Burkett, R (on the application of) v London Borough of Hammersmith & Fulham

A court has a discretion under section 51 of the Supreme Court Act 1981 to set off opposing costs orders made within the same proceedings. The rules requiring mutuality and an equitable impeachment of the claimant’s demand govern substantive set-off and do not restrict this costs jurisdiction.

Costs protection for a publicly funded party limits what that party may be required to pay. It does not prevent set-off, which merely reduces the amount recoverable. A favourable costs order remains an order for the funded client. Statutory arrangements requiring recovered money to pass through the solicitor and Legal Services Commission do not transfer ownership of the order to the Commission.

The claimant obtained public funding to challenge the council’s grant of planning permission. Permission for judicial review was initially refused for delay, but the House of Lords allowed her appeal on that issue and ordered the council to pay her costs. After remittal, Newman J dismissed the substantive claim in [2003] EWHC 1031 (Admin).

Newman J ordered the council’s costs of the unsuccessful substantive proceedings to be set off against the costs payable to the claimant under the House of Lords’ order. The claimant appealed only against that costs order. The central issue was whether public-funding legislation, costs protection or an absence of mutuality deprived the judge of power to order the set-off.

1. The appeal was dismissed. Section 51 of the Supreme Court Act 1981 placed costs incidental to High Court proceedings within the court’s discretion, subject to other enactments and rules. A set-off between opposing costs orders within the same proceedings was therefore essentially discretionary. Newman J possessed the power to make the order and there was no basis for interfering with its exercise.

2. The requirements of mutuality and equitable impeachment applicable to set-off as a defence to a substantive claim did not govern the balancing of costs orders. A right to costs arises only when the judge creates it. The judge consequently has discretion over its amount and the form of its enforcement.

3. Section 11 of the Access to Justice Act 1999 did not prohibit set-off against a publicly funded party. Set-off imposes no obligation on that party to pay; it reduces the amount otherwise recoverable. That consequence was consistent with the statutory form of costs protection.

4. A costs order in favour of a funded litigant remained an order for that litigant, rather than the Legal Services Commission. Regulations requiring money to be received by the solicitor, paid to the Commission and enforceable by the Commission concerned its collection and administration. They did not change the identity of the party entitled under the order. This conclusion was reinforced by section 22(4) of the Access to Justice Act 1999, which preserved the parties’ rights and liabilities and the ordinary principles governing judicial discretion.

5. Lockley v National Blood Transfusion Service [1992] 1 WLR 492 was binding and had not been decided per incuriam. Anderson v Hills Automobiles (Woodford) Ltd [1965] 1 WLR 745 concerned the payment of money already in court under specific rules. Re A Debtor concerned enforcement by the legal aid fund. Neither decision governed the antecedent exercise of discretion in deciding what costs order to make.

6. Litigation fees, including fees for work in the House of Lords, must be reasonable and proportionate. If the parties could not agree the costs of the proceedings, their detailed assessment was to be undertaken by the senior costs judge or another costs judge nominated by him. Permission to appeal to the House of Lords was refused.

• House of Lords: Allowed the claimant’s appeal on delay, ordered the council to pay her costs in the Court of Appeal and House of Lords, and remitted the substantive claim to the High Court.

• Court of Appeal: In [2004] EWCA Civ 1342, dismissed the appeal against Newman J’s costs order and refused permission to appeal to the House of Lords. An earlier Court of Appeal decision had upheld refusal of permission for delay.

• High Court, Administrative Court: Newman J dismissed the remitted judicial review claim in [2003] EWHC 1031 (Admin). He ordered the council’s assessed costs to be set off, within the stated limit, against the costs payable under the House of Lords’ order.