ZN (Afghanistan) & Anor v Secretary of State for the Home Department [2018] EWCA Civ 1059

[2018] EWCA Civ 1059Case No C2/2015/3805
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
ADMINISTRATIVE COURT
AND THE UPPER TRIBUNAL (IAC)
Venue Royal Courts of Justice, Strand, London, WC2A 2LLDate 11/05/2018
Before
SIR BRIAN LEVESON, President of the Queen’s Bench DivisionLORD JUSTICE SINGHLORD JUSTICE LEGGATT
Between
(1) ZN (AFGHANISTAN)Appellants(2) KA (IRAQ)AppellantSECRETARY OF STATE FOR THE HOME DEPARTMENTRespondent
Mr Stephen Knafler QC and Mr Raza Halim (instructed by Duncan Lewis) for First AppellantMr Stephen Knafler QC and Mr Greg Ó Ceallaigh (instructed by Duncan Lewis) for Second AppellantMs Samantha Broadfoot QC (instructed by the Government Legal Department) for RespondentHearing Hearing date: 21 February 2018
Judgment ApprovedLord Justice Singh :Introduction
[1]There are before the Court two applications for costs made by the Appellants following consent orders approved by the Court under which their appeals were withdrawn. The Respondent, the Secretary of State, agreed to consider their asylum claims in the United Kingdom. It was agreed by the parties that the issue of costs should be considered by a judge on the papers. Underhill LJ directed that the applications for costs should be considered by the Full Court on the basis that these cases appeared to raise a point of principle on which there is no previous authority.

Factual and Procedural Background

[2]These cases arise out of decisions made by the Secretary of State to remove the Appellants to other Member States of the European Union (“EU”), pursuant to Regulation 604/2013 of the European Parliament and of the Council of 26 June 2013 (“the Regulation”). The Regulation establishes the criteria and mechanisms for determining which Member State is responsible for examining an application for international protection lodged in one of the Member States by a third country national or a stateless person. The Regulation is also commonly known as “Dublin III”.

ZN (Afghanistan)

[3]ZN is an Afghan national, born on 1 January 1997. He left Afghanistan in 2014, on his case owing to fear of ill-treatment by the Taliban.[4]Around October 2014 ZN arrived in Bulgaria, having travelled through a number of different countries. He was arrested and kept in detention for a disputed period of time. During the course of that detention ZN describes having been beaten by the Bulgarian police and being prevented from access to any legal representation.[5]ZN’s fingerprints were taken by the Bulgarian authorities, copies of which were uploaded to Eurodac on 16 October 2014.[6]It is apparent that ZN subsequently left Bulgaria and came to the United Kingdom, as he was encountered by Kent Police hidden in the rear of a lorry at Sheerness Docks. His fingerprints were taken and he was identified on the Eurodac database as having made an application for asylum in Bulgaria. The Respondent noted that the deadline for an Article 18.1(b) request under Dublin III for return would be 5 February 2015. In the absence of an age assessment ZN was treated as a child and placed in the care of social services.[7]ZN claimed asylum in the UK on 10 December 2014.[8]On 2 February 2015 Kent Social Services assessed ZN to be an adult with an assessed date of birth of 1 January 1997. He was detained “off reporting” in order to facilitate his removal.[9]On 5 February 2015 the Respondent made a formal request to the Bulgarian authorities to take back ZN pursuant to Article 18.1(b) of Dublin III. She received formal acceptance on 19 February 2015, and the deadline for transfer was set as 19 August 2015. On 10 March 2015 the Respondent refused and certified ZN’s asylum claim on “third country grounds” pursuant to Part 2 of Sch. 3 to the Asylum and Immigration (Treatment of Claimants, etc) Act 2004 (“the 2004 Act”).[10]On 16 March 2015 ZN’s claim to have his case considered in the UK on the ground that he had a cousin in the UK was rejected and certified under Sch. 3, Part 2, para. 5(4) of the 2004 Act.[11]On 24 March 2015 the Respondent issued directions for ZN’s removal to Bulgaria. Three days later ZN submitted a pre-action protocol letter challenging the refusal and certification and the decision to remove him on “third country grounds”, relying on Articles 3 and 5 of the European Convention on Human Rights (“ECHR”) and Articles 4, 6, and 18 of the EU Charter of Fundamental Rights (“the EU Charter”).[12]On 31 March 2015 ZN filed his application for judicial review in the Upper Tribunal (Immigration and Asylum Chamber) (“UT”). The Respondent requested that Bulgaria allow extra time for transfer owing to judicial action, with the effect of suspending authorisation to remove him.[13]In April 2015 ZN was released on temporary admission.[14]On 2 September 2015 Upper Tribunal Judge (“UTJ”) Storey refused ZN’s application for permission to seek judicial review on the papers and certified it as being totally without merit. ZN subsequently sought permission to appeal to this Court and UTJ Storey refused permission for the same reasons.[15]Accordingly, on 26 October 2015 the Respondent calculated the expiry of the transfer window as 26 April 2016. This was erroneous, as the 6 month transfer window would have re-started on 2 September 2015 and would therefore have actually expired on 2 March 2016.[16]On 17 November 2015 ZN sought permission to appeal from this Court. Following consideration of the papers Lindblom LJ granted permission on 18 April 2016.[17]On the same day the judgment in R (on the application of HK (Iraq) and others) v Secretary of State for the Home Department [2016] EWHC 857 (Admin) was handed down by Garnham J, in which it was held that Bulgaria was safe for the return of asylum claimants. A subsequent appeal to this Court was dismissed: [2017] EWCA Civ 1871.[18]On 21 April 2016 the Respondent noted that it would not be possible for removal of ZN to take place before the deadline of 26 April 2016 and that the Respondent should therefore be released from detention and the third country process. This was authorised the following day and ZN was released on 25 April 2016.[19]On 27 October 2016 both parties filed a Consent Order in which ZN agreed to withdraw his appeal to this Court as the Respondent agreed to withdraw her decision dated 10 March 2015 refusing and certifying ZN’s claim on third country grounds. It was also agreed that the question of costs should be determined following written submissions.

