The Scout Association v Bolt Burdon Kemp

A solicitor acting under a lawful conditional fee arrangement does not ordinarily become a real party to litigation merely because the solicitor funds the case, controls costs applications, or will receive the benefit of recovered costs. The relevant question is whether the solicitor acted beyond or outside the ordinary role of a solicitor. Seeking recovery of profit costs, disbursements or a success fee in the client’s name is generally an incident of the retainer and promotes access to justice. A non-party costs order requires something more, such as improper or unreasonable conduct, an additional financial benefit, or control beyond that ordinarily exercised by a solicitor. An appellate court will rarely interfere with a first-instance discretionary costs decision unless there is a recognised error or the decision is plainly wrong.

The Scout Association appealed against a decision of Costs Judge Leonard refusing to make a non-party costs order against Bolt Burdon Kemp. The firm represented a personal injury claimant under a capped conditional fee agreement. After the claim settled, the firm pursued several unsuccessful applications and appeals seeking costs exceeding the Association’s offer. Because the claimant had QOCS protection and a cap limiting the claimant’s liability to the firm, the Association argued that the firm was the real party to the costs proceedings and should pay the Association’s costs under section 51(3) of the Senior Courts Act 1981.

The central issues were the proper test for making a non-party costs order against a solicitor acting under a conditional fee arrangement, the relevance of QOCS and the solicitor’s financial interest, and whether the Costs Judge’s discretionary decision was plainly wrong.

1. Appeal dismissed. The Costs Judge had not misdirected himself, failed to consider relevant matters, taken irrelevant matters into account, or reached a plainly wrong conclusion.
2. The jurisdiction to make a non-party costs order arises under section 51 of the Senior Courts Act 1981. The ultimate question is whether, in all the circumstances, it is just to make the order. The concepts of a real party and a solicitor acting beyond or outside the ordinary role of a solicitor must be considered in context.
3. A solicitor who acts under a lawful CFA or CFA lite arrangement, funds disbursements, and seeks to recover costs in the client’s name is ordinarily acting within the solicitor’s proper role. The solicitor’s expected financial benefit from the retainer does not, without more, make the solicitor a real party or justify an NPCO.
4. Myatt v National Coal Board (No 2) was to be read in its factual context, where the enforceability of the CFAs was in issue and the solicitors were acting substantially for their own benefit. Later authority, especially Flatman v Germany, confirmed that funding disbursements or providing services under a lawful CFA does not, without more, expose the solicitor to an adverse costs order.
5. The fact that the claimant’s capped liability made the costs applications financially significant principally to the solicitors, or that there were several unsuccessful applications, did not alter the analysis. The CFA arrangement was a single arrangement directed to facilitating access to justice. The absence of an application under CPR 44.11 also meant there was no finding of improper or unreasonable conduct.
6. Causation is an important element of an NPCO application, but it was unnecessary to determine that issue because the solicitor was not otherwise liable to an NPCO. The QOCS regime and its later amendment did not justify retrospectively imposing liability on solicitors for pre-amendment claims.

• High Court (King’s Bench Division): appeal from the decision of Costs Judge Leonard in the Senior Courts Costs Office dismissed. The refusal to make a non-party costs order was upheld.
• Senior Courts Costs Office: Costs Judge Leonard refused the application for a non-party costs order against Bolt Burdon Kemp.