Charles Holland -
Barrister

Licensing law, chancery/commercial litigation and property.

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Costs In Licensing Appeals

October 2, 2019

What follows is an article I wrote for the July 2019 issue of Journal of Licensing. I look at the principles underlying the award of costs, and how they apply to licensing appeals. 

 

Introduction

 

For much of the time, licensing is a “safe space” so far as costs are concerned.

 

In most “first instance” licensing tribunals - such as local authority licensing sub-committees, the typical common law principle that costs “following the event” does not apply.

 

So, when a party decides to participate in a licensing case, whether as an applicant or an objector, there is generally no risk that if unsuccessful, it will have to pay the legal costs of any other party: what are known as “adverse costs”.

 

 

 

Adverse costs risk is a strong disincentive to participation in legal proceedings. Even allowing for his characteristic hyperbole, the late satirist Auberon Waugh perhaps spoke for many litigants (specifically libel litigants) when he wrote:

 

“Anyone who goes to law puts himself in the hands of an unscrupulous ring of bandits and thugs who milk both parties as hard as they can until one of them has to pay. If one allows for the stupidity and prejudice of judges, conceit and idleness of barristers, and diffuseness of English law, neither side can have a more certain chance of winning a legal action than on a tossed coin, which is a much cheaper way of settling things”.

 

It is perhaps surprising that the absence of an adverse cost risk does not seem to have had the converse effect of incentivising participation.

 

The Licensing Act 2003 enfranchised a wide range of interested parties (including local residents and their associations) to make applications, at any time, for a review of a premises licence, with no adverse costs risk. This was a radical reform. I for one was rubbing my hands in anticipation of the explosion of work as residents’ associations, previously unable to initiate revocation proceedings, got stuck into reviewing the problem premises within their areas, safe in the knowledge that they could not be taken to the cleaners in the event of defeat.

 

Much to the disappointment of my bank manager, this did not turn out to be the case. My (personal) experience is that resident-led reviews are the exception rather than the rule.

 

One such exception was a recent review brought by a single residential household against my client’s club in Easington Colliery (the location for the childhood home of “Billy Elliot”). Although a supporting police representation was compromised by way of the addition of agreed conditions, the applicant for the review was not satisfied. The matter therefore proceeded to a full hearing in the main Council Chambers, attended by the usual gamut of premises management, witnesses and supporters, lawyers, responsible authority representatives, local authority officers, elected members and the press. The debate on complaints ranging from the tethering of my client’s members’ horses to the telegraph pole outside the applicant’s house to a parallel war that had been waged on social media was conducted at not insignificant cost to the both the operator and the local authority. Yet there was no risk that the ultimately unsuccessful applicant should pay for any of it.

 

This bubble of safety is almost unheard of in civil litigation, where not just losing but almost every action carries potential costs consequences. Apply for an adjournment, disclose a late document, amend your case, call a duff expert: you can expect to be rewarded with an adverse costs order, even if you ultimately win the case. And like the doubling cube in backgammon, without prejudice offers of settlement and the associated “Part 36” regime can be used to turn cases into games of chicken where the main issue can become costs rather than the actual subject-matter of the claim.

 

The luxurious cotton wool that surrounds participants in licensing cases at first instance is however absent in many appellate tribunals. On appeals, things can get financially unpleasant in the event of a defeat.

 

A recent example is the “Stack” appeal in Newcastle upon Tyne (Endless Stretch Limited v Newcastle City Council and Danieli Holdings Limited (Costs), Newcastle Magistrates’ Court, 2 October 2018), where District Judge Kate Meek ordered the unsuccessful trade objector appellant to pay the costs of both the local authority and operator respondents, summarily assessing those costs as £28,923 and £57,984 respectively, so a grand total of £86,907. This was on top of what the appellant had paid the QC, senior junior, licensing consultant and cost consultant it fielded for the appeal (and also on top of representation at first instance). The appellant is currently en route to the High Court in an appeal by way of case stated: time will tell whether this improves or worsens the costs position for it.

 

Stack is an extreme example, but the principles applied by the judge in that case are of universal application in licensing cases. In this article, I will attempt to nutshell for licensors those general principles and look at how they operate in particular regimes.

