Davey v Aylesbury Vale District Council

The question before the court is whether, as a matter of law or of practice, an order for costs made in favour of a successful respondent to judicial review proceedings includes costs incurred prior to the grant of permission unless these are expressly excluded.

I can take the material facts directly from the judgment of Wyn Williams J, who on 1 February 2007 concluded that the answer was yes.

The bill of costs, assessed on the standard basis and reduced by 25% because the council had belatedly met one of the grounds, came to a little under £20,000. Almost £3,000 of this was the cost of the dispute about the ambit of the judge’s order. The pre-permission costs in issue (that is to say, excluding the preparation of the council’s acknowledgment of service and grounds of opposition) were the costs of obtaining the advice of junior counsel, a total of £1,090 before discounting, together with part of the solicitor’s costs of preparation.

It follows that the second appeal now before this court by permission of Sir Henry Brooke concerns an issue of principle which far outweighs the amount at issue. In giving permission Sir Henry wrote:

The Practice Statement (Judicial Review: Costs) [2004] 1 WLR 1760 deems the pre-permission costs, if the order is silent on them, to be costs in the case. This will be the norm in cases where permission has been obtained, whether on the papers or on renewal in open court, without opposition. But it is a feature of final costs orders in many judicial review cases that the costs of having unsuccessfully opposed the grant of permission are not to be recovered by the ultimately successful defendant. Here the grant of permission had been vigorously opposed at an oral hearing before Richards J, as he then was. Upon the grant of permission, Mark Lowe QC for the council realistically conceded that the claimant’s costs vis-à-vis the council should be the claimant’s costs in the case; but Richards J preferred to reserve them. The failure of the council’s opposition to the grant of permission was accordingly reflected in the limitation placed by Forbes J upon his eventual costs order.

While therefore Wyn Williams J was right to say that the task of the costs judge was to interpret Forbes J’s order by deciding whether it gave the council 75% of all  its costs save those of the permission hearing, or 75% of its costs following the permission hearing plus (as was conceded) the costs of its acknowledgment of service and grounds of opposition, the question for this court is wider: it is whether an order that a defendant is to recover its costs in judicial review proceedings which have gone to a full hearing embraces all costs reasonably incurred by it before the grant of permission. That is how the costs judge, Master Campbell, approached the case: he described the issue, correctly, as a point of principle.

The master, having considered authorities to which I shall come in a moment and which, as he recognised, do not speak with single voice, concluded that in principle “the costs of a threatened claim are generally irrecoverable but, if a claim is made …, permission is granted … and eventually the claimant loses, then in those circumstances costs may well be recoverable.” The reason for the guarded final phrase (“may well be”) is of course that the court can always adapt its order to particular circumstances; but the sense of the master’s conclusion is that, other things being equal, a costs order in a defendant’s favour following a full hearing includes pre-permission costs. Forbes J had not been asked to deal specifically in his order with the pre-permission costs and did not do so.

On appeal Wyn Williams J noted that it was common ground that in an ordinary civil claim an unqualified costs order would extend to costs reasonably incurred in the run-up to the issue of proceedings. The question was whether the same was the case in judicial review. Having reviewed the decided cases he concluded (§20) that these “suggest strongly that very experienced judges of the Administrative Court have considered it open to them to make orders for costs against unsuccessful applicants which include ‘pre-permission costs’ after a substantive hearing.” Such a conclusion may well be right, but it does not answer the question of principle as to the prima facie meaning of an unqualified costs order. It led the judge, nevertheless, to the view that this was “the most obvious and natural meaning” of Forbes J’s order.

I do not think this was an entirely satisfactory basis on which to resolve an issue of general significance to individuals who bring a public authority to court on arguable grounds. What is needed is a general principle upon which costs awarded to a defendant at the end of a full judicial review proceeding are to be assessed, subject always to qualification in any one case. I entirely understand the judge’s reluctance to decide more than the case before him, but this court can and I think should look at the issue more broadly.

In doing so I will refer to the costs of preparing and serving an acknowledgment of service with grounds of opposition as acknowledgment costs, and to other pre-permission costs incurred by a defendant as preparation costs.

It may be helpful first to recall what Lord Diplock said in the National Federation of the Self-Employed case [1982] AC  617, 643-4:

“…. The whole purpose of requiring that leave should first be obtained to make the application for judicial review would be defeated if the court were to go into the matter in any depth at that stage. If, on a quick perusal of the material then available, the court thinks that it discloses what might on further consideration turn out to be an arguable case in favour of granting to the applicant the relief claimed, it ought, in the exercise of a judicial discretion, to give him leave to apply for that relief. …”

In the same vein, Lord Woolf in his 1989 Hamlyn Lectures, Protection of the Public – a New Challenge, noted that the Justice All Souls Review had argued for the abolition of the leave requirement but said (p.21):

“In practice the requirement, far from being an impediment to the individual litigant, can even be to his advantage since it enables a litigant expeditiously and cheaply to obtain the view of a High Court judge on the merits of his application.”

