Jersey Unreported Judgments

Judicial review - costs judgment.

[2015]JRC001

Royal Court

(Samedi)

5 January 2015

Before     :		Sir Michael Birt, Kt., Bailiff, sitting alone.
Between	Larsen Oil and Gas Drilling Limited		First Applicant
	Independent oil fields Rentals IOR Limited		Second Applicant
	North East Oil Limited		Third Applicant
And	Comptroller of Taxes		Respondent

Advocate JA. D. Hoy for the Applicants.

Advocate J. D. Kelleher for the Respondent.

judgment

the bailiff:

1.        In a judgment dated 15^th July, 2014, Larsen-v-Comptroller of Taxes [2014] JRC 143, I refused the applicants leave to apply for judicial review of the decision of the respondent ("the Comptroller") to issue a notice to Volaw Trust and Corporate Services Limited pursuant to Regulation 3 of the Taxation (Exchange of Information with Third Countries)(Jersey) Regulations 2008. 

2.        The Comptroller now applies for the costs incurred in connection with that hearing.  This raises an issue as to the principles which the Court should apply when deciding whether to award costs against an unsuccessful applicant for leave to apply for judicial review where an ex parte hearing on notice has taken place. 

The background to the proceedings

3.        The applicants submitted a written application for leave to apply for judicial review in accordance with Rule 16/2(2) of the Royal Court Rules 2004.  Rule 16/2(3) provides that the Bailiff may determine the application without a hearing unless a hearing is requested in the application.  No such request was contained in the application filed by the applicants in this case.  However, Rule 16/2(4) and (5) go on to provide:-

"(4) The Bailiff may, after considering the application for leave, direct that it be listed for oral hearing and may direct that any person against whom relief is sought be given notice of the hearing.

(5) At any oral hearing of an application for leave, the Bailiff may permit any person against whom relief is sought to make representations and, if the Bailiff considers that that person may not have received notification of the hearing of an application for leave, the Bailiff may adjourn the hearing and direct that any person against whom relief is sought be notified of the hearing of the application for leave."

4.        On 12^th June I informed the applicants that, in accordance with Rule 16/2(4) I would hold an oral hearing ex parte on notice at 2pm on 23^rd June.  On 19^th June, Messrs Carey Olsen, on behalf of the Comptroller, wrote to the applicants' advocates informing them that they (Carey Olsen) would be attending the hearing and intended to make representations on behalf of the Comptroller as to why leave should not be granted.  They stated that the submissions would be directed at the issues of delay in bringing the application and at a lack of merit in relation to the application.  They said they would be providing the applicants with the authorities on which they intended to rely by close of business the following day. 

5.        At the hearing on 23^rd June, I heard from Advocate Hoy on behalf of the applicants and Advocate Kelleher on behalf of the Comptroller.  Thereafter I refused the applicants leave to apply for judicial review. 

6.        It is in these circumstances that the Comptroller now applies for costs on the standard basis in connection with that hearing. 

7.        Advocate Hoy contended in his written skeleton that there was no jurisdiction to award costs in judicial review proceedings.  He did not pursue this at the hearing and submitted instead that, as a matter of policy, costs should not be awarded in respect of ex parte hearings on notice.  He cited the practice in England in support of such an approach. 

8.        Advocate Kelleher, on the other hand, submitted that the normal rules should apply and that costs should prima facie follow the event.  The applicants were aware that the Comptroller was attending and would be spending time in preparing and making submissions.  Having lost, it was only fair that they should pay the Comptroller's costs.  It would be strange, he submitted, if the Comptroller were to be awarded his costs on normal principles where successful following a judicial review hearing after leave has been granted but were to be denied his costs where he was successful in stopping the matter at the leave stage.  This could act as a discouragement to a putative respondent to intervene at the leave stage. 

Jurisdiction

9.        Although Advocate Hoy withdrew his suggestion that the Court had no power to award costs in judicial review proceedings, I think I should explain briefly why the submission was clearly incorrect. 

