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PW & Ors v Luton Borough Council [2017] EWHC 3028 (Fam)

Third party costs orders: whether the Legal Aid Agency had acted unreasonably as to have increased costs of the claimants by failing to state whether the statutory charge relating to the costs of care proceedings would apply to the claimant’s recovery of damages under the Human Rights Act 1998.

This is the latest instalment of Luton Borough Council v PW, MT, SW & TW [2017] EWHC 450 (Fam), in which Cobb J provided guidance on the procedure for making claims under the Human Rights Act 1998.

The issues in the current case were:

1) whether the claimants' costs of pursuing their Human Rights Act 1998 ("HRA") claim had been increased by the conduct of the Legal Aid Agency ("LAA") in failing to state whether the statutory charge relating to the costs of the care proceedings would apply to the recovery of their damages; and if so

2) whether those additional or increased costs should be paid by the LAA.

Pursuant to the Legal Aid, Sentencing and Punishment of Offenders Act 2012, civil legal services made available to parties under the Act are subject to a first charge on any property recovered or preserved in proceedings which are connected with the proceedings in question.   The claimants had brought an action in damages against the Local Authority for breaches under the HRA.  They sought an early decision from the LAA as to whether the statutory charge would be applicable to the HRA damages.

In correspondence, the LAA had specifically been referred to the judgment of Mr Justice Keehan in H v Northamptonshire County Council [2017] EWHC 282 (Fam), in which the judge had made clear that, in this type of case, well in advance of the final hearing of the HRA claim, the LAA should be invited to make a decision on whether it asserts that the statutory charge will be applicable to any award of HRA damages.

Despite that case, the LAA did not make their position clear, stating that they needed more documentation in relation to the HRA claim to make a determination.

In considering whether the claimants' costs had been increased by the LAA, Cobb J applied s.51 of the Senior Courts Act 1981, which he noted gave him a wide discretion.  He had regard to Part 44 and Part 46(2) of the Civil Procedure Rules 1998, and specifically Part 46(2) which contains the court's power to make orders for costs against third parties.  The judge held that the LAA had acted unreasonably and had increased the costs of the claimants in the prosecution of their claim.  He ordered that the LAA should pay for those additional costs.

Summary by Juliet Chapman, barrister, 1 King's Bench Walk
____________________________________

No. LU15C03851/HQ17X03213
Neutral Citation Number:
[2017] EWHC 3028 (Fam)

IN THE HIGH COURT OF JUSTICE
FAMILY DIVISION

Royal Courts of Justice

Monday 6th September 2017


Before:

MR JUSTICE COBB
(In Private)

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B E T W E E N:

PW MT SW & TW
Claimants
-  and  -
LUTON BOROUGH COUNCIL  Defendant
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Transcribed by Opus 2 International Ltd.
(Incorporating Beverley F. Nunnery & Co.)
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This transcript has been approved by the Judge.
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MR C BUTLER  (instructed by Leigh Day) appeared on behalf of SW and TW.
MS M SAVAGE (instructed by the Local Authority) appeared on behalf of the Defendant.
MR M BIRDLING (instructed by the Government Legal Department) appeared on behalf of the Legal Aid Agency.
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J U D G M E N T
If this Transcript is to be reported or published, there is a requirement to ensure that no reporting restriction will be breached. This is particularly important in relation to any case involving a sexual offence, where the victim is guaranteed lifetime anonymity (Sexual Offences (Amendment) Act 1992), or where an order has been made in relation to a young person.

This Transcript is Crown Copyright.  It may not be reproduced in whole or in part other than in accordance with relevant licence or with the express consent of the Authority.  All rights are reserved.

MR JUSTICE COBB:
1. First of all, can I express my gratitude to all counsel for the skill with which they have presented the arguments this morning on the points raised.  The hearing today was set up in accordance with an order which I made in fact as long ago as March 2017, for me to consider and ultimately to determine the claimants' application for damages under the Human Rights Act and whether I should approve the potential settlement of a claim.  I gave specific directions in relation to that back on 2 March 2017 and that order was supplemented - indeed, in some respects, replaced - by orders made on 13 April, and 19 June.

2. I should make it clear that I never contemplated - nor is it apparent from any of the orders I have made to which I refer - that I would at this hearing be deciding whether the statutory charge, to which I will refer a little later in this short judgment, would apply to the award of damages which the claimants sought under the Human Rights Act 1998.  By order of 2 March, I had made it clear that the Legal Aid Agency's contribution was to "make any representations about its funding of the claim". 

