PGI Group Limited v Magret Thomas & 30 Others

A costs capping order under the Civil Procedure Rules 1998 is an exceptional and cumulative remedy. The applicant must show that the order is in the interests of justice, that there is a substantial risk of disproportionate costs without it, and that case management or detailed assessment cannot adequately control that risk. Proportionality is contextual. It includes vindication, reputational concerns, the importance of the dispute, financial imbalance, and incurred and future costs. It is not a damages-only cost-benefit exercise. A cap may in principle be below reasonable and necessary litigation costs where those costs would be disproportionate. However, a UK cap cannot be pegged to the costs of pursuing validly brought proceedings in another country. Permission to appeal was refused.

The respondents were 31 Malawian women employed by Lujeri, a Malawian tea and nut plantation company. They brought group claims in England against its parent company, alleging sexual assaults, harassment and discrimination by Lujeri employees and breaches of duties of supervision and control.

Mr Justice Cavanagh refused the defendant’s application for a costs capping order limiting future costs to £150,000, in a judgment reported at [2021] EWHC 2776 (QB). He later fixed the respondents’ future costs budget at £848,140. The defendant sought permission to appeal on proportionality, incurred costs and the relevance of the costs of proceedings in Malawi.

1. Permission refused. The proposed appeal had no real prospect of success. The judge had refused the costs capping order, approved costs budgets and rejected the application on each of the three cumulative conditions in rule 3.19(5).

2. Costs decisions are matters of discretion and evaluation. The Court of Appeal will interfere only for an error of principle, the consideration of an irrelevant matter, failure to consider a relevant matter, or a conclusion that is plainly unsustainable. The court applied the approach in F & C Alternative Investments Ltd v Barthelemy (No 3) [2012] EWCA Civ 843; [2013] 1 WLR 548 and Patience v Tanner and Another [2016] EWCA Civ 158; [2016] 2 Costs LR 31.

3. The conditions for a costs capping order under rule 3.19(5) are cumulative: the order must be in the interests of justice; there must be a substantial risk that costs will otherwise be disproportionately incurred; and that risk must not be adequately controllable by case management or detailed assessment. The judge was entitled to find that none of these conditions was satisfied.

4. The proportionality rules required a contextual evaluation. Relevant matters included the parties’ financial imbalance, the value of non-monetary relief, reputational and wider considerations, the importance of the dispute, and costs incurred and to be incurred. The respondents’ objectives of vindication and reform meant that a costs figure substantially exceeding the damages was not necessarily disproportionate. A damages-focused cost-benefit analysis was impermissible.

5. In principle, rule 44.3(2)(a) permits a costs budget or cap to be below the reasonable and necessary costs of taking a valid claim to trial if those costs are disproportionate. The judge’s contrary suggestion that this was only theoretical was incorrect, but it did not affect the result. The formulation in Kazakhstan Kagazy PLC and Others v Baglan Zhunus and others [2015] EWHC 404 (Comm) concerned an interim payment and recoverability on assessment, not a general proportionality test. It therefore required caution in this context.

6. Although incurred costs must be considered, an applicant seeking findings about their unreasonableness or disproportionality must provide detailed submissions and evidence. The court is not required to devise a different cap figure which neither party has advanced. Any detailed treatment of incurred costs may require an analysis of past and future costs, as illustrated by CIP Properties (AIPT) Limited v Galliford Try Infrastructure Limited and others [2015] EWHC 481 (TCC); (2015) 2 Costs LR 363.

7. The availability of proceedings in Malawi did not justify pegging the UK costs cap to notional Malawian costs. The claims were validly brought in England, and the relevant costs would be assessed under the UK rules. The alternative forum could not be introduced as a forum non conveniens argument through proportionality. The absence of equivalent QOCS protection in Malawi also made close comparison inappropriate. Grounds 4 and 5 were parasitic on the rejected grounds.

1. Court of Appeal (Civil Division): permission to appeal was refused.
2. High Court, Queen’s Bench Division: Mr Justice Cavanagh refused the costs capping order application in [2021] EWHC 2776 (QB) and subsequently fixed the respondents’ future costs budget at £848,140.