South West Care Homes Ltd, R (on the application of) v Devon County Council

MR JUSTICE SINGH:

In this claim for judicial review the claimants challenge the defendant's decision, taken on 2nd March 2011 and notified to them on 4th April 2011, to make no change to the fees which it pays in relation to residents whom it places in the claimants’ homes for the financial year 2011/2012. The claimants point out that the defendant had awarded no increase in fees for the previous financial year also.

The claim form in this case was originally filed on 1st July 2011. Permission was refused on the papers by Mitting J on 15th November 2011. Unusually the judge said that, while the original grounds did not disclose an arguable case, reformulated grounds might identify a clear and arguable challenge. The claimants’ case was then reformulated by leading counsel. Following the grant of permission after an oral hearing on 8th February 2012, by order of Mr Robin Purchas QC, sitting as a Deputy High Court judge, the claimants’ skeleton argument of 2nd February 2012 was substituted for the original grounds.

Although a large amount of documentation has been placed before the court the parties were agreed that the issues for determination fall within a narrow factual compass and the issues themselves are narrow in scope. The claimants advance three grounds:

If the claimants succeed on any of their grounds it is also agreed that an issue will arise as to what remedy, if any, should be granted by the court in the exercise of its discretion.

There is a great deal of common ground about the legal framework which is applicable in this case.

By virtue of section 7A of the Local Authority Social Services Act 1970, a local authority must, in the exercise of its social services functions, act in accordance with such directions from the Secretary of State.

Section 7 of the Local Authority Social Services Act 1970 provides that:

Under section 7(1) the Secretary of State has issued formal statutory guidance in the present context; that is the choice of accommodation directions in Local Authority Circular LAC (2004) 20. It is well established that a failure without good reason to comply with formal statutory guidance, issued under section 7(1) of the 1970 Act is unlawful (see for example R (Islington Borough Council) ex p Rixon [1998] 1 Community Care Law Reports 119, at 123 (Sedley J, as he then was).

Paragraph 2.5.4 of the Circular is central to the dispute between the parties in relation to ground 1 and states as follows:

On 8th December 2010 the defendant’s Adult and Community Service Strategic Leadership Team met to consider a report on the budget for the financial year 2011/2012. The background was the government's comprehensive spending review: "The financial constraint on local government over the next 4 years will be greater than any time in living memory."

The report recommended no increase for inflation for the year 2011/12. On 20th January 2011 the defendant's Health and Adult Services Scrutiny Committee met. The Committee received a joint report from the Director of Finance and the Interim Executive Director of the Adult and Community Services. The reports contained a document setting out the budget for commissioning care provision.

On 24th January 2011 the defendant's Health and Adult Services Scrutiny Committee met and received a report from the defendant's Director of Finance. On 9th February 2011 the defendant's cabinet met. A report on the revenue budget was prepared. On 17th February 2011 the defendant had a full council meeting to consider amongst other things the revenue budget for 2011/12. The budget was set by the full council. A total of £108,676,000 was allocated under the heading "Older people and disability". However, within that overall allocation the decision as to any increase in fees for care providers was not determined by the full council but was delegated to the relevant officer Jennifer (or Jennieas she is known) Stephens.

On 23rd February 2011 the defendant's strategic provider group met and considered the budget update. This meeting was chaired by Jennie Stephens. It was also attended by, amongst other people, Duncan Ford, an official of the defendant authority.

Another attendee was Mr Geoffrey Cox (a representative of care home providers) to whom I will return in a moment. At item 5 of the minutes under the heading "Budget update and planning", the bullet points recorded that an update presentation was received from Duncan Ford that work on budgets carried out by Mr Ford, Tim Goldby and their teams were much appreciated and were commended by all attendees and that Geoffrey (Mr Cox) raised the "Pembrokeshire case of cost of care services." Mr Ford was then recorded as advising that the key issue in the Pembrokeshire case was that they had failed to follow the correct procedure according to their contracts and rules set by the Welsh Assembly in assessing the correct fee rate.

The reference to the Pembrokeshire case is a reference to R (on the application of) Forest Care Home Ltd and Ors v Pembrokeshire County Council [2010] EWHC 3514 (Admin), a judgment given by Hickinbottom J on 21st December 2010.

