NEW RULES ON COSTS CAPPING
New rules (The Civil Procedure (Amendment No.2) Rules 2016 were passed yesterday which amend CPR Part 3 in relation to costs capping. They are of relatively limited ambit, applying only to Judicial Review applications. They replace protective costs orders in relation to judicial reviews.
- There are now provisions for judicial review costs capping orders and the evidence that must be provided in support of such an application.
- When the applicant is a corporate body the court must consider making directions about the provision of information in relation to members and their ability to provide support for the purposes of proceedings.
- There are provisions which allow variation of the costs capping orders.
There amendments to the rules governing costs capping in judicial review applications. These take account of section 46.16 and 46.17 of the Criminal Justice and Courts Act 2015.
Amendments to Part 3
4. In rule 3.19— (a) for paragraphs (1) and (2), substitute—
“(1) For the purposes of this Section—
(a) ‘costs capping order’ means an order limiting the amount of future costs (including disbursements) which a party may recover pursuant to an order for costs subsequently made; and
(b) ‘future costs’ means costs incurred in respect of work done after the date of the costs capping order but excluding the amount of any additional liability.
There are Guidance Notes which explain the purposes of the Act and of the new rules.
98.Restricting the situations where a costs capping order can be made – A costs capping order limits the costs which a party may recover from another party at the conclusion of the case. In judicial review cases, a particular sort of costs capping order, known as a protective costs order, has been developed, in which costs are typically capped on an “asymmetric” basis, with the amount recoverable by a successful defendant from the applicant being capped at a lower level than the amount recoverable by a successful applicant from the defendant (which may not be capped at all). If such an order has been made and the applicant is unsuccessful in the proceedings to which the order applies, the applicant will only be liable to pay the successful defendant’s costs up to the amount specified in the order, and the defendant will have to cover any balance of its legal costs itself. When making an order capping the applicant’s costs liability, the court may also include a “cross-cap”, limiting (generally at an amount rather higher than the cap on the applicant’s liability) the amount of costs the defendant would be liable to pay the claimant if the claim succeeds. This means that an unsuccessful defendant is only liable to pay the successful applicant’s costs up to the amount in the order and the applicant would cover any remaining costs he or she had incurred.
99.Protective costs orders were developed by the courts, and the principles governing when and on what terms they will be made were re-stated by the Court of Appeal in the case of R (Corner House Research) v Secretary of State for Trade and Industry  EWCA Civ 192(20). The Corner House principles provided for protective costs orders to be for exceptional circumstances in cases concerning issues of public importance. However, over time their use has widened. Sections 88-90 make provision for a codified regime, replacing the regime in case law, to govern the circumstances in which protective costs orders may be made in judicial review proceedings (the position in relation to costs capping in other civil proceedings remaining unchanged). Section 88 provides that costs capping orders in judicial review proceedings can only be made in certain circumstances. Section 89 provides that a court must have regard to the matters set out there when considering whether to make a cost capping order and what the terms of such an order should be. Section 90 enables environmental cases to be excluded from the codified regime provided for in these sections as such cases are governed by a separate regime arising from the Aarhus Convention(21) and the Public Participation Directive.(22)
Judicial review costs capping orders – general
46.16.—(1) For the purposes of this Section—
(a) “judicial review costs capping order” means a costs capping order made by the High Court or the Court of Appeal in accordance with sections 88, 89 and 90 of the 2015 Act; and
(b) “the 2015 Act” means the Criminal Justice and Courts Act 2015.
(2) This Section does not apply to a costs capping order under rule 3.19. (Rule 3.19 makes provision for orders limiting the amount of future costs (including disbursements) which a party may recover pursuant to an order for costs subsequently made.) Applications for judicial review costs capping orders
46.17.—(1) An application for a judicial review costs capping order must—
(a) be made on notice and, subject to paragraphs (2) and (3), in accordance with Part 23; and
(b) be supported by evidence setting out—
(i) why a judicial review costs capping order should be made, having regard, in particular, to the matters at sub-sections (6) to (8) of section 88 of the 2015 Act and sub-section (1) of section 89 of that Act;
(ii) a summary of the applicant’s financial resources;
(iii) the costs (and disbursements) which the applicant considers the parties are likely to incur in the future conduct of the proceedings; and
(iv) if the applicant is a body corporate, whether it is able to demonstrate that it is likely to have financial resources available to meet liabilities arising in connection with the proceedings.
(2) Subject to paragraph (3), the applicant must serve a copy of the application notice and copies of the supporting documents on every other party.
(3) On application by the applicant, the court may dispense with the need for the applicant to serve the evidence setting out a summary of the applicant’s financial resources on one or more of the parties.
(4) The court may direct the applicant to provide additional information or evidence to support its application.
Court to consider making directions
46.18. If the applicant is a body corporate, and the evidence supporting its application in accordance with rule 46.17(1)(b)(iv) sets out that it is unable to demonstrate that it is likely to have financial resources available to meet liabilities arising in connection with the proceedings, the court must consider giving directions for the provision of information about the applicant’s members and their ability to provide financial support for the purposes of the proceedings.
Applications to vary judicial review costs capping orders
46.19.—(1) An application to vary a judicial review costs capping order must be made on notice and, subject to paragraphs (2) and (3), in accordance with Part 23.
(2) Subject to paragraph (3), the applicant must serve a copy of the application notice and copies of any supporting documents on every other party.
(3) If the application is supported by evidence setting out a summary of the applicant’s financial resources, the court may, on application by the applicant, dispense with the need for the applicant to serve such evidence on one or more of the parties.”.
The new rules come into force when the Sections are brought into force.