England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE QUEEN'S BENCH DIVISION
MR JACK BEATSON QC SITTING AS A
DEPUTY HIGH COURT JUDGE

		Royal Courts of Justice Strand, London, WC2A 2LL
		Tuesday 30th July 2002

Lord Justice Pill:

1. This is an appeal by Chorion PLC ("the appellants") against a judgment of Mr Jack Beatson QC, sitting as a Deputy High Court Judge, on 12 November 2001. The appeal is against an order for costs which the judge made on that date in proceedings for judicial review. The order was that Westminster City Council ("the Council") should pay the appellants "the costs in respect of the judicial review proceedings limited to those [appellants'] costs which are attributable to the pursuit of its case that section 6 of the policy document had the effect of providing for the 'cutting back' of the licenses even where only an application for variation of the licenses had been made. Such costs are to be subject to detailed assessment on the standard basis".
2. The applicants had sought, in proceedings for judicial review, an order quashing the Council's policy for the grant, renewal and variation of public entertainment and late cafe licenses. The decision to adopt the policy was challenged on a number of grounds. Permission to apply was granted by Richards J on 1 November 2001, the permission not being limited to particular grounds. On 20 March 2001, the Council resolved to change the policy in such a way as to address the principal complaint of the appellants.
3. As a result, the appellants applied, on 25 June 2001, for permission to discontinue the claim. They also sought an order under CPR 38.6(1) that the Council should pay the costs of the proceedings on the ground that the appellants had achieved the principal relief they had sought. If the application to allow discontinuance were to be granted, some of the issues raised by the appellants would inevitably remain unresolved.
4. There was a hearing before the judge on 20 September 2001 which lasted most of the day. On 27 September, the judge sent to the parties' lawyers, in accordance with the usual practice and in advance of pronouncing judgment, a draft judgment. This is done with a view to assisting the parties and also to provide an opportunity to "submit any list of typing corrections and other obvious errors", as was stated on the face of the draft. The judge proposed to grant permission to discontinue and award costs to the appellants. The draft judgment provided:

"26. ... In my judgment, although there was concern about the Policy as a whole, the focus of the challenge was, as shown by Paisner & Co's letter of 15 September, the application of the Policy to variations. Variations were the only matter mentioned in the letter. I conclude that the changes made in March 2001 gave Chorion the principal relief which it sought. ...

30. ... The Council's conduct after the proceedings were issued can thus be characterised as open to question and unreasonable in view of the merits of Chorion's case with regard to variations on license.

31. ... Although Chorion obtained the principal relief which it sought, and notwithstanding the Council's conduct after the proceedings were issued, there remains the fact that Chorion's conduct before proceedings were issued was in my view open to question for the reasons I have given. I have considered whether this justifies me either refusing to make the Order Chorion seeks, or only granting it a proportion of its costs. I have, however concluded that in the circumstances of this case, a costs order which in Langley J.'s words, fairly reflects the overall merits of the case and does not require either a deduction or a denial of costs ..."

(The reference to Langley J is a reference to that judge's decision in Amoco (UK) Exploration Co v British American Offshore Ltd (12 December 2000) to award costs to a party which sought to discontinue.)

5. On receipt of the draft judgment, Mr Bromley-Martin QC, for the Council, who had not appeared for the Council on 20 September, made detailed submissions, which had not been invited, on the merits. He submitted that the judge should hear further argument with a view to altering the terms of the draft judgment. It was also submitted, in a separate two-line submission, that the detailed assessment of costs should identify only those costs attributable to the variation question.
6. At a hearing on 5 October 2001, the judge rejected, rightly in my view, Mr Bromley-Martin's submission that he should not deliver the draft judgment. There was no justification for this attempt to reopen the substance of the matter on receipt of the draft. The judge handed down his written judgment, which concluded:

"32. Accordingly, I grant Chorion permission to discontinue the judicial review proceedings and I award costs against the Council. I shall hear the parties on assessment and payment on account."

On handing down the judgment the judge stated:

"For the reasons stated in the judgment that is being handed down, I grant Chorion permission to discontinue the judicial review proceedings and award costs against the Council. In view of the time this morning I cannot deal with the matters the subject of Mr Hunter's application concerning interim payment and summary assessment.

Mr Bromley-Martin: My Lord, can I indicate, because this can be dealt with, that I do not oppose the application for costs of the application to discontinue.