 

The general rule: costs follow the event

 

The general rule that “costs follow the event” is codified for the purposes of civil litigation in the Civil Procedure Rules 1998 (“CPR”).

 

CPR 44.2(2) provides that:

 

If the court decides to make an order about costs—

 

(a)        the general rule is that the unsuccessful party will be ordered to pay the costs of the successful party; but

 

(b)        the court may make a different order.

 

The civil court has a discretion as to costs: s.51(1) Senior Courts Act 1981. S.52(3) emphasises: “The court shall have full power to determine by whom and to what extent the costs are to be paid”.

 

CPR 44.2 picks up that ball and runs with it: the court may decide to make no order as to costs at all, but if it does, the general rule of costs following the event is not the only order that can be made. It is important to remember the width of the discretion and not to treat the general rule as an absolute rule. CPR 44.2(1) makes this very clear:

 

The court has discretion as to—

 

(a)        whether costs are payable by one party to another;

 

(b)        the amount of those costs; and

 

(c)        when they are to be paid.

 

That being said, the general rule is a pretty good starting point. In licensing regimes where the appellate court has a similarly wide discretion (the Licensing Act 2003 regime being one such example), then the manner in which the CPR invites the civil court to exercise its discretion is a useful guide for the licensing appellate court.

 

What is “the event”?

 

It is often said, in short-hand, that, where costs follow the event, the loser pays the winner’s costs.

 

In fact, this is an oversimplification.

 

CPR 44.2(4) provides that:

 

In deciding what order (if any) to make about costs, the court will have regard to all the circumstances, including—

 

(a)        the conduct of all the parties;

 

(b)        whether a party has succeeded on part of its case, even if that party has not been wholly successful; and

 

(c)        any admissible offer to settle made by a party which is drawn to the court’s attention, and which is not an offer to which costs consequences under Part 36 apply.

 

It is not therefore simply a matter of looking at who has won (and indeed there can be huge debate as to who is the “winner”). All the circumstances need to be considered, including the three categories of specified circumstances: conduct, success on distinct issues, and the content of admissible offers (so including offers marked “without prejudice save as to costs”).

 

CPR 44.2(5) puts more flesh on the bones so far as what might constitute “conduct”. It includes:

 

(a)        conduct before, as well as during, the proceedings and in particular the extent to which the parties followed the Practice Direction—Pre-Action Conduct or any relevant pre-action protocol;

 

(b)        whether it was reasonable for a party to raise, pursue or contest a particular allegation or issue;

 

(c)        the manner in which a party has pursued or defended its case or a particular allegation or issue; and

 

(d)        whether a claimant who has succeeded in the claim, in whole or in part, exaggerated its claim.

 

In short, unreasonable behaviour is likely to be penalised in costs. If the “winner” has engaged in bad conduct on the way to victory, it can expect a costs sanction.

 

The rule then sets out the sort of orders the civil court can make. CPR 44.2(6) and (7) provide:

 

(6)        The orders which the court may make under this rule include an order that a party must pay—

 

(a)        a proportion of another party’s costs;

 

(b)        a stated amount in respect of another party’s costs;

 

(c)        costs from or until a certain date only;

 

(d)        costs incurred before proceedings have begun;

 

(e)        costs relating to particular steps taken in the proceedings;

 

(f)        costs relating only to a distinct part of the proceedings; and

 

(g)        interest on costs from or until a certain date, including a date before judgment.

 

(7)        Before the court considers making an order under paragraph (6)(f), it will consider whether it is practicable to make an order under paragraph (6)(a) or (c) instead.

 

So, it can follow in the civil courts that, despite the general rule, the “winning” party might end up not receiving all or sometimes any of its costs, or indeed having to pay the costs of the “losing” party on some issues.

 

The two-stage approach of liability and quantum

 

Costs applications should always be determined in a two-stage approach looking at (1) whether costs are payable by one party to another (liability) and, if so (2) the amount of those costs (quantum).

 

In the civil courts, liability is nearly always dealt with by the trial judge (or the judge hearing any application where costs are at large).

 

The trial judge may decide quantum there and then (a process called summary assessment) using costs schedules provided by the parties, or may send the matter off to a costs judge for detailed assessment in default of agreement between the parties in the meantime. In general summary assessment will not be undertaken for cases lasting longer than a day.

