High Court dismisses judicial review costs claim where proceedings become moot due to regulator rescinding direction.

Neutral Citation: [2014] IEHC 614

THE HIGH COURT

COMMERCIAL

[2013 No. 864 J.R.]

[2013 No. 175 COM]

BETWEEN

VIRIDIAN POWER LIMITED AND HUNTSTOWN POWER COMPANY LIMITED

APPLICANT

AND

THE COMMISSION FOR ENERGY REGULATION

RESPONDENT

AND

GASKINK INDEPENDENT SYSTEM OPERATOR LIMITED

NOTICE PARTY

JUDGMENT of Mr. Justice Brian J. McGovern delivered on the 28th day of November 2014

1. This judgment concerns an application for costs made by the applicant in judicial review proceedings which have been withdrawn

following a decision made by the respondent to rescind what is referred to in the proceedings as the “Within Day Capacity Direction”.

In the judicial review proceedings, the applicant challenged the Within Day Capacity Direction and a Secondary Transfer Direction

made by the respondent on 21st August 2013, and the “Commission’s Instruction” issued on 13th September 2013, whereby the

respondent issued directions to Gaslink Independent System Operator Ltd. (“Gaslink”) to take certain steps to give effect to the

Decision.

2. The applicant was given leave to apply for judicial review and the hearing of the substantive application was fixed for 13th May

2014. In an interlocutory motion before the Court, the applicant sought a stay on the implementation of the Direction, or, in the

alternative, an injunction restraining the respondent from purporting to give effect to the Direction. In a judgment delivered on 10th

January 2014, I refused the application for a stay and reserved the costs of the application.

3. By a Notification to Industry made on 20th February 2014 (“the Notification Decision”), the respondent stated that the Within Day

Capacity Direction which was to have come into effect on 3rd March 2014 was being rescinded. The Notification Decision explained

that due to changing facts and circumstances, including purchasing patterns by a number of power generators and the perceived

future role for power generation units required in the Dublin region, and following discussions between the respondent and EirGrid,

there had been material progress towards the respondent realising the key objective of the Decision without the implementation of

the Within Day Capacity Direction. Accordingly, the respondent rescinded that part of the Decision comprising the Within Day

Capacity Direction. The remaining part of the Decision, namely, the Secondary Capacity Transfers Direction, remained in full force.

4. On 28th February 2014, the applicant’s solicitors wrote to the respondent as follows:

“We have reviewed with our clients your client’s decision of 20th February 2014 to rescind the Within Day Decision. The

effect of last week’s decision is to afford our clients the main reliefs sought in their application for judicial review. In

these circumstances, it is not necessary for our clients to pursue the proceedings further . . . in all of the

circumstances, it is our client’s intention to seek their costs of the proceedings. .”

5. For its part, the respondent has informed the applicant that it is not looking for its costs and is prepared to agree to each side

bearing its own costs. This proposal has not been accepted by the applicant.

6. I have been referred to the jurisprudence on the subject of costs to be awarded where proceedings have been discontinued in

circumstances such as arise in this case. From the authorities cited to me, it appears that three questions arise:

(a) Are the proceedings moot?

(b) Were the proceedings rendered moot by the actions of one party?

(c) Were these actions due to some intervening external event?

7. The respondent asserts that the proceedings are not moot, principally because the judicial review application involved a challenge

to the Within Day Capacity Direction and the Secondary Capacity Transfers Direction and that the second issue remains. Furthermore,

it says that it never conceded that this decision on the first matter was unlawful and that it would have successfully resisted the

challenge brought by the applicant. We will never know the answer to this question because of intervening factors.

8. I am satisfied that the respondent’s argument relating to the Secondary Capacity Transfers Direction is not well-founded. In my

earlier judgment, I referred to the fact that it was an important part of the respondent’s case in the interlocutory application that the

reforms prompting the Decision and Directions were a complete package involving the Within Day Capacity Direction and the

Secondary Capacity Transfers Direction and that they were not to be treated in isolation (see paras. 25 and 29 of my judgment, 10th

January 2014).

