NO PROTECTIVE COSTS ORDER FOR APPELLANT IN ACCOMMODATION APPEAL: COURT OF APPEAL DECISION TODAY

In the judgment in Swift v Carpenter [2020] EWCA Civ 165 today the Court of Appeal rejected the claimant’s application for a Protected Costs Order. There are important observations on (i) the scope of Protected Costs Orders; (ii) the exercise of the court’s discretion in relation to PCOs  (in particular the need for speed in making an application); (iii) the scope of the new CPR 52.19.

THE CASE

The claimant is bringing an appeal in relation to the method of assessment of accommodation costs following a serious personal injury.  The appeal was listed and adjourned in order that the Court of Appeal could hear further evidence.  The claimant applied for a Protective Costs Order.

APPLICATION MADE – EVEN THOUGH THE CLAIMANT HAD THE PROTECTION OF QOCS

The claimant had QOCS protection. However if she is unsuccessful the defendant’s costs could potentially be set off against damages.

It is common ground that the appellant has the benefit on her appeal, as she had at first instance, of qualified one-way costs shifting (“QOCS”) under section II of CPR Part 44. The effect of QOCS is that no order for costs made against the appellant may be enforced, without the permission of the court, to the extent that the costs payable under such an order exceed the amount of damages and interest awarded in her favour. The appellant does not consider that limitation on the recoverability of the respondent’s costs gives her fair and adequate protection in all the circumstances because, she says, without a PCO an adverse order for costs on the appeal would exceed the additional amount of £900,000 which she requires for a suitably adapted house to meet her needs as a result of the accident caused by the respondent’s negligence. It would also diminish her damages award to a significant extent and will, she says, leave some of her needs unmet.

THE COURT OF APPEAL’S DECISION

The first part of the Court of Appeal’s decision was that it was not appropriate to make a Protective Costs Order in a private case.   In any event, if there was a discretion available to the court, it would not have exercised it.

    1. Richards LJ said  [Unison v Glen Kelly [2012] EWCA Civ 1148.] (at 21):

“But for the decision in Eweida that a PCO cannot be made in private litigation, I would have been minded to make a PCO in this case. It may be that notwithstanding Eweida the wide discretion of the court in matters relating to costs would admit of the possibility of a freestanding order analogous to a PCO, even in private litigation. But it is not necessary for us to go that far. In this case it is open to us to vary the grant of permission to appeal … so as to impose a condition that the appellant, if successful, will not seek costs against the respondents.”

    1. Those observations cannot undermine the binding nature of Eweida insofar as it sets out the policy and practice of the courts. Indeed, Richards LJ recognised that it was not open to the court in Unison to make a PCO. In any event, as we have said, the application in that case was not for a PCO.
    2. Even if we had taken the view that, contrary to Eweida, a more flexible approach can be taken to the Corner House conditions, we would not have granted the present application for two principal reasons. Firstly, contrary to the impression in some of the observations made in the skeleton arguments on behalf of the appellant that the court was instrumental in bringing about the adjournment in 2019, the adjournment was made on the application of the appellant as a result of the appellant’s own conclusion that she did not have sufficient and appropriate expert evidence for her appeal. As Nicola Davies LJ observed during the hearing, the trial judge had herself made an observation about the lack of such evidence. The resulting costs of the adjournment, and of the delay in the hearing of the appeal, obtaining further evidence and the extended time estimate for the hearing of the appeal were all consequences of that tactical decision by the appellant herself, from which she now seeks to protect herself by the present application.
      1. Secondly, there was a significant delay in the application for the PCO. The possibility of such an application for a PCO was mentioned on 24 July 2019, at the directions hearing following the decision on the previous day to adjourn the hearing of the appeal, but the application for a PCO was not in fact made until late November 2019. During that time the respondent incurred very substantial costs, from which the appellant now seeks to protect herself. If a party wishes to have the protection of a PCO, the application must be made as soon as possible as its existence will be highly likely to have a material effect on decisions by the other party as to the incurring of costs and the making of offers of settlement. Mr Arney sought to explain and excuse the delay in the present case on the ground that the appellant failed to appreciate the likely size of the additional costs consequential on the adjournment and the obtaining of expert evidence. We cannot accept that as a justifiable reason for the delay, not least because the appellant has had the benefit of solicitors who are highly experienced in this area of litigation. Even if the very large sums now said to have been incurred were not predicted, considerable cost would have been anticipated.
      2. The binding nature of Corner House and Eweida as precedents must be qualified to the following extent. As we have emphasised, those decisions are about how the wide discretion of the court as to costs should be exercised. They are not decision on law but on policy and practice. Like any other policy or practice, they may be subject to adjustment in the light of circumstances that did not exist or were not anticipated at the time they were set. In the present case, Mr Arney was not able to draw our attention to any features of the present proceedings and the present application for a PCO that might distinguish them from the situations under consideration by the Court of Appeal in Eweida. He sought to distinguish those cases by emphasising that there has never been a decision on an application for a PCO in which the court has held that, but for the strict application of the Corner House conditions, it would have granted a PCO. That, however, is not a reason for departing from the policy and practice clearly set down in Eweida. In reality, the substance of the appellant’s argument is that the Court of Appeal was simply wrong in Eweida to hold that the court should not make a PCO in private litigation, or, to the same effect, in litigation in which the applicant for the PCO has a material private interest. That is not a legitimate argument for a PCO in the present case 
        1. One material change of circumstance that has occurred since Eweida is the introduction of what is now CPR 52.19 (previously CPR 52.9A). That provides as follows:

“(1) Subject to rule 52.19A [Aarhus Convention claims], in any proceedings in which costs recovery is normally limited or excluded at first instance, an appeal court may make an order that the recoverable costs of an appeal will be limited to the extent which the court specifies.

(2) In making such an order the court will have regard to—

(a) the means of both parties;

(b) all the circumstances of the case; and

(c) the need to facilitate access to justice.

(3) If the appeal raises an issue of principle or practice upon which substantial sums may turn, it may not be appropriate to make an order under paragraph (1).

(4) An application for such an order must be made as soon as practicable and will be determined without a hearing unless the court orders otherwise.”

  1. The appellant does not rely on that provision. It was apparently intended to address the type of situation in Eweida where a person appeals from a “no costs” jurisdiction, so as to preserve, in an appropriate case, the same costs policy on appeal. To that extent, therefore, the Civil Procedure Rule Committee, no doubt prompted by encouragement in some of the cases to review the inflexibility of the Corner House conditions, has reversed the effect of Corner House and Eweida. The Civil Procedure Rule Committee has not, however, decided to go further and remove entirely the condition that a PCO is not available in private litigation or where the applicant has a material private interest in the outcome of the litigation. As we have said, it is accepted by the respondent, correctly in our view, that the QOCS regime which applied at first instance in the present case continues to apply on appeal. It is also to be noted that it has been held that “the recoverable costs of an appeal” in CPR 52.19 means the costs recoverable by the winning party on the appeal, whoever the winner may turn out to be; the rule does not contemplate an order in favour of just one party, win or loseJE (Jamaica) v Secretary of State for the Home Department [2014] EWCA Civ 192, [2014] C.P. Rep. 24. That is not the order sought by the appellant in the present case.