Rayner v The Lord Chancellor

Under regulation 5(4) of the Community Legal Service (Cost Protection) Regulations 2000, costs attributable to the funded part of proceedings are costs incurred during that funded period. The provision does not require a costs judge to decide whether costs incurred after funding ceased were caused by earlier public funding.

This temporal construction accords with the linked cost-protection regime. The funded party’s protection and the funding authority’s potential liability concern the same costs. It also avoids uncertain and speculative inquiries into causation, remoteness and the continuing effects of initial funding.

Mrs Murphy, who had received public funding for litigation against Mr Rayner, changed solicitors shortly before trial. Her new solicitors were not initially named in her funding certificate. During the resulting hiatus period, she did not receive funded services, although the certificate had not been withdrawn.

Master Haworth held that she had no cost protection for that period and later held that Mr Rayner could not recover from the Commission costs incurred during it. On appeal, a Deputy High Court Judge allowed Mr Rayner’s appeal, holding that costs incurred during the hiatus could be recovered if caused by earlier funding: [2013] EWHC 3878 (Ch).

The Lord Chancellor appealed. The central issue was whether regulation 5(4) imposed a temporal test or a causal test of attribution. Mr Rayner also sought permission to pursue, out of time, an appeal against the 2011 cost-protection decision.

1. Appeal allowed. Regulation 5(4) of the Community Legal Service (Cost Protection) Regulations 2000 permits recovery from the Commission only of a non-funded party’s costs incurred during the part of the proceedings in which the client received funded services. Costs incurred during the hiatus period were therefore not recoverable from the Commission.

2. The phrase “attributable to the part of the proceedings which are funded proceedings”, read with regulation 2(1), more naturally identifies costs by the temporal part of the proceedings in which they were incurred. It does not create a causal inquiry into whether later costs resulted from earlier funding.

3. The temporal construction also accords with the structure of the regime. Cost protection under the Access to Justice Act 1999 and the Commission’s potential liability are corollaries. Regulation 5 assumes that the same costs are subject to both protections. A causal construction could expose both the funded client and the Commission to liability for the same costs.

4. A causal test would require speculative and uncertain assessments. A costs judge might have to decide whether proceedings would have been brought without initial funding and, if so, which later litigation steps were sufficiently direct consequences of that funding. Parliament was unlikely to have intended that exercise. The result could be harsh in an unusual case where funding ceased at a critical stage, but it was a permissible broad and practical legislative criterion.

5. S v S [1978] 1 WLR 11 was confined to its ratio that costs incurred before legal aid was granted could not be attributed to the later funded part of proceedings. Burridge v Stafford and Khan v Ali [2000] 1 WLR 927 was not binding on the disputed causal issue because that argument had not been advanced there, although it gave some support to the view that cost protection and fund liability were treated as matching.

6. Permission to appeal out of time against the 2011 decision was refused. The challenge was potentially decisive but had not been advanced by a timely appellant’s notice or properly raised before the Deputy Judge. The delay alone justified refusal; the 2011 decision was also likely correct on its merits.

• Court of Appeal (Civil Division) — allowed the Lord Chancellor’s appeal, restored Master Haworth’s decision, and refused Mr Rayner permission to appeal out of time against the 2011 decision: [2015] EWCA Civ 1124.
• Chancery Division — allowed Mr Rayner’s appeal on the construction of regulation 5(4), holding that hiatus-period costs could be recovered if caused by prior funding: [2013] EWHC 3878 (Ch); [2014] 1 WLR 677.
• Senior Courts Costs Office — Master Haworth held in 2013 that costs incurred during the hiatus period could not be recovered from the Commission. In 2011 he had held that Mrs Murphy lacked cost protection during that period.