Buglife - The Invertebrate Conservation Trust, R (on the application of) v Thurrock Thames Gateway Development Corp (Rev 1)

There are two matters before the court, each raised by the claimant. They both raise questions which relate to the granting of protective costs orders (‘PCOs’) in judicial review proceedings which raise environmental issues. The first is an application for permission to appeal out of time against that part of a PCO made by Sullivan J on 7 November 2007 in which he limited the amount of costs which the claimant could recover if it succeeded on the substantive claim for judicial review. In fact the claimant lost because its claim was dismissed by Mitting J on 22 February 2008. The claimant has now obtained permission to appeal against that dismissal from Laws LJ. The purpose of the proposed appeal against the order of Sullivan J is to enable the claimant to recover more than £10,000 in respect of its proceedings at first instance if its appeal against Mitting J’s order succeeds. The second matter is an application for a PCO to protect the claimant against its liability for costs of the appeal if it loses the appeal. The respondent says that no such order should be made or, in the alternative, that a reciprocal order should be made as was done by Sullivan J.

The claimant is called Buglife – The Invertebrate Conservation Trust (‘Buglife’). It is a small invertebrate charity set up in 2002 with the aim of halting extinctions and achieving sustainable populations of invertebrates through direct conservation work, education, raising awareness and lobbying. Its annual unrestricted income is less than £100,000. It challenges by way of judicial review the decision of the respondent, Thurrock Thames Gateway Development Corporation, to grant planning permission for a distribution hub at a site in West Thurrock. The projected sales revenue from the development for the Interested Party, Rosemound Developments Limited (‘the developer’) was some £28.5 million and the cost of holding the site is in the region of £100,000 a month.

Buglife’s case in short is this. The site is one of the three most important sites in Britain for rare and endangered invertebrates and hosts a nationally important population of over 900 invertebrate species. The proposed development would destroy about 50% of invertebrate habitats at the site overall and about 70% of the herb-rich grassland which provides a crucial foraging area for many insects. There is a high probability of two national, 17 regional and 37 local invertebrate extinctions if the development goes ahead.

The application for permission to apply for judicial review was refused by the President of the Lands Tribunal, Mr George Bartlett QC, on 25 July 2007. He gave short reasons for his conclusions. Buglife renewed the application and the developer applied for expedition on the ground that the delay was causing it substantial loss. The application was considered on paper by Sullivan J, who decided that there should be expedition, and on 7 November 2007 directed that there should be a ‘rolled up’ hearing at which both the application for permission and, if permission was granted, the application for judicial review should be heard before a planning judge on 22 February 2008, with a time estimate of one day.

Sullivan J also considered an application by Buglife that it should be protected by a PCO against liability for the respondent’s costs if it lost. Buglife set out its reasons for the grant of a PCO in its claim form and the respondent gave reasons why an order should not be made in its summary grounds for contesting the claim. In his order of 7 November the judge ordered that there be an upper limit of £10,000 on “the total amount of costs recoverable by/from [Buglife] in these proceedings up to and including the ‘rolled up’ hearing”. He gave reasons for limiting the amount payable by Buglife if it lost but gave no reasons for limiting the amount payable to Buglife if it won. In fact, no application had been made for an order limiting the amount payable to Buglife. It thus appears that the judge simply thought that such an order would be just.

On 14 December 2007 Buglife’s solicitors wrote to the court, with copies to the other parties, asking the court to reconsider the order limiting Buglife’s recovery of costs to £10,000, either on the basis of written submissions or orally. The letter added that in the latter case the most convenient and cost-effective course would probably be for the matter to be reconsidered at the ‘rolled up’ hearing. The letter gave reasons for the suggested reconsideration and described the funding arrangements. They were that both solicitors and counsel would represent Buglife on a conditional fee agreement (‘CFA’), although it had agreed to meet the costs of solicitors and counsel before the CFA was made up to a maximum of £10,000 plus VAT. The letter concluded by asking that the cap on Buglife’s recovery of costs be removed or, alternatively, that the cap should be varied to £70,000 plus VAT so as to allow for a total of £35,000 and an uplift of 100%. It was suggested that the solicitors were not at liberty to disclose the amount of the uplift but that, for cost-capping purposes, it should be taken as 100%.

