CHALLENGING DECISION MAKING BY JUDICIAL REVIEW PROCEDURE: COSTS. Katie Scott

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1 CHALLENGING DECISION MAKING BY JUDICIAL REVIEW PROCEDURE: COSTS Katie Scott 6 October 2009

2 General Approach to Costs in Judicial Review 1 Section 51 of the Supreme Court Act 1981 provides that the costs of and incidental to all proceedings in the Court of Appeal, the High Court and the County Court are at the discretion of the Court. Subsection 3 provides that the court has full power to determine by whom and to what extent the costs are to be paid. 2 The starting point for most applications for costs is rule (1) The court has discretion as to (a) whether costs are payable by one party to another; (b) the amount of those costs; and (c) when they are to be paid. (2) If the court decides to make an order about costs (a) the general rule is that the unsuccessful party will be ordered to pay the costs of the successful party; but (b) the court may make a different order. (3) The general rule does not apply to the following proceedings (a) proceedings in the Court of Appeal on an application or appeal made in connection with proceedings in the Family Division; or (b) proceedings in the Court of Appeal from a judgment, direction, decision or order given or made in probate proceedings or family proceedings. (4) In deciding what order (if any) to make about costs, the court must have regard to all the circumstances, including (a) the conduct of all the parties; (b) whether a party has succeeded on part of his case, even if he has not been wholly successful; and (c) any payment into court or admissible offer to settle made by a party which is drawn to the court s attention, and which is not an offer to which costs consequences under Part 36 apply. (5) The conduct of the parties includes (a) conduct before, as well as during, the proceedings and in particular the extent to which the parties followed the Practice Direction (Pre-Action Conduct) or any relevant pre-action protocol;

3 (b) whether it was reasonable for a party to raise, pursue or contest a particular allegation or issue; (c) the manner in which a party has pursued or defended his case or a particular allegation or issue; and (d) whether a claimant who has succeeded in his claim, in whole or in part, exaggerated his claim. (6) The orders which the court may make under this rule include an order that a party must pay (a) a proportion of another party s costs; (b) a stated amount in respect of another party s costs; (c) costs from or until a certain date only; (d) costs incurred before proceedings have begun; (e) costs relating to particular steps taken in the proceedings; (f) costs relating only to a distinct part of the proceedings; and (g) interest on costs from or until a certain date, including a date before judgment.... Costs at the Permission stage 3 The issue of costs is not usually considered by the Court at the permission stage in any detail unless permission is refused, the reason being of course that if permission is granted, the order for costs is usually costs in the case (or indeed if the order giving permission is silent on costs the 2004 Judicial Review Practice Statement [2004] 1 WLR 1760 provides that where permission is granted it is deemed to contain an order for costs in the case). Accordingly, the case law focuses on the costs that a successful Respondent can recover once permission to move for judicial review has been denied. The costs incurred by the Respondent at this stage can be divided into two categories: a. The cost of preparing the Acknowledgment of Service. b. The cost of appearing at the permission hearing. 4 The leading case on this is Mount Cook Land Limited & Another v Westminster City Council [2003] EWCA Civ The Court of Appeal gave the following guidance at paragraph 76:

4 a. The cost of a defendant or other interested party who has filed an acknowledgement of service, should generally recover the cost of doing so from the claimant, whether or not he attends the permission hearing. b. Paragraph 8.6 of the Practice Direction to CPR 54 (which provides that Where the defendant or any party does attend a hearing, the court will not generally make an order for costs against the claimant ) should be followed in all cases in which a defendant or other interested party files an acknowledgment of service and attends and successfully resists the claim at the permission hearing. Thus in such a case the costs of and occasioned by such attendance should not be awarded against a claimant. c. This general guidance should only be departed from in exceptional circumstances such as when the claim is hopeless, when the claimant persists even though it has been demonstrated that the claim is hopeless, when the court considers that the claimant has sought to abuse the process of judicial review, or where the claimant has had in effect the advantage of an early substantive hearing of the claim. A relevant factor may be if the unsuccessful claimant has substantial resources which it has used to pursue an unfounded claim. 5 The Court of Appeal considered the Mount Cook decision in the case of Ewing v Office of the Deputy Prime Minister & Another [2005] EWCA Civ They were there concerned that the principles established by that decision should be applied in a way so as not to impede the right of citizens to access justice, particularly when seeking to protect their environment. At paragraph 47 the following is suggested: a. Where a proposed defendant or interested party wishes to seek costs at the permission stage, the Acknowledgment of Service should include an application for costs and should be accompanied by a Schedule setting out the amount claimed. b. The judge refusing permission should include in the refusal a decision as to whether to award costs in principle and if so, an indication of the amount which he proposes to assess summarily.

5 c. The claimant should be given 14 days to respond in writing and should serve a copy on the defendant. d. The defendant should reply in writing within 7 days. e. The judge will then decide and make an award on the papers. 6 The Court of Appeal has been concerned with the cost of the preparation of the Acknowledgement of Service in the case of Ewing and Roundham and Larling Parish Council v Brecland Council & Anor [2008] EWCA Civ 714. Emphasis has been put on the fact that these documents are supposed to be only summary grounds of defence, and a party that prepares an excessive document at this stage, does so at its own expense. Costs awards after permission stage Following a substantive hearing 7 The position is fairly straightforward where the claim has gone to a contested final hearing. The usual rule is that costs follow the event (CPR 44.3), and it is for the party who loses to show that some different approach should be adopted on the facts of a particular case Davey v Ayelsbury Vale District Council [2007] EWCA Civ The court does of course have a wide discretion to make another order, and will need to consider all the matters in CPR 44.3, not least, who is the real winner. 8 When making the final order for costs following a contested hearing the Court of Appeal in the Davey case gave the following guidance at paragraph 21: a. On the conclusion of a fully contested substantive hearing concluding in a defendant s favour, the nature and purpose of the particular claim is relevant to the exercise of the judge s discretion on costs. The two ends of the spectrum being on the one hand a claim brought wholly or mainly for commercial or proprietary reasons and on the other a claim brought partly or wholly in the public interest. The latter, albeit unsuccessful, may properly result in a restricted or no order for costs. b. If awarding costs against the claimant, the judge should consider whether the pre-permission costs are to include preparation costs in

6 addition to acknowledgment costs. It will be for the defendant to justify the right to preparation costs. There may be no sufficient reason why such costs, if incurred, should be recoverable. c. These questions should be dealt with by the trial judge and left to the costs judge only in relation to the reasonableness of the individual items. d. If at the conclusion of such proceedings the judge makes an undifferentiated order for costs in a defendant s favour, the order has to be regarded as including any reasonably incurred preparation costs, but the 2004 Practice Statement should be read so as to exclude any costs of opposing the grant of permission in open court, which should be dealt with on the Mount Cook principles. Where a claim is withdrawn 9 The leading case on this issue is Boxall v Mayor and Burgess of the London Borough of Waltham Forest 21 December 2000, Unreported. Scott-Baker J gave the following guidance at paragraph 22: a. The court has power to make a costs order when the substantive proceedings have been resolved without a trial but the parties have not agreed about costs. b. It will ordinarily be irrelevant whether the claimant is legally aided. c. The overriding objective is to do justice between the parties without incurring unnecessary court time and consequently additional cost. d. At each end of the spectrum there will be cases where it is obvious which side would have won had the substantive issues been fought to a conclusion In between, the position will, in differing degrees, be less clear. How far the court will be prepared to look into the previously unresolved substantive issues will depend on the circumstances of the particular case, not least the amount of costs at stake and the conduct of the parties. e. In the absence of a good reason to make any other order the fall back is to make no order as to costs.

