Decision
of the Upper Tribunal
(Administrative Appeals Chamber)
As the decision of the First-tier Tribunal (made on 18
December 2012 under reference SE825/12/00020) involved the making of an error
in point of law, it is SET ASIDE under section 12(2)(a) and (b)(ii) of the
Tribunals, Courts and Enforcement Act 2007 and the decision is RE-MADE.
The decision is: there shall be no order for costs.
Reasons
for Decision
A.
Introduction
1.
The appeal to the First-tier Tribunal concerned the special educational
needs of Charlie. The parties reached an agreement. Subsequently, Charlie’s
mother applied for costs. On 18 December 2012, the judge made this order:
The LA shall pay to Ms S T… her
costs of bringing this appeal incurred from 1 September to date, such costs to
be agreed, or in default of agreement within 21 days from the date of this
Order, to be assessed by a Registrar of this tribunal.
The date reflects the start of the new academic year. The application
had been based on a number of grounds. The judge rejected some. As I read her
reasons, her principal reason for making the order was the local authority’s ‘unreasonableness
in persisting in naming’ its preferred school. This was compounded by ‘the
strength of Charlie’s views, along with his significant mental health
difficulties and history of school refusal’. My reading of the judge’s decision
is that this latter point alone would not have justified making a costs order.
I proceed on that basis.
2.
I gave the local authority permission to appeal against the order. The
parties have now made their submissions. Before coming to the background, I
will deal with the First-tier Tribunal’s power to award costs.
B.
The First-tier Tribunal’s powers
3.
The First-tier Tribunal had power to award costs in two circumstances.
They are prescribed by rule 10(1) of the Tribunal Procedure (First-tier
Tribunal) (Health, Education and Social Care Chamber) Rules 2008 (SI No 2699):
‘10 Orders for costs
(1) Subject
to paragraph (2), the Tribunal may make an order in respect of costs only
(a) under
section 29(4) of the 2007 Act (wasted costs); or
(b) if
the Tribunal considers that a party or its representative has acted
unreasonably in bringing, defending or conducting the proceedings.’
Paragraph (2) applies only to mental health cases.
C.
The caselaw
4.
The meaning of unreasonable was discussed in the context of
wasted costs order by the Court of Appeal in Ridehalgh v Horsefield
[1994] Ch 205 at 232-233:
‘“Unreasonable" also means
what it has been understood to mean in this context for at least half a century.
The expression aptly describes conduct which is vexatious, designed to harass
the other side rather than advance the resolution of the case, and it makes no
difference that the conduct is the product of excessive zeal and not improper
motive. But conduct cannot be described as unreasonable simply because it leads
in the event to an unsuccessful result or because other more cautious legal
representatives would have acted differently. The acid test is whether the
conduct permits of a reasonable explanation. If so, the course adopted may be
regarded as optimistic and as reflecting on a practitioner's judgment, but it
is not unreasonable.’
‘We were invited to give the
three adjectives (improper, unreasonable and negligent) specific,
self-contained meanings, so as to avoid overlap between the three. We do not
read these very familiar expressions in that way. Conduct which is unreasonable
may also be improper, and conduct which is negligent will very frequently be
(if it is not by definition) unreasonable. We do not think any sharp
differentiation between these expressions is useful or necessary or intended.’
5.
The Court also dealt with the proper approach in what it called ‘a
hopeless case’ (pages 233-234):
‘A legal representative is not
to be held to have acted improperly, unreasonably or negligently simply because
he acts for a party who pursues a claim or a defence which is plainly doomed to
fail. … As is well known, barristers in independent practice are not permitted
to pick and choose their clients. … As is also well known, solicitors are not
subject to an equivalent cab-rank rule, but many solicitors would and do
respect the public policy underlying it by affording representation to the
unpopular and the unmeritorious. Legal representatives will, of course, whether
barristers or solicitors, advise clients of the perceived weakness of their
case and of the risk of failure. But clients are free to reject advice and
insist that cases be litigated. It is rarely if ever safe for a court to assume
that a hopeless case is being litigated on the advice of the lawyers involved.
They are there to present the case; it is (as Samuel Johnson unforgettably
pointed out) for the judge and not the lawyers to judge it.
It is, however, one thing for a
legal representative to present, on instructions, a case which he regards as
bound to fail; it is quite another to lend his assistance to proceedings which
are an abuse of the process of the court. Whether instructed or not, a legal
representative is not entitled to use litigious procedures for purposes for
which they were not intended, as by issuing or pursuing proceedings for reasons
unconnected with success in the litigation or pursuing a case known to be
dishonest, nor is he entitled to evade rules intended to safeguard the
interests of justice, as by knowingly failing to make full disclosure on ex
parte application or knowingly conniving at incomplete disclosure of documents.
It is not entirely easy to distinguish by definition between the hopeless case
and the case which amounts to an abuse of the process, but in practice it is
not hard to say which is which and if there is doubt the legal representative
is entitled to the benefit of it.’
6.
