A Master had been correct to dismiss an application for an assessment of costs brought under Paragraphs 10(2) and 10(3)(c) of the Community Legal Service (Costs Protection) Regulations 2000 as it was out of time.
(1) LIVERPOOL FREEPORT ELECTRONICS LTD (2) STREED (UK) LTD (3) SHIRIN IQBAL (Claimants) v HABIB BANK LTD (Defendant/Appellant) & LEGAL SERVICES COMMISSION (Respondent) (2009)
COSTS PROTECTION : s11 ACCESS TO JUSTICE ACT 1999 : PARA 10 COMMUNITY LEGAL SERVCE (COSTS PROTECTION) REGULATIONS 2000
The First and Second Claimants were companies which had gone into liquidation and had assigned causes of action to the Third Claimant (3C). Proceedings were brought by the 3C against the Defendant/Appellant (D/A) in 1990 in which she alleged that the D/A had wrongfully debited accounts. She quantified her claim at £2,987,720.
Although successful at first instance, subject to an assessment of damages, the 3C was unsuccessful on a subsequent retrial on 25th September 2007 (which followed a successful appeal by the D/A) and Ordered to pay the D/A’s costs of the trial and retrial on an indemnity basis.
At the stage of the Appeal in 2004 the 3C had been in receipt of assistance from the Legal Services Commission and as such had costs protection within the meaning of s11 of the Access to Justice Act 1999. The Order of the Court of Appeal made in relation to costs on 29th July 2004 provided that:
“17) Habib Bank Limited’s costs of this Appeal to be paid by Mrs Shirin Iqbal such costs to be assessed if not agreed.
18) Mrs Shirin Iqbal, a party who was in receipt of services funded by the Legal Services Commission, do pay Habib Bank Limited an amount to be determined by a Costs Judge.
19) Liberty to Habib Bank Limited to apply to a High Court Judge in relation to the assessment of Mrs Iqbal’s liability for costs and in the event that the assessment gives rise to a shortfall, under the Community Legal Services (Cost Protection) Regulations 2000.”
On 18th December 2007 the D/A applied under Paragraphs 10(2) and 10(3)(c) of the Community Legal Service (Costs Protection) Regulations 2000 for
(1) a hearing to determine the costs payable by the 3C to themselves in respect of the proceedings in the Court of Appeal, and
(2) an Order that those costs be paid by the Commission.
The level of Judge specified on the Application was Costs Judge.
The following day the D/A applied for a High Court Judge to assess the 3C’s personal liability for costs at nil, or such figure as the Court thought fit, reflecting Paragraph’s 18 and 19 of the Court of Appeal’s Order.
The Legal Services Commission (LSC) argued that the Applications had been made out of time because the (then mandatory) three month time limit imposed by Paragraph 10(2) of the Costs Protection Regulations ran from the date of the Court of Appeal’s Order in July 2004, as opposed to the date of the re-trial in September 2007.
The D/A submitted that in the circumstances, where there was going to be a re-trial, the intention of Paragraph 19 of the Court of Appeal’s Order was to give them the option of applying to a High Court Judge instead of a Costs Judge and that the three month period would only begin to run when he had made an assessment of what was recoverable from the 3C and found a shortfall.
At a hearing of this preliminary issue on 5th September 2008 Master Rogers held that because the 3C’s original funding certificate was granted on 21st August 1996 (and so the application for funding must have been prior to 3rd December 2001) the Court’s discretion to extend the three month limitation period (brought in by an amendment to Paragraph 5(3)(b) of the Cost Protection Regulations) was not available. The Master further held that Paragraph 19 of the Court of Appeal Order did not extend the period, or defer its commencement and, consequently, dismissed the Applications.
Master Rogers’ decision was upheld by Mr Justice Jack (sitting with Master Hurst and Simon Versey Esq in the High Court on 30/4/09) who found, inter alia, that:
“I do not consider that it is possible to construe Paragraph 19 [in the way suggested by the D/A]. It does not say that. If it had been sought to secure such an unusual provision, it would have been necessary to spell out fully what was intended in the draft and to persuade the Court of Appeal there was power to make such an order and that it was appropriate. On the contrary, counsel suggested to the Court of Appeal that paragraph 19 simply sought to preserve the position under the Regulations. What is clear is that paragraph 19 does nothing, either expressly or by necessary implication, to somehow extend the 3 month period or to defer its commencement. Mr Farber [for the D/A] rightly accepted that paragraph 18 was a section 11(1) order. The making of such an order was a pre-condition of the Bank’s right to apply for an order against the Commission. This right was provided by the Regulations and could only be exercised in accordance with the Regulations. That included the 3 month window in which to apply which runs from the section 11(1) order. Mr Farber also sought to rely on the wide discretion as to costs provided by 5 1(1) of the Supreme Court Act 1981. That cannot affect the provisions of the Regulations. The section begins ‘Subject to the provisions of this or any other enactment and to rules of court’.”
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Division vs Apportionment 