KA (Iraq)

[20]KA is from Jalawala, Iraq. He originally fled to Europe owing to the presence of Islamic State militants in his town. Initially he escaped to Austria, where he was arrested on arrival. Following around three days of detention his fingerprints were taken and uploaded to Eurodac. The Eurodac records suggest that this was on 14 June 2015.[21]Having successfully claimed asylum, KA was taken to an outdoor camp. He was given a blanket and some toiletries and left to sleep in the open air because of overcrowding. He maintains that he received no financial assistance or support in Austria, nor was he ever provided with adequate accommodation. KA therefore decided to leave shortly after arrival.[22]On 6 July 2015 KA illegally entered the UK; he was encountered in a freight yard near Canterbury and immediately detained by agents of the Respondent. The reasons for detention were that KA had entered the UK illegally, and that he had not given satisfactory evidence of his identity, nationality, or entitlement to be in the UK.[23]On 12 July 2015 KA applied for asylum in the UK and his fingerprints were taken and submitted to the Eurodac database. The result showed that KA had successfully claimed asylum in Austria and a formal transfer request was made on that basis on 16 July 2015.[24]On 23 July 2015 Austria formally accepted responsibility for KA, and the transfer deadline was thus set as 23 January 2016 in accordance with Article 29 of Dublin III. On that same date KA applied for temporary admission to the UK; he said that he had a family member in the UK who could support him financially and provide him with accommodation. He applied again the following day, and on 3 August 2015.[25]On 4 August 2015 the Respondent notified KA of her decision to refuse and certify his application for asylum on “third country” grounds. He was subsequently served with notice of an intention to remove him to Austria on 31 August 2015.[26]On 25 August 2015 KA’s representatives served a pre-action protocol letter on the Respondent, in which they outlined an Article 3 ECHR claim regarding the poor living conditions for asylum seekers in Austria. Three days later the Respondent replied, maintaining the removal directions and certifying KA’s Article 3 claim as being clearly unfounded.[27]On 7 September 2015 KA lodged an application for judicial review in the Administrative Court on two grounds: first, a challenge to removal on Article 3 grounds and, secondly, in relation to his continued detention. The Article 3 application had the effect of ‘stopping the clock’ with regards to the Dublin III transfer window. Removal directions were therefore deferred and subsequently cancelled.[28]On 7 October 2015 Kerr J made an order that the issue be heard at an oral hearing. He heard the matter himself on 15 October 2015 and refused KA permission to bring a claim for judicial review.[29]KA appealed against Kerr J’s refusal, and an order was made by Beatson LJ on 26 April 2016 ordering a stay on removal and staying the matter pending the hand-down of the judgment of the High Court in R (on the application of Abdulkadir & another) v Secretary of State for the Home Department [2016] EWHC 1504 (Admin).[30]On 16 May 2016 a Home Office official observed that the removal target deadline for KA had passed and that no extra time letter had been sent to the Austrian authorities. Accordingly it was proposed that KA be taken out of the Third Country process.[31]On 2 June 2016 the Respondent’s Third Country Unit sent a letter to KA agreeing to withdraw the third country certificate dated 4 August 2015.[32]On 28 June 2016 Irwin J (as he then was) gave judgment in Abdulkadir [2016] EWHC 1504, in which it was held, at para. 82, that the Article 3 claims by two Iraqi nationals seeking to prevent their return to Austria were “bound to fail” if they had gone to the First-tier Tribunal. Accordingly, the certification of those claims was held to be lawful.[33]That notwithstanding, the parties agreed a consent order by which the Appellant would withdraw these proceedings as he no longer required a remedy from the Court; he had achieved the outcome he sought to achieve. Underhill LJ made an order on 27 September 2016 approving the position agreed by the parties, leaving the issue of costs to be determined.

Legal Framework for Costs in Judicial Review Proceedings

[34]The legal framework for costs in judicial review proceedings is to be found in the general provisions on costs in Part 44 of the Civil Procedure Rules (“CPR”) and the decision of this Court in R (on the application of M) v Croydon London Borough Council [2012] EWCA Civ 595; [2012] 1 WLR 2607.

Part 44 CPR

[35]In short, CPR rule 44.2 confers a discretion on the court as to whether or not costs are payable by one party to another, the amount of the costs, and when they are to be paid. If an order for costs is to be made, the general rule is that the unsuccessful party will be ordered to pay the costs of the successful party. However, this does not preclude the court from making a different order.[36]In deciding what order to make on costs, the court will have regard to all the circumstances, including the conduct of the parties; whether a party has succeeded on part of its case, even if that party has not been wholly successful; and any admissible offer to settle made by a party which is drawn to the court’s attention, and which is not an offer to which costs consequences under Part 36 regarding offers to settle apply.

