The Presidents of the Immigration and Asylum Chambers sat together in the First-tier Tribunal case of Cancino (costs – First-tier Tribunal – new powers) [2015] UKFTT 00059 (IAC) in order to give guidance on when legal costs might become payable in immigration cases. The power to make awards of legal costs to a party in immigration appeals was only introduced in October 2014 and there has been no real guidance until now.

The case should be good news for the administration of justice in the immigation tribunal. We see the norms of litigation conduct applied and special pleading disregarded. On the facts of this case this approach would have been to the detriment of the Home Office. In others it would be to the detriment of appellants or their representatives.

I have updated my costs ebook to include reference to the new case and you can purchase from the links at the bottom of this page or via the menu bar at the top.

As an aside, I don’t suppose the Upper Tribunal is likely to be considering the correctness of this case on appeal given that (a) the UT President sat on it, (b) decisions on costs are apparently excluded decisions CANNOT be appealed and (c) the particular client has unsurprisingly already had enough, thank you very much.

As a further aside, it is only through this case that I personally learned of Presidential Guidance Note No 1 of 2014. It had completely passed me by, and I keep a pretty watchful eye for such things.

Differences between wasted costs and unreasonable conduct costs

The tribunal reviews some of the case law on wasted costs, looking in particular at the cases of Ridehalgh v Horsefield [1994] EWCA Civ 40 and Medcalf v Weatherill [2002] UKHL 27. Quite reasonably, the tribunal draws on the use of the “unreasonable” element of the wasted costs test in order to inform the interpretation of the “unreasonable” conduct power conferred by rule 9(2)(b) of the procedure rules. This is right in part but it is not the whole story.

There are important distinctions between the powers that are not reflected in the tribunal’s reasoning or citation of authority in Cancino, although the headnote emphasises the difference. These differences are principled but will also matter hugely in practice if costs are awarded to rather than against the Home Office. The tribunal makes no reference to cases such as Sud v London Borough of Ealing [2013] EWCA Civ 949 or Barnsley Metropolitan Borough Council v Yerrakalva [2011] EWCA Civ 1255 in which the meaning of “unreasonable conduct” was considered rather than just “unreasonable”.

The most obvious difference is that wasted costs are awarded against a representative personally and costs for unreasonable bringing, defending or conducting an appeal are awarded against a party. For the Home Office that makes no real difference at all. For appellants and their representatives it is a hugely important difference.

The underlying justification for the two powers is also different. Wasted costs are specifically intended to penalise that representative as well as compensating the victorious party. Wasted costs are intended to discourage unprofessional conduct of litigation and are often triggered by a single but serious misdemeanor on the part of the representative.

With the power to award costs for unreasonable bringing, defending or conducting an appeal power the emphasis is more on compensating the victorious party for being the victim of the unreasonable behaviour of the unreasonable party. It is intended to discourage vexatious litigation in the first place. The case law on unreasonable conduct, none of which is cited by the tribunal in Cancino, emphasises the need to look at the overall picture and all the circumstances.

To look at it another way, wasted costs generally concerns the conduct of litigation. The unreasonably bringing, defending or conducting power generally concerns the substance of the matter. It is akin to the distinction between tactics and strategy.

From the perspective of a judge unversed in costs law unreasonable is unreasonable and the distinction between the powers may seem unclear or even irrelevant. This is not helped by Cancino. On principle judges ought to be awarding wasted costs against representatives for conduct of litigation (e.g. unethical conduct, very poor professional conduct, very poor preparation that increases costs) but be awarding unreasonably bringing, defending or conducting costs where an appeal ought never have been brought or defended in the first place, should obviously have been conceded on the merits far sooner or where the conduct of the party (rather than representative) is at fault, for example by failing to provide instructions or documents in good time.