Returning to the minutes of the meeting of 23rd February, item 5 continued with bullet points that Mr Ford advised that the County Council was unlikely to be awarding across the board increases for inflation. If the cost of providing care service went up then the volume purchased would need to be decreased. Mr Cox advised the county that strategic group "care models" for pricing should be carefully used. The example produced by Price Waterhouse was discussed. That is something to which I will return later. It was also noted that Jennie Stephens was in discussions with the National Health Service showing them the statistics available.

Before I leave the meeting of 23rd February 2011, it is worth quoting at this juncture what Mr Cox has to say about that meeting in his second witness statement in these proceedings which is dated 25th March 2012 at paragraph 38:

On 2nd March 2011 the Adult and Community Services Strategic Leadership Team received a report and met to discuss the final budget allocations. The report identified a key issue by stating that:

In her witness statement Jennifer Stephens informs the court that she took the decision to set the fee level for the year 2011/12 and did so on 2nd March 2011 (see paragraph 22 of her witness statement).

Ms Stephens accepts that:

It was common ground before me that the specific obligation on the defendant under paragraph 2.5.4 of the 2004 Circular to set and review usual costs by having due regard to the actual cost of providing care is similar to the public sector equality duty now to be found in section 149 of the Equality Act 2010. Both sides agreed that it is therefore helpful to consider the observations of Dyson LJ (as he then was) in R (on the application of) Baker v Secretary of State for Communities and Local Government [2008] EWCA Civ 141, at paragraph 31, where he referred to the then section 71 of the Race Relations Act 1976 as amended:

However, it is also important to bear in mind, as the defendant has submitted before me, that, first, provided that which it is legally relevant for the decision maker to know is brought to its attention, it is generally for the decision maker to decide upon the manner and intensity of the inquiry to be undertaken into any relevant factor (see R (on the application) of Bevan & Clarke LLP and Ors v Neath Port Talbot Borough Council [2012] EWHC 236 (Admin), at paragraph 56 (Beatson J)).

Secondly, the weight to be given to a relevant factor is for the decision maker and not for the court in the absence of irrationality (see the same case at paragraph 57). I would add this observation, again accepting the defendant's submission on this point. It will frequently be the case and is undoubtedly the case in the present context, that the relevant factors to which the decision maker must have regard do not all point in the same direction. They may well pull in different directions and a balance will have to be struck. This is quintessentially a function of the public authority concerned, subject always to judicial review on the ground of irrationality. However, in the present case, as I have said, the claimants have disavowed any reliance on the principle of irrationality.

Turning to the facts of the present case, I am satisfied on the evidence before the court that the defendant did have due regard to the actual costs of providing care. In particular, I note the following pieces of evidence.

First, I turn to the witness statement in these proceedings by Jennifer Stephens. I note that she is the strategic Director-People of the defendant authority. Between September 2009 and May 2011 she held the position of Interim Executive Director of Adult and Community Services. She has, as she describes at paragraph 3 of her witness statement, extensive qualifications and experience in the field of social care. She was, for example, from 2007 to 2009 Assistant Director for Joint Strategic Planning. As she says in paragraph 3 of her witness statement, she believes her background has given her a clear and detailed knowledge and insight into the social care sector including the challenges facing service providers.

At paragraph 11 she explains that she was well aware of the views of Mr Cox and other residential care home providers on the issue of fees and funding. She says:

At paragraph 13 Ms Stephens states that on 8th December 2010 she attended a senior leadership team meeting for Adult and Community Services where an initial paper on the budget for the financial year 2011/12 was presented. She says that the paper sets out the financial constraints expected to be placed on the council as a result of the spending review and it acknowledges there will be severe pressure on costs. Under the heading "inflation", she notes that the report accepts that providers would be facing higher costs and considered the cost impact of making increased payments to various sectors. At paragraph 15 of her witness statement Ms Stephens notes that during the SLT meeting she challenged John Holme, the author of the budget report and to whom I will return in a moment, about whether the approach that was being taken was the correct one. She says:

Furthermore I accept the defendant's submission that, as is clear from paragraph 31 of her witness statement, Ms Stephens was well aware of the costs which the defendant authority itself has to pay in the running of its own care homes, although she notes that the costs in the local authority's own care homes would be higher "due to the staffing costs we are required to pay under public sector terms and conditions of employment."

