Keehan as mustard ? Costs order against Lord Chancellor

Just when you think you’ve seen it all regarding Human Rights damages claims tacked onto care proceedings and costs, Keehan J delivers this curveball.

Re H (A minor) v Northamptonshire CC 2017

http://www.bailii.org/ew/cases/EWHC/Fam/2017/282.html

And we’re now seeing two High Court Judges waving to each other from opposite sides of the Grand Canyon on this. On one side, Keehan J is doing everything possible to make sure that the parents get their damages un-gulped up by the Legal Aid Agency and the stat charge, and on the other, Cobb J is saying that Parliament set up the stat charge in this way and if they’d intended to make an exception for the stat charge applying on care proceedings so that all the damages got swallowed up, they’d have done that. And that damages aren’t always the answer anyhow.

(Keehan J is playing a Lord Denning type role here, in manipulating and coaxing the law into shapes like a Venetian glassblower to get to the morally right outcome. I think myself that Cobb J is right in law, but who knows until the Court of Appeal tell us?)

The stat charge is tricky to understand here, so here’s an analogy.

Larry goes to a restaurant. As he is leaving, he steps on a woman’s foot. He shouldn’t have done it, he was being careless. He apologises, and offers to buy the woman a drink. She’s happy with that solution. The restaurant manager, however, says  “This woman ate a 3 course meal here for free tonight because she had a voucher, but that cost me money. So if you want to pay for a drink for her, that’s fine, but you have to give me all of the money that her food would have cost. If you don’t want to do that, you can just give me the money for the drink, but she get no drink and no money”

(Parents get free legal aid in care proceedings, even if they are millionaires. But if they win any money from a ‘connected’ case – even if that is damages for being badly treated, that money goes FIRST to pay back the legal aid agency not just in the case where they won the money but ANY legal aid they’ve had. Even though it was ‘free’. Only if there’s anything left does the parent get anything.  Because the legal costs in the care proceedings will usually dwarf the damages (just as a 3 course meal is more expensive than a drink), the only way that the parent can get any money is if the costs are paid too. And that’s tricky, because the law on costs is very clear that there are limited circumstances in which that is possible.

(The Kirklees blog spells all of that out, but I thought people might welcome an easier solution)

In this case, the parents had encountered a breach of their human rights, relating to section 20 abuse (but even this now, may be overtaken by the Court of Appeal guidance in the Hackney case where they suggest that failure to follow the guidance on s20 isn’t automatically a human rights breach). The LA made an offer to settle, and the parents lawyers understandably wanted to know, before they accepted or refused it, whether the parents would get that money, or whether it would be swallowed up by the Legal Aid Agency.

The LAA initially told them that the stat charge would bite and gobble up all of the damages. They then changed their mind, faced with being told that they’d be joined as a party to the High Court proceedings to fight that out.

It was submitted by the Lord Chancellor that HRA damages should be assessed without regard to the fact that the claimant is legally aided. I agree and accept that the assessment of the quantum of damages in a HRA claim should be made without regard to the fact that the claimant is legally aided. Where I part company with the Lord Chancellor is in respect of the submission that 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.

(This is the exact opposite of Cobb J’s conclusion in the Kirklees case)

A very cunning scheme was devised, making use of CPR  rule 46.2  (That noise you hear is every family lawyer in the country shuddering at the mention of the Civil Procedure Rules. It gives us the same visceral reaction as the idea of standing up and addressing the Stade Francais in our schoolboy/girl French)

“46.2.— Costs orders in favour of or against non-parties

(1) Where the court is considering whether to exercise its power under section 51 of the Senior Courts Act 1981 (costs are in the discretion of the court) to make a costs order in favour of or against a person who is not a party to proceedings, that person must—

(a) be added as a party to the proceedings for the purposes of costs only; and

(b) be given a reasonable opportunity to attend a hearing at which the court will consider the matter further.

(2) This rule does not apply—

(a) where the court is considering whether to—

(i) make an order against the Lord Chancellor in proceedings in which the Lord Chancellor has provided legal aid to a party to the proceedings;

(ii) make a wasted costs order (as defined in rule 46.8); and

(b) in proceedings to which rule 46.1 applies (pre-commencement disclosure and orders for disclosure against a person who is not a party).”

And the scheme here was complex (and I don’t think anyone will ever get away with it again, so I’m not going to spell it out in detail) –  the parents get the damages, the LA pay the costs. The Court then ordered the Lord Chancellor to pay MOST of the LA’s costs, to compensate them for the fact that it is only the Lord Chancellor failing to waive the stat charge in this case (which she has the statutory power to do) that led to the LA having to pay the costs.

There’s very little in law that I enjoy more than the Lord Chancellor losing in Court – a pleasure I did not get tired of during Chris Grayling’s wondrous tenure, and though Liz Truss hasn’t been in post long, she hasn’t really done herself any favours, so this is a fun read (though very very technical)

But I don’t think it is an entirely safe decision.

