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Court of Appeal gives guidance on destination of County Court "costs only" appeals

(1) Ian Handley and anr v Lake Jackson Solicitors (A Firm)/ (2) Vanda Lopes v London Borough of Croydon/ (3) Christie Owen & Davies Limited v Awan [2016] EWCA Civ 465

David Lintott successfully appeared for the London Borough of Croydon in the case of  Lopes v Croydon, one of three cases in which applications for permission to appeal against a costs order were heard together to establish the correct destination of such appeals.

The London Borough of Croydon lodged an appeal against the order of HHJ Bailey that it should pay costs in circumstances where Ms Lopes had withdrawn her appeal under s.204 of the Housing Act 1996. The issue arose as to whether such an appeal must be heard by the High Court or the Court of Appeal. Ms Lopes argued that the correct destination was the Court of Appeal. The case was listed before the Court of Appeal, along with Handley v Lake Jackson and Christie Owen v Awan, so that the Court could give directions on the correct destination for such appeals. The Court also decided whether permission to appeal should be granted in each case.

Part IV, sections 54-73 of the Access to Justice Act 1999 deals with, inter alia, the reform of the system for appeals in civil and family cases. Section 55 deals with second appeals and provides:

"(1) Where an appeal is made to a county court or the High Court in relation to any matter, and on hearing the appeal the court makes a decision in relation to that matter, no appeal may be made to the Court of Appeal from that decision unless the Court of Appeal considers that – (a) the appeal would raise an important point of principle or practice, or (b) there is some other compelling reason for the Court of Appeal to hear it."

The Access to Justice Act 1999 (Destination of Appeals Order) 2000 provides:

"5. Where- (a) an appeal is made to a county court or the High Court (other than   from the decision of an officer of the court authorized to assess costs by the Lord Chancellor); and (b)  on hearing the appeal the court makes a decision, an appeal shall lie from that decision to the Court of Appeal and not to any other court."

The Court of Appeal held as follows:

(1) Section 55 (1) is applicable only in respect of the decision of the county court on the appeal to it. The subsection applies where an appeal is made to the county court "in relation to any matter". That refers to the subject matter of the appeal to the county court, namely the decision of the decision maker at first instance.  When the section then refers to a decision "in relation to that matter" it refers to the decision which the county court makes as to the validity or otherwise of that decision; and the second appeals test relates only to the decision of the county court on that issue ([44]-45]).

(2) The Practice Direction, which was plainly intended to reflect section 55, which must take precedence, should be treated as applying the second appeals test only to the decision of the County court on the validity or otherwise of the decision maker at first instance. ([46])

(3) Article 5 of the Destination of Appeals Order is in wide terms. It does not contain the "in relation to any/that matter" phraseology of section 55. It is Article 5 that stipulates the Court of Appeal as the sole destination of a second appeal and it can take effect in accordance with its own terms. Stadlen J was in error in Rubric Lois King (A firm) v (1) Peter Lane and (2) Kim Lane QBD Birmingham (unreported) (13 March 2012) in holding that the route of appeal in that case was to the High Court. That was a case in which the county court judge had allowed the appeal and declined to give the claimants their costs of it. That circumstance fell within Article 5 since the judge had heard the appeal and on hearing it had made decisions (i) that the appeal should be allowed; and (ii) that the claimant should not recover its costs of the appeal. ([47]-[51]

(4) Article 5 applies where a county court judge makes a decision "on hearing the appeal".  Such a decision may include a decision on the costs of the appeal.  But there must have been what amounts to a hearing of the appeal. That will not be the case if the court has refused permission to appeal: Jolly v Jay [2002] EWCA Civ 277, [52]-[53]; or has dismissed the appeal upon the appellant seeking to withdraw it, as happened in Unichi v London Borough of Southwark [2013] EWHC 3681.  On the other hand, if there has been a hearing of the appeal, the Article does not cease to be applicable because part of the decision on appeal is made in writing following written submissions. The Court will still have heard the appeal and then made a decision. The route of appeal cannot alter according to whether or not a decision on costs was made (a) in a judgment delivered orally at the end of the hearing; (b) in a judgment delivered orally at a later date; (c) in writing as part of the judgment on all the issues; (d) in writing, but after a judgment had been delivered orally, or handed down in writing, on the issues other than costs.   ([52])

(5) The Court concluded:

"In short, in a case where the decision of the county court was itself made on appeal from a district judge (or a deputy district judge) the position lies thus: i) If the county court judge has heard the appeal and ruled on the issues determined by the district judge (including the validity or otherwise of the  claims, the relief to be granted and the costs of the hearing before the district judge), any appeal will lie only to the Court of Appeal. Permission must be sought from the Court of Appeal and the second appeal test will apply. ii) In respect of the costs of the appeal to the county court, any appeal will lie to the Court of Appeal; iii)  It would be open to the county court judge to grant permission to appeal to the Court of Appeal in respect of the costs of the appeal to the county court and the normal test for permission will apply. It would also be open to the Court of Appeal to grant permission applying the  same test. iv) If there has not been what can properly be regarded as a hearing of the appeal, any appeal (which is almost certainly to be one on costs) is to the High Court judge and the normal test will apply."

([54])

This approach was regarded as position as consistent with principle because it ensures that what are truly second appeals can only go the Court of Appeal and then only if they pass the second appeals test. A decision by the county court judge as to the costs of the appeal to him is not a decision which, if it goes to the Court of Appeal, will already have been reviewed once. It will not have been reviewed at all. If such an appeal must meet the second appeals test there would be a very severe restriction on appellate review of what is, in effect, an original decision.

Applying those principles the Court:

(1) Determined that there had been no hearing in the case of Lopes v Croydon. The correct destination of appeal was therefore the High Court. Sitting as the High Court the court granted permission to appeal and referred to appeal to the High Court for hearing ([59]-[60] and [71]);

(2) Determined that the correct destination of appeal in Christie Owen & Davies Ltd v Awan & Awan was the Court of Appeal with no second appeals test, and granted permission to appeal ([57] and [65]); and

(3) Determined that the correct destination of appeal in Handley v Lake Jackson was the Court of Appeal, with no second appeals test for the costs part of the appeal (although that test did apply to the order for an interim payment), and refused permission to appeal ([61] and [75])

The Court held that the case may be cited as authority in future cases ([76]).