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Peterborough City Council v K, L, M, N and P & Ors [2022] EWFC 61

Successful appeal of a third party costs order made by HHJ Tolson QC against a local authority in ongoing private law proceedings.

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Background

The four younger children of M (A, B, C and D) had moved to live with their adult sibling, K and her partner, L, following concerns about the mother's care. The local authority were involved with the family and a PLO meeting convened. The LA appeared to endorse K's care of the children.  There was a factual dispute as to whether the LA had directed the move of B, C and D to K's care. K contended that the SW had asked her to collect the children from school; the LA contended that they had expected N (the father of A, B and C) to exercise his PR. 

K and N applied for private law orders.  At the first hearing on 12 August 2021, HHJ Tolson QC deemed the applicants to be K and L seeking 'live with' orders. A transcript was obtained for the appeal, which recorded the the SW manager informing the court, when asked if public law proceedings were likely, that:

It's difficult to say. I think that private law proceedings are more likely to settle the children's future as currently the children are with K and her partner and there are no concerns about the children in K and her partner's care.

Over several hearings, HHJ Tolson QC directed s.7 and then s.37 reports.  Pursuant to s.37, he made interim supervision orders and was critical of the LA for not issuing care proceedings.

K sought an order for the LA to pay costs.  In December 2021, the LA were ordered to show cause why they should not pay the prospective and retrospective costs of the applicants, M (who now sought return of the children) and N. At the hearing on 22 December 2021, the court had position statements and head submissions. 

Judgment was handed down on 14 January 2022. Judge noted his recollection of the hearing on 12 August 2021, stating "The team manager from the local authority attended and impressed upon me that the public law outline process was being pursued and that care proceedings were highly likely to follow". He ordered the LA to pay the assessed costs of the applicants to date and the prospective costs of the applicants and M, to be assessed at the conclusion of the proceedings. 

The LA appealed on the following grounds:

(1) The judge had wrongly based his evaluation of the LA's conduct on a mistaken recollection of the hearing on 12 August 2021 .

(2) Failed to consider evidence in relation to the factual dispute as to circumstances of the children coming into K's care yet took those circumstances into account when assessing the LA's conduct.

(3) Wrongly concluded the conduct of the LA justified the making of a costs order in the absence of evidence that they had acted improperly, unreasonably or negligently.

(4) Failed to consider why it was just in all the circumstances to make the costs order.

(5) Wrongly made a costs order (past and future) without information as to the extent of the costs involved.

(6) Wrongly used the costs order to ensure that the parties' litigation was funded "through the back door"

Appeal

The appeal came before Poole J.  At paragraph 46, he sets out guidance drawn from the authorities to provide consistency in approach in relation to inter-party costs, wasted costs against legal representatives, and non-party costs orders in private proceedings concerning the welfare of children. He notes the same guidance might also apply to public law proceedings:

i) The Court has a wide discretion to make costs order including against non-parties but an application for a costs order against a non-party should be treated with caution and such an order will be exceptional by comparison with the ordinary run of cases.

ii) A non-party costs order should only be made if it is just to do so in all the circumstances.

iii) In considering whether a non-party costs order is just, the court should keep in mind that in the ordinary run of family cases concerning the welfare of children, inter-party costs orders are not made.

iv) The circumstances justifying a non-party costs order are not closed but where the conduct of a non-party is relied upon as the basis for making such an order, the non-party must have been guilty of reprehensible behaviour or unreasonable conduct in the proceedings.

v) In considering whether the behaviour of a non-party Local Authority was reprehensible, or its conduct within the proceedings was unreasonable, regard must be had both to the powers entrusted to and the obligations of Local Authorities and the finely balanced judgments that Local Authorities may have to make in exercising those powers and fulfilling those obligations.

vi) The non-party should have a close connection with the proceedings such that it is fair that they are bound by the findings made in the substantive proceedings.

vii) The circumstances which should be taken into account include the financial consequences to the potential costs recipients of the acts or omissions of the non-party. If the potential costs recipients would have incurred the same financial liabilities in any event then it would be unjust to make a non-party costs order. Hence, ordinarily, the court should have regard to the amount of costs sought to be recovered from the non-party and consider whether there is a causal connection between those costs and the non-party's acts or omissions.

viii) A non-party may well suffer injustice if not warned that an application or costs may be made against them.

ix) A non-party should be joined as a party for the purposes of the costs application only and be given a reasonable opportunity to attend a hearing at which the court will consider the matter further – CPR r.46.2(1).

x) The judge who has determined issues in the case (at a finding of fact hearing or a final hearing) should be the judge who determines an application for a non-party costs order.

xi) The procedure for determining the application should be summary in nature in that the judge should base their decision on the evidence given and findings made in the substantive proceedings.

xii) A non-party costs order should not be used as a device to circumvent other rules or provisions concerning the funding of advice or representation.

Decision

Poole J did not determine the appeal on the basis of the procedural irregularity of the LA not being joined as a party for the purposes of costs – the LA did not advance the point and had not been prejudiced.  That the judge made the order before receiving any evidence or determining disputed fact had consequences for the judge's approach but was not a procedural irregularity sufficient to overturn the decision.

The judgment and approach are critiqued comprehensively from paragraphs 50-62. HHJ Tolson QC had:

(1) applied the wrong legal test – notably failing to direct himself that (i) a non-party costs order should only be made if it is just to do so in all the circumstances and (ii) if the exceptional circumstances relied upon to justify making a non-costs order are the culpable conduct of the non-party, then the non-party should have been guilty of reprehensible behaviour or unreasonable conduct within the proceedings. The judge addressed only whether the conduct of the LA could be criticised;

(2) proceeded on a factual basis that he was not entitled to assume;

(3) disregarded relevant circumstances; and

(4) exceeded the permissible parameters of his discretion.

The non-party costs order was an impermissible device designed to provide a public source of funding for the parties' legal costs in private family law proceedings.

Appeal allowed. Costs orders set aside.

Case summary by Victoria Roberts, Barrister, Coram Chambers

For full case, please see BAILII