10.      Article 2(1) of the Civil Proceedings (Jersey) Law 1956 provides:-

"2 Power of Royal Court to award costs

(1) Subject to the provisions of this Part and to rules of court made under the Royal Court (Jersey) Law 1948, the costs of and incidental to all proceedings in the Royal Court shall be in the discretion of the Court, and the Court shall have full power to determine by whom and to what extent the costs are to be paid."

There is then a specific provision in Article 5 to say that Article 2(1) does not apply to a criminal or quasi-criminal cause or matter.  Thus Article 2(1) applies to all 'proceedings' unless they are a criminal cause or matter. 

11.      An application for leave to bring judicial review proceedings is a 'proceeding' for the purposes of Article 2(1).  See for example the observation of Lord Denning MR in Harkness v Bell's Asbestos (1967) 2 QB 729 at 735B where he said "I think that any application to the court however informal is a 'proceeding'"; and see also the observations of Rose LJ in R v Secretary of State for Wales and others [1993] WL 965798. 

12.      Advocate Hoy's written skeleton submitted that public law proceedings (such as judicial review) were not civil proceedings and therefore did not fall within Article 2(1); nor were they criminal proceedings so as to fall within the power conferred by the Costs in Criminal Cases (Jersey) Law 1961 to order costs in such proceedings.  In my judgment, this submission was untenable.  There is no black hole into which public law proceedings fall so that the Court has no power to award costs.  If they are not criminal proceedings, they are civil proceedings.  

13.      In summary, I have no doubt that the Court has jurisdiction to award costs under Article 2(1) both in relation to judicial review proceedings themselves and in relation to applications for leave to bring judicial review proceedings. 

Discretion

14.      The question then is how the Court should exercise that undoubted jurisdiction in relation to ex parte applications for leave where the prospective respondent to the judicial review proceedings attends and incurs costs in doing so.  

15.      There is little guidance to be obtained from Jersey authorities.  I was referred only to two cases. The first is Syvret v Attorney General and the Connétable of Grouville [2010] JRC 179 where Mr Syvret applied for leave to bring judicial review proceedings to stay certain criminal proceedings which had been brought against him in the Magistrate's Court.  Clyde-Smith, Commissioner convened an oral hearing and the Attorney General attended through the Solicitor General to present arguments as to why leave should not be granted.  Leave was subsequently refused.  The Commissioner awarded standard costs in favour of the Attorney General, pointing out that the Attorney General had written to Mr Syvret in advance of the hearing referring him specifically to the judicial authority (on which the Commissioner subsequently relied for his decision) which explained why the application was ill founded.  Mr Syvret nevertheless continued with his application and the Commissioner held that it was right in principle that a litigant should suffer the consequences of knowingly pursuing an application which he had been warned was likely to fail.  An appeal to the Court of Appeal against the refusal of leave was dismissed with costs but there appears to have been no argument either before the Commissioner or the Court of Appeal as to the circumstances in which costs should be awarded in relation to ex parte hearings on notice in applications for leave to bring judicial review proceedings. 

16.      The second case is Bissons Limited v Comptroller of Income Tax [2010] JRC 009 where William Bailhache, Deputy Bailiff, refused leave to bring judicial review and said this in relation to costs at paragraph 12:-

"The last thing I want to say is that the Comptroller has applied for costs against Bissons Limited. Normally costs would follow the event in a circumstance such as this. However, the Applicant has raised a number of points where there might have been some confusion or misunderstanding and the hearing today came about because, on reading the papers, I wanted to hear from the applicant as well as from the Comptroller and in my discretion I am not going to award costs against the applicant in this case."

Both sides relied on this statement.  Advocate Kelleher relied upon the Deputy Bailiff's observation that costs would normally follow the event in circumstances such as this, which he interpreted to mean at an ex parte hearing on notice.  Advocate Hoy, on the other hand, relied upon the Deputy Bailiff's decision not to award costs partly on the ground that it had been his (the Deputy Bailiff's) decision to hear from the Comptroller as a putative respondent.  

17.      In neither of these cases does there appear to have been any discussion as to the applicable principles in relation to costs.  Both decisions turned on their particular facts and I do not think that they give any assistance in ascertaining the applicable principles.  

