IS v Director of Legal Aid Casework

LORD JUSTICE PITCHFORD: This is an appeal against the refusal of the High Court to make a protective costs order ("PCO") in current judicial review proceedings, permission having been granted by Ouseley J on 25 April 2014. The appellant is the claimant in the judicial review claim and the respondents are the defendants to that claim. I shall refer to them as claimant and defendants respectively.

The claimant is a 59-year old national of Nigeria who, it is believed, has been in the United Kingdom for some 13 years. He has no passport in his possession and would appear to be in the UK unlawfully. The claimant is blind, cognitively impaired and unable adequately to care for himself. He is described by a psychiatrist who reported on 28 March 2013 as a person performing at the level of a dementia sufferer. Hackney Council declined to provide the claimant with accommodation and support under s.21 of the National Assistance Act 1948, although under an order made on an interim basis by Lang J, temporary assistance is being given.

The official solicitor acts for the claimant in his claim for judicial review brought against the Council in other proceedings. The level of assistance for which the claimant is eligible may depend upon the claimant's immigration status. For the purpose of regularising the claimant's immigration status he first requires advice as to the grounds upon which he can apply for leave to remain. The official solicitor is not in a position to provide that advice nor is he in a position to fund advice provided by a solicitor authorised for that purpose under s.84 of the Immigration and Asylum Act 1999. For this reason, the official solicitor sought legal aid for the claimant in order that he could make the appropriate application to the Home Office. As is implied by this summary of the background the application would not be made with a view to litigation but with a view to the making of an administrative decision by or on behalf of the Secretary of State for the Home Department.

The claimant is represented in these proceedings by the Public Law Project (PLP). His case was at this time being handled by Mr Ravi Low-Beer, whose statement we have, dated 9 December 2013. From the limited information available to PLP it was considered that the claimant's application for leave to remain was best founded on Article 8 of the European Convention on Human Rights. For that reason, it was concluded that the claimant would not qualify for legal aid under Part 1 of the Legal Aid Sentencing and Punishment of Offenders Act 2012 (LASPO) granted in respect of "general cases". However, s.10 of LASPO makes exceptional provision for cases that fall outside the scope of schedule 1. Under s.10, the director may make an exceptional case of determination when, (a) the determination is necessary to avoid a breach of the claimant's convention rights or of any EU rights to representation or, (b) when it is appropriate to do so in the particular circumstances of the case having regard to any risk that failure to make the determination would risk a breach of those rights. The procedure for making an application for exceptional funding is provided by Part 8 of the Legal Aid (Procedure) Regulations 2012. In short, it is the claimant's assertion that a person with his vulnerability would be unable to comply with the regulations and the administrative procedure introduced in support of the regulations without professional assistance.

On 11 June 2013, PLP sought a preliminary view from the director as to the claimant's eligibility for exceptional funding. On 25 June, the response was negative, repeated as part of a review on 16 July. PLP completed and lodged a formal application to the director on 20 August; the application was refused on 11 September. Amongst others, a ground of refusal was that there was no immigration decision in existence which interfered with any of the claimant's convention rights.

The claimant, on 9 December, issued a claim for judicial review of the decision to refuse him exceptional funding. At the heart of the claim was the assertion that the claimant's Article 8 rights were engaged in the application the claimant sought to make. It is put thus at paragraph 79 of the amended grounds:

Having discussed the claim with the official solicitor, PLP was instructed to advance further grounds which challenged not merely the decision in the claimant's case but also the lawfulness of the administration of the exceptional funding scheme generally, which it is now contended, frustrates the statutory purpose in the case of vulnerable persons and contravenes s.149 of the Equality Act 2010. Amended grounds were lodged on 14 January 2014. Issue was joined by the defendants in their grounds of 24 March 2013.

In the judicial review claim, counsel for the claimant and PLP are acting under a conditional fee agreement (CFA). The claimant does not have costs liability insurance. The official solicitor acts for the claimant because there is no other person suitable and willing to act. In general, the official solicitor is not in a position to act, unless external funding of the claim, either private or public, is in place. When the claimant is awarded legal aid a litigation friend will be able to take advantage of a conventional protection for the claimant from an award of costs. However, where the claimant is not in receipt of legal aid, the litigation friend is exposed to the risk that an award of costs in favour of the defendant will be made against him. To meet this contingency the Law Society holds and administers a fund whose purpose is to support claimants who are making, in their judgment, meritorious claims concerning the access to justice implications of LASPO.