R (on the application of M) v Croydon London Borough Council

[37]In R (on the application of M) v Croydon London Borough Council this Court analysed the general principles which a court must bear in mind when considering any decision in relation to costs.[38]In that case, the Appellant M had applied for asylum claiming that he had been born in 1996 and was aged 12. The local authority assessed him as being in fact aged 14. Initially the matter was disputed between the parties, with M issuing legal proceedings against the local authority. Eventually the local authority conceded that M was born in 1996, but refused to pay his costs of the legal proceedings.[39]The matter went to the Court of Appeal when M appealed against the decision of the Administrative Court making no order for costs.[40]In giving the judgment of the Court, Lord Neuberger of Abbotsbury MR (as he then was) stated that there were three relevant general principles which apply to costs after a trial in ordinary civil litigation, at paras. 44-46:
“44. … The first is that any decision relating to costs is primarily a matter for the discretion of the trial judge, which means that an appellate court should normally be very slow to interfere with any decision on costs … if a trial judge departs from rationality or the correct principles it is legitimate for an appellate court to interfere with his conclusion. 45. The second principle is that … the general rule in all civil litigation is that a successful party can look to the unsuccessful party for his costs. Of course as CPR 44.3(2)(b), (4), (5) and (6) demonstrate, there may be all sorts of reasons for departing from this principle, but it represents the prima facie position… 46. The third principle is that the basis upon which the successful party’s lawyers are funded, whether privately in the traditional way, under a ‘no win no fee’ basis, by the Community Legal Service, by a Law Centre, or on a pro-bono arrangement, will rarely, if ever, make any difference to that party’s right to recover costs. That point appears to me to be plainly right as a matter of principle, and it is supported by the second of the Boxall guidelines, by what was said by Hallett LJ in Scott para. 56, and by Pill LJ in Bahta paras 61-2, and by what Lord Hope said in the Supreme Court in Re appeals by Governing Body of JFS [2009] UKSC 1 paras 24-45.”
[41]Of course, this case is slightly different, in that the issue was settled between the parties prior to trial. Accordingly, the principles in relation to costs in such cases are also slightly different. In M Lord Neuberger put the position in this way at para. 47:
“It is open to parties in almost any civil proceedings to compromise all their differences save costs, and to invite the court to determine how the costs should be dealt with. The court has jurisdiction in such a case to determine who is to pay costs, but it is not obliged to resolve such a free-standing dispute about costs.”
[42]Further, he cited the case of BCT Software Solutions Ltd v C Brewer & Sons Ltd [2003] EWCA Civ 939, in which Chadwick LJ stated at paras. 24-25:
“24. … where there has been no trial – or no judgment – the judge may well not be in a position to reach a decision on those matters. He will not be in a position to decide those matters if they turn on facts which have not been agreed or determined. In such a case he should accept that the right course is to decide that he should not make an order about costs. As the arguments on the present appeal demonstrate, it does the parties no service if the judge – in a laudable attempt to assist them to resolve their dispute – makes an order about costs which he is not really in a position to make. 25. … There will be cases (perhaps many cases) in which it will be clear that there was only one issue, that one party has been successful on that issue, and that conduct is not a factor which could displace the general rule.”
[43]Lord Neuberger approved of this approach on the basis that he found it hard to see why a claimant who had complied with the relevant Protocol and achieved the remedy that he set out for by consent should not recover his costs from the responding party.[44]In cases where the Claimant does not succeed in getting all the relief sought, Lord Neuberger determined that the court will often make no order for costs, “unless it can without much effort decide that one of the parties has clearly won, or has won to a sufficient extent to justify some order for costs in its favour.”[45]In determining which cases would require little effort to be resolved, Lord Neuberger gave guidance, stating that where it is reasonably clear from the available material that a claimant would have succeeded at trial, it is open to the Court to award his costs. Lord Neuberger cited Brawley v Marczynski [2002] EWCA Civ 756; [2003] 1 WLR 813 in support of that proposition.[46]Lord Neuberger then turned to how these principles should apply in the context of proceedings in the Administrative Court, Similar principles will apply when judicial review proceedings are brought in the UT, as was the case in one of the two cases now before this Court: ZN. and raised a number of policy issues as to why defendants who concede claims in this court should be at less risk regarding costs than those who concede in ordinary civil claims: paras. 52-57.[47]Whilst it is unnecessary to consider his observations in full here, the headline considerations include(i) the fact that government and public bodies should be encouraged to settle prior to going to court;(ii) owing to relatively short time limits there will often be less time to consider the merits of a claimant’s case in a public law claim; and(iii) governments and public bodies sometimes concede claims because a decision is arguably flawed for some technical reason and therefore it is not worth fighting a case because the decision can be reconsidered.[48]That notwithstanding, the Court came to the conclusion that the position should be no different for litigation in the Administrative Court from what it is in general civil litigation.[49]Finally, Lord Neuberger identified three separate categories of claim, in which general points could be made with regard to the correct approach to allocation of costs in public law cases, at paras. 60-63.[50]The first category consists of cases where a claimant has been wholly successful, whether following a contested hearing or pursuant to a settlement. In those cases the Court could not see why a claimant should not be entitled to all of his costs.[51]However, secondly, in cases where a claimant has only succeeded in part, whether following a contested hearing or pursuant to a settlement, Lord Neuberger accepted that there would often be much to be said for concluding that there should be no order for costs.[52]Thirdly, in cases where there has been some compromise, and the compromise does not actually reflect the claimant’s claims, there is an even stronger case for there to be no order for costs. This is mitigated by the proviso that there will be some cases in which it may be sensible to consider the underlying claims and consider whether it was “tolerably clear” who would have won if the matter had not settled.

Costs in the context of Dublin III: recent authority

[53]How the above principles should be applied in cases such as this, where the Respondent has withdrawn her certification of human rights claims, was the primary focus of this Court in R (on the application of Tesfay) v Secretary of State for the Home Department [2016] EWCA Civ 415; [2016] 1 WLR 4853.[54]In that case there were a number of claimants seeking to obtain orders for costs against the respondent. The Court dealt with these claims in two groups, and allocated claimants to each group on the basis of the country to which they were they were resisting removal: Italy and Malta.[55]Lloyd Jones LJ (as he then was), giving the judgment of the Court identified the key questions at para. 56 as follows:
“First, was the effect of the withdrawal of the certification of the human rights claims that the claimants should be regarded as having succeeded so that in accordance with Bahta and M v Croydon they should normally receive their costs? Secondly, if so, was there good reason for making a different order?”
[56]In answering the question regarding the success of the Italy claimants Lloyd Jones LJ highlighted the following features of the case:(a) The fact that the grounds on which the claimants had sought to challenge the human rights certifications in their respective appeals had been vindicated before the Supreme Court in R (on the application of EM (Eritrea)) v Secretary of State for the Home Department [2014] UKSC 12; [2014] AC 1321, namely it had determined that removal to Italy posed a real risk of ill-treatment contrary to Article 3 ECHR: see para. 58 in the judgment of Lloyd Jones LJ.(b) The fact that the Secretary of State’s decisions “were clearly withdrawn because of the decision in EM (Eritrea)”: see para. 63.(c) The fact that, whilst the claimants in this particular case never obtained permission to apply for judicial review, other claims raising the same issues did and those other claims were successful. It was therefore only a matter of timing as to which claims were heard and which were not: see para. 66.[57]Taking all of the above into account, Lloyd Jones LJ concluded at para. 68:
“The withdrawal of the human rights certificates which occurred in the present cases should be equally regarded as a success for costs purposes. Considering the matter in the round, the claimants were vindicated in the proceedings in the following respects: their position on legal issues was accepted by the Supreme Court in EM (Eritrea), they obtained repeated stays on removal and the certifications of their human rights claims were withdrawn. Applying the approach laid down by this court in M v Croydon, they should be awarded their costs in the absence of good reason to the contrary.”
[58]With regard to the Malta applicants the Court did not take the same view. The Court distinguished those claimants on the basis that they had not been able to establish that their cases had been considered on a flawed legal basis and that it was therefore necessary that they be reconsidered. On the contrary, at the time that the Secretary of State withdrew the human rights certifications in respect of those cases, the applicants’ case had been rejected at first instance and the Court of Appeal had refused leave to appeal against those decisions.[59]On this basis the Court considered that the withdrawal of human rights certifications only represented a very limited success on behalf of the applicants. The Court then turned to the question whether there was good reason not to award the applicants their costs.[60]With regard to the Italy applicants, the Court could not find good reasons why costs should not be awarded. This was despite a number of submissions made by the Secretary of State in relation to whether or not proceedings were properly started, the fact that she maintained that the certifications were withdrawn on the basis of systematic failure, the evolving nature of the litigation, and the fact that the Secretary of State would have ultimately succeeded.[61]The Court did not consider the same to be the case regarding the Malta applicants. Instead, the Court held that the fact that the Malta applicants had given a false account to the Secretary of State and the Administrative Court, the lack of authority to cast doubt on the correctness of the decision of the Court below in their case, and also that the applicants had sought to take a new point which they had neither previously taken nor established was open to them, provided strong reasons for costs not to be awarded to them.

