Viridor Waste Management Ltd & Ors, R (on the application of) v HM Revenue and Customs

Although costs ordinarily follow the event, a court may depart from that rule where an otherwise successful party pursued a distinct issue which failed and generated additional costs. The court should consider whether the issue was reasonably pursued, whether it was separate from the issues on which the party succeeded, and the extent of the additional costs caused by it. Depriving the successful party of its costs of the issue does not automatically require payment of the unsuccessful party’s costs. An order requiring the successful party to pay the other side’s costs is exceptional. Where practicable, a percentage or time-limited costs order may be preferable to an issue-based order.

The claimants’ judicial review application had previously been dismissed in [2016] EWHC 1880 (Admin). This judgment concerned costs only. The defendants were wholly successful, but had relied on a separate allegation that the claimants had failed to put their cards face up on the table. That issue was rejected. The claimants sought an order requiring the defendants to bear both sides’ costs of the issue, or an equivalent percentage order. The central questions were whether the general rule should be displaced, whether the defendants should merely lose their costs of the issue or also pay the claimants’ costs, and how the order should be formulated.

The claimants’ application for judicial review had failed, so the defendants were the successful party. The court nevertheless considered whether to depart from the general rule that the unsuccessful party pays the successful party’s costs.

1. The fact that a successful party loses on an issue does not automatically justify a costs reduction. The issue must be considered in context. A distinct issue pursued by the successful party, which causes additional factual investigation and costs, may justify departure from the general rule.
2. The court may deprive the successful party of the costs attributable to that issue, without requiring it to pay the unsuccessful party’s costs. The latter order is exceptional and requires a suitably exceptional case. Unreasonableness is relevant but is not a pre-condition to making either order.
3. The allegation that the claimants had lacked candour was a distinct issue initiated and pursued by the defendants. It widened the factual inquiry and generated additional costs. Although the issue was unsuccessful, it was not so hopeless that it should never have been pursued. The defendants should therefore bear the additional costs caused by that issue, but should retain their general costs of defending the claim.
4. Under CPR r 44.2(7), the court had to consider whether a proportionate or time-limited order was practicable instead of an order relating only to a distinct part of the proceedings. The appropriate order was for the claimants to pay the defendants’ costs up to 17 July 2015 and 85% of their costs thereafter, assessed on the standard basis if not agreed. The claimants were to bear their own costs.

High Court (Administrative Court): the substantive judicial review claim was dismissed in [2016] EWHC 1880 (Admin). The present judgment determined the consequential costs order.