In an important judgement handed down on Tuesday 26 July 2011, the Court of Appeal has given guidance as to the approach to be taken to costs in public law cases which settle prior to trial. The previous approach in this situation had been set out in R (Boxall) v Waltham Forest LBC (2001) 4 CCL Rep 258, which provided that in the absence of a good reason to make any other order the fall back position was to make no order as to costs.
The new approach was set out by Pill LJ:
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.
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.
While the court sought to accommodate this new guidance within the existing principles laid down in Boxall, it stressed that what was required was an analysis of the circumstances of each particular case, applying the principles set out above, and that the Court should not be tempted too readily to adopt a fall back position of no order for costs. In reality, the observation that the Defendant bears a (potentially heavy) burden of displacing the expectation that it should pay a claimant’s costs where relief has been conceded, represents a major shift in the hitherto established practice, which, as Pill LJ recognised, in practice amounts to implementation of the recommendations of Jackson LJ in his “Review of Civil Litigation Costs: Final Report”.
The new approach is likely to be welcomed by those acting on behalf of Claimants in judicial review proceedings.
Philip Nathan (led by Richard Wilson QC) appeared on behalf of the successful Appellants, instructed by Duncan Lewis and Co.
Nathalie Lieven QC and Tim Buley appeared for the Public Law Project, who were granted permission to intervene in support of the Appellants, instructed by Leigh Day and Co.