Maugham v Uber London Ltd

A protective costs order is not ordinarily available in private litigation between private parties, even where the claim raises issues of public interest or may have significant public consequences. The classification depends on the substance of the proceedings, not the claimant’s motive or the possible effect on public revenue.

The Corner House principles are directed principally to public law challenges involving public authorities. Where they are considered by analogy, the court must examine the issues actually raised, whether their resolution is required in those proceedings, the interests and resources of funders, the defendant’s position, and the realistic prospect of discontinuance. A private claim against a potential taxpayer was therefore not an appropriate case for a protective costs order.

Mr Maugham brought private proceedings against Uber London Limited seeking a declaration and an order requiring Uber to provide a VAT invoice for a taxi journey. He argued that Uber, rather than the driver, was the supplier for VAT purposes and that the proceedings raised matters of substantial public importance.

He applied under section 51 of the Senior Courts Act 1981 for a protective costs order limiting his adverse costs exposure to £20,000. The claim was funded substantially by persons connected with the black cab trade. The central issue was whether the protective costs jurisdiction, developed principally for public law challenges, could apply to these private proceedings and, if so, whether the relevant principles were satisfied.

1. Application refused. The court declined to make a protective costs order under section 51 of the Senior Courts Act 1981.
2. The discretion under section 51 is wide but must be exercised in accordance with the rules of court and established appellate principles. The ordinary rule under CPR 44.2(2)(a) is that the unsuccessful party pays the successful party’s costs. That rule presents a substantial obstacle to a pre-emptive costs order in ordinary litigation.
3. The Court of Appeal’s decision in Eweida v British Airways Plc established, as an essential part of its reasoning, that a protective costs order cannot be made in private litigation. The present claim was a private claim against a private defendant for an alleged entitlement to a VAT invoice. It did not require any finding that HMRC had acted unlawfully or abused a public power.
4. The claimant’s altruistic motive and the possible consequences for HMRC’s VAT receipts did not alter the character of the proceedings. The issues actually raised were whether Uber was required to provide an invoice and whether the claimant had a cause of action under the Value Added Tax Regulations 1995. Public interest in surrounding issues was insufficient.
5. Even if the Corner House principles could apply, they were not satisfied. The claim did not challenge executive action, and the public interest did not require the tax issue to be resolved in these proceedings. Any challenge to HMRC’s failure to assess Uber was properly brought by judicial review, potentially engaging the statutory costs-capping regime.
6. The claimant had little personal commercial interest, but the substantial funding from the black cab trade and the funders’ commercial interest were relevant circumstances. Uber was a private commercial defendant funding its own defence. The financial and fairness considerations therefore weighed against an order. The claimant’s willingness to discontinue supported the application, but his stated intention to seek costs management made discontinuance less certain.
7. Reduced-fee representation provided some support, but the representation was not wholly pro bono. Considering all the circumstances, the case was not of the type for which the CPAG and Corner House jurisdiction was intended. The application was refused.