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HRA Claims and Concurrent Care Proceedings: Third Party Costs Orders, Statutory Charge Guidance and an Invitation to the Lord Chancellor

Ben Mansfield, barrister of The 36 Group, examines the judgment of Mr Justice Keehan in H (A Minor) v Northamptonshire County Council and the Legal Aid Agency [2017] EWHC 282 (Fam).

Ben Mansfield, barrister, The 36 Group

Ben Mansfield, barrister,The 36 Group 

The case of H (A Minor) v Northamptonshire County Council and the Legal Aid Agency [2017] EWHC 282 (Fam), heard by the Honourable Mr Justice Keehan, considers the conduct of third parties to public law proceedings and consequential adverse third party costs orders, specifically against the Lord Chancellor via her agent, the Legal Aid Agency ('LAA').

Keehan J has determined that the court has the power to make third party costs orders as against the Lord Chancellor. Further, Keehan J has considered and approved the test by which third party costs orders may be made in both HRA and care proceedings.

The case also considers issues arising from legal aid statutory charge recoupment and the consequential impact on Human Rights Act awards made where there are concurrent care proceedings. 

Guidance is given to practitioners and the LAA, especially where the factual basis for the declarations and liability has been accepted.

An invitation is made to the Lord Chancellor to amend the regulations under s.25 Legal Aid Sentencing and Punishment of Offenders Act 2012 ('LASPO'), the Civil Legal Aid (Statutory Charge) Regulations 2013 (SI 2013/503) ('CLA(SC)R'), so as to prevent recoupment by the LAA of non-means, non-merits care costs against HRA awards made alongside concurrent care proceedings.

The impact of the statutory charge is well known. The circumstances in which the statutory charge applies are set out in s.25 of LASPO namely:

"25. Charges on property in connection with civil legal services

(1) Where civil legal services are made available to an individual under this Part, the amounts described in subsection (2) are to constitute a first charge on

(a) any property recovered or preserved by the individual in proceedings, or in any compromise or settlement of a dispute, in connection with which the services were provided (whether the property is recovered or preserved for the individual or another person), …"

The sad reality is that recoupment by the LAA of the costs of purportedly 'connected' care proceedings against HRA awards will in a vast majority of cases make an HRA damages award either entirely meaningless, or so hugely diminished as to obviate in practical terms the purpose of providing 'just satisfaction'. This surely must have particular salience in relation to a child's award.

The recent case of CZ (Human Rights Claims: Costs) [2017] EWFC 11 before Cobb J has provided clarity in terms of the difficulty claimants have in persuading the court to make adverse costs orders in care proceedings to ensure recovery of the award in the absence of reprehensible or unreasonable behaviour linked to litigation conduct.

The factual background of the HRA claim in the above case centred on a long period of section 20 care (approximately two years) pre-issue, and associated significant failings. Care proceedings were belatedly but properly instituted in February 2016 and the conduct of the local uthority during care proceedings was not in issue, save for a limited discrete breach of failure to provide therapy that encroached into proceedings.

Following directions made earlier in proceedings, the child issued a Human Rights Act claim for declarations and damages in September 2016, under a separate public funding certificate, and the proceedings were issued with a separate civil case number. In accordance with the established practice, the proceedings were listed to be determined alongside each other.

Both sets of proceedings were listed for final determination over 4 days in December 2016.

Whilst liability was admitted, and consent to the court making declarations accepted by the local authority, the quantum of damages was still in issue; however Keehan J pointed out that he would have had no difficulty in determining that issue in submissions at the final hearing.

The issue that prompted adjournment was the lack of clarity about whether the LAA would in fact decide that the statutory charge in terms of care proceedings was applicable to the HRA award.

The issue of the impact of the statutory charge (in relation to the care proceedings costs) on the child's Human Rights Act damages was listed for two days in January 2017, with the Legal Aid Agency invited to confirm their position and, if recouping, to intervene.

Leading counsel were instructed by the local authority and guardian, and the care proceedings also remained live, although the substantive decision as to welfare determination was made an judgment handed down on that issue at the conclusion of the December hearing.

