Costs-Comfort for Unsuccessful Litigants in Public Law Proceedings

What you need to know

• The “starting position” in “public interest proceedings” in the Supreme Court is that an unsuccessful claimant should be exempted from a costs order against them.
• The entirely successful State party respondent may request the Supreme Court to depart from that “starting position”. The State party may request that the claimant be required to persuade the Court to exercise its discretion so as not to award costs in favour of the State party.
• The Supreme Court will depart from the “starting position” only if it is satisfied:
  • That the issue in the appeal was not truly one of general public importance, and/or
  • There are specific features of the case that suggest that the unsuccessful litigant should bear the costs.
• The Supreme Court’s application of these principles will usually have downstream impacts. These impacts can trace back to the costs awards made in the earlier proceedings in the High Court/Court of Appeal, which ultimately led to the appeal in the Supreme Court, with the Supreme Court ordering that the costs awards in those proceedings align with its decision at the conclusion of the appeal.
• In exceptional circumstances, the Supreme Court can go further. It may order the successful State party to pay some or all of the costs of the unsuccessful appellant.
• The “starting position” approach does not apply to the High Court or Court of Appeal. However, the Supreme Court has reminded these courts of their powers. They can exempt an unsuccessful public interest litigant from costs, and, in exceptional cases, make a costs award in the litigant’s favour.
• The criteria applicable in those Courts when exercising these discretions are similar to those applicable in the Supreme Court. These criteria are set out in the Supreme Court’s judgment.

Introduction

The starting position in public interest proceedings in the Supreme Court from now on is that an unsuccessful claimant will not be made to pay the State party for the costs of their defeat.

In exceptional circumstances, the Court may even make a costs order in favour of an unsuccessful claimant, and against the State party respondent.

The Court clarified that its approach did not affect the costs principles applicable between private parties in litigation. It also emphasised that the “starting position” in public interest proceedings was just that: a starting point. It does not alter or constrain the statutory discretion of the Court when making cost orders. So, if a successful State party requests a ruling on costs, the unsuccessful litigant must seek to convince the Supreme Court to exercise its discretion so as not to award costs in favour of the entirely successful State party. However, in that event, the Court will award the State party its costs only if it is satisfied either that:

1. The issue in the appeal was not in fact one of general public importance, or
2. There were specific features of the case, as outlined in the judgment, that made it appropriate to order the unsuccessful party to bear the costs.

The starting position applies only to the Supreme Court. However, when the Supreme Court adopts it at the end of an appeal, it usually affects cost orders that it will make concerning the proceedings in the courts from which the appeal to it emanated.. The other Superior Courts also have discretion when making cost orders. They have similar powers to exempt unsuccessful public interest litigants from having to pay costs. In exceptional cases, they can even award costs in favour of these litigants.

Background

In Little v Chief Appeals Officer & Others, the State respondents had “entirely succeeded” in High Court proceedings. In that Court, they were awarded their costs based on their statutory entitlement. The Court did not exercise its discretion to order otherwise. The appellant brought an appeal to the Supreme Court. They challenged both the substantive decision and the costs award.

Before the Supreme Court, the State respondents agreed to set aside the High Court’s costs order against the appellant. They also accepted that no order for costs should be made for either the High Court or Supreme Court proceedings. The Supreme Court ruled accordingly.

The Court also took this case as an opportunity to provide some “concrete guidance” on costs awards in public interest litigation.

The “starting position” for the Supreme Court

The Court noted that, since the 33rd Amendment of the Constitution, its appellate jurisdiction applied only in specific cases. An appeal can proceed only if it raises matters of general public importance, or if the interests of justice require it.

If the Court grants leave to appeal because the case involves a matter of general public importance and maintains that view after the full hearing, a specific costs approach applies in “public interest proceedings”. In these cases, the Supreme Court’s starting position is not to award costs against the unsuccessful public interest litigant. This litigant is usually the plaintiff or claimant but could also be a defendant or respondent in a case brought by a State party.

The Court defined “public interest proceedings” as civil litigation which:

1. Involves an action against the State or an organ/agency of the State, or the defence of an action or claim by the State or a State party
2. Seeks relief in public law, whether by way of plenary, judicial review, or statutory appeal proceedings, and
3. Raises directly a point of law of “general public importance”.

The Court can depart from this starting position if the State or State party requests it. In that instance, the claimant must convince the Court that it should not exercise its discretion in favour of awarding costs to the entirely successful State party. When making this decision, the Court will consider several factors, including:

• The public importance of the legal issue and whether it is novel, unclear, or, if clear, should be reconsidered and changed.
• Whether the point is ultimately found to be covered by well-established authority or precedent.
• Whether any personal advantage would be obtained by the appellant from the outcome of the proceedings.
• Whether the unsuccessful party stands to gain a private benefit that makes it unfair not to award costs against them, such as when the case was brought for a commercial purpose.
• The strength of the appellant’s case.
• The systemic importance of the point of law at issue.
• Whether the point arises from avoidably unclear legislation.
• Whether the case is a “test case” for a larger cohort of pending claims.
• Whether the nature of the case means that awarding costs could discourage others in a similar position from bringing legal action.
• The conduct of the unsuccessful party.
• Whether the legal issue is so specific to the unsuccessful party’s case that it does not meet the threshold for exemption from costs.

