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Important new case on costs
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The Court of Appeal has given judgment in an extremely important new case on costs, R (on the application of Bahta & Ors) v Secretary of State for the Home Department & Ors  EWCA Civ 895 (26 July 2011). It specifically concerns the UK Border Agency and legally aided claimants but it also has far wider ramifications. It basically supplements or even replaces the long standing approach of Scott Baker J in R (Boxall) v Waltham Forest LBC 21 December 2000 (2001) 4 CCL Rep 258.
It has become increasingly common for UKBA to concede a case before it reaches court. This avoids UKBA having to pay for Counsel to attend a hearing, enables Ministers to bang on about how few immigration judicial reviews are successful at court (only because UKBA concede so many cases after they have been lodged but before they go to court!) and, at its worst, it manipulates the justice system so that only the weakest cases go forward to become precedents. It also forces claimants to go to the expense of lodging claims and instructing lawyers, only for UKBA to concede the case late when it could and should have been conceded early. It is abusive behaviour by the UK Border Agency.
Being as UKBA conceding means that the claimant has secured what they wanted from the court, one would have thought that it was fair enough for UKBA to pay the costs of the claimant. Assuming that UKBA had fair warning and a chance to concede before costs were incurred (i.e. the pre action protocol was adhered to by the claimant) this seems fair and just: why should the legal aid fund, as desperately short as it is, with massive cuts around the corner, have to pay when UKBA concede a case after costs have been occurred rather than before? Pill LJ, giving the lead judgment, agrees:
59. What is not acceptable is a state of mind in which the issues are not addressed by a defendant once an adequately formulated letter of claim is received by the defendant. In the absence of an adequate response, a claimant is entitled to proceed to institute proceedings. If the claimant then obtains the relief sought, or substantially similar relief, the claimant can expect to be awarded costs against the defendant. Inherent in that approach, is the need for a defendant to follow the Practice Direction (Pre-Action Conduct) or any relevant Pre-Action Protocol, an aspect of the conduct of the parties specifically identified in CPR r.44.3(5). The procedure is not inflexible; an extension of time may be sought, if supported by reasons.
60. Notwithstanding the heavy workload of UKBA, and the constraints upon its resources, there can be no special rule for government departments in this respect. Orders for costs, legitimately made, will of course add to the financial burden on the Agency. That cannot be a reason for depriving other parties, including publicly funded parties, of costs to which they are entitled. It may be, and it is not of course for the court to direct departmental procedures, that resources applied at an earlier stage will conserve resources overall and in the long term.
61. In the case of publicly funded parties, it is not a good reason to decline to make an order for costs against a defendant that those acting for the publicly funded claimant will obtain some remuneration even if no order for costs is made against the defendant. Moreover, a culture in which an order that there be no order as to costs in a case involving a public body as defendant, because a costs order would only transfer funds from one public body to another is in my judgment no longer acceptable.
Pill LJ also goes on to be very critical of UKBA’s claim to have conceded the case for ‘purely pragmatic reasons’:
63. I have serious misgivings about UKBA’s claim to avoid costs when a claim is settled for “purely pragmatic reasons”. My reservations are increased by the claim, on the facts of the present cases, that the right to work was granted for pragmatic reasons. I am unimpressed by suggestions made in the present cases that permission to work was granted for reasons other than that the law required permission to work to be granted. There may be cases in which relief may be granted for reasons entirely unconnected with the claim made. Given the Secretary of State’s duty to act fairly as between applicants, and the duty to apply rules and discretions fairly, a clearly expressed reason would be required in such cases. The expression “purely pragmatic” covers a multitude of possibilities. A clear explanation is required, and can expect to be analysed, so that the expression is not used as a device for avoiding an order for costs that ought to be made.
My own experience of late has been that Treasury Solicitors have been unwilling to concede costs even in the most obvious cases, insisting that the issue goes to written submissions to a costs judge. This delays costs claims (which hits the lawyers) and increases the costs yet further as the lawyers then have to draft submissions and keep the file open. This welcome judgment should finally put paid to this intransigence and will bring some relief to the legal aid fund.