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Hill v Bailey, Chancery Division, 25 November 2003

10 December 2003
The issues

Costs – Legal Aid – Set Off – Community Legal Services Regulations

The facts

The Defendant was sued by the Claimant who was an assisted person. The Claimant had commenced an action against the Defendant who was his Partner in a firm of Solicitors. Both sides were partially successful with regard to costs. The Taxing Master certified that the parties’ costs should be set off against each other and that the balance due should be certified. Both sides appealed unsuccessfully against the Order. The Claimant proceeded to have his costs taxed both as between the parties and as between himself and the Legal Aid Board. The Defendant did not lodge his Bill for Taxation because he took the view that the costs payable to him were likely to substantially exceed the sums he owed the Claimant and the Claimant did not have the funds to pay any balance due to the Defendant so it was a waste of resources. Instead he wrote a letter to the Legal Aid Board at the London area office inviting them to take no further proceedings against him on the grounds that it would be unjust. Four years later he received a Statutory Demand requiring payment of the amount due. The Defendant applied to the Croydon County Court to set aside the Statutory Demand. His Application was dismissed and subsequently the Judge dismissed the Defendant’s Appeal.

Meanwhile the Defendant applied for a Detailed Assessment of his costs. The Master had taken the view that Section 11 of The Access to Justice Act 1999 and the Community Legal Services (Legal Service) Costs Regulations 2000 applied and that the Defendant could not proceed under the ordinary Detailed Assessment Rules.

The decision

1. The position under the CPR remains the same as it was before 1999, namely that whilst an assisted person remains protected against the making of enforceable orders for payment of costs, that protection is not available in respect of orders for costs to be used as a shield or set off and that therefore the principals in Lockley -v- National Blood Transfusion Service, remain good law.

2. In this situation, the Defendant only sought an Assessment to take advantage of the right of set off and had indeed offered the Court an undertaking not otherwise to seek or enforce any right to the sum assessed. In these circumstances, Section 11 of the 1999 Act, and its attendant 6-year limitation period, did not apply to Detailed Assessment sought by the Defendant against the Claimant even though the Claimant was an assisted person.

Appeal allowed.

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