Costs
7.204A tribunal has no power to award costs without authority,
1Jones v Department of Employment [1989] QB 1 at 25; R(FC) 2/90 in the Commissioner’s supplementary reasons. including power to award pro bono costs under the Legal Services Act 207 s194.
2Raftopoulou v Commissioners for Her Majesty’s Revenue and Customs [2015] UKUT 630 (TCC). Possible reforms of the rules have been suggested in a report by Warren J.
7.205Under TCEA, costs of and incidental to all proceedings are in the discretion of the tribunal in which the proceedings take place (s29(1)) and the tribunal has full power to determine by whom and to what extent costs are to be paid (s29(2)). This includes, by virtue of TCEA s25(2)(c), the power to order security for costs,
3Blada Ltd (in liquidation) v Commissioners for Her Majesty’s Revenue and Customs [2013] UKUT B7 (TCC) at [7]. and to make protective costs orders, costs capping orders and appeal costs orders.
4Drummond v Commissioners for Her Majesty’s Revenue and Customs [2016] UKUT 0221 (TCC).7.206This is subject to the rules of procedure (s29(3)). Under the rules of procedure, there are four costs regimes: no costs; wasted costs; unreasonable costs; and full costs. TCEA Sch 5 para 12 also authorises the rules to make provision regulating ancillary matters relating to costs.
7.207According to
McPherson v BNP Paribas (London Branch),
5[2004] ICR 1398. the proper approach on an appeal against a costs order is that:
Unless the discretion has been exercised contrary to principle, in disregard of the principle of relevance or is just plainly wrong, an appeal against a tribunal’s costs order will fail.
6[2004] ICR 1398 at [26]. No power to order costs
7.208There is no power to order costs in these cases:
•mental health cases under HESC Rules (r10(2));
•any cases under SEC Rules (r10) and WPAFC Rules (r10).
7.209Even if costs are available, it is not the usual practice to award costs in cases involving children.
7R v R (Costs: Child Case) [1997] 2 FLR 95 at 98, per Staughton LJ.Order for wasted costs
7.210There is power to make a wasted costs order in these cases:
•cases under GRC Rules (r10(1)(a));
•cases other than mental health cases under HESC Rules (r10(1)(a));
•cases under IAC Rules (r9(2)(a));
•any cases under PC Rules (r13(1)(a));
•any cases under Tax Rules (r10(1)(a)).
7.211Wasted costs are costs order against a legal representative under TCEA s29(4):
(4)In any proceedings mentioned in subsection (1), the relevant Tribunal may–
(a)disallow; or
(b)(as the case may be) order the legal or other representative concerned to meet, the whole of any wasted costs or such part of them as may be determined in accordance with Tribunal Procedure Rules.
(5)In subsection (4) ‘wasted costs’ means any costs incurred by a party–
(a)as a result of any improper, unreasonable or negligent act or omission on the part of any legal or other representative or any employee of such a representative; or
(b)which, in the light of any such act or omission occurring after they were incurred, the relevant Tribunal considers it is unreasonable to expect that party to pay.
(6)In this section ‘legal or other representative’, in relation to a party to proceedings, means any person exercising a right of audience or right to conduct the proceedings on his behalf.
8The equivalent for the courts is section 51(6)–(7) of the Senior Courts Act 1981. 7.212A wasted costs order is exceptional and tribunals should proceed with caution before making one.
9Peter Gibson LJ in Byrne v Sefton Health Authority [2002] 1 WLR 775 at [39]. A party may apply for an order against that party’s own representative or the other party’s.
10Brown v Bennett (No 2) [2002] 1 WLR 713. Although the order may have a penal effect on the representative, it can only be made in respect of costs caused by the representative’s conduct.
11Ridehalgh v Horsefield [1994] Ch 205 at 237.7.213The meaning of ‘improper, unreasonable or negligent’ was discussed by the Court of Appeal in
Ridehalgh v Horsefield:
12[1994] Ch 205.‘Improper’ means what it has been understood to mean in this context for at least half a century. The adjective covers, but is not confined to, conduct which would ordinarily be held to justify disbarment, striking off, suspension from practice or other serious professional penalty. It covers any significant breach of a substantial duty imposed by a relevant code of professional conduct. But it is not in our judgment limited to that. Conduct which would be regarded as improper according to the consensus of professional (including judicial) opinion can be fairly stigmatised as such whether or not it violates the letter of a professional code.
‘Unreasonable’ also means what it has been understood to mean in this context for at least half a century. The expression aptly describes conduct which is vexatious, designed to harass the other side rather than advance the resolution of the case, and it makes no difference that the conduct is the product of excessive zeal and not improper motive. But conduct cannot be described as unreasonable simply because it leads in the event to an unsuccessful result or because other more cautious legal representatives would have acted differently. The acid test is whether the conduct permits of a reasonable explanation. If so, the course adopted may be regarded as optimistic and as reflecting on a practitioner’s judgment, but it is not unreasonable.
