England and Wales High Court (Administrative Court) Decisions

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

		Royal Courts of Justice Strand, London, WC2A 2LL
		30/10/2013

Mr Justice Bean :

1. The claimants are practising barristers and members of the Criminal Bar Association ("CBA"). By this claim issued on 6^th September 2013 they seek a declaration that the Quality Assurance Scheme for Advocates ("QASA") approved by the defendant ("the LSB") on 26^th July 2013 is unlawful. The joint application for the approval of QASA was made by the Bar Standards Board ("the BSB") who are the first interested party in this claim and by the second and third interested parties.
2. On 4^th October 2013 Ouseley J, considering the case on the documents, granted permission to seek judicial review. The claim as lodged included an application for a Protective Costs Order ("PCO") with a cap of £15,000. Ouseley J's decision granting permission indicated that "the decision on the application for a PCO will be made on paper shortly". In making that decision he had before him detailed grounds for the application and witness statements filed by the claimants as well as detailed grounds opposing the application for a PCO from Nigel Giffin QC and Duncan Sinclair on behalf of the LSB and submissions in reply from Dinah Rose QC, Thomas de la Mare QC and Charlotte Kilroy for the claimants.
3. In a letter of 30 September 2013 Herbert Smith Freehills LLP, the solicitors then instructed by the LSB, made a number of points in opposition to the grant of a PCO. The letter includes the following:-

"You have also failed to demonstrate that the financial resources of the CBA are such that the making of a PCO would be fair and just. This claim is avowedly being brought on behalf of the Criminal Bar as a whole with the active involvement and financial support of the CBA in circumstances where it has 3,816 members with which it regularly communicates. Notwithstanding current challenges, the great majority of the CBA's members are likely to be better off than the general population, some of them considerably so. Given the CBA's longstanding stated opposition to QASA, and the over three months that has elapsed since your initial pre-action protocol letter, the CBA could very easily have sought financial contributions or commitments from its members in support of a challenge to QASA. It could still do so now, with a contribution of £100 from each member (which is presumably less than the potential financial cost of participating in the threatened boycotts) raising almost £400,000. We also note that on 9 September 2013 the current Chairman of the CBA indicated that he would also be seeking financial support for the claim from the Circuits, providing a larger potential pool of financial support."

In their written submissions of 23^rd September Mr Giffin and Mr Sinclair referred to the point made in the letter that an average contribution of £100 from each of the 3,816 members of the CBA would raise in the order of £400,000, and added:-

"The present estimate of the Defendant's solicitors is that it is unlikely that the costs of the Defendant would exceed that amount."

4. Ouseley J's decision on the PCO was as follows:-

"In the event of an order for costs being made against the Claimants in favour of either of the Defendant and First Interested Party, the Claimants shall not be liable in the aggregate for costs exceeding £150,000. In the event of an Order for Costs being made in favour of both of those parties, the judge shall apportion the costs to be paid within the cap as between the Defendant and First Interested Party.

In the event of an order for costs being made in favour of the Claimants against either or both of the Defendant and First Interested Party, they shall not recover costs exceeding £150,000 from either or both of those two parties together, as the case may be. In the event of an Order for Costs being made against both of those parties, the judge shall apportion the costs to be paid by Defendant and First Interested Party.

Neither the Solicitors Regulation Authority nor ILEX Professional Standards shall be liable for any costs incurred by the Claimants in this claim, nor shall the Claimants be liable for any costs which either of those two bodies have incurred or may incur."

5. He added the following observations:-

"I am satisfied that the public interest test is met, because of the possible impact of QASA on the Criminal Bar, the possible future effect of any extension of QASA and the possible effect which its operation may have on the administration of justice in a number of ways. I would not characterise this as litigation significantly on behalf of vulnerable defendants. There is an element of private interest but I do not see it as a large one, despite the link which some members at least of the Criminal Bar Association see between QASA and One Case One Fee changes to public funding. It is not sufficient to make a PCO inappropriate. I do not regard the fact that this is litigation by a part of a regulated profession against its regulator as taking it outside the scope of a PCO.

Whilst I would accept that the cap proposed by the Claimants of £15,000 would be a fair limit if just the four of them were Claimants in substance, that is not the correct approach here. The Criminal Bar Association stands behind the four Claimants, and its resources and ability to raise funds from its membership as a whole are very relevant. The case is said to be of importance for its 3,800 members, and to have their near unanimous support. The Defendant and Interested Party [the BSB] are also funded by the legal profession as a whole, the latter by the Bar in general. A fair balance has to be struck between these interests when one part of the legal profession and of the Bar takes issue with the decision of the regulator, and seeks to make the legal profession more widely pay almost all of the costs of this action, if it is unsuccessful. To my mind a much larger share of the costs risk must fall on the CBA and its members or supporters. Although the CBA may not have the funds at present, there is no evidence of significant but unavailing efforts to raise funds for this litigation, and in any event, the point is well made that £100 would be the court fee for small or medium scale litigation. In my judgment, it is not realistic to suppose that 1500 CBA members, fewer than half its membership and so discounting the inactive in most senses, could not and would not find the amount of the costs cap between them, given their interest and support, in addition to their CBA membership fee. I recognise the parlous position of many members of the CBA, but not that it is so generally parlous that the quite modest sum of £100 could not be raised from each of the 1500 members for an issue of this importance, or a lesser sum per head, if more were willing to step up to the plate.

