Costs News

19 September 2019
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Licensing Act allowed district judge to make non-party costs orders, says High Court

A district judge was entitled to make a non-party costs order in a licensing case, the High Court has ruled, but the failure to give that party proper notice of the application constituted a breach of natural justice.

In Aldemir v Cornwall Council [2019] EWHC 2407 (Admin), Cornwall Council revoked the licence of a bar in Newquay run by Eden Bar Newquay Ltd (EBNL), owned by a Cyprus-based man whose brother, Memet Aldemir, was the bar’s designated premises supervisor.

District Judge Baker rejected an appeal under section 181 of the Licensing Act 2003 – heavily criticising Mr Aldemir in the process – and made a costs order against him in person, after finding that he was the driving force behind EBNL. “There are times when a court can look behind the veil of incorporation and, in my view, Mr Aldemir is de facto Eden Bar Newquay Ltd,” she ruled, ordering him to pay costs of £31,000.

After the application for a non-party costs order was made, without notice, she did not accede to a request for the hearing to be adjourned and instead gave EBNL’s counsel 15 minutes to take instructions from Mr Aldemir by phone.

On appeal by way of case stated, Mr Justice Swift in the Administrative Court in Bristol considered whether the court had the power to make a non-party costs order under section 181(2), which simply permits the court to make “such order as to costs as it thinks fit”.

He said it did – absent section 181(2), the court’s powers would have been governed by section 64 of the Magistrates' Courts Act 1980, which expressly restricts magistrates to making orders against either complainants or defendants. The contrast with this “prescriptive approach… is strongly indicative of the conclusion that the power at section 181(2) is to be construed as including a power to make non-party costs orders”, he said.

However, he found that the failure to give Mr Aldemir fair warning of the application was a failure of natural justice. The district judge had said she continued with the hearing because Mr Aldemir's behaviour in the proceedings had already caused significant delay and he was represented.

Swift J said: “I can fully understand District Judge Baker's frustration at the way in which Mr Aldemir had conducted himself during the litigation. Nevertheless, an application for costs against a non-party is a course of action that is out of the ordinary and can, as was the case here, lead to significant financial consequences. It is important that such an application is heard and determined in accordance with a fair procedure.

“There is no need for anything elaborate; there are no particular hard and fast rules; but the principles of natural justice must be observed. The person against whom the application is made must have fair notice of the application and the grounds on which it is made, and a fair opportunity to respond to the application. I do not consider those principles were observed in this case.”

The judge said that, where a party intended, if successful, to make a non-party costs application, “there is no reason why it cannot or should not give notice of that intention well in advance of the moment the application falls to be made”. This did not happen here and Mr Aldemir should have been given more than 15 minutes to respond.

The lack of notice put his advocate, an experienced licensing solicitor, in “a difficult if not impossible situation”. Swift J said: “No doubt in an effort to assist the court, he spoke to Mr Aldemir briefly and then made such response to the applications as he could. But those steps in the circumstances of this case provide only the barest appearance of a fair procedure. The substance of a fair procedure was lacking.”

He added: “In most if not all cases, it will be good practice for the grounds on which a non-party costs application is made to be reduced to writing; to be provided to the respondent to the application before the application is made; and for the application to be heard and determined only after the non-party has had the chance to consider the grounds and respond to them.”

The district judge should have adjourned the application for a short period, “in all likelihood, for no more than a day”, to allow this to happen.

Swift J ruled that the costs order should be set aside and the application reconsidered.

Philip Kolvin QC and David Dadds Solicitor-Advocate (instructed by Dadds) for the claimant; Susan Cavender (instructed by Cornwall Council, Legal Services) for the defendant.

 

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