Costs Capping, Budgeting, Proportionality And Cases Of Wider Importance

THOMAS & ORS V PGI GROUP LTD (COSTS CAPPING ORDERS IN BUDGETED CASES) | FULL SUMMARY AND DECISION

---

The Claimants And The Issues In The Proceedings

The Claimants in these proceedings are 31 Malawian women who are or were employed by a Malawian-domiciled company, Lujeri Tea Estates Limited (“Lujeri”), to work in tea or macadamia nut plantations. The plantations are located in the Southern Region of Malawi.

10 of the 31 Claimants allege that they were raped by male managers, overseers or colleagues. Some allege that they have contracted HIV or have given birth to the children of their abusers.

The other Claimants claim that they were subjected to sexual assault, sexual harassment, and/or other types of sexual discrimination by male employees of Lujeri. Many of the Claimants have been abandoned by their partners after their allegations came to light.

The Claimants allege the Defendant owed a duty of care to them on the basis that it promulgated relevant policies, standards and guidelines, that it exercised supervision and control over Lujeri, and/or that it held itself out as exercising such supervision and control.

The Claimants further allege that the Defendant breached that duty of care and that they suffered loss and damage as a result.

The Claimants also contend that the Defendant breached their rights under the Malawian Constitution and the Malawian Gender Equality Act 2013.

The Defendants And Their Defence

The Defendant is the parent company of Lujeri. It is domiciled in England. At the relevant times, it had three employees.

The Defendant denies that it owed a duty of care to the Claimants, because, it says, it did not exercise operational supervision and control over Lujeri to the extent necessary to give rise to such a duty of care.

The Defendant further denies that it is liable to the Claimants under the Malawian Constitution or the Gender Equality Act 2013.

The Costs Of The Proceedings

In August 2021 each of the parties filed and served a costs budget (Precedent H) in accordance with CPR PD 3E, paragraph 4.

The Claimants incurred costs up to the date of the costs budget in the sum of £1,664,178.76. Their future costs up until the end of the trial of the Common Issues and the liability issues relating to the Lead Claimants, on the basis that there would be two Lead Claimants, were budgeted at £1,513,628.

In their Precedent R, in response to the Claimants’ Precedent H the Defendant offered (subject to various contentions) to accept future costs for the Claimants of £1,363,877.

The Defendant’s incurred costs to the date of the budget were in the region of £750,000 and their future proposed costs were £1,750,000.

The Defendant’s Position

For the Defendant it was submitted that:

• a party to legal proceedings, and especially a claimant, should only be entitled to recover costs that are proportionate to the litigation, and are reasonable. In the present case, the most that the Claimants can expect to obtain, altogether, is something in the region of £150,000-£300,000. It is not proportionate and is not reasonable, in those circumstances, for the Claimants to engage in litigation which is potentially going to involve the Claimants in incurring over £3m in legal costs, and the Defendant in incurring over £3.5m in legal costs, most of which will be irrecoverable regardless of the outcome of the proceedings. In those circumstances, a CCO should be made which ensures that the Claimants will not recover any future costs beyond those that are proportionate.
• whilst there are circumstances in which there may be non-financial objectives which make it reasonable and proportionate for a party to engage in litigation, even if the legal costs exceed the potential damages, and that vindication is a valid consideration, what makes the present case exceptional is that the Claimants have an alternative means of obtaining vindication which would be vastly less costly for all concerned. This would be by suing Lujeri in Malawi, on the basis that Lujeri is vicariously liable for its male employees. Lujeri is the more appropriate Defendant, as it was the employer of the Claimants and the men whom they allege abused them. If the Claimants brought proceedings in Malawi, they could obtain the same damages that they will obtain in England, if successful. The Claimants could also sue the Defendant in Malawi, if they wish.
• it is not reasonable nor proportionate for the Claimants to bring their proceedings in this jurisdiction, at huge cost. They could obtain, in effect, the same relief in Malawi at a small fraction of the cost. In other words, they do not need to pursue this litigation in England in order to obtain the damages and vindication that they seek. It is this feature that makes this case “exceptional” for the purposes of a CCO, and which justifies a CCO in the sum of £150,000. Any more than that would be disproportionate, especially given the amount of costs that have already been incurred.
• the Court should limit the future recoverable costs of the Claimants, if they choose to continue with their proceedings in England, to the costs that they could have recovered if they had brought proceedings in Malawi. This is a further, related, reason for imposing a CCO in the sum of £150,000
• the appropriate course of action for the court in a case such as this is to make a CCO. The stark reality facing the court is that total costs of £6.5 million (or whatever sum is costs budgeted) will be incurred, and court resources expended, for the benefit of the lawyers only.
• this is an appropriate case for a CCO because costs budgeting or detailed assessment would not deal with the matter sufficiently.
• as for costs budgeting, a CCO will provide greater certainty for the Defendant than costs budgeting. Also, CCOs involve a greater focus on the interests of justice and a more general assessment of the risk of disproportionate costs than costs budgeting and, therefore, they more naturally accommodate consideration of the unique fixed reference point of alternative proceedings in the natural forum.
• as for detailed assessment, it is unreasonable to expect the Defendant to wait until the end of the action to find out what its costs liability will be. The Defendant needs to know now that the greatest exposure it faces, in respect of the Claimants’ future costs, is £150,000. It is not sufficient to leave the issue to be dealt with at the end of the proceedings when the costs of the proceedings fall to be assessed. The only way that this can be done, satisfactorily, is by means of a CCO. Put bluntly, this litigation should be put out of its misery, and the Defendant should not be required to expend a very large sum of money in order to defend pointless proceedings, in the hope that, at the very end of the process, and if the Claimants succeed, the Costs Judge will disallow most of the Claimants’ costs.
• if the Court is not inclined to make a CCO, in the alternative that the Court should set the Claimants’ costs budget at £150,000.