 

In licensing cases, whilst it might be theoretically possible for the matter to be sent off for detailed assessment, the general practice is to have summary assessment of costs. This is even so when cases last several days (so 8 days in the Stack appeal, where the costs hearing was listed for a separate day, with directions as to service of costs schedules and written representations).

 

Summary assessment is, by necessity, a more rough and ready approach than detailed assessment (which proceeds almost like satellite litigation, with points of claim, points of dispute, and its own internal costs regime). An issue-based costs order, tricky enough to unpick in the course of detailed assessment, is almost impossible to quantify on the limited information available in a summary assessment. When considering making a liability order that it is immediately going to have to summarily assess, the court is therefore much more likely to use the broad-brush approaches of ordering the paying party to pay all, or a percentage of the receiving party’s reasonable costs, or the receiving party’s reasonable costs between certain dates.

 

The indemnity principle

 

Costs orders cannot be punitive, and it is a general rule (albeit subject to exceptions) that a paying party cannot be ordered to pay any more than what the receiving party is liable to pay its own lawyers.

 

This is known as the indemnity principle: the costs the paying party pays to the receiving party are to indemnify the receiving party for its costs, rather than to give it a profit or a bonus.

 

In the civil courts, the schedule of costs form used for summary assessment, form N260 contains a declaration to be signed by the solicitor stating:

 

“The costs stated above do not exceed the costs which [the client] is liable to pay in respect of the work which this statement covers. Counsel’s fees and other expenses have been incurred in the amounts stated above and will be paid to the persons stated”.

 

Although not a strict requirement (see Tower Hamlets LBC v Thames Magistrates’ Court, Lovebox Festivals Ltd [2012] EWHC 961 (Admin)) it is good and probably productive practice to serve costs schedules in licensing appeals in advance of the hearing where costs are to be determined. This can be either on form N260 or a document adapted from it. It makes sense to include a solicitors’ declaration in the N260 rubric. For a lengthy and/or complex appeal it might be worth engaging the services of a costs draftsman to prepare the costs schedule.

 

One important interpretation of the indemnity principle when costs are claimed by local authorities can be found in Re Eastwood (Deceased) [1974] 3 W.L.R. 454 (CA). This established that the proper method of assessment where government legal services are provided “in house” by employed solicitors is to treat the bill as if it was that of an independent, external solicitor, and so, essentially those are the rates that are recoverable. Re Eastwood has survived repeated attack, a recent example being R (Bakhtiyar) v Secretary of State for the Home Department (Costs) [2015] UKUT 519 (IAC), which described the “presumed indemnity” that the external rates give.

 

So far as officers’ time is concerned, in Federation Against Copyright Theft v North West Aerials [2006] 2 Costs LR 361, the Supreme Court Costs Office allowed a time-based apportionment of officers’ salaries as recoverable from central funds in the criminal costs regime as a cost of prosecution. In R (Ayres) v. Cotswold District Council (CO/2353/2017), unreported, October 2017, John Howell QC sitting as a Deputy High Court judge ruled that the time spent by a local authority’s planning officers in assisting with the preparation of an Acknowledgement of Service in response to an application for permission to apply for judicial review can be recovered. These cases raise an interesting question as to whether apportioned officer salaries can be recoverable as part of the costs of an appeal. However, an attempt to recover such costs in the Stack appeal did not find favour with the District Judge. 

 

Assessment on the standard and indemnity basis

 

Just to confuse everyone, the word “indemnity” is used for an additional purpose in the context of costs.

 

If a costs liability order is made, there are two alternative bases on which quantum can be assessed: the standard basis and the indemnity basis.

 

The distinction is codified in CPR 44.3, which provides:

 

(1)        Where the court is to assess the amount of costs (whether by summary or detailed assessment) it will assess those costs –

 

(a)        on the standard basis; or

 

(b)        on the indemnity basis,

 

but the court will not in either case allow costs which have been unreasonably incurred or are unreasonable in amount.

 

(2)        Where the amount of costs is to be assessed on the standard basis, the court will –

 

(a)        only allow costs which are proportionate to the matters in issue. Costs which are disproportionate in amount may be disallowed or reduced even if they were reasonably or necessarily incurred; and

 

(b)        resolve any doubt which it may have as to whether costs were reasonably and proportionately incurred or were reasonable and proportionate in amount in favour of the paying party.

