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Jersey Unreported Judgments |
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You are here: BAILII >> Databases >> Jersey Unreported Judgments >> Flynn v Reid [2013] JRC 112 (13 June 2013) URL: http://www.bailii.org/je/cases/UR/2013/2013_112.html Cite as: [2013] JRC 112 |
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Property - reasons for protective costs order.
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Before : |
W. J. Bailhache, Q.C., Deputy Bailiff, sitting alone. |
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Between |
Rosemary Flynn |
Plaintiff |
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And |
George Reid |
Defendant |
Advocate C. Hall for the Plaintiff.
Advocate J. N. Heywood for the Defendant.
H. M. Solicitor General, H. Sharp, Esq., convened.
judgment
the deputy bailiff:
1. On 24th July 2012 I heard an application by the Plaintiff for leave to appeal against a costs order made on 14th May 2012. I indicated that leave was given for the purpose of ventilating issues in relation to legal aid in the Court of Appeal, although I recognised that once leave had been given, argument in the Court of Appeal might well be at large. Indeed that is the way it in fact worked out.
2. In giving leave, I indicated that the relevance of acting on legal aid where a costs order came to be considered was a matter of public interest and I thought it important that the particular parties before me should not be penalised in relation to the costs of the appeal. Hence, I was making a form of Protective Costs Order. The order that was made was that the costs of both the Plaintiff and the Defendant on appeal, including the costs of making the application for leave to appeal would be met out of public funds. That meant that neither party would be seeking an order against the other party for costs on appeal. I proposed to put a cap on those costs at £15,000 per party based on a broad calculation of a maximum of two days in the Court of Appeal at £4,500, an additional £9,000 by way of preparation costs, and a small supplement to round up to the closest thousand pounds. I gave liberty to apply to a single judge of the Court of Appeal if the cap on costs became unrealistic. I added that leave to appeal was given on condition that the sum of £15,000 would be the limit of what counsel would charge even as between them and their own client. I had convened the Attorney General at very short notice for the purposes of argument as to whether this form of Protective Costs Order should be made and subsequently I convened him as a party to the appeal and indicated that the Law Society, if it wished to be joined, should apply to a single judge of the Court of Appeal.
3. The Court of Appeal heard the appeal on 26th September 2012 and allowed it. I note from the judgment that the Bâtonnier and the Law Society were convened, as well as the Attorney General. I have been asked by the Law Society to publish reasons for the decision as to the Protective Costs Order which I now do.
4. In England and Wales Protective Costs Orders have been developed to ensure that access to justice in public law cases is secured. The leading authority is probably the decision of the English Court of Appeal in R (Corner House Research) -v- Secretary of State for Trade and Industry [2005] EWCA Civ 192, [2005] 4 AER. Corner House, an anti-corruption non-governmental organisation, complained that the anti-corruption procedures of the Export Credits Guarantee Department had been weakened, that it had not been consulted, and it brought a claim for judicial review. It was common ground that Corner House would be unable to continue with its application unless a Protective Costs Order was granted.
5. The Court of Appeal made a full order, protecting Corner House from having to pay any costs if it lost. The basis for the decision was that if the Court had not taken that course, the issues of public importance that arose in the case would have been stifled by the fear of an adverse costs order, and the case would never have been brought. The guidance given by the Court of Appeal was in these terms:-
(i) A Protective Costs Order (PCO) may be made at any stage of the proceedings, on such conditions as the Court thinks fit, provided that the Court is satisfied that:
(a) The issues raised are of general public importance;
(b) The public interest requires that those issues should be resolved;
(c) The applicant has no private interest in the outcome of the case;
(d) Having regard to the financial resources of the applicant and the respondent, and to the amount of costs that are likely to be involved, it is fair and just to make the order; and
(e) If the order is not made, the applicant will probably discontinue the proceedings and will be acting reasonably in so doing.
(ii) If those acting for the applicant are doing so pro bono, this would be likely to enhance the merits of the application for PCO.
(iii) It is for the Court, in its discretion, to decide whether it is fair and just to make the order in the light of these considerations.
(iv) It is likely that a cost capping order for the claimant's costs will be required in all cases other than those where the claimant's lawyers are acting pro bono and the effect of the PCO is to prescribe in advance that there will be no order as to costs in the substantive proceedings whatever the outcome. When making any PCO where the applicant is seeking an order for costs in its favour if it wins, the Court should prescribe by way of a capping order a total amount of the recoverable costs which will be inclusive, so far as a party with the benefit of a conditional fee agreement is concerned, of any additional liability. The purpose of the PCO will be to limit or extinguish the liability of the applicant if it loses, and as a balancing factor the liability of the defendant for the applicant's costs if the defendant loses will thus be restricted to a reasonably modest amount. The applicant should expect the capping order to restrict it to solicitors fees and a fee for a single advocate of junior counsel status that are no more than modest. The overriding purpose of the exercise of this jurisdiction is to enable the applicant to present its case to the Court with a reasonably competent advocate without being exposed to such serious financial risks that would deter it from advancing a case of general public importance at all, where the Court considers that it is in the public interest that an order should be made.