3. That all said by way of introduction, I have been pleased this morning to approve the settlement of the two claims of the claimants under the Human Rights Act 1998 and I have separately, following on from that approval, made a directions order which effectively adjourns the investment hearing to a Master to determine the matter at the beginning of next term, as soon as a date can be located, with specific directions that the father is to replace the Official Solicitor as the Litigation Friend for the two claimants.

4. The issue on which my decision is sought now is as to whether the claimants' costs of pursuing the Human Rights Act 1998 claim have been increased by the conduct of the Legal Aid Agency in failing to state whether the statutory charge relating to the costs of the care proceedings will apply to the recovery of their damages and, following on from that determination, whether those additional or increased costs should indeed be paid by the Legal Aid Agency.  Mr Butler, on behalf of the claimants, advised me that as a ballpark approximately one half of the work undertaken on behalf of the claimants by the legal team since 19 July, the date on which the indication of the acceptance of the settlement was given, has been caused by the failure to which he has referred. 

5. It is not necessary, or indeed appropriate, for me to go into the background facts of this claim.  In so far as it is necessary to do so to understand a little more of the context of my decision, I would refer to my decision in the case of Luton Borough Council v PW, MT, SW & TW [2017] EWHC 450 (Fam), which was the judgment I delivered at the stage of the case at which I brought to an end the claimants' false start on their Human Rights Act claim, but resolved their father's Human Rights Act claim.

6. Nor is there time or, I suggest, need within this short judgment to discuss at any length the regime in the Legal Aid, Sentencing and Punishment of Offenders Act 2012 for the recoupment of costs incurred under s.25 of that Act, save to make it known that I am more than aware that civil legal services made available to parties under that Act shall be a first charge on any property recovered or preserved in proceedings which are connected with the proceedings in question.  That is, I regret, a rather clumsy summary of the statute, but its provisions are well known to me.

7. The position of the Legal Aid Agency in this case was set out initially in a position statement helpfully provided on their behalf and drafted by Mr Birdling, who ably represents them today, dated 4 April 2017.  He set out in that document the Legal Aid Agency's understanding of the relevant facts and set out the funding position and the application of the statutory charge, reproducing in para.4 of his document the relevant provisions of s.25.  After a brief discussion and analysis, he says this at para.8:

"In the circumstances of this case, the Legal Aid Agency considers that the Human Rights Act damages would be 'property recovered by the individual in proceedings or in any compromise or settlement of the dispute in connection with which the services were provided'."

8. For reasons which I do not need to develop, the hearing in fact which I had timetabled for mid-April did not take place.  I then made separate orders to which I have earlier referred, 13 April and 19 June, for the filing of documents by the claimant and the defendant, and gave the Legal Aid Agency and indeed CAFCASS the opportunity to make further representations.  In para.17 of the document prepared for this hearing by the claimants, erroneously dated 19 September but I think in fact truly dated 19 July, they say this:

"The claimants do not ask the court to adjudicate on this issue - namely, the issue of the application of the statutory charge - at the hearing on 6 September.  No decision on the application of the statutory charge to the settlement sum has yet been taken by the Legal Aid Agency.  If an adverse decision is taken, the correct procedure for challenging it is by a claim for judicial review …"

9. The provision of the skeleton argument in accordance with my direction coincided with exchanges of correspondence between Leigh Day, the solicitors instructed on behalf of the Official Solicitor for the claimants, and the Legal Aid Agency.  I have been taken through that correspondence this morning.  It is again probably unhelpful and unnecessary for me to reproduce it in full, but I make reference to one or two of the key items of correspondence, starting with the letter of 13 June 2017 from Leigh Day to Mr Barry Scott of the Legal Aid Agency.  In that letter, Miss Moore, the solicitor at Leigh Day with conduct of the case, specifically drew to the attention of Mr Scott at the Legal Aid Agency the judgment of Mr Justice Keehan in H v Northamptonshire County Council [2017] EWHC 282 (Fam), (hereafter the Northamptonshire case), in which the judge had made clear that, in this type of case, well in advance of the final hearing of the Human Rights Act claim, the Legal Aid Agency should be invited to make a decision on whether it asserts that the statutory charge will be applicable to any award of Human Rights Act damages.  Miss Moore expressly invited the Legal Aid Agency to make a decision in the case at that time and explained in the letters not only the basis on which the claim was brought under the Human Rights Act and why it was different from, as she asserted, the care proceedings, but also why it would have a direct implication for the claimants.