The Claimants’ Position

On behalf of the Claimants it was submitted that:

• this is a (lightly) disguised attempt to strike out these proceedings on the basis that they are an abuse of process, or that England is a forum non conveniens. Given that the Defendant has accepted that there are no valid grounds for striking out these proceedings, or disputing jurisdiction, it would be wrong for the court to permit the Defendant, in effect, to obtain a strike-out by means of a CCO. Moreover, the CCO regime is, nowadays, effectively otiose in light of the costs budgeting regime.
• in addition, it is not open to the Court to impose a CCO at a figure which is lower than the figure which is the minimum amount which it would cost the Claimants to pursue these proceedings to their conclusion on the Common Issues and the Lead Claimants’ cases. The purpose of a CCO is to prevent extravagant spending on costs, not to prevent a party from spending the minimum necessary because the court does not think that the litigation is worth the candle. The amount of a CCO can never be less than the minimum figure necessary for pursuing the litigation to its end.
• in the alternative, even if it is permissible for the court to use the CCO regime to impose a limit on future costs which is lower than the minimum amount which would enable the party to proceed to trial, this is not an appropriate case to impose such a limit. None of the three requirements that are imposed by CPR 3.19 before a CCO can be made is satisfied in this case.
• the Defendant accepts that the Claimants’ claims in this litigation are not an abuse of process. In those circumstances, the court should not use the CCO regime as a way, indirectly, of striking out the proceedings. Moreover, even though the likely level of damages is substantially below the costs of the proceedings, this does not mean that it is disproportionate to carry on. The Claimants complain of some of the most serious abuses that it is possible to imagine. They are entitled to vindication, even if the legal costs will dwarf the potential compensation.

MR JUSTICE CAVANAUGH:

The application for a CCO

60.

CPR 3.19(5) provides that there are three preconditions which must each be satisfied before a CCO is made. These are that (1) it is in the interests of justice to make a CCO, (2) there is a substantial risk that without a CCO costs will be disproportionately incurred, and (3) the court is not satisfied that the risk of disproportionate costs can be adequately controlled by costs budgeting or a detailed assessment. If these preconditions are met, the Court is not bound to make a CCO: it has a discretion to do so.

61. As paragraph 1.1 of PD 3F makes clear, CCOs are exceptional. They have always been extremely rare. They were introduced, with effect from 6 April 2009, by the Civil Procedure (Amendment) Rules 2008. To the extent that they ever had a heyday, that heyday came to an end on 1 April 2013, with the introduction of reforms to the CPR to implement the recommendations of the Final Report of the Jackson Review into Civil Litigation Costs of December 2009 (“Jackson”). The amendments to the CPR following the Jackson Review included the introduction of costs budgeting which, in the view of many, has rendered CCOs otiose. Since 1 April 2013, so far as the industry of counsel has managed to identify, there has not been a single case of a CCO being made under CPR 3.19.

