Leeds City Council v Leeds District Magistrates & Anor

A magistrates’ court exercising a statutory discretion to award costs after a successful licensing appeal must apply the relevant costs principles and give adequate reasons. The fact that the licensing authority’s decision was wrong does not, by itself, justify an adverse costs order. The court must identify findings showing why the authority acted unreasonably or otherwise on grounds that were not reasonably sound, while having regard to the protection of public authorities acting properly in the public interest. Reasons must enable the parties and a reviewing court to understand the basis of the decision. Where no adequate reasons or supporting findings are provided, the costs order is unlawful and may be quashed. The ordinary position after a successful appeal is that no costs are awarded, subject to justified circumstances.

Leeds City Council refused a premises licence for a Shell service station under the Licensing Act 2003. On appeal, Leeds District Magistrates found the licensing authority’s decision wrong and granted the licence. They subsequently ordered the Council to pay the interested party’s costs of £19,821.75, without giving oral or written reasons.

The Council sought judicial review of the costs order, arguing that the magistrates had applied the wrong principles, that the order was irrational, and that the failure to provide reasons breached natural justice. The magistrates were given further opportunities to explain the order but supplied no reasons. The central issue was whether the costs order could stand without adequate reasons and findings justifying departure from the ordinary approach.

1. Claim succeeded. The magistrates’ costs order was quashed.
2. Under section 181(2) of the Licensing Act 2003, the magistrates had a discretion to make such order as to costs as they thought fit. That power was materially equivalent to the power under section 64(1) of the Magistrates’ Courts Act 1980.
3. The principles in City of Bradford Metropolitan District Council v Booth [2000] EWHC 444 (Admin) applied. Costs need not automatically follow the event. Where a public authority has acted honestly, reasonably, properly and on grounds that reasonably appeared sound in exercising its public duty, the court must consider both the private party’s financial prejudice and the need to protect responsible public decision-making from undue financial exposure.
4. The appeal judgment did not provide adequate reasons for the later costs order. The finding that the licensing authority’s decision was wrong was insufficient. The magistrates had accepted that the police officer’s calculations were made in good faith and had not found unreasonable conduct by the Council or that it had acted on unsound grounds.
5. The principles concerning costs in public-law proceedings were also summarised in R (Perinpanathan) v City of Westminster Magistrates’ Court and another [2010] EWCA Civ 40. Although conduct may justify an adverse order, the necessary findings and reasons had not been made here. The appeal approach was governed by R (Hope and Glory Public House Limited) v City of Westminster Magistrates’ Court and others [2011] EWCA Civ 31, under which the magistrates had to be satisfied that the licensing authority’s decision was wrong before interfering with it.
6. The default position following a successful licensing appeal was that no costs should be awarded. The interested party was ordered to pay the Council’s judicial review costs of £6,278.55.

• Leeds District Magistrates’ Court: allowed Shell’s appeal against refusal of the premises licence and ordered Leeds City Council to pay £19,821.75 costs, without giving reasons.
• High Court (Administrative Court): quashed the costs order and ordered the interested party to pay the Council’s costs.