Nicholas Courtauld Rayner v The Lord Chancellor

JurisdictionEngland & Wales
CourtChancery Division
JudgeMr. Nicholas Strauss
Judgment Date02 Dec 2013
Neutral Citation[2013] EWHC 3878 (Ch)
Docket NumberClaim Number: HC09C01691, SCCO Reference: 11.A.4325

[2013] EWHC 3878 (Ch)

In the High Court of Justice

On appeal from

The Senior Courts Costs office

Master Haworth


Mr. Nicholas Strauss Q.C.

(sitting as a deputy judge)

Claim Number: HC09C01691, SCCO Reference: 11.A.4325

Nicholas Courtauld Rayner
The Lord Chancellor

Mrs. T. R. Peacocke, instructed by Penningtons Solicitors LLP, appeared on behalf of the first defendant;

Mr. G. Mansfield Q.C. (on issues relating to cost protection) and Mr. J. Gimlette appeared on behalf of the Lord Chancellor.

Date of hearing: 9 th– 10 th October 2013



This is an appeal against the decisions on two issues of Master Haworth, sitting as a costs judge, in relation to a claim by the 1 st defendant in the action ("Mr. Rayner") to be indemnified in accordance with the Community Legal Service (Cost Protection) Regulations 2000 ("the regulations") for the costs, totalling some £700,000, of defending the claim in this action. The claim was brought by a claimant who was funded by the Legal Services Commission (now the Legal Aid Agency but "the LSC"). The costs judge gave permission to appeal on both issues.


The claimant in the action ("Mrs. Murphy") was Mr. Rayner's carer. The second and third defendants ("Aetemus" and "Courtina") are offshore companies, incorporated respectively in Gibraltar and Panama, owned and controlled by Mr. Rayner. Mrs. Murphy claimed an interest in Mr. Rayner's flat in Ennismore Gardens, London SW7 and in his investments, on the basis of proprietary estoppel. Aetemus and Courtina are the legal owners of, respectively, the flat and the investments which were in issue in the action. Mr. Rayner denied liability and counterclaimed for money and other property wrongfully taken by Mrs. Murphy.


The hearing of the action before Mr. Jeremy Cousins Q.C., sitting as a deputy judge, began on 19 th July 2010 and there were 18 hearing days ending in early November 2010. On 18 th January 2011, the judge dismissed the claim, gave judgment on the counterclaim for some £43,000 and for an account, and awarded indemnity costs to the defendants. In March 2011, he gave judgment against Mrs. Murphy for a further £991,499 on the taking of the account. She has paid nothing and there seems to be no realistic prospect of her paying the judgment debts, let alone any of the costs.


The first issue arises because the regulations entitle individuals, but not companies, to seek an indemnity for the costs of unsuccessful proceedings against them funded by the LSC. It follows that it is necessary to decide, in a case in which the nonfunded parties consist of an individual or individuals and a company or companies, which party or parties have "incurred" the costs, and how much of them were incurred by the individual defendant(s).


In the present case, the costs judge decided that he did not have the material to decide this issue, and ordered detailed bills of costs in relation to the invoices submitted by Penningtons to each of Mr. Rayner, Aetemus and Courtina. Mr. Rayner's appeal is based on the proposition that there is nothing to decide because, in a case in which he is the sole owner of the shares in both the other defendants, and all the substantial issues in the case were between him and the claimant, all the costs are properly to be regarded as incurred by him. While this may be the right decision to reach once all the facts are known, the costs judge was perfectly entitled to take the view that he did not yet have enough information to decide and that he should therefore order a detailed assessment. There are no grounds on which I could possibly interfere with his decision on that issue.


The second issue raises a question as to the proper construction of para. 5(4) of the regulations, which arises whenever the funded party ceases to be in receipt of funding, with the result that the non-funded party's potential claim against the LSC is restricted to the costs incurred by him which are "attributable to" the part of the proceedings in which the funded party was funded. Does this mean only the costs incurred by the non-funded party in that period, or does it include costs incurred later, which were caused by the assistance previously given to the funded party?


Mr. Gimlette on behalf of the LSC contends that, in all such cases, the potential claim against the LSC is restricted to the period in which the funded party was funded. If so, in a case in which funding ceases, say, a month before trial, and the claimant then acts in person, the other party would be unable to recover substantial costs incurred shortly before and at the hearing, even if it was the earlier funding which enabled the claimant to get to trial. Mrs. Peacocke on behalf of Mr. Rayner submits that "attributable to" is not the same as "incurred in", and means that the non-funded party can recover costs outside the funded period, provided that the causal link is established.