 

(Factors which the court may take into account are set out in rule 44.4.)

 

(3)        Where the amount of costs is to be assessed on the indemnity basis, the court will resolve any doubt which it may have as to whether costs were reasonably incurred or were reasonable in amount in favour of the receiving party.

 

(5)        Costs incurred are proportionate if they bear a reasonable relationship to –

 

(a)        the sums in issue in the proceedings;

 

(b)        the value of any non-monetary relief in issue in the proceedings;

 

(c)        the complexity of the litigation;

 

(d)        any additional work generated by the conduct of the paying party; and

 

(e)        any wider factors involved in the proceedings, such as reputation or public importance.

 

So the differences between the two methods are:

 

  • where costs are assessed on the standard basis, only proportionate costs are allowed; where costs are assessed on the indemnity basis, disproportionate costs are not disallowed;

  • where costs are assessed on the standard basis, any doubt that the costs were reasonably incurred or reasonable in amount is resolved in favour of the paying party; where costs are assessed on the indemnity basis, that doubt is resolved in favour of the receiving party.

 

Guidance as to when indemnity costs might be appropriate was given in Excelsior Commercial & Industrial Holdings Ltd v Salisbury Hammer Aspden & Johnson [2002] EWCA Civ 879. Lord Woolf C.J. said (at [32]) that the “critical requirement” was that “there must be some conduct or some circumstance which takes the case out of the norm”. Likewise, Waller L.J. said (at [39]):

 

The question will always be: is there something in the conduct of the action or the circumstances of the case which takes the case out of the norm in a way which justifies an order for indemnity costs?

 

In the civil courts, the concept of “proportionality” derives from in the overriding objective at CPR 1.1(1) “of enabling the court to deal with cases justly and at proportionate cost”.

 

No similar objective applies in licensing appeals. That has not stopped the High Court finding that proportionality applies in licensing costs. In Lovebox Burnett J. (now the Lord Chief Justice) at [47] recited some of the “general principles when considering the question of costs applications as regards quantum”, including:

 

When deciding the amount of costs to be awarded, the court will take account of all of the circumstances of the case but they include the following:

 

(a)        What was at stake in the proceedings?

 

(b)        What was the importance of the issue to the parties before the court?

 

(c)        What was the complexity of the appeal?

 

(d)        What skill, specialist knowledge and responsibility did the lawyers concerned require or assume?

 

(e)        How much time was actually spent?

 

In the round, the court will be concerned to check that the expenditure actually incurred was reasonable, and ensure that any award of costs is proportionate.

 

It was not explained how the proportionality principle had come to be imported into a licensing case given the absence of any equivalent to CPR 1.1 in the Magistrates Court Rules 1981. It may be that Burnett J. simply assumed that the position would be the same. That being said, it is a brave advocate who stands up and argues that the licensing regime has no concept of proportionality given that this has been the mantra of the civil courts for the last 20 years.

 

It should be noted that the indemnity basis can apply even on summary assessment (CPR 44.3(1)). In Stack, the Second Respondent argued that the manner in which the trade objector appellant had conducted its appeal was “out of the norm” and brought indemnity costs into play. This was not a submission with which the District Judge engaged in her decision, and it appears that she assessed costs on the standard basis.

 

When the “unsuccessful” party is the regulator

 

In Bradford MBC v Booth [2001] LLR 151, B successfully appealed Bradford’s refusal to renew his private hire vehicle operator’s licence to the magistrates’ court, where he was awarded his costs by the magistrates in the assessed sum of £750. On a point of principle, Bradford appealed by way of case stated to the Divisional Court, where B was not represented.

 

Bradford argued that because it was the regulator, it should only have costs awarded against it if it had acted unreasonably or in bad faith, suggesting that otherwise a conflict might arise between its duty to protect the public qua regulator, and its concern to protect its position on costs.

 

Lord Bingham C.J. rejected Bradford’s submission at [22], holding that it went too far and would “deprive the justices of any discretion to view the case in the round which in my judgment is what s.64 intends”.

