The Supreme Court has ruled that where a party who has been given leave to bring a judicial review claim succeeds in establishing that the defendant has acted unlawfully, then some good reason would have to be shown why he should not recover his reasonable costs. In giving its decision, the court highlighted the need to consider the wider effect of a costs order in a public law context.
Facts of the case
The case of Hunt v North Somerset Council  UKSC 51 concerned H, a young man who suffered from ADHD and had other difficulties. He applied for judicial review of the Council's decision to reduce its youth services budget as he was concerned about the impact of the cuts on the provision of services for young persons with disabilities and, in particular, on a weekly youth club for vulnerable young people which he used to attend. He argued that the council, when setting its Revenue Budget, had failed to comply with its consultation duties under the Education Act 1996 and its Public Sector Equality Duty (PSED) under s.149 of the Equality Act 2010. His claim was dismissed at first instance and he was ordered to pay the Council's costs.
Court of Appeal decision
On appeal, the Court of Appeal found that the Council had not conducted the sort of focused consultation required by the 1996 Act, nor had it discharged its PSED. However, the court would not grant H the relief sought as it considered that to quash the decision would in effect quash the whole of the Revenue Budget – to make an order of that nature in relation to a budget that had expired, and in respect of which Council Tax had been demanded and levied, would be drastic and detrimental to good administration. The Court ordered H to pay half of the Council's costs of the appeal.
H then appealed to the Supreme Court. He submitted that since the Court of Appeal had held that the Council had failed in its statutory obligations, it should have made a declaration to that effect and should have made an order for costs in his favour.
Supreme Court decision
The Supreme Court allowed H's appeal. On the costs claim, Lord Toulson stated that H had succeeded on both the issues as to the Council's statutory duty and there were wider lessons for local authorities to learn from the case about their duties under each of the relevant sections. The lapse of time, such that the relevant financial year had passed, was not H's fault and to deny him his costs would be likely in practice to dissuade other claimants from pursuing legitimate public law challenges.
While it was highly unusual for the Supreme Court to entertain an appeal on an issue of costs alone, the Court of Appeal had erred in treating the Council as the "successful party". The Council was "successful" only in the limited sense that the findings of failure came too late to do anything about what had happened in the past; it was unsuccessful on the substantive issues regarding its statutory responsibilities.
However, the Supreme Court dismissed H's complaint about the court's failure to make a declaratory order. There was no "must" about making a declaratory order, and if a party did not seek a declaratory order, the court was under no obligation to make or suggest it. However, in circumstances where a public body had acted unlawfully but where it was not appropriate to make a mandatory, prohibitory or quashing order, it would usually be appropriate to make some form of declaratory order to reflect the court's finding; simply to dismiss the claim when there had been a finding of illegality was likely to convey a misleading impression and to leave the claimant with an understandable sense of injustice.
Wider public law issues
His Lordship said that the case also raised wider public law issues. In this case the court had considered that the issues were of sufficient significance to give permission for judicial review, and the ruling of the court, particularly under s.149, contained a lesson of general application for local authorities regarding the discharge by committee members of the Council's equality duty. If a party who had been given leave to bring a judicial review claim succeeded in establishing after fully contested proceedings that the defendant had acted unlawfully, some good reason would have to be shown why he should not recover his reasonable costs.
The Supreme Court therefore set aside the Court of Appeal's order and substituted an order that H should recover two-thirds of his costs both at first instance and in the Court of Appeal.
This is an interesting case in the current environment where there is a growing push back against academic or hypothetical claims or even those which might be described as involving a pyrrhic victory. For example, the new s.31(3C) of the Senior Courts Act 1981 sets out provisions relating to refusal of permission where the outcome for the applicant would not have been substantially different if the conduct complained of had not occurred. Here, however, the Supreme Court emphasised the wider public law issues attached to this case. It is of particular note that the Supreme Court said that the case set out wider learning points for other local authorities in relation to the relevant statutory duties.