The Appellants’ Applications for Costs

[62]The Appellants seek their costs on the ground that they have in practice achieved what they sought in these proceedings. In the case of KA the application is not for all of his costs but 75% of the costs before the Secretary of State’s decision on 2 June 2016 and 100% of his costs thereafter. This is because it is accepted on his behalf that he was not successful on all grounds.[63]In summary, Mr Knafler QC submits that both Appellants sought to resist removal from the UK by the Respondent pursuant to the Dublin III Regulation and to have their asylum and human rights claims considered in the UK. In respect of both Appellants the Respondent has withdrawn her decisions to refuse and certify the Appellant’s claims on “third country” grounds pursuant to paras. 4 and 5 of Part 2 of Sch. 3 to the 2004 Act by way of letters dated 13 August 2016 and 2 June 2016. She instead agreed to determine those claims herself in this country. Mr Knafler submits that the question of “success” should be viewed in practical terms, rather than technical legal terms, having regard to what he calls the “real life” situation.[64]The Respondent resists the application for costs on the ground that she has only decided to determine the Appellant’s claims in this country because of administrative failures on her part, which meant that she was unable to remove the Appellants to the relevant EU Member State within the timescales circumscribed by Dublin III.[65]On behalf of the Respondent Ms Broadfoot QC submits that the reasoning of the Court in M v Croydon suggests that there must be a causal connection between the merits of a pleaded challenge and the decision on costs, whether or not the case proceeded to a substantive hearing. She submits that the Court took that approach in Tesfay. She submits that the Appellants have not been legally successful in the proceedings which they brought.[66]The fundamental difficulty with Mr Knafler’s submission is that, if the appeals had proceeded to be determined on their merits, there can be no doubt that they would have been dismissed. In my view, the Appellants cannot be regarded as having been “successful”. I am supported in that view by the reasoning of the Court in Tesfay, in particular by way of analogy with the Malta applicants in that case.[67]The underlying rationale for the normal rule that costs follow the event is that a party has been compelled by the conduct of the other party to come to court in order to vindicate his legal rights. If those legal rights had been respected in the first place by the other party, it should never have been necessary to come to court. Accordingly, there will normally be a causal link between the fact that costs have been incurred and the underlying merits of the legal claim. This underlying rationale also explains why civil procedure normally requires a party to send a pre-action protocol letter to the other party. If the response to that letter had been to accept the merits of the claim in advance, it should never have been necessary to bring that claim to court.[68]The point can be tested in this way. Suppose that for some entirely extrinsic reason an appeal becomes academic: for example, if events occur in the Appellant’s country of origin which mean that it may be unsafe for him to be returned there even though the Secretary of State has not previously accepted that there is such a risk. In those circumstances the Secretary of State may accept that she should reconsider the claim in this country. Mr Knafler fairly accepted at the hearing before this Court that, in such circumstances, he would not be entitled to his costs. This is because there would be no causal link at all between the reason why the appeal has ended with an outcome which is favourable to an appellant and the fact that costs were incurred by him. However, Mr Knafler submits that the present cases are distinguishable because the reason why the appeals have become academic is not for some entirely extrinsic reason but arises from the conduct of the Respondent herself.[69]In my view, the answer to that submission is that what CPR rule 44.2(4)(a) (which refers to taking into account “the conduct of all the parties”) is normally concerned with is the conduct of a party in the litigation itself, not some other conduct. In the present case, there is no criticism which can be made of the Respondent’s conduct of the litigation itself. What Mr Knafler fastens upon is the administrative failures of the Secretary of State outside the context of the litigation. It is because of those administrative failures that the appeals have become academic. In my view, those failures are extrinsic to the litigation.[70]During the course of the hearing before this Court, in answer to a question from Leggatt LJ, Mr Knafler submitted that it is not always necessary that the underlying appeal should have legal merit for a party to be entitled to his costs. For example, if a default judgment is obtained by a claimant, it would be immaterial whether the underlying claim itself would have succeeded. A claimant will usually be awarded his costs in those circumstances. However, in my view, the reason for that is still to do with the conduct of the other party in the context of the litigation itself. A court can only conduct its proceedings in accordance with certain formalities, for example that there have to be pleadings. If a party does not comply with those formalities, by failing to file a defence to a claim, he can hardly complain if the court then grants the claimant judgment in default and makes a costs order which reflects that success, which is what it is in the context of that litigation.