Pausing there, it is clear in my judgment, from a reading of the passages to which I have already referred, in particular paragraphs 15 and 31, and given the deponent's extensive experience in this field that she did have regard to what she refers to as "the actual costs of providing care". Furthermore, as the defendant has admitted, she was informed about the inflationary pressures on costs and had regard to the effect of those (see in particular paragraphs 21 and 29 of Ms Stephens' witness statement). I will return to her witness statement in due course in another context.

For present, I now turn to the witness statement filed in these proceeding by Mr John Holme. He is the Assistant County Treasurer of the defendant authority and has held that position since July 2011. Between February 2007 and July 2011 he held the position of Principal Finance Manager for Adult and Community Services. At paragraph 3 he describes his extensive qualifications and experience, in particular in the fields of economics and accountancy. At paragraph 4 he informs the court:

The claimants have not sought to cross-examine the defendant's witnesses and in any event it would have been inappropriate, given the court's limited role by way of judicial review in a case of this kind. But the fact is therefore that the evidence of the defendants, that they did have due regard to the actual costs, in the light of their extensive qualifications and experience, is in substance unchallenged.

There is, as the defendant has submitted, no legal obligation on the defendant to follow any particular model, such as the Laing and Buisson model. Indeed the claimants disavowed any suggestion that there was an obligation to follow that model at the hearing before me.

The defendant has explained why it does not follow that model. In particular, as I have noted in citing the evidence, it does not accept that the illustrative figures reflect guideline figures are appropriate for Devon, nor does it accept the approach used to the cost of capital.

A number of authorities were cited to me in support of the claimant's first ground. But as I have said, there is very little if any difference between the parties as to the relevant legal principles. In the end, each case turns on the application of principle to its own facts. On the facts of the present case, I reject the claimant's first ground of challenge for the reasons I have given.

The claimants submit that the defendant was required to bear Article 8 of the Convention rights in mind and to make the appropriate proportionality balancing exercise where necessary, since the claimants, as the owners of care homes in which individuals reside, have an interest in seeking to protect those individuals’ Article 8 rights. The claimants cite, amongst other authorities the decision of Hickinbottom J in Forest Care (at paragraphs 44 and 46(6))

However, at the hearing before me the claimants did not pursue this aspect of the argument, at least with any vigour. In part at least this may be because of the provisions of section 7(1)(b) of the Human Rights Act 1998. That provision makes it clear that a person cannot rely upon the Convention rights within the meaning of the 1998 Act in any legal proceedings unless he or she is or would be a victim of the alleged breach of the right in question. It would appear at first sight at least that certainly no direct reliance can be placed upon the Convention rights under the Human Rights Act, including Article 8, by a person such as the provider of care services, as distinct from the individual whose rights are allegedly infringed or may be infringed in the future.

It may well be that, in spite of that, there can arise in principle an obligation on a defendant authority to have regard to a Convention right when it is taking a decision of the kind concerned in the present case.

It may be that public law requires such a consideration to be taken into account as a mandatory relevant consideration, even though the terms of the 1998 Act as such do not permit reliance directly upon a Convention right. However, since the point was not pursued before me and since it may be one that is important in other cases, but not decisive on any view in the present case, it is both unnecessary and inappropriate for me to say more about this issue of law.

The alternative way in which the claimants put their submission under ground 2 was to invoke the well-known principle enunciated by Sir Thomas Bingham MR (as he then was) in R v Ministry of Defence Ex parte Smith [1996] 1 QB 517, at 554, where he said that, in considering whether a decision maker has acted irrationally the human rights context is important. As he said, the more substantial the interference with human rights the more the court will require by way of justification before it is satisfied that the decision is reasonable.

Again at the level of principle I can see that, just as it would be irrational to reach a conclusion which unjustifiably breaches a person's human rights, so it can be argued that it would be irrational, as a matter of public law, to pay no regard to human rights considerations at all. But the reality is that, as the claimants candidly accepted at the hearing before me, ground 2 adds nothing of substance to their ground 1. In any event, I accept the defendant's submissions that there was no failure to have such regard, as was necessary in the present context, to human rights considerations. At most, the impact on the human rights of residents of care homes would have been indirect. Furthermore, I bear in mind the defendant's submission that the provision of care in the present context is carefully regulated for obvious reasons. If there were real concern about the impact of a decision by the defendant on the quality of care to be provided to vulnerable individuals, for example, as to the level or quantity of food to be provided, it can be expected that these issues would be raised by regulatory bodies and non-governmental organisations with an interest in the sector very quickly. Those are not the facts of the present case. I therefore reject the claimant's second ground.

