The government has failed in its bid to avoid liability for costs a claimant incurred in dealing with issues referred to the Court of Justice of the European Union (CJEU), where the UK left it to the EU to deal with those proceedings.
The claimant in Western Saharan Campaign UK v Revenue And Customs  EWHC 684 (Admin) sought just under £100,000 for its costs for the period not covered by an earlier protective costs order, which it said were largely incurred in preparing and arguing an issue referred to the CJEU.
The defendants – HMRC and the Department for the Environment, Food and Rural Affairs – said it would be “unprincipled and unprecedented” for them to be liable for the CJEU costs, given they were not the true defendants and did not participate in the hearing.
The claimant is an independent voluntary organisation that supports the recognition of the right of the Saharawi people of Western Sahara to self-determination and independence and to raise awareness of the unlawful occupation of the Western Sahara. Both claims contended that each defendant was acting unlawfully by applying provisions of EU law in relation to the region.
Four questions were referred to the CJEU but the UK government, although a party to the reference, did not participate in the proceedings either as a litigant or as an intervening member state. It decided to let the European Commission and Council of Europe, as “the owners (so to speak) of the relevant legislation”, to “take up the baton and to resist the claim”, the judge explained.
In ruling in favour of the claimant, the CJEU said the costs of the proceedings should be dealt with as part of the domestic case.
The claimant argued that there was no reason why the normal rule of costs following the event should not operate in its favour.
Mostyn J rejected the relevance of the UK government’s decision not to participate in the CJEU proceedings. “The fact that the defendant chose to allow the commission and the council to argue its case by proxy is to my mind neither here nor there. I do not consider it helpful or relevant for me to have to consider the extent of the interest which any intervening party is seeking to advance or defend in the proceedings before the CJEU.
“Nor do I consider that the non-participation by the defendants has any relevance to the decision I have to make. Non-participation in proceedings is rarely, if ever, any defence to a claim for costs. It is worth pointing out that had the defendants participated in the reference proceedings to the CJEU, and had the claimant lost in those proceedings, then the claimant would have been liable, in my judgment, for the defendants’ costs of the reference proceedings.”
The defendants also argued that the earlier protected costs order – which covered the period up to the reference to the CJEU – precluded any costs being recovered after the reference was perfected and dispatched to Luxembourg.
The order said: “The defendants’ liability, if any, in respect of costs incurred by the claimant in total for the period up to and including the handing down of any judgment in the substantive hearing listed pursuant to paragraph 5 below, together with any questions for a reference for a preliminary ruling to the CJEU which may be settled thereafter… shall not exceed £66,000 in total.”
Mosytn J said: “The defendants argue that the word ‘settled’ means ‘adjudicated’. Therefore, it is argued that all of the claimant’s costs of the reference to the CJEU are encompassed by the protective costs order of £66,000.
“I completely disagree with this. The word ‘settled’, in the context in which it is used plainly means ‘drafted and perfected’.”
The overall decision, Mostyn J said, was “simple”. He explained: “The claimant has succeeded. It has incurred costs in achieving its success. Those costs have included the incidental expense of a reference to the CJEU. Those incidental costs are plainly claimable. They should be awarded in the claimant’s favour.”
Kieron Beal QC and Conor McCarthy (instructed by Leigh Day) for the claimant, Brian Kennelly QC and Paul Luckhurst (instructed by Government Legal Department) for the defendants.