Barr & Ors v Biffa Waste Services Ltd (No.2)

A costs capping order under CPR 44.18 requires evidence of a substantial risk that the claimant’s base costs will be disproportionately incurred, together with evidence that case management and detailed assessment cannot adequately control that risk. Inequality arising from a conditional fee agreement, inadequate after-the-event insurance, or the structure of a group litigation order does not itself establish disproportionate costs. The amount of available ATE cover is not the proper measure of a costs cap. Although the court may be unable to cap costs under CPR 44.18, it may use costs estimates and its case-management powers to limit reasonable eventual costs recovery, subject to liberty to apply if the underlying assumptions change.

The claim formed part of a group litigation brought by 163 households alleging negligence and nuisance arising from odour emissions from a landfill site. The defendant applied under CPR 44.18 for an order capping the claimants’ recoverable future costs by reference to their ATE insurance limit, then £1 million.

The application arose against substantial estimated costs, a conditional fee agreement with a 100 per cent uplift, several liability under the group litigation order, and uncertainty about recovery of the defendant’s costs if it succeeded. The central issues were whether those circumstances created a substantial risk of disproportionately incurred costs and whether the court could instead control future costs by an order under CPR 43.

1. Application under CPR 44.18 dismissed. The court held that the ATE limit was not an appropriate measure of the claimants’ costs cap. The amount recoverable by a successful defendant under its insurance arrangements could not be equated with the amount reasonably recoverable by successful claimants. The amount of the cap would otherwise vary for reasons unrelated to the claimants’ own costs.
2. The relevant questions under CPR 44.18 were whether there was a substantial risk that costs would be disproportionately incurred, whether that risk could be controlled by case management or detailed assessment, and whether a cap was in the interests of justice. The substantial commercial imbalance between the parties was relevant to the final question, but it did not establish that the claimants’ base costs were disproportionate.
3. The court adopted the restrictive approach reflected in Smart v East Cheshire NHS Trust and Peacock v MGN Ltd. A costs cap was likely to be exceptional. The existence of a CFA, lack of ATE cover, or inadequate ATE cover did not automatically justify one. Costs had to be assessed by reference to the value and circumstances of the litigation, and the claimants’ base costs were not shown to be disproportionate when compared with the defendant’s anticipated expenditure.
4. The court was not satisfied that case management directions and detailed assessment could not control any risk of disproportionate costs. That independently prevented an order under CPR 44.18.
5. Nevertheless, exercising its case-management powers under CPR 43 and the overriding objective, the court directed that the claimants’ estimate of future costs should operate as their likely maximum costs recovery. The order was subject to liberty to apply if later directions altered the assumptions underlying the estimate or a significant error emerged. The defendant also remained entitled, on proper notice, to seek a stay for inadequate ATE cover or modification of the group litigation order.