18.      In the absence of local authority, I have been referred to the position in England.  That position is complicated by the fact that the procedure for applying for judicial review in that jurisdiction has changed.  It used to be governed by RSC Order 53 but, following the introduction of the Woolf reforms in 2000, it is now governed by CPR 54. 

19.      Order 53/3 of the old Rules, (which dealt with the grant of leave to apply for judicial review) was in broadly similar terms to Rule 16/2 of our Rules.  However, it did not contain an equivalent provision to Rule 16/2(4), which enables the Bailiff to direct that the application be listed for oral hearing and that notice be given to the other parties. Order 53/3(3) provided simply:-

"The judge may determine the application without a hearing, unless a hearing is requested in the notice of application, and need not sit in open court ..."

This is in similar (albeit not identical) terms to RCR16/2(3), but in the absence of the equivalent of Rule 16/2(4), both Advocate Kelleher and Advocate Hoy asserted that the practice in England was different from that which exists here because there would only be a hearing where the applicant had requested one.  

20.      However, Order 53/3(3) provides that the judge 'may' determine the application without a hearing unless a hearing is requested in the notice of application; it does not say the judge 'must' or 'shall' do so.  My understanding has always been that it was the practice for judges to themselves ask for an oral hearing, often with notice to the prospective respondent, where they thought this would be helpful.  This is confirmed by the commentary in the Supreme Court Practice (1999) edition Vol 1 at 53/14/55 where it is stated:-

"If, on considering the papers, the judge cannot tell whether there is, or is not, an arguable case, he should invite the putative respondent to attend the hearing of the leave application and make representations on the question whether leave should be granted."

Similarly, at 53/14/61, when commenting on the possible remedies if an application for leave is refused, the commentary says:-

"If, however, the applicant requests a hearing of his initial application, or perhaps even if a hearing of the application takes place because the judge deems it appropriate, and the judge refuses leave or grants it on terms after such hearing, the application for leave may not be renewed ..."

My understanding is also confirmed in the extracts from the English cases cited at paragraphs 21 and 22 below. 

21.      Thus, although the English Rules did not specifically confer a power on the judge to convene an oral hearing with notice to the prospective respondent, it is clear that such a power existed and was sometimes exercised.  The question then is what principles did the judges apply when deciding whether to order costs against an applicant where leave to apply for judicial review was refused after such a hearing.  

22.      On that, I have not been referred to any contemporaneous authority as to the practice.  However, I have been referred to two cases decided under the new Civil Procedure Rules where judges have referred in passing to the practice under the old regime.  In R (on the application of Leach) v Commissioners for Local Administration [2001] EWHC Admin 445, Collins J said this at paragraph 2 in relation to the previous practice:-

"2. The application is, as far as I am aware, a novel one in the sense that the old practice of the Crown Office was that there had to be an ex parte application for leave to move for judicial review.  That was normally dealt with on the papers although it could be dealt with by means of an oral hearing, and it being an ex parte application, normally no costs were awarded in favour of the potential respondent, even if he chose either to make representations before the matter was considered on the papers or to attend at an oral hearing. There was power to award costs if a respondent attended at an oral hearing but it was a power that was very sparingly exercised. Accordingly, the assumption generally made by those who decided that they should seek permission to move for judicial review was that the application to the court would cost them nothing over and above whatever they had to pay for their own lawyer or in respect of the court fees."

23.      That statement as to the practice under the old judicial review regime was echoed by Auld LJ in the Court of Appeal in R (on the application of Mount Cook Land Limited) v Mount Eden Land Limited and Westminster City Council [2004] CP Rep 12 at para 48 as follows:-

"48. The issue arises under the relatively new procedure for the grant of permission for claiming judicial review introduced by CPR Part 54 on 2nd October 2000, supplemented by a Judicial Review Practice Direction.  Both followed a Review of the Crown Office under the chairmanship of Sir Jeffrey Bowman, who submitted his report ("the Bowman Report") to the Lord Chancellor in March 2000. This procedure replaced the practice under RSC, Order 53 of an ex parte application for leave to move for judicial review, normally made on paper, but which could also be made orally at an ex parte hearing. A respondent, if notified of the application ("ex parte on notice"), could make representations on paper and/or, if he chose to attend and was allowed by the court to participate in a permission hearing, orally. If a respondent successfully resisted the grant of permission at an oral hearing, the court had power to award him costs against the applicant, but it was sparing in its exercise of it. Given that practice, renewed oral applications for permission were normally heard ex parte and were, in any event, short. Applicants, on the whole, were able to seek relief without fear, if permission was refused, of being saddled with the respondent's costs at that stage."

