Croyde Area Residents Association, R (On the Application Of) v North Devon District Council

An Aarhus costs cap expressed as £35,000 plus VAT may be varied where the order was agreed on the basis of the then-understood meaning of Civil Procedure Rules r 45.43, and that understanding has subsequently been authoritatively changed. The court may vary the consent order so that it reflects the proper meaning of the rule and the parties’ presumed intention. The parties’ status and resources may justify granting a protective costs cap, but they do not determine whether the cap includes VAT. Permission to appeal may be left to the Court of Appeal where the issue is appropriate for that court, while delay remains a matter for the judge’s discretion.

The claimant, a local residents group, brought an Aarhus environmental claim against the defendant, with the interested party also potentially liable for costs. The parties agreed a consent order capping liability at £35,000 plus VAT. Following the Court of Appeal’s decision in R (Friends of the Earth) v Secretary of State for Transport [2021] EWCA Civ 13, which held that the cap under Civil Procedure Rules r 45.43 was inclusive of VAT, the interested party sought variation of the order. The outstanding issues were whether the order should be varied and whether permission to appeal should be granted.

1. Variation of the costs order. The consent order was phrased as £35,000 plus VAT because that reflected the parties’ understanding of Civil Procedure Rules r 45.43 when the order was agreed. The subsequent decision in R (Friends of the Earth) v Secretary of State for Transport [2021] EWCA Civ 13 established that the statutory cap was inclusive of VAT. The interested party sought variation, rather than construction, of the order. The argument that the Court of Appeal had not been construing this particular order was therefore irrelevant.
2. The fair course was to vary the order. If the order had been agreed after the Court of Appeal’s decision, the parties would not have agreed to exclude VAT. Variation made the order reflect the proper meaning of the rule and the parties’ intention at the time. The claimant’s contention that the application was too late did not outweigh that conclusion. The consent order was accordingly varied so that the total costs liability was £35,000 inclusive of VAT.
3. The claimant’s status as a local residents group and the interested party’s status as a company were relevant to the grant of the protective costs cap at the level provided by the rules. They did not affect the separate VAT issue, which had been decided by the Court of Appeal.
4. Permission to appeal. Although the statutory bar issue was interesting, the judge considered it appropriate to leave permission to appeal to the Court of Appeal. The delay issue was a matter within the judge’s judicial discretion, applying the principles in Thornton Hall. Permission was therefore not determined in favour of the applicant at first instance.