The defendant accepts that it was under a duty to consult as a result of its past practice of consultation in relation to the setting of fees (see its detailed grounds, paragraph 27). It is well established that a past practice of consultation can give rise to a legitimate expectation of consultation (see Council of Civil Service Unions v Minister for the Civil Service [1985] AC 374) often known as the GCHQ case. Although the duty of consultation is not absolute and, in the GSHQ, case was defeated by the interests of national security, no suggestion has been made in the present case that the duty did not arise.

The requirements for a fair consultation are well established. As the Court of Appeal said in R v North and East Devon Health Authority ex parte Coughlan [2001] 1 QB 213, at paragraph 108:

The evidence on this issue is revealing in what it does not say as well as in what it does. In her witness statement Jennifer Stephens describes the meeting of the County Strategic Provider Group on 23rd February, at paragraphs 21 to 24. She states at paragraph 23:

In essence I accept the claimant's submissions on this issue. In R v Secretary of State for Social Services ex parte Association of Metropolitan Authorities [1986] 1 WLR 1 at page 4 Webster J stated that:

It is noteworthy that Ms Stephens is careful at paragraph 23 and elsewhere in her witness statement not to say that at the meeting on 23rd February 2011 she was initiating a consultation process. Equally Mr Cox, in the passage and elsewhere in his evidence which I have already referred to, did not understand, on leaving that meeting, that the defendant was embarking on a consultation process. There was nothing to put him on notice or others that the defendant was starting such a consultation exercise.

The minutes to which I have referred, so far as relevant, of the meeting of 23rd February do not record that any consultation was initiated or there was to be any particular period during which consultation responses should be conveyed to the defendant authority. Furthermore, it would be surprising, as the claimants have submitted, if consultation of the type required by public law, in accordance with the principle in Gunning and Coughlan to which I have made reference, were to be carried out satisfactorily by way of such a meeting, where the consultees would be only the ones who were present at that meeting. If so, then others who might have wished to have something to say, which would be relevant to the defendant's consideration, would not be present and would have received no notification that they should have their input.

On the other hand, if the consultation was aimed at all care home providers in the county, what was to be the mechanism, as the claimants rhetorically asked, to ensure that information concerning the consultation process cascaded to all who would have something relevant to say? As I have already said, there was no deadline specified and no future process was identified in the minutes or otherwise following the meeting of 23rd February.

Furthermore and, in any event, I also accept the claimant's submission on this point, that the time that was afforded, even if there was any consultation between 23rd February and the date the decision was made (2nd March 2011), was insufficient in accordance with the principles as to lawful consultation, to which I have already made reference. I therefore accept the claimant's third ground for judicial review.

I do not accept the suggestion, in so far as it was made at the hearing before me, that the breach of the duty of consultation in this case was academic, in the sense that consultation would have made no difference to the outcome. In that regard I note what was said by the Court of Appeal in R (On the application of) Smith v North Eastern Derbyshire Primary Care Trust [2006] 1 WLR 3315. That was a consultation case where the learned judge at first instance had proceeded at the remedial stage on the basis that if representations had been made by the claimant, they "probably would have made no difference". However, the Court of Appeal held that probability is not sufficient. As May LJ said in the main judgment at paragraph 10:

Nevertheless, as the defendant submits, the court has a discretion whether to grant any remedy and, if so, what remedy. In particular, as the defendant submitted and appears to have been common ground before me, the court cannot ignore the question of possible detriment to good administration. This can arise potentially in one or both of two ways. The first is that it is expressly referred to by statute in section 31(6) of the Senior Courts Act 1981 which reads:

The second way, as the defendant submits, is that in any event, judicial review, quite apart from the questions of delay is always discretionary. One of the factors that the court will have to regard to in its discretion is the interests of good public administration (see R v Monopolies & Mergers Commission ex parte Argyll Group Plc [1986] 2 All E R 257, at 266) in the judgment of Sir John Donaldson MR (as he then was) where he said:

On the facts of the present case I accept the defendant's submissions and, in the exercise of the court's discretion, would not quash the decision which is under challenge. My reasons, in brief, are as follows: first, the relevant financial year has ended on 31st March 2012. It is obvious that many transactions including, as the claimants accepted, things such as Tax Returns will have been concluded and submitted in the meantime on the understanding that the defendant authority's budget was as had been finalised in March and April of 2011 and would not be reopened now.

