Neutral Citation Number: [2009] EWHC 90151 (Costs)
Case No: 08.A.1709
IN THE HIGH COURT OF JUSTICE
HIGH COURT COSTS OFFICE

Clifford’s Inn, Fetter Lane
London, EC4A 1DQ

Date: 19/11/2009

Before:

Master Haworth
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Between:

	(1) Lois Austin 
(2)Geoffrey Saxby	Claimants/
Respondents	
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	Commissioner of Police of the Metropolis	Defendant/
Applicant	
	- and -		
	Legal Services Commission	3rd Respondent	

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Mr M James (instructed by Commissioner of Police of the Metropolis) for the Defendant/Applicant
Mr M F Otwal (instructed by The Legal Services Commission) for the 3rd Respondent/Defendant

Hearing dates: 11/8/2009
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Judgment

Master Haworth:
Introduction 

1.	This is an application for an order that there is “good reason” (within Regulation 5(3)(b) of the Community Legal Service (Cost Protection) Regulations 2000) for delay in commencing proceedings against the Legal Services Commission “LSC”.  
Chronology 
 19 October 2007 Judgment of the Court of Appeal handed down.
 9 November 2007 Solicitors acting on behalf of the Claimants apply for public funding to appeal to the House of Lords.  Judicial Office of the House of Lords grants an extension of time to lodge the petition until one month after the determination of the application.
 31 December 1007 Solicitors acting on behalf of the Defendant correspond with the Claimant’s solicitors to confirm that no bill of costs has been drafted pending the outcome of the application for public funding. They state “we trust that you agree this is appropriate and assume that you will take no point on delay”.  No response received from the Claimant’s solicitors.
 1 February 2008 Defendant’s solicitor writes to the Claimant’s solicitors seeking confirmation as to the determination of the public funding application.
 12 February 2008 Claimant’s solicitors reply confirming funding granted to the First Claimant on 7 February 2008.
 18 February 2008 Claimant’s solicitors confirm by telephone that Second Claimant has abandoned his appeal to the House of Lords.
 14 March 2008 Defendant’s solicitors confirm to the Claimant’s solicitors that a costs draftsman has been instructed to prepare a bill of costs in respect of the Defendant’s costs in the Court of Appeal to be claimed against the LSC.
 17 March 2008 Claimant’s solicitors state in correspondence that this course of action is premature in respect of the second Claimant as the Court of Appeal proceedings were joint with the first Claimant.
 20 April 2008 Defendant’s solicitors correspond with the LSC setting out in full the reasons for delay and putting the LSC on notice that the Defendant would be seeking a costs order against it in respect of half the Defendant’s costs incurred in the Court of Appeal.  They also state that a formal request will be made to the court for a hearing once the bill of costs is received from the costs draftsman and invite observations.
 7 April 2008 Further correspondence between Defendant’s and Claimant’s solicitors.
 1 May 2008 Application notice issued.
 2 May 2008 Directions order made. 
 27 May 2008 Directions order amended.
 1 August 2008 LSC files and serves points of dispute.
 20 August 2008 Defendant files replies.
Facts 
2.	It was common ground between the parties that any costs to be paid by the Second Claimant be assessed at nil.
3.	The points of dispute set out the LSC’s submissions with regard to this application as follows:
“Timing of the application
The Commission challenges the Respondent’s right to an order in this case because of the Respondent’s failure to comply with Costs Practice Directions paragraphs 23.4 and 23.14 by failing to submit the appropriate documents in relation to their application for an order for costs against the Commission under section 11 of the Access to Justice Act 1999.
The Court of Appeal order is dated 19 October 2007.  The appropriate documents were not served on the Regional Director until 17 April 2008.
The Respondent has failed to explain and provide good reason for failing to comply with direction within three months of the order CLS (Costs Protection) (Amendment 2) Regulations 2001 (SI 2001/312).
For persuasive authority the Commission will rely on Yenula Properties Limited –v- Venkat Mun Suami Naidu Case no. 02/700 and in particular points 40 and 53 on the issue of  “good reason”.”
