ISSUE BASED COSTS ORDER IN THE ADMINISTRATIVE COURT: A MATTER OF RISKS AND REWARDS

In The Queen on the application of British Academy of Songwriters, Composers and Authorts -v- the Secretary of State for Business, Innovation and Skills [2015] EWHC 2401 (Admin) Mr Justice Green made an issue based costs order.

THE CASE

The applicants had brought an action and successfully quashed a statutory instrument which allowed personal copying of music.  The judge considered the order for costs that should be made.

THE JUDGMENT ON COSTS

E. Costs
  1. I turn to the final issue which is costs. I propose to address this relatively briefly. It is common ground between the parties that the starting point for analysis is that the Claimants, having succeeded, are entitled to their costs. However, it is also common ground that this is ultimately a matter for the discretion of the Court and that, in an appropriate case, the Court may depart from this starting point and direct that costs may be allocated upon an issue by issue basis. This is generally appropriate where a party which is successful overall as to the result has not prevailed on all issues. Where the Court decides to apply an issues based approach the Court should then consider whether to take account of temporal considerations (e.g. costs to/from a certain date) and/or whether to make the parties bear their own costs: See generally White Book (2015) Vol. 1 paragraph [4412.7].
  2. In my view it is appropriate to determine costs upon an issue by issue basis. From my perspective, the issues were reasonably discrete and identifiable in their nature and in the effort (including the evidence) required to advance them. This I believe is evident from the Judgment itself. As to who won on each issue this is straight forward. The Secretary of State prevailed on Issues II, III, V and VI; but he failed on Issue IV. This is set out in the Judgment: see for example paragraphs [19] – [20].
  3. There is an issue as to who prevailed in respect of Issue I, the relevant legal principles. This concerned the margin of appreciation and the intensity of review, the direct effect of Article 5(2)(b), and the law relating to consultations and the appraisal of evidence. With regard to this, the result was mixed. However, on balance, I take the view that the Claimants prevailed. In allocating a victory to the Claimants on Issue I, I take into account that the Claimants were overall winners and succeeded in obtaining the substantive relief that they sought.
  4. I have considered whether I should simply order each party to bear its own costs on those issues where the Secretary of State prevailed. I have concluded that I should not adopt this course. There are two main points. First, this was high level, high stakes, litigation between the State and entire sectors of an industry. Whilst the litigation was conducted appropriately by all parties it encourages discipline generally if there is a risk as well as a reward in relation to the conduct of litigation. Making parties bear the costs of the winning party on an issue by issue basis is consistent with incentivising good litigation practice. Secondly, I have taken account of the overall economic effect of the alternative orders I could make. I have seen the Claimants’ bill of costs. For litigation of this sort it is high but not exorbitant. I recognise that my ruling will, in its effect, involve the Secretary of State making a significant net payment to the Claimants which is, on balance, a fair reflection of the fact that the Claimants did obtain a significant portion of the relief they sought (the quashing order).
  5. For these reasons the Claimants are entitled to their costs against the Secretary of State in relation to Issue I and Issue IV and the Secretary of State is entitled to his costs as against the Claimants in relation to Issue II, III and V.
  6. So far as the costs as between the Secretary of State and the Intervener are concerned, the Secretary of State prevailed. Upon this basis, the Secretary of State is entitled to his costs against the Intervener attributable to Issue VI.
  7. All costs are to be subject to detailed assessment if not agreed.
  8. A dispute exists between the parties as to the extent to which I should require the Secretary of State to pay the costs incurred by the Claimants in the instruction of experts. I do not have before me any detailed breakdown allocating expert costs as between different issues. Upon the basis that costs are determined on an issue by issue basis this is now likely to be far less of an issue, if it is one at all. Expert evidence played a major part in relation to Issue III (upon which the Secretary of State prevailed) since it was here that the reports of Professor Liebowitz and Compass Lexecon / FTI were principally deployed. I am unable at this stage to identify what portion of the Claimants’ costs (if any) may be attributable to Issue IV. Various references are made in the section of the Judgment addressing that issue to expert evidence. However, this appears to be expert evidence produced for the purpose of the consultation and decision making process, rather than for the purpose of this litigation.
  9. As to the costs of the hearing leading up to this ruling the Claimants are to have these costs. The issues I have addressed in this ruling had to be argued out at a hearing. The Claimants prevailed overall. It is appropriate to reflect this in awarding the Claimants their costs of this particular hearing.”

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