On 3 December 2013 the Law Society agreed to indemnify the Official Solicitor and the claimant against any award of costs up to a sum of £55,000. On 30 January 2014, Turner J made an order that the claimant's case should be managed and heard, together with five others, in which the issue of refusal of exceptional funding arose. Those claims in respect of which permission had not yet been considered, of which this is one, were to be heard in a rolled-up hearing. Each of the other claimants has been awarded legal aid. In an attempt to provide comfort to the official solicitor PLP wrote to the Treasury Solicitor on 26 February to secure agreement that the defendants would limit any costs claimed against the claimant to £55,000; that request was refused on 4 March.

On 5 and 6 March 2014, PLP notified the defendants of their intention to apply for a PCO. That application was also resisted. By agreement, the application was considered on the papers by Mr CMG Ockleton, Sitting as a Deputy Judge at the High Court, on 14 April 2014. He refused the application and in so doing observed as follows:

The claimant sought a reconsideration of that refusal when appearing before Ouseley J on 25 April for directions. The judge ruled that, since by agreement the parties had sought a ruling on the papers, the High Court had no further role to perform save to consider an application for permission to appeal to this court. Ouseley J, upon the making of that application, granted permission observing that the public and private interest ground was arguable, as was the issue of whether Mr Ockleton had been right to rule that the Law Society's indemnity would be adequate in any event.

The landscape in which the application had been made altered somewhat during the hearing before Ouseley J. The judge made an order that grounds 1 and 2 of the amended claim, in which the lawfulness of the operation of the exceptional funding scheme in general was under challenge, should be determined separately from ground 3 which challenged the decision made in the claimant's case specifically. Ground 3 would be considered in the joint hearing ordered by Turner J listed on Tuesday next, 13 May. Permission was given for the amendment of the claim on the terms of grounds 1 and 2. Further directions for the hearing of those grounds were reserved to the judge hearing the case on Tuesday.

I now turn to the grounds of appeal. The first point made by the claimant is that the official solicitor is in an unusual position. He acts as litigation friend in the cases of litigants vulnerable by reason of age or mental incapacity. However, the official solicitor does not have an unlimited budget. In the present case he can act only if he is indemnified in costs. He and PLP have sought from the Law Society an indemnity against an order for costs in whatever sum that order may be, but the Law Society has declined to enlarge the indemnity already given in December.

The principles upon which the court will act in an application for a PCO are well known. They were set out by Lord Phillips, MR, in R(Corner House Research) v Secretary of State for Trade and Industry [2005] EWCA Civ 192, [2005] 1 WLR 2600, as explained and developed in later decisions of the court, including R(Compton) v Wiltshire Primary Care Trust [2008] EWCA Civ 749 [2009] 1 WLR 1436, R(Buglife - The Invertebrate Conservation Trust) v Thurrock Gateway Development Corporation [2008] EWCA Civ 1209 2009 1 Costs LR80 and Morgan and Baker v Hinton Organics (Wessex) Ltd and CAJE [2009] EWCA Civ 107 [2010] 1 Costs LR1. Of particular relevance to the present appeal is the consideration in cases following Corner House Research, both at first instance and on appeal, of the stringency of the requirement as originally stated that the claimant should have no private interest in the case being advanced. In Morgan, at paragraphs 39 and 47 (iv) of the judgment of the court given by Carnwath LJ as he then was, having reviewed several of the cases, the court expressed the strong view obiter that the need for flexibility applied to each of the Corner House guidelines, including the application of the private interest test. The court approved the observations of Lloyd-Jones J, as he then was, in R(Bullmore) v West Hertfordshire Hospitals NHS Trust [2007] EWHC 1305 (Admin), also approved by the court in Compton at paragraph 23. Lloyd-Jones J, as he then was, said at paragraph 19 of his judgment:

The claimant submits that grounds 1 and 2 of his claim raise issues of substantial importance to the application of the exceptional funding scheme to vulnerable persons in general. They are, accordingly, of general public importance. It is conceded that the claimant challenges the decision in his own case. That claim, made in ground 3, also raises issues of public importance as to the application of the expceptional funding provisions to legal advice and assistance to the vulnerable other than in the course of litigation. It would be strange, it is submitted, if a PCO was otherwise fair, just and desirable in favour of an interest group, it should be refused in the case of the claimant simply because the claimant would affected by the result. It is, the claimant submits, fair and just to make the order. It is not in dispute for present purposes that the claimant is destitute and without means. Since his own case is supported by a CFA he is not eligible for legal aid which, if granted, would have protected him from a costs order. If the PCO is not made there is a significant risk, the extent of it is unascertainable at present, that issues of public importance concerning access to justice would not be heard or, in the alternative, would have to endure further protracted delay while a further application for legal aid was made.

