Discretion in relation to costs is a wide one and awarding costs on an indemnity basis against an unsuccessful party is a departure from the norm.

The substantive matter in the case of R (on the application of Kaienga) v Secretary of State for the Home Department IJR [2015] UKUT 272 (IAC) was agreed by way of a consent order; however costs had not been agreed between the parties in advance of the hearing. An application was made by the applicant for costs on an indemnity basis as a result of the Home Office’s conduct. UTJ Kopiecek awarded the applicant their costs, but refused to do so on an indemnity basis reiterating that such an order is not designed for punitive purposes.

The first claim for judicial review challenged the Home Office’s refusal to grant leave to remain on Article 8 grounds and refusal to make an appealable immigration decision. This claim was settled by way of a consent order wherein the Home Office agreed to reconsider the decision within 3 months and agreed to pay reasonable costs.

What followed was a fresh decision in almost identical terms to the first. A second claim for judicial review was issued challenging the fresh decision. Within its Acknowledgement of Service the Home Office agreed to reconsider the second decision and proposed a settlement with no order as to costs.

The applicant was understandably cautious to agree to the second proposed settlement and run the risk of a third set of essentially repetitive proceedings should the Home Office repeat her previous conduct.

Negotiations were pursued in relation to the exact wording of the proposed consent order, in particular whether the Home Office would agree to make an appealable decision and pay costs.

By the time of the hearing, an agreement had been reached for the claim to be dismissed or withdrawn. The Home Office conceded costs up to a certain date. However, the applicant sought full costs on an indemnity basis as a result of the Home Office’s conduct following the first judicial review, the fact that she has still not paid the costs for the first claim, her failure to approach the current matter in a timely fashion and her refusal to engage with the request to make an appealable decision.

Despite agreeing that a greater effort could have been made by the Home Office to seek to obtain an agreed consent order, UTJ Kopiecek refused to go so far as to order costs against the Home Office on an indemnity basis.

The judge considered and applied the commercial law case of Balmoral Group Limited v Borealis (UK) Limited [2006] EWHC 2531 (Comm) and reiterated that grounds for ordering indemnity costs may include unreasonableness in the conduct of proceedings, the raising of particular allegations or the manner in which they are raised, as well as pursuing a speculative or grossly exaggerated claim. Dishonesty or moral blame is not a necessary component. UTJ Kopiecek reiterated that indemnity costs is considered a departure from the norm and is not designed to punish the paying party; rather it aims to give a fairer result for the party in whose favour a costs order is made.

The moral of this case seems to be that the Home Office will be afforded a degree of latitude in what amounts to ‘unreasonable conduct’ for the purposes of being ordered to pay costs on an indemnity basis. However, applicants should not be deterred from pursuing such an application where there is a clear chronology of unreasonableness, particularly where the Home Office has failed to engage properly with attempts to settle the matter.

More information

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