Saunders (Executrix of the Estate of Rose Maud Gallie) v Anglia Building Society (formerly Northampton Town and County Building Society)
| Jurisdiction | UK Non-devolved |
| Year | 1971 |
| Court | House of Lords |
| Date | 1971 |
Legal Aid - Costs - Legally aided plaintiff - Substantial defendants - Plaintiff unsuccessful in Court of Appeal and House of Lords - Defendants claiming costs out of legal aid fund -
By section 2 (2) of the Legal Aid and Advice Act 1949:
“Where a person receives legal aid in connection with any proceedings — … (e) his liability by virtue of an order for costs made against him with respect to the proceedings shall not exceed the amount (if any) which is a reasonable one for him to pay having regard to all the circumstances, including the means of all the parties and their conduct in connection with the dispute.”
By section 1 of the Legal Aid Act 1964:
“(1) Where a party receives legal aid in connection with any proceedings between him and a party not receiving legal aid (in this Act referred to as ‘the unassisted party’) and those proceedings are finally decided in favour of the unassisted party, the court by which the proceedings are so decided may, subject to the provisions of this section, make an order for the payment to the unassisted party out of the legal aid fund of the whole or any part of the costs incurred by him in those proceedings. (2) An order may be made under this section in respect of any costs if (and only if) the court is satisfied that it is just and equitable in all the circumstances that provision for those costs should be made out of public funds; …”
G, a widow of 78, was induced by divers misrepresentations by one L to sign an assignment of her leasehold interest in her dwelling-house to him and he forthwith mortgaged it to a building society. The mortgage deed provided that costs “properly” incurred by the society under the mortgage or in relation to the security should be a charge on the mortgaged property. G brought an action against L and the building society for a declaration that the assignment was void and an order that the title deeds should be delivered to her. She was legally aided. The trial judge accepted her plea of non est factum and made the declaration asked for against both defendants. The Court of Appeal held that, so far as the innocent building society was concerned, the plea of non est factum did not apply to make the assignment void. The court ordered that the building society “be at liberty to add their costs occasioned by the appeal to their said security.” The House of Lords, having reviewed the whole doctrine of non est factum, upheld the decision of the Court of Appeal. G died between the conclusion of the argument and the delivery of judgment and her executrix was substituted as appellant. It was agreed that the death of G did not affect the matter. On an application that the building society should have their costs out of the legal aid fund: —
Held, (1) that the order of the Court of Appeal did not conflict with the provisions of section 2 (2) (e) for it was not an order “against” the plaintiff and did not require her to make any payment; it showed that the costs were “properly” incurred thus entitling the successful building society to operate the existing right that it already had under the mortgage deed (post, pp. 352F, H–353A, 355E, 356B, 359G, H).
(2) That in relation to the costs not covered by the Court of Appeal order, section 1 (2) of the Act of 1964 in directing the court to be “satisfied that it is just and equitable in all the circumstances” to award an unassisted person costs out of public funds directed the court to consider all the circumstances and decide on broad lines (post, pp. 354B, 357A, 360D).
(3) That so far as the costs in the House of Lords were concerned the appeal had enabled the House to examine the vexed question of the application of the doctrine of non est factum and it was a proper case for the costs of the successful respondents to be paid out of public funds (post, pp. 354D, 357F, 360H–361A); but there was no sufficient reason why they should recover from public funds the Court of Appeal costs which they chose to incur in appealing against an adverse decision at first instance (post, pp. 354F, G, 357B, C, 360H–361A).
Per Lord Reid. Under the Act of 1964, there is no suggestion of a means test when dealing with costs on appeal. I do not say that it could never be relevant to consider the means of the unassisted person but in general and in the present case I see no reason to take into account the amount of the assets of this society (post, p. 354C).
Per Viscount Dilhorne. Although in relation to costs in the appellate courts the question of severe financial hardship is not required by the Act of 1964 to be considered, nevertheless that does not mean that the financial position of the unassisted litigant is not one of the circumstances to which regard may properly be had (post, p. 357D, E).
Per Lord Pearson. One circumstance to be considered under section 1 (2) is the innocence of the building society another is that they have very large resources. Another circumstance is that they themselves took the legally aided plaintiff to the Court of Appeal. That is entitled to some weight but is far from being decisive because it was legal aid which enabled the plaintiff to gain the judgment at first instance and the building society had to appeal to get it reversed (post, p. 360D–F).
The following cases are referred to in their Lordships' opinions:
Cotterell v. Stratton (
Halsall v. Egbunike (
Leighton's Conveyance, In re [
Turner v. Hancock (
The following additional cases were cited in argument:
Cope v. United Dairies (London) Ltd. [
Hanning v. Maitland (No. 2) [
Wagg v. Law Society [
APPEAL from the Court of Appeal [
The House of Lords dismissed the appeal [
The question then arose whether the respondents, the Anglia Building Society were entitled to have their costs paid out of the legal aid fund, since Mrs. Rose Maud Gallie, the appellant, now deceased and replaced on the record by her executrix, was legally aided.
The relevant facts are stated in their Lordships' opinions.
Michael Albery Q.C. and A. E. Holdsworth Q.C. for the appellant.
P. R. Oliver Q.C. and H. F. J. Teague for the respondents.
Jack Hames as amicus curiae for the Cambridge Legal Aid Committee.
Their Lordships took time for consideration.
December 16, 1970. LORD REID. My Lords, on November 9 your Lordships decided that this appeal should be dismissed and then heard counsel on the matter of costs. Questions of general importance were raised and further consideration of the case was adjourned till today.
The original appellant, Mrs. Gallie, died after argument had been heard by the Appellate Committee, and her executrix was substituted as a party before November 9. All counsel involved agreed that this fact had no bearing on any of the questions argued before your Lordships and I shall, therefore, proceed to deal with these questions as if Mrs. Gallie were still alive.
Mrs. Gallie had been granted legal aid, and the main question is whether the successful respondents, a large building society, should have an order for payment of any of their costs out of the legal aid fund under the Legal Aid Act 1964. But before dealing with that Act I must recall the facts of this case so far as necessary for the application of its provisions.
Mrs. Gallie had a long lease of the house in which she lived, and this was of considerable value. She was induced to assign this lease to Lee for a fictitious price and this enabled Lee to borrow £2,000 from the respondents on the security of the lease. There was nothing to suggest any irregularity to the respondents and there is no suggestion now that the respondent society acted at any time otherwise than reasonably and in good faith.
In 1965 Mrs. Gallie sued Lee, and the respondent society sought a declaration that the assignment to Lee was void: if that had been established the society's security would have been worthless. That action succeeded at first instance and the society appealed to the Court of Appeal. That court dismissed the action against the society and ordered that they “be at liberty to add their costs occasioned by this appeal to their said security.”
The mortgage deed granted by Lee to the society provided by clause 7 (3) that all
“moneys costs charges and expenses properly paid or incurred by the society under this mortgage or in relation to this security … shall be a charge on the mortgaged property.”
That provision is clearly applicable to the society's costs in this action. So the society do not need leave of the court to add those costs to their security. It appears to me that the only value of the part of the Court of Appeal's order which I have quoted is to show that those costs were “properly” incurred. This form of words appears to be in regular use and it ought, I think, to be incorporated in the order made by this House. A considerable part of the society's costs can be covered in this way, and they only seek to recover from the legal aid fund the remainder which is not so covered. That will probably include their costs in this House and at least a part of their costs...
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