The Scout Association v Bolt Burdon Kemp
| Jurisdiction | England & Wales |
| Judge | Mr Justice Freedman |
| Judgment Date | 17 October 2023 |
| Neutral Citation | [2023] EWHC 2575 (KB) |
| Court | King's Bench Division |
| Docket Number | Case No: KA-2023-000026 |
[2023] EWHC 2575 (KB)
Mr Justice Freedman
Case No: KA-2023-000026
IN THE HIGH COURT OF JUSTICE
KING'S BENCH DIVISION
ON APPEAL FROM THE SENIOR COURTS COSTS OFFICE
COSTS JUDGE LEONARD
Royal Courts of Justice
Strand, London, WC2A 2LL
Mr Jamie Carpenter KC (instructed by Clyde & Co) for the Defendant/Appellant
Mr Roger Mallalieu K.C. (instructed by Bolt Burdon Kemp LLP) for the Respondent
Hearing date: 12 June 2023
Draft judgment sent to the parties: 29 September 2023
Approved Judgment
This judgment was handed down remotely at 12noon on 17 October 2023 by circulation to the parties or their representatives by e-mail and by release to the National Archives.
I Introduction
This is an appeal by the Scout Association (“the Appellant”) against an order of Costs Judge Leonard (“the Costs Judge”). The Costs Judge refused to make an order under section 51(3) of the Senior Courts Act 1981 against Bolt Burdon Kemp (“BBK”). The background was that there was an action by a person referred to as PME (“the Claimant”) against the Appellant in which the Claimant had the benefit of Qualified One-Way Costs Shifting (“QOCS”). The action was settled for an agreed sum of £29,500 plus costs. BBK refused to accept an offer of costs of £22,500. There followed various applications in which BBK, as it was entitled to do, used the name of the Claimant to seek to recover higher costs from the Appellant. The Appellant was unsuccessful on each application. No costs were payable by the Claimant due to the QOCS. The Appellant sought a non-party costs order against BBK, submitting that BBK was a real party or the real party in these applications, with the consequence that it ought to be responsible under section 51(3) of the Senior Courts Act 1981. The application was refused by the Costs Judge. I have heard this appeal with the assistance of Costs Judge Rowley.
II The facts
It is convenient to take the facts from the summary of the Costs Judge in his judgment. They are uncontroversial. In large part, they are set out also in the skeleton argument of the Appellant at paras. 55–71. The summary of the Costs Judge was as follows:
“8. The Claimant claimed against the Defendant damages for personal injury. On 22 August 2017, without proceedings being issued, the Claimant accepted the Defendant's Part 36 offer of £29,500.
9. The Claimant served a schedule of costs in August 2017. In September 2017 the Defendant, on the basis of that schedule, offered to settle the claim for costs at £22,500. That offer was rejected.
10. On 20 November 2017, on the Claimant's Part 8 application, the Senior Costs Judge made a “costs-only” order under CPR 47.14 providing, at paragraph 2:
“The Claimant's costs of the claim arising from the cause of action described in the claim form in respect of which terms of settlement have been agreed shall be paid by the Defendant and be the subject of a detailed assessment hearing in this Court.”
11. The Claimant served a bill of costs on 23 November 2017. The bill came to £42,118.58. The Claimant's bill was provisionally assessed by Costs Officer Kenny at £22,868. Excluding the time for drafting the bill, the figure was £21,357.80, less than the Defendant's September 2017 offer. The Claimant sought, under CPR 47.15 (7)-(9), an oral review on the issue of hourly rates and document time only.
12. At the oral review on 15 August 2018 before Costs Officer Kenny the Claimant conceded the document time point and only the hourly rates were reviewed. They were slightly increased, the bill being assessed at £23,626.28. Deducting again the costs of drafting the bill, the Claimant's costs were assessed at £22,096.28. This was still less than the Defendant's offer of September 2017.
13. As a result, the Claimant was ordered to pay the Defendant's costs of the Part 8 proceedings, the provisional assessment and the oral review, which were assessed at £3,290.11. Interest on the Claimant's assessed costs was disallowed.
14. That is the first costs order to which this application relates: the order made by Costs Officer Kenny on 15 August 2018.
15. The Claimant then filed an Appellant's notice under CPR 47.21.
16. The Grounds of Appeal stated:
“… the Claimant seeks a de novo detailed assessment hearing so that all issues and costs not agreed are heard afresh and assessed in the usual manner. Therefore all decisions made by Costs Officer Kenny at the provisional assessment and subsequent oral hearing are appealed…”
17. The Grounds of Appeal went on to identify preliminary issues including the argument that the appeal hearing would, effectively, be a new detailed assessment on the standard basis and an argument (not subsequently pursued) to the effect that a costs officer does not have jurisdiction to summarily assess costs.
