Judge accuses council of "serious dereliction" of duty of disclosure in costs dispute

A High Court judge has accused Leeds City Council of a “serious dereliction” of its duty of disclosure in a dispute with the Legal Services Commission over the costs incurred by the local authority in defending a housing case in the House of Lords.

On 11 May 2006 the House of Lords had made an order for costs after the council successfully defended Mr Price’s claim.

In Leeds City Council v Price & Ors [2011] EWHC 849, the council contended that it could rely on a certificate from the Clerk and Taxing Officer of the Judicial Office of the House of Lords issued on 15 February 2007 and an order that Judge Behrens had made in the High Court on 16 October 2009.

The 15 February 2007 certificate purported to tax the costs in the sum of just over £84,000. Under the order of 16 October 2009, the order of 11 May 2006 was made an order of the High Court.

The LSC, however, argued that the 16 October 2009 order should never have been made. The Commission claimed that the council had failed to comply with the relevant procedure with the result that the LSC had no notice of the application for costs against it. It also claimed that the certificate was not a determination that it should pay Leeds CC’s costs.

Judge Behrens has now concluded that:

• The 11 May 2006 was not an order under regulation 5(2) of the Community Legal Service (Costs Protection) Regulations 2000 requiring the LSC to pay the council’s costs
• The 15 February 2007 certificate was also not an order under regulation 5(2) requiring the LSC to pay the council’s costs
• The first paragraph of the order of 16 October 2009 did not impose any liability on the LSC because the order of 11 May 2006 imposed no such liability
• Paragraph 2 of the 16 October 2009 order, which imposed an enforceable liability on the LSC, was “plainly wrong”. As the order of 11 May 2006 imposed no liability on the LSC there was no basis for any order for costs against the LSC, the judge said
• The order of 16 October 2009 was “obtained as a result of a without notice application which did not contain full and frank disclosure by the council of the dispute between the council and the LSC”.

The judge added: “Even though there has clearly been some delay since October 2009 in my view the appropriate order is to set aside the order in its entirety.”

Judge Behrens accused Leeds CC of a serious dereliction of its duty of disclosure in not informing him at the time he made the 16 October 2009 order of the dispute as to the enforceability of the 11 May 2006 order.

“This was a ‘without notice’ application,” he said. “In those circumstances the council, as applicant, came under a duty of full and frank disclosure. It is, to my mind, obvious that that duty meant that the dispute between the parties should have been drawn to my attention when making the application.”

A Legal Services Commission spokesperson said: "We are pleased that the Court supported our position with regard to this matter."

A spokesman for Leeds City Council said: “We are aware of this decision and are seeking permission to lodge an appeal. At this stage, it would be inappropriate to comment further.”