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England and Wales Care Standards Tribunal
You are here: BAILII >> Databases >> England and Wales Care Standards Tribunal >> Fun Camps Ltd & Ors v OFSTED [2003] EWCST 124(EY) (12 May 2003)
URL: http://www.bailii.org/ew/cases/EWCST/2003/124(EY).html
Cite as: [2003] EWCST 124(EY)
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Fun Camps Ltd & Ors v OFSTED [2003] EWCST 124(EY) (12 May 2003)
Fun Camps Ltd
Mr S O’Donahue
Mr A James
V
OFSTED
[2003] 124.EY
Application for Costs
7th May 2003.
His Honour Judge David Pearl
President
This is an application for costs made by the Respondent, OFSTED, after the withdrawal of the appeal by the appellants. The appeal was brought by the appellants on 23rd December 2002 against a decision taken by OFSTED on 6th December 2002 in relation to a number of day care activities for the under eights operated by Fun Camps Ltd. The appeal was withdrawn on 3rd March 2003 and, in consequence of this, applying Regulation 33 of the 2002 Regulations I dismissed the appeal.
At the costs hearing, Mr J Jackson, of Walker Morris solicitors appeared on behalf of the Respondent OFSTED and Mr T Hughes, Banner Jones Middleton, solicitors represented the appellants.
Regulation 33 specifies that the President may make a costs order subject to Regulation 24(2)(3). These Regulations are administrative and they have been complied with in this case. Regulation 33(1) does not refer to Regulation 24(1). This may well be an oversight on the part of the draftsman. In any event it is agreed both by Mr Hughes and Mr Jackson that the overriding consideration for the exercise of the judicial discretion in relation to all costs applications, including those arising out of Reg 33, is that the paying party must be shown to have acted unreasonably in bringing or conducting proceedings. This provision applies under Reg 33 as much as it does in a situation where there has been a full merits appeal.
In Dr R A Fairburn (The Old Rectory Nursing Home) v NCSC [2002]76 NC, I said "the test is a high one" It is agreed by both sides that this is the appropriate test, and that the burden is on the Respondent to satisfy me to that standard that the appellant has acted unreasonably.
It is clear that conduct is a relevant factor. One issue that I need to determine is whether I can consider conduct prior to the initiation of the proceedings. I have looked at CPR 44.3.5(a) which says in that context that the civil judge can look at conduct before as well as during the proceedings. It is my view that the approach of the CPR is relevant also to proceedings before the Care Standards Tribunal. I agree with Mr Jackson who submits that conduct as a whole must be relevant, and this must include matters prior to the initiation of the proceedings. One has to take an overview of the conduct of both parties to ascertain whether one of them has acted unreasonably.
However, there is a fundamental difference between cases where findings of fact have been made and those where no findings have been made, since no merits examination has been conducted by the Tribunal. The reference in the CPR to "conduct before proceedings are commenced" presupposes findings of fact being made. If no findings of fact have been made it seems to me that the Tribunal is unable to deal with allegations that may or may not be true. The allegations have not been tested.
What I do know about this case, because it is not in dispute, is that the appellants withdrew the appeal on 3rd March 2003. In my view, this was the first available opportunity subsequent to the bulk of the evidential material being served in compliance with the Regulations.
The Respondent submits that the appellants knew at a much earlier stage of the allegations and knew of the issues that would have to be addressed. My attention was drawn to the notices themselves with the alleged breaches of the National Standards. The Respondent is right to say that the bare bones of the issues were known to the appellants at this time; certainly by the date that the notices were served if not before because there had been an exchange of correspondence between the legal advisers and there had been undertakings that had been offered on behalf of the appellants not to run activities for under eights during the half terms and school holidays.
But as against this, is the fact that the Respondent knew that an appeal was to be launched. To adopt the words of Mr Jackson "they were not taken by surprise." There was communication between the parties that the appellants would appeal directly to the Care Standards Tribunal rather than use the internal panel procedures of OFSTED. This illustrates that the appellants were anxious to resolve the matters as early as possible. In my view, both sides knew what was likely to happen, namely an appeal, at an early stage.
In looking at the high test as to whether the appellants acted unreasonably, I am not satisfied that the appellants have acted unreasonably in this case. It is a high test and rightly so. The decision to withdraw was taken at the earliest opportunity after the conclusion of the pleadings.
It is not necessary for me to deal with the other matters that have been raised before me. However, although perhaps of no significance to the parties, the other issues are matters of general interest.
The first matter I look at briefly is when should the costs assessment run, assuming an order were to be made. There are two approaches in interpreting Reg 24(1). Mr Jackson urged me to adopt a wide approach; namely, that costs incurred prior to the commencement of the proceedings could be incurred. In this case much of the material had been collected prior to the actual proceedings being commenced. Mr Hughes urged me to interpret the Regulation in a narrower and stricter sense. I think he is right. Costs can only be awarded, in my view, from the date when the proceedings start. This could the serving of the B1 form or could be when communication is made to the Tribunal of the intention to appeal. There is a third possibility in this case, acknowledged by Mr Jackson; namely the date when the parties entered into discussion as to the appropriate procedure to adopt in relation to the appeal process.
The CPR specifically enables a Judge to make an order so as to include costs incurred before the proceedings are begun. (CPR 44.3(6)(d)). There is no such provision in the 2002 Regulations. It is my view that the absence of such a provision means that the Tribunal does not have that power, and Mr Hughes must be right on the general point. On the facts of this case I would have been prepared to have assessed costs (assuming that I had been for Mr Jackson) as from the date that the parties exchanged correspondence as to the appropriate mechanism for appeal.
The final point concerns who would have been the subject of the costs order assuming I had made one. Fun Camps is a limited company and Mr James and Mr O’Donohue are the Directors. Mr Jackson urged me to lift the corporate veil in this case. I have been referred to two cases; Trustor AB v Smallbone and Others (The Vice-Chancellor, 16th March 2001) and North West Holdings v Backhouse (CA, [2001] EWCA Civ 67). These cases are not costs cases. In Trustor, the Vice-Chancellor makes it clear that lifting the veil so that an order could be made against the Directors can only be justified in three categories. These are (a) where the company is a façade or a sham (b) where the company is involved in an impropriety and (c) where it is necessary to do so in the interests of justice.
It would seem to me that the difficulty Mr Jackson faces in this case is that no findings have been made. They remain allegations. As to (a) it is agreed that this company (Fun Camps) was set up for the particular purpose of seeking money from the Lottery Fund for the running of the activities. There is nothing illegal in this. Any allegations surrounding the company have not been resolved by me. As to (b), again I have made no findings. As to (c) it was suggested that this was a matter that I should look at. But it has been accepted by Mr Jackson that no criminal proceedings are pending. There may well be matters of public policy but it is impossible in a costs application to deal with these matters when no findings have been made.
In conclusion, because OFSTED have been unable to persuade me to the high standard that the appellants have acted unreasonably in bringing or conducting these proceedings, I make NO ORDER AS TO COSTS.
His Honour Judge David Pearl
President
12th May 2003