About 40 miles from here, in 1485, Richard III unwittingly brought the Middle Ages to an end, by losing the Battle of Bosworth Field to the victorious Henry Tudor. The defeated king’s remains were taken to Leicester and lost. Found in 2013, the Divisional Court on 26th November 2013 will hear the substantive challenge brought in relation to their re-interment and location of the dead king’s final resting place.
The challenge brought by the Plantagenet Alliance Limited has already generated some interesting ancillary litigation in the field of protective costs orders: on 15th August 2013 Mr Justice Haddon-Cave granted permission to bring judicial review and also made a protective costs order on the papers. On 26th September 2013 the court heard a number of applications, including one to vary or discharge the protective costs order. In a full and careful judgment given on 18th October 2013, the court handed down its reasoned judgment reported at  EWHC 3164 (Admin).
The law relating to protective costs orders
The learned judge began by restating the substantive law, that prescribes when and in what circumstances, the court will exercise its discretion to make a protective costs order:
17. The general principles governing Protective Costs Orders were restated by the Court of Appeal in R (Corner House) v Secretary of State for Trade and Industry  1 WLR 2600 (CA) at  as follows (see also The White Book at paragraph 48.15.7):
“(1) A protective costs order may be made at any stage of the proceedings, onsuch conditions as the court thinks fit, provided that the court is satisfied that:
(i) the issues raised are of general public importance;
(ii) the public interest requires that those issues should be resolved;
(iii) the applicant has no private interest in the outcome of the case;
(iv) having regard to the financial resources of the applicant and the respondent(s) and to the amount of costs that are likely to be involved it is fair and just to make the order;
(v) if the order is not made the applicant will probably discontinue the proceedings and will be acting reasonably in so doing.
(2) If those acting for the applicant are doing so pro bono this will be likely to enhance the merits of the application for a PCO.”
(3) It is for the court, in its discretion, to decide whether it is fair and just to make the order in the light of the considerations set out above.
18. A PCO can take a number of different forms and the choice of the form of the order is an important aspect of the discretion exercised by the judge (Corner House, ibid, at ). There is room for considerable variation, depending on what is “appropriate and fair” in each of the rare cases in which the question of a PCO may arise (Corner House, ibid, at ).
19. The Court of Appeal in Corner House said that the earlier guidance in the case of King v Telegraph Group Ltd  EWCA Civ 613 at [101-2] (a defamation case) will “always” be applicable, but rephrased the King guidance in the present context as follows (Corner House, ibid, at ):
(1) When making any PCO where the applicant is seeking an order for costs in its favour if it wins, the court should prescribe by way of a capping order a total amount of the recoverable costs which will be inclusive, so far as a CFA funded party is concerned, of any additional liability.
(2) 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.
(3) 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, where the court considers that it is in the public interest that an order should be made. 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.
20. The Court should not set a PCO aside which has already been granted unless there is “compelling reason” for doing so (Corner House, ibid, at ).
The learned judge then went onto two deal with two further aspects of the substantive law, relating to protective costs orders:
21. Subsequent cases have, however, repeatedly emphasised the need for “flexibility” when applying the Corner House guidelines, and in particular guideline (iii) that an applicant should have no “private interest” in the outcome of the judicial review case (see R (Bullmore) v. West Hertfordshore Hospitals NHS Trust  EWHC 1350 (Admin), per Lloyd Jones J; R (Compton) v Wiltshire PCT  EWCA Civ 749 (Waller and Smith LJJ, Buxton LJ dissenting) ; R (Buglife) v Thurrock Thames Gateway Development Corp  EWCA Civ 1209,  1 Costs LR 80 (Sir Anthony Clarke MR, Maurice Kay and Stanley Burnton LJJ); and Morgan v. Hinton Organics (Wessex) Ltd  Env LR 30 (Laws, Carnwath and Maurice Kay LJJ). Compton (2008)
22. In Compton (supra), Waller LJ examined the 2006 Kay Report of a Working Group on Public Interest Litigation and the 2008 Sullivan Report of a Working Group on Access to Environmental Justice. Waller LJ went on expressly to approve Lloyd Jones J’s “flexible” approach and emphasise that the Corner House guidelines should not be read as statutory provisions or in an “over-restrictive” way (ibid, at ). Waller LJ also dismissed the notion of an “exceptionality” principle in addition to the Corner House guidelines (ibid, at ). Waller LJ concluded with the following observations on the meaning of “general public importance” (ibid, at ):
“Finally I do not read the word “general” as meaning that it must be of interest to all the public nationally. On the other hand I would accept that a local group may be so small that issues in which they alone might be interested would not be issues of “general public importance”. It is a question of degree and a question which Corner House would expect judges to be able to resolve.”