The term ‘negligent’ … should be understood in an untechnical way to denote failure to act with the competence reasonably to be expected of ordinary members of the profession.
13[1994] Ch 205 at 232–233.7.214The representative’s defence may be hampered by an inability to produce material that is covered by privilege. This must be allowed for when deciding whether the conditions for a wasted costs order have been established.
14Medcalf v Mardell [2003] 1 AC 120.7.214If the tribunal’s consent is required for a withdrawal, it retains jurisdiction to make a wasted costs order until it gives consent.
15Okondu and Abdussalam v Secretary of State for the Home Department [2014] UKUT 0377 (IAC) at [35].Order for unreasonable costs
7.216There is power to make an order for costs if a party or representative has acted unreasonably in bringing, defending or conducting proceedings in these cases, and if a decision, direction or order of the Charity Commission was unreasonable:
•cases under GRC Rules (r10(1)(b) and (c));
•cases other than mental health cases under HESC Rules (r10(1)(b));
•cases under IAC Rules (r9(2)(b));
•cases under PC Rules (r13(1)(b));
•any cases under Tax Rules (r10(1)(b)).
7.217The Court of Appeal explained the proper approach to this power in
Yerrakalva v Barnsley Metropolitan Borough Council.
16[2012] ICR 420 at [39] and [41]. The tribunal has to look at the whole picture of what happened in the case and to decide whether there has been unreasonable conduct in bringing, defending or conducting the case. In doing this, it has to identify the conduct, what was unreasonable about it and what effects it had. It can be dangerous to adopt an over-analytical approach. There need not be a precise causal link between the unreasonable conduct in question and the specific costs being claimed. The tribunal should focus on applying the language of the rules.
17Sud v London Borough of Ealing [2013] EWCA Civ 949 at [75].7.218For the meaning of ‘unreasonable’, see the cases above on wasted costs.
18The authorities are used interchangeably in Buckinghamshire County Council v ST [2013] UKUT 468 (AAC), quoted in DK v NHS England [2014] UKUT 0171 (AAC).7.219A claimant who withdraws a claim may have conducted proceedings unreasonably so as to be liable for costs. The issue in such a case is not whether the withdrawal was unreasonable, but whether the proceedings had been conducted unreasonably.
19McPherson v BNP Paribas (London Branch) [2004] ICR 1398.7.220There is no presumption that a regulator who acts reasonably in bringing or defending proceedings should pay the costs of a successful party, at least at first instance.
20R (Perinpanathan) v City of Westminster Magistrates’ Court [2010] 4 All ER 680.7.221The fact that a tribunal ultimately decides that it was perverse to pursue an argument does not necessarily mean that it was unreasonable to do so; the issue is not to be decided with the benefit of that hindsight.
21Buckinghamshire County Council v ST [2013] UKUT 468 (AAC) at [26].7.222The Court of Appeal has held that: (i) a party’s ability to pay is not a relevant factor; and (ii) an award should cover as a minimum the costs attributable to the unreasonable behaviour.
22Kovacs v Queen Mary and Westfield College [2002] ICR 919.7.223If the tribunal makes a costs order under these rules, it should explain the reasons for, and the basis of, the award.
23Lodwick v London Borough of Southwark [2004] ICR 884 at [23]–[27]. Their purpose is to compensate, not to punish.
24Davidson v John Calder (Publishers) Ltd [1985] ICR 143 at 146.Order for full costs and reimbursement of fee
7.224There is power to order full costs under PC Rules r13(1)(c) in land registration cases and in cases under Tax Rules r10(1)(c) and (d). Rule 10(1)(c) deals with Complex cases in which the taxpayer has not requested protection from liability for costs; rule 10(1)(d) makes similar provision for MP expenses cases. There is power under IAC Rules for the tribunal, if it allows an appeal, to order the Secretary of State to pay costs in order to reimburse fees.
7.225The normal rule is that the successful party will be awarded costs, provided that it is possible to identify who that party is.
25See the analysis in AL (Albania) v Secretary of State for the Home Department [2012] 1 WLR 2898 at [23]. This does not apply to regulatory proceedings.
26Baxendale-Walker v Law Society [2008] 1 WLR 426.Liability in the Upper Tribunal
7.226Costs in the Upper Tribunal are governed by UTR r10.
