AN & Ors v Poole Borough Council

A Lockley set-off order may permit a defendant’s recoverable interlocutory costs to be set off against damages or costs payable to claimants. The extent of the set-off must reflect the costs fairly attributable to the particular claimants and claims concerned. It is unjust to expose claimants to the whole of a costs liability arising substantially from another party’s claim. The court may therefore apportion the costs for set-off purposes, while leaving the underlying costs liability unchanged.

The claimants and their mother had pursued related claims against the defendant. Following a costs hearing before Master Eastman, the mother remained liable for the costs of her claim, while the order concerning the children’s claims was set aside. At a later hearing, the defendant sought inclusion of a Lockley order in the draft order and claimed entitlement to set off 75% of the costs incurred before Master Eastman against sums recoverable by the children.

The issue was the proper proportion of those costs which could fairly be set off against the children’s damages or costs.

1. The court applied the principle in Lockley v National Blood Transfusion Service [1992] 1 WLR 492. There was no dispute that a set-off order should be made. The dispute concerned the extent of the set-off.

2. The costs order made by Master Eastman left the mother liable for the costs of her claim. The children had pursued that claim with her, but had also pursued a separate claim. Their exposure to set-off therefore had to reflect their fair share of the costs, rather than the whole of the 75% liability attributed to the proceedings before the Master.

3. It would not meet the justice of the case to permit the defendant to set off all of those costs against sums due to the children. Balancing the importance of the claims, the court ordered that the set-off against sums due to the children should apply to 40% of the 75% costs of the hearing before Master Eastman. This did not alter the parties’ underlying liability for those costs.

4. The defendant was ordered to pay one half of the children’s costs of correspondence after the hearing concerning the drawing of the order. Payment was to be made within 28 days of the seal date. Counsel were directed to draft an order removing the mother’s name from paragraph 1 and re-dating the draft.

The judgment records an appeal number but determines outstanding issues concerning costs and the drawing of an order following the costs hearing before Master Eastman. No citation for the decision under appeal is stated.