62. CCOs are not popular with legal writers. For example, the author of Friston on Costs (3rd ed), §13.04, rather wonderfully observes that ‘Costs management has done for [costs capping] what video did for the radio star’ and says that it is ‘an almost entirely impotent jurisdiction’ where it is difficult to envisage ‘even hypothetically’ that any costs capping order would now be made. Both the author of Friston on Costs and the authors of Cook on Costs recommend the abolition of CCOs on the basis that they add to the over-complication of the rules on costs, for no positive benefit. See Friston at §13.05 and Cook at §17.02.

63. The fact that not a single CCO has been made for more than eight years is not, of itself, a reason to decline to make a CCO in the present case. CPR 3.19 has not been withdrawn, even though it now sits alongside the rules providing for costs budgeting. But it serves to emphasise their exceptional nature.

64. It is easy to see why CCOs have fallen out of use following the introduction of costs budgeting. Both CCOs and costs budgeting provide parties with a relative degree of certainty, well in advance of trial, about their likely exposure to the other party’s costs if they were to lose. But, in comparison to costs budgeting, a CCO is, as Mr Bacon QC puts it, a “blunt instrument.” Costs budgets have advantages in that, inter alia, they break down the work by phases (this facilitates settlement of costs in the event of settlement of the damages claim). Further, good reason has to be established to reduce a budgeted sum for each phase downwards if that phase has been completed. It is hard to see how, in a normal case, a CCO would be preferable to costs budgeting. One of the pre-conditions for a CCO is that the court must not be satisfied that the protection against disproportionate costs cannot be effected by costs budgeting. It is difficult to envisage circumstances in which a CCO can provide protection against disproportionate costs which cannot better be provided by costs budgeting.

65. However, Mr Bacon QC submits that this is such a case, primarily because a CCO is, he says, suited to a case in which the argument for a cap on costs at the level sought comes down to a single issue, namely the availability of alternative proceedings in the natural forum (i.e. Malawi).

66. I will deal in turn with the question whether each of the three preconditions for a CCO has been met in this case, but I will take them in a different order from the order in which they are set out in CPR 3.19(5). I will begin with the question whether there is a substantial risk that without a CCO costs will be disproportionately incurred.

(1) Is there a substantial risk that without a CCO in the sum of £150,000 costs will be disproportionately incurred?

67. Strictly, this conflates two issues. The first is whether a CCO should be made at all, on the basis that costs will be disproportionately incurred if it is not. The second is whether, if a CCO should be made, it should be made in the sum of £150,000. As for the latter question, the quantum question, CPR PD 3F, paragraph 4.1, requires the court to take account of questions of proportionality, and, in particular, the factors set out in CPR 44.4 (though paragraph 4.1 refers to CPR 44.5, it is clear that the text was not updated in 2013 and the reference should be to CPR 44.4).

68. In fact, in my view, these two issues can only sensibly be dealt with together. The real issue is whether I should accede to the Defendant’s application for a CCO in the sum of £150,000. This requires me to decide whether recoverable costs in excess of £150,000 for the Claimants would be disproportionate.

The parties’ arguments

69. At the heart of the Defendant’s submission on proportionality is the contention that it would not be proportionate to permit the Claimants to accrue more than £150,000 in further costs in this litigation, even if that means that it will not be possible for the Claimants to prepare this case for trial and then to argue it. The Defendant submits that such a costs cap is appropriate because the potential financial benefit for the Claimants from the litigation is very small, compared to the costs, and may well be nil, and because they have a very much cheaper way of obtaining vindication, namely through suing Lujeri in Malawi. If this was done, the recoverable costs in Malawi would be very much lower than they are in England, and would be around £150,000.

