Beechwood Construction Ltd v Afza & Anor

A third party debt order may be made against a debt owed to a publicly funded litigant, even though the debt is subject to the Legal Services Commission’s statutory charge. The charge and regulation 18 of the CLS (Costs) Regulations 2000 regulate the collection and priority of the money; they do not remove the underlying debt owed to the judgment debtor.

The order must direct payment to the judgment debtor’s solicitor, who must deal with the statutory charge. Any surplus may then be payable to the judgment creditor. A third party debt order cannot be made for unassessed costs, and costs orders involving a publicly funded party must take account of section 11 of the Access to Justice Act 1999.

The judgment debtor had obtained judgment against the third party for £10,260 following publicly funded litigation. The judgment creditor subsequently obtained an interim and then final third party debt order to enforce an unrelated judgment debt owed by the judgment debtor.

The district judge directed the third party to pay the judgment creditor and made ancillary orders concerning costs, disclosure and the Legal Services Commission. The judgment debtor appealed. The central issues were whether the statutory charge and regulation 18 prevented a third party debt order, and whether the ancillary provisions of the order were legally effective.

1. The third party debt order. The appeal against the making of the order was dismissed. The debt established by the Bradford County Court judgment was due from the third party to the judgment debtor. Section 10(7) of the Access to Justice Act 1999 imposed a first charge on recovered property, while regulations 18 to 20 of the CLS (Costs) Regulations 2000 provided a procedure for collecting and applying the money. They did not alter the identity of the debtor or prevent jurisdiction under CPR 72.2(1) (paras [12]–[16]).
2. The judgment creditor could obtain no better position than the judgment debtor. The order therefore remained subject to the statutory charge and the collection procedure in regulation 18. Payment had to be made to the judgment debtor’s solicitor, who could give the required discharge. After satisfaction of the charge, any balance could be paid to the judgment creditor (paras [13]–[18]).
3. A third party debt order could not be made against the judgment debtor’s solicitors or the Legal Services Commission because no debt was presently due or accruing due from either of them. Dawson v Preston was distinguishable because the money in that case had already been paid over, creating a debt to the judgment debtor (para [15]).
4. The parties’ concessions were accepted. The order could not include unassessed costs, and the costs order had to take account of section 11 of the Access to Justice Act 1999, including the judgment debtor’s means (para [10]).
5. The order was varied by removing the reference to the costs of the Bradford proceedings, directing payment to the judgment debtor’s solicitors under regulation 18, and deleting paragraphs 2 and 4 to 9 of the district judge’s order. The judgment debtor was provisionally ordered to pay £1,502 of the judgment creditor’s costs before the district judge, subject to section 11. There was no order as to the costs of the appeal (para [20]).

High Court (Chancery Division): appeal from an order of DJ Anderson dated 4 July 2008. The third party debt order was upheld, but the order was varied in relation to payment arrangements, costs and ancillary directions.