England and Wales High Court (Administrative Court) Decisions

IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
CROWN OFFICE LIST
DIVISIONAL COURT

		Royal Courts of Justice The Strand London
		10 May 2000

1. THE LORD CHIEF JUSTICE: The issue in this appeal by case stated is whether justices erred in the exercise of their discretion by awarding costs against a local authority on a successful complaint against a vehicle licensing decision of the local authority when the local authority had not, in making the decision appealed against, acted unreasonably or in bad faith.
2. The appellant is the City of Bradford Metropolitan District Council. The respondent to the appeal (who does not appear) is Mr Eric Booth who operates a private car hire business.
3. The facts of the case so far as relevant are these. On 7 October 1997 the local authority granted Mr Booth a private hire operator's licence. That licence was valid from 7 October 1997 for one year and its effect was to license Mr Booth to operate private hire vehicles in the City of Bradford. The licence was subject to a condition that no more than one private hire vehicle should be run from an address in Haworth where Mr Booth lived.
4. The local authority took the view that Mr Booth had broken the condition of his licence and at the expiry of the year refused to renew it. The court is not concerned with the detailed grounds for the local authority's view, although it is plain that it was thought that Mr Booth was operating more than a single private hire vehicle from his home address.
5. Mr Booth was aggrieved by the decision of the local authority not to renew his licence and on 23 November 1998 preferred a complaint against the local authority. The effect of this complaint was to appeal against the decision not to renew his licence under section 62(3) of the Local Government (Miscellaneous Provisions) Act 1976 against the decision not to renew his licence under section 62(1)(b) of the Act. By section 77 of that Act, sections 300 - 302 of the Public Health Act 1936 are incorporated. Section 300 of the Public Health Act affords a right of appeal to the magistrates' court by way of complaint. In this way Mr Booth's complaint came before West Yorkshire Justices sitting in Bradford. The justices concluded that Mr Booth had not breached the condition of his licence, nor relevant planning legislation. Accordingly the justices upheld Mr Booth's appeal and renewed his private operator's licence on the same terms and conditions as had obtained previously.
6. Mr Booth by his representative then applied for costs against the local authority under section 64 of the Magistrates' Courts Act 1980 which so far as relevant provides in subsection (1):

"On the hearing of a complaint, a magistrates' court shall have power in its discretion to make such order as to costs --

(a) on making the order for which the complaint is made, to be paid by the defendant to the complainant;

(b) on dismissing the complaint, to be paid by the complainant to the defendant,

as it thinks just and reasonable;...."

7. On behalf of Mr Booth it was argued before the justices that in this situation, as in other litigious situations, the principle that costs follow the event should apply. It was contended that R v Merthyr Tydfil Crown Court, ex parte Chief Constable of Dyfed Powys Police (unreported, 9 November 1998, CO/3484/98), to which I will come in a moment, should be distinguished. It was further contended that although the local authority were exercising an administrative function in the licensing of private hire operators, if they made a mistake or failed to consider matters properly they should not escape the consequences of paying an appropriate sum in costs. It was, however, conceded on behalf of Mr Booth that the local authority had not acted unreasonably or in bad faith.
8. Those submissions made on behalf of Mr Booth were strongly contested in counter-submissions made by the local authority, on whose behalf it was argued that the local authority was carrying out a public function which it was required to perform by law and that in those circumstances costs should not follow the event but should be awarded only if the local authority had acted unreasonably or in bad faith. It was argued that the principle in the Merthyr Tydfil case should be followed. It was further argued that a conflict might arise between the local authority's overriding duty to protect the public, as set out in Department of Transport guidance, and the authority's concern to protect its position on costs. Such a dilemma, it was said, would be even more acute if costs automatically followed the event.
9. The justices formed the opinion, as recorded in the statement of case, that costs should follow the event in the instant case, subject to costs being just and reasonable, and accordingly ordered that Mr Booth should recover £750 plus VAT against the local authority. The questions posed for the opinion of the court are two- fold:

"a) Were we correct in law in finding that the principle that 'costs follow the event' apply against Local Authorities who make decisions on licensing functions which they are required to perform?

b) Were we correct in law in finding that there was no requirement that we be satisfied that the Local Authority had acted unreasonably or in bad faith, before we could order costs against the Local Authority?"