The judge: Yes.

Mr Bromley-Martin: So I say nothing about that.

The judge: In that case I will order that costs are to be paid by the defendant, to be assessed if not agreed.

Mr Bromley-Martin: On the standard basis, my Lord, yes."

7. On 2 November 2001, the Court sealed an order which stated:

"IT IS ORDERED that

1. This application be allowed and permission to discontinue Judicial Review proceedings be granted.

AND IT IS ORDERED that the Defendant pay the Claimant's costs such costs to be assessed if not agreed"

It was also ordered that any question of the form of the order be adjourned. I am satisfied that the inclusion of that provision by the associate did no more than pick up a comment Mr Hunter, for the appellant, had made in an abundance of caution in the course of argument. It has no bearing on the present issue.

8. There was a further hearing on 12 November 2001, the transcript for which extends to 22 pages. The Council sought permission to appeal against the judgment and order for costs and that was refused. Notwithstanding the sealed order, however, the Council argued that the order for costs should be limited to a single issue. Much of the argument was taken up with that question. The judge acceded to that argument, stating:

"118. The matter of whether there should be issue costs was not dealt with at the main hearing, and I am going to order that the costs should be those costs attributable to the claim that the policy meant that the licences could not be cut back on variation and that such costs to be subject to detailed assessment if not agreed."

Thus the awarded costs were to be limited to a single issue, one of several, raised on the application for judicial review.

9. The judge had previously stated that "paragraph 32 of the judgment states that while I awarded costs against the Council I would hear the parties on the assessment and payment on account". Mr Hunter drew to the judge's attention to the apparent inconsistency between the order proposed and the sealed order, which did not identify issue costs. The judge referred to the limitations of time at the hearing on 5 October and stated that "paragraph 32 was supposed to leave that point".
10. Mr Bromley-Martin urged the judge to confirm the further order he had proposed, stating:

"It was quite clear from your Lordship's draft judgment that the only question raised in the judgment as to a proportion of costs was dealing with whether or not that should be done by reason of the conduct of the parties rather than the issue. So, my Lord, having not been in the substantive hearing, looking at it, so to speak, from the outside, when I first read the draft judgment, it led me to believe that your Lordship had not determined the question of issue costs."

The judge proceeded to make the order set out in paragraph 1 of this judgment stating:

"163. I have looked at the terms of the order on 5^th October. Noting that we were very pressed on that occasion and that the matter had to be adjourned, I conclude that I do not consider that this matter was decided then. I have regard to Mr Hunter's submissions and the decision of Langley J in which, although the party awarded costs did get everything it sought, there were no issue costs awarded. Nevertheless, I consider that in this case, in regard to the order I made earlier this morning, I should not revisit it."

The judge refused permission to appeal against the order. He also made an interim order for costs in the appellant's favour but on the new basis.

11. The 12 November order is not expressed to be by way of variation of or substitution for the sealed order resulting from the judgment of 5 October. In my view, the two judgments are inconsistent. An order that "the defendant pay the claimant's costs such costs to be assessed if not agreed" is contradicted by an order which provides that the claimant shall receive costs on only one issue. There was no appeal against the earlier order, permission having been refused by the trial judge.
12. Reference is made to the greater willingness of the courts under the Civil Procedure Rules to award costs on an issue by issue basis. In Phonographic Performance Ltd v AIE Rediffusion Ltd [1999] 1 WLR 1507, Lord Woolf MR stated, at p 1522H:

"The most significant change of emphasis of the new rules is to require courts to be more ready to make separate orders which reflect the outcome of different issues. In doing this the new rules are reflecting a change of practice which has already started. It is now clear that a too robust application of the 'follow the event' principle encourages litigants to increase the costs of litigation, since it discourages litigants from being selective as to the points they take. If you recover all your costs as long as you win, you are encouraged to leave no stone unturned in your effort to do so."

