Costs News

16 May 2019
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Judge refuses costs-capping order for crowd-funded JR with wealthy backers

The High Court has rejected an application for a costs-capping order (CCO) in favour of an impecunious company with funding from the website CrowdJustice but also wealthy individual backers who it concluded did not want to fund the litigation beyond third-party support, rather than were unable to.

In R (on the application of We Love Hackney Limited) v London Borough of Hackney [2019] EWHC 1007 (Admin), the claimant company has permission to apply for judicial review of the decision of the defendant to adopt a revised statement of licensing policy, which would change the core hours policy for licensed premises within the borough.

Though Mr Justice Lavender granted permission on the papers, he rejected an application to cap any liability of the claimant for the defendant's costs at £35,000, and any liability of the defendant for the claimant's costs to reasonable hours at the rates paid to counsel by the Government Legal Department and the rates for solicitors charged by the department.

He concluded that they were not public interest proceedings and, even if they were, this would not be an appropriate case for a CCO because the claimant was formed by, among others, wealthy individuals who have a commercial interest in the litigation.

The claimant renewed the application for an order at an oral hearing before Mrs Justice Farbey, while the defendant sought security for costs. She noted: “At the core of both the claimant's application for a CCO and the defendant's application for security for costs is the claimant's impecuniosity.”

The judge was told that We Love Hackney was initially an association of local residents and business owners campaigning about Hackney's night-time economy, and became a company more recently, currently owned by 10 Hackney residents.

An initial £20,000 crowdfunding target, through CrowdJustice, has been met and the company continues to raise further money in order to reach its ‘stretch target’ of £53,000.

“The evidence which I have seen suggests that multiple donors have each made comparatively small donations. The generosity of members of the public has been at the forefront of my mind and has weighed heavily with me. I am nonetheless obliged to consider the evidence as a whole and to apply the legislation that governs CCOs.”

Farbey J found that some of the 10 shareholders of We Love Hackney have a commercial interest in the outcome of the proceedings, as well as the financial resources to fund them. Further, the case did not concern an issue or point of law of general public importance; the essential challenge was to the way in which the council formulated its specific policy.

It was also hard to measure how significantly the policy would affect people, especially as she was “not persuaded on the evidence before me that any section of the community… speaks with a uniform voice about the effects of the [policy]”.

Section 88(6)(b) of the Criminal Justice and Courts Act 2015 says the court may only make a CCO if it is satisfied that, in the absence of the order, the applicant would withdraw the application for judicial review or cease to participate in the proceedings.

While the judge accepted that the claim would be withdrawn, she had also to consider whether this would be reasonable (section 88(6)(c)). “In this regard, it is relevant to note that the claimant’s directors and significant supporters are individuals who have a commercial interest in the proceedings. I do not accept that either they as individuals, or their businesses if commercial advantage warranted it, would individually or together be unable to fund litigation which they say is of great significance to them.

“A number of well-resourced individuals have chosen to litigate the claim via an impecunious company which has taken possession of funds donated by members of the public. Given their individual and cumulative financial resources, I infer that the directors and other backers do not want to fund the litigation beyond the level of third party support, rather than that they are incapable of doing so.

“I do not accept on the evidence before me that the claimant would be forced to withdraw the claim through impecuniosity. In my judgment, absent any compulsion to withdraw through impecuniosity, it would not be reasonable for the claimant to withdraw its application for judicial review. This part of the statutory test for a CCO is not met and, for this reason too, the application for a CCO does not succeed.”

For the same reason, it was “not realistic” to suggest that these people would be denied justice in the absence of a CCO, Farbey J added.

She did grant the application for a security for costs order, however. The defendant sought £106,279 to cover costs up to but not including the substantive hearing. “In all the circumstances, it would be reasonable to order security in the sum of £60,000 representing the defendant's costs to date (about £55,000 not including the costs of the present applications) together with a modest uplift to represent the limited further costs that may be reasonably incurred to prepare for the substantive hearing.”

Philip Kolvin QC and Christopher Knight (instructed by Leigh Day) for the claimant; David Matthias QC and Charles Streeten (instructed by London Borough of Hackney) for the defendant.

Picture credit: Fin Fahey

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