Western Saharan Campaign UK v Revenue And Customs

Where a claimant succeeds in domestic judicial review proceedings, the ordinary costs principle may include costs incurred in an incidental reference to the Court of Justice of the European Union. A protective costs order must be construed according to the ordinary meaning of its terms and context. Non-participation by a defendant in the reference does not generally prevent recovery of the claimant’s incidental costs, particularly where the defendant chose to allow other parties to advance its position by proxy.

The claimant brought two related judicial review claims concerning the application of EU agreements to goods from, and fisheries in, Western Sahara. Mr Justice Blake granted a reference to the CJEU. The reference was sent to Luxembourg on 27 April 2016. Following Council v Front Polisario [2016] EUECJ C-104/16, the first two questions fell away. The CJEU subsequently answered the fisheries question favourably to the claimant and left costs to the national court.

The substantive dispute was resolved by agreed declarations. The remaining issue was whether the claimant could recover costs incurred after the reference, despite a protective costs order and the defendants’ non-participation in Luxembourg.

1. Costs order. The claimant had been completely successful in the domestic litigation. Its costs of the CJEU reference were incidental to the domestic judicial review and were therefore recoverable in principle.
2. Construction of the protective costs order. The order capped the defendants’ liability for costs incurred up to and including the substantive hearing, together with questions for a preliminary ruling which might be settled thereafter. The word “settled” meant drafted and perfected, rather than adjudicated. The order therefore did not encompass all costs of the subsequent CJEU proceedings within the £66,000 cap.
3. Non-participation in the CJEU. The defendants’ decision not to participate in the reference did not affect their liability for the claimant’s incidental costs. They had chosen to allow the Commission and Council to advance their position by proxy. Non-participation was rarely, if ever, a defence to a costs claim.
4. VAT. The £66,000 protective costs figure was exclusive of VAT. The calculations on which the order was based had used figures stated without VAT, and the omission of an express qualification could potentially have been corrected under Civil Procedure Rules 1998 CPR 40.12.
5. The claimant was awarded its costs from 27 April 2016, to be assessed on the standard basis if not agreed. The agreed declarations recorded that neither relevant EU agreement applied to Western Sahara or its adjacent waters, and that HMRC had erred in law in failing to investigate and query the stated origin of imported products.

The judgment describes earlier stages of the same litigation. In R (on the application of Western Sahara Campaign UK) v HM Revenue and Customs [2015] EWHC 2898 (Admin), Mr Justice Blake granted a reference to the CJEU. The present judgment determined the consequential costs issues.