The Court of Appeal considered an equivalent provision to rule 10(1)(b)
in McPherson v BNP Paribas (London Branch) [2004] ICR 1398. The case
concerned a claim for unfair dismissal and breach of contract before an
employment tribunal. Having secured a postponement of the hearing on the ground
of ill health, the claimant then withdrew his claim. The tribunal ordered him
to pay the whole of the employer’s costs on the ground that the claimant had
acted unreasonably. Mummery LJ discussed a number of points of general
relevance.
7.
First, the proper issue was the conduct of the proceedings, not the
decision to withdraw:
‘30. … The crucial question is
whether, in all the circumstances of the case, the claimant withdrawing his
claim has conducted the proceedings reasonably. It is not whether the
withdrawal of the claim is in itself reasonable …’
8.
Second, the costs that may be awarded are not limited to those that are
attributable to the unreasonable conduct:
‘40. … The principle of
relevance means that the tribunal must have regard to the nature, gravity and
effect of the unreasonable conduct as factors relevant to the exercise of the
discretion [whether to order costs], but that is not the same as requiring BNP
Paribas to prove that specific unreasonable conduct by the applicant caused
particular costs to be incurred.’
9.
Third, costs must not be punitive:
‘41. … the indemnity principle
must apply to the award of costs. It is not, however, punitive and
impermissible for a tribunal to order costs without confining them to the costs
attributable to the unreasonable conduct.’
10. Fourth,
the unreasonable conduct is relevant at three stages:
‘41. … As I have explained,
the unreasonable conduct is a precondition to order costs and it is also a
relevant factor to be taken into account in deciding whether to make an order
for costs and the form of the order.’
11. The
decision of the Court of Appeal in Kovacs v Queen Mary and Westfield College [2002] ICR 919 is also relevant. The court decided that: (i) a party’s
ability to pay is not a relevant factor; and (ii) an award should cover as a
minimum the costs attributable to the unreasonable behaviour.
12. I
have taken this statement from one of my previous decisions on costs. I notice
that it is reproduced in the local authority’s application to the Upper
Tribunal.
D.
What happened at the hearing
13. The
appeal to the First-tier Tribunal related to Parts 2, 3 and 4 of the statement.
As so often, a number of points were agreed before the hearing. Some points
remained outstanding on the day of the hearing. Most important was the school that
Charlie should attend. It was agreed that he needed specialist residential
provision, but there was a dispute about the school to be named. The local
authority preferred PL School, whereas his mother preferred GH School. The
difference in cost was said to be £70,000. There was a dispute about this, but (as
the judge has said) this was not unusual and was the sort of issue that would
be resolved at the hearing.
The possible adjournment
14. The
bundle provided to the Upper Tribunal by the First-tier Tribunal contains 1086
pages, of which only a few were generated after the hearing. At the start of
the hearing, the presiding judge told the parties that one of the panel members
had not received a full set of those papers. This is relevant as background to
what happened at the hearing. That raised the issue of whether the tribunal
could proceed without an adjournment. Naturally, Ms T opposed an adjournment if
one could be avoided. Apparently, the local authority’s view was never sought. The
local authority’s solicitor has said that its representatives accepted that a
delay would not be beneficial to Charlie and would cause his mother anxiety. I
accept that statement, especially as the judge described the authority’s
solicitor as having ‘maintained a reasonably calm and constructive approach
throughout the correspondence.’ This was, the judge said, in contrast to the
approach taken by the solicitors for Charlie’s mother.
The concern about PL School
15. The
judge also drew attention to a concern about naming PL School. I take the
statement of those difficulties from the submission of the solicitors for
Charlie’s mother. This no doubt puts the point as strongly as it can be made:
The January report [by OFSTED] noted
that the school failed to meet national minimum standards for residential
special schools in relation to safe recruitment and vetting procedures;
arrangements made to safeguard and promote the welfare of pupils, and
procedures under the local Runaway and Missing from Home protocols and
procedures. The June report found that provision for pupils’ welfare, health and
safety was inadequate because child protection arrangements did not follow
national and local safeguarding guidance, and the child protection policy was
inadequate.
The judge says that the fact that the deficiencies were
still present in June shows that the problems were endemic.
16. It
is not clear to me exactly what the judge said to the parties. The solicitors
for Charlie’s mother vary in their expression. They refer to the tribunal being
‘very reluctant’ to name PL School, but later refer to ‘the tribunal’s very
firm indication that it would be perverse to name PL’. The judge has also
expressed herself slightly differently. In places, she talks of perversity, but
elsewhere she is a little more circumspect. She accepted in her costs decision
that there is no legal bar to naming the school in those circumstances. She
identified the problem as a lack of evidence before the tribunal that would
allow it to decide one way or the other. She says that she put this concern to
the parties so that they could consider what issues might properly be conceded
or compromised. Whatever the precise terms of what the judge said, it is (I
believe) fair to say that she made it clear that the tribunal could not find on
the evidence that PL School was suitable.
Charlie’s circumstances
17. Charlie
had expressed determined opposition to attending PL School. One argument for
Charlie’s mother was that the local authority had acted unreasonably in
persisting with PL School despite Charlie’s views. The judge said that she was
‘less persuaded’ that his views made the local authority’s conduct unreasonable,
because the relevance of Charlie’s views would have depended on the evidence.