4.	In reply the Defendants stated in their Replies:
“General point 4
Timing of the application
The reasons for the timing of the application are substantively set out in the application (copy grounds attached).  The Applicant particularly refers to the fact of the delay by Mr Saxby’s solicitors in informing the Applicant of his decision to abandon his claim.  As soon as this was confirmed the procedure was undertaken expeditiously.”
 
5.	It was common ground that the Second Claimant, had made an application for funded services on 27 July 2001 and the First Claimant, on 5 March 2002.  On 15 October 2007 the Court of Appeal ordered the First and Second Claimants to pay the Defendant’s costs, the amount to be determined by a costs judge.  Such costs to be subject to detailed assessment if not agreed.  The court further ordered that the costs of the First and Second Claimants be assessed in accordance with the Community Legal Service (Costs) Regulations 2000.  Furthermore the Claimant’s application to petition the House of Lords was refused.
6.	The Community Legal Service (Costs) Regulations 2000 (as amended) and the Community Legal Service (Cost Protection) Regulations 2000 provide a three-month period for the Defendant in this case to request a hearing to be listed to determine the Court of Appeal costs payable to the Defendant by the Claimants and as a consequence the liability of the LSC to pay such costs.  The trigger date for the three-month period was the 15 January 2008.  The request for a hearing was made by application dated 17 April 2008 and it was common ground that it was over three months out of time.  
7.	In support of their application that there was good reason for the delay in requesting a hearing the Defendants relied on the following evidence:
A letter from solicitors acting on behalf of the Claimants dated 9 November 2007 which stated:
“We write to confirm that we have applied for legal aid to appeal to the House of Lords the Court of Appeal decision in the above case and the Judicial Office of the House of Lords has extended time to lodge the Petition of Appeal to one month after the final determination of the application.”
On 31 December 2007 the Defendant wrote to the Claimant’s solicitors in the following terms:
“I refer to your letter dated 9 November 2007.  Please note that we have not at this point prepared a bill in relation to our costs as we are waiting to see if the House of Lords gives permission to appeal.  We trust that you agree that this is appropriate and assume that you will take no point on delay.”
8.	On 1 February 2008,the Defendants wrote seeking an update of the position.
9.	On 12 February 2008 the Claimant’s solicitors wrote to the Defendants advising them public funding had been granted to the First Claimant dated 7 February 2008 to lodge a petition to the House of Lords.  On 18 February 2008 they wrote to the Defendants to advise them that:
“…Geoffrey Saxby will be abandoning his claim and shall not be lodging an appeal with the House of Lords.  We can confirm however that Lois Austin has received public funding and shall be lodging a petition to the House of Lords.”
10.	In response the Defendants wrote to the Claimant’s solicitors on 14 March 2008 as follows:
“Given that Mr Saxby has now abandoned his claim, I am instructing a costs draftsman to prepare a bill.  I will be asking for an order that the Legal Services Commission pays the Defendant’s costs in the Court of Appeal.”
11.	On 17 March 2008 the Claimant’s solicitors wrote to the Defendants stating:
“.......As no more costs have been incurred because the Court of Appeal action being joint rather than on behalf of one person we believe it is surely premature to be drawing up a bill of costs.”
12.	On 4 April 2008 the Defendant’s wrote to the Regional Director of the LSC setting out the background to the matter including the Claimant’s solicitors’ response dated 17 March 2008 in the following terms:
“I have considered this carefully and must respectfully disagree with them.  Mr Saxby’s claim stands dismissed whatever happens in respect of Ms Austin’s appeal to the House of Lords.  The Defendant had an order for costs in his favour.  As the matters were heard together it would be unrealistic to try to split the Respondent’s costs into those specifically incurred in defending the claim of Mr Saxby and those incurred in defending the claim of Ms Austin and I believe that the appropriate way forward is to seek half the Respondent’s costs in the Court of Appeal.
Accordingly I now formally put the Legal Services Commission on notice that I will be applying for a costs order against it in respect of half the Respondent’s costs in the Court of Appeal and I intend to request a hearing in accordance with regulation 10 of the Community Legal Service (Costs) Regulations 2000 as soon as I receive the bill from the costs draftsman.
