Back to school…but is it time for a change?
Lord Justice Jackson’s ‘Review of Civil Litigation Costs: Supplemental Report – Fixed Recoverable Costs’ was published at the end of July. Recognising that an effectively functioning system of judicial review is central to the rule of law, the Supplemental Report makes recommendations that may increase access to this important specialist area of litigation. Past proposals have, however, been left unimplemented.
Judicial review is a means by which private persons can hold the state to account by ensuring that it acts lawfully and without abusing its power. It is a specialised form of civil litigation challenge to the lawfulness of: (a) certain legal enactments (such as statutory instruments), or (b) decisions, actions or failures to act by public bodies in relation to the exercise of public functions. The general rule in civil litigation in England and Wales is that at the end of a case the unsuccessful party will be ordered by the court to pay the legal costs of the successful party. This currently applies equally to most claims for judicial review.
Since the costs incurred by public bodies in defending judicial review claims may be substantial, potential claimants of modest means might be deterred from pursuing legitimate claims for fear of the financial risks. On the other hand, if those risks were removed, the effect might be to encourage unmeritorious claims that put public bodies (i.e. ultimately the tax payer) to considerable unwarranted expense. The significant cost implications might also extend beyond the State, to private persons who benefit from decisions being challenged (e.g. the burden a property developer might face if a challenge is brought to the validity of the planning permission on which her project depends).
The objective of Lord Justice Jackson’s review is to make recommendations for controlling costs across the spectrum of civil litigation. Chapter 10 of his Supplemental Report addresses costs in judicial review claims. It recognises the above dilemma, noting that: “[c]itizens must be able to challenge the executive without facing crushing costs liabilities if they lose” albeit that “in a time of austerity, defending JR claims puts a substantial burden on the public purse”. In essence, Lord Justice Jackson’s position is that despite “unwelcome burdens falling on public authorities [and, one might add, other interested parties], the ready availability of JR proceedings in which public bodies are held to account for their actions and decisions, is a vital part of our democracy”.
In line with the above position, the Supplemental Report puts forward what is described as a “modest proposal” for reform that is seemingly calibrated to promote access to justice while displaying sensitivity to the risk of imposing undue and unsustainable new burdens on others (“it strikes the right balance between the conflicting interests which are in play”).
The existing regime for environmental judicial review claims is known as the “Aarhus Rules”. Under it, a claimant’s potential liability for the defendant’s costs is capped at £5,000 or £10,000 and the cap for the defendant’s liability is £35,000. These are default figures, subject to variation.
Lord Justice Jackson’s first recommendation in the Supplemental Report is that the Aarhus Rules should apply in all cases where the claimant is an individual (or an individual who is a representative of a number of natural persons with a similar interest) without legal aid. The above caps would apply so long as the claimant opts in, and subject to some form of means testing. There should also be inbuilt opportunities for the claimant or defendant to seek to vary the caps, and certain other procedural rules.
The Supplemental Report recognises that these changes would require legislative amendment to remove the regime of ‘judicial review cost capping orders’ brought into force in August 2016 under sections 88-90 of the Criminal Courts and Justice Act 2015. One of the striking features of the Supplemental Report is its scathing criticism of such orders as being:
“…of little practical value, because the procedure for obtaining such orders is too cumbersome and too expensive. The criteria for granting [cost capping orders] are unacceptably wide and the outcome of any application must be uncertain. Also, that outcome will not be known until too late in the day.”
In line with his overall position that the “only way to control costs effectively is to do so in advance: that is before the parties have run up excessive bills”, in 2010 Lord Justice Jackson recommended imposing court approved and enforced costs budgets for bigger claims. A system was then introduced where, if fixed budgets specifying acceptable levels of legal costs were not agreed, the court would resolve any disputes at a costs management hearing.
Judicial review proceedings are exempt from that costs budgeting procedure, and it remains the case that it will be unsuitable for most judicial review claims. Lord Justice Jackson’s second recommendation in the Supplemental Report is, however, that a simplified version of the costs budgeting procedure should be formulated for use in certain ‘heavy’ judicial review claims (i.e. those “where the costs of a party are likely to exceed £100,000 or the hearing length is likely to exceed two days”). The proposal is that the procedure would only apply at the discretion of the judge, on the court’s own motion or on the application of either party, and would be “reserved for a small number of cases which require such discipline”.
It remains to be seen whether the above recommendations will be adopted by the government. There may be reluctance to do so if the government disagrees with the balance struck, either because it offers too much encouragement to claimants (bearing in mind that other reforms have sought to reduce the number of judicial review claims), or it offers too little protection to the public purse. It is notable that Lord Justice Jackson’s previous proposal, to introduce ‘qualified one way costs shifting’ in judicial review, remains very popular with some (for example the majority on the Aarhus model working group whose report was published as an appendix to the Supplemental Report, most of whose members mainly represent claimants), but it was not taken up and seems to have fallen by the wayside.
It may be indicative of the hurdles Lord Justice Jackson’s recommendations will now face that the practitioner on the Aarhus model working group with particular experience of representing defendants was not supportive, regarding the proposal to extend the Aarhus Rules as going too far towards protecting claimants. Indeed the report of the working group records that:
“In light of the disagreement over the scope of a workable model, there was no consensus within the group that the benefits of an Aarhus based model would justify its introduction without a fuller understanding of its impact upon access to judicial review and public law advice and representation”.
The conclusion of the working group’s report was also rather ambivalent, noting that extending the Aarhus Rules “will not help all, or even a majority of would be claimants but is, in the view of the majority, preferable to no action”.
It is worth reiterating that the Aarhus Rules would, under Lord Justice Jackson’s recommendations, apply only where the claimant is an individual, not where it is a company. Costs budgets would apply only where the dispute is ‘heavy’ enough and the judge considers it appropriate. If the recommendations are adopted, therefore, perhaps the surest outcome will be asymmetrical effects across different categories of judicial review claims, according to these key features. A clear picture of whether the effects will be positive or negative, and for whom, will therefore take time to emerge.
If these proposals are ever introduced, practitioners will need carefully to think through the implications for their clients in each particular case. To illustrate, although it would reduce the financial consequences of losing for some claimants, the proposal of extending the Aarhus Rules would also reduce those claimants’ prospects of recovering the bulk of their legal spend if they succeed. Defendants and others in cases where the Aarhus Rules apply might be burdened with greater risks of challenge, but would also gain some protection against potentially large costs orders if they lose. Similarly, costs budgets might provide some protection for all parties against excessive bills, albeit only (at least initially) in those exceptional cases where the costs budgeting procedure is engaged, and only if the court’s approach is realistic. The court would retain flexibility about whether to depart from caps and impose budgets, but it will be some time before we learn how that discretion is likely to be exercised.
We will write further about the progress of Lord Justice Jackson’s recommendations in light of future developments.
Lawyers from Kingsley Napley are regularly blogging about a range of legal issues, including public law matters and the impact of Brexit. Follow our Brexit blog and Public Law blog for the latest commentary.
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