24.      As stated in that passage, the new procedure was introduced in 2000 and was supplemented by a Judicial Review Practice Direction.  The CPR now provide that an applicant for leave to apply for judicial review must serve the claim form on the proposed defendant and any other interested party.  The proposed defendant must then file an acknowledgement of service.  Where he intends to contest the claim, he must set out a summary of his grounds for doing so.  Thus the judge now has the views in writing of the proposed defendant before deciding whether to grant leave.  

25.      The Practice Direction referred to deals with the position as follows:-

"8.5 Neither the defendant nor any interested party need attend a hearing on the question of permission unless the court directs otherwise.  

8.6 Where the defendant or any party does attend a hearing, the court will not generally make an order for costs against the claimant."

26.      The practice as to the award of costs at the leave stage under the new procedure was considered in Mount Cook (supra) and was summarised as follows at para 76 of the judgment:-

"76. Accordingly, I would hold the following to be the proper approach to the award of costs against an unsuccessful claimant, and to the relationship of the obligation in CPR 54.8 on a defendant 'who wishes to take part in the judicial review' to file an acknowledgement of service with the general rule in paragraph 8.6 of the Practice Direction that a successful defendant in an oral permission hearing should not generally be awarded costs against the claimant:-

1. The effect of Leach, certainly in a case to which the Pre-Action Protocol applies and where a defendant or other interested party has complied with it, is that a successful defendant or other party at the permission stage who has filed an acknowledgment of service pursuant to CPR 54.8 should generally recover the costs of doing so from the claimant, whether or not he attends any permission hearing.

2. The effect of paragraph 8.6, when read with paragraph 8.5, of the Practice Direction, in conformity with the long-established practice of the courts in judicial review and the thinking of the Bowman Report giving rise to the CPR 54 procedure, is that a defendant who attends and successfully resists the grant of permission at a renewal hearing should not generally recover from the claimant his costs of and occasioned by doing so.

3. A court, in considering an award against an unsuccessful claimant of the defendant's and/or any other interested party's costs at a permission hearing, should only depart from the general guidance in the Practice Direction if he considers there are exceptional circumstances for doing so.

4. A court considering costs at the permission stage should be allowed a broad discretion as to whether, on the facts of the case, there are exceptional circumstances justifying the award of costs against an unsuccessful claimant.

5. Exceptional circumstances may consist in the presence of one or more of the features in the following non-exhausting list:-

(a) the hopelessness of the claim;

(b) the persistence in it by the claimant after having been alerted to facts and/ or of the law demonstrating its hopelessness;

(c) the extent to which the court considers that the claimant, in the pursuit of his application, has sought to abuse the process of judicial review for collateral ends - a relevant consideration as to costs at the permission stage, as well as when considering discretionary refusal of relief at the stage of substantive hearing, if there is one; and

(d) whether, as a result of the deployment of full argument and documentary evidence by both sides at the hearing of a contested application, the unsuccessful claimant has had, in effect, the advantage of an early substantive hearing of the claim.

6. A relevant factor for a court, when considering the exercise of its discretion on the grounds of exceptional circumstances, may be the extent to which the unsuccessful claimant has substantial resources which it has used to pursue the unfounded claim and which are available to meet an order for costs.

7. The Court of Appeal should be slow to interfere with the broad discretion of the court below in its identification of factors constituting exceptional circumstances and in the exercise of its discretion whether to award costs against an unsuccessful claimant.

