Rayner v The Lord Chancellor

For the purposes of cost protection, “attributable to” does not mean simply “incurred during”. Where proceedings are partly funded, a successful non-funded party may recover from the funding authority costs incurred outside the funded period if those costs were caused by the funded part of the proceedings. The assessment is fact-sensitive and may require consideration of whether the funding was a substantial cause of the later litigation costs.

Where individual and corporate defendants are jointly liable for costs, the question of which party incurred the costs cannot necessarily be resolved by ownership or control alone. The court may require detailed evidence concerning the retainers, work undertaken, payments, and the parties’ respective interests.

Mrs Murphy, who was publicly funded, brought proprietary estoppel proceedings against Mr Rayner and two companies controlled by him. The claim was dismissed and the defendants obtained an indemnity costs order. They sought an order under the Community Legal Service (Cost Protection) Regulations 2000 requiring the Legal Services Commission to indemnify their costs.

The costs judge ordered detailed assessment of the costs incurred by the individual and corporate defendants. He also held that costs incurred during a period when Mrs Murphy’s funding arrangements were interrupted could not be recovered from the Commission. Mr Rayner appealed both decisions. The central issues were the meaning of “incurred” and “attributable to” in the Regulations.

1. Costs incurred by individual and corporate defendants. The costs judge was entitled to require detailed bills and further factual investigation. A person ordinarily incurs costs where he is liable to pay them, but the Regulations provide no automatic answer where several defendants, including companies, are jointly and severally liable. Relevant considerations include the terms of the retainers, work done solely for each defendant, common work, payments made, the parties’ interests, and the role played by each defendant. Ownership and control of the companies did not by themselves establish that all costs were incurred by Mr Rayner.
2. Meaning of “attributable to”. Paragraph 5(4) of the Community Legal Service (Cost Protection) Regulations 2000 is concerned with causation, not merely the period during which funded services were provided. Costs incurred during an interruption in funding may therefore be recoverable where they were caused by the earlier funded proceedings.
3. The relevant question was whether the Legal Services Commission’s funding was a substantial cause of the litigation continuing into the disputed period, or whether the litigation and resulting costs would have occurred in any event. That question was remitted to the costs judge as part of the detailed assessment.
4. The Court of Appeal’s decisions in Burridge v Stafford and Khan v Ali, reported at [2000] 1 WLR 927 (CA), did not bind the court on this issue because the relevant proposition had been assumed without argument or consideration. The principle identified in R (Khadim) v Brent LBC Housing Benefit Review Board permitted that course in an obvious case.
5. The appeal was allowed on the second issue and in relation to disclosure of relevant case plans and bills of costs, but dismissed on the first issue.

• High Court (Chancery Division): appeal from decisions of Master Haworth in the Senior Courts Costs Office. Appeal allowed on the construction of para. 5(4) and related disclosure; appeal dismissed on the issue of which defendants incurred the costs.