10. That letter was responded to by the Legal Aid Agency in an email dated 22 June in which Mr Rymer, senior lawyer for the central legal team of the Legal Aid Agency, indicated that the Legal Aid Agency had already set out their position in their written submissions to which I have earlier referred "… so you are aware of the Legal Aid Agency's position"; but, says Mr Rymer, "[y]ou have raised some new points and so I should be grateful if you could let me have until 7 July to respond".

11. Miss Moore, on behalf of the claimants, in an email of 12 July reinforced for the claimants to the Legal Aid Agency why it was significant for the Legal Aid Agency to reach a decision.  That was responded to by Mr Rymer two days later in these terms:

"In order that we can understand your position more, please could you send me copies of all of the pleadings, statements of case and orders in the care proceedings and in the proposed Human Rights Act case".

12. On 19 July, the Legal Aid Agency followed up that request - and they say there had been some intervening exchanges of correspondence - with this message:

"I am going to be meeting Barry later to see what he has got so that I don't ask you to send me material that the Legal Aid Agency already has".

13. That is a message from Mr Rymer to Miss Moore.  Accordingly, in a sense, she (Miss Moore) put on hold any intention to send documents to the Legal Aid Agency although, on 21 July, chased it up by a request: "Do you need any further documents from me?"  Mr. Rymer replied, 21 July, in these terms:

"I will not be able to provide an answer to your letter until I have a comprehensive copy of the pleadings that show what the issues were in the care case and the HRA claim.  I have not seen the pleadings that Barry has yet and I am just checking with my client what pleadings they would find helpful.  I am hoping to be able to let you know in the next hour".

14. Pausing there for a moment, so far as I can understand it, there was no response within the "next hour" or indeed the next day or, so far as I can tell, the next week.  Instead, on 11 August, the Legal Aid Agency submitted a further skeleton argument or written representation.  That is in my bundle.  That is again prepared by Mr Birdling.  In that further representation, he says this:

"The Legal Aid Agency has not yet reached a decision as to the statutory charge would apply in the claimants' case".

15. I think it should be a "decision" "as to whether the statutory charge would apply".

"In this regard, the Legal Aid Agency has previously filed written representations in this matter as directed by the court based on its understanding of the factual background which was set out in those representations.  It appears from correspondence received from the claimants' solicitors subsequent to that date that its understanding of the relevant background may have been incomplete.  At the conclusion of these proceedings, the Legal Aid Agency will consider the operation of the statutory charge in light of that correspondence, the final outcome of the case and the material which has been disclosed to it".

16. Hence, it appears to me that by no later than 11 August, the Legal Aid Agency was clearly declaring their intention to review, the original decision.  That position was picked up by Miss Moore at Leigh Day on 14 August.  She says:

"For the avoidance of doubt, our skeleton argument does not set out that we think a decision should be taken at the end of the case.  It simply confirms our client's position that this is not a matter for consideration within these proceedings".

17. She again refers to the Northamptonshire case and says this:

"It is our view that the Legal Aid Agency should make a decision now and has the required information to do so.  The approval application will not provide any further information about the case that the Legal Aid Agency does not currently have in its possession and, in our view, has no bearing on the issues that the Legal Aid Agency must consider when deciding whether the statutory charge applies".

18. The response came - and I do not quote the whole of the email; just the final sentence - as follows:

"The HRA claim is not yet concluded and so the decision will be made after you have reported the outcome of that case to the Legal Aid Agency and, if necessary, your file has been considered".

19. Miss Moore, on 25 August, wrote a letter in which she expressly responds to the 15 August email and, in essence, challenges the approach of the Legal Aid Agency and specifically makes this point:

"You will be aware that the Legal Aid Agency's refusal to provide a decision about the statutory charge was subject to criticism from HHJ Keeham (sic) in the case of H v Northamptonshire.  In this case, a costs order was made against the Legal Aid Agency due to delays in its decision-making process.  Should you continue to fail to make a decision, we will be seeking directions from Mr Justice Cobb on this issue".

20. I am told, although I have not seen it, that a holding letter was provided on Tuesday of last week, 29 August, indicating that a response would be available later that week.  It was not but, at 5.01 on 5 September, last night, an email was sent by Mr Rymer indicating that:

"The Legal Aid Agency has not refused to make a decision.  The Legal Aid Agency has not been provided with any documentation in the Human Rights Act Part 8 claim which was issued last week.  As the statutory test is whether there is a connection between this case and the care proceedings, it is essential that the Legal Aid Agency is provided with this information and the order which concluded the care proceedings on 8 March which I understand has not been provided either".