There were no significant submissions about the reciprocal cap, but one is appropriate even though the Claimants' lawyers are acting pro bono; there is still the possibility of a Pro Bono costs award.

This Order conveys no view about the potential of an award for costs for or against the First Interested Party, but it would be wrong to make this decision on the basis that no such award should be made, when the trial judge may conclude that it should."

6. The LSB's suggestion that their costs of defending this judicial review claim might reach or come close to £400,000 was at first sight staggering. The estimated costs of the BSB (admittedly as an interested party rather than as a defendant) are of the order of £100,000. The claimants' counsel (Ms Rose, Mr de la Mare and Ms Kilroy) and solicitors (Baker & McKenzie) are very commendably acting pro bono, although if the claimants succeed at the substantive hearing it will be open to the court to make a pro bono costs order pursuant to Section 194 of the Legal Services Act 2007.
7. While Ouseley J was considering the application for a PCO, the LSB were considering a change of solicitors. On 9^th October 2013 an article in Legal Week informed readers that the LSB had brought in Field Fisher Waterhouse to replace Herbert Smith Freehills as its solicitors and that the LSB had "railed against high cost estimates for the hearing". Similarly, in Legal Futures the next day an LSB spokesman is quoted as saying that the change of solicitors was about "managing the LSB's exposure to costs" now that the court had granted permission to bring the judicial review. Mr Giffin tells me, and I accept, that the LSB had reached this decision before it was notified of Ouseley J's decision on the PCO. But it is a reasonable inference that it was made because the LSB too considered that an estimate of £400,000 for their costs of defending this case was grossly excessive. The application for a PCO, by flushing out this figure, thus had the salutary effect of reducing the total cost of this litigation even before Ouseley J gave his decision.
8. The variation application before me is put on the following basis. It is important when a costs cap is being considered that the court is provided with reasonably accurate costs estimates by a defendant in order that it may make an informed judgment about what order is appropriate and fair. In its response to the original application for a PCO the LSB had suggested that its estimated costs "would not exceed £400,000". The LSB has since changed its legal advisors with the stated intention of managing its exposure to costs and has made it clear that the figure of £400,000 was not a costs estimate at all. Accordingly, Ouseley J was misled as to the defendant's likely costs; and his assessment that a cap of £150,000 "struck a fair balance" between the interests of the CBA and those of the legal profession as a whole (since the LSB is funded by the legal profession as a whole) by apportioning an appropriate "share of the costs risk" to the CBA was therefore made without a proper understanding of what the true costs risk actually was. In any event, the claimants argue, the BSB as an interested party should not be entitled to any costs, and as for the defendant, a figure of £150,000 "exceeded the reasonable and proportionate costs which the LSB, as a public authority, might be expected to incur in defending the claim."
9. The claimants' application before me on 23^rd October was to vary the order of Ouseley J by substituting a lower figure of £75,000, and to require the LSB and BSB to file costs budgets within 7 days.

The jurisdiction to vary a PCO

10. Neither Mr Giffin for the LSB nor Timothy Dutton QC for the BSB argued that I had no jurisdiction to vary the order of Ouseley J. But a threshold question is whether the approach to that jurisdiction should be only to exercise it on the basis of a material change in circumstances or to reconsider the order from scratch. In R (Compton) v Wiltshire PCT [2009] 1 WLR 1436 at para 42 Waller LJ, after referring to the leading case of R (Corner House Research) v Secretary of State for Trade & Industry [2005] 1 WLR 2600, said:-

"It seems to me that in the Corner House case it was being recognised that a defendant had the right to apply to set aside, vary or discharge the order but it was warning parties that where, as is the case with an application for a PCO, the defendant has had an opportunity to put its points on paper to the judge dealing with the matter on paper, it will require a compelling reason to alter the order made. That the claimant, who may have been refused a PCO, should have a little more latitude is understandable, since without a PCO no proceedings will be brought at all, whereas the existence of a PCO will not prevent a defendant defending the merits of the case."

