DEG-Deutsche Investitions und Entwicklungsgesellschaft MBH v Koshy & Ors

A statutory deeming provision must be applied consistently with its legislative purpose, and no further. Where revocation of legal aid has retrospective effect, the fiction that the assisted person is deemed never to have been assisted does not apply indiscriminately to every statutory reference to an assisted person. It may permit variation of an existing costs order where the retrospective loss of legal aid is a material change of circumstances. A court may vary the order under the specific statutory power in the legal aid regulations, even though it generally has no power to vary an order after it has been passed and entered.

DEG sued Mr Koshy and Lasco for alleged fraud and obtained orders concerning the costs of interlocutory applications. Harman J ordered costs against Mr Koshy subject to the statutory regime governing assisted persons. After Mr Koshy’s emergency legal aid certificate was retrospectively revoked, DEG applied to vary the order. Rimer J held that he lacked jurisdiction under the legal aid legislation and regulations, and the Court of Appeal heard DEG’s appeal.

The court also considered, but did not finally determine, whether an inherent jurisdiction to supplement or work out an order could have assisted DEG.

1. Appeal from Rimer J allowed. The Court of Appeal held that regulation 130 of the Civil Legal Aid (General) Regulations 1989 applied to DEG’s application to vary the costs order.
2. The statutory fiction in regulation 74(2), by which a person whose certificate is revoked is deemed never to have been an assisted person, had to be applied in accordance with its legislative purpose. That purpose was to withdraw the protection afforded by section 17(1) of the Legal Aid Act 1988, including retrospectively. It did not require, and could not justify, applying the fiction indiscriminately to every reference to an assisted person.
3. The retrospective revocation of legal aid was capable of being a material change of circumstances within regulation 130(b). The expression “circumstances” was not confined to financial circumstances. The court regarded the retrospective loss of legal aid as potentially the most significant change affecting the costs order.
4. Exercising the discretion which Rimer J had considered himself not to possess, the court varied the order so that Mr Koshy was to pay the costs of the two applications, subject to immediate detailed assessment on the standard basis. The applications were a substantial and discrete part of the litigation and had wholly failed.
5. The court expressed no final view on inherent jurisdiction. It noted the general rule that a court cannot vary an order after it has been passed and entered, together with recognised or possible exceptions. The appeal from Harman J’s original order was dismissed as unnecessary.

• Court of Appeal (Civil Division): appeal from Rimer J’s order of 17 February 2000 allowed; appeal from Harman J’s costs order of 20 March 1998 dismissed as unnecessary.
• High Court, Chancery Division: Harman J dismissed the strike-out applications and made a costs order against Mr Koshy subject to the legal aid regime. Rimer J later held that he had no jurisdiction to vary that order.