One of the points made forcefully in Medcalf that is perhaps not sufficiently emphasised in Cancino is that legal representatives might be at no fault at all despite superficial appearance to the contrary, such where an adjournment is caused by late production of documents, for example. This is a particular concern in a jurisdiction where some seem to perceive that lawyers direct their clients rather than the other way around. The legal representative may be unable to defend him or herself because he or she remains bound by client confidentiality. Judges are supposed to be very slow indeed to award wasted costs. Judges who have experience as advocates and/or litigators will be aware of these difficulties, but such experience is very far from universal in the immigration jurisdiction and some judges may be over-eager to punish representatives perceived to be defaulters.

The same restraint is not required for the award of costs against a party on the basis of unreasonably bringing, defending or conducting an appeal, although the standard of unreasonableness is still very high.

Facts of Cancino

The facts of Cancino revolved around an allegation of a sham relationship. The appellant’s representatives had from the initiation of the appeal repeatedly requested further information and an audio recording of the critical interviews, the accuracy of the written records of which was disputed. The Home Office simply ignored these requests until one week before the hearing when the audio recording for one of the interviews but not the other was finally produced. On the day of the hearing, the Home Office representative did not have all the papers and on instructions withdrew the decision.

It was, as the tribunal says, an example of withdrawal at the 59th minute of the 11th hour. Considerable litigation costs had been expended bringing the appeal. There was no conceivable justification for The tribunal indicated that costs would have been awarded at 75% of the claimed amount.

Circumstances where costs might be awarded

At paragraph 25 the tribunal sets out some guidance on the principles to be observed when considering the issue of unreasonable conduct costs. There is little indication of specific examples of behaviour that might incur an award of costs, though. The guidance goes more to conduct that should not incur an award of costs.

The point is made that concessions, even to the point of an appeal being abandoned by one party or the other, are a positive feature of litigation and should not automatically be penalised. To do so would dissuade parties from making otherwise desirable concessions. Where a concession is made, though:

In every case, the fundamental enquiry for the Tribunal will be why the withdrawal has occurred, coupled with the related enquiry of why it did not materialise sooner.

A belated withdrawal of an appeal will need to be explained, but a change of legal representatives might well offer sufficient explanation. For the Home Office, though, the very late stage at which Presenting Officers become involved is not likely to be sufficient justification.

Late production of documents by the Home Office leading to withdrawal of an appeal might justify an award of costs against the Home Office, but late production of documents by the appellant leading to the Home Office’s withdrawal would not justify an award of costs against the Home Office. This last point makes it particularly important for an appellant’s best case to be put forward at the earliest possible juncture.

There is nothing in the guidance either way on whether costs might be awardable because the very decision to contest the appeal was unreasonable, although the possibility is clearly raised by the inclusion of the words “bringing” and “defending” an appeal as well as “conducting”.

Procedure: application, quantification and assessment

Although the determination in Cancino reveals the amount of costs claimed and what would have been awarded (75% of the total), the tribunal gives no guidance at all on the means of assessment, whether a schedule of costs had been prepared or in what format or how costs should be quantified in the first place. Contrary to quite widespread belief, one does not simply claim the costs the client has agreed to pay, at least for solicitor costs: there are guidance rates depending on seniority and geographical location. Some judges and representatives will be familiar with this process through other forms of litigation but many immigration specialists will not, so further guidance would certainly be helpful. If you do want to learn more and have ready access to the relevant rates and so on, you can buy my ebook or join as a member to take the full online course.

It even seems from the determination in Cancino standing alone (we do not know what happened at the hearing) that the tribunal may in its hypothetical exercise have fallen into the error of the judge below in Morgan v The Spirit Group Ltd [2011] EWCA Civ 68 by not conducting an assessment as such but instead simply deciding “what it is proportionate to expect the defendant to pay”.

The President does, though, urge that assessment in other cases be conducted by means of summary assessment or agreement. Detailed assessment by means of the county court is to be avoided. He also gives some guidance (based simply on the procedure rules) on what is and is not required in an application for costs in the First-tier Tribunal. In short, a written application is not needed, a schedule is not needed but an opportunity for submissions from both sides is needed. Note that the requirements in the Upper Tribunal are different.