The respondent wrote two letters addressed to the court. Each was dated 20 December, although the one relating to the CPO was not sent until 27 December. The letter referred to an earlier decision of Collins J in which he had made a PCO in favour of the claimants in the sum of £10,000 and directed “as a reciprocal measure … that the claimants’ reasonable costs be limited to £20,000”. The letter stated that the respondent was a public body funded by taxation and that its budget was to be spent in the public interest and not otherwise. It complained that, on Buglife’s case, if the respondent lost it would have to pay its own professional fees at a market rate, the claimant’s professional fees at a market rate and an unrevealed success fee to Buglife’s lawyers, whereas if the respondent won it would still have to pay its own fees but only recover £10,000. The letter added that Sullivan J’s order should be upheld and concluded by saying that, if the court proposed to depart from the order, the respondent requested the opportunity to argue the matter out at a hearing.

Neither side sought an oral hearing of the PCO issue or issues before the ‘rolled up’ hearing which came before Mitting J on 22 February 2008. In Buglife’s skeleton argument for that hearing it was simply stated at paragraph 47 under the heading PCO that there was an outstanding issue relating to the PCO about which the parties were agreed that there needed to be further submissions to the court. It concluded:

For its part, the respondent referred in paragraph 3 of its skeleton argument to the fact that there was an argument by which Buglife sought to avoid responsibility for costs. It added that this issue was dealt with in a schedule but that the court might find it convenient to deal with the issue of judicial review and then, possibly through written submissions, deal with any residual questions of costs. The respondent’s submissions in the schedule dealt only with the question whether Buglife should have the benefit of a PCO at all. It submitted that it should not.

In the event the judicial review argument lasted all day on 22 February and Mitting J delivered judgment orally late in the afternoon. He refused Buglife’s application for judicial review. We have a transcript of the post-judgment discussion. Mr Straker QC applied for costs but he expressly accepted that they were capped and he did not challenge the cap. He told us that he had taken instructions and that his instructions were not to pursue the argument advanced in the schedule. The judge accordingly made an order that Buglife pay costs limited to £10,000 subject to a detailed assessment and subject to a stay pending a possible appeal, although he himself refused permission to appeal. The judge also refused the developer’s application for costs. Buglife having lost, the question whether its costs should be capped did not arise and was not further addressed.

Buglife renewed its application to this court for permission to appeal. Laws LJ considered it on paper on 22 May 2008. In granting permission he said:

The hearing of the substantive appeal is fixed for 18 November 2008 with an estimated length of 1½ days. The hearing of the PCO applications contemplated by Laws LJ has come before us. There are three of us because it seemed to us that the applications should be heard by three LJJ. Buglife seeks two orders. The first is an order extending the costs protection granted by Sullivan J to the proceedings in this court, so that the total amount of costs payable by Buglife if the appeal fails is £10,000. If that application succeeds, Buglife will be exposed to no liability for costs in this court because it has already been ordered to pay the capped amount of £10,000 by the judge. The second order sought is an order, by way of appeal from the decision of Sullivan J, varying the PCO made by him so as to remove the reciprocal costs cap of £10,000 on any costs recoverable by Buglife if the appeal succeeds. If both the application for permission to appeal and the appeal succeed, the respondent’s liability to Buglife for costs will be unlimited both here and below.

Before considering these specific applications, it is we think appropriate to consider the relevant legal principles and the correct procedural approach to PCOs in the light of the authorities. The authorities focus on two distinct aspects of PCOs, namely the relevant principles for granting a PCO and the appropriate process at first instance and in this court. We will consider them in turn.

The leading case is R (CornerHouse Research) v Secretary of State for Trade and Industry [2005] EWCA Civ 192, [2005] 1 WLR 2600. After considering the state of the authorities as at that date, Lord Phillips CJ, giving the judgment of the court which also comprised Brooke and Tuckey LJJ, summarised the position at [74] to [76]:

We would therefore restate the governing principles in these terms:

In the later case of R (Compton) v Wiltshire Primary Care Trust [2008] EWCA Civ 749 this court, comprising Waller, Buxton and Smith LJJ, returned to the relevant principles. At [10] Waller LJ quoted the principles set out in [74] of Corner House. At [18] he referred to the Report of a Working Group on Public Interest Litigation which was chaired by Maurice Kay LJ and comprised representatives from PLP, public law claimants and their representatives, senior representatives from the Department of Constitutional Affairs, and (in a personal capacity) a member of the staff of the Treasury Solicitor. Waller LJ noted that the Group was agreed that to be suitable for a PCO a case must be a “public interest case”, but found it difficult to define what sort of case fell within the definition a “public interest case” and what did not. Ultimately the Group concluded as follows:

Waller LJ further noted that the court was also shown a Report from a Working Group on Access to Environmental Justice, which was chaired by Sullivan J and published on 9 May 2008 (‘the 2008 Report’). That was of course after the decision of Sullivan J in this case. As Waller LJ observed, the main concern of the 2008 Report was with the question whether the current approach of the courts in relation to costs was compliant with the UNECE Aarhus Convention, which is concerned with access to justice in environmental matters. Its conclusion was that it is not. Waller LJ quoted from Appendix 3 of the 2008 Report, to which we too were referred, where the ‘exceptionality test’ was addressed in these terms:

At [20] Waller LJ expressed the opinion that there should be no difference in principle between the approach to PCOs in cases which raise environmental issues and the approach in cases which raise other serious issues and vice versa. At [21] Waller LJ expressed the view that the two tests of general public importance on the one hand and the public interest in the issue being resolved on the other were difficult to separate. We agree. The court was there considering a rather different problem from that here: see eg at [23]. However, Waller LJ said that the paragraphs in Corner House quoted above are not to be read as statutory provisions or in an over-restricted way and approved the flexible approach of Lloyd Jones J in R (Bullmore) v West Hertfordshire Hospitals NHS Trust[2007] EWHC 1350 (Admin).

Although those statements were made in a somewhat different context, they appear to us to be of general application. Thus Waller LJ held at [24] that there is no principle of exceptionality which imposes additional criteria to those set out in Corner House at [74] and that the issue whether the cases raises matters of general public importance is a question of degree and one “which Corner House would expect judges to be able to resolve”. Throughout his judgment Waller LJ makes it clear that the question is essentially one for the judge.

Buxton LJ and Smith LJ both concluded that the principles stated in Corner House are binding on this court. We agree. As we read Smith LJ’s judgment, she essentially agreed with Waller LJ, while Buxton LJ, who dissented, took a different and somewhat narrower view of the public interest and of what can amount to general public importance. It follows that the correct approach is for us to follow Corner House as explained by Waller LJ and Smith LJ.

Smith LJ summarised the position as she saw it at [87]:

The cases have also focused on the question whether, where a PCO is made in favour of the claimant, it may also be appropriate to make an order capping the liability of the defendant to pay the claimant’s costs if the claimant wins. In both Corner House and Compton the court recognised that, in a case where it was making a PCO in favour of a claimant, the answer might well be yes. Thus at [76 (ii)] the court in Corner House said:

Similarly in Compton Smith LJ said at [86]:

That approach shows that all depends upon the circumstances, which are very wide. However, Mr Fordham submits that we should not follow the approach described in Corner House and Compton, so far as capping the defendant’s liability for the claimant’s costs is concerned. He draws our attention to paragraphs 3 to 5 of Appendix 3 of the 2008 Report under the heading “Tightened King cap”, which is, of course, a reference to Musa King v Telegraph Group Ltd (Practice Note) [2004] EWCA Civ 613, [2005] 1 WLR 2282. Those paragraphs say that the consequence of Corner House is to set PCO levels too low.

For example paragraph 3 of the Appendix complained that, while Musa King said that the costs capped in advance should be reasonable and proportionate, Corner House introduced the further constraint that the costs capped should be ‘modest’. In addition in paragraphs 4, 5 and 6 Appendix 3 said this:

Mr Fordham submits that, for the reasons there set out, it is wrong in principle to limit the recoverability of claimants’ costs either to reasonably modest costs or to the costs of junior counsel. We would certainly accept that there can be no absolute rule limiting costs to those of junior counsel because one can imagine cases in which it would be unjust to do so. However, in Corner House this court laid down guidance which, subject to the facts of a particular case and unless and until there is a rule which has statutory force to the contrary, we must follow, albeit in a flexible way. That was the unanimous view of the court in Compton. It follows that, as the court put it in Corner House, the costs should in general be reasonably modest and the claimant should expect the costs to be capped as set out in [76 (ii) and (iii)] of the judgment in that case.

