Costs/Damages Set Off Allowed Across “Distinct” High Court/County Court Proceedings

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R (Black) v Secretary of State for Justice (SSJ) involved a judicial review claim (CO/1109/2021) brought by Mr Paul Black, a prisoner at HMP Wymott, against the SSJ in 2021. The claim alleged that the SSJ had acted unlawfully in November 2020 by requiring Mr Black to pay postage for sending a letter to the United States.

In a separate matter, Mr Black commenced a damages claim (J32YJ180) against the Ministry of Justice (MOJ) in Preston County Court in September 2022. This claim alleged that the MOJ had acted unlawfully in February 2022 by destroying a legal letter rather than passing it on.

Chronology of Key Events

• 25 August 2021: In the judicial review claim, HHJ Sephton refused permission and certified the claim as totally without merit. Mr Black was ordered to pay the SSJ’s costs of £2,856 by 4pm on 3 September 2021.
• 23 September 2021: After considering Mr Black’s objections, Judge Sephton confirmed the costs order of £2,856 against Mr Black.
• 29 September 2022: Mr Black commenced the damages claim against the MOJ in Preston County Court.
• 27 April 2023: In the county court claim, DDJ Mitchell allowed the claim and ordered the MOJ to pay Mr Black damages of £150 within 42 days. The MOJ’s advocate orally notified the intention to seek a set-off in the High Court.
• 16 May 2023: The SSJ notified Mr Black by letter of the intention to apply for a set-off.
• 5 June 2023: The SSJ issued an application in the High Court seeking an order to set off the £150 county court damages against the £2,856 High Court costs order.
• 8 June 2023: Judge Sephton granted the SSJ an extension of time/stay of the obligation to pay the £150 damages pending the set-off application.

Issues to be Decided by the Court

The key issue to be decided by the High Court was whether to grant the SSJ’s application for an order permitting the set-off of:

1. The £150 in damages owed by the MOJ to Mr Black under the county court order of 27 April 2023, against
2. The £2,856 in costs owed by Mr Black to the SSJ under the High Court costs order of 23 September 2021.

Parties’ Positions and Arguments

The SSJ, represented by James Williams, argued that:

• The High Court has jurisdiction under CPR 40.13A(6) and s.72 of the County Courts Act 1984 to grant permission for the set-off of judgments/orders between the High Court and county court.
• The applicable test is whether allowing the set-off would be just in all the circumstances, per Fearns v Anglo-Dutch Paint & Chemical Co Limited [2010] EWHC 2366 (Ch).
• It would be just to allow the set-off in this case, as both proceedings related to correspondence issues and involved the same litigant in substance (the prison authorities). It would be unjust to allow Mr Black to insist on payment of the damages while leaving his larger costs liability outstanding.

Mr Black, acting in person, argued that:

• The set-off application should be dismissed as the two claims were separate with insufficient connection.
• The SSJ proceeded in the wrong forum and should have promptly sought the set-off in the county court at the hearing on 27 April 2023.
• The application was not made promptly within the 42-day period specified by the county court.
• There were procedural defects in the SSJ’s application, such as not pleading the relevant rules and late provision of legal authorities.

Decision

Fordham J found that the High Court had jurisdiction, on the SSJ’s application and notice to Mr Black, to grant permission to set off the £2,856 costs order owed by Mr Black and the £150 damages owed to him.

“I am satisfied of three things. First, that I have jurisdiction, on the SSJ’s application to this Court, on notice to Mr Black, to give permission to set-off the sum of £2,856 payable to the SSJ by Mr Black under Judge Sephton’s order, and the sum of £150 payable by the SSJ to Mr Black under Judge Mitchell’s judgment and order. Secondly, that the test I should apply is whether it is just in all the circumstances to give permission for the set-off. Thirdly, that the jurisdiction remains extant, notwithstanding that the judicial review claim was – in one sense – at an end when Judge Sephton refused permission for judicial review and certified the claim as TWM.

“As to the third point, it is familiar that parties may make applications under proceedings where the file has been closed. Examples are applications for permission to obtain documents from the court records; or applications to reopen a decision. Permission to set-off a judgment or order is another such example. Otherwise, permission for set-off could in practice only ever be made to the court who gave the latest judgment or order, and at the time of doing so. That could seriously undermine the utility and effectiveness of set-off. It would be inconsistent with the provisions to which I have referred.” [10]

In ligth of the above he concluded that it would be just to allow the set-off.

“I am also satisfied that it would be just to allow a set-off, so that the £150 damages are taken off the £2,856 costs. The justice of allowing the set-off is, in my judgment, very strong. Yes, these were distinct proceedings in the High Court and in the county court. But both sets of proceedings alleged illegality relating to correspondence. Yes, it is the SSJ who is sued in judicial review proceedings and the MOJ in county court proceedings, but the substance of the position is that this is the same litigant, as is seen by the fact that both cases were about actions of the prison and either act could in principle have been impugned in either court.

“The High Court had made a costs order which has gone unfulfilled by Mr Black. Within a year he had commenced his new proceedings seeking damages from the person to whom he still owed that unmet costs liability. It would in my judgment be unjust if Mr Black were entitled to insist on the payment of the £150 damages to him from the MOJ, while at the same time leaving intact the larger unmet costs liability owed to the SSJ. That is a ‘double standard’. It is having it both ways. It undermines the interests of justice and the public interest. Added to all this is the fact that the SSJ actively pursued the stay, and secured the stay. That means, unlike Mr Black and his costs liability, the SSJ has not been in ongoing default. Non-payment, in the interim period up to this judgment, has been sanctioned by the Court.” [11]