Secondly, there is a more specific type of detriment to others to which the defendants can point. This can be seen from paragraph 37 of the defendant's detailed grounds in these proceedings where they said this:

Thirdly, I accept the defendant's submission that this case is now extremely stale. Even if one takes the view that the grounds for making the claim first arose on 4th April 2011, the claim was commenced just inside the 3 month time limit, on 1st July, and sought to overturn a decision which was in effect taken on 2nd March 2011.

Even if there was no undue delay, something I will put to one side for the purpose of this consideration, the original grounds were in a form which in the opinion of Mitting J did not disclose a clear and arguable challenge. On the evidence before the court it would appear that the claimants did not have the matter expedited until November 2011, after refusal of permission on the papers by Mitting J. It was not until 2nd February 2012 that the claim was amended in a skeleton argument of that date, in a form which eventually obtained permission at the oral hearing before the learned deputy judge. By that time, as the defendants have submitted, the decision under challenge was already almost 1-year-old.

As I have said, even if one puts to one side questions of delay, I have had regard to the principle in the Argyle case and accept the defendant's submissions that it would be detrimental to the interests of good administration to grant a quashing order in this case.

The final matter which I have had regard to in the exercise of the court's discretion is that, in any event, the views of the claimants on the question of fees and actual costs were well-known to the defendant. Although I have not accepted the defendant's submission that that is sufficient to mean that the duty of consultation was complied with, it is nevertheless, in my view, one factor to be taken into account in the court's exercise of discretion when it comes to the question of remedies.

For the claimants it was submitted that they do not seek a mandatory order requiring the court to order the defendant authority to increase the fees in question. The claimant submits that such an order would usurp the role of a public authority in making the relevant decision: so they submit the court should not hesitate to grant a quashing order. In my view, this argument is a little disingenuous, since the claimants wish there to be consultation with a view to achieving a real change in practice and not for academic reasons. If there is a real prospect of a change in practice then, in my view, for the reasons I have already given, there would be detriment to good public administration and, in the exercise of the court's discretion, I would not grant a quashing order.

Nevertheless, I do not accept the defendant's submission that I should refuse even declaratory relief. In my judgment it would be appropriate to grant a declaration in appropriate terms to reflect the terms of my judgment that I have accepted that the claimants succeed on their ground 3: there was an unlawful failure of consultation in the present case.

This would vindicate the rule of law. I note in that context the decision of Webster J in the AMA case, to which I have already made reference, at page 15. Granting a declaration can serve a valuable function in guiding future conduct. A declaration is a flexible and proportionate remedy: it can be tailored to fit the facts of the particular case before the court and to reflect the particular breach of public law which the court has identified. In that regard, I bear in mind the recent judgment of the Divisional Court in R (on the application of) Hurley and Anr v Secretary of State for Business Innovation and Skills [2012] EWHC 201 (Admin), in particular at paragraph 99 (Elias LJ).

For the reasons I have given, this claim for judicial review is granted to the extent that I have indicated. In the exercise of the court's discretion, the decision of the 2nd March 2011 will not be quashed but I will grant a declaration that the defendant unlawfully failed to consult the claimants before reaching that decision.

MR JUSTICE SINGH: Yes?

MR BOURNE: My Lord, can I address the court on costs?

MR JUSTICE SINGH: Yes.

MR BOURNE: In a word each party has enjoyed a degree of success, the one in pursuing a claim to a remedy and the other in resisting both grounds of claim which have failed and remedy in part in respect of the ground that has succeeded.

In relation to costs, I am going to propose that if the court is minded to award the claimants any costs it should be only a proportion of their costs, to reflect the degree of success and failure.

Your Lordship's judgment has gone back in some detail through the procedural history of the claim. It is not the happiest history starting from initial delay and proceeding in a slightly undistinguished way up until I think it was 2nd February when we first saw Mr Clayton's grounds which at least that point gave what a signpost towards three grounds, two of which would fail and one of which would succeed and gain a declaration.

There is one other factor which I would like to make the court aware if I may. I am not sure whether your Lordship's correspondence bundle got as far as page 1217. I say that because mine did not as it reached me a day or two before the hearing.