 

He held that the magistrates’ court power to award costs (found here in s.64(1) of the Magistrates’ Courts Act 1980) conferred a discretion to make such order as to costs as it thinks just and reasonable, applying both to liability and quantum; and that in exercising that discretion, it had to have regard to all of the relevant facts and circumstances of the case.

 

So, far, so conventional: an identical position as is found in CPR 44.2(1) and (4).

 

The licensing nuance came in the additional factors which the Divisional Court held the appellate court should have regard in licensing cases. Lord Bingham C.J. said:

 

Where a complainant has successfully challenged before justices an administrative decision made by a police or regulatory authority acting honestly, reasonably, properly and on grounds that reasonably appeared to be sound, in exercise of its public duty, the court should consider, in addition to any other relevant fact or circumstances, both (i) the financial prejudice to the particular complainant in the particular circumstances if an order for costs is not made in his favour; and (ii) the need to encourage public authorities to make and stand by honest, reasonable and apparently sound administrative decisions made in the public interest without fear of exposure to undue financial prejudice if the decision is successfully challenged.

 

In R (Cambridge City Council) v Alex Nestling Ltd [2006] EWHC 1374 (Admin) (DC) Richards L.J. held at [11] that Bradford v Booth principles apply not to just to taxi licensing but to “comparable cases where there is a statutory appeal from a decision of the Local Authority and the court has a broad discretion as to costs”. In Perinpanathan v City of Westminster Magistrates Court [2010] EWCA Civ 40 the Court of Appeal approved its general application in licensing cases (at [40]). Stanley Burnton L.J included amongst a summary of principles the following:

 

  • Where the principle applies, and the party opposing the order sought by the public authority has been successful, in relation to costs the starting point and default position is that no order should be made.

  • A successful private party to proceedings to which the principle applies may nonetheless be awarded all or part of his costs if the conduct of the public authority in question justifies it.

  • Other facts relevant to the exercise of the discretion conferred by the applicable procedural rules may also justify an order for costs. It would not be sensible to try exhaustively to define such matters, and I do not propose to do so.

So far as the “financial prejudice” factor identified in Bradford v Booth, Stanley Burnton L.J. in Perinpanathan said at [41]:

 

I think it clear that the financial prejudice necessarily involved in litigation would not normally justify an order. If that were not so, an order would be made in every case in which the successful private party incurred legal costs. Lord Bingham LCJ had in mind a case in which the successful private party would suffer substantial hardship if no order for costs was made in his favour.

 

As initially analysed Bradford v Booth merely identified certain specific factors, which, amongst all the circumstances of the case, the appellate court has to consider when exercising its discretion as to costs.

 

So, it was held that Bradford v Booth does not establish a presumption one way or the other: Law Society v Adcock [2006] EWHC 3212 (Admin) (DC) per Waller L.J. at [39]. Nor, it was held, did it establish a “test” Perinpanathan v City of Westminster Magistrates Court at first instance [2009] EWHC 762 (Admin) at [32]

 

However, it has been suggested that the Court of Appeal’s decision Perinpanathan has “strengthened” the formulation (per George Leggatt QC sitting as a Deputy High Court Judge in R (Newham LBC) v Stratford Magistrates’ Court, Saron and Dodds [2012] EWHC 325 (Admin) at [31] by making no order for costs against an unsuccessful local authority respondent the “default” or “starting” position (which looks rather like a presumption), and focusing on “substantial” hardship to the successful party if no order is made.

 

Those seeking costs against local authority which has not acted unreasonably or in bad faith might wish to remind themselves (and the costs awarding tribunal) of rejection by Lord Bingham in Bradford v Booth at [22] of the suggestion that costs may only be awarded against authorities that have behaved in that manner. This point has been emphasised in subsequent cases: see R (Borough of Telford and Wrekin) v Shrewsbury Crown Court [2003] EWHC 230 Admin per Moses J. at [16] (although “It is difficult to conceive of circumstances in which it would be just and reasonable to award costs against an authority acting in a licensing capacity, unless there was a good reason to do so.”); Crawley BC v Attenborough [2006] EWHC 1278 (Admin) (DC) per Scott Baker L.J. at [13]; and R (Cambridge City Council) v Alex Nestling Ltd (per Richards L.J. “Although as a matter of strict law the power of the court in such circumstances to award costs is not confined to cases where the Local Authority acted unreasonably and in bad faith, the fact that the Local Authority has acted reasonably and in good faith in the discharge of its public function is plainly a most important factor.”).

