Judicial Review: Protective Costs Orders

For a claimant bringing a judicial review (JR), the possibility of losing is about more than simply losing the case: they may also face a substantial bill for the defendant’s legal costs. This can be particularly problematic where the claimant is an individual, charity or non-governmental organisation (NGO) bringing proceedings in the public interest.

Protective Costs Orders (PCOs) provide a potential solution. They allow the court to limit a claimant’s exposure to adverse costs, helping to ensure that financial risk does not prevent a potentially important claim from being heard. In this sense, PCOs sit at the intersection between the ordinary costs rules and the wider principle of access to justice.

The general starting point is that the court has discretion as to whether costs are payable by one party to another and, if so, in what amount. This is reflected in CPR 44.2.

The Corner House Principles

The leading authority PCOs is the Court of Appeal decision in R (Corner House Research) v Secretary of State for Trade and Industry [2005] EWCA Civ 192. Corner House is an anti-corruption NGO who were initially refused a PCO for a JR they were bringing against the Export Credits Guarantee Department.

The Court of Appeal reversed that decision and captured the essence of the PCO issue at paragraph [145], where they said that if they had not granted the PCO:

...issues of public importance that arose in the case would have been stifled at the outset, and the courts would have been powerless to grant this small company the relief that it sought.

Criteria

The judgment gives a detailed analysis of the issue of costs in public law litigation and sets out the following guidance on the granting of PCOs at paragraph [74]:

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:

• the issues raised were of general public importance;
• the public interest required those issues to be resolved;
• the applicant had no private interest in the outcome;
• having regard to the parties’ financial resources and the likely costs, it was fair and just to make the order; and
• without the order, the applicant would probably discontinue the proceedings and would be acting reasonably in doing so.

The court also noted that the fact that lawyers were acting pro bono could strengthen an application for a PCO.

The central question is ultimately whether, having considered the circumstances of the case, it is fair and just to grant protection from costs.

Forms of the Order

As the criteria demonstrate, the court has a wide discretion as to the granting of a PCO. There are also a variety of forms that the order itself can take.

The most generous would be where a claimant is not liable for any defendant costs, but would be allowed to recover all theirs (including a success fee) if they won. There could also be no order as to costs regardless of outcome, meaning each side will bear their own costs.

The court in Corner House indicated (at [146]) that an order with some form of capped costs condition would be the more normal kind. This can take many forms, a mutual cap for each side, for example both sides being limited to say £100,000. Or it may be that the claimant’s costs are capped, limiting the defendant’s liability, but at the same time removing the claimant’s risk. There could also be an order that the claimant would only be liable for a fixed proportion of the defendant’s costs.

The important point is that a PCO does not necessarily make litigation cost-free. Instead, it provides greater certainty about the financial consequences of the proceedings and prevents the claimant’s potential liability from becoming so large that it acts as a barrier to bringing the claim.

Issues

While undoubtedly a crucial mechanism for providing equality to arms, the Corner House guidance still potentially leaves a claimant on the back foot. Paragraph [76] sets out what are effectively two sub-considerations relating specifically to the costs a claimant with a PCO could expect to recover if it is successful. These would apply to cases where a cost-capping order is used:

• ii) 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.
• iii) The overriding purpose of exercising 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 …. The beneficiary of a PCO must not expect the capping order that will accompany the PCO to permit anything other than modest representation, and must arrange its legal representation (when its lawyers are not willing to act pro bono) accordingly. [76]

Why should the claimant be limited to ‘modest representation’ by a single advocate of junior status? Cases of high public interest are generally complex and require one or more very senior counsel. Paragraph [76] indicates that if claimant’s want the right counsel for the job they are expected to persuade them to take on the case pro bono.

Obtaining pro bono representation is not unheard of. However, this is an exceptional case with a large degree of publicity which the Bar itself has unquantifiable interest in. The solicitors and counsel who specialise in JR claims could not be expected to routinely act on a pro bono basis as this work is the majority of their practice.

Subsequent decisions have levelled the playing field somewhat with the junior counsel rule no longer good law. In R (Buglife) v Thurrock Thames Gateway Development Corporation [2008] EWCA Civ 1209 the court stated that:

we would certainly accept that there can be no absolute rule limiting costs to those of junior counsel because one can imagine cases where it would be unjust to do so. [25]

The criteria are now generally accepted as guidance rather than rules as was said in R (Compton) v Wiltshire PCT [2009] EWCA Civ 1209: ‘The paragraphs in Corner House are not, in my view, to be read as statutory provisions, not to be read in an over-restrictive way.’

Current Application and the Future

PCOs are a useful tool for claimants and defendants alike. They also highlight a publicly important area of law that allows broad judicial discretion. Claimants are very much in the hands of a judge deciding if it is ‘fair and just’ to grant them a PCO, with no guarantees that they will be protected.

In light of the current squeeze on legal aid and the governments proposals to limit JR claims, PCOs could well become much more prevalent in coming years. Watch this space.