Order for costs — Legally aided litigants — Funds from proceeds of sale of house — Whether order to be enforced — Whether funds part of defendants’ disposable income — First instance order making defendants pay costs — Appeal against order dismissed
In 1982, the plaintiff and the first defendant, who were brothers, purchased 56 Oak Farm Close, Walmley, Sutton Coldfield, for £23,500. They were assisted by a mortgage for £22,080. Although the property was owned mortgage for £22,080. Although the property was owned jointly, it was occupied by the defendant, his wife and family. In 1986 the defendants became registered proprietors of the property by transfer seemingly signed by the plaintiff. In 1994 at first instance, the judge made a declaration in the plaintiff’s favour and ordered a rectification of the register. Both parties were legally aided and the defendants were ordered to pay the plaintiff’s taxed costs but that that order should not be enforced without leave. The judge refused to order that the property be sold. In 1994, the defendants attempted to purchase the plaintiff’s half-share in the property but the plaintiff made it clear that any arrangement for the purchase should include provision for his costs which amounted to £28,000 after the trial.
The defendants placed the property on the market and the parties agreed that it should be sold for £63,500. The plaintiff sought his costs against the proceeds of sale of the property. The defendants argued that they intended to use the half-share of the proceeds of sale to buy a new house and thus, by analogy with the exemption in section 17 of the Legal Aid Act 1988, the sum received should be exempt from any order for costs. The hearing was adjourned and when the application came back before the judge, the defendants had arranged a mortgage for their proposed new house so that it was possible for them to purchase it without the half-share of the proceeds of sale of 56 Oak Farm Close. The judge ordered that the plaintiff was entitled to enforce his order for costs limited to the half-share of the proceeds of sale. The defendants appealed.
Held The appeal was dismissed.
1. The issue raised in the present appeal was an important matter of practice to be reviewed by the appeal court.
2. The judge had properly concluded that he had jurisdiction when assessing liability of the defendants.
3. He then went on to consider whether as a matter of discretion such an order ought to be made.
4. The defendants argued that in making the order, the judge paid insufficient weight to the fact that the proceeds of sale came from the defendants’ dwelling-house and that their share was going to be used to purchase another house at a price that they could just afford.
5. However, each case depended upon the particular facts. By the time of the second hearing, the judge had been told that the defendants had obtained a mortgage and were able to purchase a new house without the need of the half-share of the proceeds of sale. Thus that sum could properly be taken as a capital asset which was not needed to buy a dwelling-house.
6. The judge had to decide whether it was reasonable that the money should be applied to pay the costs of the action which the defendants had lost or be used by them to better their standard of living. In those circumstances he made the appropriate order.
David Stockhill (instructed by Willcox Lane Clutterbuck, of Birmingham) appeared for the defendant appellants; James Corbett (instructed by Willson Hawley & Co) appeared for the plaintiff respondent.
