Court rejects bid for non-party costs order against claimant’s solicitors

Hayman: Important protection for firms

The High Court has rejected a bid to make a claimant’s solicitors pay the costs of assessment proceedings where the protection of qualified one-way costs shifting (QOCS) is in place.

Mr Justice Freedman upheld the decision of Costs Judge Leonard in finding that, as London firm Bolt Burdon Kemp (BBK) had acted in line with the scheme for conditional fee agreements (CFAs), it could not be held liable for the costs that were owed.

Though the substantive case in The Scout Association v Kemp [2023] EWHC 2575 (KB) settled in 2017 with a payment of £29,500 to the claimant, the costs dispute has been going on since.

BBK refused to accept an offer of costs of £22,500 but, in a series of subsequent hearings in the name of the claimant, failed in its bid for higher costs, leading to costs orders exceeding £40,000 being made against the claimant.

QOCS applied and the defendant said it had no intention of attempting enforcement against the claimant. It instead sought a non-party costs order (NPCO) against BBK on the basis that the sots proceedings were being run for its benefit.

Costs Judge Leonard ruled earlier this year it would not be “just or consistent with established authority” to make such an order, saying that otherwise applications for NPCOs against solicitors acting under a CFA or CFA lite would become commonplace. BBK was acting under a capped CFA similar to a CFA lite.

Upholding this, Freedman J said the “key issue” was whether the solicitor could be described as the or a ‘real party’ to the litigation.

“In the context of an NPCO application, that will usually be determined by reference to whether the solicitor was acting ‘beyond or outside the role of a solicitor’.”

He went on: “A solicitor doing no more than the relevant funding legislation permits will not usually be so acting… The scheme works on the basis that solicitors are not exposed to personal risk by, without more, acting for a client on a CFA or CFA lite basis.

“It is all one arrangement where at the front end, the solicitor provides access to justice by offering legal services and paying disbursements and other charges, and at a later stage, recovering the same through orders for costs in the name of the client.

“Their ability to make the application is an incident of the arrangement with the client which in turn assists with access to justice.”

To have solicitors on risk of being penalised in costs as a starting point “would be to create a burden on the solicitor which might affect a solicitor’s willingness to take on such cases”.

Freedman J added that the fact that BBK stood to benefit financially from the success of the litigation “does not mean that the solicitors have acted in some way beyond or outside their role as a solicitor”.

Sam Hayman, a partner and head of costs at BBK, said: “The decision represents an important protection to such CFA firms and goes some way to ensuring that access to justice is not hindered by fear of NPCOs for solicitors doing no more than conducting claims on behalf seriously injured claimants or victims of sexual abuse, whom my firm represents, under favourable CFA terms.”

A circuit judge in London last week issued a similar ruling over an application for an NPCO against Anexo Group, the listed company that owns the law firm that acted for the claimant in that case.

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