Judicial review has played a critical role in shaping the legal environment in which public sector bodies operate, but do budget cuts and the nascent trend towards using mediation mean that a valuable source of guidance will be eroded? Azadeh Khalilizadh investigates.

Addressing local government lawyers at last year's Solicitors' in Local Government Weekend School, the then Local Government Minister John Healey pleaded with local authorities to reduce the number of judicial review proceedings they were bringing in response to government policy initiatives.

The government may now get its wish, albeit not in the way it intended, as local authorities are tightening their belts in anticipation of budget cuts. Will bringing judicial review proceedings prove to be an expensive luxury?
Judicial review is an expensive process, and not one that brings much financial compensation in the same way as other forms of litigation. While councils can recoup their costs if they succeed, a negative outcome can leave a local authority nursing a large bill.

For this reason, many will think twice before launching proceedings.

“If judicial review is successful the court provides an order to recover the bulk of the costs incurred and will be able to enforce the order,” says James Goudie QC, of 11 King's Bench Walk.  “But if it loses the judicial review case, not only with the authority be liable for its own costs but the costs of the other party, so it becomes a very expensive outing.”

It follows, according to Planning and Public Law barrister James Maurici of Landmark Chambers, these ‘substantial costs’ will have to be met from a local authority’s existing budget and cuts will undoubtedly impact the willingness of local authorities to defend judicial review proceedings - the alternative being to settle the case. “Where a local authority is itself contemplating bringing proceedings similar issues will arise,” Maurici says.

According to Goudie, local authorities should not be deterred to bring strong judicial review claims if there are major issues at stake. However, in the face of budget cuts, local authorities should do everything to persuade the other party from entering into litigation before launching court proceedings.

In tighter economic times, Goudie says local authorities must just think “long and hard”, not only before launching proceedings but after, in order to hear what the defendant is saying, understand their grounds of resistance and re-appraise the case to see if it is weaker or stronger.

“It is important to consider whether the nature of the victory is sufficient to justify the costs,” he adds. “One assumes that before judicial review is sought, anything that could be done should be done and litigation is used as a last resort.”

Although authorities should continue court proceedings on pressing matters, authorities might be more careful in peripheral judicial review, Goudie notes. For instance, it may not be sensible to initiate proceedings concerning a criticism of a report from an ombudsman that they don’t like, which they may otherwise consider in less stringent conditions.

Peter Keith-Lucas, partner at to Bevan Brittan partner Keith-Lucas suggests where there is a dispute between two local authorities, they may choose to appoint a counsel instead of going to court. ”Judges are not wildly keen on cases involving public money on both sides,” he says.

However, while harder times may well reduce the appetite of many local authorities for going to court,, shrinking budgets could actually result in an increase in the number of judicial reviews. “People haven’t seen the worst [of the cuts] yet,” Goudie says. “In a bad economic situation, it does not necessarily follow that local authorities will be more reluctant to go to court.”

For instance, Goudie explains if authorities feel they are being squeezed with respect to grants, making it difficult to offer their services, or being forced to sack staff or freeze recruitment, the situation may motivate them to bring judicial review against the central government.

“Sometimes councils need to go to court on a vital matter if they know they have an arguable case, even if there is little prospect of success,” he says. “It may be more difficult to finance litigation, but there is more at stake hanging on the outcome.”

According to Peter Keith-Lucas, there is added pressure for local authorities to proceed with a court case if it is part of a series of cases that create a precedent effect. “If they do not go to court they will leave with the unfortunate precedent of having a reputation for being a soft touch,” he says.

Moreover, there remains some scepticism about the effectiveness of mediation to settle disputes bound for judicial review. A survey of local authority lawyers late last year by law firm Nabarro and barristers 39 Essex Street, found that almost all (97%) do not refer judicial reviews to mediation before court proceedings and that only one in ten cases were referred to mediation after court proceedings were commenced.

Speaking at the time, Nabarro partner Gerard Khoshnaw said that many more judicial cases could be taken to mediation. “There is a large number of disputes where it could be used; for example, where there is the existence of a continuing relationship between the Local Authority and the other party or where confidentiality or speed are particularly important,” he said.

Others remain to be convinced. ”If a local authority wants a definitive ruling on an issue of law, it is difficult to see what alternatives there are to judicial review proceedings,’ Maurici says. “Certainly mediation does not offer the chance for definitive rulings on difficult and disputed legal issues. In my experience it can be expensive and there is no guarantee of a definitive result to the dispute.”

The future looks more complex still after Lord Justice Jackson’s review of civil litigation costs, which recommended that, amongst others, judicial review cases would be suitable for the introduction of ‘one-way cost shifting’ in which claimants would not be liable for the other side's costs in the event of an unsuccessful claim, provided that their conduct in bringing the action was “reasonable”.

“The effect of which would be to make the default position, applicable other than in special categories of case or where there is unreasonable conduct, that win or lose a claimant would not be liable for the costs of the defendant public authority, but where the claim succeeds the defendant pays the costs of the claimant,” Maurici says. “This would only increase the costs burden of judicial review on local authorities where they are the defendant.”

Azadeh Khalilizadh is a freelance journalist