The Suggested Relevance of the Legal Aid Position

[71]At the hearing before us Mr Knafler raised what we considered to be a potentially important issue of more general application: the extent to which it may be relevant in making a costs order to take into account that one party is publicly funded by legal aid. Accordingly, we granted the parties permission to file written submissions after the hearing as to the legal aid position. We are grateful to them for those submissions.[72]On behalf of the Appellants Appellants’ Note on Costs in the Legal Aid Context, dated 6 March 2018. Mr Knafler submits that the failure to secure a costs order (on an inter partes basis) can have a profound impact on a publicly funded practice and this is a matter which a court should take into account when deciding whether to make a costs order and what order to make. In that context Mr Knafler relies on Lord Hope DPSC’s observations in Re Appeals by Governing Body of JFS and others [2009] UKSC 1; [2009] 1 WLR 2353, at paras. 24-25:
“24. As has already been noted, Ms Rose declined to seek an order that each side should be liable for its own costs in any event on the ground that to do so would be wrong in principle. As Scott Baker J observed in R (Boxall) v Waltham Forest London Borough Council (2000) 4 CCLR 258, at para 12, the failure of a legally aided litigant to obtain a costs order against another party may have serious consequences. This is because, among other things, the level of remuneration for the lawyers is different between a legal aid and an inter partes determination of costs. This disadvantage is all the greater in a case such as this. It is a high costs case, for which lawyers representing publicly funded parties are required to enter a high costs case plan with the Legal Services Commission. It is a common feature of these plans that they limit the number of hours to an artificially low level and the rates at which solicitors and counsel are paid to rates that are markedly lower than those that are usual in the public sector. Mr Reddin has indicated that, as they are defending a win, E’s solicitors would not be expected to be paid at risk rates. Nevertheless the rate of remuneration that is likely to be agreed for this appeal will be considerably lower than that which would be reasonable if costs were to be determined inter partes. 25. It is one thing for solicitors who do a substantial amount of publicly funded work, and who have to fund the substantial overheads that sustaining a legal practice involves, to take the risk of being paid at lower rates if a publicly funded case turns out to be unsuccessful. It is quite another for them to be unable to recover remuneration at inter partes rates in the event that their case is successful. If that were to become the practice, their businesses would very soon become financially unsustainable. The system of public funding would be gravely disadvantaged in its turn, as it depends upon there being a pool of reputable solicitors who are willing to undertake this work. In R (Boxall) v Waltham Forest London Borough Council Scott Baker J said that the fact that the claimants were legally aided was immaterial when deciding what, if any, costs order to make between the parties in a case where they were successful and he declined to order that each side should bear its own costs. It is, of course, true that legally aided litigants should not be treated differently from those who are not. But the consequences for solicitors who do publicly funded work is a factor which must be taken into account. A court should be very slow to impose an order that each side must be liable for its own costs in a high costs case where either or both sides are publicly funded. Had such an order been asked for in this case we would have refused to make it.”
[73]Mr Knafler has drawn our attention to two particular developments since JFS was decided in 2009, which he submits has made the position of legal aid practitioners worse. First, there were across the board cuts of 10% in legal aid rates in October 2011. Secondly, the introduction of the Legal Aid, Sentencing and Punishment of Offenders Act 2012 (“LASPO”) took whole areas of work out of the scope of the legal aid scheme and made judicial review applications “at risk” up to the grant of permission. He submits that the effect on legal aid practices of these changes has been to lead to a considerable reduction in the number of legal aid providers available to advise or to represent litigants who are otherwise unable to afford to vindicate their legal rights. He submits that courts can and should take this factor into account because effective access to justice, especially in public law cases, ultimately concerns the rule of law.[74]Since the hearing in the present case, another constitution of this Court decided the case of RL and others v London Borough of Croydon [2018] EWCA Civ 726. In that case this Court dismissed an appeal against an order as to costs made at first instance. It did so in part on the basis that the Judge was entitled to take into account the fact that, if the matter had not settled, it was not tolerably clear that the claimants would have won: see para. 65 in the judgment of Moylan LJ. What is also of interest for present purposes is what was said by Underhill LJ in his concurring judgment, at para. 78:
“It follows that I do not believe that the Appellants are entitled to their costs. The reason why I reached this conclusion with some reluctance is that I am very conscious of the importance to solicitors undertaking publicly-funded work of recovering costs on an inter partes basis not only when they succeed in litigation but when the litigation is resolved on a basis that represents success. I am all the more conscious of that factor in the present case, where PLP’s work on behalf of the Appellants appears to have been of very high quality and showed exceptional commitment to their case. But that does not justify an award of costs for which I cannot find a principled basis.”
[75]In the present appeals, I have come to a similar view. There must be a principled basis on which the Court makes an order as to costs. For the reasons I have already given, I can find no principled basis on which the Appellants are entitled to their costs in the present cases. Although that is sufficient to dispose of this application, I will address the parties’ submissions about the relevance of a legal aid certificate because of the wider importance of that issue.[76]On behalf of the Secretary of State Submissions on behalf of the Secretary of State in response to the Appellants’ Note on Costs in the Legal Aid Context, dated 11 April 2018. Ms Broadfoot submits that, although the basic facts of the legal aid scheme and the changes which have been made to it in the last few years are not disputed, there is a general statutory prohibition on treating parties differently by reference to the nature of their funding. She submits that the fact that a person is publicly funded is not permitted to affect: “(a) the rights or liabilities of other parties to the proceedings, or (b) the principles on which the discretion of the court or tribunal is normally exercised”: see section 30(1) of LASPO.[77]That provision repeats what had been said in an earlier provision: see section 22(4) of the Access to Justice Act 1999. There has been similar provision ever since the creation of the legal aid scheme: see section 1(7) of the Legal Aid and Advice Act 1949, which was considered by the Court of Appeal in Blatcher and another v Heaysman and another [1960] 1 WLR 663.[78]Ms Broadfoot has drawn our attention to what was said in JG v Lord Chancellor [2014] EWCA Civ 656 relating to the funding of expert reports in private law children cases. At para. 93, Black LJ (as she then was) said:
“In order to decide whether a court order has fallen foul of s22(4) [i.e. the predecessor to s30(1)], a more sophisticated exercise is required. It is necessary to ask what order the court would make in its discretion on the particular facts of that case, leaving aside any resources problems. The answer may not uncommonly be an order for equal apportionment of the costs but that cannot be assumed. It may be that a full consideration of the circumstances of the case produces the result that the publicly funded party should be paying a greater share of the costs in any event, quite irrespective of any financial difficulties that the other parties may have in sharing the cost of the expert. In such circumstances, s22(4) does not prevent the court from making an order accordingly, because the order is in no way affected by the fact of public funding.” (Emphasis added)
[79]Ms Broadfoot submits that this is consistent with the well established and often repeated “third principle” enunciated by Lord Neuberger MR in M, at para. 46 (which I have quoted earlier but for convenience will set out here again):
“The third principle is that the basis upon which the successful party’s lawyers are funded, whether privately in the traditional way, under a ‘no win no fee’ basis, by the Community Legal Service, by a Law Centre, or on a pro-bono arrangement, will rarely, if ever, make any difference to that party’s right to recover costs. That point appears to me to be plainly right as a matter of principle, and it is supported by the second of the Boxall guidelines, by what was said by Hallett LJ in Scott para. 56, and by Pill LJ in Bahta paras 61-2, and by what Lord Hope said in the Supreme Court in Re appeals by Governing Body of JFS [2009] UKSC 1 paras 24-25.”
[80]Ms Broadfoot submits that, if anything, Lord Neuberger may have slightly understated the position and it is not clear whether this Court was referred to section 30 of LASPO or its predecessor provisions. However, it is worth noting that Lord Neuberger expressly cited the passage in JFS which I have quoted earlier, and on which Mr Knafler relies. I do not read what Lord Neuberger said as being in conflict with what was said by Lord Hope in JFS. I will return later to how the apparent tension between them can be reconciled.[81]Ms Broadfoot submits that the JFS case is not authority for the proposition that the method of funding should play any part in the exercise of a court’s discretion as to costs and submits that, in any event, that case is distinguishable. The legal question in that case was whether the decision taken by the then Legal Services Commission to refuse to fund the appeal unless it had the benefit of a protected costs order was lawful. She submits that the observations of Lord Hope at para. 25, upon which the Appellants rely in the present case, were made in a very different context. She also submits that his comments, if read as broadly as the Appellants would read them, are not easy to reconcile with the terms of section 22(4) of the 1999 Act or its successor in section 30(1) of LASPO.[82]We have now received the Appellants’ response to the Respondent’s note on this matter. The Appellants seek the permission of this Court to file that brief written response (dated 17 April 2018). I would grant them permission to do so, although it was not the subject of the permission granted for sequential exchange of written submissions at the end of the hearing. This is because the Respondent’s note has raised a legal provision (section 30 of LASPO) which had not previously been drawn to its attention and it is right that the Court should be as well informed as possible of what the true legal position is.[83]Mr Knafler submits that the purpose of that provision is predominantly to ensure that it is possible for an order to be made that an unsuccessful party should be required to pay a successful party their costs despite the fact that the indemnity principle does not apply. That was the view of this Court in the case of R (on the application of Heshmati) v London Borough of Wandsworth (4 November 1997, unreported), applying the decision in Blatcher v Heaysman. The Court held that, despite the fact that both parties were being funded by the public purse, costs should follow the event. Sir Stephen Brown P said:
“In point of fact, the point of principle involved in this case received the attention of this court presided by over by Lord Evershed MR as long ago as 1960 in the case of Blatcher and Another v Heaysman [1960] 2 All ER 721, [1960] 1 WLR 663. It was an appeal from the refusal of a judge to make an order for costs in respect of a legally aided litigant. Lord Evershed in the course of his judgment at page 665 of the latter report said: ‘Mr Owen naturally enough then asked for costs and stated: “In this case all four people are legally assisted.”
It is quite obvious that on that information being imparted to him the judge (Stable J) expressed himself with the refreshing vigour characteristic of him. He said:
“If what I am invited to do is to make some sort of contribution for the legal aid fund, I am not going to do it. I have said for years and years and years that until they pay costs to the successful defendants when they lose they are going to get no assistance from me.” ’ In point of fact, the Master of the Rolls pointed out that that was contrary to the Act of 1949, which was then the governing statute. At page 667 of the latter report the Master of the Rolls said: ‘By section 1(7)(b) of the Act of 1949 it is expressly provided that “the rights conferred by this Part of this Act on a person receiving legal aid shall not affect the rights or liabilities of other parties to the proceedings or the principles on which the discretion of any court is normally exercised.”
That imposes upon the court, as I conceive, the duty of considering the question who is to pay costs in accordance with the principles on which such discretion is normally exercised. If that be the right premise, it seems to me unanswerable. I confess that, prima facie, these defendants ought to have been ordered to pay the costs of the action. If no parties had been legally aided, the conclusion in the case which I have read quite manifestly would have led to the result that the defendants would have been ordered to pay the costs.’ Accordingly, that appeal was allowed. That decision has been applied in a number of decisions thereafter and of course was followed in the decision which counsel for the appellant has now drawn to our attention, in respect of which he has provided a transcript of the judgment. That clear principle is accordingly the law. In this case the judge was wrong to make a special rule for a legally aided case. The two public bodies were in fact quite separate public bodies in this instance. One was a local authority, having a different financial position for that of the Legal Aid Board. But it is plain from the provisions of s 31(1)(b) of the Legal Aid Act 1988 that the judge should have considered the application for costs upon the normal principles. In this case, it is apparent from the terms of the judgment that costs would normally have followed the event. Accordingly, each of the successful applicants should have been awarded an order for costs against the defendant in their favour.”[84]Mr Knafler suggests that the resolution to the apparent tension between the various dicta which have been cited to this Court may lie in the decision of this Court in R (on the application of Bahta) v Secretary of State for the Home Department [2011] 5 Costs LR 857, at para. 62, where this Court said:
“… it is not an acceptable reason to make an order for costs in favour of a claimant … 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 … in relation to publicly funded parties, demonstrate the need for analysis of the particular circumstances.”
[85]Accordingly, Mr Knafler submits, the statement by Lord Hope in the JFS case (whether strictly obiter or not) remains sound in principle. He submits that it follows that the fact that a party is publicly funded, although it is not a reason for awarding costs to that party in itself, is a relevant factor which can and should be taken into account in determining whether to make an order as to costs and what order to make.[86]I accept the substance of those submissions made by Mr Knafler. In my view:(1) There has been a provision like section 30(1) of LASPO ever since the inception of the legal aid scheme in 1949. Its predecessor provisions were the subject of judicial comment in cases such as Blatcher v Heaysman and Heshmati.(2) Section 30(1) does not in terms set out an absolute rule that the fact that a party is on legal aid is necessarily irrelevant. It refers, in para. (b), to “the principles on which the discretion of the court or tribunal is normally exercised” (emphasis added).(3) It is unlikely that judges with the experience of Lord Hope and Lord Neuberger would have been unaware of the predecessor provisions to section 30(1) but, even if they were, what they said in JFS and M is not, in my view, inconsistent with those provisions.(4) What Lord Neuberger called his “third principle” in M, at para. 46, was expressly stated to be based in part on what Lord Hope had said in JFS, at paras. 24-25. Therefore I do not regard those statements as being inconsistent with each other.[87]In R (on the application of Sino) v Secretary of State for the Home Department [2016] EWHC 803 (Admin), That case went to the Court of Appeal on a different issue: [2017] EWCA Civ 1975. The Court of Appeal decided that it was inappropriate to assess damages for false imprisonment summarily without giving the claimant the opportunity to make proper submissions. There was no discussion of the costs decision. at para. 28, the point was well expressed by Hayden J as follows:
“The appellate courts have expressed concern at the prospect that those lawyers who practise in publicly funded work, often taking on challenging points on behalf of individuals to whom neither the profession nor the public would be instinctively sympathetic, might not be able to recover remuneration at inter partes rates in cases where they were essentially successful. The real risk is that publicly funded practises would soon be unsustainable and access to justice compromised more widely. In my judgement, this is a factor which can and ought properly to be taken into account. It is not a subversion of the principles of the CPR, rather it is a reassertion of the principles in 44.2 (2), ultimately therefore a restatement of a workable costs regime. The minute calibration of success and loss, the pursuit of some platonic concept of ‘perfect justice’ … can generate a battle that litigants can only lose.”
[88]I would respectfully endorse those observations, which are consistent with what has been said by judges in the Supreme Court and the Court of Appeal in recent years. I would wish to stress that political decisions, and in particular matters of public finances, are not for the courts to pronounce upon. However, effective access to justice is of profound concern to the courts, especially in the field of public law, which concerns the legality of the actions of the executive and so relates in a direct way to the rule of law in this country.[89]I cannot express the importance of access to justice more eloquently than the way it was put in the Supreme Court in R (on the application of UNISON) v Lord Chancellor [2017] UKSC 51; [2017] 3 WLR 409. At para. 66, Lord Reed JSC said:
“The constitutional right of access to the courts is inherent in the rule of law. …”
[90]At para. 68, he continued:
“At the heart of the concept of the rule of law is the idea that society is governed by law. Parliament exists primarily in order to make laws for society in this country. … Courts exist in order to ensure that the laws made by Parliament, and the common law created by the courts themselves, are applied and enforced. That role includes ensuring that the executive branch of government carries out its functions in accordance with the law. In order for the courts to perform that role, people must in principle have unimpeded access to them. Without such access, laws are liable to become a dead letter …”
[91]If the fact that one of the parties is on legal aid is not necessarily irrelevant, how may it be relevant to the court’s decision to award costs? It is important not to lay down any prescriptive rules about this, since costs are within the discretion of the court and each case turns on its own facts. However, I hope it will be helpful if I give an example.[92]Suppose a claim for judicial review is brought to challenge the Secretary of State’s decision to remove an adult from the UK. The grounds of challenge include a complaint that there will be a breach of the right to respect for family life in Article 8 and also a complaint that the Secretary of State failed to have regard to the best interests of the claimant’s children under section 55 of the UK Borders Act 2007. Before the case gets to court the Secretary of State concedes that she did not have regard to section 55 and agrees to a consent order by which her decision will be quashed so that she can reconsider her decision. Not all of the grounds have succeeded but the claimant may feel that he has obtained a victory in substance and he has obtained the outcome which is often the most a person can realistically hope to obtain in judicial review proceedings. When the court comes to consider the issue of costs, I stress again that everything depends on the particular facts but the court may feel that in such a case the claimant should be awarded his costs and not engage in too technical an exercise about precisely which ground succeeded.[93]In my view, it is open in such a case to the court to take into account the legal aid considerations mentioned in cases such as JFS and Sino. That is not impermissible in the exercise of the court’s discretion. Were it otherwise, I think the courts would be turning a blind eye to the realities of the way in which legal aid practices now have to operate and that could have a detrimental impact on the public interest in effective access to justice.[94]That all said, as I have indicated, on the facts of the present cases I have come to the conclusion that the Appellants’ applications for costs should be refused. The fact that they are publicly funded does not affect the outcome.

