COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM ADMINISTRATIVE COURT
Strand, London, WC2A 2LL
B e f o r e :
LORD JUSTICE MAURICE KAY
LORD JUSTICE STANLEY BURNTON
| THE QUEEN on the application of BUGLIFE-THE INVERTEBRATE CONSERVATION TRUST
|- and -
|THURROCK THAMES GATEWAY DEVELOPMENT CORPORATION
|- and -
|ROSEMOUND DEVELOPMENTS LIMITED
Timothy Straker QC and Caroline Bolton (instructed by Berwin Leighton Paisner LLP) for the Respondent
Reuben Taylor (instructed by Wragge & Co) for the Interested Party
Hearing date: 15th October 2008
Crown Copyright ©
Sir Anthony Clarke MR:
This is the judgment of the court.
Proceedings at first instance
"Whether the issue arises depends on who prevails. That, and the very tight one day estimate on which the [respondent] and the [developer] have insisted, indicates that the issue should be left over until after judgment is given on the substantive issues."
Buglife thus made no written submissions on the PCO issues.
Proceedings in the Court of Appeal
"Mitting J may well have been right, but the public interest requires the issues raised to be ventilated in the Court of Appeal."
In addition to a justified complaint about the length of the skeleton argument, Laws LJ added that he would not deal with the issues relating to PCOs referred to in paragraphs 84 to 88 of Buglife's skeleton argument on a without notice basis. He said that, if Buglife wanted to pursue such matters, it should issue a fresh application notice for permission to appeal against Sullivan J's order and seek a hearing before two LJJ on notice to deal with all PCO points.
The legal principles
74. We would therefore restate the governing principles in these terms:
(1) A protective costs order may be made at any stage of the proceedings, on such conditions as the court thinks fit, provided that the court is satisfied that: (i) the issues raised are of general public importance; (ii) the public interest requires that those issues should be resolved; (iii) the applicant has no private interest in the outcome of the case; (iv) having regard to the financial resources of the applicant and the respondent(s) and to the amount of costs that are likely to be involved it is fair and just to make the order; and (v) if the order is not made the applicant will probably discontinue the proceedings and will be acting reasonably in so doing.
(2) If those acting for the applicant are doing so pro bono this will be likely to enhance the merits of the application for a PCO.
(3) It is for the court, in its discretion, to decide whether it is fair and just to make the order in the light of the considerations set out above.
75. A PCO can take a number of different forms and the choice of the form of the order is an important aspect of the discretion exercised by the judge. In the present judgment we have noted: (i) a case where the claimant's lawyers were acting pro bono, and the effect of the PCO was to prescribe in advance that there would be no order as to costs in the substantive proceedings whatever the outcome (R (Refugee Legal Centre) v Secretary of State for the Home Department  EWCA Civ 1296); (ii) a case where the claimants were expecting to have their reasonable costs reimbursed in full if they won, but sought an order capping (at £25,000) their maximum liability for costs if they lost (R (Campaign for Nuclear Disarmament) v Prime Minister  EWHC 2712 (Admin)); (iii) a case similar to (ii) except that the claimants sought an order to the effect that there would be no order as to costs if they lost (R v Lord Chancellor, Ex P Child Poverty Action Group 1 WLR 347); and (iv) the present case where the claimants are bringing the proceedings with the benefit of a CFA, which is otherwise identical to (iii).
