Baker v Quantum Clothing Group Ltd & Anor

Where an appeal would otherwise be stifled by an appellant’s inability to fund potential costs liability, the Court of Appeal may make a pre-emptive order requiring respondents who joined for their own interests to bear their own appeal costs. The court must balance access to justice and the wider public importance of the appeal against the potential injustice to successful respondents of losing the ordinary costs protection. A material change in circumstances may justify revisiting the position, even where the relevant risk was previously mentioned only as a possibility. Earlier case-management orders containing liberty to apply do not necessarily prevent the application. The jurisdiction to make the order may be found in section 51 of the Supreme Court Act 1981 and CPR 3.1(2)(m).

Mrs Stephanie Baker appealed from a decision of His Honour Judge Inglis in the High Court. Her noise-induced hearing loss was quantified at £5,000, but her claim against Quantum was dismissed on the basis that no relevant duty arose before 1990. Meridian and Pretty Polly joined, or sought to join, the appeal, which had been broadened to address issues affecting the wider textile-employer litigation. Baker’s ATE insurance covered Quantum’s costs but not the potential costs of the additional respondents. She applied for an order that Meridian and Pretty Polly bear their own costs, arguing that otherwise the appeal could not proceed. The central issue was the fair and just costs order in those circumstances.

Lord Justice Rix gave the substantive reasons. Lady Justice Smith and Lord Justice Buxton agreed.

1. Disposition. The application was granted. Meridian and Pretty Polly were ordered to bear their own costs of the appeal, regardless of its outcome. Quantum remained fully covered for its costs.
2. Jurisdiction and change of circumstances. If a change of circumstances was required under CPR 3.17 to vary or revoke the earlier position, that requirement was satisfied. The critical change was that it had become clear that the ATE underwriters would not cover the potential costs liability to Meridian and Pretty Polly. The fact that this possibility had previously been raised did not prevent it from constituting a material change. The June 2007 order required neither revocation nor variation because the present application sought an order which it did not contain. The court also held that its jurisdiction or power was found in section 51 of the Supreme Court Act 1981 and CPR 3.1(2)(m), citing King v Telegraph Group Ltd ([2004] EWCA Civ 613; [2005] 1 WLR 2282).
3. Earlier case-management orders. The July 2007 and January 2008 orders, under which the appeal would stand dismissed unless funding was confirmed or a continuation of the stay was sought, were working-out orders rather than a final bar. Their liberty to apply permitted Baker’s application, made before the relevant deadline. The material date for assessing change was the June 2007 judgment and order.
4. Fairness. The court weighed the broad public importance of the appeal, the risk that costs would stifle it, and the substantial investment already made in the litigation against the ordinary entitlement of successful parties to recover costs. Meridian and Pretty Polly were not Baker’s chosen respondents. They had joined for their own interests, while Quantum’s costs were fully protected. Although denying costs to successful respondents involved potential injustice, they were substantial parties able to protect their own interests. Ordering the appeal to proceed was regarded as the least unjust solution.
5. Capping. No capping order was made because no party had applied for one. The possibility was mentioned for completeness only. Any such application would have required further exploration and might have raised conflicts between the respondents.

• Court of Appeal (Civil Division): Granted Baker’s application and ordered Meridian and Pretty Polly to bear their own costs of the appeal.
• High Court, Queen’s Bench Division, Nottingham District Registry: His Honour Judge Inglis quantified Baker’s noise-induced hearing loss at £5,000 but dismissed her claim against Quantum; Baker received permission to appeal.
• Earlier Court of Appeal directions: The appeal was broadened on 28 June 2007. Subsequent orders in July 2007 and January 2008 provided for dismissal unless funding was confirmed or a continuation of the stay was sought, subject to liberty to apply.