29 June 2022

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Mr Justice Poole said circuit judge applied the wrong test in deciding that council should pay both incurred and prospective costs

Peterborough: Council successfully appeals order

The High Court has overturned a non-party costs order made against a local authority in private family law proceedings, describing it as “an impermissible device designed to provide a public source of funding for the parties' legal costs”.

In Peterborough City Council v K, L, M, N and P & Ors [2022] EWFC 61, Mr Justice Poole found that His Honour Judge Tolson QC had applied the wrong test in making the order – which unusually covered both incurred and prospective costs – against Peterborough City Council.

In his ruling, HHJ Tolson made plain his view that the council should have issued public law proceedings, which would have meant the mother of the four children involved, as well as her adult daughter and her partner, would have qualified for public funding. He noted that the children's guardian supported the application for a non-party costs order.

The judge said: “[The mother] has lost the care of her children as a result of local authority – state – intervention. The state must ensure a fair trial for her. She has not obtained and apparently does not qualify for legal aid. I do not see how in current circumstances any trial could be fair to her unless she has an opportunity to be represented – as the system within care proceedings would provide for her.”

Poole J set out 12-point guidance for non-party costs orders in private family proceedings concerning the welfare of children and held that HHJ Tolson had erred in law in the test he applied. The circuit judge failed to direct himself that a non-party costs order should only be made if it was just to do so in all the circumstances.

Further, he did not consider that, if the exceptional circumstances relied upon the justify making a non-costs order were the culpable conduct of the non-party, “the non-party should have been guilty of reprehensible behaviour or unreasonable conduct within the proceedings”.

As a result, the judge did not address whether the council’s conduct was reprehensible or unreasonable, only whether it could be criticised, and if it was not reprehensible or unreasonable, whether the conduct was otherwise exceptional.

While the judge was entitled to consider that the council ought to have issued public law proceedings, the council was “likewise entitled to make its decision [not to] and it has not been suggested that it was an unlawful decision”, said Poole J.

That could not properly be regarded, in itself, as reprehensible or unreasonable and could not, without more, constitute exceptional circumstances. The council had not acted in bad faith or misled the parties or the court either.

Poole J held that the grounds the judge relied upon to make the order fell “well short” of justifying a finding that the council’s behaviour was reprehensible or unreasonable, and further failed to consider matters relevant to the question of whether in all the circumstances it was just to make the non-party costs order.

For example, in relation to “the causal link between the conduct of the local authority and the costs impact on the parties”, the judge did not consider that the impact was due to funding arrangements determined by Parliament, not the council.

Poole J was also critical of the inclusion of all prospective costs in the order. “The judge could have had no idea what the future costs of the private law proceedings would be – would proceedings resolve with agreement or be robustly contested and protracted, what expert evidence might be required, how many hearings would be needed? There was no estimate of future costs…

“With respect to the judge, he should have stepped back and considered whether the order was just in all the circumstances. Had he done so he could not reasonably have exercised his discretion to make such a draconian and far-reaching costs order.”

It was apparent from the judgment as a whole, Poole J continued, that the costs order made was “designed to provide the applicants and respondent mother with funding for legal advice and representation to which they had no entitlement under the laws enacted by Parliament”.

“In conclusion, the judge applied the wrong legal test, proceeded on a factual basis that he was not entitled to assume, disregarded relevant circumstances, and exceeded the permissible parameters of his discretion.

“The non-party costs order was an impermissible device designed to provide a public source of funding for the parties' legal costs in private family law proceedings. For those reasons I allow the appeal and set aside the non-party costs order in its entirety.”

Sarah Duxbury, (instructed by the appellant's legal department) for the appellant. The first and second respondents in person. The third to fifth respondents not appearing. Ian Martignetti (instructed by the Children's Guardian) for the sixth to ninth respondents.