We have been shown in the course of argument the transcript of a permission application in the Administrative Court [2007] EWHC 2352 (Admin) in the course of which Burton J expressed a preference for the maximum amount of material on a contest at the permission stage. While there may be cases in which it is necessary or helpful to explore issues in depth at this stage, such cases must be quite exceptional. The proper place for a full exploration of evidence and argument is at the hearing of a claim which has been shown at the permission stage to be arguable.

It follows that it ought not ordinarily to be necessary for a public body on which a claim for judicial review is served to do much additional work before completing its acknowledgment of service. In the nature of things it should already know what it has done and why. If on inspection it realises that it has slipped up, it may well not oppose the application. For the rest, its proper course is to explain its decision and any further grounds of opposition in short form and wait to see if, with or without a contested court hearing, permission is granted to challenge it.

The pre-action protocol applicable to judicial review proceedings, which centres on trying to sort out the issue by correspondence, recognises that this process has no bearing where the authority has no power in law to withdraw or modify its decision. Planning decisions may well be in this class. Such cases are therefore likely to proceed directly from a disputed decision to the filing of a judicial review claim form requiring an acknowledgment of service with grounds of opposition.

Planning cases tend also to lie on or near the boundary between private or commercial judicial review and public interest litigation. Many, including the present one, straddle it: they are brought by a personally interested individual, typically a neighbouring landowner or occupier, but raise issues of local or general environmental concern. Insofar as they do so, it is right to bear in mind what this court said in R (Corner House Research) v Secretary of State for Trade and Industry [2005] EWCA Civ 192, 1 WLR 2600, §69-70:

“We are satisfied that there are features of public law litigation which distinguish it from private law civil and family litigation … The important difference here is that there is a public interest in the elucidation of public law by the higher courts in addition to the interests of the individual parties. One should not therefore necessarily expect identical principles to govern the incidence of costs in public law cases …”

In line with the foregoing guidance, at least two rules of practice have developed under the CPR. One is that an unsuccessful applicant for permission must expect to pay the defendant’s costs of putting in an acknowledgment of service. To this extent the effect of the order of Forbes J in the present case is not contentious. The other is that a defendant which chooses to attend and oppose an oral application for permission cannot ordinarily expect to recover its costs of doing so even if permission is refused, but may exceptionally be allowed them – for example where it has been able to alert the court to an abuse of its process. These guidelines were spelt out and explained by this court in R (Mount Cook Land Ltd) v Westminster City Council  [2003] EWCA Civ 1346. In relation to them Auld LJ commented (§77):

“77.

Such an approach seems to me to accord with public policy in providing ready access to the courts by individuals or bodies seeking relief from and/or to draw attention to actual or threatened transgressions of the law by public bodies, whilst, in exceptional cases protecting those bodies and the public that funds them from unnecessary, burdensome and costly substantive litigation. If properly and consistently applied by the courts, I can see nothing about it that would, as Mr. Steel suggested, undermine the fairness and probity of judicial review as a means of control of the administration or run contrary to Article 6.1 of the European Convention of Human Rights, Lord Woolf's Civil Justice Reforms or the adoption of them in this context in the Bowman Report.”

To the sources of policy and law referred to by Auld LJ, Robert McCracken QC for Mr Davey adds what is set out in art. 9 of the Aarhus Convention (ratified by both the UK and the EU):

It is because of the need to keep the costs of environmental litigation down without encouraging or rewarding misconceived challenges that issues such as the present one arise. What we are asked to decide is whether, as a general rule, an order made following a full judicial review hearing that a successful defendant should recover its costs will entitle it not only to its acknowledgment costs but to any reasonably incurred preparation costs. Such a general rule, as James Findlay for the local authority stresses, would do no more than follow the practice in civil litigation; but, for reasons I have outlined, that is not a sufficient justification in public law.

Each side is able to point to an anomaly in the other party’s case. Mr McCracken points out that a claimant who fails to obtain permission will have to pay the defendant’s acknowledgment costs but not its preparation costs. Why then, he asks, should a claimant who has a good enough case to secure permission but who in the end loses be worse off? Mr Findlay points out that a claimant who succeeds at trial will recover all his costs including preparation costs. Why, he asks, should the same not be the case for a successful defendant?

If there is a satisfactory answer to each of these questions, it has to lie in the calibrated exercise of the court’s power – a power which is in effect an obligation - to adapt its provision for costs to the conduct and outcome of the case before it. The method of fine-tuning an award of costs to a defendant who has successfully opposed the grant of permission, set out by this court in Mount Cook (above), illustrates the proper approach. Absent such fine-tuning, the position is as described by Collins J in R (Thurman and Earle) v LB Lewisham  (CO/2806/2003):

“The costs of dealing with a threatened claim are generally irrecoverable, unless a claim is made, gets permission and eventually the claimant loses.”

Taking the same approach, these seem to me to be the appropriate guidelines  for dealing with the present problem. They should be read subject to the caveats set out in the judgment of the Master of the Rolls.

