Peacock v MGN Ltd

A costs capping order in defamation proceedings is an exceptional case-management remedy. The court must be satisfied that such an order is in the interests of justice, that there is a substantial risk of disproportionate future costs, and that ordinary case management or detailed assessment cannot adequately control that risk.

In assessing proportionality, the court should focus on the costs properly within the scope of the applicable rule. Additional liabilities such as conditional-fee uplifts and after-the-event insurance premiums may be excluded. Where the principal concerns are hourly rates or the use of leading counsel, retrospective detailed assessment may provide an adequate safeguard and justify refusing a prospective cap.

The claimant brought defamation proceedings against the defendant. The claimant was funded by a conditional fee agreement. The defendant applied for a costs capping order under CPR 3.1(2)(m), seeking a cap on both parties’ costs through trial and exclusion of leading-counsel costs.

The application was considered against substantial estimated exposure, the straightforward nature of the issues, recent amendments to CPR Part 44 and the Costs Practice Direction, and competing approaches in earlier authorities. The central issue was whether the statutory and procedural criteria for a prospective costs cap were satisfied, or whether detailed assessment could adequately control the risk of disproportionate costs.

1. Application refused. The court accepted that there was a substantial risk that costs would be disproportionately incurred, particularly because of proposed city hourly rates and the instruction of leading counsel. Nevertheless, a costs capping order could be made only in exceptional circumstances, and the applicable criteria had to be applied.
2. Under CPR 44.18, the court had to consider whether a cap was in the interests of justice, whether there was a substantial risk of disproportionate costs, and whether that risk could adequately be controlled by case-management orders or detailed assessment. All the circumstances were relevant, including the parties’ financial imbalance, the proportionality of determining the cap, the stage reached, and costs incurred and anticipated.
3. The court treated the conditional-fee regime as sanctioned by Parliament. By CPR 44.18(2), additional liabilities were excluded from “future costs”. The assessment therefore concentrated on base costs, including hourly rates and the proposed use of two counsel.
4. Although the court was concerned about an “arms race” in which one party’s instruction of leading counsel encouraged the other to do likewise, the reasonableness of city rates and leading counsel could be addressed retrospectively by an experienced costs judge. Detailed assessment was therefore capable of adequately controlling the identified risk.
5. The court could not presently identify useful case-management directions to narrow the issues. The defendant remained entitled to present the allegations as a continuum of behaviour. That circumstance did not justify a costs cap where detailed assessment was sufficient. The application was accordingly dismissed.