76. There is of course room for considerable variation, depending on what is appropriate and fair in each of the rare cases in which the question may arise. It is likely that a cost capping order for the claimants' costs will be required in all cases other than (i) above, and the principles underlying the court's judgment in King at paras 101-2 will always be applicable. We would rephrase that guidance in these terms in the present context: (i) When making any PCO where the applicant is seeking an order for costs in its favour if it wins, the court should prescribe by way of a capping order a total amount of the recoverable costs which will be inclusive, so far as a CFA-funded party is concerned, of any additional liability. (ii) The purpose of the PCO will be to limit or extinguish the liability of the applicant if it loses, and as a balancing factor the liability of the defendant for the applicant's costs if the defendant loses will thus be restricted to a reasonably modest amount. The applicant should expect the capping order to restrict it to solicitors' fees and a fee for a single advocate of junior counsel status that are no more than modest. (iii) The overriding purpose of exercising this jurisdiction is to enable the applicant to present its case to the court with a reasonably competent advocate without being exposed to such serious financial risks that would deter it from advancing a case of general public importance at all, where the court considers that it is in the public interest that an order should be made. The beneficiary of a PCO must not expect the capping order that will accompany the PCO to permit anything other than modest representation, and must arrange its legal representation (when its lawyers are not willing to act pro bono) accordingly."
"75. After much discussion the Group came back to the first two criteria identified by the Court of Appeal in Corner House and agreed that these provided a definition that was both workable and sufficiently flexible. A public interest case is one where:
(i) the issues raised are ones of general public importance, and
(ii) the public interest requires that those issues should be resolved.
76. The Group agreed that the definition should be given a broad, purposive interpretation. The definition should not be allowed to become unduly restrictive."
"In Corner House, the Court of Appeal accepted that PCOs should only be granted in "exceptional" cases. But it now seems this 'exceptionality' test is being applied so as to set too high a threshold for deciding (for example) 'general public importance', thus overly restricting the availability of PCOs in environmental cases. For example, in a recent case, Bullmore, the implicit approach taken in the High Court and confirmed in the Court of Appeal was that there really should only be a handful of PCO cases in total every year. Such an approach if generally adopted would ensure that the PCO jurisdiction made no significant contribution to remedying the access to justice deficit it was intended to deal with, including in the environmental field. Unless the exceptionality criterion is eased, PCOs cannot be used in any significant way to assist compliance with Aarhus."
"It seems to me as a matter of common sense, justice and proportionality that when exercising his discretion as to whether to make an order and if so what order, the judge should take account of the fullness of the extent to which the applicant has satisfied the five Corner House requirements. Where the issues to be raised are of the first rank of general public importance and there are compelling public interest reasons for them to be resolved, it may well be appropriate for the judge to make the strongest of orders, if the financial circumstances of the parties warrant it. But where the issues are of a lower order of general public importance and/or the public interest in resolution is less than compelling, a more modest order may still be open to the judge and a proportionate response to the circumstances."
As we see it, the correct approach is to take account of all the circumstances of the case.
"The purpose of the PCO will be to limit or extinguish the liability of the applicant if it loses, and as a balancing factor the liability of the defendant for the applicant's costs if the defendant loses will thus be restricted to a reasonably modest amount. The applicant should expect the capping order to restrict it to solicitors' fees and a fee for a single advocate of junior counsel status that are no more than modest."
"At one end of the scale, the judge may make a PCO which imposes on a defendant the burden of bearing its own costs even though it wins on the merits and does not relieve it of the prospective burden of paying the applicant's costs in the event that the applicant succeeds. However, Corner House makes it plain that it will be usual to limit the successful claimant to recovery of modest costs, comprising the fees of the solicitor and one junior counsel. That is the 'strongest' form of order which will usually be made. It puts the defendant at a major disadvantage; on costs it is in a 'heads you win tails I lose' position. At the other end of the scale, the court can make a much more modest order, whereby the claimant's liability to pay the defendant's costs is capped not at nil but at a specified level and where the defendant is given a guarantee that it will not be required to pay any of the claimant's costs. Holman J made a modest order of this type. He directed that, if the defendant PCT were to succeed, the claimant would be liable for £20,000 of its costs; that was two-thirds of the sum which the defendant PCT (then) estimated its costs would be. If the claimant were to win, the defendant would not have to pay any of the claimant's costs. (In fact, the claimant's costs will be minimal, as she has no solicitors and has the benefit of counsel acting pro bono.) Under that order, the defendant has the comfort of knowing that it cannot be required to meet any bill of costs other than its own and, over that, it has a large measure of control. Between the two extremes of the forms of order I have mentioned, it is possible for the judge to tailor the terms of the order to meet what he sees as the justice and fairness of the case."