MR JUSTICE SINGH: Is that Volume F.

MR BOURNE: That would be the last volume, yes.

MR JUSTICE SINGH: No, my ends at 1213.

MR BOURNE: Right, if I may I would just like to acquaint your Lordship with a bit of correspondence that happened shortly before the hearing which is germane to the question of costs. Can I please hand up small number of pages (Same Handed).

Page 1216 is a covering note. But then there is an open letter written at 1217 and 1218. Can I give your Lordship a moment just to look at that? (Pause) So as at 5th April an attempt is made to try to avoid a hearing, making a concession about the lack of a well documented formal consultation process, making an offer in relation to costs. And mentioning one, if you like, collateral matter about funding which might go to some way to ease the position of the claimants. On page 1219 was a schedule which contained the matters which my clients reiterated would bring about a detriment to good administration and was a reason why the defendant's team predicted, correctly as it turns out, that a hearing would not bring about a quashing order.

In response we heard from the claimant's solicitors on 16th April, that being the day on which the defendant's proposal was said to expire and that is a couple of sheets further on in what I have handed up. That reply said, this is without prejudice save as to costs:

My Lord, that is as far as it went. I think I am right in saying we did not hear from them again.

The only other thing that happened about costs, and this is not strictly relevant for today but may come up in an assessment. I think on the day after the hearing we received a notice of funding telling us that on day 1 of the hearing a CFA had been entered in to. That was validly served within the 7 days they have to serve. That is an assessment point.

MR JUSTICE SINGH: Is there anything else more specific that you want to submit on the quantum of costs, given the letters that I have read?

MR BOURNE: My Lord, all I would say about it is this. Up to and including the order of Mitting J until the day before the 2nd February, the claim was failing. It was not a claim that called for concessions on my client's part. By the time of the hearing, one might view the hearing as being if not strictly unnecessary because we did not actually arrive at an agreement, nevertheless eminently avoidable and my clients have left the ball in the other side's costs saying: well, if half your costs is not good enough, what do you want? When one then looks at the whole history of the claim, one is left asking oneself during which time period were they actually credibly and properly running up costs for which the defendant should be liable. If they lose both the beginning of the claim and the final hearing only a small fraction is left.

MR JUSTICE SINGH: Forgive me, Mr Bourne, for interrupting, is the practical position this? You were prepared in an open letter, not without prejudice letter, to pay half of the claimant's costs up to the letter of 5th April.

MR BOURNE: Yes.

MR JUSTICE SINGH: Basically what you were saying was: the hearing in May is unnecessary so let us all at least avoid the cost of that.

MR BOURNE: My Lord yes.

MR JUSTICE SINGH: So one possible course for the court to take might be - I don't know, I will have to hear submissions from the claimants in a moment - is to award the claimants half of their costs up to 5th April.

MR BOURNE: My Lord, indeed it might. If your Lordship were so minded I would not quarrel with that.

The rules and practice directions exhort us to go for a fraction rather than necessarily trying to chop a case into chronological periods. I was going to suggest, if one looked at the whole of the claim instead of a limited period, you might say a significantly smaller fraction than half given it is the hearing that is the expensive bit. Given also, as I say, the first part of the claim, for which we did make an offer to pay.

MR JUSTICE SINGH: I take your point, that is normally the case, but it would not be particularly difficult as an assessment exercise in this case, would it? One could see the justification for it very plainly, which is that you are saying: we put our hands up, as it were, to half the costs, up to 5th April. You could have quarrelled with some of that. You might have said: well, Mitting J, thought -- the point is you are not quibbling with detail, you are taking a broad brush approach at that stage but the broad brush also says: you are not going to have anything hereafter, in particular you are not going to have the costs of the hearing.

MR BOURNE: My Lord quite right and indeed the threat made was that we would be seeking our indemnity costs of the hearing if things went that way. Certainly if your Lordship felt that kind of order struck the balance I would not try to dissuade your Lordship.

MR JUSTICE SINGH: Shall we see what the claimants have to say.

MR BOURNE: I am grateful. One final factor to acquaint your Lordship to with and just to be aware. I think it was the term of the order Mr Robin Purchas QC, that costs of and occasioned by the amendment would be Devon's in any event. So I just mention because that has already been discussed.