21. Pausing there for a moment, of course, Miss Moore had been standing ready to provide that information for some time (see [13] above).  Mr Rymer goes on:

"The Legal Aid Agency understands the need to bring this matter to a conclusion and has no objection in principle to indicating whether or not the statutory charge will apply by 27 September.  However, it will only be able to do so if the documentation which it reasonably requires to reach a view on this matter is provided in good time in advance of this".

22. He proposes that an order is made broadly in the terms of version two of the two proposed orders that I was sent yesterday by the claimants which I have, with some minor amendments, approved and made earlier today.

23. In considering the question which I earlier posed, whether the claimants' costs have been increased by the conduct of the Legal Aid Agency in failing to state whether the statutory charge relating to the costs of the care proceedings apply, I apply the provisions of s.51 of the Senior Courts Act 1981 which gives me a wide discretion in this regard.  I have had specific regard to Part 44 and Part 46(2) of the Civil Procedure Rules 1998.  Specifically in Part 46(2) and the power of the court to make orders for costs against third parties, I have had regard further to the decision of Globe Equities v Globe Legal Services Ltd [1999] EWCA Civ 3023, in which Lord Justice Morritt said at para.21 as follows:

"It will be a matter for judgment and the exercise by the judge of his discretion to decide whether the circumstances relied on are such as to make it just to order the some non-party to pay the costs.  Thus, as it seems to me, the exceptional case is one to be recognised by comparison with the ordinary run of cases not defined in advanced by reference to any further characteristic".

24. That is a case to which I had cause myself to make reference in a case called Re OB (Private Law Proceedings: Costs) [2016] 1 FLR 92 and specifically to draw attention to the fact that Globe Equities was authority for the proposition that it was not necessary to demonstrate exceptionality; simply the administration of a just outcome.

25. I have been referred by Mr Butler to the Northamptonshire case specifically for three reasons.  First, to para.58 and Mr Justice Keehan's recognition and confirmation that the court has power to make third party costs orders in the circumstances, a point about which I have no hesitation in agreeing with.  Secondly, para.93, that the court should exercise that discretion where the third party has increased costs unnecessarily and/or unreasonably.  Thirdly, in a passage which for its full import should be read essentially from para.81 through to 91, that there is no reason why the Legal Aid Agency should not make a decision before the conclusion of Human Rights Act litigation, particularly where the Human Rights Act claim has been compromised and the factual matrix of the claim is agreed and settled – see paras.85, 87 and 88 in particular.

26. I do not underestimate the challenges for the Legal Aid Agency in implementing the provisions of the Legal Aid Sentencing and Punishment of Offenders Act, both in relation to its relative complexity, particularly when taken in conjunction with the associated regulations, but secondly, in order to ensure that, so far as it can, it fulfils its functions in a fair and just way.  More than once in this type of case have judges had cause to express their concern - I among them - about the injustice that is effected by the incidence of the statutory charge on damages awarded to claimants in cases which arise largely as a result of, or in association with, facts which have founded the basis of making Part IV Children Act 1989 applications and possibly orders.  However, it was in my judgment unreasonable for the Legal Aid Agency not swiftly to put itself into a situation where it could - and, in my judgment, should - have made a decision about the statutory charge and its application in this case when, first, it arguably had all the relevant documentation in July or thereabouts, as Mr Rymer makes clear in his correspondence to Miss Moore.

27. Secondly, in so far as it did not have the relevant documentation, it was being offered the relevant documentation, repeatedly so by Miss Moore, and it did not take up that offer or indeed pursue discovery essentially until last night.  Thirdly, it was being reminded in correspondence on a number of occasions about the implications of the Northamptonshire case.  Specifically, I refer to the correspondence of 13 June, 2 August, 8 August and 25 August.  Even when it indicated that it would send a reply last week to the final letter from Leigh Day, it did not do so.

28. In those circumstances - and given that the Legal Aid Agency now accepts that it can and should make its decision by 27 September - I am driven to the conclusion that it has acted so unreasonably as to have increased the costs of the claimants in the prosecution of their claim.  In the circumstances it would, applying the discretion which is open to me under s.51 of the 1981 Act and the Civil Procedure Rules 1998, only be just that I determine that the Legal Aid Agency should pay those additional or increased costs.