We previously blogged about Cavanagh J’s refusal to impose a costs capping order in Thomas & Ors v PGI Group Ltd  EWHC 2776 (QB).
That decision has now been endorsed by Coulson LJ, who refused permission to appeal in a recent decision available here.
Kate Boakes is one of the counsel team representing the Claimants.
The background to the litigation and the reasons for Cavanagh J’s judgment are set out in our previous blog.
Coulson LJ began by pointing out that costs capping orders had largely been superseded by the costs budgeting regime:
CCOs are very rare. CPR PD 3F at 1.1 makes plain that they will only be made “in exceptional circumstances”. The costs budgeting regime, introduced after costs capping as part of the Jackson reforms, is widely regarded as a more scientific way of achieving the same goal.
However, he noted that it was not right to say that the costs capping regime was “moribund”. It still apparently has some significance in cases involving Pension and Trust Funds, who like the certainty such orders can bring in cases with a finite amount of money.
The first general reason why Coulson LJ rejected the application for permission to appeal related to the nature of the judge’s discretion:
He refused the CCO and instead calculated cost budgets for both sides. In exercising his discretion, he took into account all the facts and matters raised by the parties, including but not limited to the matters set out in paragraph 12 above. The question of proportionality, which is the entire focus of this application for permission to appeal, was just one element of the judge’s overall evaluation.
There was no prospect of the Defendant reaching the high threshold needed to overturn a decision about costs issues and no basis on which Coulson LJ should interfere with the judge’s exercise of his case and costs management powers.
Second, there were three pre-conditions which each need to be made out before a costs capping order would be made. The judge concluded that none of those three pre-conditions had been met. The three grounds of appeal only concerned one of the pre-conditions, namely whether or not there was a substantial risk that, without an order, costs would be disproportionately incurred.
That failure to address the other pre-conditions was “fatal”. Satisfying the pre-conditions was not just “idle box-ticking”. On the contrary:
It is impossible to over-state the interests of justice in the present case, given the nature, scope and extent of the respondents’ allegations and what the judge said about them at . If a CCO in the sum of £150,000 would have the effect of stifling these valid claims, then that might be regarded as a very powerful factor against making such a CCO.
Ultimately, Coulson LJ agreed with Cavanagh J’s assessment of the injustice of consequences of imposing such an order:
A CCO in the sum of £150,000 would inevitably bring an end to the claim. The making of such a CCO would therefore amount to the striking out of a valid claim by the back door. That would, in my judgment, be contrary to the overriding objective set out in r.1.1. The court would need exceptional reasons for taking such a course.
Far from there being the kind of exceptional circumstances that would justify the making of a costs capping order, they in fact militated strongly against it:
I would respectfully suggest that, if there is a case which, on its facts, would make a good vehicle for testing the limits of the proportionality provision in r.44.3(2)(a) by way of a CCO, this is most assuredly not it.
Finally, Coulson LJ pointed out that the Defendant’s attempt to compare the costs position in respect of the proceedings in England with notional proceedings in Malawi (the alternative possible forum) when commenting on proportionality “ran the risk that it became a forum non conveniens argument by the back door”:
The costs of pursuing the claim in Malawi must be irrelevant to the making of a CCO in the UK. If a claim is validly brought in the UK, then that brings with it the reasonable/proportionate costs of pursuing those proceedings in the UK. As noted above, those costs could only be assessed on either the standard or the indemnity basis. It is wrong in principle to say that, although the claims were validly brought in the UK, the costs should be pegged to the costs that would be incurred if the claims had been brought in a different country. There is no authority for such a proposition. It would be completely artificial.