Reciprocal Costs Capping Orders In Public Interest Judicial Review Claims

WESTERN SAHARA CAMPAIGN UK V SECRETARY OF STATE FOR INTERNATIONAL TRADE & ANOR (COST CAPPING IN JUDICIAL REVIEW CLAIMS) | DECISION

MR JUSTICE CHAMBERLAIN:

37. The Claimant applies for a cost-capping order. The Defendants are neutral on the question whether, in principle, such an order should be made. Section 88(6) of the Criminal Justice and Courts Act 2015 (“the 2015 Act”) permits the making of a costs-capping order only if the court is satisfied that (a) the proceedings are public interest proceedings, (b) in the absence of the order, the applicant for judicial review would withdraw the application for judicial review, and (c) it would be reasonable for the applicant to do so.

38. These are, in my judgment, public interest proceedings. If the Claimant is correct, the Defendants are acting unlawfully by according preferential tariff treatment to goods originating in Western Sahara and in doing so are facilitating the exploitation of the resources [of] that territory contrary to international law. The potential impact of this exploitation on the people of the territory is described in the witness statement of Mr John Gurr, filed on behalf of the Claimant. That impact includes the depletion of natural resources in such a manner as to cause irreparable damage and pollution causing damage to human health. The issue is therefore one of general public importance within s. 88(7)(a) of the 2015 Act.

39. It may be that the direct impact of UK tariffs on the exploitation of the resources of Western Sahara is small, but the public interest in resolution of the issues in this claim goes wider than that, because, if the Claimant is right to say that the issue is justiciable, those issues engage the UK’s compliance with international law. Even if the Claimant is wrong about the justiciability of the claim, there is a powerful public interest in the resolution of the issues in the claim, because the principles to be applied when considering a challenge to the exercise of the power conferred by s. 9 of the 2018 Act are likely to be of relevance in other cases. The proceedings therefore satisfy the requirements of s. 88(7)(b) and (c), taking into account the matters identified in s. 88(8).

40. The second witness statement of John Gurr establishes that the financial conditions in s. 88(6)(b) and (c) are satisfied.

41. This means that the criteria for a costs capping order are met. The Claimant has proposed that its costs be capped at £18,000 plus VAT (£21,600 inclusive of VAT). The Defendants do not oppose that figure. In my judgment it is appropriate, given the financial information in Mr Gurr’s second witness statement.

42. The only point on which the Defendants have raised issue is the figure proposed for the reciprocal cap on the costs claimable by the Claimant from the Defendants in the event that the claim succeeds. The Claimant says it should be £80,000 plus VAT (£96,000 including VAT).

43. The principles to be applied are these:

(a) Where a costs capping order is granted limiting the costs liability of a claimant in the event the claim fails, the court must impose a reciprocal cap limiting the liability of the other party: s. 89(2) of the 2015 Act.

(b) However, as the Secretary of State for the Home Department recently conceded before the Court of Appeal, there is no requirement that the reciprocal cap should be set at the same level as the cap on the costs liability of the claimant: R (Elan-Cane) v Secretary of State for the Home Department [2020] EWCA Civ 363, [2020] QB 929, [138]. This reflects the law prior to the 2015 Act. For example, in R (Buglife) v Thurrock Thames Gateway Corp. [2008] EWCA Civ 1209, [2009] Env LR 18, Sir Anthony Clarke MR, giving the judgment of the court, said this at [26]:

“We entirely agree that there should be no assumption, whether explicit or implicit, that it is appropriate, where the claimant’s liability for costs is capped, that the defendant’s liability for costs should be capped in the same amount. As just stated, the amount of any cap on the defendant’s liability for the claimant’s costs will depend upon all the circumstances of the case.”

(c) In the past, the reciprocal cap has in some cases been set substantially higher than the cap on the claimant’s liability, in order to allow for the recovery of a success fee or uplift in cases where the claimant’s representatives were acting on a conditional fee basis: see e.g. R (Medical Justice) v Secretary of State for the Home Department [2010] EWHC 1425 (Admin)

(d) Since the abolition of success fees, a disparity between the cap on the claimant’s liability and the reciprocal cap can no longer be justified on that ground: see e.g. the discussion of the issue by Nicol J in R (Detention Action) v First-tier Tribunal, CO/558/2015, 12 June 2015

(e) However, Cranston J’s statement of principle at [28] of his judgment in Medical Justice remains good: “there is a strong public interest in ensuring that costs orders permit the proper funding of solicitors who take public interest cases and who take the risk of losing“

(f) This must be read subject to the caveat that a claimant who benefits from a cap limiting its costs liability cannot expect itself to recover costs at commercial rates. The reciprocal cap should never allow a claimant to recover at more than “a reasonable, modest rate“: R (Western Sahara Campaign UK) v HM Revenue and Customs [2015] EWHC 1798 (Admin), [44]. This reflects Lord Phillips CJ’s statement in R (Corner House Research) v Secretary of State for Trade and Industry [2005] EWCA Civ 192, [2006] 1 WLR 2600, [76], that the reciprocal cap should limit the claimant’s recoverable costs to “a reasonably modest amount” covering “solicitors’ fees and a fee for a single advocate of junior counsel status that are no more than modest“

(g) In setting the reciprocal cap, it is necessary to bear in mind that in judicial review a claimant’s costs can generally be expected to be higher than a defendant’s (assuming representation of equivalent seniority). This is because the preparatory work of collating the evidence supporting a claim and of formulating the submissions to advance it is usually (though not always) more time-consuming than the work of producing responsive submissions and evidence. In addition, claimants generally do not have the advantage of counsel charging Treasury rates (an arrangement which is possible only because of the volume of work offered by the Government as client)

(h) The rules governing cases which engage the provisions of the Aarhus Convention reflect these points in setting the cap for the liability of a non-individual claimant at £10,000 but the cap on costs recoverable against from defendant at £35,000: see CPR 45.43. This does not indicate that a ratio of 2:7 is appropriate in every case, but it provides an indication that it may often be appropriate to set the reciprocal cap at a higher level than the cap on the claimant’s liability.

44. In this case, the Defendants submit that the Claimant has already incurred substantial and, they say, excessive costs. In my judgment, it is not necessary or appropriate to assess the reasonableness of the Claimant’s costs to date at this stage of the proceedings. The assessment of costs would ordinarily be undertaken at the end of the case. If it turns out that costs have been unreasonably incurred, they will not be allowed. The reciprocal cap will apply after any assessment. The exercise of setting the reciprocal cap depends on how much of its reasonable costs the Claimant should be able to recover, charging on a reasonably modest basis. That involves applying the principles set out above. In my judgment, the appropriate figure is £60,000 plus VAT (£72,000 inclusive of VAT). I note in this regard that the permission hearing before me took almost a full day and that, since circulation of this judgment in draft, the parties have agreed that the time estimate for the substantive hearing is 3 days.

Link to Judgment