70. In response, the Claimants submit that costs capping pre-quantifies a party’s recoverable costs under a subsequent costs order (see CPR 3.19(a)). The least that the receiving party will be entitled to is costs on the standard basis. The Claimants point out that there is no issue as to jurisdiction and that the Defendant has accepted that it has no substantive grounds on which to strike out the Claimants’ claims. It follows, contend the Claimants, that there is no basis for contending that it would be disproportionate for the Claimants to recover at least the minimum costs that are required for them to litigate their claims effectively in the High Court. Mr Williams QC submits that there is no power under the CPR to cap the Claimants’ costs at less than the level required for them to litigate their claims effectively in the High Court, or for the court to fix costs at a lower sum than they would be likely to recover if their costs were subject to a standard basis assessment.

71. I should add that the Claimants submit that, even if they are wrong about this, the three preconditions for a CCO are not satisfied, and/or the court should not exercise its discretion to grant a CCO. Mr Williams QC submits that the Claimants are entitled to proceed in this jurisdiction, and these claims are about far more than money. It is a mistake to assess the value of the claims by reference to the sums that the Claimants are likely to recover, and it is wrong to assess the benefits of vindication on the false assumption that they can obtain vindication much more cheaply in the Malawian courts, if they chose to do so.

Discussion

72. For the reasons set out below,

in my judgment, the Claimants are right that it would not be appropriate, having regard to the principle of proportionality, to cap the costs at a figure that is less than the minimum costs that are required for them to litigate their claims effectively in the High Court. It follows that there is no substantial risk that, without a CCO in the sum of £150,000, costs will be disproportionately inccurred [sic]. It follows in turn that this precondition for a CCO is not met.

73. One part of the Claimants’ submissions raises an important point of legal principle. Mr Williams QC submits that it is not permissible, under the CPR, to fix costs at a lower sum than the party would be likely to recover if its costs were subject to a standard basis assessment, which, he says, is the level required for the party to litigate its claims effectively in the High Court. Put another way, a “proportionate” level of recoverable costs can never be less than the amount that is required by the party to litigate its claims effectively. If he is right about this, then this would provide a knock-out blow to the Defendant’s submissions on cost capping. As I have already said, I accept that a CCO of £150,000 or thereabouts would mean that the Claimants could not litigate their claims effectively (or, probably, at all) in this litigation. It is far less than the amount that they require to litigate their claims effectively.

74. I will briefly summarise the issue of legal principle at the end this judgment, but I do not have to decide it, because, even assuming, in the Defendant’s favour, that there may in theory be cases in which the minimum sum required for a Claimant to fight the case would be disproportionate, because the costs are out of proportion to the potential benefits to the Claimant of the litigation, this is not such a case.

75.

In the present case, it will not be disproportionate for the Claimants’ costs to be budgeted at a figure which represents the amount that is necessary for them to proceed to litigate this case.

76. The starting point is that the Claimants are entitled to bring these proceedings against the Defendant in this jurisdiction. The Defendant has never suggested otherwise and it is clear, pursuant to Article 4 of the Recast Brussels Regulation, that the Claimants are so entitled. Furthermore, the Defendant accepts that the Claimants’ claims are arguable.

77. The Defendant submits that, nonetheless, it will not be proportionate for the Claimants to spend what is necessary to proceed with these claims in this jurisdiction because the potential damages are far less than the legal costs, and the Claimants can obtain the vindication that they seek by commencing fresh proceedings in Malawi, either against Lujeri alone or against Lujeri and the Defendants. In other words, the Defendant contends that the costs in excess of £150,000 will be disproportionate because the game, if played in England, is not worth the candle.

78. I do not accept that submission.

79.

It is true that the potential damages that the Claimants may recover are very much lower (perhaps by a factor of 10 or more) than the costs that will be incurred by the end of these proceedings, but, in the particular circumstances of this case, that does not mean that the costs will be disproportionately incurred. The sums that are likely to be recoverable, though small by English standards, are very significant for poor Malawian plantation workers, and they may indeed be life-changing. I accept the Claimants’ submission that in any event, the Claimants’ objectives in bringing these proceedings are not entirely, or even principally, about money. They claim to have been abused sexually, including, in many cases, by rape. They say that this was a chronic problem in the plantations run by Lujeri. They say that this was the result of a systematic failure by the Defendant to use its powers and influence to control the behaviour of male managers and overseers and to ensure that these abuses did not take place on the plantations. I am satisfied that the Claimants’ legitimate desire for personal vindication, and for the acceptance by the Court that they were abused in the way that they allege and that the Defendant is liable for this treatment, coupled with a legitimate desire to use the court proceedings as a way of shining a light on these practices and promoting reforms in the future, mean that future costs that are substantially in excess of the damages at issue will not be disproportionately incurred. The importance of the matter to the parties is a relevant consideration, in relation to proportionality (see CPR 44.4(3)(c)).

