Lumsdon & Ors v Legal Services Board

Once a protective costs order has been made after all parties had an opportunity to address the court, variation requires a compelling reason. That ordinarily means a material change of circumstances which would probably have led the first judge to make a different order. The court should not revisit the merits of the original decision merely because it might have assessed the relevant factors differently. An indemnity obtained after the order, or support from an additional interested party, will not necessarily justify reducing the cap. Where recoverable costs are already capped, a costs budget may be inappropriate, particularly if the proceedings have already caused the parties to reduce their costs exposure.

The claimants, practising barristers, sought judicial review of the Legal Services Board’s approval of the Quality Assurance Scheme for Advocates. Ouseley J granted permission and made a protective costs order capping the claimants’ aggregate liability to the defendant and the Bar Standards Board at £150,000.

The claimants later sought to reduce the cap to £75,000 and alternatively to require the defendant and the Bar Standards Board to submit costs budgets. They relied on financial guarantees obtained after the original order, the Law Society’s intervention in support of the claim, and the defendant’s clarification that its earlier reference to costs of £400,000 had not been a genuine estimate. The central issue was whether those matters justified varying Ouseley J’s order.

1. The applications to reduce the protective costs cap and to require costs budgets were refused. The cap therefore remained at £150,000.

2. Applying R (Compton) v Wiltshire PCT [2009] 1 WLR 1436, the court held that, where all parties had had an opportunity to make submissions on paper and the judge had granted permission, fixed the figure and given detailed reasons, variation required a compelling reason. This meant a material change of circumstances likely to have led the first judge to reach a different decision.

3. The fact that the claimants had subsequently obtained indemnities covering the existing cap was not a reason to reduce it. The indemnities properly protected the individual claimants, but did not alter the considerations on which the original cap had been fixed.

4. The Law Society’s intervention in support of the claimants also did not justify variation. Its substantial membership and resources might have affected the original decision had it been involved as a claimant from the outset, but its later intervention did not require the cap to be reduced.

5. The clarification that the earlier £400,000 figure was not a genuine costs estimate did not establish a compelling reason. Ouseley J’s reasons showed that he had fixed the cap by reference to the Criminal Bar Association’s resources and ability to raise contributions, rather than by reference to the defendant’s total estimated costs. A first-instance judge hearing a variation application should not substitute his own assessment for that of the original judge.

6. The alternative application for costs budgets was also refused. It was unnecessary to decide whether the Administrative Court possessed jurisdiction to order budgets under its inherent case-management powers. Such an order would be inappropriate where recoverable costs were already subject to a protective costs order, especially since the proceedings had already encouraged the defendant to manage its costs exposure.

Ouseley J granted permission for judicial review and made the protective costs order. The present court refused to vary that order; the substantive judicial review was listed separately before a Divisional Court.