23. Smith LJ endorsed a similarly “flexible” approach to Waller LJ in Compton and gave the following guidance in relation to the question of “general public importance” at :
“It seems to me that a case may raise issues of general public importance even though only a small group of people will be directly affected by the decision. A much larger section of the public may be indirectly affected by the outcome. Because it is impossible to define what amounts to an issue of general public importance, the question of importance must be left to the evaluation of the judge without restrictive rules as to what is important and what is general.”
24. Smith LJ enunciated the following useful, common sense yardstick in Compton at  (which was cited by Sir Anthony Clarke MR in Buglife at ):
“It seems to me as a matter of common sense, justice and proportionality that when exercising his discretion as to whether to make an order and if so what order, the judge should take account of the fullness of the extent to which the applicant has satisfied the five Corner House requirements. Where the issues to be raised are of the first rank of general public importance and there are compelling public interest reasons for them to be resolved, it may well be appropriate for the judge to make the strongest of orders, if the financial circumstances of the parties warrant it. But where the issues are of a lower order of general public importance and/or the public interest in resolution is less than compelling, a more modest order may still be open to the judge and a proportionate response to the circumstances.”
Having noted the flexible nature of the jurisdiction, he then went onto consider some further decisions of the Court of Appeal:
25. In Buglife (supra), the Court of Appeal stated Waller LJ’s views were of general application (ibid, at ) and said that the correct approach was to follow Corner House as explained by Waller LJ and Smith LJ in Compton (Buglife, ibid, at [18-19]). The Court of Appeal in Buglife also expressly agreed with Waller LJ’s view that it was “difficult to separate” the two tests of “general public importance” on the one hand, and “public interest” on the other (per Sir Anthony Clarke MR giving the judgment of the Court, ibid, at ).
26. In Morgan Hinton (supra), the Court of Appeal noted that the Rules Committee had not yet addressed the criticisms of the narrow approach to the Corner House guidelines and went on to say that, in the meantime, the “flexible” basis proposed by Waller LJ and approved by Buglife, should be applied to all aspects of the Corner House guidelines (Morgan Hinton, ibid, at ):
27. In the very recent decision of R (Litvinenko) v. Secretary of State for the Home Department (Goldring LJ, Treacy LJ and Mitting J, 4th October 2013), the Court of Appeal is summarily reported as having stated as follows:
(1) The starting point was that a PCO would not be made unless (a) there was a real prospect of success in the judicial review proceedings, (b) the issues raised were of general public importance and (c) there was a compelling public interest for them to be resolved.
(2) A private interest in the judicial review claim is not fatal to the application for a PCO. Subsequent cases have emphasised the need for flexibility when considering the requirement in Corner House that an applicant should have no private interest in the case. The correct approach was that an applicants’ private interest was (merely) “a factor” to consider when balancing against the other elements of the Corner House guidance.
(3) In the present case, Mrs Litvinenko’s liquid assets outweighed the value of the Secretary of State’s estimated costs and she had greater means than many other litigants. She had the financial means to bring the proceedings if she chose to and it would not be “fair or just” to make a PCO, nor was it an “exceptional” case for the Corner House principles to apply.
28. It should be noted that the reference in Litvinenko to an “exceptionality” requirement is in contrast to the Court of Appeal’s previous endorsements of Waller LJ’s approach in both Buglife and Morgan Hinton (see above). A full transcript of Litvinenko is not yet available.
He then concluded after carefully listing and considering the various factors, that the requirements for a protective costs order were satisfied.
Relationship with security for costs
The Secretary of State in addition to seeking the discharge of the protective costs order, made a counterblast, of seeking an order for security for costs, noting that the claimant was a limited company set up by an individual with the real interest in pursuing the claim.
