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Administrative Court takes a hard line on costs applications following settlement
The guidance, which was published on 18 November 2013, reaffirms the approach to judicial review costs set out in M v Croydon  EWCA Civ 595, namely that the assessment of costs will generally depend on the extent to which the claimant has succeeded in obtaining the relief that it sought and the scope and significance of any grounds on which it failed.
The guidance also establishes a number of procedural requirements that parties should comply with before making an application for costs. Specifically, no submissions on costs should be made to the Court following settlement of the proceedings unless:
1. all reasonable avenues of negotiation and compromise have been exhausted;
2. the parties have a clear understanding of why no agreement has been reached and are able lucidly to explain this to the Court; and
3. the party claiming costs is clear (a) that the Court will be able to decide that an order for costs should be made in favour of that party applying the Croydon principles, bearing in mind that unless it is clear that the claimant seeking costs has succeeded on all of the substantive parts of the claim, it is much more likely that there will be no order as to costs, and (b) that the application is a proportionate use of the Court's time.
The guidance also contains a number of directions in respect of the preparation and filing of costs submissions, which will apply absent any special circumstances. They include, among others, the following directions:
1. the applicant must file and serve submissions on costs within 7 days of delivery of the consent order to the Court; the respondent, if contesting that claim, must then file and serve its submissions within 7 days of the applicant's submissions;
2. submissions must be no longer than two A4 pages (and consideration of submissions exceeding two pages will be limited to the first two pages);
3. submissions must confirm that all reasonable endeavours have been used to negotiate a costs settlement and the amount of costs involved in the case, and identify how the Croydon principles apply to the dispute in question; and
4. the Court should be given sight of pre-action correspondence (if not already provided) and other correspondence demonstrating justification for bringing the claim or for not agreeing relief until after the claim was issued.
Where submissions are received out of time they will not be considered. The sanction for failure to comply with the guidance more generally is that the party failing to comply "cannot expect an order for costs to be made in its favour".
The Court's dissatisfaction with current costs practices is clear from the tone of the guidance. That the Court should issue new guidance on cost applications is perhaps unsurprising in light of the wider Jackson Reforms, including a new overriding objective, which places proportionality front and centre when it comes to costs and the allocation of judicial time.
The reassertion in the guidance of the unlikelihood of an order as to costs unless the applicant has succeeded on all substantive parts of the claim may well encourage more dialogue and negotiation. However, it may disincentivise a losing party from conceding on all issues during settlement in an effort to dissuade a future application by the "winner".
The key issue for practitioners, however, will be whether the Court applies the guidance, including the directions in particular, strictly.
The issue of consistency in the judicial application of procedural rules is of wider relevance in light of the significant changes to the CPR that have been implemented by the Jackson Reforms. In particular, there have already been a number of decisions in which rules have been applied with varying degrees of strictness. It is hoped that the Court of Appeal's decision in Mitchell v News Group Newspapers might lead to the adoption of a more consistent approach by judges (the question for the Court will be whether the Master took too strict an approach in imposing a sanction – in light of Mr Mitchell's failure to file on time, treating his costs budget as comprising only his Court fees – and her subsequent refusal to grant relief from sanctions).
Against the backdrop of the Government's recent proposals for rebalancing the financial incentives in judicial review, the Court's guidance, where effective at reducing its administrative burden, should provide a timely example of how judicial review can be streamlined without necessarily limiting access to justice.
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