It is apparent from Master Campbell’s judgment on the costs hearing that the claimant’s solicitor, Richard Buxton, who is extremely experienced in environmental litigation and in the judicial review process, argued this aspect of the assessment not on any issues of detail (save as to one specific amount, on which he succeeded) but on the wider question whether the judge’s order, properly interpreted, embraced the council’s preparation costs. For the reasons set out above, I consider that it did. For the same reasons, I consider that it was not satisfactory that an order should have been made, without debate, in this broad form, and that in future such orders should be specific. This in turn means that counsel will need detailed instructions.

The fee paid to junior counsel for settling the acknowledgment of service was accepted by Mr Buxton as part of the acknowledgment costs. The fee paid to leading counsel for advice prior to the permission hearing was disallowed. Whether, had the claimant contested the need in addition to have junior counsel’s advice before and after settling and serving the acknowledgment, at a cost of a further £1,090, the costs judge would have taken the attitude indicated in §14 above, we do not know.

This appeal must therefore be dismissed. It has nevertheless served the valuable purpose of allowing this court to consider and, we hope, regularise a problematical and too often neglected area of practice which can have very substantial financial repercussions.

I agree with both judgments.

I agree that this appeal should be dismissed for the reasons given by Sedley LJ. I add a few words of my own on some of the topics which he has considered.

The order made by Forbes J was that:

“the Claimant do pay 75% of the costs of this claim not to include costs of the permission hearing to be subject to detailed assessment if not agreed and paid by the Claimant to the Defendant's solicitors. "

As I see it, in an order in that form “the costs of the claim” means the “costs of and incidental to” the claim: see section 51(1) of the Supreme Court Act 1981. Those costs can include costs incurred before issue of the proceedings, although, this being an order for assessment on the standard basis, in order to be entitled to payment of any particular item of such costs, the successful party (whether claimant or defendant) must show (as in the case of every other item of costs claimed) that it was reasonably incurred and both proportionate and reasonable in amount: see CPR 44.4(1) and (2).

The order made by Forbes J shows that the court can restrict the costs to be recoverable. In this case he only awarded 75% of the costs and excluded the costs of the permission hearing. He could have excluded pre-issue costs if he had been asked to do so and thought it appropriate to do so.

I entirely agree with the guidelines set out by Sedley LJ at paragraph 21 above. I would however add one note of caution. It does seem to me that costs should ordinarily follow the event and that it is for the claimant who has lost to show that some different approach should be adopted on the facts of a particular case. That principle is supported by the decision and reasoning of Dyson J in R v Lord Chancellorex p Child Poverty Action Group [1999] 1 WLR 347 at 355H-356E. That passage concludes as follows:

“…. In considering whether, and in what circumstances, there should be a departure from the basic rule that costs follow the event in public interest challenge cases, in my view it is important to have in mind the rationale for that basic rule, and that it is for the applicants to show why, exceptionally, there should be a departure from it.”

The basic rule he refers to is, as he explained at page 356C, that costs follow the event in public law cases, as in others, because, where an unsuccessful claim is brought against a public body, it imposes costs on that body which have to be met out of money diverted from the funds available to fulfil its primary public functions.

That said, I agree with Sedley LJ’s second proposition at paragraph 21 above, namely that it will be for the successful defendant to justify preparation costs. That is, however, because (as stated above) he must show that it was reasonable and proportionate to incur such costs. If the claimant wishes to submit that any or all the costs which would be otherwise recoverable should not be recovered, however reasonable and proportionate they were, it is, as I see it, for him to persuade the court to that effect.

I should add that I also agree with Sedley LJ’s third proposition, namely that these questions should be dealt with by the trial judge, leaving to the costs judge only the question whether the individual items are reasonable.

The only other point upon which I wish to comment arises out of a submission made by Mr McCracken on behalf of the appellant to the effect that to permit defendants to recover preparation costs would encourage public authorities to incur costs needlessly at the pre-permission stage. I do not accept that submission. In Ewing v Office of the Deputy Prime Minister [2005] EWCA Civ 1583 Carnwath LJ, with whom Brooke and Dyson LJJ agreed, considered at [40] to [47] what he called ‘Costs under Mount Cook’, where this court considered the position in a case in which the application for permission to claim judicial review failed. Carnwath LJ explained what is meant by a “summary of grounds” at the permission stage. He stressed at [43] that the purpose of the summary is not to provide the basis of full argument of the substantive merits, but rather to assist the judge in deciding whether to grant permission and, if so, on what terms. He added that it should be possible to do what was required without incurring “substantial expense at this stage”.

It seems to me that any defendant who incurs more cost at the permission stage than is contemplated by Carnwath LJ will not be awarded such additional costs at the permission stage if the application is unsuccessful. Moreover, as I see it, the court should at that stage decline to look at anything which goes beyond the “summary of grounds” described in Ewing. In these circumstances, I am not persuaded that the approach we have adopted in this case will give rise to a risk of defendants recovering more expense than is reasonable at the permission stage.