The Legal Aid Agency confirmed in correspondence that they would intervene.  They sent a series of emails, which they argued at the substantive hearing amounted to reserving their position as to 'connection', but which Keehan J had little difficulty in determining had the effect of confirming that they meant to enforce recoupment.

Two clear working days before the contested hearing the Legal Aid Agency confirmed that they had reviewed their position and were no longer regarding the proceedings as 'connected', and consequently the recoupment provisions would not apply and they would not be intervening.

The local authority put the Legal Aid Agency on notice that it would seek orders that the LAA pay the local authority's costs in the HRA claim and care proceedings from the previously listed December hearing to include the contested hearing, and an order that they pay the Child's HRA costs from the same date.

Third Party Costs Orders, in particular against the Lord Chancellor
The local authority relied on s.51 Senior Courts Act 1981, and CPR r46.2 to argue that the court clearly had the power to make a third party costs order.

"51.— Costs in civil division of Court of Appeal, High Court and county courts...

shall be in the discretion of the court.

(3) The court shall have full power to determine by whom and to what extent the costs are to be paid."

It was argued on behalf of the LAA that there was in effect a 'blanket immunity' afforded to the LAA pursuant to regulation 9 of the CLA(SR)R which are subsidiary regulations to s.25 and s.26 of LASPO. The regulations deal in significant part with 'costs protection', which is in essence a regime to limit the amount to be ordered to be paid by a legally aided party against whom a costs order is made, in favour of a non-legally aided party, with provision made for a further degree of recoverability against the Lord Chancellor directly.

Regulation 9(2) of CLA(SC)R provides that the court may not make a costs order against the Lord Chancellor except in accordance with that part of the regulations. This was relied upon by the LAA to argue immunity from cost orders generally, and was rejected by Keehan J. He noted that it was subsequent to the deeming provision in reg 9(1) CLA(SC)R which confirmed that part of the regulations applied when costs protection applied, and therefore was not relevant to the case: the non-legally aided party was the losing party in the substantive proceedings.

Keehan J accepted that he had the power to make a third party costs order in principle against the Lord Chancellor (via the LAA), as a third party. He was referred to key cases as to the test to be applied by the local authority, and accepted them:

"§46 In relation to the circumstances in which it would be appropriate to make a costs order against a third party I was first referred to the judgment of the Court of Appeal in Globe Equities Ltd v. Globe Legal Services Ltd [1999] EWCA Civ 3023 where Morritt LJ said:

'[21] The principal argument was directed to the question whether the circumstances in these applications could properly be regarded as "exceptional". […] But these statements left open the question by what standard the circumstances are to be judged in ascertaining whether they are exceptional. That question was answered by Phillips LJ in Chapman v Chapman [1998] 2 WLR 12 at p. 20 where he said

"The test is whether they [sc. the features relied on] are extraordinary in the context of the entire range of litigation that comes to the courts."


In none of the cases to which I have referred have "exceptional circumstances" been elevated into a precondition to the exercise of the power; nor should they be.

Ultimately the test is whether in all the circumstances it is just to exercise the power conferred by subsections (1) and (3) of s.51 Supreme Court Act 1981 to make a non-party pay the costs of the proceedings. … 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 advance by reference to any further characteristic.'

§47 In Re OB (Private Law Proceedings: Costs) [2013] EWHC 1956 (Fam), [2016] 1 FLR 92 Cobb J commented on a further feature of the decision in Globe when he said:

'[41] Morritt LJ (again with the consensus of the court) went on to hold (and I include this for further clarification) that it is not necessary for a determination of the issue of exceptionality for there to be a finding that the conduct of the non-party was 'improper' (para [27]). Specifically, he said:

"That element ... is not a pre-requisite to the exercise of the jurisdiction conferred by s 51(1) and (3) Supreme Court Act 1981.' (para [27])"

§48 Finally in relation to potential liability of the LAA's predecessor organisation – the Legal Aid Board – Thomas J, as he then was, in Kelly v. South Manchester Health Authority [1998] 1 WLR 244 at 257D, observed:

'In my judgment, the courts do have power in an appropriate and exceptional case to make an order in respect of costs against the board under section 51(1); the role of the board in litigation in which it is assisting one of the parties is a crucial one. The board's efficient performance of its statutory duties is crucial to the proper and expeditious conduct of such litigation and the courts have an essential interest in seeing that those functions are performed in such a way that litigation is effectively progressed.'"