9. If the case becomes moot, then there are three broad categories into which it could fall:

(a) The case could become moot due to the unilateral act of one party, in which case the general rule is that that party

should be liable for the costs of the proceedings (see Cunningham v. President of the Circuit Court [2012] 3 I.R. 222);

(b) the case could become moot due to wholly external events beyond the control of either party, in which case the

appropriate order will usually be no order as to costs (see Telefonica O2 Ireland Ltd. v. Commission for Communications

Regulation [2011] IEHC 380); or

(c) as considered in Cunningham v. President of the Circuit Court, the case may become moot due to a decision of one

party to the proceedings which, it was claimed, was due to external events. Current jurisprudence suggests that in such

a case, the Court, should, in the absence of significant countervailing factors, ordinarily lean in favour of making no order

as to costs.

The applicant claims that this case falls within category (a) and the respondent claims that it falls within category (c).

10. In Cunningham v. President of the Circuit Court, Clarke J. stated at para. 26:

“[26] In that context it is, of course, important to note that statutory officers and bodies have an obligation to exercise

their powers in a proper manner. If circumstances change then it is, of course, not only reasonable but necessary for

such officers and bodies to reflect the new circumstances by adopting a position (even if different) which takes into

account the circumstances as they have come to be. The mere fact, therefore, that a statutory officer or body adopts

a changed position which renders judicial review proceedings moot does not, of itself, necessarily mean that it is

appropriate to characterise the proceedings as having become moot by reason of a unilateral act of one party.

[27] If there were no change in underlying circumstances and if the statutory officer or body had simply changed his or

its mind or adopted a new and different view, then such a characterisation might be appropriate. Where, however, there

is an underlying change of circumstance, it is necessary to consider the extent to which it can properly be said that the

proceedings have become moot by reason of the unilateral act of one party, on the one hand or, in reality have become

moot by reason of a change in underlying circumstances outside the control of either party, on the other hand. The

result of any such analysis should play an important role in the court's consideration of the justice of where the costs of

proceedings rendered moot should lie.”

11. Clarke J. went on to state that where an officer or body argues that the true underlying reason is an external factor outside the

control of that officer or body, it is incumbent on them to put before the Court sufficient evidence to allow the Court to assess

whether that was so, and whether it can be properly said that the proceedings had become moot by reason of a change in external

circumstances.

12. In this case, it seems to me that the issue in the judicial review proceedings has become moot, notwithstanding the arguments

made to the contrary by the respondent.

13. Accepting, as I do, that the proceedings are now moot, it is necessary to see whether or not they have become moot by a

decision of the respondent which was made due to external events.

14. The applicant has withdrawn its application for judicial review following upon the Notification Decision made by the respondent on

20th February 2014. That appears to be beyond dispute and confirmed by the applicant’s solicitors in their letter of 28th February

2014 quoted above.

15. The Notification Decision sets out in clear terms why the respondent decided to rescind the Within Day Capacity Provision of the

Decision. It is not necessary to repeat what is said in the Notification Decision beyond stating that detailed reasons for the rescission

were set out. The respondent had noted evidence of a trend that the volume of revenues from the power sector was exceeding that

which was anticipated and that the key objective underlying the Decision was materially being achieved in the absence of the

implementation of the Within Day Capacity Provision. Having regard to the matter set out in the notice, the respondent considered

that it was “now possible and proportionate to rescind the Within Day Capacity Provision on the basis that it no longer had the

particular level of necessity the CER considered it to have at the time by making the Decision”.

16. In my view, the matters set out in the Notification Decision established that the decision of the respondent to rescind the Within

Day Capacity Provision of the Decision was made due to an underlying change of circumstance outside its control and reflected the

adoption of a changed position reflecting new circumstances and taking those circumstances into account.

17. Furthermore, the respondent has adduced sufficient evidence of the underlying change in circumstance sufficient to justify the

Decision notified on 20th February 2014. The contents of the notice are sufficient evidence for the purpose of satisfying the onus

imposed on it by virtue of the decision in Cunningham v. President of the Circuit Court.

18. Accordingly, the appropriate order is to direct that each party bear their own costs of the application. So far as the reserved

costs of the motion for a stay are concerned, it seems to me that they should also be borne by each party, notwithstanding the fact

that the applicant failed in that application. Since the Notification Decision of 20th February 2014, the respondent has made it known

that it was prepared to pay its own costs in these proceedings. In circumstances where the applicant failed in the application for a

stay, I do not believe it would be entitled to the reserved costs of that application.

19. I therefore direct that each party shall bear their own costs in the costs reserved from the motion for a stay.