Swift v Carpenter [2020] EWCA Civ 165

This article originally appeared in Issue 5 (May 2020).

So Swift v Carpenter rumbles on. The restrictions imposed during the Covid-19 pandemic have meant that the adjourned appeal of 24 July 2019, due for hearing on 23 March 2020 and listed for four days, has been postponed. The appeal is now due to start remotely on 22 June 2020. The Court of Appeal has ruled, however, on whether the Claimant was entitled to a Protective Costs Order pursuant to s.51 of the Senior Courts Act 1981 and CPR part 44.4. 

To recap, the Claimant called no evidence at a trial designed to undermine the decision in Roberts v Johnstone (“R v J”), a fact noted in the judgment by Lambert J. The trial judge considered herself bound by R v J and declined to award any damages in respect of the cost of purchasing suitable accommodation but also found, no doubt in case of a successful appeal, that those costs amounted to £900,000. She herself gave permission to appeal and the Claimant duly took up the invitation. 

At the hearing in July 2019 the Appellant’s primary position was that additional evidence – or indeed evidence at all – was not required for a just resolution of the appeal but, in case this were wrong, she sought to admit the evidence of an actuary expert in valuing reversionary interests. His evidence had only been obtained after the first instance decision. 

The Respondent opposed the admission of this fresh evidence but, in the result, the court allowed expert evidence and acceded to the Appellant’s application for an adjournment. Currently the parties have permission to call evidence from an actuary, a valuer, an economist, a chartered surveyor and an IFA. The Intervener, PIBA, is also allowed to adduce evidence. 

In November 2019 the Appellant applied for a Protective Costs Order, the effect of which would have been to protect her against any costs liability to the Respondents for costs incurred after the date when the appeal was originally listed. In essence her argument was that the issue was of wide and considerable importance and that continuing uncertainty was detrimental to the community of claimants needing special housing, insurers meeting such claims, lawyers handling the claims and others (presumably including NHS Resolution). She gave various eye-watering estimates of the costs incurred and to be incurred since July 2019 in support of a submission that an adverse costs award would either wholly consume or at the very least substantially erode any damages she may be awarded and therefore leave her legitimate needs, caused by the fault of another, unmet. She argued too that the expansion of the appeal to include many experts had made it a much longer and consequently more expensive hearing, something she had not anticipated. It was accepted that the QOCS regime applied to both first instance hearing and appeal. 

The Decision 

In R (Corner House Research) v Secretary of State for Trade and Industry [2005] EWCA Civ 192 the Court of Appeal set out the circumstances surrounding the making of a PCO, which were that: 

  1. A protective costs order may be made at any stage of the proceedings, on such conditions as the court thinks fit, provided that the court is satisfied that: i. The issues raised are of general public importance; 
  2. The public interest requires that those issues should be resolved; 
  3. The applicant has no private interest in the outcome of the case; 
  4. Having regard to the financial resources of the applicant and the respondent(s) and to the amount of costs that are likely to be involved it is fair and just to make the order; 
  5. If the order is not made the applicant will probably discontinue the proceedings and will be acting reasonably in so doing. 
  6. If those acting for the applicant are doing so pro bono this will be likely to enhance the merits of the application for a PCO. 
  7. It is for the court, in its discretion, to decide whether it is fair and just to make the order in the light of the considerations set out above. 

Clearly precondition (3) set out in paragraph 1 is the one most relevant to the present case as the Claimant has a very significant financial interest in the outcome of the appeal and no doubt would not be pursuing the appeal otherwise. The court also found, however, that she would not discontinue her appeal if no PCO were made but might feel constrained by fear of costs to settle her claim in advance for less than it was truly worth. There was no great discussion of the impact of the fifth precondition. 

In Swift the court approved and held itself bound by the decision in Eweida v British Airways plc [2009] EWCA Civ 1025. This was an appeal from the Employment Appeal Tribunal, a no costs jurisdiction. In Eweida it was decided that a PCO could not be made in a private law claim even if the subject matter of the claim was of general importance. Reliance was placed on observations by Hoffmann LJ in McDonald v Horn [1995] ICR 685 to the effect that the normal rule that costs would follow the event was a “formidable obstacle” to a PCO in a private law claim. In Eweida Lloyd LJ said at [38]: 

“In my judgment, the court cannot make a PCO in this case. This is not public law litigation, but a private claim by a single employee against her employer. A PCO cannot be made in private litigation.” 

Eweida was followed in Jolyon Maugham v Uber Limited [2019] EWHC 391 (Ch) where the claimant sought a VAT invoice from Uber for a trip that cost him £6.34 and then sued when he was refused one. His motive was of course not financial but instead a desire to bring to light, and thus no doubt to stop, “financially meaningful tax avoidance” in the UK. The public interest lay in the exposure of Uber’s alleged mischaracterisation of its relationship with drivers and HMRC’s inactivity in the face of that mischaracterisation and in preserving public confidence in the taxation system. He had made a tactical decision to proceed via a private law claim rather than an application for judicial review. Indeed, the Court in Maugham noted that whilst the case was no doubt of some public importance it raised no issues of public law or at least none that was readily ascertainable. No PCO was made as this was private litigation. 

There is thus a distinction between private law actions, where no PCO may be made, and public law claims where it remains possible though exceptional order. What then is the yardstick by which one may judge whether a public law claim will qualify? The words of Dyson J (as he then was) in R v Lord Chancellor ex p CPAG and others [1999] 1 WLR 347, 353 provide a useful starting point. In that case he said: 

“I should start by explaining what I understand to be meant by a public interest challenge. The essential characteristics of a public law challenge are that it raises public law issues which are of general importance, where the applicant has no private interest in the outcome of the case. It is obvious that many, indeed most judicial review challenges, do not fall into the category of public interest challenges so defined. This is because, even if they do raise issues of general importance, they are cases in which the applicant is seeking to protect some private interest of his or her own.”

[Emphasis added to the original]. 

So, the absence of a defined stake in the outcome of the litigation, other presumably than that which flows from simply being a member of society, may be crucial. 

Those thinking of applying for a PCO should also heed the cautionary tale of this case. Although the possibility of applying for a PCO had been raised at the adjourned hearing of July 2019 no application was in fact made until November of that year. The Court of Appeal said that even if it had held that there was reason otherwise to make a PCO it would nevertheless have refused one on the ground of delay. At [49] it said: 

“If a party wishes to have the protection of a PCO, the application must be made as soon as possible as its existence will be highly likely to have a material effect on decisions by the other party as to the incurring of costs and the making of offers of settlement.”