Law Report: Court will grant leave to enforce costs order

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Wraith v Wraith; Court of Appeal (Lady Justice Butler-Sloss, Lord Justice Peter Gibson, Lord Justice Potter) 15 February 1997

Where an order for costs not to be enforced without the leave of the courts (known as a "football pools" order) was obtained as against a legally aided liti-gant and that litigant, as a result of suing his solicitors for negligence in their conduct of the case, subsequently obtained an insurer's indemnity against any costs he might be required to pay in the original action, it would thereafter be proper for the court to grant an application by the successful party for leave to enforce the costs order against him on the ground that his circumstances had changed.

The Court of Appeal allowed the defendants' appeal against the decision of Judge Cooke, sitting as a deputy High Court judge on 15 April 1996, who dismissed their summons for leave to enforce an order for costs against the plaintiff, under regulation 130 of the Civil Legal Aid (General) Regulations 1989 (SI 339), on the ground of a change in his circumstances.

The action arose out of a partnership dispute between two brothers. The plaintiff claimed he was a partner with the defendants. They denied it and the plaintiff, who had legal aid, began proceedings on 22 July 1982.

On 28 August 1991 the action was struck out for want of prosecution. Costs were awarded to the defendants, who were not legally aided. But since the plaintiff was legally aided, the district judge directed that the order for costs be not enforced without further leave of the court.

The plaintiff sued his solicitors for negligence and settled that action on payment to him of pounds 60,000 with costs. He was also indemnified by the Solicitors Indemnity Fund against any costs he might incur should the defendants in the partnership action obtain leave to enforce their costs order.

The defendants' costs in the partnership action were taxed in the sum of pounds 27,864.62 and they sought leave to enforce them on the ground that, because of the indemnity obtained in his action against his solicitors, the plaintiff's circumstances had changed.

Ian Karsten QC (Hague & Dixon, York) for the defendants; Nicholas Davidson QC (Wansbroughs Willey & Hargrave, Leeds) for the plaintiff.

Lady Justice Butler-Sloss said the judge made a typical order for costs not to be enforced without leave of the court. Its effect was to suspend the plaintiff's obligation to payment indefinitely. On an application by the defendant under reg 130 the court might make such order as it thought fit. The court had a wide discretion as to the order that might be made, ranging from refusing any variation to giving the defendant leave to enforce the order in whole or in part.

What were the relevant considerations? The order was originally termed a "football pools" order, a term no doubt coined on the assumption that many legally aided litigants who lost had only a remote prospect of ever achieving a financial situation sufficient to meet the costs of their unsuccessful litigation.

If, however, they did, there seemed no good reason of principle or common sense why they should be treated differently from a formerly impecunious litigant who won a football pool. If he pulled off a business coup, obtained highly paid employment or inherited a small fortune it was likely to be equally appropriate that he met a costs order previously outside, but now within, his means. Nor was there any good reason to exclude from the list of contingencies the settlement of an action (whether or not connected with the litigation in which the costs order was made). Finally, where that settlement carried with it the right to an indemnity against payment of costs under the very order the subject of the other party's application, the case for variation was likely to be overwhelming.

Their Lordships would reject entirely the notion that to make an order for payment in such a case was to grant a windfall to the party whom ex hypothesi the court had earlier decided was entitled to payment of those costs.

It would always be a matter for the judge on the facts of each case before him to consider whether the suspended order should be met in full or in part. The source of the extra funds was not irrelevant and in some cases it might lead the court to leave them out of account: funds donated to ease hardship or meet expenses arising from personal injuries following an unsuccessful action were an obvious example.