CR, R (on the application of) v Director of Legal Aid Casework and Ors

The appellant contends that a CCO may not be made except in accordance with the criteria set out in sections 88 – 90 CJCA, in particular the mandatory criteria in 88(6)(a) – (c). At the time the original CCO was made the criteria were met but once the legal aid certificate was granted, conferring costs protection for the entire period of the litigation, the criteria could no longer be fulfilled.

The appellant accepts that in considering the application to set aside/vary the CCO, the Judge had an element of discretion. In exercising that discretion it is the appellant’s case that the Judge should have taken into account the mandatory requirements of section 88(6) which reflect the legislative intent and purpose of the CCO provisions and the fact that the backdating of the legal aid certificate meant that the CCO was no longer compliant with the requirements of section 88(6).

Further, the appellant submits that in circumstances where it is the respondent’s decision making which has generated the need for judicial review proceedings, account should be taken of that by the court when exercising its discretion.

As to the reciprocal cap for the respondent, provided by section 89(2), the appellant contends that its purpose is to balance the litigation risk faced by the respondent when a CCO is granted, it is not to provide a financial benefit or windfall where no CCO is necessary. As legal aid had been backdated to a date before the making of the CCO, there was no need for a reciprocal cap upon the respondent’s costs during the period in which, albeit retrospectively, legal aid had been granted.

It is the appellant’s case that the effect of the order is to deprive the appellant of the opportunity to claim inter partes rates. The difference as between the appellant’s costs at a privately paid rate and those calculated at GLD rates, up to the date the CCO was set aside, would be between £84,444.74 (private) and £46,337.20 (GLD). The privately paid rates would be subject to detailed assessment, following which a reduction in the order of 20 – 30% is likely. Reliance is placed upon the observations of Lord Hope in R(E) v JFS [2009] UKSC 1, paras 24 – 25, namely that an appropriate level of recovery of costs for solicitors who carry out a substantial amount of publicly funded work is of importance in ensuring the financial sustainability of their business.

The appellant contends that the Judge’s order is irrational in that he (i) failed to take relevant factors into account and (ii) made a decision which is legally unsustainable on all the available material. The order unreasonably permits the respondent to benefit from circumstances caused by her own flawed decision making. Unless the CCO is set aside ab initio the substantial proportion of the appellant’s recoverable costs are capped notwithstanding the appellant’s success in her claim for judicial review, and in all material respects, due to the concession made by the respondent and the first interested party. Such a cap will act as a disincentive to claimants who turn to CCOs as a means of seeking prompt access to justice.

The limit on the respondent’s recoverable costs is a windfall because the only reason the appellant applied for a CCO was to secure costs protection which has since been provided by legal aid.

The appellant relies upon the authority of R (Elan-Cane) v Secretary of State for the Home Department [2020] EWCA Civ 363 and the recognition by the Court of Appeal of the legislative intention underpinning the CCO regime, namely the promotion of access to justice. At para 148 Henderson LJ stated:

“Mr Mountford … is right to emphasise the underlying public policy which underpins the costs capping regime in the 2015 Act of promoting access to justice in judicial review proceedings which satisfy the test of being “public interest proceedings” within the meaning of section 88. If that test is satisfied, both sides will know from an early stage what their maximum exposure to costs will be, but they will also know that the costs which they actually incur in pursuing or defending the litigation are likely, to a greater or lesser extent, to prove irrecoverable. That is the price which has to be paid, in the wider public interest, so that justice can be obtained in important cases of this character.”

Such access is not promoted if the appellant’s solicitors, a legal charity, are restricted in their ability to recover inter partes costs.

The appellant agreed that the Judge had accepted the respondent’s reasons which were clearly set out in the letter dated 5 April 2022. As I understand the point which the appellant sought to make, it was that this application raised an important point of principle which went further than a discretionary costs assessment.

The appellant accepts that this ground adds little to grounds 1 – 3.

The respondent contends that the appellant’s reliance on section 88(6) CJCA is of limited effect in respect of revocation as this is a jurisdictional provision which the court must satisfy before it can make a CCO. The section does not provide that the CCO is revocable if, subsequently in the litigation, those criteria cease to be satisfied. There may be many reasons why criteria cease to be satisfied e.g. disclosure, a change in the law, or the case may cease to be one of public interest proceedings. Section 88 does not require the court to assess on a continuing basis whether the CCO remains appropriate.