80. I should emphasise that the Claimants’ allegations are untested and that the Defendant contends that, even if these abuses did occur, the Defendant is not liable for them, but the fact remains that it is not disproportionate for the Claimants to decide to spend a substantial sum in these proceedings.

81. The Defendant accepts in principle that vindication considerations may render it proportionate to spend substantial sums in litigation, even if the damages at issue are small. But, the Defendant says, what makes this case exceptional is that the Claimants have another, vastly less expensive, way of obtaining vindication and of bringing the abuses to the attention of the wider world. This would be by suing Lujeri, or Lujeri and the Defendant, in Malawi. The Defendant says that, if this were done, then the Claimants can expect a fair hearing, the same determination of the issues on their merits as will take place in England, and the same assessment of damages. They will also obtain the same vindication in Malawi as they would if they succeeded in England, and proceedings in Malawi would be much more convenient, as both the Claimants and their alleged abusers live in Malawi, the court is more likely to speak the same language as them, and the court will be familiar with the customs and social norms of the areas in which these events took place.

82. I am unable to accept the argument that the proceedings in England are disproportionate because the Claimants could have sued Lujeri in Malawi. The fact remains that they are entitled to choose to sue Lujeri’s ultimate parent company in England. The Defendant accepts that the Claimants’ claim in England is arguable, and that it is not liable to strike-out as being an abuse of process or to being stayed on the basis of forum non conveniens. The Claimants are entitled to take the view that they prefer to bring their proceedings in England. Whether or not their concerns about bringing legal process in Malawi are justified or not, they are entitled to bring these proceedings in England. The Defendant, too, has an interest in vindicating its reputation, though it is understandably reluctant to have to spend millions of pounds to do so.

83. I have also considered whether the proceedings are disproportionate because they involve Claimants who live many thousands of miles away from England. Might it be said that, regardless of the importance of the proceedings to the Claimants, to plantation workers in Malawi, and the public in Malawi, the matter is not of public importance to the courts of England and Wales and that valuable court time should not be taken up by litigation involving events in a different continent? In my judgment, the answer is clearly “no”. The courts in this jurisdiction very frequently deal with disputes, in the commercial field, and in other fields, that have little if any connection with parties domiciled in England and Wales or with events in this country. A matter can be of public importance even if the events with which it is concerned took place in a different country. In any event, in the present case, one of the parties, the Defendant, is domiciled in England. It is a matter of public importance in this country whether a company that is domiciled here is in breach of a duty of care to workers on plantations in Malawi, owned by a subsidiary company. CPR 44.3(5)(e) states that the extent to which a claim is in the public interest is a matter to be taken into account when considering proportionality.

84. On behalf of the Defendant, Mr Bacon QC pointed out that there have been instances of cases being struck out as an abuse of process because the recoverable damages and vindication were minimal when compared to the overall costs of pursuing the claim. Mr Bacon QC referred to Jameel v Dow Jones and Co [2005] EWCA Civ 75; [2005] QB 946, the Court of Appeal was concerned with a libel claim against a US newspaper in relation to an article published on the internet which was accessed by only five subscribers in England. The Court of Appeal struck out the claim as an abuse of process. Lord Phillips of Worth Maltravers said, at paragraphs 54 and 69:

“54…..An abuse of process is of concern not merely to the parties but to the court. It is no longer the role of the court simply to provide a level playing field and to referee whatever game the parties choose to play upon it. The court is concerned to ensure that judicial and court resources are appropriately and proportionately used in accordance with the requirements of justice….”

….

“69. If the claimant succeeds in this action and is awarded a small amount of damages, it can perhaps be said that he will have achieved vindication for the damage done to his reputation in this country, but both the damage and the vindication will be minimal. The cost of the exercise will have been out of all proportion to what has been achieved. The game will not merely not have been worth the candle, it will not have been worth the wick.”

