Child Poverty Action, R (on the application of) v Lord Chancellors Department

Factual and Procedural Background

These interlocutory applications concern requests for pre-emptive costs orders in two separate judicial review proceedings. Leave to move for judicial review has been granted in both cases. The applicants seek orders that no costs be awarded against them regardless of the outcome. Both respondents refuse to agree to such terms. The applications involve public interest challenges, a category of judicial review where the applicants have no private interest in the outcome but seek to address matters of general public importance. The first case involves a registered charity ("Company A") challenging the refusal of the Lord Chancellor to extend legal aid to certain Social Security Tribunals and Commissioners, which are currently excluded from legal aid. The second case involves two human rights organisations ("Company B" and "Company C") seeking judicial review of the Director of Public Prosecutions' decision not to prosecute individuals for possession of a prohibited weapon, raising issues about the application of the public interest test in prosecutions.

The applications raise novel questions about the principles governing pre-emptive costs orders in public interest judicial review cases. The court was asked to determine whether such orders should be made at the interlocutory stage and under what circumstances. Both applications were heard together, and the court received submissions on the nature of public interest challenges, the applicable legal principles, and the financial implications for the applicants.

Legal Issues Presented

1. Whether the court has jurisdiction to make pre-emptive costs orders in judicial review proceedings involving public interest challenges.
2. What principles should guide the court in deciding whether to grant pre-emptive costs orders in such cases.
3. Whether the facts and circumstances of the two applications justify the making of pre-emptive costs orders.
4. How to balance the general rule that costs follow the event against considerations of public interest and the financial capacity of the parties.

Arguments of the Parties

Applicants' Arguments

• The applications qualify as public interest challenges because the applicants have no private interest in the outcomes but seek to address matters of general public importance.
• The court should be more willing to make pre-emptive costs orders in public interest cases to prevent the chilling effect of potential adverse costs orders deterring genuine public interest litigation.
• The applicants contend that the existing principles governing costs in private law litigation are not fully applicable to public interest challenges and that a departure from the default rule is justified.
• It is argued that the merits of bringing the claim, distinct from the merits of the claim itself, can be assessed at the interlocutory stage to justify a pre-emptive costs order.
• The applicants submit that the respondents have greater financial resources and that, absent a pre-emptive costs order, the applicants would likely discontinue the proceedings, thereby frustrating public interest litigation.
• They also contend that the applications raise novel and important points of law and principle warranting protection from adverse costs orders at this stage.

Respondents' Arguments

• Both respondents concede jurisdiction to make pre-emptive costs orders but dispute the principles and circumstances justifying such orders in these cases.
• They submit that the general rule that costs follow the event should apply, including in public interest challenges, to encourage sensible litigation and avoid misuse of public funds.
• The respondents argue that the applicants do not meet the exceptional threshold necessary for pre-emptive costs orders, as the merits of the claims and their public importance cannot be sufficiently assessed at this interlocutory stage.
• They emphasize that the applicants have some private or direct financial interests, particularly "Company A," undermining their public interest challenge claim.
• The respondents contend that the applications do not raise new points of law or principle justifying a departure from the normal costs rule.
• They request that costs be awarded against the applicants, reflecting their success in opposing the pre-emptive costs applications.

Table of Precedents Cited

Court's Reasoning and Analysis

The court began by affirming the existence of jurisdiction to make pre-emptive costs orders in judicial review proceedings, including those involving public interest challenges, citing established case law. It then carefully defined "public interest challenges" as judicial review cases raising issues of general public importance where applicants lack private interests in the outcome.

The court acknowledged the applicants' submission that public interest challenges warrant a more lenient approach to costs to encourage such litigation and prevent chilling effects. However, it emphasized that the general rule that costs follow the event remains a fundamental principle promoting sensible litigation and protecting parties from unnecessary expense.

In balancing these considerations, the court identified necessary conditions for granting pre-emptive costs orders: (1) the issues must be truly of general public importance, and (2) the court must have sufficient appreciation of the merits to conclude that it is in the public interest to make the order. The court also noted that financial disparity between parties and the likelihood that the applicant would discontinue without protection are relevant factors.

Applying these principles to the two cases, the court found that it lacked sufficient material to conclude that the issues raised were of sufficient public importance or that the merits justified pre-emptive costs orders. The complex legal arguments, particularly in the first case involving legal aid and European law, could not be adequately assessed at this interlocutory stage. In the second case, the factual complexity and the possibility of a narrow decision limited the general public importance of the issues.

The court further observed that the applicants did not convincingly demonstrate that they would discontinue the proceedings absent a pre-emptive costs order, especially as the second case involved two organisations who might continue jointly. The court also rejected the argument that the merits of bringing the claim could be assessed separately from the merits of the claim itself at this stage.

Consequently, the court concluded that the exceptional circumstances required to depart from the basic rule on costs were not present. It dismissed the applications for pre-emptive costs orders but granted leave to appeal, recognizing the general importance of the issues raised.

Holding and Implications

The court DISMISSED the interlocutory applications for pre-emptive costs orders in both judicial review proceedings.

The direct effect of this decision is that the applicants remain potentially liable for the respondents' costs if their judicial review applications fail. The court reaffirmed the fundamental principle that costs generally follow the event, even in public interest challenges, reserving pre-emptive costs orders for truly exceptional cases where the public importance and merits clearly justify such relief at the interlocutory stage.

No new legal precedent was established; rather, the court clarified the stringent conditions under which pre-emptive costs orders may be granted in public interest judicial review cases. The decision underscores the court's cautious approach to departing from established costs rules without a full and mature consideration of the substantive issues.