MR JUSTICE SINGH: Obviously anything I say about costs is not going to vary any other order as to costs already been made.

MR BOURNE: My Lord, of course.

MR JUSTICE SINGH: I know the generality of what he said was costs in the case. I am dealing with that now. Let us see what the claimants have to say.

MISS HEAL: My Lord I am obliged. May I start with Volume 1 of the White Book and in particular page 1878.

MR JUSTICE SINGH: I do not know if we have that in court. We have not. Volume 1.

MISS HEAL: My Lord yes.

MR JUSTICE SINGH: I have the latest one in my room so I will wait for that. (Pause) Sorry, what page is it?

MISS HEAL: It starts at 1877, it is Part 54, to deal specifically with costs and I start there rather than with Part 44 because it deals specifically with the costs of the order.

MR JUSTICE SINGH: Let me get that...

MISS HEAL: 1878.

MR JUSTICE SINGH: Yes.

MISS HEAL: My Lord will see that it begins on the previous page with the heading "Costs" and this is where permission has been refused and there is to be an oral hearing. In the middle page on 1878, the first paragraph, begins:

MR JUSTICE SINGH: Which page?

MISS HEAL: 1296, which is Part 44 rule 3, which sets out the court has a discretion about whether costs are payable and by whom. The general rule is that the unsuccessful party will be ordered to pay the costs of the successful party. In my submission, the defendant has been unsuccessful in that the claimants only had to succeed on one of their grounds in order to succeed on their claim for judicial review, in the broad sense. Now, the rules then exhort the court to go on and consider whether it may be appropriate to deal with the action on an issue by issue basis. Before I take my Lord to that specific rule, I would like to turn to the letter that my learned friend has just taken your attention to, which he has numbered 1217 of the bundle. Right at the bottom it says:

So I would invite my Lord to go back to the rule on the discretion on costs and I ask my Lord to look in particular at paragraph 44, rule 3: in deciding what order to make, in my submission, the court must have regard to all the circumstances, including the conduct of the parties and whether a party has succeeded on part of his case, even if he has not been wholly successful. In commercial cases of course it is much easier to carve a case up and say: you have been successful on one issue and not on another. But in Administrative Court cases it is a different analysis and in my submission, the starting point is that the claimants have been successful. It is true that they ran two grounds in respect of which my Lord has found against them but a declaration in these circumstances is a remedy and it is a significant remedy in these proceedings and one which my Lord has been prepared to grant.

The conduct of the parties in my respectful submission is not relevant here, in that there is no suggestion by either side that this case has been conducted inappropriately. It is true that the claimant's first formulation of the claim form was held by Mitting J not to show a ground. However that is now water under the bridge. In fact if I could take, if its necessary to take my Lord to the relevant part of the original claim form, both actual costs and consultation are both in sections 3 and section 5, although I accept they are difficult to find. Mr Purchas' order that the skeleton substitute those pages seems to me, with respect, to clear up that problem.

MR JUSTICE SINGH: I do not think you are going to need to go to that. It seems to me without cutting things unduly short, and of course I will hear anything you want to say to me. It seems to me that the central issue on costs for me to decide is whether to limit your costs by some fraction or not, up to the point of the letter of 5th April.

MISS HEAL: Yes, it is my primary submission that my Lord should not.

MR JUSTICE SINGH: Exactly. Or whether I should grant you costs up to and including this hearing. If I decide to grant costs up to and including this hearing, then there is a question importantly of whether you should recover all of your costs or whether I should award only a fraction, to reflect the fact that although you have been successful you were only partially successful. It may be of some interest - every case turns on its own facts - but it may be of some interest to know that in the Hurley case the order of the Divisional Court eventually made was to award half of the costs to the claimants.

MISS HEAL: My Lord, I submit that the correct approach is an issue-based approach in this case. I would carve up the issues as half and half, actual cost and consultation, because the human rights aspects of the case took a very short time, as did the delay and the other aspects and in those circumstances an order that the defendant pay half of the claimant's costs up to and including today is the appropriate order that has what.

MR JUSTICE SINGH: That is what you apply for.

Mr Bourne you have heard what has been said. Why should I not award half of the claimant's costs up to today's date?