 

Given that the costs discretion is exercised on all the circumstances of the case, costs decisions are highly fact-specific, and only limited guidance can be gained from previously decided cases. With that health-warning duly delivered, here are 10 previously decided cases where the public role of the unsuccessful local authority respondents was considered.

 

R (Gorlov) v Institute of Chartered Accountants [2001] EWHC Admin 220 - irrational not to award costs in favour of appellant - per Jackson J. at [37]:

 

The Institute is a professional body which, acting in the public interest, brings disciplinary proceedings against accountants. That is a factor which points against any automatic award of costs in disciplinary proceedings which fail. The present case, however, has special features. The disciplinary proceedings brought by the Institute were a shambles from start to finish. … The conduct of the Institute throughout the disciplinary proceedings was of course honest and well intentioned. That conduct was, however, misguided. Mistake was piled upon mistake. In my view, the Institute’s conduct was unreasonable.

 

R (Swale BC) v Boulter [2002] EWHC 2306 (Admin) - award of costs against local authority following dismissed complaint in respect of a dangerous dog not upset on appeal - magistrates reasons stated “We did not consider that it would be reasonable to order the Appellant to pay the full costs because of its role as a public authority in acting as prosecutor on behalf of members of the public. However, the complaint had been dismissed and it was proper that the unsuccessful party should pay a significant portion of the successful party's costs.”

 

Powell v The Chief Executive of the City and County of Swansea [2003] EWHC 2185 (Admin) - per Pitchford J. at [10] “the justices erred in concluding that the decision was made on grounds that reasonably appeared to be sound. In view of their findings this was plainly a case for an award of costs, since the respondent had purported to apply to the applications a policy which it could not apply”.

 

R (Uttlesford District Council) v English Heritage [2007] EWHC 816 (Admin) per Pitchford J. at [16] purpose of guidance in Bradford v Booth was to draw attention to the public role reposed in certain authorities whose position required careful consideration. Public nature of the role may or may not be critical in the balancing exercise, given the facts of the case. Costs order not overturned - here a fully contested hearing was unnecessary, and had been caused by the local authority’s refusal “to engage in useful negotiation on the main issue which was resolved in favour of [the appellant]”.

 

Waveney DC v Lowestoft (North East Suffolk) Magistrates’ Court, Witham Oil & Paint (Lowestoft) Ltd [2008] EWHC 3295 (Admin) - costs order against local authority not irrational in circumstances where the council “had effectively not completely thrown their hand in, but just stood back and taken no active day-to-day part” and “had put up no effective resistance … but had not given up”.

 

Ware v Hackney LBC [2009] EWHC 1698 (Admin) - costs should have been ordered against local authority who had “a fundamentally mistaken view of the way in which the statutory provision that was in fact engaged operated”.

 

Tower Hamlets LBC v Ashburn Estates Ltd (Trading as the Troxy) [2011] EWHC 3504 (Admin) - costs order against local authority quashed as too much weight placed by district judge the “ample time” the local authority had to consider offers of settlement “because of the time factor involved in considering the compromise offer made, sensible though it may have been, and because of all the competing interests that would need to be considered in the evaluating of it. This is not like an ordinary piece of civil litigation where it ought to be possible to form a view about a settlement reasonably quickly.”

 

Lovebox [2012] - costs order against local authority upheld; it was unreasonable for sub-committee to have found that dispersal from a festival caused significant disturbance to residents when the evidence it relied upon was generic in nature without linking to specific adverse events or incidents or the evidence of a previous festival.

 

Luton BC v Zeb [2014] EWHC 732 (Admin) - award of £2,500 costs against respondent local authority not set aside - although no financial evidence to support assertion of “substantial hardship” on part of successful appellant before court, court had conscientiously considered merits of the costs application on Bradford v Booth principles. The local authority should have appreciated that when witnesses indicated their unwillingness to attend Crown Court, the original decision was unsustainable.

 

Chief Constable of Warwick Police v Young [2014] EWHC 4213 (Admin) - dangerous dogs case continued until shortly before trial despite defendant serving voluminous evidence that her dogs not the ones which had attacked sheep, and repeatedly inviting police to withdraw - award of costs against police upheld.