85. Mr Bacon QC also referred to Sullivan v Bristol Film Studios Ltd [2012] EWCA Civ 570; [2012] EMLR 27. The Claimant was a hip-hop artist who did not like the video that a production company had made of one of his songs. He claimed £800,000 on the basis that the video had damaged the marketing potential of his song. The claim was transferred to the Chancery Division and the multi-track. A judge assessed the maximum possible recovery at £50, and struck out the claim as an abuse of process. The Court of Appeal upheld the strike out. At paragraph 29, Lewison LJ said:

“29… The mere fact that a claim is small should not automatically result in the court refusing to hear it at all. If I am entitled to recover a debt of £50 I should, in principle, have access to justice to enable me to recover it if my debtor does not pay. It would be an affront to justice if my claim were simply struck out. The real question, to my mind, is whether in any particular case there is a proportionate procedure by which the merits of a claim can be investigated. In my judgment it is only if there is no proportionate procedure by which a claim can be adjudicated that it would be right to strike it out as an abuse of process.”

86. At paragraph 40, Etherton LJ said:

“40. For my part, I would emphasise that the disproportion justifying the strike out of Mr Soloman’s claim is not merely between the likely amount of damages he would recover if successful in the proceedings and the litigation costs of the parties. It includes consideration of the extent to which judicial and court resources would be taken up by the proceedings. That was the approach rightly taken by the Deputy Judge, who said in [27] of judgment that the proceedings would involve a large amount of court time and would cost a great deal of money to argue and would be a disproportionate use of the court’s resources and unfair to the defendant.”

87. In my judgment, these authorities do not assist Mr Bacon QC in his application for a CCO. They establish that there can be cases in which the disproportionate nature of the proceedings means that the claim should be struck out as an abuse of process. However, the Defendant does not suggest that this is such a case. In his skeleton argument, Mr Bacon QC said that “it is not part of [the Defendant’s] case that the claims should be struck out on the grounds that they amount to an abuse of process.” Once this concession was (rightly) made, these authorities do not support the Defendant’s case. If the proceedings are truly disproportionate, then they should be the subject of an application to strike them out as an abuse of process. Neither Jameel nor Sullivan lends any support to the contention that the CCO regime should be used in a case such as the present.

In my judgment, the Claimants are right that it is wrong in principle for a party to use the CCO regime, in effect, as a proxy for the abuse of process jurisdiction. Similarly, it would be wrong for the court to impose a CCO in order to punish a party who has lawfully brought proceedings in this jurisdiction because the court thinks that they should have issued their proceedings in a different jurisdiction.

88. The Defendant further submits that it would be in the interests of justice to impose a CCO which is limited to the costs that the Claimants could expect to recover if they brought their proceedings against Lujeri in Malawi. I reject this argument. The Defendant expressly acknowledges, in its skeleton argument, that “The Claimants are entitled to seek vindication of their rights in an available jurisdiction of their choosing.” I agree. In those circumstances, however, I do not see any reason why the interests of justice should limit the Claimants’ recoverable costs to the costs that they would have recovered if they had chosen a different jurisdiction. This would be to penalise the Claimants for choosing England over Malawi. It would also, in effect, mean that the court would be applying the costs rules that apply in Malawi to proceedings that are properly brought in England.

(2) The interests of justice

89. In my judgment, this application also fails to satisfy the requirement that a CCO must be in the interests of justice.

90. All of the considerations, set out above, which led me to the conclusion that there is no substantial risk that without the CCO, costs will be disproportionately incurred, are also reasons why it would not be in the interests of justice to impose a CCO.

91. Moreover, I think that it is highly significant, in this regard, that

the imposition of a CCO would almost certainly have the effect of forcing the Claimants to abandon their claims. If the Defendant considered that the various reasons put forward by the Defendant meant that the continuation by the Claimants of these proceedings would be an abuse of process, then the Defendant should have persisted with its strike out application. However, given that the Defendant has abandoned the strike out, has accepted explicitly that the proceedings are not an abuse of process, and has never challenged the proceedings on a forum non conveniens basis, I do not think that it would be right to impose a CCO which would have exactly the same consequences for the Claimants as a strike out or a stay of proceedings. The reasons why this is not an appropriate case for a strike out are all reasons why this is not an appropriate case for a CCO.