13. Mr Bromley-Martin submits that, from the remarks the judge made on 12 November, the judge was plainly under the impression that the question of issue costs had not been resolved. Mr Bromley-Martin states that, notwithstanding his own comments following the handing down of the judgment on 5 October, he too was under the impression that the question whether the appellants should have all their costs or, on an issue by issue basis, only part of them remained open. The expression "assessment of costs", he submits, includes a consideration of whether a party should have its costs or only costs on a single issue.
14. I do not accept Mr Bromley-Martin's submission. The only issue before the Court on 20 September was a dispute as to costs. The hearing lasted for the greater part of the day. The appellants applied for their costs. If the Council wished to take the point that the party which had (as the judge found) achieved the "principal relief which it sought" should not have its full costs, it was open to the Council to present its arguments to the judge on 20 September. That was not done either for tactical reasons, as Mr Bromley-Martin at one stage suggested, or for other reasons or for no reason at all. I find it almost incredible that the scope of the 20 September hearing had not been appreciated by the Council's representatives then appearing. Whether or not they did appreciate it, an order for costs was made and a judgment sealed following the hearing and the Council should not have obtained a different order on 12 November.
15. The judge made an order, which was later sealed, the meaning of which is clear. It reflected what he said in his judgment. The judge awarded costs against the Council. In context, that can only mean all the costs and not part of the costs. The assessment of costs, which was deferred, is a different procedure from deciding whether a party is to be awarded all its costs or only a part of its costs. Unsurprisingly, I entirely reject Mr Bromley-Martin's submission that the conclusion I have reached bears adversely on the judge's credibility. The judge too may have been under a misapprehension but he should not, with respect, have been persuaded on 12 November to make a different and inconsistent order.
16. There may be cases in which a party discontinues its claim, having achieved by concession a considerable measure of success, and yet that party is not entitled to all its costs. Issues besides the one the concession on which led to discontinuance may have been raised. If the other submissions are of no merit or relevance the principle stated by Lord Woolf in Phonographic Performance Ltd may well apply. If it is to operate, the point should be raised at the appropriate time which is on the application for discontinuance.
17. The judge will not usually be in as good a position to determine the point as a judge who has heard the merits of a case. Not having heard the case, he may find it difficult to decide which are the good points of the successful party and which are the points to which the principle should apply. Care is, therefore, required. Had it been open to the judge, on 12 November, to award costs on only one issue, he should have but did not consider the merit or absence of merit of the points claimed to be unnecessary to the relief sought on the application and that granted. If upon discontinuance, costs are by rote to be refused on other issues, a party to whom discontinuance is acceptable will need to proceed with its claim to demonstrate that the other points have merit and that too is a potential mischief. Each case should be considered on its merits.
18. I would allow this appeal and discharge paragraph 2 of the order of 12 November 2001.

Sir Martin Nourse:

19. I agree.
20. It is made clear in the first two paragraphs of the judgment handed down by the learned deputy judge on 5^th October 2001 that at the hearing on 20^th September the Council did not oppose the appellants' application for permission to discontinue their claim in the judicial review proceedings. The sole issue for determination was which party should pay the other's costs of those proceedings. The appellants said that the Council should pay their costs and the Council said that the appellants should pay their costs. Despite those extreme positions, it would have been perfectly obvious, as it invariably is, that the judge might make an order somewhere in between. In that state of affairs it was incumbent on the parties to make all the submissions they wished to make on those questions of costs which are habitually decided by the trial judge and are not remitted to the costs judge on an assessment. Those questions include apportionment of costs, whether on a fractional or percentage basis or on a basis referable to the issues in the case ("issue costs").
21. We were assured by Mr Bromley-Martin QC, for the Council, that no mention of issue costs was made at the hearing on 20^th September. In the present context the only significance of that is that counsel then appearing for the Council did not submit, as an alternative to the Council's primary case, that an order for issue costs should be made. But that is beside the point. Exceptional circumstances apart, the function of a judge in civil litigation is to decide the questions before him in the light of the submissions that are made on each side. Exceptional circumstances apart, if a submission which could have been made is not made, it is not open to the party who could have made it to reopen the decision, certainly not after it has been embodied in a sealed order.
22. Accordingly, there being no exceptional circumstances in the present case, it was not open to the Council to apply for an order for issue costs after the judgment had been handed down on 5^th October, certainly not after the sealing of the amended order on 2^nd November 2001. That is an end of the case. The appellants are entitled to succeed in their appeal against the judge's order of 12^th November, 2001.
23. For these reasons, as well as for those stated by Lord Justice Pill, with which I am in complete agreement, I too would allow the appeal.
Order: Appeal allowed; Respondents to pay the Appellants costs which are agreed in the sum of £8,404. (Order does not form part of the approved Judgment).