High Court refuses first application for costs-capping order since 2013

The High Court has refused what is believed to be the first application for a costs-capping order (CCO) since budgeting was introduced in 2013.

Mr Justice Cavanagh accepted that capping the costs of women suing the British owners of tea and macadamia nut plantations in Malawi over claims of systemic sex abuse would bring an end to their claim.

PGI Group, the UK parent company of Malawian tea company Lujeri, applied for the women’s future recoverable costs in their court case to be limited to £150,000. They have incurred nearly £1.7m up to the date budgets were filed in August, with their budget for future costs up until the end of the trial of the common issues and the liability issues relating to two lead claimants – scheduled for next summer – of £1.5m.

PGI said it had incurred £750,000 up to the budget and estimated future costs at £1.75m.

It was served with a claim in April 2020 for failing to protect 31 women employees from rape, sexual assault, sexual harassment, coercion and discrimination by male workers.

The claimants, who are among the poorest workers in the world, said they often submitted to the harassment for fear of losing their employment. Many have contracted HIV while others have become pregnant, they allege.

PGI argues that, even if the alleged misconduct occurred, it did not owe the women a duty of care.

It was common ground that any damages the women would receive would be modest by UK standards, at most £10,000 each, but Cavanagh J accepted that the claim was about more than money; objectives he described collectively as “vindication”. It is also covered by qualified one-way costs shifting.

Sitting with Costs Judge Brown as assessor in Thomas and Ors v PGI Group Ltd [2021] EWHC 2776 (QB), the judge said PGI argued that the fact the CCO would force the claimants to discontinue was not a reason to refrain from making one.

CPR 3.19(5) sets out three preconditions for making a CCO: it is in the interests of justice to make one; there is a substantial risk that, without a CCO, costs will be disproportionately incurred; and the court is not satisfied that the risk of disproportionate costs can be adequately controlled by costs budgeting or a detailed assessment.

If these preconditions are met, the court is not bound to make a CCO: it has a discretion to do so.

Cavanagh J said the fact no CCO has been made for more than eight years was not a reason not to do so – CPR 3.19 was still in place. “But it serves to emphasise their exceptional nature,” he observed.

None of the conditions were met, the judge continued. It would not be appropriate, having regard to the principle of proportionality, to cap the costs at a figure that was less than the minimum costs the claimants required to litigate their claims effectively in the High Court.

The sums likely to be recoverable, though small by English standards, would be “very significant for poor Malawian plantation workers, and they may indeed be life-changing”.

Cavanagh J continued: “I accept the claimants’ submission that in any event, the claimants’ objectives in bringing these proceedings are not entirely, or even principally, about money.

“They claim to have been abused sexually, including, in many cases, by rape. They say that this was a chronic problem in the plantations run by Lujeri. They say that this was the result of a systematic failure by the defendant to use its powers and influence to control the behaviour of male managers and overseers and to ensure that these abuses did not take place on the plantations.

“I am satisfied that the claimants’ legitimate desire for personal vindication, and for the acceptance by the court that they were abused in the way that they allege and that the defendant is liable for this treatment, coupled with a legitimate desire to use the court proceedings as a way of shining a light on these practices and promoting reforms in the future, mean that future costs that are substantially in excess of the damages at issue will not be disproportionately incurred.

“The importance of the matter to the parties is a relevant consideration, in relation to proportionality (see CPR 44.4(3)(c)).”

It did not matter that the claimants could have sued Lujeri in Malawi: they were entitled to choose to sue Lujeri’s ultimate parent company in England.

These reasons also meant the application failed to satisfy the requirement that a CCO must be in the interests of justice.

The defendant had abandoned a strike-out application and, in doing so, explicitly accepted that the proceedings were not an abuse of process. But imposing a CCO would have the same impact as a strike-out, the judge said.

Further, even if the claimants were able to “struggle on” with the CCO, it would lead to “a gross inequality of arms”.

“I can understand that the defendant is unhappy that it will have to pay the claimants’ costs if the claimants succeed, but the claimants will not have to pay the defendant’s costs if the claimants’ claims fail. However, this is a function of the QOCS rules, and it is not a reason to impose a CCO on the claimants.”

Finally, it was “highly unlikely” that a CCO would be better than costs budgeting at controlling disproportionate costs in the circumstances.

But Cavanagh J stressed that this did not mean the figures each party had set out should be the budgeted sums.

Leigh Day partner Sapna Malik, representing the claimants, welcomed the ruling.

“As the judge saw, our clients want to shine a light on the abuses that they and their colleagues have endured, they want to bring about a change of practice at the plantations so that there is zero tolerance of sexual harassment, as well as receive compensation for their suffering.

“We are glad that this blatant attempt by PGI to halt the legal action has been stopped in its tracks.”

Richard Hermer QC, Benjamin Williams QC and Kate Boakes (instructed by Leigh Day) for the claimants. Charles Dougherty QC, Nicholas Bacon QC and Ognjen Miletic (instructed by Hogan Lovells) for the defendant.

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Costs News
Published date
27 Oct 2021

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