Content last updated: October 3, 2024
Costs: Navigating & Negotiating Costs
Costs
Regardless of your organisation’s level of experience with litigation, you probably know this: litigation is expensive.
The cost of litigation is, unfortunately, one of the most significant barriers that organisations need to overcome to launch meaningful public interest legal challenges. PILS is proud to be an organisation that seeks to break down that barrier for our members.
In addition to providing further information on the support that PILS can provide to confront concerns about costs, this section will also explain how costs work, and the different measures that exist, or that your organisation can advocate for, to make litigation more accessible.
What are costs?
The term ‘costs’ has a specific legal meaning. It refers to the financial resources that parties expend to bring litigation. Litigation is a long process, and often requires parties to take a number of steps before they can reach the court.
Unfortunately, not all of the work and resources that your organisation pour into a case are considered ‘costs’ for the purposes of legal proceedings. We will begin with explaining what resources constitute ‘costs’ for the purpose of legal proceedings.
What costs are recoverable?
Costs for the purposes of court proceedings, generally fall into two categories: outlays, which are sometimes referred to as disbursements, and professional fees.
Outlays are items of expenditure that are incidental to litigation. These costs include fees that you have to pay to the court to lodge proceedings, printing costs, or the cost of obtaining expert reports.
Professional fees specifically refer to the fees that solicitors and barristers charge for their services.
PILS’ Support
PILS can provide support for each step in the proceedings that have a significant public interest component. PILS provides support for outlays, costs indemnity, and professional fees in different ways.
You can submit a Casework Application to request financial support to pay for outlays and a costs indemnity in a public interest case.
Generally, the PILS Project does not provide financial support to cover professional fees. This kind of financial support is only available in exceptional circumstances, and we require our members to establish that exceptionality if they apply for financial support to cover professional fees. We expect that legal professionals will work pro bono (provide their services free of charge). If you are unable to obtain pro bono legal support, The PILS Project can act as your organisation’s solicitor or enlist one of the skilled barristers or solicitors from The PILS Project’s Pro Bono Register.
Cost considerations and the PILS Litigation Fund
What costs are not recoverable?
Your organisation cannot recover the cost of time spent on the work that goes into pre-litigation steps. In the section on judicial review, we explored the requirement that an applicant exhaust all adequate alternative remedies before launching an application for judicial review.
The costs expended in pursuing those remedies are not recoverable, despite it being a requirement to launch judicial review proceedings. Your time put into supporting the applicant in their judicial proceedings is also not recoverable under a costs order.
The only individuals whose work time can be recovered is that of barristers and solicitors. Litigation will not compensate your organisation’s efforts in supporting the individual or helping them navigate the litigation process.
A costs order will also not compensate you for the money that you spend on any research or expert reports that you need to obtain to establish your claim.
It is important that organisations factor these costs to their organisation into their decision as to whether to launch proceedings because, while important and costly, the court will not recognise that effort as a recoverable cost.
Who pays what?
Costs are ordered at the discretion of the court and determined, largely, based on the outcome of the proceedings.
The general rule is that the successful party in the proceedings will recover their costs from the other party to the litigation. In other words, the loser pays the winner’s costs.
This is part of what makes litigation out of reach for many individuals and organisations. The cost of bringing litigation alone is expensive. That expense is only potentially heightened by the risk that, if your organisation is unsuccessful, you will also need to pay the other party’s costs. It is often a deterrent for many organisations because these costs can be exorbitant and sometimes it is not possible to know the full scope of the costs that the other party has incurred.
Conditional fee arrangements
Conditional fee arrangements are used in some jurisdictions to combat the costs risk in litigation. Conditional fee arrangements are also known as “no win no fee” claims. These arrangements are an agreement between solicitor firms and their clients which establish that the solicitor will only collect a fee if their client’s claim is successful.
Conditional fee arrangements are not permitted in Northern Ireland. You cannot enter into a “no win no fee” arrangement with a solicitor firm. Legal experts have determined that conditional fee arrangements restrict access to justice for many groups, particularly individuals with high risk claims or claims of low financial value to solicitor firms.
Costs Order
Costs can only be awarded through a court order. In other words, the court must make a costs order for parties to be entitled to recover costs in any proceedings.