I do appreciate that there is a three-month time limit from the date of the costs order within which to request a hearing under regulation 5(3)(b) of the Community Legal Service (Cost Protection) Regulations 2000 and that this date has passed.  However the regulation provides for “good reason for the delay”.  I consider that the delay in the Respondent being informed of the abandonment of Mr Saxby’s appeal until 18 February 2008 and issues raised by the Claimant’s solicitors would constitute a “good reason” and that the court would exercise its discretion in favour of the Respondent in the circumstances.”
13.	On 7 April 2008 the Defendants wrote to the Claimant’s solicitors stating:
“..........I agree that in principle it would be unrealistic to try to separate out the costs incurred by the Respondent into those specifically incurred in defending the claim of Mr Saxby and those incurred in defending the claim of Ms Austin in the Court of Appeal.  However Mr Saxby’s claim stands dismissed whatever happens in respect of Ms Austin’s appeal to the House of Lords.  The Defendant has an order for costs in his favour.
Given that I will be applying for an order that the Legal Services Commission (LSC) pay the Respondent’s costs in the Court of Appeal in respect of Mr Saxby’s claim under the Community Legal Service (Costs) Regulations 2000 and Community Legal Service (Cost Protection) Regulations 2000, it would be wrong to postpone consideration of this by the LSC especially when the regulation contains strict time limits for so doing.  It would not be sufficiently good reason for the delay under regulation 5(3)(b) of the Community Legal Service (Cost Protection) Regulations 2000 to await the outcome of Ms Austin’s appeal to the House of Lords.  Accordingly I believe that the appropriate way forward is to seek half the Respondent’s costs in the Court of Appeal at this stage.”
The Law
14.	The law ordering the LSC to pay the costs of a non-funded party in respect of funded proceedings, is governed by the Access to Justice Act 1999 section 11, which states:
“11 Costs in funded cases
(1)	Except in prescribed circumstances, costs ordered against an individual in relation to any proceedings or part of proceedings funded for him shall not exceed the amount (if any) which is a reasonable one for him to pay having regard to all the circumstances including –
(a) the financial resources of all the parties to the proceedings, and
(b) their conduct in connection with the dispute to which the proceedings relate;
and for this purpose proceedings, or a part of proceedings, are funded for an individual if services relating to the proceedings or part are funded for him by the Commission as part of the Community Legal Service.
(2)	In assessing for the purposes of subsection (1) the financial resources of an individual for whom services are funded by the Commission as part of the Community Legal Service, his clothes and household furniture and the tools and implements of his trade shall not be taken into account, except so far as may be prescribed.
(3)	Subject to subsections (1) and (2), regulations may make provision about costs in relation to proceedings in which services are funded by the Commission for any of the parties as part of the Community Legal Service.
(4)	The regulations may, in particular, make provision –
(a) specifying the principles to be applied in determining the amount of any costs which may be awarded against a party for whom services are funded by the Commission as part of the Community Legal Service.
(b) limiting the circumstances in which, or extent to which, an order for costs may be enforced against such a party,
(c) as to the cases in which, and extent to which, such a party may be required to give security for costs and the manner in which this is to be given.
(d) requiring the payment by the Commission of the whole or part of any costs incurred by a party for whom services are not funded by the Commission as part of the Community Legal Service.
(e) specifying the principles to be applied in determining the amount of any costs which may be awarded to a party for whom services are so funded.
(f) requiring the payment to the Commission, or the person or body by which the services were provided, of the whole or part of any sum awarded by way of costs to such a party.
(g) as to the court, tribunal or other person by whom the amount of any costs is to be determined and the extent to which any determination of that amount is to be final.”