92. In addition, so far as the interests of justice are concerned, it is also relevant, in my view, that a CCO would lead to a gross inequality of arms. Even if the Claimants were able to struggle on with a CCO of £150,000, it is clear that the Defendant’s resources are far greater. They have proposed a budget that would involve them spending more than ten times as much. The requirements of the interests of justice are reflected in the overriding objective, which provides, at CPR 1.2(a), that courts should,
“ensure that the parties are on an equal footing and can participate fully in proceedings, and that parties and witnesses can give their best evidence”

93. It is also worth noting that

this is not a case in which a wealthy Claimant is deliberately pursuing a low-value claim, at great expense, in order to harass the Defendant, or to cause as much unnecessary cost to the Defendant as possible. Rather, this is a case in which extremely poor Claimants are pursuing a relatively low-value claim for a number of legitimate reasons, only one of which is the prospect of damages.

94. I can understand that the Defendant is unhappy that it will have to pay the Claimants’ costs if the Claimants succeed, but the Claimants will not have to pay the Defendant’s costs if the Claimants’ claims fail. However, this is a function of the QOCS rules, and it is not a reason to impose a CCO on the Claimants.

(3) Will the risk that costs will be disproportionately incurred be controlled by costs budgeting or by a detailed assessment?

95. Once again, this precondition is not met. As stated above, in the general course of events it is highly unlikely that a CCO would be better than costs budgeting at controlling disproportionate costs. Mr Bacon QC submits that what makes this case different is that the reason why the Defendant says that a CCO is appropriate is a single discrete point: it comes down to the proposition that there is a cheaper and more convenient way of obtaining the relief the Claimants seek via proceedings in Malawi. He says that if I accept this argument then it would be more efficient to impose a CCO and, in effect, send a clear and emphatic signal at this stage that the Claimants cannot expect to recover future costs in excess of £150,000. As I have not accepted this argument, it follows that there is no advantage in making a CCO. In any event, however, I think that it will be extremely unlikely in future that this third precondition will be met, as costs budgeting is a more sophisticated and nuanced way of setting a costs figure than a CCO.

Other authorities relied upon by the parties

96. Both Mr Bacon QC and Mr Williams QC drew my attention to a number of other authorities. I have left them until now because none of them was directly on point and, in particular, none of them addressed specifically whether a CCO should be imposed if the minimum reasonable costs of taking the matter to trial substantially exceeded the costs which were proportionate to spend in light of the nature and objectives of the litigation.

97. I will deal with the authorities in turn, albeit only relatively briefly.

Solutia UK Ltd v Griffiths and others [2001] EWCA Civ 736

98. In this case, the Court of Appeal addressed an issue which arose in the case about the appropriateness of the claimants in a personal injury case concerned with a leak from a chemical plant in Wrexham using London Solicitors, Messrs Leigh Day (as it happens, the Claimants’ solicitors in the present case). The claims were settled on the basis that there would be a detailed assessment of costs if not agreed. The Defendant challenged the Claimants’ costs on the basis that it was not reasonable to incur the costs of London solicitors. The costs judge disallowed the additional costs on the basis that the claims did not require the services of specialist London solicitors. The Deputy High Court judge and the Court of Appeal allowed the Claimants’ appeal. Mr Bacon QC observed that at paragraph 25 of the judgment, Sir Christopher Staughton pointed out that, during oral argument, two of the judges in the Court of Appeal had described costs of £210,000 when the amount that was recovered for the claimants was £90,000 as “ludicrous”.

99. In my judgment, the Solutia case is of no relevance to the present case. It was a different case, on very different facts. It was decided before the Jackson reforms. The Solutia case did not involve issues of vindication and public importance such as arise in the present case.

Tidal Energy Ltd v Bank of Scotland plc [2014] EWCA Civ 847 and Black and others v Arriva North East Limited [2014] EWCA Civ 1115

100. These cases are the only occasions on which the Court of Appeal considered CCOs under CPR 3.19.

101. As for Tidal Energy, the subject matter of the appeal was very different from the present case and the judgment of Arden LJ, who gave the judgment of the Court, does not shed any light on the issues that I have to decide. In Tidal Energy, the Claimant took proceedings against the Defendant bank to recover a sum of just over £217,000 which had been paid into the wrong account and which could not be recovered. The Claimant sought a CCO with a view to ensuring that it would not have to pay the costs of leading counsel that the Defendant had chosen to instruct for the appeal (because the claim had wider implications for the Defendant’s business). The Court of Appeal declined to impose a CCO, because it was satisfied that the risk of disproportionate costs could be adequately controlled by the detailed assessment of costs. There was no occasion for the Court of Appeal to give more general guidance about CCO, or to express a view about the value of CCOs in light of the costs budgeting regime which had just come into force.

