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14 July 2023
Since their introduction in 2016, cost capping orders (“CCOs”) have become an established feature of ‘public interest’ judicial review litigation. Invariably, in non-environmental judicial review claims, campaigning groups will seek a CCO as way of limiting a claimant’s potential cost liability to the other parties (principally the defendant) in the dispute. In R (All-Party Parliamentary Group on Fair Business Banking) v The Financial Conduct Authority [2023] EWHC 1662 (Admin), Fordham J helpfully summarised the principles and procedure governing the CCO regime. In this article, we consider that judgment and discuss the form of CCO made by Fordham J. Whilst context specific, Fordham J’s decision is, in our view, noteworthy and should be considered by all judicial review practitioners especially defendant lawyers responding to CCO applications.
The CCO regime is governed by sections 88 to 89 of the Criminal Justice and Courts Act 2015 (the “2015 Act”)[1] and Parts 46.16 to 46.19 of the Civil Procedure Rules (“CPR”). The purpose of the CCO regime is explained in the commentary in the White Book 2023 Vol. 2 at page 2747: CCOs are reserved for cases where there are serious issues of the highest public interest, in cases granted permission for judicial review, which would otherwise not be able to be taken forward.
Pursuant to the statutory regime, there are certain preconditions which need to be satisfied before the Court can make a CCO:
Assuming that these preconditions have been met, the Court is then required to consider, as a matter of discretion, whether it should make a CCO and, if so, on what terms. In doing so, the Court considers the following:
Where a CCO is made, the order must include a limit on the amount a claimant can recover if that claimant enjoys a cost order made in its favour, e.g., following success at trial (section 89(2)).
Public interest proceedings – R (the All-Party Parliamentary Group on Fair Business Banking) v The Financial Conduct Authority [2023] EWHC 1662 (Admin)
As explained above, the Court can only make a CCO where, amongst other things, the underlying judicial review proceedings are “public interest proceedings”. How does the Court determine what are “public interest proceedings”? The 2015 Act requires the Court to adopt the following approach:
First, section 88(7) provides that proceedings are “public interest proceedings” only if:
Second, section 88(8) sets out a non-exhaustive list of the matters which the Court must have regard to when determining whether proceedings are “public interest proceedings”. These matters include:
The CCO regime did not emerge out of a vacuum. Prior to the enactment of the CCO statutory regime, the common law had developed what had become known as “protective costs orders”: see in particular R (Corner House) v Secretary of State for Trade and Industry [2005] EWCA Civ 192 (“Corner House”).
In R (Beety) v Nursing and Midwifery Council [2017] EWHC 3579 (Admin), a case decided shortly after the commencement of the new CCO regime, Ouseley J highlighted (at paragraph 6 of his judgment) the similarities between the statutory regime and the common law regime:
“6. There are specific statutory changes to the regime developed judicially, but it seems to me that, except where specific changes have been made, the language of the statute is couched in terms quite similar to those found in the previous case law and where the case law can continue to provide guidance.”
In R (the All-Party Parliamentary Group on Fair Business Banking) v The Financial Conduct Authority [2023] EWHC 1662 (Admin), Fordham J adopted a similar approach in deciding whether it would be appropriate to grant a CCO. In the proceedings (which relate to a judicial review challenge brought by an All-Party Parliamentary Group in respect of the Financial Conduct Authority’s (“FCA”) decision to not act on the findings of an independent reviewer concerning the interest rate hedging products redress scheme) Fordham J applied, inter alia, Corner House to decide if the proceedings met the requirements of the statutory regime. After considering these authorities, Fordham J held that the proceedings amounted to “public interest proceedings” and that it would be appropriate to make a CCO.
Once the Court has decided to make a CCO, it must decide on what terms to make the order. The CCO must be reciprocal: thus, the CCO must be coupled with an order placing a limit on the amount that a claimant who is successful can recover from a defendant if the claimant ultimately wins the case.
