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The principle in Re Eastwood lives to fight another day

In May 2015, the Upper Tribunal heard the case of Bakhtiyer v Secretary of State for the Home Department. Judgment was handed down earlier this month. The Upper Tribunal confirmed the principle in Re Eastwood that the costs of the Government Legal Service would be assessed on the same basis as that of a solicitor in private practice.

Background to the claim

The underlying substantive claim made by the applicant was for judicial review of decisions made by the Secretary of State for the Home Department relating to an asylum claim. Permission to move for judicial review was refused and the applicant was ordered to pay the respondent Secretary of State’s costs of the acknowledgment of service (claimed and assessed at £400), unless the applicant notified the Tribunal that he objected to paying such costs within 7 days. The applicant duly objected, not to the principle that he should pay the costs, but to the amount.

The claim for costs was put at £200 an hour. The applicant argued that claiming costs at this level was a breach of the indemnity principle as £200 represented more than the Secretary of State paid per hour to the Government Legal Service. It was further argued that, in any event, £200 was too high.

Clearly, the amounts in dispute were minimal. However, it must have been in the minds of both parties and the Tribunal (although no mention is made of this in the judgment) that this issue is relevant to many thousands of cases a year, brought for and against the government in a number of courts. It is understood, for example, that the solicitors’ firm representing the applicant has been raising this issue in a large number of Upper Tribunal immigration cases.

Submissions

The applicant’s submissions were based on the case of Re Eastwood, which the applicant argued established two relevant propositions:

  • The process of calculating the costs of a successful party is the same whether the party has engaged a solicitor in private practice or one employed as part of its organisation (as restated by the Court of Appeal in Coles v BT).
  • In special cases, it is appropriate for the court to carry out a more detailed calculation (those where it is reasonably plain that if the method of assessment used for a solicitor in independent practice is utilised there will be a breach of the indemnity principle).

The first principle was agreed by the respondent and accepted by the Tribunal. Of course, the process applied on summary assessment is to consider the claimed hourly rates by reference to the guideline hourly rates. As to the second principle, the Tribunal expressed some doubt as to what the Court of Appeal in Re Eastwood meant. Ultimately, it accepted the applicant’s submission on this point.

In support of the submission that this was one of those special cases in which a more detailed calculation was appropriate, the applicant submitted a table of hourly rates. This set out the amount the Government Legal Service charged per hour to other government departments, including that of the Secretary of State for the Home Department. It was said that, as the work had been done by a junior lawyer, for the applicant to pay anything more than £93 an hour (the amount the Secretary of State for the Home Department paid the Government Legal Service for the work done by a junior lawyer) would breach the indemnity principle.

Outcome

The Tribunal rejected this argument for two reasons:

  • Firstly, the rate paid was an inappropriate starting point. This was because the rates charged by the Government Legal Service are set by government policy, rather than considerations that apply to the calculation of a bill of costs by a solicitor in private practice.
  • Secondly, the rate paid by the Secretary of State for the Home Department to the Government Legal Service did not represent the cost to the government of the legal services being provided. The defendant was named as the Secretary of State for the Home Department. In truth, the respondent was “the Crown”; therefore the starting point was not the rate paid by the individual department, but the cost to the government as a whole.

The Tribunal concluded that this was not one of those cases identified by Re Eastwood where there would obviously be a breach of the indemnity principle had the guideline hourly rates been applied.

Analysis

It is perhaps not surprising that the applicant’s argument failed. The court has long had a horror of having to work out the cost to a particular organisation of their legal services on a case-by-case basis. While proportionality considerations did not feature in this judgment, such an exercise would be costly, take up precious court resources and ultimately be difficult to achieve accurately.

It might be said then that the judgment is a victory for common sense. This decision will clearly be welcome news to central government, but it remains to be seen how useful it will be for other organisations that employ in-house legal teams.

The Tribunal took a somewhat narrow approach to the arguments before it. The decision is very much focused on the business and structure of government. The Tribunal was not prepared to consider the various government departments as separate entities, despite the fact that the Secretary of State was named as respondent in the claim. The applicant had produced evidence of the internal charging structure in play for a particular department. However, this was insufficient as a means of showing that using the conventional basis of assessment (guideline hourly rates) would obviously give rise to a breach of the indemnity principle in respect of the government as a whole. Such an argument may not be so easily defeated in a differently structured organisation.

However, it remains the case that, with respect to non-governmental organisations, it is very difficult for applicants to obtain any evidence of either an internal charging structure or the cost to the organisation of the legal services being provided. Indeed, in most cases there will be no internal charging structure. Consequently, there are likely to remain few such disputes. No doubt this will be a relief to the judiciary.

An oddity of this decision is that it was dealt with by the Upper Tribunal on summary assessment. One might think that this is hardly surprising, given the amounts involved, but of course the matter took a whole day, required witness evidence and skeleton arguments, and resulted in a 14 page judgment. This is hardly the stuff of summary assessment.

The reason for this probably lies in the rules. The Upper Tribunal can only deal with summary assessments of costs. If the matter is to be dealt with pursuant to a detailed assessment, it will be referred to the Senior Courts Costs Office. Presumably the Upper Tribunal wanted to keep this case for precisely the same reason that the applicant’s solicitors wanted to run it: the sheer number of cases to which this issue applies.

39 Essex Chambers Katharine Scott

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