 

The quirk in s.64(1) Magistrates’ Courts Act 1980

 

On appeals brought by complaint to the magistrates where no independent statutory costs awarding provision exists, so including appeals relating to private hire vehicle operator’s licences, the court’s costs discretion is found in s.64(1) Magistrates’ Court Act 1980, which provides:

 

On the hearing of a complaint, a magistrates’ court shall have power in its discretion to make such order as to costs—

 

(a)        on making the order for which the complaint is made, to be paid by the defendant to the complainant;

 

(b)        on dismissing the complaint, to be paid by the complainant to the defendant,

 

as it thinks just and reasonable; but if the complaint is for an order for the variation of an order for the periodic payment of money, or for the enforcement of such an order, the court may, whatever adjudication it makes, order either party to pay the whole or any part of the other’s costs.

 

It seems plain on its face that this is a far more limited discretion than that found in s.181 of the Licensing Act 2003, which empowers the magistrates court hearing an appeal under that Act to “make such order as to costs as it thinks fit. The s.64(1) regime only appears to encompass costs following the event: see for example the dicta in Perinpanathan of Stanley Burnton L.J. at [19] and Lord Neuberger M.R. at [58].

 

However, in Crawley BC v Attenborough, Scott-Baker L.J. said, obiter, that he saw “no practical distinction” between s.64(1) and s.181 of the Licensing Act 2003.

 

In Prasannan v. Royal Borough Kensington and Chelsea [2010] EWHC 319 (Admin) the successful appellant was nonetheless landed with a substantial adverse costs order made under s.181 of the 2003 Act. She appealed by way of case stating, gamely arguing that if there was “no practical distinction” between s.181 and s.64(1) of the 1980 Act as Scott-Baker L.J. had said in Crawley, then there was no power to order her, the successful appellant, to pay the respondent’s costs. Perhaps unsurprisingly this argument got pretty short shrift from Belinda Bucknall QC, sitting as a Deputy High Court Judge.

 

But the issue remains that where s.64(1) governs the scene, the costs order has to fit in to one of the two statutory scenarios. In the recent appeal by Uber London Limited against the refusal by Transport for London to renew its London private hire vehicle operator’s licence, the Chief Magistrate allowed Uber’s appeal - it was, on one analysis, the successful party and obtained the order for which complaint was made. However, Uber wanted to pay, and TfL wanted to receive, TfL’s costs in the agreed sum of £495,000. The Chief Magistrate was persuaded to make this order on the basis (I paraphrase and summarise) that the complaint originally made was for a full 5 year licence, Uber initially asserting that TfL’s decision was wrong, that position being resisted by TfL, whereas what Uber received was a limited “probationary” licence having accepted that TfL’s decision was right, and so therefore TfL was the successful party.

 

There is no doubt that s.64(1) is unwieldly and overly prescriptive given the modern approach to costs as codified in CPR Part 44. Unless and until it is updated, it will continue to strain lawyers’ ingenuity as to how an otherwise perfectly sensible costs order might be made.

 

Appeal not proceeded with

 

S.52(3) of the Courts Act 1971 provides that where a complaint is made “but the complaint is not proceeded with”, a magistrates court may make such order as to costs to be paid by the complainant to the defendant as it thinks just and reasonable.

 

This is plainly - and sensible - a wider discretion than is found on s.64(1) of the 1980 Act, and indeed, used creatively, might rescue some appeals from the straitjacket of s.64(1). Might it be arguable, for instance, that Uber’s initial complaint was “not proceeded with”?

 

The necessity for the appellate court to give reasons when awarding costs

 

In Crawley BC v Attenborough, Scott-Baker L.J. indicated that the part of his decision in R. v Stafford Crown Court, ex p. Wilf Gilbert (Staffs) Ltd [1999] 2 All ER 955 where he said that reasons for costs award need not be given should not now be followed. This accords with the modern approach of openness and transparency.

 

In Leeds City Council v Leeds District Magistrates [2013] EWHC 1346 (Admin), Supperstone J. quashed an adverse costs order made against the local authority on the basis that no reasons for the order were given. The decision to allow the appeal “does not begin to provide adequate reasons for the costs award that was subsequently made”.