Such a cross application could be characterised by a cynical observer as a transparent attempt to stifle the claim: but in any event it covered the same ground and the same consideration of whether a protective costs order should be made, it being the claimant’s case that if such an order was not granted, the claim would not proceed. In the event it was given short shrift by the court.
56. The Justice Secretary made a separate and stand-alone application for an order for security for costs against the Claimant pursuant to the discretion given to the Court to grant permission to apply for Judicial Review and/or pursuant to CPR 25.12, 25.13(1)(a) and 25.13(2)(c). Mr Weisselberg submitted on behalf of the Justice Secretary that the incorporation of the company was simply a ‘device’ to avoid the consequences of an adverse costs order being visited on its sole director and shareholder (Mr Nicolay), that the Claimant was a ‘busy-body’ and the Claimant should be ordered to put up substantial security, failing which the case should be stayed.
57. In my judgment, however, an order for security for costs would not be appropriate in the present case for three reasons. First, an inference as to improper motivation cannot properly be drawn in view of the actual reasons given for incorporation of the applicant company (see above) (see the similar observation by Richards J in R v Leicestershire County Council, ex p Blackfordby & Boothorpe Action Group Ltd  Env LR 2 ). Second, on the evidence presently before the Court, an order for security for costs would simply stifle the claim. Third, in any event, as Miss Proops acknowledged, the application for security for costs simply does not arise if the Court decides to maintain the PCO.
Quantum of costs
The effect of the protective costs order, is to prevent the defendants to the litigation from recovering their costs, even if they are successful. The learned judge had to decide however, how much the claimant would recover in turn, if it won, a cap on the claimant’s costs being the quid pro quo, for the protection the court had granted against adverse costs.
59. The principles governing the quantum of cost-capping in the context of PCOs are in summary as follows:
(1) Costs should be capped at a level that is “modest” (Corner House, supra, at.
(2) This will normally mean restricting claimants to the costs of solicitors and one junior counsel; but there is no absolute rule (Buglife, supra, at ).
(3) CFA uplifts are, in principle, recoverable because it was important that those skilled in public interest litigation should continue to operate (per Moses LJ in Corner House, supra, at [17-19].
(4) Cost-capping in context of PCOs involves having regard to concepts of public interest (and the public purse) (c.f. R (Davey) v Aylesbury Vale District Council  EWCA Civ 1166).
(5) There is a wide discretion for judges to do what is fair and just in all the circumstances of the particular case subject to the guideline cases.
60. The Courts have employed a variety of costs solutions in different PCO cases, including: e.g. (i) ordering Treasury rates only but with a full CFA uplift (R (Medical Justice) v Secretary of State for the Home Department  EWHC 1425 (Admin), per Cranston J at [27-28]); (ii) allowing commercial rates equivalent to the defendant’s rates but without a CFA uplift (R (Public Interest Lawyers Ltd) v Legal Services Commission  EWHC 3259 (Admin) per Cranston J); (iii) allowing leading and junior counsel where the Secretary of State has the same (R (Medical Justice) v Secretary of State for the Home Department  EWHC 1425 (Admin) CA); and (iv) allowing two junior counsel where the case warranted (R (Public Interest Lawyers Ltd) v Legal Services Commission  EWHC 3259 (Admin) CA).
61. A number of cost caps have been in the £20-25,000 range (see e.g. Badger Trust v Welsh Ministers  EWCA Civ 807; and R (Mencap) v Parliamentary & Health Service Ombudsman  EWCA Civ 875 at ); but some caps have been £100,000 (Public Interest Lawyers Ltd,  supra).