Conclusion

[95]For the reasons I have given I would refuse the Appellants’ applications for costs.

Lord Justice Leggatt :

[96]I agree with Singh LJ that the Appellants’ applications for costs must be refused for the reasons he gives. I also agree with him that, in exercising the court’s discretion as to costs under CPR 44.2, the courts should not ignore the realities of the legal aid regime and that section 30(1) of LASPO does not require them to do so. I agree that, in considering how the court’s discretion should be exercised, it is relevant to take account of the constraints on public funding referred to by Singh LJ and the public interest in effective access to justice. Where I respectfully differ from him is about how those factors should be taken into account.[97]For my part, I do not consider that, in deciding what order to make about costs at the end of proceedings, the fact that a party is publicly funded can in principle be relevant. This accords with the third principle stated by Lord Neuberger MR in R (on the application of M) v Croydon London Borough Council [2012] EWCA Civ 595; [2012] 1 WLR 2607 at para. 47. I agree that section 30(1) of LASPO does not establish an absolute rule that this fact must always be ignored. As Singh LJ notes, section 30(1)(b) says that the grant of legal aid shall not affect “the principles on which the discretion of the court or tribunal is normally exercised” (emphasis added), thus leaving open the possibility that it could be taken into account in abnormal or exceptional circumstances. But it would be inconsistent with section 30(1)(b) to build the fact that a party is publicly funded into the principles which govern the exercise of the court’s discretion under CPR 44.2, either generally or in a particular category of case. In any event, irrespective of what section 30(1) of LASPO requires, treating the source of a party’s funding as relevant would be unfair. As Lord Hope said in the JFS case at para. 25, “legally aided litigants should not be treated differently from those who are not”. That applies equally whether the costs order proposed is less favourable or more favourable to the litigant than the order which would have been made if he or she had not been legally aided. A claimant who has been granted legal aid already has the advantages over other claimants(a) of public funding for the litigation and(b) that a costs order made against the claimant is ordinarily not enforceable. I can see no justification for adding to those advantages preferential treatment in deciding whether or what liability for costs should be imposed on the defendant. It would be unfair to a claimant who has had to fund the litigation herself if at the end of the proceedings the court were to decline to award her costs which the defendant would have been ordered to pay if the claimant had been legally aided.[98]By the same token, the fact that the solicitors acting for a legally aided claimant will otherwise go unpaid or will be paid at a lower rate is not a good reason to order the defendant to pay any costs of the claimant which the defendant would not otherwise have been ordered to pay. As Brooke LJ said in R (on the application of Davies) v Birmingham Deputy Coroner [2004] EWCA Civ 207; [2004] 1 WLR 2739 at para.45(7):
“There is nothing in the Costs Rules to suggest that the financial welfare of a party's lawyers is a legitimate consideration when a court makes an order as to costs.”
[99]Dicta of Lord Hope in the JFS case (quoted in para. 72 above) may appear to conflict with these principles – in particular, his observation that “the consequences for solicitors who do publicly funded work is a factor which must be taken into account”. But I agree with Ms Broadfoot QC that this observation has to be seen in the context of the order under discussion in the JFS case, which was a costs capping order that each side should be liable for its own costs whatever the outcome of the litigation. The effect of making such an order would have been to disapply the principles which normally govern the award of costs so as to prejudice the claimant’s lawyers (by making it impossible for them to receive remuneration at inter partes rates) in a way which would not have prejudiced them if the case had been privately funded. On analysis, therefore, Lord Hope’s objection to such an order is consistent with his endorsement of the principle that legally aided litigants should not be treated differently.[100]This was how Lord Hope’s observations were interpreted by Hickinbottom LJ (with whom the other members of the Court of Appeal agreed) in R (on the application of Gourlay) v Parole Board [2017] EWCA Civ 1003; [2017] 1 WLR 4107, at paras. 60-61. In that case the Court of Appeal reaffirmed the principle (at para. 61) that “in considering costs orders in public law claims, the court is bound to ignore the fact that the party seeking a costs order is publicly funded.”[101]It does not follow, however, from the fact that the court is bound to ignore the fact that the particular party seeking a costs order is publicly funded that the courts cannot take account in their approach to costs of the considerations to which Singh LJ has referred. The note on costs in the legal aid context provided to the court by the Appellants describes the difference in the rates of pay for solicitors when costs are recovered from an opposing party and when payment is made from legal aid. The current guideline hourly rates applicable in assessing costs recoverable from an opposing party range (according to the seniority of the solicitor and location of the practice) from £111 to £409. By contrast, the prescribed hourly rate for legal aid work is £71.55, and this is subject to a limit on the number of hours that can be claimed for – a limit which is often less than the number of hours which the solicitors feel obliged to work in order to protect their client’s interests. The result is that, unless costs are recovered from the defendant in a sufficient number of cases, representing claimants on legal aid is simply not viable. As Lord Hope noted in the JFS case, the system of public funding depends on the existence of a pool of reputable solicitors who are willing to undertake legal aid work. The approach taken to the award of costs, therefore, has significant ramifications not just in the individual case but for the functioning of the system as a whole. It is both legitimate and desirable that, so far as they can consistently with other general principles, the courts should in exercising their discretion as to costs give weight to this vital public interest.[102]The general rule prescribed by CPR 44.2(2) is that the unsuccessful party will be ordered to pay the costs of the successful party, although the court may make a different order. When a claim for judicial review is settled or withdrawn after the defendant has taken or agreed to take a step which was a material part of the relief sought by the claimant, it is often not straightforward to determine whether or to what extent the claimant can be judged to have been successful. The defendant may, for example, assert that it has taken the step in question for reasons unconnected with the merits of the claim; and the claimant may have achieved part, but only part, of what was claimed.[103]In my view, in such cases the public interest in facilitating access to justice may properly influence the exercise of the court’s discretion as to costs in at least three ways. First, it is a reason to analyse the circumstances of the particular case to try to work out whether the claimant has been successful rather than too readily adopting the fallback position of making no order for costs. The need for such analysis for this reason has been urged by the Court of Appeal in R (on the application of Scott) v Hackney London Borough Council [2009] EWCA Civ 217, para. 38, and R (on the application of Bahta) v Secretary of State for the Home Department [2011] EWCA Civ 895; [2011] 5 Costs LR 857, at paras. 61-62 and 66-68. Second, it is a reason not to set the bar too high in judging what constitutes success and to treat it as sufficient to characterise the claimant as the successful party for the purposes of CPR 44.2(2) that as a result of the litigation the claimant has achieved any material part of the relief sought. Third, it is a reason not to be too astute to pare down awards of costs or to deprive a claimant who has achieved such a measure of success of costs just because the claimant has not been wholly successful, provided that the claim has been conducted reasonably.[104]I believe that this approach is fully consistent with that commended by Singh LJ at paras. 92 and 93 above. The only difference between us is that the reasons for adopting it do not in my view depend, and should not depend, on whether the particular claimant before the court is legally aided or is having to fund the proceedings himself. The same principles should be applied in all cases where individuals need to resort to the courts in order to vindicate their public law rights.[105]Nevertheless, these principles do not assist the Appellants in the present cases since, as Singh LJ has shown, analysis of the particular circumstances leads unavoidably to the conclusion that their claims have not succeeded.

Sir Brian Leveson P :

[106]I also agree that these applications must fail. For my part, however, I would endorse the observations of Singh LJ about the extent of the relevance of the existence of a legal aid certificate when the question of costs falls to be considered in circumstances where (unlike in this case, for the reasons which he explains) there is a principled basis upon which an Appellant would be entitled to costs. Entirely within the principles of law which he articulates, Singh LJ does no more than recognise the imperative that legal aid is of vital assistance to those who, for want of resources, would not otherwise be able to seek redress for breach of their legal rights; solicitors and counsel who are prepared to act with the benefit of legal aid (at the rates available) perform an important public service so that if, in reality, the claim succeeds for reasons which can be encompassed within the grounds, there should be no reason for depriving them of the more attractive rates available on assessment of costs. Having said that, it does not appear to me to be clear that there would be any real difference in outcome between the approach articulated by Singh LJ and that preferred by Leggatt LJ.

Cited in 9 later judgments