Wallace & Anor v Brian Gale & Associates (a Firm)

The meaning of costs provisions in a compromise order depends principally on the agreement embodied in the order. Solicitors’ fees reasonably incurred in procuring compliance with the settlement may fall within the costs of the action. Disbursements incurred for additional expert work may fall outside that expression where the order deals expressly with related expenses elsewhere. Where enforcement of a costs order requires leave, the court may grant, stay or rescind leave in light of changes to a party’s legal aid position and may reconsider the matter if a certificate is later granted.

The parties settled proceedings concerning defects in a house by an order staying the action on agreed terms. The order provided for specified remedial works and for the defendants to pay the plaintiffs’ costs, subject to restrictions on enforcement and to legal aid taxation.

The plaintiffs obtained declarations that costs incurred in implementing the settlement fell within the costs provision. They also obtained leave to enforce the costs order against Mr Gale after his legal aid certificate was revoked. Mr Gale appealed both decisions. The central issues were the meaning of costs of the action and the effect of the subsequent legal aid changes.

1. Costs of implementing the settlement. The words costs of the action had to be interpreted in the context of the compromise order and the agreement made by the parties. Authorities concerning the recoverability of similar costs from the Legal Aid Fund were of limited assistance. They did not determine the meaning of the parties’ agreement.
2. Solicitors’ fees reasonably incurred in procuring performance of the settlement could fairly be treated as part of the costs of the action. The position was different for disbursements, including the additional expert’s report concerning the condition of the property. Those expenses were outside the costs provision, particularly because other paragraphs of the schedule expressly allocated related costs. The first appeal was dismissed, with costs.
3. Leave to enforce. The parties had used the order with legal aid in mind. The ending of Mr Gale’s legal aid position was therefore capable of constituting a circumstance in which leave to enforce should be given, even though revocation had not been specifically contemplated. The judge had been entitled to grant leave.
4. Because the legal aid position remained uncertain, enforcement was stayed for three months. Mr Gale had liberty to apply to the official referee. If no certificate was renewed, enforcement could proceed. If a certificate were renewed retrospectively, the leave would have to be rescinded; if a new certificate raised an arguable discretionary issue, the matter would return to the judge. The second appeal was otherwise subject to no order, with the stated stay, liberty to apply and costs directions.

• Court of Appeal (Civil Division): dismissed the appeal from the order of His Honour Judge Humphrey Lloyd QC. The first appeal was dismissed with costs. On the second appeal, enforcement was stayed for three months, with liberty to apply to the official referee and costs payable as ordered.