Adopting a recommendation in the Jackson Report, the Court of Appeal has altered the position on costs awards where a public body settles a judicial review claim after it has been issued.

Key points

  • Where relief is granted by a public body after a judicial review claim has been issued but before trial, the defendant will bear the burden of justifying a departure from the general rule that the unsuccessful party should pay the successful party's costs.
  • The burden is likely to be a heavy one if the claimant has, and the defendant has not, complied with the Pre-Action Protocol.  
  • Public authorities will need to engage with threatened proceedings at a much earlier stage if they wish to avoid costs liability.

Background

The appellants were asylum seekers who judicially reviewed decisions by the Secretary of State for the Home Department refusing them either permission to work or indefinite leave to remain. After waiting for a decision by the Supreme Court on a point of principle relevant to four out of five of the appeals, the Secretary of State granted each of the appellants what they sought without a contested hearing and the judicial review applications were withdrawn by consent.

The appellants sought orders for their costs but these were refused in each case on the basis that, following the principles set down in R (Boxall) v Waltham Forest LBC [2000] All ER (D) 2455 and related case law, the High Court considered that it was not "plain and obvious" at the time the judicial review proceedings were issued that they would succeed. The appellants bought a consolidated appeal on the issue of costs.

The principles in Boxall

In Boxall, Scott Baker J held that the court has the power to make a costs order when the substantive proceedings have been resolved without a trial and set down some general principles applicable to the exercise of this power. In subsequent cases, courts have summarised the Boxall position to be that there should be no order as to costs in these circumstances unless it was "plain and obvious" when the proceedings were commenced that the claimant would have won had the substantive issues been fought to a conclusion.

Boxall was decided before the Pre-Action Protocol for judicial review took effect in 2002. As is well known, the Protocol requires a claimant to send a letter before claim to identify the issues in dispute and establish whether litigation can be avoided. Defendants are normally required to respond within 14 days, but can send an interim reply requesting a reasonable extension. The Protocol expressly states that a court must have regard to a failure to follow the Protocol when determining costs.

In this case, counsel for the appellants argued that whether there had been compliance with the Protocol should be the appropriate starting point for consideration of costs in the circumstances and that the Boxall principles should be amended accordingly. It was not appropriate for defendants to be left with the impression that, provided they concede before the final hearing, they will not be ordered to pay costs.

These submissions echoed those made to Lord Justice Jackson on Boxall during his review of civil litigation costs. In his Final Report in December 2009, Lord Justice Jackson recommended that, "in any judicial review case where the claimant has complied with the protocol, if the defendant settles the claim after (rather than before) issue by conceding any material part of the relief sought, then the normal order should be that the defendant pays the claimant’s costs." This was on the basis of the view that while Boxall made eminently good sense at the time that case was decided, the approach needed modification now that there is a Pre-Action Protocol for judicial review.

The new approach

The Court of Appeal agreed with Lord Justice Jackson that it was appropriate to depart from the "plain and obvious" principle set down in Boxall. The importance of the Pre-Action Protocol in seeking to prevent litigation and to facilitate and encourage parties to settle proceedings, meant that the pre-action stage was now the appropriate time to make the concessions contemplated in Boxall. The Court's view was that "[i]t would be a distortion of the procedure for awarding costs if a defendant who has not complied with a Pre-Action Protocol can invoke Boxall principle (vi) in his favour when making a concession which should have been made at an earlier stage."

The Court stated that, "[w]hat is not acceptable is a state of mind in which the issues are not addressed by a defendant once an adequately formulated letter of claim is received by the defendant. In the absence of an adequate response, a claimant is entitled to proceed to institute proceedings. If the claimant then obtains the relief sought, or substantially similar relief, the claimant can expect to be awarded costs against the defendant."

In the light of this analysis, where a public body settles a judicial review claim after it has been issued, the Court held that the position should be that "[w]here relief is granted, the defendant bears the burden of justifying a departure from the general rule that the unsuccessful party will be ordered to pay the costs of the successful party and that the burden is likely to be a heavy one if the claimant has, and the defendant has not, complied with the Pre-Action Protocol."

Conclusion

This decision represents a significant shift in the presumption of which party should bear the burden of costs where judicial review proceedings are settled at an early stage and will mean that defendant public authorities will need to engage with threatened proceedings in detail at a much earlier stage if they wish to avoid costs liability.

The decision will also be welcomed by lawyers undertaking legal aid funded work since, where proceedings settle in their client's favour after the issue of proceedings but before trial, they will now be paid at standard rates under the costs award rather than legal aid rates.

R (Bahta and others) v Secretary of State for the Home Department [2011] EWCA Civ 895