15.	The regulations referred to in section 11(1)(3) are:
The Community Legal Service (Cost) Regulations 2000 (S.I. 2000 No. 441) where the following regulations are applicable:
“9(2) If the court considers that it would have made a costs order against the client, but that it would not have specified the amount to be paid under it, the court shall, when making the section 11(1) costs order:
(a) specify the amount (if any) that the client is to pay under that order if, but only if:
i) it considers that it has sufficient information before it to decide what amount is, in that case, a reasonable amount for the client to pay, in accordance with section 11(1) of the Act; and
ii) it is satisfied that, if it were to determine the full costs at that time, they would exceed the amount referred to in sub-paragraph (i);
(b) otherwise, it shall not specify the amount the client is to pay under the costs order.
9(5) The amount (if any) to be paid by the client under an order made under paragraph (2)(b) or paragraph (3)(b), and any application for a costs order against the Commission, shall be determined in accordance with regulation 10, and at any such determination following an order made under paragraph (2)(b), the amount of the full costs shall also be assessed.
10(2) The receiving party may, within three months after a section 11(1) costs order is made, request a hearing to determine the costs payable to him.
10(3) A request under paragraph (2) shall be accompanied by:
(a) if the section 11(1) costs order does not state the full costs, the receiving party’s bill of costs, which shall comply with any requirements of relevant rules of court relating to the form and content of a bill of costs where the court is assessing a party’s costs;
(b) [unless the conditions set out in paragraph (3A) are satisfied, a statement of resources; and]
(c) if the receiving party is seeking, or, subject to the determination of the amount to be paid under the section 11(1) costs order, may seek, a costs order against the Commission, written notice to that effect.
10(4) The receiving party shall file the documents referred to in paragraph (3) with the court and at the same time serve copies of them:
(a) on the client, if a determination of costs payable under section 11(1) of the Act is sought; and
(b) on the Director, if notice has been given under paragraph (3)(c).”
16.	The Community Legal Service (Cost Protection) Regulations 2000 (S.I. 2000 No. 824) apply and the following provisions are relevant:
“2. Interpretation
(1)… “funded proceedings” means proceedings (including prospective proceedings) in relation to which the client receives funded services or, as the case may be, that part of proceedings during which the client receives funded services;
“funded services” means services which are provided directly for a client and funded for that client by the Commission as part of the Community Legal Service under sections 4 to 11 of the Act;
5. Costs order against Commission
 (1) The following paragraphs of this regulation apply where:
(a) funded services are provided to a client in relation to proceedings;
(b) those proceedings are finally decided in favour of a non-funded party; and
(c) cost protection applies.
(2) The court may, subject to the following paragraphs of this regulation, make an order for the payment by the Commission to the non-funded party of the whole or any part of the costs incurred by him in the proceedings (other than any costs that the client is required to pay under a section 11(1) costs order).
(3) An order under paragraph (2) may only be made if all the conditions set out in sub-paragraphs (a), (b), (c) and (d) are satisfied:
(a) a section 11(1) costs order is made against the client in the proceedings, and the amount (if any) which the client is required to pay under that costs order is less than the amount of the full costs;
(b) [unless there is a good reason for the delay,] the non-funded party makes a request under regulation 10(2) of the Community Legal Service (Costs) Regulations 2000 within three months of the making of the section 11(1) costs order;
(c) as regards costs incurred in a court of first instance, the proceedings were instituted by the client and the court is satisfied that the non-funded party will suffer financial hardship unless the order is made; and
(d) in any case, the court is satisfied that it is just and equitable in the circumstances that provision for the costs should be made out of public funds.
7. Effect of these Regulations
(1) No order to pay costs in favour of a non-funded party shall be made against the Commission in respect of funded proceedings except in accordance with these Regulations, and any costs to be paid under such an order shall be paid out of the Community Legal Service Fund.”
17.	By virtue of rule 44.17 CPR the application of costs rules introduced by the Civil Procedure Act do not apply to the assessment of costs in proceedings to the extent that section 11 of the Access to Justice Act 1999 and the provisions made under that Act make different provision.  However, the Cost Practice Direction at sections 21 to 23 set out the procedure to be followed where a party is wholly or partially funded by the LSC.
