09 September 2011 #Dispute Resolution
The Court of Appeal has recently reversed a longstanding rule on the recoverability of legal costs in judicial review proceedings. This is an important development which public bodies need to bear in mind if threatened with judicial review.
The general rule in legal proceedings is that the losing party pays the winning parties` legal costs. However, a different rule has been applied in judicial review proceedings in cases where a public body concedes the claim shortly after legal proceedings are issued. Where this happens, the Courts had required the parties to bear their own costs unless it was "plain and obvious" that the claimant would have won the case. In other words, the public body was not ordered to pay the claimant`s costs of preparing the judicial review proceedings even though the claimant had won the case.
This rule has been reversed by the Court of Appeal in R (on the application of Bahta and others) v Secretary of State for the Home Department and others  EWCA Civ 895 (26 July 2011).
The Bahta decision re-establishes the time honoured rule that the unsuccessful party pays the successful party`s costs unless there is a good reason not to grant such an award. In order to recover costs, the claimant will still need to prove that it has complied with the Judicial Review Pre-action Protocol, including sending out a letter of claim before issuing legal proceedings, save in exceptional circumstances.
It is very important, therefore, that public bodies take seriously any letter they receive threatening judicial review and consider whether they have legal grounds for defending the claim. The option of waiting to see whether a claimant is prepared to follow up on a threat to issue legal proceedings is only viable if you are prepared to pay their legal costs if you ultimately decide not to defend the claim.