In re appeals by Governing Body of JFS

The Supreme Court refused the respondent's application for a protective costs order and declared that the Legal Services Commission should continue to provide public funding for the respondent's representation in this appeal. The court held that the Commission's decision to condition continued funding on the obtaining of a protective costs order was incompatible with the statutory scheme for legal aid and was irrational in the Wednesbury sense in the circumstances of this case. Key statutory material considered included the Access to Justice Act 1999 (in particular section 11 and the duty to prepare a Funding Code under section 8) and the Community Legal Service (Cost Protection) Regulations 2000 (regulation 5(3)(d)). The court applied and distinguished earlier authorities on protective costs orders (notably R (Corner House Research) v Secretary of State for Trade and Industry and Weaver v London Quadrant Housing Trust) and found that the publicly funded respondent had a legitimate expectation that funding would continue while an unsuccessful party pursued an appeal, given (a) the risk of substantial future costs if funding were withdrawn, (b) the respondent's continuing personal and public interest in the outcome, and (c) the public importance of the issues to be resolved.

This is a procedural application under rule 30 of the Supreme Court Rules 2009 by the respondent (E) for a protective costs order preventing the appellants (the Governing Body of JFS and the United Synagogue) from recovering costs from E or from the Legal Services Commission (the Commission). The background is that Munby J in the High Court found JFS in breach of its duty under section 71 of the Race Relations Act 1976 in relation to school admissions; the Court of Appeal allowed E's appeal on discrimination grounds ([2009] EWCA Civ 626) and ordered costs in proportions against JFS and the United Synagogue. The appellants obtained leave to appeal to this Court. The Legal Services Commission funded E in the courts below but indicated it would refuse further funding for the Supreme Court appeal unless E procured protection against a costs order in the appellants' favour.

The issues framed were (i) whether the court should make a protective costs order for E in respect of the appellants' costs in this Court, and (ii) whether the Legal Services Commission was entitled to refuse continued funding unless such an order were obtained. The court considered principles drawn from earlier authorities on protective costs orders (Corner House and Weaver) and analysed the statutory scheme for legal aid: the Access to Justice Act 1999 (sections 7, 8 and 11), the Funding Code prepared under section 8 and the Community Legal Service (Cost Protection) Regulations 2000 (regulation 5(3)(d)).

The reasoning was that, while protective costs orders may be appropriate in some public interest cases, the decisive question here was whether the Commission's stance was compatible with the statutory scheme and lawful. The court emphasised (a) the legitimate expectation created when a litigant has been publicly funded and succeeds in the court below, (b) the need to consider access to justice and the client's Article 6 interests at a late stage, and (c) that withdrawing funding in these circumstances would expose the publicly funded litigant to a substantial risk of future costs and risk shutting him out of the appeal, thereby undermining public interest resolution of important discrimination issues. The court concluded that the Commission's decision was irrational and unlawful and therefore refused the protective costs order application but declared the Commission should continue funding the appeal. The Commission was ordered to pay the costs of this application. The court also made an anonymity direction for the child concerned.

The application for a protective costs order was refused. The court held that the Legal Services Commission's decision to condition continued funding on the obtaining of a protective costs order was incompatible with the statutory scheme and unreasonable in the circumstances. The court declared that the Commission should continue to provide public funding for the respondent's representation in this appeal and ordered the Commission to pay the costs of this application.

High Court (Munby J): [2008] EWHC 1535/1536 (Admin) (challenge to JFS admissions; breach of section 71 found). Court of Appeal: E's appeal allowed on discrimination grounds [2009] EWCA Civ 626; costs ordered in proportions (50% JFS, 20% United Synagogue, 30% others). Leave to appeal to the House of Lords was refused in one respect, but an appeal committee gave leave to the Governing Body and Panel to appeal to this Court (as recorded in the judgment). The present proceedings were heard in the Supreme Court on 1 October 2009 and judgment given 14 October 2009.