England and Wales High Court (Administrative Court) Decisions

IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
THE ADMINISTRATIVE COURT

		Royal Courts of Justice Strand London WC2
		17th May 2006

1. MR JUSTICE TOULSON: "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 when the Local Authority have not, in making the decision appealed against, acted unreasonably or in bad faith."
2. Those words come from the opening paragraph of the judgment of Lord Bingham CJ in City of Bradford Metropolitan District Council v Booth [2000] 164 JP 485. I will return to the guidance given by this court in that case after stating briefly the facts of the present case.
3. The proprietors of the Kingston Arms in Kingston Street, Cambridge wanted to extend their hours for serving alcohol and providing live music. They applied to the licensing authority under the terms of the Licensing Act 2003. The premises are in a residential area and neighbours objected because of the noise. The Local Authority had to balance the rival arguments. They allowed part of the application relating to public holidays, but refused to extend the hours beyond 11 pm on ordinary Fridays and Saturdays. The proprietors appealed to the local Magistrates under section 181 of the 2003 Act. The Magistrates received representations from the licensee, Ms Fairhall, and residents. The court struck the balance differently. They allowed the appeal in part, extending the licensing hours to midnight on Fridays and Saturdays but on condition that the garden was closed at 11 pm. Nobody could suggest that the decision either of the Local Authority or of the Magistrates was unreasonable, but the decision of the Magistrates prevails because it is the appellate body. At conclusion of the appeal the proprietors applied for an order for costs under section 181. This provides that on dealing with such an appeal the Magistrates' Court "may make such an order as to costs as it thinks fit".
4. There was argument during which the Magistrates were referred to the case of City of Bradford Metropolitan District Council v Booth. The Magistrates announced their decision and gave their reasons as follows:

"The bench considers that the matters have been correctly dealt with by the Local Authority and that the process was duly acted upon albeit that the bench reached a different conclusion.

It is also a consideration that Ms Fairhall's appeal was not successful in its entirety and the successful portion of the appeal has the potential to increase the profitability of the establishment. The bench has also taken into account that the issue has only arisen because of the desire of Ms Fairhall to alter the existing licence.

We do however accept that Ms Fairhall has had substantial expense in this matter and award costs of £2,000. This includes VAT and any court costs."

5. The Local Authority appeals against that order for costs. In the Case Stated the Magistrates explained their reasoning more fully as follows:

"6. We were advised by our legal adviser that the usual rule in civil cases was that costs should follow the event and an unsuccessful party to proceedings [would generally be required to meet some of all of the reasonable costs of the successful party. We were also reminded that these proceedings] derived from a decision made by a publicly funded authority carrying out a responsibility imposed upon it by statute. However we were also advised that the respondent had a right to appeal derived from the same legislation. We were reminded of the terms of section 181 of the Licensing Act 2003 and most particularly of the provisions therein to the effect that when dealing with such an appeal the magistrates' court 'may make such order as to costs as it thinks fit'.

7. We were of the opinion that although the licensing authority had carried out its statutory duties in a conscientious and proper manner this court had reached a different conclusion and found that it was reasonable and proportionate to allow the additional hour of trading on Friday and Saturday provided that the garden area was closed to the public during that additional hour of trading. We found also that it would be inequitable to order the appellant to pay all of the costs of the respondent because the respondent's appeal against the decision of the licensing authority had not been successful in its entirety and the successful portion of the respondent's appeal had the potential to increase the profitability of the establishment in question. In this respect also we took into consideration that the cause for appeal arose initially only because the respondent was desirous of altering the terms of the existing licence and submitted such an application to the licensing authority. However we found that the respondent had incurred substantial expenses in connection with the appeal process and had been partially successful in their application. One factor in our decision as regards costs was the fact that the licensing authority had seen fit to grant more generous hours of trading to two other premises in the same street. We were of the opinion that it was equitable,in all the circumstances, to order that the licensing authority pay the sum of two thousand pounds, to include VAT and court costs, towards the costs of the respondent. This represents an order of half of the costs the respondent has incurred in these proceedings."

6. The Justices then posed the question for the opinion of this court whether it was equitable to order the respondent to pay half the appellant's costs.
7. The words in square brackets in paragraph 6 appeared in a draft of the Case Stated but were omitted from the formal case as finally stated by the Justices. The omission of words appears to have been a simple typographical error. Without their inclusion the paragraph is ungrammatical and not fully comprehensible. I therefore proceed on the basis that the words in square brackets are to be read as included in the Stated Case.
8. This court can only interfere if the Justices misdirected themselves in their approach or reached a plainly unsupportable result. I come back to the decision of this court in City of Bradford Metropolitan District Council v Booth. In that case the Local Authority exercised a licensing function in relation to vehicles. Appeal lay from its decision under section 64 of the Magistrates' Courts Act 1980, which conferred on the court a power to make such order for costs as it thinks just and reasonable.
9. In considering how that power ought to be exercised, Lord Bingham said:

"I would accordingly hold that the proper approach to questions of this kind can for convenience be summarised in three propositions:

1. Section 64(1) confers 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.

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.

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."

10. He then went on to answer the questions posed as follows:

"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?

No.

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

Yes."

