MAKING UNWARRANTED ASSERTIONS LEADS TO INDEMNITY COSTS – AGAINST A SECRETARY OF STATE

There are numerous cases where the courts have considered conduct that leads to indemnity costs. In Secretary of State for the Home Department v Barry [2018] EWCA Civ 790 the Court of Appeal found that the Home Department’s conduct of an appeal warranted an award of indemnity costs against it. It illustrates the danger of a party obtaining permission to appeal on one ground and then abandoning that ground (without explanation) at the hearing.

THE CASE

The Secretary of State brought a second-tier appeal against a decision of the Upper Tribunal (Immigration and Asylum Chamber).   The Secretary alleged that there had been a systemic failure by the Tribunals to apply the law properly.  However this allegation was not pursued at the appeal itself.  The appeal failed. The Court of Appeal then considered the question of costs.

THE JUDGMENT ON COSTS

 

    1. The parties are agreed that, in the circumstances, the Appellant should have to pay the Respondent’s costs. On behalf of the Respondent Mr Gill applies for those costs to be awarded on an indemnity basis. The relevant test for present purposes, as the Appellant accepts, is whether the conduct of a party was “unreasonable to a high degree”. In this context “unreasonable” does not mean merely wrong or misguided in hindsight: see Kiam v MGN Ltd (No. 2) [2002] EWCA Civ 66[2002] 1 WLR 2810, at para. 12 (Simon Brown LJ).
    2. Mr Gill submits that the Appellant made a serious allegation against the UT, suggesting that the present case was not an isolated instance but potentially raised a “systemic” failure on the part of the UT to correct obvious errors of law by the FTT. He submits that, unlike most litigants before this Court, the Secretary of State has access to statistical and other information which would tend to support or refute that suggestion of a systemic problem. He submits that the Appellant failed to place any such evidence before this Court. He submits further that, having obtained permission to appeal on that basis, the Secretary of State abandoned the argument without explanation.
    3. On behalf of the Appellant Ms Patry accepts that the Appellant should have made clear at an earlier stage that the “systemic failure” argument was no longer to be pursued. She submits that some three years had passed by the time the appeal came to a substantive hearing and the Appellant took the view that there was no longer any basis for asserting that there might be a more systemic issue. She accepts that this should have been made clear to the Respondent and the Court. Ms Patry submits that the real issue in this case is whether a party who obtains permission on one basis (but not the sole basis) is entitled to continue in her appeal when circumstances change after the grant of permission and she decides not to pursue a certain aspect of it. She submits that, unless the continued appeal is hopeless, or where the Respondent is put to additional costs because of her conduct, then indemnity costs should not be awarded.
    4. I do not accept those submissions on behalf of the Appellant. The fundamental point which Ms Patry fails to meet is that this was a second appeal. The well known criteria for a second appeal are much more stringent than for a first appeal. It is also clear that, on the facts of this case, there was no issue of general importance other than the suggestion that there was a “systemic” problem in the UT. That was an unusual allegation and a serious one. That was clearly the basis on which Longmore LJ granted permission in this case. Having obtained permission on that basis, the Appellant failed either to make the submission good with evidence or to pursue the argument. She abandoned it without even explaining why. In my view, in all the circumstances of this case, the Appellant’s conduct was indeed unreasonable to a high degree.
    5. I would therefore grant the application made on behalf of the Respondent for costs to be awarded on an indemnity basis.
Lord Justice Underhill :
  1. I agree that this appeal should be dismissed, for the reasons given by Singh LJ.  This seems to me a straightforward case where the FTT directed itself correctly on the law and, after a clear and careful consideration, reached a decision which was open to it on the facts.  It is not a case that would normally have received permission for a second appeal, and I share Singh LJ’s concern that the Secretary of State should have sought and obtained permission on the basis of an allegation of what was described as “systemic failure” on the part of the UT which she has since made no attempt to make good. For that reason I agree also that the Respondent should have his costs on the indemnity basis.