MR BOURNE: For these reasons. No 1 there is a degree of failure by the claimants which of course in the end it is your Lordship's job to quantify. Grounds that have failed and the earlier procedural failures. That is one impact. Second, I accept it makes perfectly good sense to make what I call a one way costs order: D to pay X% of C's costs. But in assessing per cent one bears in mind that if we were having a strictly issue based approach, it might be C's costs on consultation and D's costs against C on the things that they have lost on. That is what brings the percentage down.

There is a precedent in the case law as well, as Hurley the other case that comes to mind is Lumba, where I think I am right in saying that Mr Hussein in the end got a third of his costs. That was from the Supreme Court of course, as your Lordship knows a battle royal on 101 different things.

The only other thing I say, correcting a misunderstanding. I am not seeking any costs order in my favour, permission hearing or anything else. One final thing about that offer letter at page 1217, it referred to one fact of some significance which is of course that by the time that letter was written a consultation had already taken place in respect of the next year, in which, as the letter accepted, Devon had gone about it in a much more structured formal way, so the claimants had in their hands the fruit of what they had already achieved on consultation. It was there for them to see.

MR JUSTICE SINGH: One thing I bear in mind, Mr Bourne, is that last week Mr Straker, who was leading you made the submission, as I understood him, that I should decline even to make a declaration. If things had stood simply as they did on 5th April, what the claimants would not have had is the formal and public vindication that there had been a breach of the law, which a declaration gives them and they have come to the court and obtained a remedy that was resisted.

MR BOURNE: My Lord that is a fair point, all I set against is that, given a without prejudice negotiation was at that point taking place, the only thing they quibbled on was the cost. A letter that come back said: not enough costs. My Lord unless I can assist any further.

MR JUSTICE SINGH: Thank you both very much for your helpful submissions.

I have taken into account everything that has been said to me and I have had regard to the provisions of the White Book, particularly in the passages that have been directed to my attention. The conclusion that I have come to is that in the exercise of the court's discretion, the just order in this case would be that the defendant shall pay half of the claimant's costs up to and including today's date. That is to be subject to detailed assessment if not agreed.

MISS HEAL: My Lord, may I also have an order which I am asked to ask for, that the proceedings be transferred to CU Superior Court's costs office, the SSCO which my Lord may not have had a chance to look at in the White Book, I certainly had not until last night. It is in Volume 2 and if it is of assistance if I could read it to you. For my Lord's note it is on page 226 Volume 2 of the White Book. It is paragraph 18.1 at 1C-117 on that page it says: where detailed assessment is going to be quite a complicated matter in a substantial case, it is appropriate that the matter be, that there be an order for transfer to the SSCO. I seek that order.

MR JUSTICE SINGH: Any submissions on that?

MR BOURNE: My Lord, if I may say so, it sounds like a very practical suggestion.

MR JUSTICE SINGH: I will make that direction.

MISS HEAL: I am obliged.

MR JUSTICE SINGH: Is there anything?

MISS HEAL: No my Lord -- one moment (Pause).

My Lord, I am instructed to ask for an interim payment on costs and if my Lord I could just have a moment? In the sum of £40,000, payable within 21 days. That is considerably less than half of the claimant's costs in the matter up until today. The claimants are a group of small business owners and it has been a matter of considerable sacrifice to them and their businesses to bring these proceedings. They are keeping their businesses afloat nevertheless and it would be of great assistance to them - not to put too fine a point on it - to have a proportion of their costs as soon as possible. My submission of £40,000 within 21 days is an appropriate figure.

MR JUSTICE SINGH: Is that resisted?

MR BOURNE: Can I take instructions on it? (Pause).

My Lord the only potential bone of contention, perhaps unsurprisingly is the amount. We do not dispute the principle. Obviously the detailed assessment, as my learned friend has already anticipated, may be quite a thorny matter and whether 40 will turn out to be much less than half of their costs remains to be seen. It is a matter for your Lordship's discretion.

MR JUSTICE SINGH: I am going to make an order for interim payment of £40,000. That seems to me to be a reasonable estimate which is well below, so far as one can judge, what cases of this kind in the High Court are likely to entail ultimately. I will direct that shall be paid by the defendant within 21 days.

MISS HEAL: I am obliged.

MR JUSTICE SINGH: Can I thank you, not only both counsel who have attended today but also all counsel who have been involved in the case and also all the solicitors, because I know that preparing a case of this kind takes a lot of effort. If I may say so, the bundles were beautifully presented to the court. Thank you very much.