Protective costs orders (PCOs) can be made in favour of people accused of terrorism and where reliance is put on ‘closed evidence’, the High Court has ruled.
Ruling on an application by Moazzam Begg, a former Guantanamo detainee, Mr Justice Cranston said that reliance on closed evidence could make it “impossible to determine the merits of any challenge”.
He said that “for understandable reasons in this type of case the state is able to withhold its case” from individuals.
“The other side of the coin, however, is that if these individuals wish to vindicate important rights, such as reputation, they may be at risk of paying substantial costs since they cannot assess the strength of the case against them, with the result that they may be dissuaded from pursuing the matter.”
The court in Begg v HM Treasury  EWHC 1851 (Admin) heard that Mr Begg’s designation under the Terrorist Asset-Freezing etc. Act 2010 had been revoked, but he was seeking to clear his name by having it declared void from the outset. Mr Begg complained that having been previously designated made it difficult to access financial services.
However, there was material which it was not in the public interest to disclose, commonly referred to as ‘closed material’. Mr Begg argued that without costs protection, he could not pursue this case because on this closed material, which he would never see, his claim may prove to be ill-founded
Cranston J said that closed material procedures were recognised in law “for good reason”, but were not consistent with “ordinary principles of procedural fairness”, particularly the rules of disclosure.
Though the Treasury’s counsel had in court warned him against taking the “very bold step to establish a novel category of costs protection”, the judge ruled: “In these circumstances, the orientation of the costs rules changes, and, consistent with the overriding objective, a protective costs order may be the fair and just way to dispose of the case. Without costs protection, access to justice may be denied.”
However, Cranston J said PCOs should only be made in this type of case subject to “strict conditions”. First the case must be of “real benefit” to the individual bringing it, and second the individual must not be able to assess the prospects of success in the ordinary way.
Cranston J continued: “Thirdly, having regard to the financial resources of the individual and to the amount of costs likely to be involved, it is fair and just to make the order. Fourthly, if the order is not made the applicant will probably discontinue the proceedings and will be acting reasonably in doing so. Finally, the individual should not benefit from the order if his conduct is later judged to be unreasonable or abusive.”
Applying the conditions to the case before him, the judge said he was “yet to be persuaded” that the first condition was met, partly because there was “no evidence, least of all from Mr Begg, about how his reputation has been adversely affected” by his designation under the 2010 Act. He said both Mr Begg and his wife had banking services.
Cranston J held that his second condition, like the first, was “not yet satisfied” until HM Treasury had served all its evidence, while the position on the third and fourth conditions was “somewhat unsatisfactory”.
Cranston J said it would be up to the judge who heard the case to decide if Mr Begg’s conduct was reasonable.
The judge concluded that a PCO “may be appropriate” in the case, but “for the reasons I have given, it is premature at this point”.