There is a further point of some potential importance in this appeal. Paragraph 7 of Appendix 3 begins in this way:

Paragraph 7 of Appendix 3 continues:

Before considering the application of those principles to this case, it is appropriate for us to consider the procedure which ought to be adopted at first instance and on appeal.

In Corner House the court set out at [78], [79] and [81] the procedure which ought to be followed at first instance. It also expressed the hope that the Civil Procedure Rules Committee would consider the matter, which it has not so far done in any detail. The court said this:

In Corner House the court did not make detailed references to the various potentially relevant provisions of the CPR. In Compton it did; see per Waller LJ at [31] to [43], especially at [41] to [43] where he in effect followed the guidance set out at [79] of Corner House. Smith LJ expressly agreed: see her [90]. In the result the court underlined the principles in that case and emphasised that it should not rewrite them. Nor should we.

Unfortunately the parties did not proceed in this way at first instance in this case. Neither party chose to challenge Sullivan J’s PCO in the way suggested in Corner House. Moreover, the respondent did not submit on paper that, if a PCO was made, it would be just to make an order capping the respondent’s liability for costs. If a defendant wishes to make such a case it should make it in the acknowledgment of service. It appears to us that, whatever the outcome of this appeal, parties should follow the guidance in the above paragraphs in order to limit the costs of arguing about PCOs. In our opinion the courts should do their utmost to dissuade parties from engaging in expensive satellite litigation on the question whether PCOs and thus cost capping orders should be made. The expenditure of such costs cannot be in the public interest. Judges in the administrative court have considerable experience in this area and their decisions should not be revisited save in exceptional circumstances, as this court made clear in [79] of Corner House quoted above. In the rare case in which it is necessary to have an oral hearing, it should last a short time as contemplated in Corner House and it should take place in good time before the hearing of the substantive application for judicial review so that the parties may know the position as to their potential liabilities for costs in advance of incurring the costs.

Similar considerations apply in this court. Waller LJ so stated concisely at [47] to [49] in Compton:

The procedure at [47] was not followed in this case. So far as we are aware, the respondent’s case was not put before the court on paper before the applications for permission to appeal and for a PCO were considered by Laws LJ. If it had been, he would have been able to consider both issues together. It is of great importance that issues relating to permission to appeal and to a PCO and a consequent cost capping order or orders should all be considered at the same time and on paper. This should avoid further hearings of the kind which has taken place here. Such further hearings should be very rare.

The importance of the two aspects of the case being considered together at the first stage is underlined by our experience in this case. As already stated, in giving permission to appeal, Laws LJ said:

There is undoubtedly some overlap between the issue whether to grant permission to appeal and the issue whether to grant a PCO. They both involve some consideration of the merits and should therefore be considered together. The general principle is that, where permission to appeal is granted, the court will not readily set the order aside. CPR 52.9(2) expressly provides that it will only do so if there is compelling reason and the cases show that it will only do so in very restricted circumstances. It would not be appropriate to do so in this case, where Laws LJ formed the view that there was a sufficient public interest in the issues raised to require permission to be granted.

Mr Straker sought to persuade us that, even if the permission to appeal could or should not be set aside Buglife’s prospects of success are poor and therefore that we should not grant a PCO in favour of Buglife. In particular he drew our attention to the fact that, although Laws LJ said that the public interest required a hearing in the Court of Appeal, so that the test in [74 (ii)] of Corner House that the public interest required that the issues be resolved was satisfied, he did not say that it raised a question of general public importance, so that the test in [74(i)] was not satisfied. Problems of this kind would be avoided (and would have been avoided in this case) if all these matters had been considered together by Laws LJ.

The respondent does not now challenge the PCO made in favour of Buglife in the court below. Mr Fordham QC submits on behalf of Buglife that in these circumstances the order made by Sullivan J should be extended to include the costs in this court. Alternatively he submits that Buglife’s liability for costs should be capped in this court. Mr Straker submits that the fact that an order was made by Sullivan J is irrelevant and that no PCO should be made in this court. Alternatively he submits that, if Buglife’s liability is to be capped, fairness demands that the respondent’s costs should be capped too. The first question is therefore whether Buglife’s liability for costs should be capped in this court.

Mr Fordham submits that, given that Laws LJ gave permission to appeal and said that the public interest required that the appeal be heard, a PCO should be made. He submits that all the considerations which led Sullivan J to make a PCO in favour of Buglife equally apply in this court. He notes that the respondent does not challenge the order made against Buglife in the court below and he further submits that it would be just to protect Buglife entirely from the costs consequences of losing.

