Bahta & Ors, R (on the application of) v Secretary of State for the Home Department & Ors [2011] EWCA Civ 895

This is not a housing case, but it is an important case on costs in settled claims for judicial review, which is a major issue for many housing practitioners.

The Court of Appeal considered five joined appeals in immigration judicial review claims all on the issue of costs following consent orders. In each case, no order as to costs was made. The issue was whether a) the Judges had correctly interpreted R (Boxall) v Waltham Forest LBC 21 December 2000 (2001) 4 CCL Rep 258 and b) whether the test in Boxall should be modified in the light of current circumstances and the recommendations in Jackson LJ’s review of civil litigation costs.

In each of the cases, the Judicial Review claims had settled following the Secretary of State granting all, or substantially, the relief sought after issue of the claim.

The principles set out in Boxall are:

(i) the court has power to make a costs order when the substantive proceedings have been resolved without a trial but the parties have not agreed about costs.
(ii) it will ordinarily be irrelevant that the Claimant is legally aided;
(iii) the overriding objective is to do justice between the parties without incurring unnecessary court time and consequently additional cost;
(iv) at each end of the spectrum there will be cases where it is obvious which side would have won had the substantive issues been fought to a conclusion. In between, the position will, in differing degrees, be less clear. How far the court will be prepared to look into the previously unresolved substantive issues will depend on the circumstances of the particular case, not least the amount of costs at stake and the conduct of the parties.
(v) in the absence of a good reason to make any other order the fall back is to make no order as to costs.
(vi) the court should take care to ensure that it does not discourage parties from settling judicial review proceedings for example by a local authority making a concession at an early stage

The Court of Appeal notes that in subsequent cases applying the Boxall guidelines, the expression “plain and obvious” has been applied in relation to (iv) and (v). In each of the cases under appeal, the Judge below found that, for varying reasons, it was not ‘plain and obvious’ that the claimants would have won, at least until a relevant judgment of the Supreme Court. (The costs decisions in other similar cases had gone the other way, with the judges finding it was plain and obvious that the claimant would have won).

The appellants, supported by the PLP as intervener, argued that Boxall was decided before the effect of the CPR became clear and before the Judicial Review Pre-Action Protocol was introduced. The Protocol makes a number of mentions of sanctions in costs for parties, including defendants, failing to follow protocol steps in time.

Further, the Jackson Report (at 4.13) 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. A rule along these lines would not prevent the court from making a different order in those cases where particular circumstances warranted a different costs order

And the level of legal aid funding was a significant factor:

The problem is exacerbated, Miss Lieven [for PLP] submitted, by the very considerable difference between the level of publicly funded costs, still paid at 1994 rates, and costs inter partes. The order that there shall be no order as to costs has a chilling effect on the ability of lawyers to act, both for publicly funded and privately paying litigants. This, it was submitted, has significant constitutional implications.

The lead judgment of Pill LJ is worth quoting in its conclusions at length, not least because some of the arguments (about workload and resources) advanced by UKBA are frequently heard from other public bodies:

59. What 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. Inherent in that approach, is the need for a defendant to follow the Practice Direction (Pre-Action Conduct) or any relevant Pre-Action Protocol, an aspect of the conduct of the parties specifically identified in CPR r.44.3(5). The procedure is not inflexible; an extension of time may be sought, if supported by reasons.

60. Notwithstanding the heavy workload of UKBA, and the constraints upon its resources, there can be no special rule for government departments in this respect. Orders for costs, legitimately made, will of course add to the financial burden on the Agency. That cannot be a reason for depriving other parties, including publicly funded parties, of costs to which they are entitled. It may be, and it is not of course for the court to direct departmental procedures, that resources applied at an earlier stage will conserve resources overall and in the long term.

61. In the case of publicly funded parties, it is not a good reason to decline to make an order for costs against a defendant that those acting for the publicly funded claimant will obtain some remuneration even if no order for costs is made against the defendant. Moreover, a culture in which an order that there be no order as to costs in a case involving a public body as defendant, because a costs order would only transfer funds from one public body to another is in my judgment no longer acceptable.