7 f. The court should take care to ensure that it does not discourage parties from settling judicial review proceedings for example by a local authority making a concession at an early stage. 10 The test set out in Boxall has been approved by the Court of Appeal in a number of cases, recently in the case of Scott v London Borough of Hackney [2009] EWCA Civ 217. This was a fairly complex case in which the claimant withdrew or did not pursue some of the issues raised in the original claim, and the defendant fulfilled its duties to the claimant on other issues raised by the claim form. Shortly before the hearing it became clear that there was nothing left in the proceedings and so the claimant withdrew. The parties asked the court to determine where the costs should lie. The defendant argued for no order for costs, the claimant sought its costs. The judge at first instance was unable to confidently conclude that the claimant would have won if the matter had proceeded to trial, and so made no order for costs. On appeal the court came to the view that this was a case in which there was no clear winner or loser and so no order for costs was the only way to do overall justice to it. Lady Justice Hallett went on to say at paragraph 51 that she urged all judges to bear in mind that, when an application for costs is made, a reasonable and proportionate attempt must be made to analyse the situation and determine whether an order for costs is appropriate. I emphasise a reasonable and proportionate attempt, bearing in mind the pressures on the Administrative Court, yet another hard pressed institution. A judge must not be tempted too readily to adopt the fall back position of no order for costs. 11 The Boxall principles were applied by the Court of Appeal in March of this year to a case that was withdrawn prior even to permission being granted Mendes & Another v London Borough of Southwark [2009] EWCA Civ 594. The proceedings had been issued as a matter of urgency as the claimant was facing the prospect of being made homeless as a result of the defendant s misunderstanding of the homelessness legislation. After issue of the proceedings the defendant carried out a statutory review of its decision and came to the view that it had indeed misinterpreted the legislation and so the claimant was offered housing. The Court of Appeal took the view that it was

8 reasonable for the claimant to have issued judicial review proceedings, and it was clear that he would have won had it gone to a final hearing, and so applying the Boxall principles he should be entitled to his costs. Protective Costs Orders 12 Appended to this handout is a paper prepared by Kate Grange and Parishil Patel of 39 Essex Street on Protective Costs Orders (PCOs). This sets out the background and case law on this issue up until December This paper is by way of an update. I am also indebted to Kate Grange and Jenni Richards for a paper they prepared entitled Developments in Judicial Review in 2008 available on the 39 Essex Street web site: ( Compton 13 In the case of R (Compton) v Wiltshire Primary Care Trust [2008] EWCA Civ 749 the Court of Appeal has given further guidance as to: a. The circumstances in which the test of general public importance will be satisfied when considering the making of a PCO; b. Whether there is a separate exceptionality test, aside from the five criteria in paragraph 74 of Corner House; c. Whether, in an application to set aside a PCO which has been made on paper,the Court must be satisfied that there are compelling reasons for setting the order aside; d. The proper procedure to be adopted in the Court of Appeal when dealing with PCOs in that appellate jurisdiction. 14 In Compton the Court of Appeal (Waller LJ, Buxton LJ, Smith LJ) considered three appeals relating to the grant of PCOs. a. The first appeal was from a decision of McCombe J under which he refused to reconsider an order for a PCO made by Simon J on paper in judicial review proceedings relating to the day hospital at Savernake Hospital (the day hospital); b. The second and third appeals were from the decision of Holman J granting a

