BC v DE (Rev 1)

Legal costs funding may cover costs already incurred as well as future costs where the underlying proceedings remain ongoing. The court must distinguish those costs from genuinely historic costs arising in concluded proceedings with no further litigation in prospect. A funding order is not a surrogate inter partes costs jurisdiction. The central question is whether, without funding, the applicant could reasonably obtain appropriate legal services and participate on an equal footing. The court should assess fairness between the parties with caution and realism. It need not wait until the solicitor has actually stopped acting, but there must be a clear case that the solicitor is approaching the limit of tolerable unsecured credit.

The mother applied under Schedule 1 of the Children Act 1989 for financial provision for the parties’ child. She also sought funding for outstanding and prospective legal costs incurred in the Schedule 1 proceedings and related section 8 child-arrangements proceedings. The father opposed funding for outstanding costs, while offering a global contribution. Earlier judges had made awards for some prospective costs and, on one occasion, outstanding costs. The issue before the court was whether costs incurred before the determination of the funding application were irrecoverably historic, or whether they could be funded because the related proceedings remained ongoing.

The court ordered the father to pay £212,438.78 towards the mother’s past and future legal bills, payable by instalments. The sum was confined to legal costs funding.

1. Applicable jurisdiction. The court confirmed its power to fund legal costs in both Schedule 1 proceedings and section 8 proceedings, applying the equality-of-arms principle recognised in CF v KM (Financial Provision for Child: Costs of Legal Proceedings) [2011] 1 FLR 208. The jurisdiction is directed to ensuring fair access to legal representation. It is not an inter partes costs jurisdiction or a commercial safety valve.
2. Outstanding costs. The rule in Rubin v Rubin [2014] EWHC 611 (Fam) concerned genuinely historic costs in concluded proceedings where no further litigation was in prospect. It did not directly apply to costs reasonably and legitimately incurred in ongoing proceedings before the funding application was determined. The court therefore distinguished that case. It also accepted the essence of its warning that a clear case is required before historic costs are funded.
3. Solicitor’s position. An applicant need not show that solicitors have actually stopped acting, or will do so immediately. That requirement could disadvantage solicitors who continue acting for the client. The evidence must nevertheless show that the solicitors are approaching the end of their tolerance for carrying significant unsecured debt.
4. Assessment. The court applied a judicious mixture of caution and realism. It found that the mother had a proper case, could not reasonably obtain funding elsewhere, and would suffer material disadvantage from significant unpaid costs. A 15% deduction was made across the claims to reflect a broad notional standard-basis assessment, having regard to CPR 44.3(2)(a), CPR 44.3(2)(b) and PD 44.6.2.