My Lords, this has been a useful debate and we have, by agreement, covered two groups. I will therefore respond on behalf of the Government in respect of both groups, which are effectively concerned with the same subject matter, namely costs capping.
Clauses 68 and 69 would build on case law, particularly the Corner House case referred to by a number of noble Lords, to establish a codified costs capping regime for judicial review proceedings, to govern what is ordinarily or alternatively referred to as a protective costs order. These provisions would put protective costs orders on a statutory footing. At present, a court can make a protective costs order before it has considered whether a claimant’s case is suitable to be given permission to proceed to judicial review. Claimants with what may turn out to be weak cases can thus benefit from costs protection even if the court subsequently decides that their case should not be given permission for judicial review, thereby leaving the public body to pay its own costs of dealing with a case which had no merit. Effectively, a claimant would have had a risk-free process until then.
Subsection (3) of Clause 68 seeks to address this by ensuring that a costs capping order can be made only if permission is granted for the judicial review to proceed. Amendments 75 and 75A would remove this principle, thereby allowing the court to make an order at any stage of the proceedings.
The Government intend to ensure that, when considering bringing a judicial review, would-be claimants give due consideration to the merit of their case, so that public bodies do not bear the financial burden of unmeritorious claims. The provision should not deter those who have cases with substantial and proper grounds for challenging the Government. On the other hand, people are generally cautious about proceeding with litigation in all contexts. They would do so only if they had reasonable prospects of success, having balanced what might be obtained from the litigation and the costs of doing it. We do not therefore think that a measure of proper deterrence is inappropriate in these circumstances.
I am happy to assure your Lordships that under Clause 68 a costs capping order may cover costs incurred prior to the grant of permission, as at present. The applicant can, as now, ask the court to make the order as part of the permission application. It is right, however, that until permission is granted the claimant should bear the financial risk of bringing a weak claim because, ex hypothesi, it will be weak.
Amendment 75E seeks to remove the requirement for the court to be provided with information on funding likely to be available to an applicant when deciding whether to make a costs capping order. I do not agree that prospective funding should be excluded from the information an applicant is expected to disclose or that the court should not be asked to consider it when making the order. It is vital—and this echoes arguments made in the previous group—that the courts are aware of the full financial underpinnings of a claim. This allows the court to assess whether a claim, although notionally brought by a claimant of limited means, is in fact sufficiently well resourced not to require subsidy by way of costs protection. The Corner
House principles require courts to consider the financial resources of claimants who request costs capping orders, to ensure that any award made is fair and just. This should be reflected in this new regime, firmly to re-establish the principle.
Clause 68 also provides that in judicial review proceedings a court may make a costs capping order in favour of a claimant only if it considers that the proceedings are “public interest proceedings”, and sets out factors the court must consider in making this decision. This reflects the principle in the Corner House case that costs capping orders should be made only if the issues raised are of general public importance and the public interest requires those issues to be resolved. Part of the effect of Amendment 75F would be to remove any public interest requirement, and Amendment 77 would remove the list of factors to which the court should have regard when considering whether the case is in the public interest.
The Government consider that it is right that costs capping orders should be made only in public interest cases, otherwise costs capping orders could be made in cases where no order would have been made under the Corner House principles. In fact, the amendments are therefore effectively a loosening of the established law. The taxpayer should be asked to subsidise cases only where there truly is a public interest in the case proceeding.