Timing
Cost orders are usually made at the end of a proceedings. The court will usually say that costs will “follow the event”, which means that the unsuccessful party pays the successful party’s costs. Usually, costs orders are made after the court gives its final judgment in the matter. The court may, however, make a costs order against one of the parties at another stage in the proceedings, for example after leave is decided or following an interlocutory application, where the court is of the view that the circumstances of the case require such an arrangement.
Practically, costs operate as a form of “reimbursement” for the successful party. This means that each party will have to pay professional fees and outlays and may be able to recover some or all of that sum if the court makes a cost order in their favour. As a result, in most cases, organisations will still need a great deal of financial resources to pursue litigation. PILS’ support in the form of representation, pro bono counsel or a costs indemnity can help to overcome that initial barrier to pursuing litigation.
Considerations
The court’s time is valuable. Any steps taken that may unnecessarily delay proceedings or that make it more difficult for the court to reach a decision may have cost implications for the party who takes those steps.
Misconduct or poor practice can increase your party’s cost risk. If it appears to the court that a party made an unreasonable or improper omission, the court may order that the party is not entitled to recover costs in respect of the improper act or omission and may be liable to the other party for a portion of their costs. The consequence of that determination could be that a successful party, who would otherwise be awarded costs, will have to pay a portion of the costs because they misled the court.
Calling witnesses where it is not reasonable or necessary can also increase your cost risk. In most proceedings, including judicial review, it is not necessary to call witnesses. Where a party calls a witness and the court is of the view that the evidence that the witness provides could have been advanced in another way, the court may order that the party who called the witness may not recover the costs that they incurred to bring the witness. Again, the consequence could be that a successful party who would otherwise be entitled to recover their full costs, may have to pay a portion of their own costs.
Courts will also be resistant to litigation which asks it to sidestep the legislature. The court’s role is to interpret that law as set by the legislature. Its role is not to make law, and it will not take kindly to litigation which asks it to step outside of those bounds. Brining this kind of litigation may expose the relevant applicant to a hefty costs order.
For more information on costs...
Full information on the court’s discretion and the rules that apply to Cost Orders are available at Order 62 of The Rules of the Court of Judicature (Northern Ireland) 1980.
Cost Considerations
Before launching proceedings, it is important to understand the potential costs implications of that decision. Remember, your organisation will be responsible for paying the cost of bringing the proceedings upfront, and if your organisation is not successful, they may also have to pay the other party’s costs at the end of the proceedings.
Litigation involves a number of fees, some of which are obvious, and some of which, an organisation may not know about until they are in the middle of litigation. If you have determined that litigation is the right path forward, your organisation is likely contemplating an application for judicial review. Here is a rough breakdown of the costs that a party might incur in the course of an application for judicial review:
Each of these stages accumulates costs, and it is difficult to assess the amount for each stage because it will always vary based on the complexity of the matter and who is representing you. There will also be additional costs between each of these stages. The most considerable costs in legal proceedings are usually professional fees. Your solicitor and the barrister(s) working on the proceedings will be conducting work between these stages, and consulting you as the case progresses. Costs will continue to accumulate anytime that they conduct work on your file.
Remember, these costs only represent what you, as a party to the proceedings, will be expected to spend to make your case. On top of these costs is the added and significant risk of an adverse costs order being made against you at the end of the proceedings. The effect of that order would be that you would then be responsible for paying the other party’s costs. As a non-governmental organisation, it is often likely that the other party will be a public or governmental body for whom the cost considerations are not the same, and who may incur more costs than your organisation.
Additional Unexpected Costs
Your costs will increase with any interlocutory matter, even if the other side is bringing the interlocutory application, or initiating a case management review. Your solicitor will need to respond to any intervening matter that occurs in the course of proceedings. It is therefore difficult to definitively predict the cost of proceedings upfront.
Significant Cumulative Cost Risk
All of these costs are one reason why it is important to consider all other avenues before launching an application for judicial review. It is also why it is important to understand the various cost and risk mitigating supports and procedures that exist. We will now go on to consider Protective Costs Orders and how they can help insulate parties from that significant cost risk in litigation.
