Manolete Partners PLC v White

Factual and Procedural Background

This judgment concerns the application of pro bono costs orders under section 194 of the Legal Services Act 2007. The issue arose following an appeal allowed by the Court of Appeal concerning an order requiring the Appellant to draw down his occupational pension to satisfy a substantial judgment debt owed to Company B. The Court held that the original order was prohibited by the Pensions Act 1995. The Appellant was represented pro bono during the appeal stage by solicitors and counsel arranged through a national pro bono charity. The pro bono legal team seeks an order for payment to the prescribed charity under section 194, while Company B contests the amount and the manner in which such an order should take into account the outstanding judgment debt owed by the Appellant to Company B.

Legal Issues Presented

1. Whether, and how, the court should consider an outstanding judgment debt owed by a successful party represented pro bono when deciding whether to make a pro bono costs order under section 194 of the Legal Services Act 2007.
2. Whether the court may or should order Company B to pay the prescribed charity an amount equivalent to the notional pro bono costs, subject to set off or conditional upon recovery of the judgment debt.
3. The appropriate amount to be ordered under section 194 for payment to the prescribed charity.

Arguments of the Parties

Appellant's Arguments

• The court is not required to replicate any set off against the outstanding judgment debt when making an order under section 194.
• Making the payment conditional on the Appellant’s ability to pay or the creditor’s willingness to enforce the judgment debt would be unjust and defeat the legislative purpose of section 194.
• The order should be unconditional and not subject to set off, reflecting the policy intent to support free legal services broadly.

Company B's Arguments

• The claimed notional costs of £121,920.80 are excessive, citing disproportionate fees and time spent by pro bono lawyers.
• The court must have regard to the outstanding judgment debt and should replicate any set off that would have applied had the representation not been pro bono.
• The proposed order should be conditional, requiring Company B to pay the prescribed charity only if and to the extent that Company B recovers funds from the Appellant on the judgment debt.

Table of Precedents Cited

Court's Reasoning and Analysis

The court clarified that the power to make an order under section 194(3) is discretionary and that the court must have regard to what order it would have made if the party had not been represented pro bono, but this does not impose a requirement to replicate any set off against the judgment debt. The statutory language and scheme imply that an order under section 194 cannot be made against the party who received pro bono representation, but only against a third party who would have been ordered to pay costs to that party. The court rejected the proposal to make the order conditional on the creditor’s enforcement of the judgment debt or the debtor’s ability to pay, reasoning that such conditions would undermine the legislative purpose of section 194, which is to place parties on a more equal footing and to provide funding to support free legal assistance. The court emphasized that Parliament enacted section 194 knowing that most pro bono litigants lack means to pay legal fees, so conditional orders would defeat the statutory aim. The court also noted the practical and evidential difficulties of a detailed costs assessment and the limited interest in such an exercise. Accordingly, the court adopted a broad brush approach and reduced the amount payable to the prescribed charity from the claimed £121,920.80 to £85,000, balancing fairness and policy considerations.

Holding and Implications

Holding: The court granted an unconditional order under section 194 requiring Company B to pay £85,000 to the prescribed charity (the Access to Justice Foundation) in respect of the pro bono representation costs. The court rejected the proposals to condition the payment on enforcement of the judgment debt or to replicate any set off against that debt.

Implications: This decision clarifies that pro bono costs orders under section 194 are discretionary and not bound to mirror conventional costs orders or set off arrangements. It upholds the legislative purpose of supporting free legal assistance by ensuring that payments to the prescribed charity are not undermined by conditionality linked to the financial circumstances of the pro bono party or the creditor’s enforcement decisions. The ruling does not create new legal precedent beyond the statutory interpretation but provides authoritative guidance on the application of section 194 in cases involving outstanding judgment debts.