The same principles apply to costs incurred in the same proceedings before they reached the Supreme Court. The Court will therefore make cost orders regarding the proceedings before they reached the Supreme Court which are aligned with the order made as respects the appeal.

The Court, however, noted that different costs orders might apply as between the proceedings in the Court(s) below. Examples include where issues were raised in the High Court or Court of Appeal, but not raised before the Supreme Court, or if aspects of how the case was handled below are relevant to deciding the costs that should be ordered concerning those proceedings.

Cost orders in favour of unsuccessful appellants

While “most rare”, the Court can order some or all of the costs of an unsuccessful appellant in public interest proceedings to be paid by the successful State party.

Here, the test is much stricter than the one used simply to exempt the unsuccessful litigant from having to pay costs. What is required is a case of:

“real substance, in which there is a clear and significant public interest on a matter of fundamental importance served by the clarification brought to the law by the suit”.

A case will ordinarily need to raise a “foundational issue[ ] of constitutional or European law” for this type of award to be made.

The Court noted five types of cases where this type of order had been made:

1. Cases raising “fundamental” constitutional issues which “touched on sensitive aspects of the human condition”
2. “Constitutional cases of ‘conspicuous novelty’”, often involving the separation of powers doctrine
3. Cases in which the issue was one of “far reaching importance in an area of the law with general application”
4. Cases that clarified an “obscure or unexplored area”, and
5. Cases in which a claimant had lost the appeal but succeeded on a significant issue during appeal.

Consequences for High Court and Court of Appeal

The Supreme Court's "starting position" does not apply to the High Court or Court of Appeal, except for the downstream cost effects linked to a Supreme Court appeal. However, the Supreme Court reminded these courts that they have the power to exempt an unsuccessful public interest litigant from paying costs. In exceptional cases, they can also award some or all costs to that party. When exercising this discretion, these courts should consider similar factors to those outlined by the Supreme Court in its Little judgment.

Conclusion

In practice, State parties have often either agreed not to seek, or been refused, costs awards against their unsuccessful opponent in civil public interest cases. However, the decision in Little v Chief Appeals Officer & Others now reinforces this and establishes it as the “starting position” for costs of appeals to the Supreme Court in these types of proceedings. By definition, such proceedings raise points of law of general public importance. While State parties who are entirely successful in such proceedings have a statutory entitlement to an award of costs in their favour unless the Court decides otherwise, the Supreme Court will now proceed on the basis that no order for costs should ordinarily be made.

In exceptional cases, where criteria similar to ones listed in Little apply, an unsuccessful litigant may even be awarded some or all of their costs against the State party.

State parties who disagree with the application of the “starting position” will have to request a ruling on costs in their favour. The unsuccessful litigant, relying on this “starting position”, will have to convince the Court that it should not depart from it, based on the specific circumstances of the case.

The Supreme Court has ruled that it will not depart from this position unless:

1. It becomes clear that the case does not actually raise a matter of general public importance, and/or
2. There are specific factors, as outlined in the Little judgment, that outweigh the starting position.

While the Supreme Court’s “starting position” does not apply in the High Court and Court of Appeal, the other principles and guidance in the Little judgment do. These Courts also have the discretion to exempt unsuccessful litigants in public interest proceedings from adverse cost-awards. In exceptional cases, they may even award costs to such litigants against State parties.

For litigants challenging State parties and for State parties involved in these cases, the Little judgment is essential reading. It will help such parties to forecast whether the proceedings are likely to be classified as "public interest proceedings." If they are, it is also important to assess whether the High Court or Court of Appeal will view them as raising matters of general public importance.

If an appeal is brought to the Supreme Court, the granting of leave will suggest that that Court considers the case to raise a matter of general public importance. However, it will remain to be seen whether the Court will maintain this view at the end of the substantive appeal. If it does, the "starting position" on costs will apply.

If the relevant factors are present, the Courts may decide, in their discretion, not to order costs against the unsuccessful litigant in favour of the State party. However, if a request is made to depart from this approach, the Court will consider whether there are additional factors—outlined in the judgment—that justify awarding costs against the litigant, even if the case meets many public interest or general public importance criteria. These would include:

• Weakness of case
• Lack of novelty
• Extent of private advantage at stake
• Discreteness and limited general applicability of the case, and
• Conduct of the unsuccessful party.

In general, Little reinforces and clarifies the principles guiding the Superior Courts in civil public interest cases. It affirms their discretion to exempt unsuccessful litigants from costs and, in exceptional cases, to award costs in their favour. By setting a "starting position" for the Supreme Court’s discretion, the judgment preserves flexibility while providing clear guidance on how costs are likely to be handled when certain factors are present. It also outlines when the Court might take a different approach.

This is likely to offer some reassurance and cost protection to those considering public interest litigation. At the same time, it serves as a reminder to State parties that even if they successfully defend or conduct such cases, they may not be awarded costs. In rare instances, they could even face costs awards against them.

For more information and expert advice, please contact a member of our Public, Regulatory & Investigations team.

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