London Borough of Newham, R (on the application of) v Dodds

Where a private party successfully challenges an administrative licensing decision made by a public authority acting honestly, reasonably and in the public interest, the starting point on costs is ordinarily no order for costs. Success alone does not justify an award. The court must consider the particular circumstances, including any substantial and exceptional financial hardship to the private party and the need to protect sound public decision-making from undue financial exposure. A costs order may be justified by other particular circumstances, including unreasonable conduct. A magistrates’ court must exercise its statutory costs discretion according to those principles. It is an error to treat the authority’s decision being wrong as automatically making costs follow the event.

The London Borough of Newham challenged a costs order made by a District Judge in licensing appeals brought by an interested party against conditions imposed on alcohol licences. The District Judge rejected allegations of bad faith and did not find the council’s decision unreasonable, but ordered the council to pay £5,350 after concluding that its original licensing decisions were wrong.

The council applied for the magistrates to state a case. The application was refused as frivolous. On judicial review, the council abandoned its second proposed question and asked the High Court to determine whether the costs order was legally erroneous and whether the magistrates should have stated a case.

1. Procedure. Under Magistrates’ Court Act 1980, section 111(5), “frivolous” means futile, misconceived, hopeless or academic. The application to state a case was plainly not frivolous. However, following R (Griffin) v Richmond Magistrates’ Court [2008] 1 WLR 1525 and Sun World Ltd v Hammersmith & Fulham London Borough Council [2007] 1 WLR 2102, the High Court could determine the legal question itself because no further findings of fact were needed and the magistrates’ reasons made the issue apparent.
2. Costs principle. Section 181(2) of the Licencing Act 2003 conferred a broad but principled discretion. The approach in City of Bradford Metropolitan District Council v Booth [2000] EWHC Admin 444, applied and approved in later authority, was well established. Where a private party succeeds against an honestly and reasonably made public regulatory decision, the default position is no order for costs. The court must consider all relevant circumstances, including substantial and exceptional financial hardship and the need to encourage public authorities to make and stand by sound decisions.
3. Error in the District Judge’s approach. The District Judge rejected the claims of virtual success and bad faith, identified no unreasonable or improper conduct by the council, and found no evidence of financial hardship or other special circumstances. The unnecessary work identified was attributable to the private party’s conduct and could not justify costs in his favour. By awarding costs because the council’s original decision was wrong, subject only to deducting wasted costs, she effectively treated costs as following the event. That was contrary to the governing principle.
4. Costs of the judicial review. The magistrates should have accepted that the application to state a case was not frivolous. Their refusal and subsequent attempt to add justifications for the original costs order justified a contribution to the council’s costs. The magistrates were ordered to pay £2,000, subject to provision of a costs schedule within seven days and liberty to object within fourteen days.

The claim was a first-instance judicial review of a costs order made by a District Judge sitting in the Stratford Magistrates’ Court. Permission to proceed was granted by HHJ Gosnell, sitting as a Deputy Judge of the High Court, on 30 March 2011. The Administrative Court determined the remaining legal question directly rather than ordering the magistrates to state a case.