The quid pro quo of the validly made CCO was the reciprocal cap for the respondent. This was the intention of Parliament, as provided by section 89(2) CJCA. The appellant’s representatives knew at the time the CCO was made that they would not be recovering fees assessed at privately paid inter partes rates. The purpose of the CCO regime is to provide legal certainty to the parties as to their costs liability and potential costs recovery, an intention recognised by Henderson LJ in Elan-Cane. Such certainty would be undermined were the courts to revoke CCOs which were made on a properly informed basis at the start of the proceedings on the basis that something has subsequently changed.

The respondent contends that certainty is what the provisions are designed to achieve and a change of circumstances does not of itself justify the retrospective variation of the CCO. This is consistent with the authorities of R (Harvey) v Leighton Linslade Town Council [2019] EWHC 760 (Admin) in which a CCO was varied by reason of material non-disclosure (which does not apply on the facts of this case) and Anti-Trafficking and Labour Exploitation Unit and Another v The Secretary of State for Justice (“ATLEU”) [2022] EWHC 1962 (Admin) in which Lane J was required to determine whether a CCO made by a previous judge should be varied. Lane J was satisfied there was no jurisdictional bar to the court making an order that retrospectively varied the original order (para 48) but recognised that:

“50.

… there are, nevertheless, extremely compelling public policy considerations, which mean that, even if the Court can do so, it should decline to revisit a CCO, where a party has incurred costs that fall within the ambit of the CCO. The same point applies to those carrying out professional work on the party's behalf, who are understandably concerned not to be retrospectively put out of pocket.

51.

These considerations are both legitimate and powerful. It will therefore only be in an exceptional set of circumstances that the Court is likely to vary CCO in the way described. The question is whether the facts of the present case reach that threshold.”

Lane J made the variation sought but did so on the basis that the circumstances were “of a sufficiently exceptional kind” namely that there were facts in existence which were not known to the judge when the original order was made.

The respondent relies upon the appellant’s letter dated 21 March 2022 and the respondent’s letter in response dated 5 April 2022 as evidence of the written representations which were before the judge and which he considered, when he made the decision to vary. Given the detail of the letters, the respondent submits that there is no basis upon which the appellant can contend that the Judge failed to take into account relevant matters.

As to the appellant’s “windfall” submission, the respondent describes it as ‘misplaced’ because the outcome of the Judge’s order is the result of the correct application of the legislative provisions governing CCOs. Further, the submission appears to be premised on the suggestion that the initial refusal of legal aid was wrongful. This is strongly refuted by the respondent who submits that the merits of the substantive claim for judicial review were lawfully assessed in good faith. The conclusion reached was rationally open to those assessing the application. When permission to proceed to judicial review was granted, the prospects of success were reconsidered by the respondent and the rational conclusion, based on the materials then available was that the prospects of success were higher than previously assessed with the consequence that legal aid was granted. That development does not render the initial decision wrongful or unreasonable.

As to any argument by the appellant that a cap on recoverable costs would act as a disincentive to claimants who seek CCOs that is described as “flawed”. CCOs are by definition a cap on recoverable costs, claimants are aware that costs prior to receiving legal aid may be capped, the purpose of a CCO is not to ensure any particular level of remuneration for a claimant’s legal representative.

The decision of the Judge was within the wide discretion afforded to him. It involved no error of principle and resulted in a wholly lawful decision.

The intention of Parliament, and the public policy which underpinned the introduction of the costs capping regime in the CJCA, was the promotion of access to justice for claimants in judicial review proceedings which are “public interest proceedings” within the meaning of section 88 CJCA. The CJCA recognised the need to ensure reciprocity for defendants by way of a reciprocal cap on their liability to pay the claimant’s costs (section 89(2)). The effect of, and the intention behind, sections 88 and 89 CJCA was that claimants and defendants would know the extent of their costs liability. The purpose underlying these provisions was to provide legal certainty as was recognised by Henderson LJ in Elan-Cane.

It is accepted that the court has jurisdiction to vary or revoke a CCO pursuant to CPR 46.19. The circumstances in which an order can be varied are fact specific and, as was stated by Lane J in ATLEU, although there is no jurisdictional bar to the court making an order to retrospectively vary a CCO, it will only be in an exceptional set of circumstances that such a variation is appropriate. This is wholly consistent with the purposes behind the CCO legislation namely to provide access to justice for claimants, to ensure a degree of reciprocity for defendants and to provide legal certainty for both parties as to the recovery of costs.

The CCO made on 25 January 2022 by Mr Tim Smith was a valid order made in accordance with the relevant provisions which included section 88(6) of the CJCA. Subsequent to the making of the order a change of circumstances occurred namely that the appellant was granted legal aid for the judicial review proceedings which had been instituted, the order being backdated to 10 December 2021. This change was neither unusual nor exceptional; as any litigator knows, changes of circumstances occur during the course of legal proceedings. The fact of such a change does not, of itself, invalidate the original order. There is nothing in section 88(6) which provides a basis for stating that, as the mandatory criteria are no longer satisfied, that of itself permits revocation of or retrospective variation of the CCO.