6. In the course of giving his judgment, Lord Phillips MR referred to the Law Commission Consultation Paper Administrative Law: Judicial Review and Statutory Appeals (Law Com No. 126) (1993) in which the Law Commission picked up upon suggestions that judges should have the power to award costs out of central funds in civil cases, particularly where there was no other source from which they could be paid and the interests of justice so required, and that the Court should be empowered to grant legal aid for the application for leave or for the substantive hearing. Indeed the Commission itself recommended that costs should be available from central funds for a successful party and in favour of an unsuccessful applicant where the case had been allowed to proceed to a substantive hearing on the basis of a public interest challenge or for the purposes of seeking an advisory declaration. However the Commission's proposals were not accepted by government, which at that time was perceived to have led to a gap in the Court's ability to do justice.
7. It is noteworthy that there are different forms of Protective Costs Orders. It may be that an order will be made which protects a party from an adverse costs order but nonetheless permits that party to recover costs if successful. A different form of order would be where there is no order as to costs whatever the outcome of the case. Another variation is where the Court makes an order capping the maximum liability for a party's costs if it loses.
8. It was clearly contemplated that Protective Costs Orders would not be made in private law civil cases. This is because it would be unusual that a point of general public importance, which goes well beyond the confines of the specific argument between the parties in that particular case, would be raised.
9. In R (Compton) -v- Wiltshire PCT [2009] 1 AER 978, the Court of Appeal has revised the proper approach to the public importance/public interest principle. The Compton case concerned two linked judicial review challenges to the closure or reconfiguration of local hospital services in Wiltshire. The Court of Appeal held that ultimately the issue was one for the judge dealing with the Protective Costs Order, who enjoyed a wide discretion. With reference to the Corner House decision, Smith LJ said this:-
10. The "no private interest requirement" was considered in the case of Goodson -v- HM Coroner for Bedfordshire [2005] EWCA Civ 1172. Mrs Goodson sought a full coroner's enquiry into the circumstances of her father's death. The Court of Appeal decided that this was a private interest and accordingly her application failed. The Court of Appeal went as far as saying that a personal litigant who has sufficient standing to apply for judicial review will normally have a private interest in the outcome of the case. The effect of Goodson would seem to exclude many individual claimants from succeeding in an application for a Protective Costs Order in judicial review cases.
11. Goodson has not been formally departed from, but it has been considered with various degrees of scepticism in different courts. In Wilkinson -v- Kitsinger [2006] EWHC 835 (Fam) Potter P declined to apply Goodson to a case concerning the validity in the United Kingdom of a foreign lesbian marriage. He granted a limited Protective Costs Order on the basis that the private interest principle was no more than a flexible element in the court's consideration as to whether it was fair and just to make the order. That decision was approved by the Court of Appeal in R (England) -v- L B Tower Hamlets [2006] EWCA Civ 1742 where it was said at paragraph 14:-
12. In R (King's Cross Railway Lands Group) v Camden LBC [2007] EWHC 1515 (Admin) Collins J gave his view rather more explicitly:-
13. Collins J expressed the same view in R (Eley) -v- Secretary of State for Communities and Local Government [2008] EWCA Civ 1632 when he said that:-
and granted a Protective Costs Order. The Court of Appeal dismissed an application by the Secretary of State for permission to appeal and held that the fact that a person has standing for the purposes of bringing a claim for judicial review or a statutory planning appeal is not a bar to being granted a Protective Costs Order.