In considering what is the just order to make, we decline to enter into a detailed analysis of the facts. That will be the role of the court at the hearing of the appeal. We do not read Laws LJ as holding that Buglife has no prospect of success and, as already stated, we do not think it appropriate to set aside the permission to appeal. On the other hand, there are in our view formidable problems facing Buglife on the merits. It failed to persuade the President of the Lands Tribunal that its case was arguable and, although Mitting J gave permission to apply for judicial review, he dismissed the claim and refused permission to appeal. We do not accept Mr Straker’s submission that the PCO should be refused because Laws LJ referred only to the public interest and did not say that the appeal raises a point of general public importance, especially since the two tests are difficult to separate: see [17] above. We do not think that he was considering the distinction when he considered the matter on paper.

We see no reason to disagree with the view formed on this issue by Sullivan J at first instance. He expressed the view that the conditions for a PCO were fulfilled. He noted the huge discrepancy in resources available between the parties and that a rolled up hearing exposes the claimant to a greater risk as to costs. On the other hand he said that, since permission had been refused, he did not think that the claimant should have full protection. He then limited the cap to £10,000 below. There is no reason to think that he misdirected himself in any way and it is not suggested on behalf of the respondent that he did. Since then Buglife has lost but has been granted permission to appeal. It appears to us that Buglife should have some protection in this court but it would in our opinion be unjust for Buglife to have 100% protection against costs, especially given the significant risk of its losing. The just order would be to limit Buglife’s costs in this court to £10,000. Thus if Buglife loses in this court and below its total liability for costs will be £20,000.

The question then arises whether the respondent should have any protection. Sullivan J thought that it should have protection in the same amount. Although he did not give reasons, we do not think that there can be any doubt that he thought that such an order would be just. He was plainly aware of the relevant authorities, notably Corner House, and there is no reason to think that he was not purporting to apply the principles there stated to these facts. It is therefore clear that he thought that justice required that the respondent too should have some protection. There is no reason to think that he simply ordered the same amount as some kind of automatic reaction to the £10,000 cap on the claimant’s liability. He has a great deal of experience of this kind of case and would we are sure have thought that such an approach was unprincipled. It is clear from the reasons he gave that he had some regard to the merits and it seems reasonable to suppose that he had regard to the status of the respondent as a public body which depends upon the taxpayer for support.

Although, as was made clear in Compton, a judge in the position of Sullivan J deciding these issues on paper should give short reasons and he did not, no-one has asked him to give his reasons subsequently, although either party could have done. We detect no error in principle in the order made by Sullivan J capping the respondent’s liability in the court below. Nor do we see any compelling reason for revisiting the exercise of his discretion. In these circumstances, we have reached the conclusion that an appeal by Buglife against Sullivan J’s decision would have no realistic prospect of success. We therefore refuse the application for permission to appeal against it. In these circumstances there would be no purpose in extending the time in which to make the application.

We should add that there are in our view strong grounds for refusing permission to appeal on the further basis that the time to challenge Sullivan J’s decision was before the hearing of the judicial review application and not afterwards. We are reluctant to do that on these facts because both parties and the court seem to have accepted that it was an appropriate procedure, although in our opinion it was not in the light of the decision in Corner House. In any future case permission to appeal would almost certainly be refused on this ground.

Should a similar order to that made by Sullivan J be made in this court? We have reached the conclusion that it should. Buglife’s prospects of success do not appear to us to be strong and, for what are essentially the same reasons as led Sullivan J to make the order he did in the court below, we think it right to cap the respondent’s liability in costs to Buglife in an appropriate sum. Again, a cap of £10,000 seems to us to be a fair sum.

For these reasons we refuse Buglife’s application for permission to appeal against the PCO made by Sullivan J on 7 November 2007 capping the respondent’s liability in costs to Buglife at first instance. However, we grant Buglife’s application for a PCO capping its liability in costs in this court. We also grant the respondent’s counter-application for an order capping its liability in costs to Buglife in this court. In each case the limit will be £10,000. Finally we should note that we have assumed that there is no possibility of Buglife being liable in costs to the developer, whatever the outcome of the appeal. If that is or might be wrong, we would be willing to provide further protection for Buglife.