 

Time for payment

 

Costs awards are civil debts, and advocates often jump up and tell the magistrates that they cannot give the paying party time to pay, as they would with a fine. However, time to pay is part of the general discretion under the CPR code and it seems odd that a costs order can be made which might be immediately enforceable. In my view there is scope to argue that the discretion of the magistrate’s court to award costs includes a discretion to timetable the payment of those costs.

 

Non-party costs orders

 

The editors of Paterson’s Licensing Acts 2019 suggest at [6.21] that the wide discretion afforded to the appellate court in relation to costs includes a discretion to make costs orders against non-parties, akin to that the well-established power the civil court has to do the same.

 

A non-party costs order may be appropriate where an appeal is brought by an impecunious corporate party to further the interests of the persons behind that company, who, to reference William Wycherley, have adopted the position that someone without money needs has nothing more to fear from a crowd of lawyers than from a crowd of pickpockets.

 

I understand that Westminster Council is one local authority which has successfully obtained non-party costs orders against those funding appeals. 

 

Recent case-law has established that early warning of a potential non-party costs order to those affected is a fundamental requirement to the subsequent making of such an order:  Sony/ATV Music Publishing LLC v WPMC Ltd [2018] EWCA Civ 2005. Accordingly where a local authority respondent is faced with an appeal from an impecunious company and fears not being able to enforce a costs award, then early steps need to be taken establish for whose benefit the appeal is brought so that they can be put on notice of the possibility of a non-party costs application against them.

 

An alternative which, so far as I am aware, remains untested is whether the width of the discretion in s.181 of the Licensing Act 2003 permits the magistrates’ court to require the provision of some sort of security for costs. This would be an interesting argument.

 

“Participants”

 

R (Chief Constable of Nottinghamshire) v Nottingham Magistrates Court [2009] EWHC 3182 (Admin) confirmed that the magistrates’ court has an implied power to allow non-parties to participate in appeals: in that case, the non-party being the police, which was not a respondent to Tesco’s appeal.

 

Such persons are not joined to the proceedings as such, but participate, and - in general - should neither pay nor receive costs. It might be potentially feasible to obtain a non-party costs order against a participant who by its conduct causes the actual parties to waste costs, although I am not personally aware of any examples of this.

 

Some conclusions

 

When preparing to sail out of the calm harbour of the “no costs” first instance regime and into the potentially stormy waters of the “costs risk” appellate regime, it is wise to take precautions.

 

Treating the licensing appeal as if it was litigation subject to the CPR is not a bad start. Not least if you end up in the High Court on appeal, you will have provided the magistrates court with the right vocabulary and (hopefully) approach. The relevant provisions of the CPR are not complicated and provide a useful checklist that the court can be taken through when (hopefully) contrasting the receiving party’s exemplary conduct with the paying party’s unhelpful behaviour.

 

So, when it comes to costs, litigants that conduct themselves in such a manner as would avoid criticism on the CPR 44.2(5) checklist may fare better than those who do not engage in pre-action correspondence, raise duff issues, fight cases with extreme and unnecessary aggression or exaggerate the good points they have.

 

Attempting to narrow issues or compromise completely in without prejudice communications and meetings is never a bad idea. Remember that unless the communications are expressed to be “without prejudice save as to costs” rather than simply “without prejudice” then they cannot be shown to the judge making the costs order without both parties’ consent. Rarely is there much point in labelling communications simply “without prejudice”. It is good discipline to never mix up open correspondence with without prejudice correspondence: if in doubt, send two letters: the open letter dealing with the open issues and the “without prejudice save as to costs” letter dealing solely with settlement.

 

Preparing costs applications well in advance, including detailed costs schedules with supporting representations, can pay dividends. It prevents complaint being made by the other side that they are being ambushed, and puts the court in the mind-set that costs is not some irritating loose end, but a substantial issue that needs to be determined.

 

Local authorities should not assume that Bradford v Booth gives them automatic immunity. A licensing authority respondent that makes no attempt to review and assess the merits of an appeal as it progresses does so at its peril.

 

And often, licensing authorities do not appreciate the full scope of recoverable costs that can be pursued, nor the steps that can be taken when an impecunious appellant threatens a cost loss.

 

Happy sailing!

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