Preliminary issue
18.	The applicability of the Community Legal Service (Cost) Regulations 2000 (Cost Regulations) 
19.	The words “unless there is good reason for the delay” in regulation 5(3)(b) of the Community Legal Service (Cost Protection) Regulations 2000 was inserted by the Community Legal Service (Cost Protection Amendment No. 2) Regulations 2001 No:3812 Regulation 4(1). In addition Regulation 3 states as follows:
“These regulations shall apply to applications for funded services made on or at 3 December 2001 and applications made before that date shall be treated as if these regulations had not been made.”
Accordingly, prior to the amendment of the 200 Cost Protection Regulations, the time limit of three months for requesting a determination of costs payable by the LSC was mandatory.  In R –v- Secretary of State for the Home Office ex parte Gunn [2001] EWCA 891 Phillips MR at paragraph 31 of the judgment said:
“…(ii) The receiving party may at the same time seek a costs order against the Commission (regulation 10(3)(c)).  We wish to take this opportunity to emphasise a fact that we understand is not generally appreciated. The time limit for seeking an order against the Commission is mandatory – there is no power to extend it.”
20.	Mr Otwal for the LSC argued that as the application for funded services was made by the Second Claimant on 27 July 2001, the 2000 Cost Protection Regulations applied unamended and as such the discretion afforded to me by the Amendment No. 2 Regulations did not apply.  He relied on the dicta of Phillips MR in Gunn. The three-month time limit was mandatory and as such the Defendant in this case fell foul of the regulation and as such no costs could be awarded against the LSC.
21.	Mr James, for the Defendant, submitted that this was a novel argument which had not been pleaded in the Points of Dispute.  He had not been made aware of the date of the Second Claimant’s application for public funding until shortly before the commencement of this hearing.  He argued that the LSC were not entitled to raise the point at this late stage. The date of the Second Claimant’s application for public funding was entirely within the knowledge of the LSC and consequently this argument could not have been anticipated.  He asserted that I should deal with the matter on the basis of the LSC’s pleaded case and by analogy the Cost Protection Amendment No. 2 Regulations 2001, which gave me a discretion in cases where there was “good reason for the delay”.  
Jurisdictional issue: 
22.	On behalf of the Defendant, Mr James submitted that Yenula Properties Limited –v- Venkat Mun Swami Naidu [2003] EWHC 9009 (Costs), Master Campbell, was wrongly decided. As an alternative argument Mr James sought to distinguish the decision in Yenula where, at paragraph 49 of his judgment, Master Campbell said:
“49. As I have said in paragraph 18, the Amendment No. 2 Regulations apply to “applications for funded services” made on or after 3 December 2001.  If that means an application by the client for legal aid the amendment would not assist Yenula because it is common ground that Mr Naidu made his application before 1 April 2000.  In my judgment, to avail herself of the amendment Miss Windsor must demonstrate that these words refer to the timing of the successful unassisted party’s application for determination of its costs payable by the LSC and not to the assisted person’s application for legal aid.
 50. I am not persuaded that Miss Windsor’s interpretation of the amended regulations is correct.  I agree with Mr Gimlette that if it was intended that that should be the meaning, the amended regulations would have said so.  Regulation 2 of the CLS Costs Regulations defines “funded services” as services provided directly for a client and funded by the LSC.  If “funded services” was to mean something different in the amended Cost Protection Regulations than in the CLS Costs Regulations, in my opinion the draftsman of the amended regulations would have made that clear in terms.  In my judgment, “applications for funded services” means simply applications by clients for legal aid.
 51. Moreover, for the amendments to have the meaning contended for by Miss Windsor I would have expected the explanatory note in the Amendment No. 2 Regulations to have said so but it does not.  I have reached this view for the following reasons.  In respect of cases litigated from 5 June 2000 onwards it is the date of the application for legal aid that is crucial.  For applications signed before 1 April 2000 and received by the LSC by 1 May 2000, section 18 of the Statute governs the law and regulation 2–13 of the CLS Costs Regulations are the procedures that apply: for applications signed on 1 April 2000 thereafter it is the Cost Protection Regulations (given effect by section 11(3) of the Act) that govern the law and the CLS Costs Regulations the procedures. To my mind it would be illogical and inconsistent with what had gone before if, in respect of applications made on or after 3 December 2001, the trigger was the date the receiving party applied for a determination of his costs payable by the LSC rather than the date the client applied for legal aid.   Had such a volte face been intended I consider the explanatory note would have made this clear, but I have said it does not.”