11. Local authorities have many licensing functions. It is clear that Lord Bingham's guidance did not depend on considerations specific to the licensing of vehicles, but is equally applicable in comparable cases where there is a statutory appeal from a decision of the Local Authority and the court has a broad discretion as to costs. Although as a matter of strict law the power of the court in such circumstances to award costs is not confined to cases where the Local Authority acted unreasonably and in bad faith, the fact that the Local Authority has acted reasonably and in good faith in the discharge of its public function is plainly a most important factor.
12. As to the financial loss suffered by the successful appellant, a successful appellant who has to bear his own costs will necessarily be out of pocket, and that is the reason in ordinary civil litigation for the principle that costs follow the event. But that principle does not apply in this type of case. When Lord Bingham referred to the need to consider the financial prejudice to a particular complainant in the particular circumstances, he was not in implying that an award for costs should routinely follow in favour of a successful appellant; quite to the contrary.
13. In this case, Mr Magee makes a number of criticisms of the reasoning of the Magistrates. First, he criticises their approach in paragraph 6 because they appear to have regarded the rule that costs follow the event as at least capable of carrying some weight. They refer to being advised that that was the usual rule in civil cases. They did not say that they had been advised by their clerk, as held by this court in City of Bradford Metropolitan District Council v Booth that such a rule had no part to play in cases of this kind. Mr Magee submits that echoes of the "costs follow the event" approach can be seen to permeate their thinking in the sentences which followed.
14. Secondly, the magistrates in the next paragraph began by saying that although the licensing authority had carried out its statutory duties in a conscientious and proper manner, they had reached a different conclusion. That is, at lowest, a strange way of putting the matter. It is rather suggestive that they were in some way diminishing the significance of the fact that the Local Authority had acted in a conscientious and proper manner by setting it against the fact that the Magistrates had reached a different conclusion, thus echoing the "costs follow the event" principle. What their thinking should have been is that although the court had reached a different conclusion from the licensing authority, nevertheless they acknowledged that the licensing authority had acted in an entirely proper fashion. That was the antithesis of the way in which they expressed themselves.
15. Thirdly, Mr Magee criticises the Magistrates for taking into account as a factor in their decision that the local authority had granted more generous hours of trading to two other premises in the same street. The only possible relevance of that matter could be if it led them to think that the Local Authority had been applying double standards and acted unreasonably. But any such finding would have been wholly inconsistent with their decision that the Local Authority had acted reasonably and conscientiously.
16. In my judgment, these criticisms are well founded. I am satisfied that the award for costs therefore cannot stand. The amount awarded was £2,000. The beneficiaries of the order have not appeared before this court to contest the appeal. It would be wholly inappropriate to send the matter back to the Magistrates for further consideration in these circumstances. In any event, I do not see, on the facts as found, how the Magistrates could properly have awarded costs against the Local Authority in these circumstances. For those reasons, I would answer the question posed in the negative and direct that the award be quashed.
17. LORD JUSTICE RICHARDS: I agree.
18. MR MAGEE: I appreciate that this, to some degree, an application in respect of moving money between pots, but the Local Authority in this situation, having dealt with it appropriately and drawn the appropriate law to the Justices' attention at the appropriate stage, find themselves with the Licensing Act 2003 with no budget, in fact, to deal with it. Given the way that I would respectfully submit to the court the appellant has dealt with the matter properly throughout, could I invite your Lordship to consider an order for costs out of central funds?
19. LORD JUSTICE RICHARDS: You are not seeking costs from the respondent, Alex Nestling Limited, even though they applied for the costs in the first place and they opposed the way you put it.
20. MR JUSTICE TOULSON: When they had got the Stated Case, although they took the position that they were not going to appear at this court, I assume they did not write to you and say they were prepared to waive their costs.
21. MR MAGEE: They did not, my Lord. The reason why I took the central funds approach was, in effect, they took a hands-off approach.
22. LORD JUSTICE RICHARDS: I do not really see on what basis you can ask for an award of costs from central funds. One method of dealing with the issue of principle would be to make an order for costs against the respondent but on the basis of the liberty to apply in writing within 21 days, given that they are not here to deal with the matter now.
23. MR MAGEE: I think, as your Lordship said, that is the only route open to us. We cannot seek them from the Justices.
24. LORD JUSTICE RICHARDS: Do you have a schedule of costs?
25. MR MAGEE: I do, my Lord. (Handed).
26. LORD JUSTICE RICHARDS: Speaking entirely for myself, Mr Magee, I am a little surprised at almost 11 hours being spent by the solicitors on research, perusal and preparation, in addition to your own work in drafting. Do you have any observation on that?
27. MR MAGEE: Could your Lordship give me a moment? (Pause).
28. LORD JUSTICE RICHARDS: Let me say that against that is to be set a very modest hourly rate.
29. MR MAGEE: Quite. My Lord, the position is this. Perhaps within the limited resources available to local authorities there is, in fact, only one fee earner capable of doing the work. That rate is quite modest. I know that some research was done in addition by those who instruct me. In respect of my drafting, I would say that that covers not just the drafting, but all of the preparatory work leading up to the point of the Case Stated.
30. LORD JUSTICE RICHARDS: We will summarily assess the costs in the round figure of £3,000. The order will, therefore, be that the respondent is to pay costs summarily assessed in that sum of £3,000 but with a liberty to apply in writing within 21 days.
31. MR MAGEE: I am most grateful for that.
32. LORD JUSTICE RICHARDS: Thank you very much.