Retrospectivity

Throughout this piece I have discussed the award of costs in Cancino in hypothetical terms and said that costs would have been awarded. In fact, costs were not awarded. The reason was that the tribunal also held that costs should only be awarded where the appeal was initiated after the new procedure rules came into force on 20 October 2014.

The more thorough review of case law here suggests that President McCloskey is more at home dealing with this thorny academic legal issue. Essentially, it seems that there is no real “right” answer to the question in strict legal terms given the terms of the transitional provisions but that on principle the President takes the view that costs should only be awarded for appeals from 20 October 2014 onwards. I guess an appeal to the Upper Tribunal on this question might struggle given the pedigree of the judges sitting in the First-tier…

It remains arguable that an appeal to the Upper Tribunal that commenced after 20 October 2014 is eligible for an award of costs under these new powers. By the same reasoning as Cancino, the party bringing, defending or conducting an Upper Tribunal appeal from 20 October 2014 onwards will have been aware of the new costs power.

Conclusion

Ultimately, Cancino is good news for justice and for good standards of litigation in the immigration tribunal, at least one of which has been notably absent.

The Home Office will need to put its house in order and engage properly with appeals at a far earlier stage to avoid being vulnerable to adverse costs orders.

Appellants and their representatives will also need to up their game, though. Late adjournment requests or the bringing of truly hopeless cases may be penalised in future. Appellant representatives will need to ensure that their client’s best case is actively advanced at the earliest stage in order to maximise the opportunity to secure an award of costs and will need to ensure they do not fall vulnerable to a wasted costs order. The exercise of the wasted costs power is a real concern in a jurisdiction where some judges seem so hostile to legal representatives and their clients and where many judges do not have direct experience of the vicissitudes of litigation or the particular problems faced by those working with vulnerable clients.

For more analysis and explanation of the costs regime and quantifying costs, take a look at this previous post, join up as a member to access an online course including podcast with Jawaid Luqmani or download the full ebook:

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More information

For more information join as a member to take the full online costs course including podcast interview on costs with Jawaid Luqmani or download my newly updated (February 2015) ebook:

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Official headnote

The official headnote reads:

[1] Rule 9 of the 2014 Rules operates in conjunction with section 29 of the Tribunals, Courts and Enforcement Act 2007.

[2] The only powers to award fees or costs available to the First-tier Tribunal (the “FtT”) are those contained in Rule 9 of the Tribunal Procedure (First-tier Tribunal) (Immigration and Asylum Chamber) Rules 2014 (the “2014 Rules”).

[3] Transitionally, Rule 9 of the 2014 Rules applies only to appeals coming into existence subsequent to the commencement date of 20 October 2014. It has no application to appeals predating this date.

[4] It is essential to be alert to the distinctions between the costs awarding powers contained in Rule 9(2)(a) and Rule 9(2)(b) of the 2014 Rules.

[5] Awards of costs are always discretionary, even in cases where the qualifying conditions are satisfied.

[6] In the ordinary course of events, where any of the offending types of conduct to which either Rule 9(2)(a) or Rule 9(2)(b) of the 2014 Rules applies, the FtT will normally exercise its discretion to make an order against the defaulting representative or party.

[7] The onus rests on the party applying for an order under Rule 9.

[8] There must be a causal nexus between the conduct in question and the wasted costs claimed.

[9] One of the supreme governing principles is that every case will be unavoidably fact sensitive. Accordingly, comparisons with other cases will normally be inappropriate.
[10] Orders for costs under Rule 9 will be very much the exception, rather than the rule and will be reserved to the clearest cases.

[11] Rule 9 of the 2014 Rules applies to conduct, whether acts or omissions, belonging to the period commencing on the date when an appeal comes into existence and ending on the date of the final determination thereof.

[12] The procedure for determining applications under Rule 9 of the 2014 Rules will be governed in the main by the principles of fairness, expedition and proportionality.