"4. As a consequence, caps on claimant costs are being set at levels that (in general even if not necessarily in each particular case) are unsustainable and as a result stifle litigation. If unrealistic caps are set on a claimant's costs, lawyers who specialise in such cases will not be able to continue to work in this field. The impact of this requirement therefore threatens to undermine the contribution PCOs can make to access to justice generally and, if applied to environmental cases, to Aarhus compliance.
5. The Court of Appeal approach in Corner House, which limits capped costs to cover junior counsel only, also causes difficulties. By their very nature, complexity and public importance, a significant number of cases worthy of a PCO will justify the instruction of leading counsel. Indeed, there will frequently be leading counsel instructed for the defendant (as well as the developer or other interested third party) and in such cases their automatic exclusion for claimants would result in substantial inequality of arms.
6. There is a fundamental difference in the ways in which the burdens of costs caps fall on the claimant and defendant. The PCO limiting the defendant's costs recovery is paid by the defendant public body itself (in the same way as if the claimant were legally aided). There is no impact on the fees paid to the defendant's lawyers. Any cap on the claimant's costs is almost inevitably paid for by reducing the fees recovered by the claimant's lawyers. In effect, claimant's lawyers are bearing the burden of subsidising the provision of access to justice for their clients."
"7. There have been worrying examples where the implicit (or even explicit) assumption by the court is that the capped limit on the claimant's costs should somehow reflect the PCO limit imposed on the defendant. This is taken to represent an equitable approach as between the parties. We remind ourselves that this is not the way the Corner House principles are formulated and its adoption is unhelpful in the application of the PCO jurisdiction."
We entirely agree that there should be no assumption, whether explicit or implicit, that it is appropriate, where the claimant's liability for costs is capped, that the defendant's liability for costs should be capped in the same amount. As just stated, the amount of any cap on the defendant's liability for the claimant's costs will depend upon all the circumstances of the case.
"This problem is further exacerbated in cases where the claimant's lawyers are acting under a Conditional Fee Arrangement (CFA). When taking a view as to the reasonable costs cap to be imposed on the claimant, judges are reluctant to order what they consider at first glance to be excessive cost caps, resulting from the existence of the CFA. Because of the principle that the success fee is not to be disclosed before the conclusion of the case, a maximum 100% success fee must be assumed, resulting in a cap twice the size of the claimant's base costs. Parliament has legislated to provide CFA jurisdiction as part of the range of measures in place to achieve access to justice. The costs cap base level should not therefore be reduced."
We do not accept that approach in this context. The agreed success fee is relevant to the likely amount of the liability of the defendant to the claimant if the claimant wins. It is therefore relevant to the amount of any cap on that liability. In our opinion the court should know the true position when deciding what the cap should be.
The correct procedure – first instance
"78. We consider that a PCO should in normal circumstances be sought on the face of the initiating claim form, with the application supported by the requisite evidence, which should include a schedule of the claimant's future costs of and incidental to the full judicial review application. If the defendant wishes to resist the making of the PCO, or any of the sums set out in the claimant's schedule, it should set out its reasons in the acknowledgment of service filed pursuant to CPR 54.8. The claimant will of course be liable for the court fee(s) for pursuing the claim, and it will also be liable for the defendant's costs incurred in a successful resistance to an application for a PCO (compare Mount Cook Land Ltd v Westminster City Council  EWCA Civ 1346 at para 76(1)). The costs incurred in resisting a PCO should have regard to the overriding objective in the peculiar circumstances of such an application, and recoverability will depend on the normal tests of proportionality and, where appropriate, necessity. We would not normally expect a defendant to be able to demonstrate that proportionate costs exceeded £1,000. These liabilities should provide an appropriate financial disincentive for those who believe that they can apply for a PCO as a matter of course or that contesting a PCO may be a profitable exercise. So long as the initial liability is reasonably foreseeable, we see no reason why the court should handle an application for a PCO at no financial risk to the claimant at all.
