Manolete Partners PLC v Ian Russell White

An order under section 194 of the Legal Services Act 2007 is discretionary. The court must consider the costs order it would have made without pro bono representation, but need not replicate that order or any associated set-off.

The discretion must reflect the statutory purposes of placing privately funded and pro bono parties on a more equal litigation footing and funding free legal assistance. A condition which makes payment to the prescribed charity dependent on recovery from the pro bono litigant may defeat those purposes. The court may instead order an unconditional payment and determine its amount by a cautious broad-brush assessment where detailed assessment would be disproportionate or impractical.

The appellant successfully challenged High Court orders reported at [2023] EWHC 567 (Ch) and [2023] EWHC 1350 (Ch), which had required him to exercise rights over his occupational pension to reduce a judgment debt exceeding £1 million. The Court of Appeal allowed his substantive appeal in [2024] EWCA Civ 1418.

This supplemental judgment determined the costs consequences. Conventional costs incurred below and when filing the appeal were agreed to be payable by the respondent and set off against the judgment debt. The disputed issue concerned the period during which the appellant was represented free of charge. His lawyers sought an order under section 194 of the Legal Services Act 2007 requiring payment of notional costs to the Access to Justice Foundation.

The central question was whether that payment should be unconditional or should reflect the set-off likely to have been ordered had the appellant paid for his representation.

1. Disposition. An unconditional order was made requiring the respondent to pay £85,000 to the Access to Justice Foundation under section 194 of the Legal Services Act 2007. Snowden LJ gave the leading judgment. Green LJ and Asplin LJ agreed.

2. The power under section 194(3) is discretionary. Section 194(4) requires the court to have regard to the order it would have made if the representation had not been free. It does not require an order which corresponds exactly, or as closely as possible, to the conventional costs order. The set-off which would probably have been ordered was itself discretionary under section 51 of the Senior Courts Act 1981 and directed towards a just result.

3. An order under section 194 is distinct from a conventional costs order under section 51 and CPR Part 44. It does not conform to the indemnity principle. The discretion must therefore account both for conventional costs principles and for section 194's legislative purposes: placing privately funded and pro bono parties on a more equal litigation footing, and generating funds for organisations which provide free legal help.

4. The structure of section 194(4)(a) implicitly prevents an order under section 194 from being made against the party represented free of charge. A proposal requiring that party to pay the charity, coupled with a corresponding reduction in the judgment debt, was therefore impermissible.

5. The alternative proposal, under which the respondent would pay the charity only from sums recovered on the judgment debt, was rejected. It made payment dependent on the respondent's willingness to enforce and on the impecunious appellant's ability to pay. Its uncertainty and likely practical effect were inconsistent with the statutory purposes. Parliament could not have intended payments routinely to depend on pro bono litigants finding money equivalent to legal fees they could not afford.

6. A detailed assessment was inappropriate because the appeal lasted one day, the sum was not unusually large in commercial litigation, and neither the appellant nor realistically his pro bono team or the charity had an interest in participating. A cautious broad-brush assessment reduced the claimed notional costs of about £122,000 to £85,000.

7. The respondent was also ordered to pay the appellant's conventional costs below and the costs associated with filing the appeal, subject to assessment or agreement and set-off against the judgment debt. A payment on account of £30,000 was ordered in respect of the costs below.

1. Court of Appeal (Civil Division): In [2024] EWCA Civ 1558, the court made an unconditional order for payment of £85,000 to the Access to Justice Foundation and determined the remaining conventional costs consequences.

2. Court of Appeal (Civil Division): In [2024] EWCA Civ 1418, the court allowed the appellant's substantive appeal, holding that the pension-related order was prohibited by section 91(2) of the Pensions Act 1995.

3. Court of Appeal (Civil Division): At an earlier hearing reported at [2024] EWCA Civ 356, the appeal was adjourned to enable the unrepresented appellant to seek pro bono representation.

4. High Court: By decisions reported at [2023] EWHC 567 (Ch) and [2023] EWHC 1350 (Ch), HHJ Hodge KC ordered the appellant to exercise such rights as he had to draw down his occupational pension fund so that the proceeds could reduce the judgment debt.