23.	Mr James adopted the arguments put forward by Miss Windsor in Yenula and set out by Master Campbell at paragraph 22 of his judgment wherein, firstly the reference to “applications for funded services” in regulation 3 of the Cost Protection Amendment No. 2 Regulations was a reference to applications by the receiving party, namely the Defendant in this case. Secondly that the reference to “funded proceedings” referred to in regulation 2(1) of the Cost Protection Regulations 2000 was a reference in this case to the proceedings before the Court of Appeal. It was common ground that the Second Claimant’s application for funded services for his appeal to the Court of Appeal would have been made later than 3 December 2001 and therefore subject to the test of the “good reason for delay” provisions of the Cost Protection Amendment No. 2 Regulations.  
24.	In support of his submission that “applications for funded services” was a reference to applications by a receiving party, Mr James argued that the overall fairness of the case dictated so.  In particular, he submitted that the receiving party (in this case, the Defendant) could have no knowledge of the date that an application is made by a party to the proceedings and therefore would have no knowledge that he could fall foul of the 2000 Cost Protection Regulations (unamended).  He argued that the Cost Protection Amendment No. 2 Regulations were enacted to remedy the defect in Gunn and to move the focus to the date the application was made by the receiving party.  Further, he argued, the reference in section 11(4)(d) of the Courts and Legal Services Act 1990 to: 
“requiring the payment by the Commission of the whole or part of any costs incurred by a party for whom services are not funded by the Commission as part of the Community Legal Service”
supported his argument that “applications for funded services” could not be construed as an “application for funds” i.e. funding from the LSC.  In other words, the reference to “applications” in regulation 3 of the Cost Protection Amendment No. 2 Regulations is a reference to applications made by receiving parties for payment of their costs by the LSC on or after 3 December 2001 and not to applications by a party for funded services.  Any other attempt to make sense of the Regulations was to construe the words “applications for funded services” narrowly and would result in a construction which made no sense of regulation 5 of the Cost Protection Amendment No. 2 Regulations.
25.	Similarly, in relation to the words in regulation 2(1) of the Cost Protection Regulations 2000 to “funded proceedings”, defined as 
“means proceedings (including prospective proceedings) in relation to which the client receives funded services, or, as the case may be, that part of proceedings during which the client receives funded services;”
can only be a reference to the proceedings in the Court of Appeal and the word “proceedings” in regulation 5(1)(a) and regulation 5(2) and regulation 5(4) of the Cost Protection Regulations 2000 is a reference to the Court of Appeal proceedings and therefore supported the argument that “applications for funded services” referred to in paragraph 3 of the Cost Protection Amendment No. 2 Regulations meant applications by the successful unassisted party for costs against the LSC.
26.	Mr Otwal, on behalf of the LSC, submitted that the Defendant was seeking to add words to regulation 3 of the Cost Protection Amendment No.2 Regulations 2001 and that the words of the regulation are clear and should be given their normal and literal meaning. The starting point for interpreting the Regulations are the words themselves.  The Cost Protection Regulations 2000 clearly draw a distinction between “ funded proceedings” and “funded services” at regulation 2(1) and it therefore follows from those Regulations that regulation 3 in the Cost Protection Amendment No. 2 Regulations is a reference to applications by “the client” and not by the receiving party and that as such Master Campbell was right when he said in Yenula at paragraph 55:
“As to Miss Windsor’s alternative case that the “application for funded services” under regulation 3 of the No. 2 Amendment should be construed as including all applications for extensions to the certificate, I reject that argument too.  In my judgment, the reference to “application” means the application for legal aid since once that application is granted it does not matter how many successful or unsuccessful applications are subsequently made for extensions, because cost protection by then will already be in place.  I consider that it is the original application which is critical and not the dates upon which applications for extensions are made.”
