The Continuity of IPEC Cost Caps and Security for Costs on Appeal: Establishing Commensurate Limits to Facilitate SME Access to Justice

Introduction

This commentary examines the Court of Appeal’s decision in Shorts International Ltd v Google LLC ([2025] EWCA Civ 653), delivered on 14 May 2025 by Lewison LJ. The case originated in the Intellectual Property Enterprise Court (IPEC), a specialist forum designed to simplify and limit costs for SMEs in intellectual property disputes. The dispute concerns trade mark infringement, with Shorts as claimant and Google as defendant. After a seven-day IPEC trial dismissed Shorts’s claim, the parties agreed to transfer the case to the Business and Property Courts while preserving the IPEC costs cap. Shorts secured permission to pursue additional grounds of appeal, but Google sought security for costs as a condition of that permission. The Court of Appeal was asked to determine two key questions:

Whether CPR 52.19 allows continuation of the IPEC costs cap on appeal; and
The appropriate level of security for costs required from Shorts to safeguard Google’s position.

Summary of the Judgment

The Court of Appeal held that:

CPR 52.19 applies to appeals in proceedings that began in IPEC, even if transferred to another list, because the underlying nature of the claim—and its ordinarily capped costs regime—remains unchanged.
In exercising its discretion under CPR 52.19, the court must give substantial weight to the “need to facilitate access to justice” for SMEs. On the facts, Shorts demonstrated on a balance of probabilities that, without a costs cap, it could not pursue the appeal.
The appropriate cap on recoverable costs on appeal and cross-appeal is £60,000, mirroring the first-instance cap.
Under CPR 25.15, security for costs is warranted where a limited company appellant is likely unable to pay adverse costs. Having capped recoverable costs at £60,000, the Court ordered Shorts to provide security for that sum.

Analysis

Precedents Cited

CPR 52.19 – Permits cost-capping orders on appeal where costs are “normally limited or excluded at first instance.”
CPR 52.19A – Exceptions to CPR 52.19 (not directly engaged here).
CPR 3.19 – General power for costs capping orders, but not directed at facilitating access to justice.
Black v Arriva Northeast Ltd [2014] EWCA Civ 1115 – CPR 3.19 should not be used to facilitate access to justice; distinguished from 52.19.
Glass v Freyssinet Ltd [2016] EWCA Civ 1120 – Illustrates deterrent effect of adverse costs risk on appeals.
Goldtrail Travel Ltd v Onur Air [2017] 1 WLR 3014 – Supreme Court guidance on security for costs and “stifling” an appeal.
Sir Rupert Jackson’s Final Report – Recommends commensurate caps on appeal where IPEC costs are capped.

Legal Reasoning

Lewison LJ’s reasoning unfolded in two stages:

Costs Capping (CPR 52.19):
- Despite the transfer from IPEC, the proceedings are “in which costs are normally capped” because they began in IPEC under a capped regime.
- The appeal court must consider the parties’ means, case circumstances, and, critically, the “need to facilitate access to justice.”
- On the evidence, Shorts had no realistic means to fund the appeal’s estimated cost of £400,000 and lacked further insurance or investor backing.
- Refusal of a cap would likely “stifle” the appeal—a concept drawn from Goldtrail—and thus impede SME access to justice.
- Accordingly, the Court exercised its discretion to impose a £60,000 cap, equal to the original IPEC cap.
Security for Costs (CPR 25.15):
- Shorts, a limited company, plainly could not meet an adverse costs order beyond the £60,000 cap.
- Security is discretionary but appropriate to protect Google’s position.
- The quantum of security tied to the capped recoverable costs—£60,000—ensures consistency and proportionality.

Impact

This precedent clarifies the treatment of appeals from IPEC:

Affirms that cost-capping protections survive transfer to higher courts.
Reinforces CPR 52.19’s purpose—to align appeal costs with first-instance caps and protect SME litigants.
Confirms that security for costs on appeal will be limited to the cap, preventing disproportionate financial hurdles.
Guides litigants and practitioners on evidence required to establish risk of stifling and on framing security applications.

Complex Concepts Simplified

Cost Capping Order: A court order limiting the amount of costs one party can recover from another, intended to keep litigation affordable for SMEs.
Security for Costs: A safeguard requiring a litigant to deposit money or provide guarantee so that, if they lose, the other side can recover its costs.
Stifling an Appeal: Imposing conditions (cost cap refusal or security requirement) so burdensome that an appellant cannot proceed.
Access to Justice: The principle that courts should make their processes affordable and fair to ensure parties can pursue legitimate claims.
Balance of Probabilities: The civil standard of proof requiring that a fact is more likely than not to be true, here used to assess likelihood of stifling.

Conclusion

The Court of Appeal in Shorts International Ltd v Google LLC has established a clear precedent that appeals from proceedings commenced in IPEC carry forward the original cost-capping regime under CPR 52.19. This ensures that SMEs are not deterred by exorbitant appeal costs. At the same time, the decision balances the respondent’s right to recover costs by allowing security up to the cap—£60,000—thus preserving fairness. Going forward, practitioners can rely on this authority when advising SME clients on cost management and security applications in intellectual property appeals.