Croydon Council case highlights the issues around costs for many Local Housing Authorities

25 January 2017


Susan Elmore, Senior Associate and housing litigation specialist, acted for The London Borough of Croydon ("LBC") in its successful appeal against a county court decision to award an applicant for housing, Vanda Lopes ("VL"), 85% of her costs following settlement by consent of statutory county court appeal proceedings issued pursuant to Part 7, Section 204 of the Housing Act 1996 ("the Act").

VL's appeal was against a decision by LBC on a review of an earlier refusal to provide VL and her family with housing on the grounds that she was not homeless, or threatened with homelessness, finding she had accommodation available to her in Portugal. VL served fresh information after she had instigated the appeal. The High Court held that:

  • LBC had not failed to carry out adequate inquiries; and
  • Had the appeal been fought, LBC would have been successful in resisting it; and
  • As LBC would have to entertain a fresh homelessness application in any event;
  • So it was entitled to its costs.

The facts in brief

VL challenged LBC's review decision pursuant to Section 202 of the Act that VL was not homeless as she had accommodation in Portugal which was available and suitable for her and her family's occupation. The accommodation was a flat which she had previously occupied with her partner, two children, mother-in-law, brother-in-law and his family.

This decision was reached following two interviews conducted by LBC with VL, with an interpreter present at both. The notes of the first interview with VL recorded that "she left as there was no work in Portugal" and that she was not asked to leave. Her partner and children continued to live in the flat when she came to the UK. The second interview notes recorded that VL had again stated that she was not asked to leave but that as there was tension and disagreements with her brother-in-law, she had been told to find a solution to the issue and so had left to find work in the UK. It was only after she found work that her family came to reside with her. LBC had concluded that VL had planned her move to the UK and had not been evicted from the flat by her mother-in-law. VL appealed.

Shortly after lodging the appeal, VL served a witness statement exhibiting a letter from her mother-in-law stating she would not be able to accommodate VL and her family at her home in Portugal. 

Due to this fresh information, VL agreed to withdraw her appeal and LBC agreed to withdraw its decision, the subject of the appeal and issue a fresh Section 202 review decision.  

The issue of costs

As to the costs of the appeal, VL argued that she should recover her costs as she had obtained the relief sought as if she had won her appeal. LBC argued VL would have lost her appeal but that it would have had to entertain a fresh application based on the new evidence from VL's mother-in-law in any event, and so it should recover its costs of the appeal. 

The issue of costs was determined by the court on paper. VL submitted that LBC had failed to make reasonable and proper  inquiries before making its decision and that, had it contacted VL's mother-in-law, it would have obtained the new information before its Section 202 decision was reached. VL would not therefore have had to submit this new evidence on appeal. 

Further, that the effect of the Judgment of Lord Neuberger in Regina (M) v Croydon LBC (2012) EWCA Civ 595 1 W.L.R. 2607 at paragraph (61) was that VL should be awarded her costs because Croydon Council had agreed to make a fresh decision on her homelessness application and she had therefore received the relief sought.   

LBC submitted that it had made appropriate inquiries by interviewing VL twice, with a person present who could interpret for her and in relying on what she had said.    As a fresh application would in any event have had to be entertained based on the fresh information, it was commercially sensible to agree within the appeal to undertake a fresh review when the fresh information could then be considered.  Further LBC submitted that it would have won the appeal had it not been compromised for commercial reasons.

The Central London County Court judge, HHJ Bailey, awarded VL 85% of her costs of the appeal. LBC appealed against that costs order.

The issues on appeal before the High Court

  1. Was the judge wrong in ordering LBC to pay 85% of VL's costs of the appeal?; and
  2. If so, what was the correct order for costs, that:
  • VL pays the costs of the appeal
  • That there be no order for costs

The High Court decision

In reaching its decision, the High Court held that:

  1. The court below had failed to identify and apply the appropriate test in determining whether proper inquiries had been made. It was for LBC to decide what inquiries were appropriate to enable it to be satisfied of the relevant matters under the Act, with its decision being subject to challenge on traditional public law grounds.
  2. That the question of costs in appeals settled by consent depends on the facts and circumstances of each case. As held in the case of Regina (M) v Croydon LBC: whether a party has succeeded in obtaining the relief sought, the facts of the case may make it appropriate to make:
    • No order as to costs; or
    • If it is reasonably clear who would have won to award that party their costs; or
    • Where settlement does not reflect a party's claim, to determine who would have won and award that party their costs.
    • Where it is not possible to determine without a disproportionate expenditure of judicial time, the appropriate order is no order for costs.
  3. The provisions of Practice Direction 52A provides that where an applicant does not wish to proceed with an appeal it can:
    • Ask the court to dismiss it, when costs will normally be awarded against the applicant;
    • Seek to agree with the respondent there should be no order for costs and ask the court to dismiss on this basis;
    • The claimant and the respondent can ask for the appeal to be dismissed, when if approved the appeal will be dismissed.

Applying the above, the High Court held that LBC would have succeeded on the appeal. It had:

  • Made appropriate inquiries by interviewing VL twice, in the presence of an interpreter; and
  • Obtained information from her as to the nature of the accommodation in Portugal, which she and her family were occupying;
  • That she had not been asked to leave that accommodation;and
  • That she had come to the UK to look for employment with a view to her partner and children joining her at that stage.

LBC did not act unlawfully by not making further inquiries or by not contacting VL's mother-in-law in Portugal. LBC was entitled to conclude on the material before it that VL was not homeless or threatened with homelessness. Accommodation was available for her and her family in Portugal.

Furthermore, the reason for LBC agreeing to withdraw its review decision, rather than fighting the appeal, was that VL had produced the new material, after she had instituted the appeal proceedings. That meant that LBC would be obliged to conduct further inquiries into any fresh application for housing assistance made on the basis of that new information, irrespective of the outcome of the appeal. The appeal had thereby been rendered academic but, had it been fought, the High Court held that LBC would have been successful in resisting it and so the successful party. In all those circumstances, the proper order was that VL pays the costs of the appeal, subject to any protection to which she was entitled by reason of being publicly funded.

Guidance on jurisdiction for hearing the costs appeal

This case also provides guidance on jurisdiction of statutory county court appeals on costs. At the permission to appeal stage the Court of Appeal held that where on an appeal there had been a decision on costs only and the court had not considered the validity of the underlying decision, an appeal in relation to those costs lay to the High Court not the Court of Appeal.

Conclusion

This case highlights the issues currently faced by many Local Housing Authorities on the issues around costs. It confirms that the court will not simply award a claimant its costs on the basis it obtained the relief sought, but will in appropriate cases order costs against an applicant.

The fact a party may have obtained all or some of the relief sought is not always a reason to award that party its costs. Consideration must be given to the circumstance leading to an agreement between the parties as well as the merits of each party's case. 

Of the merits of the challenge, it is for the council to judge what inquiries are necessary and it is only susceptible to a successful challenge if it is considered that no reasonable council would have failed to regard as necessary the further inquiries suggested by the applicant for assistance. That such additional enquiries may have been 'helpful' is not sufficient.

Further, LBC took a sensible approach in agreeing to carry out a fresh review decision to consider the new information submitted by VL. The alternative approach was to fight the appeal, when at the same time, VL was entitled to make a fresh homelessness application, when, LBC would be required to consider the new information in any event.

Although costs in the case at first instance can only be enforced with leave of the Court against a legally aided applicant, the costs in the appeal are recoverable from the Legal Aid Agency, which must be claimed within three months of the order awarding the costs.


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