62. In a helpful analysis of the case law prepared by Miss Emmerson, Junior Counsel for the University of Leicester, it is clear that it is common to link partial PCOs linked with reciprocal caps, i.e. the cap matches the level of protection at which the partial PCO is set (see e.g. Garner v. Elmbridge  EWCA Civ 1006). In this case, however, I have granted a full PCO
63. Mr Clarke, Counsel for the Claimant, said that it was accepted that any costs recovery had to be relatively modest. He submitted that the Court should take as its starting point commercial rates similar to those being paid to the University of Leicester’s legal team and allow two counsel to match the defence teams. Mr Clarke further submitted that, whilst the Court might not give effect to a straight CFA, the Court should consider ‘building in’ a 50% uplift for a success fee to reflect ‘aggravating factors’ arising from the Justice Secretary’s conduct in particular in (a) breaching the disclosure order of 15th August 2013, (b) publicly criticising these proceedings in the media using a number of epithets, and (c) failing to engage with the Claimant’s open offer to settle the matter. He referred me to the witness statement of Mr Howarth of Messrs Gordons LLP who explained that (i) a significant amount of work was done by Messrs Gordons LLP and the Claimant’s Counsel prior to the entering into of a CFA but this had been treated on a pro bono basis due to the Claimant’s limited means; (ii) some £60,000 fees had already been incurred between 15th August and 17th September 2013; and (iii) that total fees in the region of £200,000 were estimated for the case, including dealing with any appeal. Mr Clarke pointed out that Claimants bringing the case would be put to more work than those responding. Claimant’s Counsel recognised, however, that recovery of fees of the order £200,000 would not be appropriate. He submitted that, in all the circumstances, a cap of around £100,000 would be appropriate.
64. Mr Weisselberg, Counsel for the Justice Secretary, argued for Treasury rates, one junior counsel, no CFA or uplift and a modest cap of between £20,000 and £40,000 on the basis that was a ‘fairly standard’ judicial review, not factually or commercially complex or document-heavy, albeit it was a high profile case and much publicised. He took issue with many aspects of the Claimant’s draft estimate of costs. He accepted, however, that it was reasonable to assume that the Justice Secretary would spend over £50,000 in total on the case.
65. Miss Proops, Counsel for the University of Leicester, adopted Mr Weisselberg’s stance and argued for a global cap in the region of £35,000. She also submitted that because this was ‘unquestionably an extremely interesting, colourful and high-profile’ case, the Claimant should have explored getting entirely pro bono representation. In my judgment, as stated above, this submission runs counter to the time-honoured principle that people are entitled to instruct lawyers of their choice (within reason) and that lawyers are entitled to be paid a reasonable fee for work done.
66. The Court necessarily adopts a broad-brush approach when deciding levels of costcapping. It does so having proper regard to all the circumstances, including (a) the general nature of the case and (b) any particular features of proposed litigation and the parties. Each case depends on its own facts.
67. My ruling on appropriate cost-capping in the present case is as follows:
(1) Rates: Treasury rates are appropriate for a case such as this, rather than commercial rates. Treasury rates are, in general, a more suitable benchmark of modesty. This case also involves scholarship and intrinsic interest, rather than burdensome commercial, factual or documentary analysis.
(2) CFA: Giving effect to a CFA would not be appropriate in the context of this case or a full PCO. The concept of a CFA does not generally sit easily with the notion of a modestly funded case in any event. Moreover, the tide has turned against CFAs in the post-Jackson world.
(3) ‘Uplift’: It would not be appropriate to delve into ‘unreasonable conduct’ issues at this stage in order to second-guess any uplift to any eventual costs recovery (albeit that such conduct might not go entirely unremarked). To do so would be premature and speculative.
(4) Counsel: It would be appropriate, in the interests of fairness and equality of arms, to allow the Claimant to recover the cost of both retained Junior Counsel (Mr Clarke and Mr Cleaver of Blackstone Chambers) since theJustice Secretary has allowed himself the luxury of the Treasury Devil (Mr James Eadie QC) and two Junior Counsel, and the University of Leicester has two Junior Counsel.
(5) Overall Cap: It seems that this case will be hard fought, despite entreaties, with no quarter being given on either side. The overall cap should have regard to this fact, the amount of costs already expended and likely future costs assuming Treasury rates, allowing some headroom but reflecting the principle of modesty. In my judgment, taking all factors into consideration, an overall cap of £70,000 would be appropriate. I am fortified that this is a fair figure because it splits the difference between the parties’ proffered figures (see above).
The decision is a useful illustration of how an application for a protective costs order works in practice. This is a topic that will become of more importance, given the increasingly restrictive approach to a grant of Legal Aid to bring judicial review, coupled with the non-recoverability of ATE premiums.
In this sense the jurisdiction, fills the funding gap, which would otherwise exist and leave a claimant potentially exposed to an adverse costs order.
To leave a claimant so exposed, could have a “chilling” effect on the ability to bring proceedings for judicial review, if claimants with meritorious claims are dissuaded from issuing them, for fear of the financial consequences of failure.