The claimant submits that while the original estimate of the defendant's cost was a reasonable one that was on the basis that the claim was singular. It is now to be heard with five other cases and grounds 1 and 2 have been severed from ground 3. Costs are now therefore less predictable than they were when Mr Ockleton made his decision. In any event, it is argued that Mr Ockleton failed to place any weight on the defendant's refusal voluntarily to limit their costs to the sum available by way of indemnity, or any other sum.

It is argued on behalf of the defendants that, to the extent issues of public importance arise in the claimant's case, they can be taken by other claimants on Tuesday. In any case, the generic issues may turn out to be "academic" once individual cases have been resolved. Accordingly, it is said, there is no pressing public interest that the claimant's case should proceed.

The claimant has a private interest to advance; so also does the Law Society, which has limited its indemnity to £55,000. It is not the defendants who should bear the risk of costs that cannot be recovered, but the Law Society, whose fund exists specifically for the purpose of protecting vulnerable claimants from the chilling effect of the current legal aid regime, if proved.

Finally, it is submitted that it is not demonstrated that the claimant will be denied a hearing. It is open to the claimant to make an application for legal aid in respect of grounds 1 and 2 and, for that purpose, to seek an adjournment of that part of the claim.

I turn then to consider Mr Ockleton's reasons laconically expressed in writing. That expression is not intended to be any criticism of him; it is in the nature of reasons given in writing in what appears to be a straightforward case. He stated:

Mr Ockleton continued that the Order was unnecessary because there was no good reason to think that the proceedings would be discontinued if the PCO was not made (I shall return to that reason in a moment). Further, there was no reason to suppose that the claimant's liability for costs in the managed litigation would be more than the cap sought. I agree with Ouseley J's preliminary view that there was reason to think that the liability for costs might exceed £35,000, namely, the defendant's refusal to contemplate an agreed cap. That was an interesting refusal having regard to the defendant's knowledge that the five other claimants were legally aided and costs could not be recovered against them. Furthermore, by the date of the hearing before Ouseley J, it was known that the hearing of grounds 1 and 2 would have to go off to another day entirely. That fact now increases the risk.

Having reached these conclusions I should therefore approach the merits of the application afresh. It is my view that the claimant's claim for judicial review raises both in its narrower and in its wider aspects an issue of general public importance which ought to be determined, namely, the ability of the defendant's procedural requirements to secure compliance with the principle of access to justice by those who labour under physical and/or mental disability. I accept that the claimant has a personal interest in the outcome, but I also accept the claimant's submission that the balance in favour of the public over the private interest at stake is a strong one.

I wish to make it clear that nothing I have said is intended to reflect upon the merits of the challenge which may, in the end, be determined upon comparatively narrow issues of fact which we have not seen for the purposes of this appeal. But that they are important and pressing, I have no doubt. If there is a flaw in the working of the defendant's exceptional funding scheme in the case of those under a disability, it is in the public interest that they are exposed as soon as possible.

I turn to the financial resources of the parties. Of course, in the case of the defendants, it is the public purse that will bear the shortfall in any order for the recovery of the costs. Relevant in the consideration of financial resources is the defendant's acknowledgement that five other claimants are legally aided and that costs cannot be recovered against them. In the case of the claimant, it is not disputed that he is destitute. He would not be able to bring these proceedings unless either he was publicly funded, or the lawyers were prepared to act pro bono or under a CFA. It is argued on behalf of the defendants that there is no reason why the public, rather than the Law Society, should bear the risk in costs. Since the Law Society has granted an indemnity, it has a personal interest in the outcome of the proceedings.