Protective Costs Orders
Protective Costs Orders (PCOs) are court orders that impose a limit on the costs that can be awarded against an unsuccessful applicant who brings a court case which addresses public interest issues.
The terms of a PCO will typically provide that an unsuccessful applicant of limited means will either not be liable for the other party’s costs or will only be liable up to a fixed amount. A PCO will also typically provide that a successful applicant of limited means will still be entitled to recover all or part of their costs from the other party.
PCOs are a valuable access to justice tool. PCOs enable organisations and applicants of limited means to launch public interest litigation without facing the risk of facing a substantial adverse costs order if the matter is not decided in their favour and provide a level of certainty for applicants.
PCOs are not universally available, and an organisation or individual must apply for a PCO and demonstrate their eligibility for a PCO before the court will agree to such an order.
Eligibility for a PCO
Whether or not to grant a Protective Costs Order is a matter of the court’s discretion. The court will consider whether making a PCO is fair, just, and reasonable in the circumstances, having consideration to all of the criteria.
Criteria
The court must be satisfied that the issues raised are of general importance.
You can refer to PILS’ definition of public interest to inform whether a matter is of general importance. It would be important to highlight if the issue in the proceedings would impact vulnerable members of society. Such litigation would be viewed to be of general public importance.
Case law from the High Court suggests that the decision must demonstrably impact more individuals than the applicant. In Re McHugh’s Application for Judicial Review, for example, the Court determined that the health trust’s decision not to make arrangements to provide the applicant with assistance to adapt her home to her needs was not a matter of public importance.
The court must be satisfied that the public interest requires that those issues be resolved.
It is not sufficient that the matter raises an issue of public importance. That issue of general importance must have some consequence which begs that it be resolved in this particular matter. It might be helpful here to highlight the urgency of the matter, or the number of individuals who are and will continue to be adversely impacted by this issue if it is not resolved.
The court must be satisfied that the applicant’s interest in the outcome of the case is not exclusively private.
The general rule is that the court must be satisfied that the applicant does not have a private interest in the outcome of the case. Caselaw has however established that it is not essential that the party applying for a PCO have no personal interest in the proceedings, but rather that the interest not be entirely private or personal. In Re McHugh’s Application for Judicial Review, the Court notes that the fact that the applicant had a personal interest in the proceedings did not invariably amount to a complete bar to making an application for a PCO.
The court must be satisfied that the applicant is likely to discontinue if the PCO is not made.
If this is the case, it is important to state this expressly in your application for a PCO. You should also show the court that the applicant cannot bear the financial risk of a cost order by providing the court with the applicant’s financial information. It is also relevant to advise the court if the applicant is either ineligible for legal aid or if legal aid was refused. Advise the court if professional services are being provided pro bono. The fact that services are being provided pro bono are likely to enhance the argument in favour of a PCO. All of these things help to demonstrate that the applicant cannot afford to bear a risk of unlimited costs.
The court must be satisfied that making the PCO is just and fair, having regard to the parties’ financial resources and the amount of costs likely to be involved.
The parties’ individual financial resources and their relative financial resources to each other are relevant to determining both whether to grant a PCO and to determining its terms. In Re Thompson’s Judicial Review, the Court found that a limit of £10,000 on any adverse costs order against an individual applicant was fair when challenging a planning permission decision. The applicant’s financial circumstances made her eligible for legal aid, but it was refused because she was a part of a forum community group objecting to the development who were deemed to be in a financial position to pay for the litigation. The Court imposed the cap of £10,000 because she was a person of limited means and the evidence before it showed that exposure to unlimited costs would make it inevitable that she could not proceed with the litigation if the cap was not imposed.
In Commissioner of Valuation v Doherty, a Tribunal imposed a PCO which required that the appellant, a public body with access to substantial resources, bear both its costs and the respondent’s costs regardless of the outcome of the proceedings. In this matter, the individual respondent had a very low annual income. The President of the Tribunal considered that this PCO was fair and just in respect of the parties’ financial circumstances.
Applying for a Protective Costs Order
Before Applying for a PCO
You should advise the other parties involved in the litigation and the court of your intention to apply for a PCO at the earliest opportunity. In an application for judicial review, you should include that you intend to apply for a PCO in your pre-action protocol letter.
