In judicial review proceedings, the courts have the power to make a Protective Costs Order ("PCO"), the main purpose of which is to assure a claimant or defendant at an early stage in the proceedings that no (or only limited) costs will be ordered against them whatever the outcome. In R (on the application of Compton) v Wiltshire Primary Care Trust [2008] EWCA Civ 749 the Court of Appeal considered the principles and guidance set out in R (Corner House Research) v Secretary of State for Trade & Industry [2005] EWCA Civ 192, the leading authority on PCOs. Arguably, the interpretation of the Corner House principles by the majority of the Court of Appeal in Compton has increased the likelihood of PCOs being granted in future cases.

Background

Mrs Compton brought two sets of judicial review proceedings, challenging decisions of the Trust to close two hospital units. Permission was granted for both applications to proceed (by two separate judges). In addition, Mrs Compton successfully applied for PCOs in respect of each set of proceedings. The terms of the first PCO were (i) that the Trust should not be able to recover any costs from Mrs Compton, regardless of the outcome of the case; and (ii) that the costs recoverable by Mrs Compton from the Trust if she succeeded should be capped at £25,000. Under the second PCO, (i) costs recoverable by the Trust were capped at £20,000 and (ii) Mrs Compton would be unable to recover any costs from the Trust. Both parties appealed to the Court of Appeal, where the focus of the argument was the interpretation of certain of the Corner House principles and their application to the facts of the case.

Corner House

In Corner House, the Court of Appeal set out the following principles to be followed when considering an application for a PCO.

"1. A protective costs order may be made at any stage of the proceedings, on such conditions as the court thinks fit, provided that the court is satisfied that:

(i) The issues raised are of general public importance;

(ii) The public interest requires that those issues should be resolved;

(iii) The applicant has no private interest in the outcome of the case;

(iv) Having regard to the financial resources of the applicant and the respondent(s) and to the amount   ofcosts that are likely to be involved it is fair and just to make the order;

(v) If the order is not made the applicant will probably discontinue the proceedings and will be acting reasonably in so doing."

Later on in the judgment, the Court of Appeal referred to an earlier decision on PCOs, (R v Lord Chancellor ex parte CPAG [1998] EWHC Admin 151) in which Dyson LJ had said that the jurisdiction to make a PCO should be exercised only "in the most exceptional circumstances". The Court of Appeal endorsed that statement but added that "of itself it does not assist in identifying those circumstances".

Issues of general importance requiring resolution in the public interest?

The principal issue for consideration by the Court of Appeal in the present case was identified by Lord Justice Waller as being whether Mrs Compton's judicial review claims satisfied the first two of the Corner House criteria set out above, namely (i) did they raise issues of general importance which (ii) the public interest required to be resolved? The Trust argued that neither test was satisfied. In support of that position, it referred to an earlier case involving an application for a PCO in the context of a challenge to a hospital closure (R (Bullmore) v West Hertfordshire Hospitals NHS Trust [2007] EWHC 1350 (Admin)) in which a PCO was not granted on the basis that there was no general point of legal importance and it was not a case requiring the elucidation of public law by the Administrative Court in the public interest. Furthermore, it was argued that the reference to "exceptionality" in Corner House had the effect of imposing an additional requirement which went beyond the governing principles numbered (i) to (v) set out above.

A majority of the members of the Court of Appeal upheld the judges' decisions to grant the PCOs to Mrs Compton. In the leading judgment, Waller LJ emphasised that the relevant parts of the Corner House judgment were not to be read in an over-restrictive way or as statutory provisions. He accepted that Holman J at first instance had been entitled to conclude that the issues could be of general public importance because they were important for a sufficiently large section of the public (namely the 30,000 to 50,000 people in the affected catchment area). It was not fatal to the application for a PCO that the case did not raise legal or other issues of importance to the general public or nation as a whole. Neither did it matter that this was not a "test case" in the sense that it did not involve some point of law requiring clarification by the higher courts. 

Less emphasis is placed in the Court of Appeal judgments on the issue of whether resolution of the challenges was necessary in the public interest. Waller LJ cites the relevant parts of Holman J's judgment, from which it is clear that he had some reservations about finding this part of the test to be satisfied on the facts of the case. Holman J observed that the case had provoked interest from the media and among the public at large but that essentially this was an issue affecting local people. Despite this, he granted the PCO. In her judgment, Lady Justice Smith noted that Holman J's reservations on this point had been reflected by the terms of the PCO that he had granted. She emphasised that PCOs were a flexible tool, the terms of which could and should reflect the extent to which the Corner House tests were fulfilled. In other words, where a case only just crosses the threshold in terms of requiring resolution in the public interest, the judge may exercise his discretion to make a modest order.

Exceptionality

The other key point to emerge from this case is the majority view that in its reference to "exceptional circumstances" the court in Corner House was describing the nature of cases which would meet the five governing principles, rather than seeking to impose exceptionality as an additional requirement. On the face of it, this finding by the Court of Appeal could make it easier for parties to obtain PCOs in the future.

Comment

The issue of PCOs is a topical one (earlier this year, they were considered in a report published by a Working Group on Access to Environmental Justice and the Civil Procedure Rules Committee is also reviewing their use) and this Court of Appeal decision provides some welcome clarification of the proper approach to the Corner House principles. As Waller LJ observed in his judgment, this is not the first time that those principles have been "diluted" by an interpretation which works to an applicant's advantage. In R (on the application of Derek England) v Tower Hamlets London Borough Council [2006] EWCA Civ 1742 the Court of Appeal cast doubt on the appropriateness and workability of the criterion that an applicant seeking a PCO should not have any private interest in the proceedings. That requirement has been the subject of much criticism, not least because it would appear to preclude the granting of PCOs in human rights challenges (because a "victim" under the HRA will by definition have a private interest in the matter). It will be interesting to see whether the Court of Appeal's judgment in Compton provides further encouragement to potential applicants. Buxton LJ's view was certainly that its effect would be "very greatly" to extend the type of cases in which PCOs could be made. We understand that the Trust has sought permission to appeal to the House of Lords.