9 PCO in relation to judicial review proceedings relating to the Minor Injuries Unit (the MIU) at the same hospital. 15 Consequently the appeals arose from two separate judicial review proceedings in which Mrs Compton, on behalf of Community Action for Savernake Hospital challenged the closure of the day hospital facility and the MIU. Separate grounds for judicial review arose in the two different claims. Waller LJ and Smith LJ (Buxton LJ dissenting) upheld the decisions of the first instance judges and dismissed the appeals. The judgments highlight widely differing views as to the proper interpretation of the Corner House decision. General public importance 17 Perhaps the key issue in the case was whether Holman J was correct to conclude that the judicial review challenge brought by Mrs Compton in respect of the MIU met the first criteria outlined in Corner House i.e. did it raise issues of general public importance. 18 Holman J decided that this criterion was marginally satisfied. In essence his conclusion boiled down to the following: I am satisfied that the ultimate issue in this case is an important and not a trivial one; and that it is of importance to a sufficiently large section of the public namely the 30,000 to 50,000 people in the affected catchment area, as to be an issue of general public importance 19 He did however conclude that the issues in the case did not raise legal or other issues of importance to the general public or nation as a whole. The case was not a test case and it did not involve any elucidation of public law in the higher courts. As to the separate requirement whether the public interest requires that such issues are resolved, Holman J thought that this was even more marginal. Whilst the issue had engaged the national media, the public at large had no direct interest in it and of all of the people affected by the decision only Mrs Compton had commenced judicial review proceedings. 20 When considering this question Waller LJ concluded that: 21. It seems to me that when considering whether a PCO should be granted

10 the two stage tests of general public importance and the public interest in the issue being resolved are difficult to separate 23. Where someone in the position of Mrs Compton is bringing an action to obtain resolution of issues as to the closure of parts of a hospital which affects a wide community, and where that community has a real interest in the issues that arise being resolved, my view is that it is certainly open to a judge to hold that there is a public interest in resolution of the issues and that the issues are ones of general public importance. The paragraphs in Corner House are not, in my view, to be read as statutory provisions, nor to be read in an over-restrictive way. Indeed, it seems to me there is already support for a non-rigorous approach exemplified by paragraph 19 of Lloyd Jones J s judgment in Bullmore where he said in relation to the criteria of no private interest :- 19. This particular requirement as formulated in Corner House has been diluted in the later case law. I have in mind particularly Wilkinson v Kitzinger [2006] EWHC 835 (Fam), [2006] 2 FCR 537, [2006] 2 FLR 397 (Fam), where Sir Mark Potter P said at para 54: As to (1)(iii), I find the requirement that the Applicant should have 'no private interest in the outcome' a somewhat elusive concept to apply in any case in which the Applicant, either in private or public law proceedings is pursuing a personal remedy, albeit his or her purpose is essentially representative of a number of persons with a similar interest. In such a case, it is difficult to see why, if a PCO is otherwise appropriate, the existence of the Applicant's private or personal interest should disqualify him or her from the benefit of such an order. I consider that, the nature and extent of the 'private interest' and its weight or importance in the overall context should be treated as a flexible element in the court's consideration of the question whether it is fair and just to make the order. Were I to be persuaded that the remaining criteria are satisfied, I would not regard requirement 1(iii) as fatal to this application. I note that passage was approved by the Court of Appeal in R (England) (?) v London Borough of Tower Hamlets and others at Smith LJ agreed with Waller LJ and held that: a. There is no absolute standard by which to define what amounts to an issue of general public importance [75]. b. There are degrees to which the requirement may be satisfied; some issues may be of the first rank of general public importance, others of lesser rank although still of general public importance [75]. c. Making the judgement is an exercise in which two judges might legitimately reach a different view without either being wrong [75]. d. Corner House does not say that only issues of national importance will qualify [76].