10. On behalf of the local authority today Mr Blair-Gould submits that the approach taken by the justices was erroneous in principle. The correct principle, he submits, is that a local authority ought never to be ordered to pay costs in a situation of this kind unless it has acted unreasonably, improperly or dishonestly. He reminds us, quite correctly, that sometimes an authority may have a duty of enforcement as, for example, the police in relation to licensing. But equally he points out, correctly, that sometimes a local authority or the police themselves may be the licensing authority. He draws our attention to the huge range of licensing functions which the local authority is required by statute to carry out. Of those their duties in relation to vehicle licensing are probably the largest and most exacting. He submits that the local authority works inevitably through sub-committees who seek to act in a quasi-judicial manner, making decisions in the public interest, and he urges that it would be gravely detrimental to the protection of the public if local authorities were to be deterred from making whatever decisions they thought were right by the fear that if those decisions were challenged, and if the challenge were successful, they would be mulcted in costs. As a matter of practical reality, he submits, a local authority in a case of this kind has no choice but to appear in the magistrates' court. The argument then may be about the facts upon which the local authority relied in making its decision, for example as to whether a condition had been breached, or might be as to whether a licensee had shown himself unfit to hold a licence, in which case the magistrates, while accepting the local authority's view, might nonetheless decide to give the licensee another chance. In either situation, Mr Blair-Gould urges, the financial consequences of the hearing to the successful complainant are irrelevant or virtually so. He submits that the costs of a hearing such as this should be regarded by a complainant as an ordinary business expense. If the complainant cannot afford legal representation, then he should go without. He submits, roundly, that it can never be just and reasonable to order a local authority to pay costs in the absence of bad faith or unreasonable behaviour. Thus, he submits that the justices erred in this case. He fortifies his submissions by urging that the present issue is one of very considerable import to a large number of local authorities who have expressed interest in the outcome and sought guidance.
11. The justices were referred to the case already mentioned, R v Merthyr Tydfil Crown Court, ex parte Chief Constable Dyfed Powys Police (9 November 1998), in which the Chief Constable objected to the transfer of a justices' on-licence to a Mrs W. It was an important feature of the case that he had good grounds for doing so. The transfer was refused by licensing justices. Mrs W appealed and the Chief Constable, having objected to the transfer, became a respondent. On the appeal Mrs W contended that, since the conduct of which the police complained, she had undergone training and addressed the deficiencies in her performance as a licensee. She furthermore was able to adduce the support of a major brewer. The Crown Court allowed Mrs W's appeal and granted the transfer of the justices' licence to her, although it is noteworthy that in doing so the judge commented that the court had accepted that the objections placed before it by the police were well-founded and related to serious breaches of the licensing laws. The question of costs then arose. The Crown Court ordered that the police should pay Mrs W's costs of the appeal. It was that order that was challenged before Lightman J. In the course of giving judgment Lightman J quoted a passage from the judgment of Roch J in R v Totnes Licensing Justices, ex p Chief Constable of Devon and Cornwall (1990) 156 JP 587, The) Times, 28 May 1990, where Roch J had said:

"In my judgment it was wrong for the justices to treat this matter as civil proceedings between two private litigants and to ignore the factor urged upon them by the solicitor appearing for the police authority, namely, that the police have a function which they are required to perform. They are required to supervise the proper conduct of the licensed premises and to object in those cases where there are good grounds for objecting to the renewal of the licence. That that is the police's function is clearly demonstrated by the provisions in the Licensing Act which give the police power to enter licensed premises whether at the invitation of the licensee or not.

In addition, in my view, the police authority must also bring to the attention of the licensing justices matters of which the police know and which can fairly and properly be said to amount to misconduct by the licensee or those for whom he is responsible ...."