77. Such an approach seems to me to accord with public policy in providing ready access to the courts by individuals or bodies seeking relief from and/or to draw attention to actual or threatened transgressions of the law by public bodies, whilst, in exceptional cases, protecting those bodies and the public that funds them from unnecessary, burdensome and costly substantive litigation. If properly and consistently applied by the courts, I can see nothing about it that would, as Mr Steel suggested, undermine the fairness and probity of judicial review as a means of control of the administration or run contrary to Article 6.1 of the European Convention on Human Rights, Lord Woof's civil justice reforms or the adoption of them in this context in the Bowman Report."

27.      It seems to me therefore that, in relation to whether to award costs in favour of a successful putative respondent following an oral hearing for leave, the practice in England and Wales has not really changed as between the old procedure under Order 53 and the new procedure under CPR 54.  Under the old procedure, such costs were awarded 'sparingly' whereas, under the new procedure, they should only be awarded in 'exceptional circumstances', although the judge is given a broad discretion as to what constitutes such exceptional circumstances. 

28.      The reason for this approach is clearly one of public policy as articulated by Auld LJ in the passage quoted above.  The importance of ready access to the courts for judicial review requires that applicants should not routinely face the risk of an adverse costs order at the leave stage.  Clearly very different considerations apply once leave has been granted and the matter is then contested in the usual way.  Advocate Hoy argues, in accordance with this approach, that it is unreasonable to expect an applicant to pay the costs of an oral hearing when it is not within his control as to whether there is such a hearing.  The applicant may wish the matter simply to be considered on the papers (in which event there can be no award of costs as the putative respondent will not have incurred any), but the Bailiff may of his own volition decide that an oral hearing is required.  This is outside the control of the applicant. 

29.      In my judgment, the policy considerations which underlie both the old and new practice in England in relation to oral hearings for leave - the position in England is of course now different in relation to the costs of filing an acknowledgment of service - are much the same as in Jersey.  I find them persuasive.  Accordingly, I hold that the general approach should be that a putative respondent should not be awarded his costs in relation to such a hearing unless the judge hearing the application considers in his discretion that there are grounds for departing from this normal practice.  I would prefer to put it this way rather than referring to 'exceptional circumstances' as the use of such an expression immediately invites dispute as to whether the circumstances are sufficiently different or unusual to become 'exceptional'.  As Auld LJ emphasised in the passage referred to above, the matter is ultimately one for the discretion of the judge but having regard to the general approach. 

30.      Applying this approach to the facts of this case, I consider that there should be a departure from the normal rule.  This was a case where the application was brought over two years after the expiry of the time limit laid down in RCR 16/2 for challenging the notice issued by the Comptroller in circumstances where the applicants were closely connected to the parties who had already pursued a lengthy appeal process (all the way up to the Privy Council) against the issue of the very same notice which the applicants were seeking now to challenge by judicial review.  In my judgment, it was a hopeless application which was doomed to failure and the fact that I asked for an oral hearing ex parte on notice did not alter the hopelessness of the application.  Furthermore, the Comptroller made it clear in advance that he would be attending the oral hearing and would be taking the point about delay.  The applicants were therefore on notice of the point, yet they chose to persist in it. 

31.      In the circumstances, I held that there were good reasons to depart from the normal approach and that was why I ordered that the applicants should pay the costs of the Comptroller on the standard basis of and in connection with the oral hearing. 

Authorities

Larsen-v-Comptroller of Taxes [2014] JRC 143.

Taxation (Exchange of Information with Third Countries)(Jersey) Regulations 2008.

Royal Court Rules 2004.

Civil Proceedings (Jersey) Law 1956.

Harkness v Bell's Asbestos (1967) 2 QB 729.

R v Secretary of State for Wales and others [1993] WL 965798.

Costs in Criminal Cases (Jersey) Law 1961.

Syvret v Attorney General and the Connétable of Grouville [2010] JRC 179.

Bissons Limited v Comptroller of Income Tax [2010] JRC 009.

Supreme Court Practice (1999) edition Vol 1 at 53/14/55.

R (on the application of Leach) v Commissioners for Local Administration [2001] EWHC Admin 445.

R (on the application of Mount Cook Land Limited) v Mount Eden Land Limited and Westminster City Council [2004] CP Rep 12.