11 e. If the issue is of public importance and affects only a section of the population, it does not follow that it is not of general public importance, although it will not be in the first rank of public importance [77]. f. The question of importance must be left to the evaluation of the judge without restrictive rules as to what is important and what is general [77]. 22 It should be noted that Buxton LJ strongly dissented on this issue, highlighting the very different types of case referred to in Corner House when addressing this criterion. In addition he commented that the effect of the majority decision was very greatly to extend the types of cases in which, if other requirements are fulfilled, a PCO can be made. [70] 23 Despite Smith LJ s protestations to the contrary (see [89]) it is apparent that the decision does indeed broaden out the circumstances in which the general public interest test will be satisfied. It is, on its face, a decision which runs directly contrary to the conclusion reached by Lloyd Jones J in R (Bullmore) v West 24 Hertfordshire Hospitals NHS Trust [2007] EWHC 1350 (Admin) provides that decisions on hospital provision, school reorganisation or any aspect of local government services which affect a significant catchment area may now fall within the Court s jurisdiction to make a PCO. 25 The decision also endorses those cases in which the need for a claimant to have no private interest in the outcome of the case has been doubted Wilkinson v Kitzinger [2006] EWHC 835 (Fam), [2006] 2 FCR 537, [2006] 2 FLR 397 (Fam). Exceptionality 26 As to the question whether Corner House imposed a separate and distinct exceptionality test, aside from the five criteria identified in paragraph 74 of Corner House, both Waller LJ and Smith LJ decided that it did not. In practice once all five requirements were satisfied and the court thinks it right to

12 exercise its discretion, nothing more is required and exceptionality has implicitly been satisfied [82]. Again Buxton LJ strongly dissented [64]-[66]. Compelling reasons 27 Both Waller LJ and Smith LJ held that, once a PCO had been granted on the papers, the defendant did need to show compelling reasons on any application to set aside the order. They concluded that the court in Corner House: was anxious to impose a procedure that would avoid drawn out preliminary skirmishes and for that reason intended, with justification, to impose a difficult hurdle (compelling reasons) on a defendant who seeks to set aside an order made on consideration of the papers. [90] 28 However a complete failure by the judge at the paper stage to provide any reasons for the decision will amount to a compelling reason why the decision should be reviewed on its merits [93]. Consequently a note from the judge explaining his reasoning (in two or three sentences) was essential in all cases [93]. PCOs in the Court of Appeal 29 Finally the Court of Appeal laid down guidance as to the proper procedure to be followed when dealing with the question of PCOs in the Court of Appeal. That guidance is to be found at paragraphs [47] to [49] of the judgment of Waller LJ. Further developments 30 A differently constituted Court of Appeal considered the issue of PCOs in the case of Buglife v Thurrock Thames Gateway Development Corp [2008] EWCA Civ 1209 and stated at paragraph 19 that the correct approach was to follow Corner House as explained by Waller LJ and Smith LJ in Compton. Accordingly on the facts of that case they came to the view that: (i) They must follow the guidance laid down in Corner House albeit in a flexible way, thus a Claimant who had the benefit of a PCO costs order should expect the costs to be capped in accordance with paragraph 76

13 (ii) (iii) of Corner House ie modest solicitor s fees and a fee for a single junior advocate. There is no assumption, whether explicit or implicit that it is appropriate, where the claimant s liability for costs is capped, that the defendant s liability for costs should be capped in the same amount [26]. The amount of any cap depends on all the circumstances of the case. Where a claimant s legal team is acting under a CFA, the court should know the true position when deciding what the cap should be [27]. It is suggested that this means the court should know what the uplift is. 31 The Court of Appeal earlier this year were faced with an application for a PCO from a respondent to an appeal in the case of Weaver v London Quadrant Housing Trust [2009] EWCA Civ 235. The applicant (and the respondent to the appeal) was an assured tenant in social housing managed by the Housing Trust. She sought judicial review after being issued with a notice of possession. A major issue in the proceedings was whether the trust was a public authority for the purposes of the Human Rights Act. The court concluded that it was and made a declaration to that effect (while refusing the judicial review application). T he Trust obtained permission to appeal on the declaration. The Equality and Human Rights Commission obtained permission to intervene in the appeal and make representations in opposition to the Trust. At the time of the application they had only obtained permission to make written representations. The court was told that the LSC had agreed to fund the applicant s legal costs but only on the condition that they would not be liable to the Trust for their costs if they won. 32 The court noted at paragraph 8 that there is no authority involving an application for a PCO by someone who is a respondent to an appeal, the principles all appear to have been developed in cases in which it is in the public interest that the litigation is conducted, and the litigation would be discontinued were the PCO not made. Accordingly the court came to the view that it was not possible to apply the Corner House principles precisely to the case. The court did come to the view that:

14 (i) The case raised an issue of general public important and the public interest required that the issue should be resolved. (ii) There is a disparity between the financial resources of the two parties. 33 As to the private interest requirement, the Trust argued that the applicant had a private interest in the litigation, as a result of the declaration made in the court below she now had the benefit of public law protection of an assured tenant. Elias LJ at paragraph 12 stated: I do not accept that this is the kind of private interest which the court was talking about in the Corner House case. In the Goodson case, to which I have made reference, at paragraph 28 reference was made to the fact that, in some cases, a personal litigant who has standing to apply for judicial review may have a private interest in the outcome of the case in the case in the sense that there will be some benefit, but it is no more than the interest that will apply to the population or a section of the population as a whole. That seems to be the position here. The appeal is being conducted in the public interest at the behest of the Trust, not to assert a private interest of the applicant. The possession order against her will stand come what may, and any personal interest she may derive is no greater than that which will accrue to the benefit of all tenants in the same position that she is. 34 The final of the Corner House requirements considered by the court was whether, if the order were not made, the applicant would discontinue the proceedings. The court held, unsurprisingly, that given the circumstances of this case, this consideration did not strictly apply. Instead the court stated that the question was whether the effect of refusing the order would be that the applicant would no longer take part in the case and whether she would be acting reasonably in so doing. The court came to the view that this would be the outcome, and it would be reasonable on the part of the applicant given her theoretical exposure to the Trusts costs and the fact that she had no continuing interest in the outcome of the case over and above that which all tenants may have. Added to this, the court considered it was vital that both parties were represented before the court in this important case. Accordingly, the PCO was granted. Morgan 35 The court of appeal, somewhat unusually in the case of Morgan & another v Hinton Organics [2009] EWCA Civ107 set out their view on what they called the controversial element in the Corner House guidelines, that is the requirement that

15 the applicant should have no private interest in the case. They did so despite the fact that they were not being asked to make a PCO. Their comments are therefore strictly obiter. They carried out a useful review of the case law on this issue at paragraph 38 and came to the view that while it could be said that Goodson was binding on the court as an application of the private interest requirement it is impossible to ignore the criticisms of this narrow approach. The court called for the Rules Committee to address this issue in the near future, and in the meantime in our view, the flexible basis proposed by Waller LJ and approved in Buglife should be applied to all aspects of the Corner House guidelines. The Jackson Review 36 In January 2009 the Master of the Rolls appointed Jackson LJ to carry out a review of the principles governing the costs of civil litigation and to make recommendations in order to promote access to justice at proportionate cost. The review's findings are due to be presented in December Sir Rupert Jackson has however published his preliminary report on 8 May of this year in preparation for a public consultation exercise. This provides some detailed analysis of the Corner House decision. Possible criticisms of Corner House. The following are possible criticisms of Corner House: (i) The circumstances in which a PCO should be made are defined too restrictively. (ii) There is no reason why the fact that the applicant has a private interest in the outcome should be fatal, provided that the public interest test is satisfied. (iii) The Corner House criteria put undue pressure on claimant solicitors to act probono. It is simply not practicable for firms specialising in this line of work to do cases pro bono as a matter of routine. (iv) If the existing CFA regime survives, then capping the costs recoverable by the claimant at the same level as the costs recoverable by the defendant creates substantial difficulties. (v) Any judicial review claimant, who has obtained permission to proceed with his or her claim, has a proper case which merits determination. A claimant of modest means who brings such a case against a public authority should not be at risk of a crushing adverse costs liability.

