Care North East Northumberland, R (on the application of) v Northumberland County Council
[2024] EWHC 1370 (Admin)
Durham County Council v The Durham Company Limited
26 June 2023
[2023] EWCA Civ 729
Court of Appeal
A company sued a council for allegedly illegally subsidizing its own business. A judge capped the council's legal costs. The Court of Appeal said the judge couldn't do that and threw out the cost cap, saying there are better ways to control legal costs.
Key Facts
- •Durham County Council (Council) appeals a Competition Appeal Tribunal (CAT) decision capping its recoverable costs at £60,000 in a subsidy control case brought by Durham Company Limited (Max Recycle).
- •Max Recycle alleges the Council's trade waste charging practices constitute an unlawful cross-subsidy, subsidizing its commercial operation with non-commercial household waste funds.
- •The case is the first application for statutory judicial review under section 70 of the Subsidy Control Act 2022.
- •The CAT judge imposed the cap to prevent excessive costs from discouraging challenges under the Act.
- •The Council argues the CAT lacked jurisdiction to impose such a cap, and that the amount was irrationally low.
Legal Principles
Statutory judicial review of subsidy decisions under section 70 of the Subsidy Control Act 2022.
Subsidy Control Act 2022, section 70
The CAT's jurisdiction to make costs capping orders arises from Rule 19(2)(r) and 53(2)(m) of the CAT Rules, analogous to CPR 3.19.
Competition Appeal Tribunal Rules 2015, Rules 19(2)(r), 53(2)(m); CPR 3.19
Costs capping orders under CPR 3.19 require: (a) it's in the interests of justice; (b) substantial risk of disproportionate costs without the order; (c) risk can't be controlled by case management or detailed assessment.
CPR 3.19(5)
A successful litigant is normally entitled to recover reasonable and proportionate costs; limiting caps are a derogation requiring rules or legislation.
Case law discussed in the judgment
The CAT's case management powers under its rules don't restrict its ability to manage costs, even in subsidy control cases, but these powers do not extend to setting arbitrary caps.
Subsidy Control Act 2022, section 70; CAT Rules
Outcomes
The Court of Appeal allowed the Council's appeal.
The CAT judge erred in imposing a limiting costs cap without jurisdiction to do so under the CAT Rules or the Subsidy Control Act 2022. The judge did not properly apply the principles of CPR 3.19, which would have required consideration of whether the three conditions were met before the imposition of any cap. The Court of Appeal held that costs budgeting or detailed assessment, rather than an arbitrary cap, were the appropriate methods to control costs in this case.
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