A new code and form of order for cost capping was brought into effect in August 2016, when Sections 88 to 90 of the Criminal Justice and Courts Act 2015 ('the Act') came into force. Cost capping is the court's ability in judicial review proceedings to assure a party to the proceedings that notwithstanding the outcome of the case, it will pay only a certain amount (or none) of another party's costs.
Prior to August 2016, the regime for costs protection in judicial review was not on a statutory basis. The courts followed the Court of Appeal's approach in R (Corner House Research) v Secretary of State for Trade and Industry [2005] EWCA Civ 192, which established the 'Corner House Principles' for protective cost orders ('PCOs').
The statutory regime introduces the cost capping order ('CCO'). Those involved in actual or prospective judicial review claims should note that:
-
The court may only impose a CCO once it has granted permission for judicial review. Previously, a PCO could be made at any stage in proceedings, including before the grant of permission. Applications for judicial review may reduce as a result of applicants' unwillingness to seek permission without the possibility of cost protection.
-
The entitlement to seek a CCO only after the permission stage may prevent would-be CCO applicants from seeking rolled-up hearings (in which permission and the substantive issues are considered at one hearing).
-
Only if the court is satisfied that the criteria in Section 88(6) are met may it impose a CCO. The court must be satisfied that '(a) the proceedings are public interest proceedings, (b) in the absence of the order, the applicant for judicial review would withdraw the application for judicial review or cease to participate in the proceedings, and (c) it would be reasonable for the applicant for judicial review to do so.' Sections 88(7) and Sections 88(8) contain the mandatory criteria and factors the court must apply in determining whether the proceedings are 'public interest proceedings.'
-
The factors to which the court must have regard when determining if proceedings are 'public interest proceedings' are more thorough and robust than the Corner House Principles. For example the court must have regard to the 'number of people likely to be directly affected if relief is granted to the applicant for judicial review' and 'how significant the effect on those people is likely to be'. An issue which attracts plentiful campaigners but directly affects the lives or wellbeing of a few individuals could fall outside the definition of 'public interest proceedings'. The exception is environmental cases, in respect of which separate regulations may be (but have not yet been) made.
-
Further matters to which the court must have regard are set out in Section 89(1), including notably (a) 'the financial resources of the parties to the proceedings, including the financial resources of any person who provides, or may provide financial support to the parties.' This may lead to the court considering the resources of affiliated organisations and third parties, or the crowdfunding capabilities of a party. If a party was deemed capable of raising money through third parties, the court may consider a CCO unwarranted.
-
CCOs must always be reciprocal. The protection of the CCO will apply to the other party if the case is found against the party who sought the CCO. An applicant would not therefore have licence to incur a high legal spend and recover this from the other party.
-
The process for applying for a CCO (if the claim form was filed after 8 August 2016) is now prescribed in the Civil Procedure Rules (CPR 46.16-19), introduced by the Civil Procedure (Amendment No. 2) Rules 2016. An applicant must submit a notice, along with evidence in reference to the new statutory requirements and a summary of financial resources and the costs the parties are likely to incur.
We will be watching carefully for the court's interpretation and application of the new 'public interest' test and whether this has a knock-on effect on the number of CCOs imposed. If your organisation or authority is concerned about the consequences of CCOs we would be happy to discuss this development with you.