Supreme Court upholds general practice on costs awards in care cases

The general practice of not awarding costs in care proceedings against a party, including a local authority, "in the absence of reprehensible behaviour or an unreasonable stance", should not be subject to an exception in the case of discrete fact-finding hearings, the Supreme Court has ruled.

The case of T (Children) [2012] UKSC 36 involved a local authority’s application for a care order under s. 31(2) of the Children Act 1989 covering two children whose parents had separated.

The application was made in response to allegations from the children that they had suffered sexual abuse by their father and six other men. It was also alleged that the grandparents had colluded in this.

The six men and the grandparents were joined to the care proceedings as interveners. A fact-finding hearing was then conducted by the judge, who exonerated five of the men and the grandparents of any such abuse.

The six men had all qualified for legal aid so that they could be represented at the hearing but the grandparents did not. Their costs came to £52,000, which they paid for by taking out a mortgage on their house.

After the fact-finding hearing, they applied for an order that the council should pay their costs on the grounds that they had successfully defended the allegations. It was common ground that the authority had acted reasonably in bringing the proceedings.

The judge refused the application. This was then overturned at the Court of Appeal, which concluded that costs could be awarded in respect of discrete fact-finding hearings.    

The Supreme Court granted permission to appeal – but only on the basis that, whatever its decision, the grandparents’ entitlement to recover costs as a result of the Court of Appeal’s order would not be disturbed.

Giving the unanimous judgment of the court, Lord Phillips pointed out that family proceedings departed from the general rule applicable in civil proceedings that the unsuccessful party would be ordered to pay the costs of the successful party (CPR 44.3(2)(a)).

“In family proceedings, there are usually special considerations that militate against the approach appropriate in other kinds of adversarial litigation,” he said. “This is particularly true where the interests of children are at stake. This explains why it is common in family proceedings, and usual in proceedings involving a child, for no order to be made in relation to costs.”

Lord Phillips said the decision whether or not to have a split hearing was one of case management, taken by the court. “[This decision] cannot affect the principles to be applied by the court when dealing with costs, although it may have a practical impact on the court’s decision.”

The judge added that if it was correct in a particular case to award costs in relation to individual issues of fact, this could more easily be done if the costs associated with those issues were incurred in a separate hearing, but this was only relevant to the practicality of such an order.

Lord Phillips concluded that the question of whether it was just to make an award of costs against a public authority must be distinguished from the question of whether a litigant’s costs should be publicly funded. “The former question is for the court, the latter for the legislature.”

The effect of the Funding Code prepared by the Legal Services Commission was that children, parents and those with parental responsibility were granted funding without reference to means, prospects of success or reasonableness, but such funding was not available to interveners who were joined in such proceedings.

“There may be a case for saying that this results in injustice in the case of interveners in the position of grandparents in the present case, but it does not follow that justice demands that any deficiency in the provision of legal aid funding should be made up out of the funds of the local authority responsible for the care proceedings,” Lord Phillips said.

The judge added: “If in principle a local authority should be liable for the costs of interveners against whom allegations have been reasonably made that are held unfounded, then this liability should arise whether or not the interveners are publicly funded.”

He pointed out that in the present case, the five men who intervened and were exonerated should have sought and been awarded costs. The burden of costs awarded against local authorities in such circumstances was likely to have been considerable.

“When considering whether it is just to make an award of costs against a local authority in circumstances such as those of the present case it is legitimate to have regard to the competing demands on the limited funds of the local authority,” the judge said.

Lord Phillips added that in the context of care proceedings, it was not right to treat a local authority in the same position as a civil litigant who raises an issue that is ultimately determined against him.

Local authorities have duties imposed on them by the Children Act 1989, he said.

“If the local authority receives information that a child has been subjected to or is likely to be subjected to serious harm, it has a duty to investigate the report and, where there are reasonable grounds for believing that it may be well founded, to instigate care proceedings.”

The local authority has much in common with the role of prosecuting authority in criminal proceedings in this respect, the judge said. “It is for the court, and not the local authority, to decide whether the allegations are well founded.”

Lord Phillips said: “It is a serious misfortune to be the subject of unjustified allegations in relation to misconduct to a child, but where it is reasonable that these should be investigated by a court, justice does not demand that the local authority responsible for placing the allegations before the court should ultimately be responsible for the legal costs of the person against whom the allegations are made.”

The judge said there was no valid basis for restricting the approach of the Court of Appeal in this case to findings of fact in a split hearing.

“The principle that he [Lord Justice Wilson] applied would open the door to successful costs applications against local authorities in respect of many determinations of issues of historical fact. The effect on the resources of local authorities, and the uses to which those resources are put would be significant.”

Lord Philips said the Supreme Court had concluded that the general practice of not awarding costs in care proceedings against a party, including a local authority, in the absence of reprehensible behaviour or an unreasonable stance, was one that “accords with the ends of justice and which should not be subject to an exception in the case of split hearings”.

Philip Hoult