Nevertheless, she considered that the complexity of his needs compounded the
authority’s unreasonableness in persisting with PL School.
The compromise
18. The
local authority first offered to place Charlie at GH School on an assessment
basis. This was not accepted, but the parties agreed that Charlie would be
placed there subject to an interim annual review in six months. The tribunal
endorsed this settlement.
E.
Putting a tribunal’s concerns to the parties
19. Tribunals
form provisional views on the issues before them. That is an almost inevitable
consequence of previewing the case, which itself contributes to the efficiency
and quality of the hearing. It is proper for the tribunal to put its concerns
to the parties so that they know how the tribunal is thinking. Doing so
contributes to the fairness of the hearing.
20. But
tribunals need to be careful how they express themselves. If the judge really
expressed herself in such uncompromising terms as it appears that she did, she
was placing herself and the members she sat with in the position of saying that
they had reached a conclusion that could not be changed on the evidence before
them. And that they had come to that conclusion without hearing from the
parties. That is prejudgment.
21. It
is always wise to bear in mind what Megarry J said in John v Rees [1970] Ch 345 at 402
As everybody who has anything to
do with the law well knows, the path of the law is strewn with examples of open
and shut cases which, somehow, were not; of unanswerable charges which, in the
event, were completely answered; of inexplicable conduct which was fully
explained; of fixed and unalterable determinations that, by discussion, suffered
a change. Nor are those with any knowledge of human nature who pause to think
for a moment likely to underestimate the feelings of resentment of those who
find that a decision against them has been made without their being afforded
any opportunity to influence events.
22. However
firm the tribunal’s provisional opinions, it is sensible to state them to the
parties in a way that avoids any suggestion of prejudgment and allows for the
possibility of being persuaded by argument.
F.
Analysis
23. I
have set aside the costs order because the judge failed to take sufficient
account of the fact that the issue of PL School had never been fully
considered. The local authority did not accept that its argument was not
sustainable. It settled by a compromise that was acceptable to both parties and
to the tribunal. No doubt, the authority took account of the view expressed by
the judge when it decided to settle on those terms. But it was also influenced
by the pressure to reach a decision on the day. And it did so on terms that
preserved its position on PL School – the interim review allowed for the
possibility that it might still decide to name that school, perhaps on the
basis of further information about the safeguarding issues.
24. The
solicitors for Charlie’s mother say that this was not a concession in any
meaningful sense as the tribunal had effectively told the local authority that
it would lose on this point. I do not accept that. It was a compromise. The
agreement made provision for an interim review after six months, which allowed
for the possibility that the local authority might then name PL School, by
which time the safeguarding issue might have been resolved. Charlie’s mother
accepted that possibility, although no doubt see was under pressure to reach a
final decision on the day of the hearing.
25. The
judge expressed the tribunal’s views at the hearing and has maintained that
position in her costs decisions, but that position has never been the subject
of full argument. I consider that she was not entitled to form the opinion that
it was unreasonable to adopt and pursue the preference PL School. There are
three positions. The local authority’s position is that there was evidence that
could have resolved the tribunal’s concerns. The mother’s position is that it
could never be appropriate to name a school that had failed this aspect of an
inspection. The judge’s position is that there was no legal bar to doing so,
but that it might be inappropriate in the circumstances of a particular case; specifically,
it might have been perverse to name the school on the evidence available at the
hearing. I have looked at the Ofsted reports. I note that the June report says
that some problems had been remedied, but that some remained. I accept the
honest view of the experienced panel that there were evidential problems on the
face of the case as presented. But the problems as they are stated in the two
reports do not seem to me insuperable, even in the context of Charlie’s
particular difficulties and needs. It is possible that, with the benefit of
full argument and in light of the findings that the tribunal may have made
after a full hearing, a tribunal might have been persuaded that they were not
an impediment.
26. Moreover,
I do not accept that it will always be unreasonable to present and pursue an
argument that the tribunal decides it would be perverse to accept. The test in
the caselaw is not one that is applied with the benefit of hindsight. Applying
the Court of Appeal’s acid test does not require either that approach or that
result. The local authority has presented arguments in response to the
tribunal’s concerns. The judge does not accept that they were practical in the
circumstances, but that does not mean that they are not relevant to the issue
of whether the conduct of the proceedings was unreasonable.
G.
Conclusion
27. In
conclusion, I consider that the judge was not entitled in the circumstances of
this case to characterise the conduct of the local authority as unreasonable.
28. There
are two lessons to be taken from this case. One is that judges should be
cautious in how they express concerns to the parties. The other is that they
should make appropriate allowance when judging the reasonableness of a party’s
conduct for the fact that the proceedings were compromised with the result that
arguments were left undeveloped and unexplored in the context of a full
analysis of a child’s needs. This does not mean that a party is entitled to
pursue a hopeless argument for tactical advantage. That is not what has
happened in this case.
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Signed on original
on 17 September 2013
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Edward Jacobs
Upper Tribunal Judge
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