27.	In relation to the issue of fairness, Mr Otwal argued that the purpose of the Regulations need not trouble me.  The Regulations are not intended to deprive a party of costs.  They are not unfair provided that the application under the unamended 2000 Regulations was made within three months.  He argued that Yenula was decided on similar facts and should be followed.  
Good reason for delay
28.	The Defendant submitted that as recently as October 2008 the LSC had not sought to take any point about delay.  I was referred to correspondence from the LSC, namely letters dated 12 September 2008 and 7 October 2008 wherein it was sought to argue that the LSC would not take issue regarding delay on the basis that (a) it would be potentially futile to determine the issue of the Second Claimant’s costs whilst the First Claimant’s appeal to the House of Lords was under consideration because the Court of Appeal decision may have been reversed, and (b) the issue of apportionment was not an easy one to resolve until Ms Austin’s appeal to the House of Lords had been determined.  It was also submitted that:
1)	It was not known that the Second Claimant was abandoning his appeal to the House of Lords until 18 February 2008.
2)	The Defendant had informed the Claimants’ solicitors that no bill had been drafted by the end of 2008 and “assumed” that the Claimants’ solicitors would not take any point on delay.
3)	On any view this was a difficult and substantial case and in all the circumstances these amounted to “good reasons”.
29.	Mr Otwal, for the LSC, contended that the only evidence relied on by the Defendant was that contained in part C of their application notice which simply lists a chronology of events and asserts good reason for the delay.  He argued that the reason advanced for the delay was that the Defendant was awaiting notification of the Claimants’ intentions in relation to an appeal from the decision of the Court of Appeal.  There was no suggestion that the Defendant was at any time unaware of the requirement to request a hearing within three months. The LSC’s case is that a conscious decision was taken not to request a hearing within three months.  
Findings
30.	I will deal with each of the issues in turn.
31.	In relation to the preliminary argument as to the application of the Community Legal Service (Cost Protection) Regulations 2000 (unamended), I accept that the Defendant could not anticipate the argument put forward by the LSC because it was not pleaded by them in the Points of Dispute. However, the plain fact of the matter is that the Second Claimant’s application for funded services was made on 27 July 2001 prior to the transitional date referred to in regulation 3 of the Cost Protection Amendment No. 2 Regulations, namely 3 December 2001.  I have to apply the correct regulations applicable in these proceedings and to this application.  In that regard I prefer the submissions of Mr Otwal to those of Mr James. In my judgment, the applicable regulations are the Cost Protection Regulations 2000 (unamended). As such, the three-month period referred to in regulation  5(3)(b) is mandatory in accordance with the decision in Gunn with which I am bound and as such I have no discretion even where there is good reason for the delay.  It follows that in those circumstances the Defendant’s application, which was not made until 15 April 2008 some thirteen weeks out of time, must fail.  As a consequence, the application is dismissed.
32.	If I am wrong in that regard, I turn to consider the submissions made by Mr James that Master Campbell was wrong in deciding the case of Yenula and that the Defendant can bring itself within the Cost Protection Regulations as amended on the basis that the words “application for funded services” referred to in regulation 3 of the Cost Protection Amendment No. 2 Regulations is not defined. Therefore following the logic of the submissions made by Miss Williams in Yenula, the reference to “applications” in paragraph 3 of the Cost Protection Amendment No. 2 Regulations is a reference to applications made by receiving parties for payment of costs by the LSC on or after 3 December 2001 and not to applications by a client for funded services.  I reject the submissions of Mr James in that regard, preferring those of Mr Otwal and adopt the reasoning of Master Campbell in Yenula, particularly at paragraphs 49, 50 and 51 of his judgment.  
33.	I am not persuaded that his alternative submission with regard to “funded proceedings” as defined by the Cost Protection Regulations 2000 relates to proceedings before the Court of Appeal. There is a distinction in the Regulations between “funded proceedings” and “funded services”.  In my judgment and following the judgment of Master Campbell in Yenula, regulation 3 of the Cost Protection Amendment No. 2 Regulations is a reference to applications for funded services by “the client” and is not meant to be a reference to applications for funded services by the receiving party or the Defendant in this case.  In my judgment, the reference to “application” within regulation 3 of the Cost Protection Amendment No. 2 Regulations, when construed with the definitions of “funded services” and “funded proceedings” in regulation 2 of the Cost Protection Regulations 2000, means that the only logical conclusion is that an “application” is a reference to an application by a potential assisted party for financial assistance from the LSC.  In my judgment, it is stretching the bounds of statutory interpretation too far to construe that reference to “applications” is a reference to applications by the receiving party, the Defendant in this case.
