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 3 Costs LR 317,(2009) 159 NLJ 1513, Technology & Construction Court - John Bates
A defendant's application for a costs capping order under CPR r.44.18 was refused where the risk of costs being disproportionately incurred by the claimants could be contained by case management or detailed assessment.
The applicant waste contractor (B) applied for an order capping the recoverable costs of the claimants (X) if, contrary to B's case, X were successful in their claims for negligence and nuisance.
X, having issued their proceedings against B on the basis of alleged odour emissions from B's landfill site, had obtained a group litigation order. They had the benefit of an after the event (ATE) insurance policy with a limit that had been increased to £1 million. B sought to cap X's recoverable costs, pursuant to CPR r.44.18, by reference to that £1 million limit.
B contended that the £1 million cap was fair and created mutuality because that sum was likely to represent, in practical terms, the maximum that it would be able to recover from X if it was successful.
HELD: A party seeking a costs capping order needed to demonstrate, on the evidence, that such an order satisfied the criteria at CPR 44.18(5) and CPR 44.18(6). Those sub-rules demanded a restrictive approach, and a case in which the criteria were satisfied was likely to be exceptional, Peacock v MGN Ltd  EWHC 769 (QB),  4 Costs L.R. 584 applied. It was entirely random to link the amount at which a claimant's costs could be capped to the amount that a defendant could recover against the claimants under an ATE policy, particularly where the latter figure was outside the control of the defendant and, at least directly, outside the control of the court. In the instant case, the crucial issue was the criteria in CPR r.44.18(5), namely whether there was a risk that costs would be disproportionately incurred. A costs capping order would not be made if the risk of disproportionate costs being incurred (almost always by a claimant) could be contained by case management or detailed assessment. B had not established that case management directions and costs assessments could not, between them, control any risk that X's base costs would be disproportionately incurred. A costs capping order under CPR 44.18 would not, therefore, be made against X. However, because of the potential unfairness of B's wider commercial position, the court instead made an order linking X's ultimate costs recovery to a recent estimate of their future costs, namely £1,471,767, albeit granting them liberty to apply to modify that order if their costs estimate was subsequently modified as a result of an order or direction by the court.