I accept that the position of the Law Society is a relevant consideration, but so also, in my view, are the nature of the proceedings and the fund available. In 2012 the Law Society created, we are informed, a fund of £250,000 for the purpose of supporting litigation as to the ability of LASPO to deliver access to justice in cases where it was thought a challenge should be made. That fund will last, depleting as it goes, until October 2015. What is unusual about the fund is that it supports claims against the Legal Aid Authority in which applications for legal aid would have to be decided by the Legal Aid Authority. The defendant suggests that the effect of the Law Society's support is to circumvent the merits test imposed by the LAA. I do not consider that this is a fair approach. The merits test would be imposed by the defendant himself. That of course is not a reason of itself for making a PCO, but it is a feature of the defendant's argument which must, in my view, qualify its cogency. Secondly, while there is no merits test imposed by the LAA on the claimant currently, the official solicitor holds a position of responsibility that requires him to assess the prospects of success. We have his two statements, and I have no doubt that he is performing his role conscientiously. Thirdly, counsel and solicitors for the claimant are acting under a CFA. It seems to me that these are in themselves disciplines upon the grounds which are now being advanced.

In my judgment, the appropriate way to view the role of the Law Society is to regard the limit of the indemnity as the limit of funds available to the claimant in the event of an order for costs rather than that the Law Society has a personal interest in the outcome of the proceedings in which it is not a party.

As for fairness and justice, I accept that, theoretically, the trial of these issues could await an application for legal aid which, if successful, could cause a hearing an unknown distance in the future. I do not find it possible on the information available to the court to form a view whether such an application would succeed. However, I am quite sure that, if the ground 1 and ground 2 issues had to go off for such an application to be made, the trial of the issues may never take place at all or, if they did, the trial would likely be put off for a further period to the detriment of the public interest which I have endeavoured to describe.

The claimant cannot say with certainty that the proceedings will be discontinued without a PCO. That may depend on the outcome of arguments addressed to the court on Tuesday. It occurred to the court during the course of argument that one way in which the prominence raised by the present appeal could be confronted was by considering a separate cap on costs for proceedings commencing on Tuesday from that which might apply upon the trial on grounds 1 and 2. That, however, was not a prospect raised by either party in the claimant's notice or the defendant's notice. We have not therefore considered it further. I accept that it will be in a rare case that a PCO will be granted where the evidence is that the claim will proceed with or without a PCO, if at all. Mr Chamberlain, in this context, draws our attention to paragraphs 76 (iii) of Corner House in which Lord Phillips said, while considering the need for the imposition of a reciprocal PCO in favour of the defendant:

I do not regard the definition of purpose as constituting a hardline qualification which must be crossed before a PCO can be contemplated. In my view, the state of the evidence in the round must be considered, including the prospect that the public interest will be damaged by discontinued or prolonged postponement of the issue. Taking account of all considerations addressed to us, in my judgment, the merits are in favour of the PCO sought on behalf of the claimant.

That brings me to the respondent's notice. It is contended on behalf of the defendants that if, contrary to the defendant's primary case, the court thinks it right to order a PCO, then the court should also make a reciprocal PCO in favour of the defendant. I can see no reason why there should not be a reciprocal PCO given by the claimant for the reasons enunciated by Lord Phillips at page 76 of Corner House. In my view, it should be in the same sum of £55,000, on the basis that the claim proceeds to its completion within a relatively short period. With a total hearing time of some two to three days, it seems to me that the cap of £55,000 is reasonable in the circumstances. How the lawyers acting for the claimant in these proceedings act in such a way as to keep within that cap, should they decide to do so, is a matter for them. I would make the order I propose.

LORD JUSTICE BEATSON: I agree. I have one observation about the third of the Corner House principles. It is clear in the light of the subsequent decisions to which my Lord has referred that the nature and extent of the private interest and its weight or importance in the overall context is to be treated as a flexible element for the court's consideration of the question of whether it is fair and just to make the order. While all the Corner House principles are overarching principles applying regardless of context, the extent of the flexibility may vary accordingly to context and the circumstances of a particular case. For example, in an environmental case in which the Aarhus principles apply, as was stated in Morgan at paragraph 38(iv), the influential 2008 Sullivan Report considered that the private interest requirement was inconsistent with those principles. In other contexts, it remains a requirement, albeit diluted and to be applied flexibly.

In the present case, as my Lord has stated, the particular position of the Director of Legal Aid Casework - in relation to the underlying substantial matter, and the fact that the Official Solicitor, a public official with responsibility with great experience in these matters, considers this to be an appropriate case for a Protective Costs Order are factors justifying a particular flexibility in favour of the applicant for a protective costs order.

LADY JUSTICE GLOSTER: I agree with both judgments.

LORD JUSTICE PITCHFORD: Would you kindly agree your order.