79. The judge will then consider whether to make the PCO on the papers and if so, in what terms, and the size of the cap he should place on the claimant's recoverable costs, when he considers whether to grant permission to proceed. If he refuses to grant the PCO and the claimant requests that his decision is reconsidered at a hearing, the hearing should be limited to an hour and the claimant will face a liability for costs if the PCO is again refused. The considerations as to costs we have set out in paragraph 78 above will also apply at this stage: we would not expect a respondent to be able to demonstrate that proportionate costs exceeded £2,500. Although CPR 54.13 does not in terms apply to the making of a PCO, the defendant will have had the opportunity of providing reasoned written argument before the order is made, and by analogy with CPR 52.9(2) the court should not set a PCO aside unless there is a compelling reason for doing so. The PCO made by the judge on paper will provide its beneficiary with costs protection if any such application is made. An unmeritorious application to set aside a PCO should be met with an order for indemnity costs, to which any cap imposed by the PCO should not apply. Once the judge has made an order which includes the caps on costs to which we have referred, this will be an order to which anyone subsequently concerned with the assessment of costs will be bound to give effect (see CPR 44.5(2)).
81. It follows that a party which contemplates making a request for a PCO will face a liability for the court fees, a liability (which should not generally exceed a proportionate total of £2,000 in a multi-party case) for the costs of those who successfully resist the making of a PCO on the papers, and a further liability (which should not generally exceed a proportionate total of £5,000 in a multi-party case) if it requests the court to reconsider an initial refusal on the papers at an oral hearing. We hope that the Civil Procedure Rules Committee and the senior costs judge may formalise these principles in an appropriate codified form, with allowance where necessary for cost inflation in due course."
The correct procedure – Court of Appeal
"47. As to the procedures to be used in the Court of Appeal, having upheld the guidance in paragraph 79 of Corner House it seems to me that any procedure in the Court of Appeal should follow that guidance as far as possible. Let me deal first with cases where PCOs have been granted and the proceedings have been fought out. The governing principles identified in paragraph 74 can be taken to have been established so far as the case at first instance is concerned. If the person benefiting from a PCO is the would-be appellant, they may however have to be re-examined at the appellate stage. It may have become clear that no issue of general public importance arises or it may be clear that there is no public interest in bringing the case to the Court of Appeal. If the beneficiary of a PCO has succeeded in the court at first instance, it is difficult to think that some protection will not be appropriate in the Court of Appeal.
48. So far as procedure is concerned, if the recipient of the PCO in the court below is wishing to appeal, an application for a PCO should be lodged with the application for permission. The respondent should have an opportunity of providing written reasons why a PCO is now inappropriate. The decision will be taken on paper by the single Lord Justice. If a PCO is refused the applicant can apply orally. If it is granted then a respondent will need compelling reasons to set it aside.
49. What about PCOs on appeals from a refusal to grant a PCO or from the granting of a PCO? Again the matter should be dealt with by a single Lord Justice on paper and the normal order should be that there will be no order for costs save in exceptional circumstances, for example where the application is an abuse of process."
Smith LJ expressly agreed at .
"Mitting J may well have been right, but the public interest requires the issues raised to be ventilated in the Court of Appeal."
That led to an argument that Laws LJ had formed the view that Buglife had a thin case on the merits and that we should revisit the grant of permission or, at least, that we should hold that Buglife is unlikely to succeed on the merits and, for that reason, we should hold that it would not be just to grant a PCO in respect of Buglife's liability for the respondent's costs of the appeal.
Application to the facts