In the matter of Thomas and others v PGI Group Ltd  EWHC 2776 (QB) Mr Justice Cavanagh refused to grant the Defendant a Costs Capping Order under CPR 3.19, which is thought to be the first attempt at imposing a Costs Capping Order since the introduction of Cost Budgeting.
The matter involved 31 Malawian women who were employed by the Defendant; and the PGI Group were the UK parent Company of the Malawian tea company Lujeri. It was alleged that they were owed a duty of care in relation to sexually abusive, harassing and discriminatory acts alleged to have been committed against some of them by the Defendant’s managers and other employees, which had resulted in them suffering HIV, the birth of children and abandonment by their partners.
It was stated that the proceedings had non-financial motives and related to systemic human rights abuses.
At cost budgeting stage, The Claimants’ had incurred costs of approximately £1.66 million and sought future costs of £1.5 million in respect of two lead Claimants. The Defendants’ incurred costs were £750,000.00 and estimated future costs of £1.75 million to Trial.
The Defendants applied for the Claimants’ future costs to be limited to £150,000.00 which would ensure that the Claimants would not recover any future costs beyond those that were proportionate. Further, it was submitted that it was not reasonable nor proportionate for the Claimants to have commenced their Proceedings in England, and as such, the case was exceptional therefore justifying a Costs Capping Order as the Claimants would still be able to bring Proceedings in Malawi for a fraction of the legal costs.
CPR 3.19(5) provides that:
(5) The court may at any stage of proceedings make a costs capping order against all or any of the parties, if –
(a) it is in the interests of justice to do so;
(b) there is a substantial risk that without such an order costs will be disproportionately incurred; and
(c) it is not satisfied that the risk in subparagraph (b) can be adequately controlled by –
(i) case management directions or orders made under this Part; and
(ii) detailed assessment of costs.
(6) In considering whether to exercise its discretion under this rule, the court will consider all the circumstances of the case, including –
(a) whether there is a substantial imbalance between the financial position of the parties;
(b) whether the costs of determining the amount of the cap are likely to be proportionate to the overall costs of the litigation;
(c) the stage which the proceedings have reached; and
(d) the costs which have been incurred to date and the future costs.
At Paragraph 60 of his Judgment Mr Justice Cavanagh stated that: “CPR 3.19(5) provides that there are three preconditions which must each be satisfied before a CCO is made. These are that (1) it is in the interests of justice to make a CCO, (2) there is a substantial risk that without a CCO costs will be disproportionately incurred, and (3) 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.”
Mr Justice Cavanagh determined that all of these preconditions had not been met, and therefore, It would not be appropriate having regard to proportionality, to cap the costs at a figure that was less than the minimum costs that the Claimants required to litigate their claims effectively (paragraph 71), which would lead to “a gross inequality of arms.”