14. The Court of Appeal in England has also held that an application is more likely to be successful if the claimant's lawyers are acting pro bono (as opposed to acting under a conditional fee agreement or when instructed on an ordinary private client basis). It may be thought that the logic behind the Court of Appeal's conclusion was a reflection of the fact that if a Protective Costs Order assisted claimant who enjoys pro bono representation wins the case, he or she will not seek a costs order because there are no costs to seek, a costs order being intended to benefit not the lawyer but the party who has incurred the legal fees. That logic is not easy to reconcile with the decision of the Court of Appeal in this present case on the costs issue referred to it. It seems to me the reconciliation must lie in the contractual provision in the contract between the legally aided client in Jersey and his lawyer which enables the lawyer to charge a fee if the litigation is successful or a favourable costs order is obtained. It may be that such a contractual provision needs to be revisited or that the Court should be more assiduous when both parties are on legal aid to add to a costs order a requirement that it is not to be enforced without leave, as contemplated in paragraph 43 of the Court of Appeal's judgment in the instant case. Be that as it may, it is clear that in England the pro bono representation is only one factor in any decision to grant or refuse an application for a protective costs order, and is not of itself determinative of the application. As it turned out, the argument of the defendant in Corner House 2 ((R) Corner House and Campaign Against Arms Trade -v- Director of the Serious Fraud Office [2008] EWHC 71 (Admin)) that the claimant should have to adduce evidence that it had tried and failed to obtain pro bono representation as a pre-condition of obtaining a protective costs order failed because the matter was raised at a late stage in the preparation of the case. The point was expressly left open for future determination.
15. In Corner House the underlying rationale for the system of capping of the claimant's costs as a condition precedent for the grant of a Protective Costs Order was to ensure that claimants did not run up excessive costs and also to ensure some equity as between the interests of the claimant and the interests of the defendant. How this works in practice in the United Kingdom of course differs from Jersey, because we do not have the same system of leading and junior counsel, nor in the United Kingdom is there a fused profession. It is probably sufficient to note that in R (Buglife) -v- Thurrock Thames Gateway Development Corporation [2008] EWCA Civ 1209, Sir Anthony Clark MR said at paragraph 26:-
16. The Corner House decision indicated that the making of a Protective Costs Order was exceptional. In Compton, this was by a majority overruled. Lord Justice Waller said at paragraph 24:-
17. In the same case Smith LJ said at paragraph 83:
18. The Compton approach was approved by the Court of Appeal in Buglife.
19. The statutory jurisdiction to make costs orders in the Royal Court arises out of the Civil Proceedings (Jersey) Law 1956, Article 2 of which being in these terms:-
20. To the extent that the costs order in the instant case covered the costs of the application for leave to appeal, that was the statutory basis for it.
21. However the Protective Costs Order which I made extended to the costs of the hearing in the Court of Appeal itself. In that respect, the statutory jurisdiction of the Court of Appeal to make an order for costs arises out of Article 16 of the Court of Appeal (Jersey) Law 1961 which is in these terms:-
22. It is clear that when granting leave to appeal, I was not acting as a single judge of the Court of Appeal but as the judge of the court whose decision was being appealed. I consider that my jurisdiction to make the order I did, arose out of the court's inherent jurisdiction to add conditions to its order granting leave to appeal. It is obvious that the statutory jurisdiction conferred on the Court of Appeal, both by virtue of Article 16 and generally, is such that the order made in the Royal Court could itself have been varied in the Court of Appeal, although in fact it has not been so varied.
23. The Royal Court has on numbers of occasions in the past refused to make a costs order against a party in favour of the States or the Attorney General, in cases where it is perceived that the point which has been raised is one which needed to be resolved in the wider public interest. As is so often the case with statements of a practice which is commonplace, it is not easy to find specific instances by way of example; but the practice nonetheless exists. It is a reflection of the principle that government sometimes has to spend public money in establishing what is the right thing to do, and that applies just as much to litigating a particular point in court as it does, for example, to commissioning a consultation paper from a local or external expert.
24. In public law cases, it is also sometimes the position that the court marks its disapproval of a course of conduct by a public authority by an award of indemnity costs in circumstances where, had the matter been argued against a private litigant, standard costs might otherwise have been the result. This is to emphasise that high standards are required of our public authorities. La Ruette Pinel Farm Limited -v- Minister for Planning and Environment [2012] (1) JLR 73 is an example of such a case.
25. Other than in children cases, I am not aware of any public law cases, however, in which Protective Costs Orders have so far been made in Jersey in advance of the hearing. Nonetheless in my judgment there is absolutely no reason why, in an appropriate case, they should not be made, and most of the principles in the English cases which I have mentioned above would seem to have just as much force in Jersey. In my judgment, it is right in an appropriate case that they should be applied.
26. It might be said that the Royal Court has adopted a similar approach in public law children cases, where the Minister for Health and Social Services seeks a care order or supervision order in respect of a minor child, and the Court has appointed a guardian and sometimes a lawyer for the child, the costs of which are met from the public purse. Following Re B (separate representation of minors) [2010] JLR 387 administrative arrangements between the profession and the Judicial Greffe, approved by the Treasury, certainly have had a similar effect, albeit now the position as regards costs is not governed directly by any court order. Nonetheless, the emergence of that arrangement started with the Royal Court making an order that the costs incurred by the appointment of a guardian and a lawyer for the child were to be met out of the Court and Case Costs provision in the Judicial Greffier's budget.