Any application for a setting aside or for a variation of a CCO has to be assessed upon its own facts and its merits. In considering such an application, the judge is exercising a discretion. This court would be slow to interfere with the exercise by a judge of a discretion particularly in respect of costs where the discretion is wide. I accept that this judge had not been the trial judge but he was in receipt of detailed written representations from both the appellant and the respondent.

The reality of the application to set aside the CCO, made by the Public Law Project representing the appellant, was to seek an order which would permit recovery at commercial rates and without any restrictions, in respect of costs already incurred and which had hitherto been the subject of the CCO. I accept the respondent’s contention that such an order would deprive the respondent of the protection of the reciprocal cap which the CJCA had required as part of the quid pro quo for the appellant obtaining a CCO. In my view, such an order would undermine the concept of legal certainty which was an intention of the CCO regime. Further, the practical effect of such an order would be to retroactively expose the respondent to a significantly greater adverse costs liability in respect of costs already incurred and currently covered by the CCO.

The principles applicable to the setting of the reciprocal cap were summarised by Chamberlain J in Western Sahara Campaign UK v Secretary of State for International Trade [2021] EWHC 1756 (Admin) at para 43, they included:

The purpose of a CCO is not to ensure any particular level of remuneration for a claimant’s legal representatives. It is of note that when the appellant applied for the original CCO, an order was sought which included a provision that the defendant’s liability for the claimant’s costs and the costs of any interested party be limited to the claimant’s reasonable costs recoverable at GLD inter partes Treasury panel rates and any disbursements. I bear in mind the observations of Lord Hope in R(E) v JFS (para 22 above). It was that reasoning which provided the basis for the respondent accepting that the CCO should be lifted prospectively such that the appellant’s representatives will be able to recover their prospective costs at inter partes rates. In my view, such an approach fairly reflected the balancing of interests as between the appellant and the respondent, and as such was accepted by the Judge when he made the order of 13 April 2022.

I regard the appellant’s contention that the judge failed to take into account relevant factors as misconceived. The application by the appellant to set aside the CCO included a request that it be done on the papers. Pursuant to that request, the appellant and the respondent filed letters with the court which set out with clarity and detail their respective submissions (paras 10 and 11 above). In his order the Judge records that having read the documents and made the order “It seems to me that the defendant’s detailed reasons for the making of the order in the form above are correct.” I am satisfied that before the Judge were submissions which identified all relevant facts and arguments and which were read and considered by the Judge. They included the appellant’s arguments as to the effect of setting aside the CCO only upon a prospective basis.

The appellant’s letter also raised what were described as “issues of fairness and probity in play”. It identified the fact that the respondent determined applications for legal aid in respect of legal aid actions against herself and there had been an initial refusal of legal aid which was subsequently changed. A prospective only basis of variation permitted the defendant to benefit from her earlier wrongful refusal of legal aid. This suggestion was “refuted in the strongest possible terms” in the respondent’s letter in reply. Firstly, the rationale for the subsequent grant of legal aid reflected the grant of permission by the court (para 33 above). Secondly, a point made in the respondent’s letter and at this hearing is that applications for legal aid for the purpose of challenging the Director’s decisions are considered on their merits by a separate team from that involved in either the underlying decision or the proposed litigation. The process is subject to supervision by the court by way of judicial review. In my judgment, there is no sound evidential basis to support this aspect of the appellant’s submissions.

This court would be slow to interfere with the exercise by a judge of a discretion particularly in respect of costs where the discretion of the judge is wide. I accept that this Judge had not been the trial judge, but he was in receipt of detailed submissions contained in the letters from the appellant and the respondent. The Judge considered the letters which properly addressed all relevant issues and having done so, he decided that he preferred the reasoning of the respondent. In so determining, what the Judge was doing was identifying and balancing the interests of the respective parties in the context of the legislation and its purpose. In my view, the Judge’s acceptance of the respondent’s reasons was not only reasonable, it was fair.

This ground was not pursued with any vigour by the appellant before this court. Such an approach realistically reflects the position that the judge, having identified his acceptance of the detailed reasoning of the respondent, all parties knew and understood, or should have understood, the reasoned basis for his decision.

The appellant was correct to state that this ground added little to grounds 1 – 3.

For the reasons given, I would dismiss grounds 1 – 4 of this appeal.