Swift v Carpenter – Protective Costs Orders in the Court of Appeal

William Audland QC and Richard Viney appeared for the successful Respondent in the Court of Appeal’s decision in respect of a protective costs order in the case of Swift v Carpenter [2020] EWCA Civ 165. The full appeal hearing is due to take place in 24.03.20 – 27.03.20.

This case has been commented upon on a number of occasions. This note solely discusses the Appellant’s recent application for a protective costs order pursuant to s.51 of the Senior Courts Act 1981 and CPR r. 44.2.

Relevant Chronology

It is worth taking a moment to set out the relevant chronology on the basis of the pivotal role it played in disposing of the Appellant’s application.

On 23.07.19, the substantive hearing of the appeal was due to be heard over two days on the subject of how a negative discount rate affects the Roberts v Johnstone calculation in respect of accommodation claims. After significant discussion, the Appellant applied for an adjournment to seek the relevant expert evidence which was granted.

On 24.07.19, case management directions were given by Irwin LJ.

On 26.11.19, the Appellant applied for a protective costs order in the form of an order that she will not be responsible for the respondent’s costs incurred on or after 24.07.19

On 06.02.20, this application was dismissed.

On 20.02.20, the Court of Appeal provided written reasons for the refusal.

The Relevant Principles

The principles underlying are set out in the case of R (Corner House Research) v Secretary of State for Trade and Industry [2005] EWCA Civ 192. In that case, the Court of Appeal held that a protective costs order (“PCO”) may be made at any stage in proceedings and on such conditions as the court sees fit, provided that the court is satisfied that:

  1. the issues raised are of general public importance
  2. the public interest requires that those issues should be resolved
  3. the applicant has no private interest in the outcome of the case
  4. having regard to the financial resources of the applicant and the respondent(s) and the amount of costs that are likely to be involved, it is fair and just to make the order; and
  5. if the order is not made, the applicant will probably discontinue proceedings and will be acting reasonably in so doing.

The Court further noted that if those acting for the applicant were acting pro bono, that would enhance the merits of an application for a PCO and further that it is a wholly discretionary exercise for the court to make in light of the considerations above.

These principles, and a number of other cases discussing the third condition (no private interest in the outcome) were further analysed in the case of Eweida v British Airways plc [2009] EWCA Civ 1025, a case that began in the Employment Tribunal and thus a no costs jurisdiction. In Eweida it was held at [38] that “a PCO cannot be made in private litigation … the issue may be of general importance, but the claim is a private claim for the benefit of the employee.”

The Decision

At [30] the Court of Appeal held that the case law establishes that as a matter of judicial policy and practice, the application should be refused in the present case. Further, if that policy did not “compel” such a result, the Court would have refused the PCO in exercise of their discretion due to the underlying facts / chronology.

Pursuant to the Corner House principles and the case of Eweida, there was binding authority to the effect that a PCO should not be made in private litigation [44], despite the appeal having wider interest to future litigants in a similar position, insurers and the legal profession. The Court noted that such wider interests are “true of many, if not most, of the appeals in the Court of Appeal in private litigation.”

Further, at [48-49], the Court explained, had they not been bound to dismiss the application, that they would have dismissed the application in any event for two reasons:

  • First, the adjournment of the appeal hearing in July 2019 was the result of a tactical decision made by the Appellant and as such, all resulting costs were consequences of that decision.
  • Second, the delay in applying for the PCO of some four months was dispositive. The application could (and indeed should) have been made shortly after the directions hearing on 24.07.19, particularly given that mention was made of it then and there. Indeed, it was held that the application for a PCO “must be made as soon as possible as its existence will be highly likely to have a material effect on the other party as to the incurring of costs and making offers of settlement.”

Analysis

It has now been stated even more comprehensively than it already was that despite a body of case law advocating a more flexible approach to PCOs, it is very unlikely that they will be granted in the course of private litigation including personal injury.

However, it was noted at [50] that this was “not a decision on law but on policy and practice” and that had the applicant been able to point to features of the dispute that differed from those in Eweida, such policy and practice may have been “subject to adjustment in light of the circumstances that did not exist or were not anticipated at the time [those policies] were set.” That being said, the Court declined to give any examples of what such features might consist.

For the time being, and likely the foreseeable future, PCOs will only be available in public litigation.

Henry King