11. Ms Kilroy, who has put the claimants' case on the application to vary the PCO with great tenacity, submits that since this variation application is made by the claimants they should have what Waller LJ described as "a little more latitude" than would apply if the application were being made by the defendant. But I do not accept that this is the distinction which Waller LJ was drawing. A claimant who is applying for a PCO on the basis that if it is refused the claim will be withdrawn is in an analogous position to when he is applying for permission. The unfavourable decision on paper brings the claim to an end subject to the claimant's right to request reconsideration at an oral hearing. This is to be contrasted with this application for a PCO where all parties have had an opportunity to put their points to the judge dealing with the matter on paper and he has granted permission, fixed a particular figure, and given detailed reasons for doing so. In such a case, whether it is the claimant or the defendant who is seeking a variation of the PCO, there must in my view be a "compelling reason" to alter the order made, namely a material change of circumstances which would have been likely to lead the first judge to reach a different decision.
12. Ms Kilroy argued that there had been three material changes since the decision of Ouseley J:

(1) At the time when the original application for a PCO was lodged, the CBA had not obtained guarantees of support sufficient to indemnify the claimants for more than £40,000 of the opposite parties' costs. Since his decision the Circuits of the Bar have combined with the CBA to guarantee payment of costs, if necessary, up to the full amount of the £150,000 cap.

(2) By an application made on the morning of the variation application, the Law Society were granted leave to intervene in the proceedings and made it clear that their submissions would be in support of the claimants' case: the claimants can therefore be viewed as representing the whole profession rather than simply the Criminal Bar.

(3) As set out above, the LSB appears to have reduced drastically the tentative costs estimate in the material placed before Ouseley J. In response to an enquiry from me as to what the defendant's rough estimate of its costs now was, Mr Giffin told me that it was £200,000 plus VAT, that is to say £240,000 in all.

Discussion

13. I do not accept that the fact that the claimants are now indemnified for the full amount of £150,000 is a reason to reduce that figure set by Ouseley J. It is, of course, absolutely right and proper that the four individual claimants should not be exposed to personal liability for costs and that the CBA and the Circuits should stand behind them. Otherwise, as their witness statements make clear, they would not continue with the claim, and no one could expect them to do so. But I do not see that the welcome fact that they now have this indemnity is a reason to reduce Ouseley J's order.
14. I also do not agree that the recent intervention of the Law Society is a reason for reducing the cap. Although their evidence has yet to be filed, their application to intervene in support of the claimants' case tends to suggest that they too have some concerns about QASA, in particular its effect on the role of the solicitor advocate. But in considering the issue of a PCO the Law Society's intervention, like the support of the Circuits, is not a reason for reducing Ouseley J's figure of £150,000. The Law Society has over 100,000 members, far more than the CBA. If the claimants in this case had included one or more solicitor advocates with the financial backing of the Law Society it is possible that Ouseley J would not have granted a PCO at all.
15. Turning to the third change, I do not interpret Ouseley J's decision as attaching importance to the figure of £400,000 referred to in the LSB's written submissions. It is true to say that in a number of cases on PCOs the court has attached significance to the estimated costs of the defendant. Ms Kilroy argues that Ouseley J, as a very experienced judge of this court, must have done so; or alternatively, if he did not, he should have done. As it happens, I respectfully agree with Ouseley J's reasoning. But even if I did not, it is not for me as a judge of first instance on a variation application to say that he should have taken the £400,000 figure into account. He was asked to cap the costs which the claimants could be made liable to pay at £15,000. He refused, saying that in the light of the CBA's resources and ability to raise funds from its membership as a whole a much larger share of the costs risk must fall on the CBA and its supporters. He accepted the argument on behalf of the LSB that a per capita contribution of £100 would be not unreasonable, but held that the CBA could be expected to raise that sum from each of 1500 members: hence the figure of £150,000. He said nothing about the total costs of the LSB, nor the total costs of the LSB and the BSB.

The application to require costs budgets

16. Ms Kilroy's further or alternative application was for an order that the LSB and BSB be required to draw up and submit costs budgets. CPR Practice Direction 3E does not expressly provide for costs budgets in the Administrative Court. Ms Kilroy submits that there is jurisdiction to order one anyway as part of the court's inherent case management powers. It is unnecessary to decide whether that is correct, because I accept Mr Giffin's submission that it would be inappropriate to order the submission of costs budgets by parties whose recoverable costs are already the subject of a PCO. Moreover, an important purpose of a costs budget is in imposing pressure on parties to litigate more economically; and in the case of the LSB the application for a PCO, as I have noted above, has already had that salutary effect.

Conclusion

17. These are the reasons why, at the end of the hearing on 23 October, I refused the application to reduce the costs cap set by Ouseley J, and the alternative application that the LSB and BSB be required to submit costs budgets. The PCO will therefore remain at £150,000.
18. It may be useful to note here that following a directions hearing before Sir Brian Leveson P and myself, the substantive judicial review hearing is listed to be heard by a Divisional Court on 28 and 29 November 2013.