Upper Tribunal (Administrative Appeals Chamber)

Decision of the Upper Tribunal
(Administrative Appeals Chamber)

As the decision of the First-tier Tribunal (made on 1 November 2010 under reference 09-01042) 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 that the application for a costs order is within the jurisdiction of the First-tier Tribunal but is refused.

Reasons for Decision

A.          Introduction

1.           This case is related to the identification of the special educational needs of Chandresh. His father is the appellant and the local authority is the respondent. The case follows from my decision in HJ v London Borough of Brent [2010] UKUT 15 (AAC), which turned on the handling of the evidence before the First-tier Tribunal. Chandresh’s needs have now been identified to the satisfaction of his father, but an issue has arisen about the costs of the proceedings.

B.          the error of law and how it was made

2.           On 21 January 2010, I allowed the father’s appeal and remitted the case to the First-tier Tribunal for reconsideration. The case was listed for hearing on 19 July 2010. On that day, the local authority conceded and the father withdrew his appeal. This was put into writing and signed by the father, his counsel and the authority’s representative. Paragraph 4 of the agreement reads: ‘The issue of costs to be dealt with by further application under Rule 10.’ The father submitted a written application for costs and, on 28 July 2010, Judge Aitken directed the authority to respond. The application was considered and refused by Judge Vaisey on 4 October 2010. On 1 November 2010, Judge Brayne reviewed that decision and substituted a decision that the First-tier Tribunal had no jurisdiction to make a costs order. The review was on the basis that no application for costs had been made during the proceedings and, once the appeal had been withdrawn, there were no longer any proceedings in which an application can be made. The judge refused permission to appeal, but I gave permission in view of the issues that appeared to arise. I then directed an oral hearing of the appeal. This was held on 24 March 2011. At the hearing, the authority’s representative accepted that an application for costs had been made orally to the First-tier Tribunal before the appeal had been withdrawn. The proceedings were ongoing at that stage. In those circumstances, the tribunal had power to deal with the costs order under rule 10(5) of the Tribunal Procedure (First-tier Tribunal) (Health, Education and Social Care Chamber) Rules 2008 (SI No 2699):

 ‘An application for an order under paragraph (1) may be made at any time during the proceedings but may not be made later than 14 days after the date on which the Tribunal sends the decision notice recording the decision which finally disposes of all issues in the proceedings.’

3.           It follows that the decision of Judge Brayne was made in error of law, as the tribunal did have jurisdiction to deal with the costs application. The parties agreed that, rather than remit the case to the First-tier Tribunal for the application to be dealt with again, I should deal with it. I gave directions for the parties to put their cases to me in writing, which they have now done.

C.          The First-tier Tribunal’s powers

4.           I have to exercise the powers available to the First-tier Tribunal. It has 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:

‘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.

5.           The application in this case is for an order on the grounds set out in rule 10(1)(b).

D.          the law on unreasonable conduct

6.           Three issues arise: Did the local authority or its representative act unreasonably in defending or conducting the proceedings? If so, should the Upper Tribunal make a costs order against the authority? If so, in what amount?

The caselaw

7.           The meaning of ‘unreasonable’ was discussed by the Court of Appeal in Ridehalgh v Horsefield [1994] Ch 205 at 232:

‘“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.’

The Court was there concerned with wasted costs, but the reasoning is equally applicable to unreasonable conduct.

8.           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 he had acted unreasonably. Mummery LJ discussed a number of points of general relevance.

9.           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 …’

10.        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.’

11.        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.’

12.        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.’

13.        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.

E.           The costs application

14.        I do not need to set out the details of the application or of the authority’s response, both are in the papers together with their supporting documents. I can summarise it like this. The complaint is that the authority acted unreasonably in defending and conducting the proceedings in three respects. First: by not accepting the expert reports obtained by the family from the United States. Second: by not viewing the video showing Chandresh’s behaviour at home. Third: by requiring the production of an unnecessary number of expert reports. Fourth: by failing to concede until the last minute. The tone, and some of the content, of the application impugns the good faith, and questions the motivation, of those involved in the proceedings on behalf of the authority.

F.           why i refuse the application

15.        The issue is whether the authority acted unreasonably. My decision is that it did not. This is why.

16.        I cannot award costs just because the father effectively won his case. That would undermine the restricted basis of the power under rule 10(1)(b). It is always possible to look at matters after the event with the benefit of hindsight. I must not do that.

17.        In making my assessment, it is not proper to second guess a party’s decisions in the course of litigation. Merely because particular evidence in the end secured a particular outcome, it does not follow that it was unreasonable to defend the case or that it was unreasonably conducted. It is important to remember that Chandresh’s needs had to be decided as at the date of the hearing before the tribunal. The significance of individual reports have to be considered in the context of the way the evidence unfolded, as well as in the developing circumstances of the availability of school places and other factors. The reasonableness of a party’s conduct has to take into account the ongoing and evolving nature of the proceedings.

18.        As to the viewing of the video evidence, it was the First-tier Tribunal’s decision to exclude this. It did not take that decision properly, but the value of the evidence was limited. It showed how Chandresh behaved at home over a period of time. It consisted of clips and would therefore present only a series of snapshots. Moreover, authorities do not necessarily have the facilities available to view video evidence. This was at best only of marginal value, however important it seemed to the father.

19.        As to the production of reports, it is a matter for a parent what reports to commission. The other party is not obliged to accept them and their significance may develop as the case unfolds. It does not follow from the existence of reports that they were the sole, or even a major, factor in persuading the authority to concede.

20.        As to the last minute decision to concede, the authority did ask for a postponement. That would have avoided the costs of attendance, but the First-tier Tribunal refused the application. Moreover, a hearing was probably necessary in order to ensure that the disposal of the case was formally correct.

21.        It would be unreasonable if any officers of the authority had acted with any improper motive or for an improper purpose in the handling of the case. However, I do not accept that there is any basis for accusing the officers concerned of doing so. There is no evidence to support such allegations or implications. They may reflect the father’s genuine perception, but there is no objective basis for them.

Signed on original on 12 May 2011

Edward Jacobs Upper Tribunal Judge