16 Forming Companies to Avoid Costs 37 Appended to this handout is a paper prepared by Richard Harwood of 39 Essex Street called Forming Companies to Bring Proceedings: Use or Abuse. This sets out in some detail the background to this topic. In summary it has become standard practice for a limited company to be formed specifically to bring judicial review proceedings. The company holds the chose in action and has the costs liability for the litigation. The advantages are plain, as a limited company the maximum liability of share holders is 1. If the company loses the litigation, it is simply wound up. 38 For those forming such companies, care needs to be taken to ensure that any CFA or indeed rule 15 letter covers a company formed after the legal team was first instructed. 39 A defendant faced with a limited liability claimant can make an application for security for costs pursuant to CPR which provides as follows: (1) A defendant to any claim may apply under this Section of this Part for security for his costs of the proceedings. (Part 3 provides for the court to order payment of sums into court in other circumstances. Rule 20.3 provides for this Section of this Part to apply to Part 20 claims) (2) An application for security for costs must be supported by written evidence. (3) Where the court makes an order for security for costs, it will (a) determine the amount of security; and (b) direct (i) the manner in which; and (ii) the time within which the security must be given (1) The court may make an order for security for costs under rule if (a) it is satisfied, having regard to all the circumstances of the case, that it is just to make such an order; and (b) (2) The conditions are... (i) one or more of the conditions in paragraph (2) applies, or (ii) an enactment permits the court to require security for costs. (c) the claimant is a company or other body (whether incorporated inside or outside Great Britain) and there is reason to believe that it will be unable to pay the defendant s costs if ordered to do so;

17 40 A claimant company can avoid such an application being made, or indeed defeat it, by making clear that it, or its solicitors, have sufficient funds to pay any costs order that may be made. 41 The CPR only allows defendants to make applications for security for costs, this is therefore not an option for an interested party. It is however possible to add persons as parties to the proceedings for the purposes of costs only, typically the directors of the company. Costs against non-parties is governed by section 51(3) of the Supreme Court Act The procedure for making such an application is set out in CPR 48.2 which provides: 1) Where the court is considering whether to exercise its power under section 51 of the Supreme Court Act (costs are in the discretion of the court) to make a costs order in favour of or against a person who is not a party to proceedings (a) that person must be added as a party to the proceedings for the purposes of costs only; and (b) he must be given a reasonable opportunity to attend a hearing at which the court will consider the matter further. 43 The principles that the Court will apply in determining such an application are derived from the case of Dymocks Franchise Systems (NSW) Pty Ltd v Todd [2004] UKPC 39, [2004] 1 WLR 2807 at para 25: Where, however, the non-party not merely funds the proceedings but substantially also controls or at any rate is to benefit from them, justice will ordinarily require that, if the proceedings fail, he will pay the successful party's costs. The non-party in these cases is not so much facilitating access to justice by the party funded as himself gaining access to justice for his own purposes. He himself is "the real party" to the litigation 44 The Court of Appeal adopted this reasoning in the case of Ewing v Office of the Deputy Prime Minister [2005] EWHC 825 (Admin) at paragraph 30 in coming to the view that it did not matter whether one of the claimants was technically a party to the proceedings, as he had shown himself to be the real party and this was sufficient to found a costs order against him. 45 A section 51(3) order is ultimately dependent upon an exercise of discretion. As Lord Justice Longmore said in Petromec Inc v. Petroleo Brasileiro SA Petrobras [2006] EWCA Civ 1038 [2007] Costs LR 212 at para 10:

18 If the evidence is that a respondent (whether a director or shareholder or controller of a relevant company) has effectively controlled the proceedings and has sought to derive potential benefit from them, that will be enough to establish the jurisdiction. Whether such jurisdiction should be exercised is, of course another matter entirely and the extent to which a respondent has, in fact, funded any proceedings may be very relevant to the exercise of discretion. Katie Scott 39 Essex Street London WC2R 3AT 16 September 2009