18. The appeal was listed before me on 14 February 2019. On the day, the Claimant raised a new argument to the effect that a costs officer did not have jurisdiction to conduct a provisional assessment at all. The hearing was adjourned, so that two issues could be argued before me: whether the appeal was limited to the issues actually considered by Ms Kenny on 15 August 2018, and whether Ms Kenny had had jurisdiction to undertake the provisional assessment.
19. I heard argument on those issues on 3 May 2019 and handed down judgment on 30 July 2019. I found that there was no viable argument to the effect that costs officers have no jurisdiction to conduct provisional assessments; that there is no appeal from a provisional assessment, only from an oral hearing, if requested; and that any such appeal would be limited to decisions made at the oral hearing.
20. I reserved to the detailed assessment hearing the costs of the issues addressed by my judgment. The Claimant sought (and I granted) permission to appeal only on the issue of whether, following an oral hearing under CPR 47.15 (7)-(9), a party's rights of appeal extend not only to decisions made at the oral hearing but to decisions made on the provisional assessment that preceded it.
21. The Claimant's appeal from my judgment of 30 July 2019 was dismissed by Stewart J on 12 December 2019. The Claimant was ordered to pay the Defendant's costs of the appeal, summarily assessed at £8,091 net of VAT.
22. That is the second costs order to which this application relates.
23. On 16 January 2020 I heard and dismissed the substantive appeal from Costs Officer Kenny, ordering the Claimant to pay the Defendant's costs of the appeal. I gave directions for the determination of those costs in a hearing listed for 3 July 2020, which was adjourned by consent to await the judgment of the Supreme Court in Ho v Adelekun [2021] UKSC 43.
24. It is not, as I understand it, in dispute that because the Claimant has accepted a Part 36 offer from the Defendant, there is no order for damages in favour of the Claimant against which the Defendant could enforce an order for costs without the permission of the court (see Cartwright v Venduct Engineering Limited [2018] 1 WLR 6137, at paragraph 44). The effect of the decision in Ho (handed down on 6 October 2021) is that the Defendant is also unable to recover its costs by way of set-off against the damages or costs payable to the Claimant.
25. It follows that, without the permission of the court, the Defendant has no means of recovering from the Claimant the costs which the Claimant was ordered to pay by Costs Officer Kenny on 15 August 2018 (£3,290.11); by Stewart J on 12 December 2019 (£8,091 net of VAT, the recoverability of which is a bone of contention between the parties); and by me on 16 January 2020 (which have yet to be assessed but which I understand will be claimed in the sum of £28,499.07 inclusive of VAT).
26. The Defendant has stated in correspondence that it has no intention of attempting enforcement against the Claimant and instead seeks an order that BBK pay all of those costs.”
There is reference in this judgment to the terms “CFA lite” and “capped CFA”. As the Costs Judge explained at para. 31 and following, these terms can be understood as follows. The term “CFA lite” is commonly used to describe a Conditional Fee Agreement (“CFA”) under which a solicitor undertakes litigation on the basis that the client will be responsible for the solicitor's fees and expenses only to the extent that they are recovered from the other party. Under such arrangements, win or lose, there are no circumstances in which the client will have to draw upon their own resources to meet those fees and expenses.
The CFA between the Claimant and BBK does not quite meet that description, but it comes close. It provides for the Claimant, in the event of success, to pay a success fee (irrecoverable from the Defendant) of 100% but it also provides for any shortfall between the sums payable by the Claimant to BBK under the CFA and the costs and disbursements recovered from the Defendant, to be capped at 15% of the damages received by the Claimant.
There is in any event a statutory limit on the success fee payable by the Claimant to BBK, but the arrangement offered by BBK, in imposing an overall limit on any costs shortfall, offers an additional benefit to the Claimant. This sort of arrangement shall be referred to as a “capped CFA”.
Since the capped CFA between the Claimant and BBK provides for a 100% success fee, following the recovery of £29,500 in damages the Claimant will have to account to BBK for no more and no less than 15% of those damages, whatever might be recovered from the Defendant by way of costs. In consequence, it is said that the only party with a tangible financial interest in the outcome of these detailed assessment proceedings has been BBK itself.
There was a question before the Costs Judge as to whether he would have a...
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