Firstly,

• The local authority is forcibly critical of the second email sent on behalf of the LAA by Mr Rimer on 22 December. Mr Tyler submitted that the position of the LAA as set out in that email, namely that the statutory charge would apply to any damages awarded to H in respect of costs incurred under his public funding certificate in respect of the care proceedings, was clear and unequivocal. In his and Mr Mansfield’s skeleton argument it is asserted:

“48. The LAA has inappropriately – almost certainly unlawfully – sought to recoup the cost of the provision of the ‘non-means, non-merits’ legal aid available for the claimant from the award of damages to which he is entitled due to the breaches of his human rights.

49. Only at the eleventh hour – and when faced with the prospect of a High Court trial on the issue – has it adopted an approach which is correct in law.

50. In so doing, it has caused the unnecessary attenuation of both the HRA and the care proceedings.”

Okay, those are submissions and not the judgment, but I don’t think you can properly conclude that the LAA was unlawful in following the LASPO provisions. The provisions are stupid and ugly and unkind and mean-spirited, but they are lawful provisions. There isn’t (yet) a section 6 challenge that the LASPO provisions in this regard are themselves incompatible with the HRA. It would be interesting to see the outcome if someone takes it that far – LASPO is far from beloved as a piece of legislation.

The point, I presume is making use of Keehan J’s previous side-step of the stat charge by claiming that the HRA proceedings ‘are not connected’ to the care proceedings.  I am afraid that I am with Cobb J on that – there may be occasions when the damages case is genuinely ‘not connected’ to the care proceedings, but these clearly were.

Glad you’re back George

But more importantly

• Ms Stout’s principal submission was that the court had no power, on the facts of this case, to make an order for costs. She relied upon the provision of the CLA(C)R 2013 and in particular on Part 3 and regulations 9(1), 9(2) and 10. In a case where one party is legally aided (i.e. the claimant) and one party is not legally aided (i.e. the local authority) she contended that the effect of regulation 9(2) was that an order for costs could only be made against the Lord Chancellor if all the conditions set out in regulation 10 are satisfied.
• It is common ground between the parties that the conditions of this regulation are not satisfied in this case.

So not possible to make the costs order against the Lord Chancellor, because the power to do so sets out a condition that has to apply and the condition doesn’t.

That wasn’t the end of it though

• I regret I do not accept the submission that the court does not have the power to make a costs order against the Lord Chancellor in this case. I so decide for the following reasons.
• The provisions of s.26 LASPO only apply where costs have been awarded against a legally aided party. In these circumstances the order for costs “must not exceed the amount (if any) which it is reasonable for the individual to pay having regard to all the circumstances …”: s.26(1) LASPO. A s.26(1) costs order “means a costs order against a legally aided party where cost protection applies”: reg.2(1) CLA(C)R 2013. The phrase ‘cost protection’ means “the limit on costs awarded against a legally aided party in relevant civil proceedings, set out in section 26(1) and (2) of the Act: reg.2(1) CLA(C)R 2013. All of these provisions are based on a costs order having been made against a legally aided party. In this case, of course, no order for costs has been or will be made against the claimant.
• The only possible basis on which the Lord Chancellor’s submissions on this issue could succeed is if I interpret s.26 LASPO and the CLA(C)R 2013 to mean that it applies if there is the ‘potential’ for a costs order being made against a legally aided party. The clear wording of the section and the regulations simply do not permit such an interpretation.
• Regulation 9 of CLA(C)R 2013 is headed ‘Effect of this Part’. Regulation 9(1) provides that ‘This Part applies where cost protection applies’. If I insert the clause set out in Reg 2(1) for the definition of ‘cost protection’, reg.9(1) would read ‘This Part applies where the limit on costs awarded against a legally aided party in relevant civil proceedings set out in section 26(1) and (2) of [LASPO] applies’. Cost protection does not apply in this case and thus the provisions of Part 3 of the CLA(C)R 2013 do not apply in this case, most especially regulation 9(2).
• It is plain that regulations 9 and 10 apply in respect of the Lord Chancellor as the funder of legal aid to a party to civil proceedings. Reg.10 only applies where ‘proceedings are finally decided in favour of a non-legally aided party’. It is designed to provide recompense to that party, in specified and limited circumstances, where there is a shortfall between the costs incurred by that party and the limited costs which the legally aided party is ordered to pay, in consequence of which the non legally aided party will suffer financial hardship. Once again those circumstances do not arise in this case.
• I am completely satisfied that

(a) the CLA(C)R 2013 has no application or relevance to this case; and(b) they do not preclude the court from making a costs order against the Lord Chancellor in appropriate circumstances, still less do they provide the Lord Chancellor with a ‘blanket immunity’ against an order for costs as a third party or otherwise.

Keehan J summoned up the spirit of JPR Williams and  David Duckham and jinks and weaves to make his side-steps work. It is beautiful to watch.  But I think there’s a forward pass in there somewhere.