27. The costs rules are a formidable barrier to access to justice. Many claims are in fact never brought at all because the risk of losing and facing an uncertain and often very large costs bill has an inhibiting effect. Similarly, the risk of incurring significant costs can drive a party to settle disputes at a level which otherwise would not have been contemplated. Arguments about what is or is not the right way of approaching costs matters can be variously run, but there cannot be any doubt at all that exposure to costs is an important factor in dealing with litigation.
28. In this case, leave to appeal was granted because I considered that there was a public interest in the Court of Appeal giving a reasoned decision on what impact, if any, the fact of legal aid ought to have on the making of a costs order. It was accordingly desirable that the Court of Appeal should hear the appeal, and undesirable that risks as to costs might drive the parties into settlement of the appeal of the costs order, thus resulting in the matter of public interest not being ventilated. In my judgment, it was therefore necessary to make a Protective Costs Order in relation to the appeal even though this was not a public law case.
29. In B -v- J [2008] JLR N 28 Sir Philip Bailhache, Bailiff, determined that in that complex private law case where, unusually, the Royal Court had decided to appoint a lawyer to represent the child, it was appropriate that the States should meet the cost of representation as opposed to the parents, and do so on an indemnity basis. In a sense this was a form of Protective Costs Order in a private law case, which ensured that neither parent faced the risks of having to pay for that lawyer's expenses, and indeed one could see immediately that it might be unfair to visit such a risk on parents engaged in private litigation where an expense was introduced into the court proceedings as a result of a court order.
30. We have, therefore, one example of where a Protective Costs Order can be made in private law proceedings. There were in fact two components to the order made in the present proceedings - the first was an order that come what may (although obviously subject to the Court of Appeal's jurisdiction) neither appellant nor respondent were to seek cost orders against the other on the appeal. This was not to cause injustice because the second component of the order was that a sum of money was to be made available out of public funds to meet the costs of the appeal. Before making this order, as indicated above, I convened the Solicitor General in order that he might have the opportunity of contesting either the jurisdiction or the exercise of discretion pursuant to that jurisdiction. He was given very short notice of that convening, but nonetheless he neither contested the jurisdiction nor the exercise of discretion, nor indeed did he seek any adjournment so the matter could be considered further.
31. As far as jurisdiction for that second component is concerned, the case of Channel Islands Knitwear Company Limited -v- Hotchkiss [2001] JLR 570 confirms that the Court of Appeal could exercise a jurisdiction pursuant to Article 16 of the Court of Appeal (Jersey) Law 1961 to make an order that the costs of the respondent be paid out of public funds - in fact by the States, notwithstanding that the States was not, in any form, a party to the proceedings. That decision, I should note, was made by the Court of Appeal by a majority, Carey JA dissenting. The provisions in the Court of Appeal Law insofar as costs are concerned are similar to those which appear in the Civil Proceedings (Jersey) Law 1956, and therefore, it seems to me, fall to be construed in the same way, and they thus permit the Court to make an order against the States for payment of costs notwithstanding that the States are not, under any emanation, a party in the proceedings.
32. The reason it became appropriate to make a protective costs order in this case, in my judgment, was that the approach of the Royal Court to costs orders where a party was legally aided was a matter of particular public importance. It was right that there should be full argument before the Court of Appeal on this subject. I had in mind in particular that if the order were not made, there was a high probability that the risks for both sides in taking this particular point to the Court of Appeal would be so high that there was every probability that the appeal would be compromised and the point never argued. This would not have been in the public interest, and it was therefore important on this ground too that the Protective Costs Order should be made.
33. The question which then arose was whether the fact that the parties had a private interest in the outcome of the appeal was such an important factor that the order ought not to be made. At that point, it seemed to me that the line of English authority in public law cases which has resulted in the conclusion that a personal or private interest in the outcome of the judicial review application is not determinative as to whether a Protective Costs Order should or should not be made, becomes relevant. Once one has concluded that the point to be argued is one which has a much wider impact than merely the interests of the particular parties, there is no basis for concluding that a Protective Costs Order of the kind made in this case should not be made, and indeed every reason why it should.
34. While it is true, of course, that the relevant considerations in each case will turn on their particular facts, I add that it seems to me unlikely that there will be many other cases in private law proceedings where a Protective Costs Order of this kind will be made, because the private interests are more likely to dominate than the public interest.