102. In Black, the Appellant was pursuing an appeal to the Court of Appeal in a discrimination claim against public transport providers. She had obtained legal expenses insurance in the sum of £50,000 and she applied for a CCO of the Respondents’ costs in that sum. It was submitted that if the CCO was not made she would not be able to proceed with the claim, as ATE insurance was no longer available for this type of claim, and also that the claim was of general public importance. The Court of Appeal declined to make a CCO. At paragraph 11, Christopher Clarke LJ said that it was not the function of CCOs to remedy the problems of access to finance to litigation.

103. Black is of no relevance to the present case. It was a case in which an impecunious party sought a CCO against the other party. That is not the position in this case.

The point of legal principle

104. The point of legal principle which is raised in the Claimant’s argument is not specific to CCOs. The point relates to the meaning of “disproportionate” in the costs regime. In summary, the point of legal principle encompasses the following questions: (1) whether costs can ever be disproportionate, even though they are no more than the minimum costs which the party needs to spend in order to bring the case to trial; (2) if so, in what circumstances; and (3) again if so, how should a court decide what the proportionate figure should be? In particular, may a judge, on proportionality grounds, reduce a costs budget or impose a CCO, simply because the judge disapproves of the claimant’s decision to proceed with the litigation, e.g. because the sum claimed is much smaller than the anticipated costs and there are no vindication issues?

105. As I have said, I do not need to decide this issue. Even if I assume, in the Defendant’s favour, that the answer is “yes”, I have concluded that this is not an appropriate case to impose a CCO of £150,000 on the basis of the grounds relied upon by the Defendant. Moreover, since this is potentially an issue of general public importance, I think that I should refrain from expressing any firm views on the point. It should wait for a case in which the point needs to be decided.

106. I will, however, briefly add that, in argument on this point, the parties drew my attention to the Jackson Report, paragraphs 7.22 and 7.23, CPR 44.3(2)(a), especially the last sentence thereof, and several authorities, including Lownds v Home Office [2002] 1 WLR 2450 (a case which set out the position prior to the 2013 changes); Brian May and another v Wavell Group Limited and another (HHJ Dight, Central London County Court, 22 December 2017, unrep., at paragraph 44); Kazakhstan Kagazy plc and others v Baglan Abdullayevich Zhunus [2015] EWHC 404 (Comm), per Leggatt J, at paragraph 13, and West v Stockport NHS Foundation Trust [2019] EWCA Civ 1220; [2019] 1 WLR 6157, at paragraphs 73 and 87-93. In addition, useful guidance can be found in a case which was not cited to us by counsel, Ernst Malmsten v Lara Bohinc [2019] EWHC 1386 (Ch); [2019] 4 WLR 87, per Marcus Smith J, at paragraphs 48-58.

Setting a costs budget

107. The reasons which I have given for declining to impose a CCO in the sum of £150,000 are equally reasons why I decline to impose a costs budget in that amount.

108. On behalf of Judge Brown and myself, however, I wish to stress that it does not follow from this judgment that we accept that a costs budget should be set in the sum that the Claimants have set out in their Precedent H, or, indeed, in the sum that the Defendant has offered (in the event that its main argument failed). We will have to consider whether the proposed budgets are unreasonable and/or disproportionate on “normal” grounds, i.e. not on the grounds that were relied upon by the Defendant when seeking a CCO in the sum of £150,000. We have decided that cost budgeting is a matter that Judge Brown and I should deal with jointly.

Conclusion

109. For the reasons set out above, I refuse the Defendant’s application for a CCO capping the Claimants’ future costs at the sum of £150,000, or any other sum below the minimum sum required for the Claimants to litigate their claims effectively in the High Court.

110. The parties are invited to notify the Court whether they seek a further hearing before Costs Judge Brown and myself at which oral representations can be made about the costs budget, or whether the matter can be dealt with by way of written representations.

---