Keehan J found on the facts of the case that the test was met and ordered the third party costs sought against the LAA in relation to costs incurred following the decision to enforce recoupment in late December 2016 in relation to both HRA costs of the child and the LA, and the care proceedings costs of the LA since that date, summarily assessed.

Guidance on HRA Cases Generally
Keehan J disagreed with the proposition from the LAA that:

"§78 … the impact of the statutory charge on the extent to which the claimant will receive any part of the damages awarded is irrelevant to a court assessing damages and then considering whether to make consequential orders for costs. I emphatically disagree.

§82 I put to one side, and differentiate cases, where the basis of threshold and/or the material facts upon which the local authority relied in the care proceedings were in dispute. The court would have to give a judgment in which findings of fact were made to establish the relevant factual matrix.

§83 I also put to one side, and differentiate, HRA claims where (i) the issues are fully contested and the court needs to determine disputed facts, and (ii) the court then has to decide whether there has been a breach or there have been breaches of a claimant's human rights before embarking on an assessment of what damages, if any, should be awarded.

§84 In cases where there is a dispute about the essential factual matrix in either the care proceedings and/or the HRA claim it is self evident that the LAA will need to know the court's findings and ultimate conclusions before it is able to make a decision on whether the statutory charge is applicable to any damages awarded to the claimant in the HRA claim.

§85 The position is quite different, however, where the claimant and the local authority have reached a settlement of the HRA claim, at least, in relation to the factual basis upon which it is admitted that the local authority breached the human rights of the claimant. Whether or not the quantum of damages have been agreed or need to be determined by the court is irrelevant for these purposes. The factual matrix of the HRA claim is agreed and settled.

§86 In these circumstances, I am at a loss to understand why the LAA cannot make a determination of whether the statutory charge is applicable to any award of damages. The issue for the LAA, pursuant to s.25 LASPO, is whether the factual basis of the HRA claim is 'connected with' the factual basis of the concurrent publicly funded care proceedings and thus whether the statutory charge is applicable. The quantum of any damages awarded in respect of the HRA claim, pursuant to s.25 LASPO and the Civil Legal Aid (Statutory Charge) Regulation 2013 ('CLA(SC)R'), is immaterial to a determination of the applicability of the statutory charge in any particular case.

§87 Therefore in relation to cases where liability is admitted and settled in a HRA claim, as in this case, I cannot see any reasonable justification why the LAA cannot, in short order, determine whether, on the facts of the individual case, the statutory charge will be applicable to any award of damages made on the HRA claim and thereafter to notify the court and the parties of its decision.

§88 I go further. It is essential, in my judgment, that a court determining the quantum of a claimant's HRA damages, where liability is admitted on an agreed basis, and determining any consequential orders for costs, must and should know the stance of the LAA on the applicability of the statutory charge."

In terms of how the court should list and determine such cases, Keehan J has approved the underlying principles behind the often cited, but factually distinct HRA injunctive relief cases of Re L (Care Proceedings: Human Rights Claims) [2003] EWHC 665 (Fam), as approved by Re: V (Care Proceedings: Human Rights Claims) [2004] 1 FLR 944, that HRA and care cases should be listed and determined concurrently:

"§115 I respectfully agree with Munby J's general proposition that a court hearing public law proceedings should deal with any associated HRA claim brought by one of the parties to the care proceedings. His concern was to prevent the proliferation of satellite litigation in respect of HRA claims. The judgment should not be read, and was plainly not intended to be read, as requiring a party seeking HRA damages to issue his or her claim within the existing public law care proceedings. On this basis the decision in Re L, and the decision in Re V, may be distinguished from proceedings in which a HRA claim is pursued and damages are sought. Therefore, where the remedy sought in the HRA claim is not limited to injunctive or declaratory relief but includes a claim for damages, it is almost inevitable that those representing the Claimant will be well advised to issue separate proceedings and to seek the issue of a separate public funding certificate because of the potential applicability of the statutory charge in respect of any HRA damages awarded. 