34.	If I am mistaken and the amended regulation 5(3)(b) in the Costs Protection Regulations 2000 does apply, it is necessary for me to decide whether the reasons advanced by the Defendant are “good reasons” for the delay.  As to the meaning of “good reason”, although each case will turn on its own particular facts, the words mean what they say.  The burden is upon the Defendant to establish a good reason for delay.  I was referred to the case of Gavin Kay –v- London Borough of Lambeth, a decision of Master Rogers, where at paragraph 51 he said:
“Mr Carpenter accepted that there is no definition of “good reason” in the Amendment Regulations but submitted that there must be something more than mere physical impossibility which at least in the past has been suggested as being the only ground upon which the three-month period could be extended.”
In this case the principal reason for the Defendant to delay in requesting a hearing date is contained in the letter from the Defendant’s solicitors to the LSC on 4 April 2008 when they state:
“I consider that the delay in the Respondent being informed of the abandonment of Mr Saxby’s appeal until 18 February 2008 would constitute a good reason.”
Likewise in their Replies to the Points of Dispute at general point 4, they stated:
“The fact of the delay by Mr Saxby’s solicitors in informing the applicant of his decision to abandon his claim.  As soon as this was confirmed the procedure was undertaken expeditiously.”
In my judgment, the only reason advanced for the delay is that the Defendant was awaiting notification as of the Claimants’ intention to appeal to the House of Lords against the decision of the Court of Appeal.  There is no suggestion that the Defendant was at any time unaware of the requirement to request a hearing within three months.  It was the Defendant’s conscious decision not to request a hearing within three months.  It is clear from the correspondence that by 9 November 2007 the Defendant had chosen not to prepare a bill of costs, having been informed that the Claimants intended to apply for public funding for an appeal to the House of Lords.  
35.	At 31 December 2007 the Defendant was clearly aware of the requirement to request a hearing date within three months of the section 11 costs order and was writing to the Claimants’ solicitors requesting confirmation that it was not intending to prepare a bill of costs pending the outcome of the application for public funding and as a result they required confirmation that no point on delay would be taken by the Claimants.  In my judgment, this is significant in that no doubt the request for the Claimants not to take a point on delay was specifically made in an attempt to avoid the Defendant falling foul of the requirement to request a hearing date within three months of the Court of Appeal order.  The Claimants’ solicitors had not replied to the Defendant’s letter of 31 December when the three-month period expired.  Furthermore, neither had they agreed not to take a point on delay. It was only after subsequent correspondence on 4 April 2008 did the Defendant inform the LSC for the first time that one half of the costs of the Court of Appeal would be sought from it and a request for a hearing would be made as soon as the bill of costs was received from their costs draftsman.  
36.	I reject the argument put forward by the Defendant that to have prepared a bill of costs in this matter would have been premature on the basis that had the House of Lords reversed the Court of Appeal decision, in respect of the First Claimant’s appeal all the costs thereby incurred in relation to the application would have been wasted.  I reject the submission on the part of the Defendant that in this case a conscious decision was taken to avoid incurring costs and that as a consequence, this must amount to a good reason.  
37.	The Defendant’s solicitors were aware of the three-month period.  They chose to ignore it when an application could have been made to the court and thereafter the proceedings stayed pending the resolution of the appeal to the House of Lords.  Instead, they sought to delay in making their application and in my judgment they have not provided a “good reason” for the delay and in the circumstances I reject their submissions in this regard.  
38.	In the circumstances and for the reasons given I dismiss the Defendant’s application.  It follows that the Defendant must pay the costs of the Legal Services Commission of and incidental to this application.  In the event that costs cannot be agreed, I order detailed assessment.