West Law Report

Disclosure in applications for protective costs orders

Posted in Times Law Report by mrkooenglish on November 21, 2008

From The Times
November 18, 2008
Disclosure in applications for protective costs orders

Court of Appeal

Published November 18, 2008

Regina (Buglife – The Invertebrate Conservation Trust) v Thurrock Thames Gateway Development Corporation

Before Sir Anthony Clarke, Master of the Rolls, Lord Justice Maurice Kay and Lord Justice Stanley Burnton

Judgment November 4, 2008

Where a party with limited means applied for a protective costs order to bring a matter of public importance before the court, and that party was represented by means of a conditional fee agreement, the agreed success fee was relevant to the amount of the cap on the costs order and consequently was to be disclosed to the court.

The Court of Appeal so held: (i) refusing permission to the claimant, Buglife – The Invertebrate Conservation Trust, to appeal against a protective costs order made by Mr Justice Sullivan on November 7, 2007, capping the liability in costs at first instance of the defendant, Thurrock Thames Gateway Development Corporation, to Buglife; (ii) granting Buglife’s application for a protective costs order capping its liability at £10,000 in the Court of Appeal and (iii) granting the corporation’s application for an order capping its liability to Buglife at £10,000 in the Court of Appeal.

Mr Michael Fordham, QC and Ms Emma Dixon for Buglife; Mr Timothy Straker, QC and Ms Caroline Bolton for the defendant; Mr Reuben Taylor for Rosemound Developments Ltd, as interested party.

THE MASTER OF THE ROLLS, giving the judgment of the court, said that the authorities focused on two distinct aspects of protective costs orders, the relevant principles for granting a protective costs order and the appropriate process at first instance and in the Court of Appeal. The leading case was R (Corner House Research) v Secretary of State for Trade and Industry (The Times March 7, 2005; [2005] 1 WLR 2600).

Because of concerns that the exceptionality test in Corner House was being applied so as to set too high a threshold for deciding general public importance thus overly restricting the availability of protective costs orders in environmental cases, in R (Compton) v Wiltshire Primary Care Trust ([2008] EWCA Civ 749) it was held that there was no principle that protective costs orders should be granted only in exceptional cases, exceptionality not being one of the five criteria required for an order set out at paragraph 74 of Corner House.

In Compton Lord Justice Waller said that the governing principles in paragraphs 74 to 76 of Corner House were not to be read as statutory provisions or in an overrestricted way; he approved a flexible approach.

His Lordship regarded those statements as of general application. Everything depended on the circumstances, which were very wide.

Buglife submitted that it was wrong in principle to limit the recoverability of claimants’ costs either to reasonably modest costs or to the costs of junior counsel. There could be no absolute rule limiting costs in that way because cases could be imagined where it would be unjust to do so.

However, the guidance laid down in Corner House was binding on the court and had to be followed, albeit in a flexible way. It followed that the costs in general should be reasonably modest and the claimant should expect the costs to be capped as set out in Corner House.

It should not be assumed, whether explicitly or implicitly, that where the claimant’s liability for costs was capped, it was appropriate that the defendant’s liability for the claimant’s costs should be capped in the same amount. It all depended on the circumstances.

The court rejected the submission that since the principle that the success fee in a conditional fee agreement should not be disclosed before the case concluded, the court had to assume a maximum 100 per cent success fee.

If the claimant, won the agreed success fee was relevant to the likely amount of the defendant’s liability to the claimant. It followed that it was relevant to the amount of any cap on that liability. When deciding what the cap should be the court should know the true position.

In Corner House (at paragraphs 78, 79 and 81) the court set out the procedure which ought to be followed at first instance. It was unfortunate that in this case the parties did not proceed in that way.

A defendant who wished to submit that, if a protective costs order was made, it would be just to order a cap on the defendant’s liability for costs, should include it in the acknowledgment of service.

Parties should follow the guidance to restrict the costs of argument about protective costs orders. The courts should do their utmost to dissuade parties from engaging in expensive satellite litigation on whether protective costs orders and thus costs capping orders should be made. Decisions made at first instance should rarely be revisited save in exceptional circumstances.

In the Court of Appeal similar considerations applied. It was a matter of great importance that issues concerning permission to appeal, a protective costs order and a consequent cost capping order should all be considered on paper at the same time. Oral hearings should be very rare.

Solicitors: Richard Buxton, Cambridge; Berwin Leighton Paisner LLP; Wragge & Co.

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