The Legal Services Commission v F & Ors

Whether a non-funded party suffers financial hardship under the Community Legal Service (Cost Protection) Regulations 2000 is a question of fact and degree. The court must assess the impact and likely consequences of unreimbursed costs in the applicant’s circumstances. No fixed wealth threshold or public-funding eligibility test applies, and financial hardship does not require penury.

Once hardship is established, the court must still consider whether an order for the whole or part of the costs is just and equitable. The applicant need not justify every pound claimed, but any proposed reduction should have a rational and defensible basis. In the absence of such a basis, a full award may be made.

The Legal Services Commission appealed from a costs decision of Master Simons in the Senior Courts Costs Office dated 28 June 2010. The Master ordered payment from public funds of the recoverable costs incurred by R and three interveners in family proceedings in which a publicly funded party’s claims had failed.

The appeal concerned the meaning and application of “financial hardship”, whether the interveners should receive all or only part of their recoverable costs, whether common costs should be attributed to a company, and whether it was just and equitable to make the orders.

1. Appeal dismissed. The appeal was confined to points of law, and the court exercised a power of review rather than conducting a rehearing. The Master was entitled to find that each intervener had suffered financial hardship.
2. Under regulation 5 of the Community Legal Service (Cost Protection) Regulations 2000, financial hardship is assessed objectively but by reference to the particular applicant. It is a question of fact and degree. The court must consider the impact or likely consequences of the LSC not bearing the costs, including reasonable financial expectations, future demands and legal or moral commitments.
3. The removal of “severe” deliberately relaxed the former threshold. A person may suffer financial hardship despite being comfortably or well off after paying the costs. The phrase “financial equilibrium”, read in the context of the Master’s decision as a whole, did not mean that every minor inconvenience would suffice.
4. The Master was entitled to award the interveners all their agreed recoverable costs. The onus remained on the applicants to establish hardship, and no presumption of full recovery arose automatically. However, it was unrealistic and impractical to require justification of every pound. A partial award required a rational, factual and defensible basis. None had been advanced.
5. The challenge concerning attribution of costs to K, a company, was not a proper point of law and had not been raised in the notice of appeal. In any event, the Master was entitled on the facts to conclude that the relevant work had been undertaken for V personally and that K had played only a limited role.
6. It was normally just and equitable for public funds to meet costs ordered against a party supported by public funding where the non-funded party would otherwise suffer financial hardship, unless facts made that result unjust or inequitable. The Master had considered the interveners’ resources and was not plainly wrong in making the orders.

• High Court (Queen’s Bench Division): appeal from the reserved costs decision of Master Simons, Costs Judge, in the Senior Courts Costs Office dated 28 June 2010. Appeal dismissed.