Fowler De Pledge (a firm) v Smith

Under section 17 of the Legal Aid Act 1988, the court must assess what amount of costs is reasonable in all the circumstances. The legally assisted party’s financial resources, particularly disposable income and capital, are a compelling consideration. Conduct remains relevant, but cannot justify an amount that is unreasonable having regard to the party’s means. The judge must make explicit findings on means and must not infer an ability to pay a substantial order without adequate evidence. An order directing a rehearing must also state clearly whether it is at appeal-court level or is a rehearing of the original application.

The claimants, Mr Smith’s former solicitors, sought payment of costs following a consent settlement of their claim for unpaid fees. The amount of Mr Smith’s liability was determined under section 17 of the Legal Aid Act 1988. District Judge Skerritt ordered him to pay the full costs. Judge Brandt allowed an appeal and directed that the claimants’ application be reheard before a circuit judge. Judge Thompson conducted the rehearing and ordered payment of more than £36,000.

Garland J held that the rehearing had taken place at appeal-court level and declined jurisdiction over a further appeal. The Court of Appeal had to determine the correct appellate route and whether Judge Thompson had properly assessed the amount reasonably payable under section 17.

Disposition. Lord Justice Brooke delivered the judgment of the court. Mr Smith’s appeals were allowed. Garland J’s order was set aside, and Judge Thompson’s costs order could not stand. If the parties could not compromise the amount, the issue was remitted to a different circuit judge for a fresh determination. The claimants were ordered to pay the costs before Garland J and Judge Thompson; there was no order for costs before Judge Brandt.

1. Appellate route. The level of a rehearing depends on the terms and intended effect of the order directing it. Judge Brandt had granted permission to appeal, treated the hearing as the hearing of the appeal, allowed the appeal, set aside the district judge’s order and directed that the claimants’ application be reheard before a circuit judge. He had exercised powers under CPR 52.10(2)(a) and (c). He had not directed a rehearing of the appeal at appeal-court level under CPR 52.11(1)(b). The subsequent hearing was therefore a rehearing of the original application, and the appeal from Judge Thompson was a first-tier appeal.
2. Section 17 assessment. The court applied the guidance in Crystall v Crystall [1963] 1 WLR 574, Gooday v Gooday [1968] 3 All ER 611 and Chaggar v Chaggar [1997] 1 All ER 104. The court must consider all the circumstances, with particular attention to the financial resources of the parties, including disposable income and disposable capital. Conduct is relevant but cannot displace the requirement that the amount be reasonable having regard to means.
3. Application. Judge Thompson had been overly influenced by his adverse view of Mr Smith’s conduct and had failed to make explicit findings that Mr Smith possessed sufficient means to pay more than £36,000. The evidence did not justify an implied finding of access to such funds. The amount ordered was therefore not reasonable within section 17.
4. Unargued provisions. The court declined to determine the effect of article 8 of the Access to Justice Act 1999 (Commencement No 3, Transitional Provisions and Savings) Order 2000 or regulations 10(2) and 12(3) of the Community Legal Service (Costs) Regulations 2000, leaving reliance on them open on the rehearing.

1. Court of Appeal (Civil Division): In [2003] EWCA Civ 703, the court set aside Garland J’s refusal of jurisdiction, treated the appeal from Judge Thompson as a first-tier appeal, allowed it, and remitted the costs issue for fresh determination if necessary.
2. High Court, Norwich District Registry: Garland J held on 31 July 2002 that Judge Thompson’s rehearing had been conducted at appeal-court level and that the proposed further appeal lay to the Court of Appeal.
3. Ipswich County Court: Judge Thompson reheard the claimants’ application on 30 January 2002 and ordered Mr Smith to pay £36,136.51.
4. Ipswich County Court: Judge Brandt had earlier allowed permission to appeal and directed that the claimants’ application be reheard before a different circuit judge.