27See also Lands Rules r10. In essence, the Upper Tribunal’s powers reflect the power of the First-tier Tribunal in respect of the jurisdiction in question. However, the Upper Tribunal may always make an award of costs in these cases: judicial review proceedings; if the conditions for a wasted costs are satisfied; if the tribunal considers that a party or its representative has acted unreasonably in bringing, defending or conducting proceedings; and in a financial services case if the decision referred was unreasonable.
Costs in judicial review proceedings in the Upper Tribunal
7.227In judicial review proceedings that are within the exclusive jurisdiction of the Upper Tribunal, the tribunal should adopt the same approach to costs as would be taken on an appeal from the tribunal that is the respondent to the proceedings.
28R (LR) v First-tier Tribunal (HESC) [2013] UKUT 0294 (AAC). The same approach has been applied to the Upper Tribunal’s judicial review jurisdiction in criminal injuries compensation.
29H v First-tier Tribunal and CICA [2014] UKUT 0338 (AAC).7.228In judicial review proceedings that are transferred to the Upper Tribunal by the High Court in exercise of its discretionary power, the tribunal follows the principles that apply in the Administrative Court.
30R (MM and DM) v Secretary of State for Work and Pensions [2015] UKUT 0566 (AAC).7.229A defendant who successfully resists permission being given to bring judicial review proceedings is entitled to the costs of filing an acknowlegement of service and summary grounds,
31R (Mount Cook Land Ltd) v Westminster City Council [2003] EWCA Civ 1346 at [76(1)]. but not the costs of providing full argument on the substanative merits of the case.
32R (Davey) v Aylesbury Vale District Council [2008] 1 WLR 878 at [32]–[33]. A solicitor in private practice would not be entitled to the costs of supervising the preparation of the acknowledgement and summary grounds from legal aid. There is an argument that, by parity of reasoning, the Government Legal Department should not be entitled to recover that element of its costs.
7.230A successful defendant who has attended an oral hearing will only recover the costs of doing so in exceptional circumstances.
33R (Mount Cook Land Ltd) v Westminster City Council [2003] EWCA Civ 1346 at [76(2)–(7)].7.231In
R (M) v Croydon London Borough Council,
34[2012] 1 WLR 2607. the Court of Appeal analysed the principles that apply to an application for costs when proceedings have been settled:
60. Thus, in Administrative Court cases, just as in other civil litigation, particularly where a claim has been settled, there is, in my view, a sharp difference between (i) a case where a claimant has been wholly successful whether following a contested hearing or pursuant to a settlement, and (ii) a case where he has only succeeded in part following a contested hearing, or pursuant to a settlement, and (iii) a case where there has been some compromise which does not actually reflect the claimant’s claims. While in every case, the allocation of costs will depend on the specific facts, there are some points which can be made about these different types of case.
61. In case (i), it is hard to see why the claimant should not recover all his costs, unless there is some good reason to the contrary. Whether pursuant to judgment following a contested hearing, or by virtue of a settlement, the claimant can, at least absent special circumstances, say that he has been vindicated, and, as the successful party, that he should recover his costs. In the latter case, the defendants can no doubt say that they were realistic in settling, and should not be penalised in costs, but the answer to that point is that the defendants should, on that basis, have settled before the proceedings were issued: that is one of the main points of the pre-action protocols. …
62. In case (ii), when deciding how to allocate liability for costs after a trial, the court will normally determine questions such as how reasonable the claimant was in pursuing the unsuccessful claim, how important it was compared with the successful claim, and how much the costs were increased as a result of the claimant pursuing the unsuccessful claim. Given that there will have been a hearing, the court will be in a reasonably good position to make findings on such questions. However, where there has been a settlement, the court will, at least normally, be in a significantly worse position to make findings on such issues than where the case has been fought out. In many such cases, the court will be able to form a view as to the appropriate costs order based on such issues; in other cases, it will be much more difficult. I would accept the argument that, where the parties have settled the claimant’s substantive claims on the basis that he succeeds in part, but only in part, there is often much to be said for concluding that there is no order for costs. … However, where there is not a clear winner, so much would depend on the particular facts. In some such cases, it may help to consider who would have won if the matter had proceeded to trial, as, if it is tolerably clear, it may, for instance support or undermine the contention that one of the two claims was stronger than the other. …
63. In case (iii), the court is often unable to gauge whether there is a successful party in any respect, and, if so, who it is. In such cases, therefore, there is an even more powerful argument that the default position should be no order for costs. However, in some such cases, it may well be sensible to look at the underlying claims and inquire whether it was tolerably clear who would have won if the matter had not settled. If it is, then that may well strongly support the contention that the party who would have won did better out of the settlement, and therefore did win.
7.232A successful party should not be deprived of costs just because it is now too late for the tribunal to provide an effective remedy.
35R (Hunt) v North Somerset Council [2015] 1 WLR 3575 at [17].