In ZN (Afghanistan) and KA (Iraq) [2018] EWCA Civ 1059, the Court of Appeal considered the tricky issue of costs in public law cases, in a scenario where the appeals were withdrawn following consent orders.

The main points

The judgment is interesting for three reasons:

1. it summarises various authorities on costs
2. it clarifies what “being successful” means
3. it looks at whether the fact that a claimant is represented on a publicly funded basis should make a difference to any cost award 

Spoilers: ZN and KA did not get inter partes costs as they were not considered “successful” despite certification being withdrawn, and the answer to whether being publicly funded should make a difference in costs awards is — in a word — “no”.

Background: certified asylum cases

Both ZN and KA are asylum seekers who had been fingerprinted in another European country before entering the UK. The Secretary of State had certified both asylum claims on third country grounds. 

The procedural history is quite similar, as both ZN and KA made a request for their asylum claim to be substantively considered by the UK and in each case the Secretary of State refused the application and certified the claim as clearly unfounded.

In both cases, a challenge to the certificate was unsuccessful but, while the appeals were pending at the Court of Appeal, the Home Office realised that the deadline to transfer ZN and KA to Bulgaria and Austria respectively had passed. 

Hence both cases were taken off the third country process and the appellants consented to withdraw their appeals, with the issue of costs to be determined. The Administrative Court made no order for costs and the appellants appealed this decision to the Court of Appeal.

Costs in settled cases

Lord Justice Singh, who gave the main judgment, referred to M v Croydon [2012] EWCA Civ 595 and stated that the cost principles applicable to cases that do not go to trial are slightly different from those applicable where there is a court decision. The judge may not be in a position to decide on costs in relation to matters that have not been determined by the court.

M v Croydon, one of the most welcome decisions for legal aid practitioners, clarified that the principles in proceedings before the Administrative Court are similar to those applicable to general civil litigation. Where a claimant has been wholly successful, he should generally be entitled to all of his costs. Where he has been partly successful following a hearing or a settlement, there is much more scope for a no cost order, especially if there has been some compromise between the parties.

Tesfay and costs in third country cases

In relation to Dublin cases, the Court of Appeal looked at Tesfay v SSHD [2016] EWCA Civ 415, where the respondent had withdrawn her certification of a human rights claim, as in the present case. In that case there were

two groups of claimants seeking cost orders. Only one group was awarded costs: the claimants who had resisted removal to Italy. They would have been ultimately successful given the outcome of EM Eritrea, which established that removal would have put the claimants at a real risk of ill-treatment in breach of Article 3 ECHR.

By contrast, the court did not award costs to a second group of claimants who resisted removal to Malta, because they had not established “that their cases had been considered [by the Home Office] on a flawed legal basis and that it was therefore necessary that they be reconsidered”. In fact, at the time when the Secretary of State withdrew the human rights certification, the Court of Appeal had refused permission to appeal to the claimants.

In the present case, the appellants could not claim to have been successful either. The certificates were withdrawn because Home Office officials missed a deadline to remove them. But “if the appeals had proceeded to be determined on their merits, there can be no doubt that they would have been dismissed”.

The missing causal link

The court stated that “the 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”. This means that there must be a “causal link between the fact that costs have been incurred and the underlying merits of the legal claim”.

When “extrinsic reasons” make the appeal academic, there is no causal link. The court clarified that the conduct of one of the parties (in this case the missed removal deadline) can constitute an “extrinsic reason” because it is not conduct of the litigation itself.

Legal aid: a relevant factor

The court also looked at the general issue of whether the fact that a party is legally aided should impact on cost orders.

Singh LJ considered the appellants’ submissions that the inability to recover costs would severely impact on legal aid practices that have already seen cuts in their remuneration and run judicial review applications at the risk of not being paid unless permission is granted.

He noted the importance of effective access to justice and found that funding may be “a relevant factor” to be taken into account in the determination of costs. But, he concluded, cost recovery must be on a principled basis. It depends on the success that a party has or would have had if the case had proceeded to trial.

Leggatt LJ, who added his opinion to the judgement, went further:

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.

Doing otherwise would unfairly advantage a legally aided claimant who 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.

For the same reasons, the fact that the solicitors “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”.

A fair decision

Considering the facts of the case, this decision seems perfectly fair. It is unlikely that the appellants would have won their substantive appeals and it would be difficult to justify that they should be awarded costs simply because they received public funds.

Future challenges may, however, lead to different outcomes due to the difficulty in defining what “being successful” mean and the discretion afforded to the courts by Rule 44.2 CPR as to whether or not costs are payable inter partes.