What happened in this case was that Mrs. Murphy had a certificate of funding until the end of the trial but, on or about 19 th May 2010, she changed her solicitors, who applied for an amendment of the certificate, while covering the position for the time being by a CFA. In the meantime, Mrs. Murphy's legal costs were not covered by the certificate, which was not amended to cover her new solicitors until 31 st August 2010. If, as the LSC contends, and the costs judge held, Mr. Rayner could make no claim on the LSC in respect of costs incurred in the period between 19 th May and 31 st August 2010, taking in the last stages of trial preparation and part of the trial, this will affect at least half his costs, even though he had no option but to defend the proceedings which Mrs. Murphy had pursued practically to the door of the court with the assistance of finance by the LSC.


However, I respectfully disagree with the costs judge on this issue. I hold that Mr. Rayner's claim is not limited to the periods in which Mrs. Murphy was in receipt of funding. The effect of para. 5(4) is that Mr. Rayner is entitled to claim all costs, including those incurred in the period of the hiatus in funding, which are attributable to (in the sense of caused by) the part of the proceedings for which the claimant received funding. Causation is an important factor in claims against third party funders under section 51 of the Senior Courts Act 1979 (see para. 83 below), and it is equally so in relation to claims under para. 5(4) of the regulations.


In the course of their written submissions after the hearing, both Mrs. Peacocke and Mr. Gimlette invited me to decide causation in their favour, but this is a matter for the costs judge to decide as part of his detailed assessment, as Mrs. Peacocke originally submitted. The question is whether the LSC's financial support was a substantial cause of the litigation in the disputed period, or whether, for example, Mrs. Murphy would have been able to pursue the litigation until 19 th May 2010 even without funding by the LSC, so that the later costs would have been incurred anyhow.


My more detailed reasons on both points are set out below.

Detailed facts


Mrs. Murphy was granted a full representation CLS funding certificate on 5 th May 2009 and the proceedings were commenced on 19 th May 2009 against all three defendants. Mrs. Murphy was represented by Ismail & Co., and all the defendants were represented by Penningtons.


On 2 nd June 2009, the funding certificate was extended to "all steps up to and including … final hearing and any action to implement (but not enforce) the judgment or order", but this was amended on 18 th February 2010 to "all steps up to but excluding trial but including … Counsel's Opinion".


Mr. Rayner's defence was served on 13 th June 2009. Aetemus and Courtina served separate defences in December 2009.


On 1 st April 2010, Ismail & Co., provided the LSC with a case plan, setting out the proposed funded services: Mr. Rayner sought disclosure of this, but the costs judge refused his application.


On or about 15 th May 2010, Mrs. Murphy ceased to instruct Ismail & Co., and instructed Smithfield Partners ("Smithfield") to represent her. Smithfield did not have a contract with the LSC to provide funded services, and therefore sought an "exceptional case" contract; in the meantime they entered into a CFA with Mrs. Murphy, and with new counsel. Smithfield notified Penningtons of the change of solicitors by letter dated 20 th May 2010, and served a copy of the notice of funding, referring to the CFA, on 28 th May 2010.


Smithfield responded on 5 th June 2010 to an enquiry by Penningtons, confirming that "our client's LSC's Certificate has neither been withdrawn or revoked (sic)".


At a hearing relating to disclosure before Chief Master Winegarten, Mrs. Murphy's counsel said that the funding certificate remained effective, and that the costs order made by the Master could not be enforced against her, i.e. that she had "cost protection" under the regulations. Mr. Rayner claims that, because of this, he was unable to obtain a summary assessment of £20,000 for costs of and connected with the hearing.


On 23 rd June 2010, Penningtons wrote to the LSC, asking (inter alia) when Mrs. Murphy's funding certificate was discharged. The LSC replied on 29 th June 2010 to say that the certificate remained in force, but that the nominated solicitor on the certificate was Ismail & Co., and that Penningtons would be notified if the certificate was withdrawn.


In the meantime, on 26 th June 2010, the LSC wrote to Ismail & Co. referring to the correspondence from Smithfield, to say that Smithfield were acting without any application having been made for a transfer of the certificate: the LSC had therefore issued a notice to show cause why funding should not be withdrawn.


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1 cases
  • Rayner v The Lord Chancellor
    • United Kingdom
    • Court of Appeal (Civil Division)
    • 9 November 2015 Mr Guy Mansfield QC. The same counsel appeared before us. 11 Mr Strauss handed down a reserved judgment on 2 December 2013 ([ 2013] EWHC 3878 (Ch)), now reported at [2014] 1 WLR 677. He allowed Mr Rayner's appeal on the issue of principle, though he held that it remained necessary for ......

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