1. Introduction

The case of PGI Group Ltd v Thomas & Ors ([2022] EWCA Civ 233) is a pivotal decision by the England and Wales Court of Appeal (Civil Division) that underscores the stringent criteria governing Costs Capping Orders (CCOs). This comprehensive commentary delves into the background, key issues, judicial reasoning, and the broader implications of the judgment.

2. Summary of the Judgment

The respondents, 31 Malawian women employed by Lujeri, alleged severe misconduct, including rape and discrimination by their employers. They initiated a group claim in the UK, asserting that PGI Group Ltd, as the parent company, owed them supervisory and control duties. PGI sought a CCO to cap the respondents' future legal costs at £150,000, a figure significantly lower than the £848,140 proposed by the trial judge. The Court of Appeal ultimately refused permission to appeal, upholding the trial judge’s decision to reject the CCO, emphasizing the importance of proportionality and the interests of justice.

3. Analysis

3.1. Precedents Cited

The judgment references several key cases and rules, notably:

• Tidal Energy Limited v Bank of Scotland PLC [2014] EWCA Civ 847: Addressed the boundaries of CCOs in complex cases.
• Black v Arriva North East Limited [2014] EWCA Civ 1115: Focused on litigation funding and CCOs.
• Kazakhstan Kagazy PLC and Others v Baglan Zhunus and others [2015] EWHC 404 (Comm): Discussed interim payments on account of costs.
• F & C Alternative Investments Ltd v Barthelemy (No 3) [2012] EWCA Civ 843 and Patience v Tanner and Another [2016] EWCA Civ 158: Emphasized the discretionary nature of costs decisions.

These precedents collectively reinforce the cautious and discretionary approach courts take when considering CCOs, ensuring they are reserved for exceptional circumstances.

3.2. Legal Reasoning

The court meticulously analyzed the criteria for granting a CCO as outlined in CPR r.3.19. The three key preconditions are:

• In the interests of justice.
• A substantial risk that costs would be disproportionately incurred without the CCO.
• No adequate control of costs through other means, such as costs budgeting.

The appellate court affirmed that none of these preconditions were met. Specifically:

• The proposed cap of £150,000 was deemed excessively low, potentially stifling legitimate claims.
• The judge ensured that costs could be adequately managed through budgeting, negating the need for a CCO.
• The interests of justice were paramount, especially considering the non-financial objectives of the claimants, such as vindication and reputational restoration.

Additionally, the court addressed the relevance of costs associated with pursuing claims in Malawi, deeming them inapplicable to the UK's proportionality assessment.

3.3. Impact

This judgment reaffirms the judiciary’s reluctance to impose CCOs except in rare, exceptional circumstances. It emphasizes that:

• CCOs are not a substitute for detailed cost budgeting.
• Proportionality in costs is multifaceted, encompassing both financial and non-financial considerations.
• The interests of justice, particularly in cases involving significant personal vindication and reputational stakes, outweigh attempts to limit costs through CCOs.

Future litigants and practitioners can draw from this case a clear understanding of the high threshold required to secure a CCO, ensuring that such orders are not sought lightly.

4. Complex Concepts Simplified

4.1. Costs Capping Order (CCO)

A CCO is a court order that limits the amount one party can be ordered to pay in the other party’s legal costs. They are granted only in exceptional cases to prevent disproportionate costs.

4.2. Proportionality in Legal Costs

Proportionality assesses whether the legal costs incurred are appropriate relative to the case's complexity, the amount at stake, and the interests of justice. It ensures that litigation remains fair and financially feasible for all parties involved.

4.3. Costs Budgeting Regime

Introduced as part of the Jackson reforms, costs budgeting involves estimating the legal costs of each party before trial. It provides a structured framework to manage and cap future litigation costs, offering more flexibility and precision than CCOs.

5. Conclusion

The Court of Appeal's decision in PGI Group Ltd v Thomas & Ors underscores the judiciary’s commitment to maintaining rigorous standards for awarding Costs Capping Orders. By rejecting the CCO sought by PGI, the court highlighted the necessity of proportionality, the indispensability of detailed cost assessments, and the paramount importance of justice, especially in cases with profound personal and reputational implications. This judgment serves as a critical reference point for future cases, affirming that CCOs remain exceptional tools, meticulously scrutinized to preserve the fairness and integrity of the legal process.