12. In the course of his own judgment Lightman J said:
13. "In my view, the position is quite clear: the same principle applies before the Crown Court as before the licensing justices. The language of the relevant rules is for all practical purposes identical. This is reinforced by the consideration that the proceedings before the Crown Court take place by way of rehearing. In the same way as the justices need the assistance of the police in respect of the provision of any information which may assist them in deciding whether or not the Applicant is a fit person to hold a licence, the Crown Court requires that assistance. It seems to me that no order can properly be made against the police simply on the basis that costs follow the event. The Crown Court can only make such an order if it can be shown that the police's position has been totally unreasonable or prompted by some improper motive."
14. Lightman J concluded that the Crown Court in that case had misdirected itself. It was of course a case in which the police were not themselves the licensing authority but were merely bringing information by way of objection before the licensing justices, and, furthermore, a case in which the objections of the police were found to be entirely well-founded.
15. Perhaps closer to the present case is Chief Constable of Derbyshire v Goodman and Newton (DC, unreported, 2 April 1998). The facts in that case were that firearms licences were granted to the two respondents, Mr Goodman and Mr Newton, by the Chief Constable, and in due course revoked by the Chief Constable. They appealed to the Crown Court against that revocation and their appeal was allowed. The judge, however, ordered the Chief Constable to pay the costs of the two respondents, and he appealed against that order. It was the correctness of that order which was the issue on the appeal. In the course of giving judgment May LJ said at page 5D of the transcript:
16. "It should be said that the learned judge had found that the Chief Constable had acted entirely in good faith, and no criticism was levelled against him in the way in which this had been handled."
17. Having considered a number of decided cases, some of them dealing with a subject-matter somewhat different in my judgment from the present, May LJ said at page 9D of the transcript:
18. "It is of course important to say that decisions as to costs are discretionary and that any court or tribunal exercising such discretion is obliged to take into account all relevant circumstances. One such relevant circumstance was that this was indeed a police authority performing a statutory licensing function. This will not be determinative of all cases, but it is important that the tribunal takes into account that, generally speaking, a cost order adverse to such an authority would not be made unless there was some good reason for doing so, which was more than the fact that the other party to the contest had succeeded."
19. May LJ them summarised the submissions made on behalf of the parties to the appeal and concluded at page 11C:
20. "In my view, this is a borderline case so far as costs are concerned. I can certainly see some force in [counsel's] submissions, but exercising afresh, as in my view we are entitled to do, the discretion which Judge Morrison exercised, I consider on balance that this is not a case where costs ought to have been ordered against the Chief Constable. He acted, as the judge held, in complete good faith and, in those circumstances, the costs order ought not to have been made against him."
21. On that basis the appeal was allowed.
22. It seems to me that the justices in this case misdirected themselves, first, in relying on a principle that costs should follow the event, that misdirection being compounded by their view that the reference in section 64 to the order being just and reasonable applied to quantum only. On the other hand, in my judgment the submissions made by Mr Blair-Gould on behalf of the local authority go too far the other way since to give effect to the principle for which he contends would deprive the justices of any discretion to view the case in the round which is in my judgment what section 64 intends.
23. I would accordingly hold that the proper approach to questions of this kind can for convenience be summarised is three propositions:
24. 1. Section 64(1) confers a discretion upon a magistrates' court to make such order as to costs as it thinks just and reasonable. That provision applies both to the quantum of the costs (if any) to be paid, but also as to the party (if any) which should pay them.
25. 2. What the court will think just and reasonable will depend on all the relevant facts and circumstances of the case before the court. The court may think it just and reasonable that costs should follow the event, but need not think so in all cases covered by the subsection.
26. 3. Where a complainant has successfully challenged before justices an administrative decision made by a police or regulatory authority acting honestly, reasonably, properly and on grounds that reasonably appeared to be sound, in exercise of its public duty, the court should consider, in addition to any other relevant fact or circumstances, both (i) the financial prejudice to the particular complainant in the particular circumstances if an order for costs is not made in his favour; and (ii) the need to encourage public authorities to make and stand by honest, reasonable and apparently sound administrative decisions made in the public interest without fear of exposure to undue financial prejudice if the decision is successfully challenged.
27. To the questions asked by the court I would for my part answer the first question "No" and the second question "Yes". The consequence of those answers is to express disagreement with the approach adopted by the justices, but I find myself in no position to rule how the discretion should on the facts of this particular case have been exercised. The ordinary consequence of that conclusion would be to remit the case to the justices for further consideration, but Mr Blair-Gould has made it plain that the object of the local authority is to obtain guidance on the proper approach and not to seek any recovery from Mr Booth, to whom his costs have already been paid. In that situation I would make no further order.
28. MR JUSTICE SILBER: I agree.