Ltd
• 5)Diarise a 2-month deadline
• 6)Seek to serve the bill on the LAA within 2 months so that negotiations can be undertaken and any issues ironed out prior to any application is made
• 7)Agree costs or make application by the absolute deadline (identified in point 3)
• 8)Undertake further steps as directed by the court/as necessary

DISCLAIMER:

This article does not constitute legal advice.