As noted in the introduction to this article, CCOs are increasingly being sought by campaigning groups often in tandem with crowdfunding exercises. This feature was present in the APPG v The Financial Conduct Authority proceedings: the APPG was using crowdfunding as a way of financing the litigation (not only in relation to its own costs but also in the event that it would have to meet an adverse cost order if, for example, it failed at trial). In Stephen Hawking and others v Secretary of State for Health and Social Care and National Health Service Commissioning Board [2018] EWHC 989 (Admin), Cheema-Grubb J held that a successful crowdfunding campaign will not always mean that a CCO is inappropriate. In the APPG judicial review proceedings, Fordham J did not dissent from this approach. However, Fordham J imposed what he described as “Solomon’s solution”:
“I am not prepared to order a zero cap, whether for the APP Group’s costs exposure or for the Authority’s costs exposure. I do not regard that course to be justified, necessary or appropriate. Nor am I ordering caps in fixed amounts. Instead, I am adopting a mechanism which was identified as the Authority’s fallback, albeit that I have adjusted from 50% to 40%. The mechanism involves taking a cap which is a percentage of the funds raised by the APP Group, including those raised already and any raised from here on. It is common ground that my power (s.88(2)) has this flexibility. I am required to impose a reciprocal cap (s.89(2)) and I choose parity: the same 40% of the same funds. In my judgment, this was an ingenious mechanism for the Authority’s lawyers to have put forward as a possible solution, albeit without advocating it as their primary position.”
(paragraph 13)
Fordham J went on to state that this solution “reconciles the public interest imperatives, secures fairness to the parties, recognises the practicalities, incentivises the APP Group to do what it can and should, and gives crystal clarity” (paragraph 14).
Fordham J’s approach is novel. Whilst it provides the claimant with a measure of cost protection, the CCO is not blind to the reality of how the claimant is funding its litigation, through crowdfunding. As a general rule, in a crowdfunded judicial review claim, where a claimant has the benefit of a CCO, the concern – at least from a defendant’s perspective – is that once the claimant has raised funds to meet its costs and the defendant’s costs (which are, by their nature, fixed as set out in the CCO) the claimant no longer is subject to any moderating effect through an open ended cost risk. This can, on occasion, result in a claimant pursuing a more aggressive approach to the litigation, such as filing applications for specific disclosure, without the concern that would ordinarily affect any other party of potentially dealing with an adverse cost order. Once the claimant has the benefit of the CCO, it in effect has carte blanche. The limiting effects that costs otherwise impose on a party are substantially reduced. Of course, this is a generalisation of a potential risk. And in any event the rules of Court and the professional obligations on a party’s representatives should also act as a disciplining effect on a crowdfunded judicial review claimant. However, there are several prominent examples where a crowdfunded CCO protected claimant has pursued what is arguably an aggressive litigation strategy, perhaps because the claimant does not have the same cost concerns as a party without CCO protections. See for example R (Good Law Project Ltd) v Secretary of State for Health and Social Care [2021] EWHC 2595 (TCC), Fraser J at paragraph 5:
“These parties – both the Claimant and the Secretary of State – therefore have a greater interest than most in conducting cost-effective and efficient litigation. There are a number of different sets of proceedings between them. The Claimant raises money by way of donation and crowdfunding. The Secretary of State is, by definition, expending public money. Whether the current stance of these two parties on procedural matters is explained simply by the volume of litigation between them presently, or for other reasons, is not entirely clear. However, the hearing on 21 September 2021 is one of four full-day interlocutory hearings that have, or will have, taken place within the short period July to October 2021. I urge greater co-operation upon the parties. Matters that ought to be agreed are being contested, and this can only vastly increase these parties’ collective expenditure on legal costs.”
Perhaps in part because of this lack of co-operation concern, defendants often oppose CCO applications. As a secondary position, the approach of the FCA in the APPG proceedings is one which other defendants, when faced with a crowdfunded claimant, may wish to consider further. By linking the CCO cap to a % of the funds raised by the claimant in its crowdfunding campaign, the defendant will have some certainty that the claimant will not, once it has reached a certain point in its crowdfunding campaign, enjoy the carte blanche described above. Instead, the claimant remains subject to some cost disciplines in the conduct of the litigation.
In conclusion, whilst context specific, Fordham J’s “Solomon’s solution” is one which defendants should consider further when faced with a CCO application made by a crowdfunded judicial review claimant.
This article is for general awareness only and does not constitute legal or professional advice. The law may have changed since this page was first published. If you would like further advice and assistance in relation to any of the issues raised in this article, please contact us today by telephone or email enquiries@sharpepritchard.co.uk.
[1] Please note that unless otherwise indicated sections referred to in this article are references to sections of the Criminal Justice and Courts Act 2015.