You should also consider making a Protective Costs Agreement (PCA) with the other party before applying for a PCO.
A PCA is an agreement made between the parties to legal proceedings, limiting the costs awarded against one or more parties. A PCA will provide certainty and not require the judge to consider a request for a PCO. A party can seek a PCA by writing to the other party and asking them to consent to your proposed terms for the PCA. It may be necessary to negotiate with the other party as to the specific costs which will be payable on the conclusion of proceedings, and who will bear those costs. Any PCA agreed between the parties should be committed to writing. PCA’s do not have to be disclosed to the court, but it is good practice to write to the court to advise it of the agreement. In some instances, the parties may request or consent to the PCA being made a PCO.
If there is a PCA in place at the conclusion of proceedings, the parties may either request that the court make no order as to costs or request that the court make a Costs Order as per the terms of the PCA.
Application Process
There is no established procedure that you must follow to apply for a PCO.
You can make an application for a PCO by way of:
- a letter to the court;
- an affidavit lodged with the court; or,
- by including the application for a PCO within the Order 53 statement (if the case is an application for judicial review)
There are similarly no rules outlining the content of an application for a PCO. However, best practice would be to ensure that your application, in whatever form, addresses each of PCO criteria.
These are called the Cornerhouse criteria, and make up the test that the court will apply when deciding whether to grant your PCO. You must demonstrate to the court that these criteria are met, or that, on the balance, the court should exercise its discretion in favour of making a PCO.
Your application should also include information on why, in your view, a PCO is needed in this case, and your proposed terms of the PCO.
The terms could include: (1) that the respondent cannot recover any costs; (2) that the respondent can recover only up a particular amount in costs; or, (3) that neither party can recover costs. Remember that the court will consider whether your proposed PCO is just and fair having regard to the parties’ financial circumstances. It is therefore best practice to ensure that your proposed terms for the PCO are reasonable and fall within the range of terms that would be fair and just in the circumstances.
Practical Considerations
Timing
You can apply for a PCO at any stage in the proceedings. However, it is best practice to apply as early as possible.
Fees
There may be a fee for lodging an application for a PCO. The fee associated with the application will depend on the court in which the application is lodged and the method by which you make the application.
You can find out the fees that might be associated with making an application for a PCO in courts and tribunals in Northern Ireland here.
A process exists to apply for an exemption or remission of a court fee; more information on that is available here.
An applicant seeking a PCO may also be liable to pay the costs that the other party incurred in the PCO application proceedings in the event that the application is unsuccessful. In practice, these costs are likely to be minimal and the respondent usually does not seek recover those costs. However, it is still important to be aware of this risk.
You can apply for financial support from PILS to cover the court fees for applying for a PCO and an indemnity against any adverse costs that may be made if the application for a PCO is unsuccessful.
Hearing
The court will usually consider PCO applications when the case is first listed before the court. In judicial review proceedings, this is likely to be the leave hearing.
If the PCO application is made after the leave hearing then the court will consider the PCO at the first available opportunity, usually at a review hearing.
PCOs in Environmental Cases
There are specific rules setting out caps on legal costs in environmental cases in Northern Ireland.
The Costs Protection (Aarhus Convention) Regulations (Northern Ireland) 2013 provide a framework for fixed costs in legal challenges of environmental decisions. Under these provisions the maximum amount recoverable from the application was capped at £5,000 where the applicant was an individual and at £10,000 in other cases (for example where the applicant was a Non-Governmental Organisation). If the application succeeded, the amount recoverable from the respondent was £35,000.
The 2013 regulations have been amended by The Costs Protection (Aarhus Convention) (Amendment) Regulations (Northern Ireland) 2017, which came into force on 14, February 2017. The 2017 Regulations provide the courts greater flexibility when setting the cost caps which apply to the applicant and the respondent in environmental cases.
It is important to know that your service user or client still needs to make an application for a PCO to avail of this framework. The relevant PCO application should cite the 2017 Regulations. This regulatory framework eases the burden on applicants seeking a PCO in environmental cases.
