County Court Costs Issue Question

[InNeedOfHelpP]

Hello all

I'm after some advice on a costs issue please.

If a costs order is made against 'A' in the County Court in favour of 'B', but 'B' never paid their solicitors fees and went bankrupt are these costs still enforcable?

It would seem wrong that 'B' should be able to enforce them as they would be profiting from this but there is still an order in place against 'A' so just wondered if anyone could help me as to whether 'B' can apply can enforce or not please.

Many thanks in advance.
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[R0b]

Can't see any reason why A should be able to wriggle out of paying costs just because B may have been declared bankrupt, since it doesn't detract from the fact that a costs order has been made by the court therefore ought to be enforceable against A.

Nothing I can find that suggests A doesn't need to pay a costs order where the other side is bankrupt. If A takes issue with it, then A should have appealed the order.

[InNeedOfHelpP]

Can't see any reason why A should be able to wriggle out of paying costs just because B may have been declared bankrupt, since it doesn't detract from the fact that a costs order has been made by the court therefore ought to be enforceable against A.

Nothing I can find that suggests A doesn't need to pay a costs order where the other side is bankrupt. If A takes issue with it, then A should have appealed the order.

Thank you for your reply Rob.

I'm not sure the term 'wriggle out' is appropriate however I understand where you are coming from. Perhaps I should have been clearer, 'B' was made bankrupt after refusing to pay their solicitors fees (the same fees that A was ordered to pay to B). These are fairly substantial costs (c.£5k) and it does seem very strange & a little perverse that B would be allowed to go bankrupt, wait until that is lifted and then come after A for the costs order for fees he never paid thereby profiting from the costs order, which I am sure is not meant to happen.

Of course had B paid the solicitors then gone bankrupt for some other debt then I would not even be asking the question, although there may be a question whether that money should have gone into the bankruptcy vut that is a whole other ball park!*

Also A does not take issue with the costs order, just what has happened since as above.*

[R0b]

Perhaps it isn't the best term I've used but I initially read it as perhaps A not wanting to pay B costs simply because be has been declared bankrupt. Of course if A doesn't take issue with the order, then A should just pay up.

However, it's not clear why A has been ordered to pay B costs nor is it clear the background to all of this and for general purposes, for a costs order to be made, you either have to lose your case (or defence) or your conduct has not been up to the standard that the court expects. I can't fathom how B doesn't pay solicitor fees, is then made bankrupt but then A has to be B a costs order, can you explain that?

I'm not 100% sure (but pretty confident), however any costs order is likely to be treated like a breach of contract claim, the time limit for enforcement will be 6 years from the date the order was made.

[InNeedOfHelpP]

*I can't fathom how B doesn't pay solicitor fees, is then made bankrupt but then A has to be B a costs order, can you explain that?

Thank you again for taking the time to reply R0b, it is much appreciated.*

So the order it happened was costs order made against A in favour of B. The following year B's solicitors applied succesfully for bankruptcy as B did not pay their fees. 2 years later and B is discharged from the bankruptcy, now B is claiming the costs against A even though B had never paid them fees/costs as they are the debt that made him bankrupt.*
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[R0b]

The starting point is that court orders are seen as a means of finality and, unless one wishes to appeal and re-argue the issues, the courts do not generally interfere with an order.

What you are alluding to may fall within the CPR 3.1(7): "A power of the court under these Rules to make an order includes a power to vary or revoke the order."

Whilst the above provision allows a court to revoke an order, it is likely to be exercised sparingly because of the general rule. For example, The Court of Appeal in Tibbles v SIG Plc (link here) had this to say:

Para. 39

In my judgment, this jurisprudence permits the following conclusions to be drawn:

(i) ... The rule is apparently broad and unfettered, but considerations of finality, the undesirability of allowing litigants to have two bites at the cherry, and the need to avoid undermining the concept of appeal, all push towards a principled curtailment of an otherwise apparently open discretion.
...
(vii) The cases considered above suggest that the successful invocation of the rule is rare. Exceptional is a dangerous and sometimes misleading word: however, such is the interest of justice in the finality of a court's orders that it ought normally to take something out of the ordinary to lead to variation or revocation of an order, especially in the absence of a change of circumstances in an interlocutory situation.

Having said that, in a High Court case following Tibbles, Lloyds Investment (Scandanavia) v Ager-Hanssen provided clear guidance and suggested CPR 3.1(7) could be invoked where there has been a material change of circumstances since the order was made. That was approved in a later Court of Appeal case, Collier v Williams.

It sounds plausible to argue that there has been a material change of circumstances as B was made bankrupt. However, the court might want to inquire as to whether the failure to pay those costs were brought about because A did not pay the costs order, in which case the court may have some sympathy towards B. Equally, knowledge and conduct may also come into play and A might need to explain when A became aware of B's bankruptcy and why A not at that point make an application to revoke the order rather than two years on. Of course, let's not lose sight of the purpose of a costs order which is not to punish the other side but to compensate the successful party for any reasonably incurred costs as a result of bringing/defending the case. So if B was bankrupt at the time and those costs were discharged, then it may be seen as an unjust enrichment.

In summary, A is likely going to have to make an application to the court for the order to be revoked or otherwise under some other provision of the CPR I am not aware of. Otherwise, the order remains enforceable against A and B has every right to pursue it despite what A might think.

[InNeedOfHelpP]

Thank you R0b for your detailed and well reasoned answers, and of course for you time it is very much appreciated.**