62. Equally, it is not an acceptable reason to make an order for costs in favour of a claimant, and neither the appellants nor the interested parties have suggested it is, that publicly funded lawyers are, or are claimed to be, inadequately remunerated. Whether to make an order for costs depends on the merits of the particular application. However, both the warning in Scott against too ready resort to making no order as to costs, and the indication by Lord Hope in JFS, cited at paragraph 28, in relation to publicly funded parties, demonstrate the need for analysis of the particular circumstances.

63. I have serious misgivings about UKBA’s claim to avoid costs when a claim is settled for “purely pragmatic reasons”. My reservations are increased by the claim, on the facts of the present cases, that the right to work was granted for pragmatic reasons. I am unimpressed by suggestions made in the present cases that permission to work was granted for reasons other than that the law required permission to work to be granted. There may be cases in which relief may be granted for reasons entirely unconnected with the claim made. Given the Secretary of State’s duty to act fairly as between applicants, and the duty to apply rules and discretions fairly, a clearly expressed reason would be required in such cases. The expression “purely pragmatic” covers a multitude of possibilities. A clear explanation is required, and can expect to be analysed, so that the expression is not used as a device for avoiding an order for costs that ought to be made.

64. In addition to those general statements, what needs to be underlined is the starting point in the CPR that a successful claimant is entitled to his costs and the now recognised importance of complying with Pre-Action Protocols. These are intended to prevent litigation and facilitate and encourage parties to settle proceedings, including judicial review proceedings, if at all possible. That should be the stage at which the concessions contemplated in Boxall principle (vi) are normally made. It 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. If concessions are due, public authorities should not require the incentive contemplated by principle (vi) to make them.

65. When 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. I regard that approach as consistent with the recommendation in paragraph 4.13 of the Jackson Report.

66. I do not accede to the request to tack on words to the Boxall guidelines to meet the appellants’ submissions. Such a formula would carry the danger of being used mechanistically when what is required is an analysis of the circumstances of the particular case, applying the principles now stated. These include the warning in Scott that a judge should not be tempted too readily to adopt a fall back position.

And on disposing of a claim for judicial review where a settlement has been reached, Pill LJ adds

69. Where relief is granted by consent, CPR r.54.18 provides a procedure whereby the court may decide the claim for judicial review without a hearing. That procedure should be followed wherever possible. It requires the filing of a document signed by all the parties “setting out the terms of the proposed agreed order together with a short statement of the matters relied on as justifying the proposed agreed order and copies of any authorities or statutory provisions relied on” (CPR PD 54A, para.17.1).

Comment
This is a valuable judgment and one which undoes many of the formulaic gestures to Boxall reasoning made by Defendants in offering to settle on the basis of no order as to costs.

While the Boxall guidelines were not expressly amended, the Court of Appeal’s clear view is that it would be for the Defendant to justify why there should be a departure from the usual rule of costs to the winner where relief had been granted (or achieved). Compliance with the pre-action protocol should be a significant consideration in assessing whether the Defendant has met such a burden of justification, with the suggestion that a failure to meet protocol requirements by the Defendant would make it very difficult indeed to justify why there should be no order on settlement where relief has been substantially granted.

Given that public bodies’ failure to respond to protocol letters in time or at all is very familiar to housing claimants lawyers, and that claims are very often settled after issue or after permission with a form of relief being given, this case should be of significance to claimant and defendant lawyers on the issue of costs of a settled claim. It also provides encouragement for costs to be taken to written submissions, where the Defendant tries to insist on no order as to costs. The assertion that there are ‘pragmatic reasons’ alone for settlement should be referred to paragraph 63 of this judgment – “The expression “purely pragmatic” covers a multitude of possibilities. A clear explanation is required, and can expect to be analysed, so that the expression is not used as a device for avoiding an order for costs that ought to be made.”