Case Study - The Clean Air NI Case
Friends of the Earth NI availed of the caps imposed on environmental litigation under The Costs Protection (Aarhaus Convention) Regulations (Northern Ireland) 2013 in the diesel emissions case.
Friends of the Earth brought an application for judicial review against the Department for Infrastructure’s ongoing failure to perform legally compliant exhaust emissions tests on diesel cars in Northern Ireland since 2006. PILS provided Friends of the Earth with junior and senior counsel from our Pro Bono Registry.
After lodging proceedings, Friends of the Earth obtained a Protective Costs Order fixing that, in the event that Friends of the Earth is unsuccessful, the maximum amount that the Department can recover in costs is £10,000. PILS has also agreed to indemnify Friends of the Earth, which means that, if they are unsuccessful, PILS will pay the £10,000 costs order.
Pro Bono Cost Orders
Pro Bono Costs Orders are largely not (presently!) available in Northern Ireland.
Pro Bono Costs Orders are only available in relation to environmental cases under The Costs Protection (Aarhus Convention) Regulations (Northern Ireland) 2013.
They are, however, an incredibly useful tool in public interest litigation. We have therefore included them in this toolkit to explain how they work in other jurisdictions in the UK, and to encourage you to help us advocate for their wider introduction in Northern Ireland.
Operation of Pro Bono Costs Orders
Pro Bono Costs Orders apply where one party is obtaining professional legal advice or representation pro bono, meaning the barrister or solicitor is providing their services for free.
Generally, a barrister or solicitor acting pro bono is not entitled to recover costs in the form of professional fees because the party that they are representing has not incurred costs in the form of professional fees.
However, Pro Bono Cost Orders allow a successful party, who was provided with services pro bono, to seek to recover costs against the unsuccessful party. The amount is based on what a fee-paying client would recover, and are paid into a fund which distributes the money to agencies and projects that provide free legal advice.
Pro Bono Costs Orders help to even the playing field between parties in litigation. Presently, where an organisation is receiving services pro bono, the opposing party does not bear a costs risk, whereas the organisation bears a significant risk of costs if they are not successful. Where legal practitioners have access to Pro Bono Costs Orders, they are able to use the risk of costs as an incentive for the opposing party to consider settling the case.
Legal Aid
Legal aid is a service which assists individuals to obtain financial support to secure legal services and representation that they could not otherwise afford. Legal aid is also only available in relation to particular kinds of cases.
There are three different legal aid schemes: legal advice and assistance, civil legal aid, and criminal legal aid. You can find more information on these schemes here.
Legal aid is not available for organisations. It is therefore not a potential source of support if your organisation is bringing a case in its own name, but might be available where your organisation is supporting an individual applicant.
PILS & Legal Aid
When you make an application for financial support to the PILS Board, the application form will ask you what other avenues you have explored for financial support.
The PILS Project expects you to make an application for legal aid, where the applicant is eligible, or advise the PILS Project as to why your applicant is not eligible.
The PILS Project does not provide financial support for professional fees, so this is additionally an important avenue to explore for solicitors who hope to recover professional fees.
General Information on Legal Aid
Eligibility for legal aid is based on two factors: the individual’s income and the merits of their proposed case.
It is a service that exists specifically for individuals who heave a disposable income below a particular threshold. Therefore, it will only be low income individuals who are able to secure support from legal aid.
Legal aid applications should be made by a solicitor, and a solicitor is able to tell you if the individual that you are supporting is eligible for legal aid. The solicitor making the application will need the following information from the person who will be the applicant in the proposed litigation:
- National Insurance number
- All information about the applicant’s income and savings
- Bank/building society/credit union statements/savings documents
- Letter from the Social Security Agency detailing any benefits that the applicant receives
- Name and address of applicant’s employer
- Any other relevant documents to support applicant’s case
If the applicant’s application for legal aid is refused, they can request an appeal of that decision. However, appealing that decision will not necessarily be required before you can seek support from the PILS Project.
If your service user or client is seeking legal aid in relation to an application for judicial review, the time required to apply for legal aid, and their processing time, must be factored into the 3-month deadline. The courts have been clear that awaiting a decision on funding from legal aid or another source does not justify delay in an application for judicial review.