§116 Where liability and the quantum of damages are agreed, and the only issue is the court's approval of the infant settlement, the same principle of issuing separate proceedings applies, namely the issue of a Part 8 claim."

Specific Guidance on HRA claims within the Currency of Care Proceedings, §117
Where damages are sought in just satisfaction of an HRA claim during the currency of public law proceedings, Keehan J provided the following guidance:

(a) alleged breaches of Convention rights by a local authority must be set out with particularity in a letter before action as soon as ever possible;

(b) every effort should be made by the claimant and the local authority to settle the issues of liability and the quantum of damages before and without the need to issue proceedings;

(c) where liability and quantum are agreed prior to the issue of proceedings, it will invariably be in the interests of the child to issue a Part 8 claim to secure the court's approval of the proposed settlement pursuant to CPR r 21.10;

(d) the local authority should, save in exceptional circumstances, pay the reasonable costs of the claimant's HRA claim/proceedings; 

(e) where is it necessary for a party to issue a formal HRA claim, proceedings should be issued separately from the care proceedings and a separate public funding certificate should be sought from the LAA in respect of the same;

(f) 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. Where

i. the basis of threshold and the material facts of the case are agreed or the court has made findings of fact and given a judgment establishing the factual matrix of the public law proceedings; and

ii. liability is agreed and the material facts relied upon to establish the breach or breaches of the claimant's Convention rights are agreed or have been determined by the court,

I see no reason in law or on public policy grounds or in practical terms why the LAA could not and should not notify the court and the parties of its decision on the applicability of the statutory charge prior to the final hearing and well in advance of the submission of the claimant's solicitor's final bill(s); and

(g) with the benefit of the LAA's decision, the court should have all the necessary information to assess the quantum of damages or, as the case may be, to approve the settlement, and to consider what are the appropriate orders for costs.

Invitation to the Lord Chancellor
Keehan J has also invited the Lord Chancellor to amend the regulations to avoid the recoupment of care costs against HRA awards (no issue in relation to HRA costs: they should be borne by the local authority save in exceptional circumstances; for instance, if the above guidance is not adhered to).

Legal aid in care proceedings is non-means and non-merits tested. There would be no question of recoupment of care costs if, for instance, a party won the lottery or was a millionaire.

Arguably perversely, only in circumstances where a parent or child has been so badly treated by the state so as to occasion an award for damages, because public declarations are not sufficient to afford just satisfaction, might care legal aid costs be recoverable by the LAA if they chose to regard the proceedings as 'connected'.

Keehan J accepted and respectfully agreed with the recent decision of Mostyn J in the recent case of R(Faulkner) v. Director of Legal Aid Caseworker [2016] EWHC 717 (Admin), confirming at §120-123 that:

"I agree HRA damages against the state for breaches of Convention right by the State are not currently 'ring fenced' from the applicability of the statutory charge.

The issue I raise, in the context of HRA claims brought by children, and by parents, during the currency of pending care proceedings, is whether it is just, equitable or reasonable that damages awarded to a child, or to a parent, as a result of breaches of his/her Convention Rights by one organ of the State should be recouped by another organ of the State in respect of public law proceedings which would otherwise not be recoverable. Public funding in such cases is non means tested and non merits based. Furthermore, save in exceptional circumstances, the local authority issuing the care proceedings is not liable to pay the costs of any other party: Re T [2012] UKSC 36.

I very much doubt that such a recoupment is just, equitable or reasonable. In the vast majority of cases the effect of the recoupment of the child's or parent's costs of the care proceedings will be to wipe out the entirety of the HRA damages awarded. In this event, the child or the parent will not receive a penny.

In making these observations, I have well in mind that:

a. it is a founding principle of the introduction and provision of State funding to ensure that a legally aided party is in no better and in no worse a position than a privately paying party to litigation; and

b. a solicitor representing a privately paying client has a lien over any damages recovered by his/her client in respect of the solicitor's fees.

Nevertheless, I question whether the time has come to exclude a child's and/or parents HRA claim damages from the application of the statutory charge in relation to costs incurred in 'connected' public law proceedings within the meaning of s.25 LASPO. This is, of course, solely a matter for the Lord Chancellor."

The Lord Chancellor's consideration of and response to the Honourable Mr Justice Keehan's invitation is awaited.