Eden Brown Ltd v Office of Fair Trading

Factual and Procedural Background

This opinion concerns the question of costs arising from three appeals heard together against a decision by the Office of Fair Trading ("OFT") dated 29 September 2009 in a competition case concerning the Construction Recruitment Forum. The appeals were determined by the Competition Appeal Tribunal ("the Tribunal") in a main judgment dated 1 April 2011. Two of the appellants, referred to as Eden Brown and Hays, seek orders for the OFT to pay the majority of their costs on the basis that they were substantially successful in their appeals. The third appellant resolved costs issues with the OFT and did not make any application for costs. The Tribunal’s jurisdiction to award costs is governed by rule 55 of the Competition Appeal Tribunal Rules 2003, which provides broad discretion to make costs orders at any stage of the proceedings.

Legal Issues Presented

1. Whether the general principle that a successful party should recover its reasonable and proportionate costs applies to penalty-only appeals against decisions of the OFT.
2. Whether the OFT should receive any special protection from costs orders in penalty appeals given its public enforcement role.
3. The appropriate proportion of costs to be awarded to the appellants Eden Brown and Hays, taking into account success on some grounds and failure on others.
4. The recoverability of costs incurred under a conditional fee agreement ("CFA"), including the success fee element.
5. Whether specific elements of Hays’ costs, including the instruction of a second Queen’s Counsel ("QC") and an expert accountant, should be disallowed as disproportionate.

Arguments of the Parties

Appellants' Arguments

• Both Eden Brown and Hays argued that, having been substantially successful in their appeals, they should recover the majority of their costs from the OFT.
• Hays contended that 70-80% of its costs should be recoverable, despite some unsuccessful grounds of appeal.
• Eden Brown submitted for a higher proportion of costs recovery than Hays, reflecting differences in grounds of appeal and incurred costs.
• Eden Brown sought recovery of costs including the success fee under its conditional fee agreement, arguing the CFA was enforceable and the success fee reasonable given the risks.

Respondent's (OFT) Arguments

• The OFT submitted that as a matter of principle there should be no order for costs in penalty-only appeals, advocating that costs should lie where they fall.
• The OFT argued that the assessment of penalties involves evaluative judgment and that costs orders against the OFT would unduly burden the public purse and potentially deter enforcement.
• Regarding Hays’ costs, the OFT challenged the reasonableness of instructing two QCs and an expert accountant, submitting these were disproportionate and the claimed amounts excessive.
• The OFT opposed recovery of the success fee under Eden Brown’s CFA.

Table of Precedents Cited

Court's Reasoning and Analysis

The Tribunal began by examining its broad discretion under rule 55 of the Competition Appeal Tribunal Rules 2003 to make costs orders, noting the variety of appeals it hears and the differing approaches to costs depending on the nature of the proceedings. It rejected the OFT’s submission that penalty-only appeals should have a different costs approach from appeals on liability, concluding that the general principle applies equally: the successful party should recover reasonable and proportionate costs.

The Tribunal emphasized that this starting point is not immutable; it may be departed from based on specific case circumstances. Success should be assessed on an issues basis, with costs proportionally awarded according to success on different grounds.

Regarding Hays, the Tribunal found that although it succeeded substantially on two grounds leading to a significant penalty reduction, it failed on others and abandoned one. The Tribunal disallowed costs relating to the instruction of a second QC and an expert accountant as disproportionate, but allowed recovery of 65% of the remaining costs, reflecting both partial success and the OFT's entitlement to costs on grounds where it prevailed.

For Eden Brown, which succeeded on four grounds and failed on two, the Tribunal determined a higher proportion of costs should be recoverable—80%. Eden Brown’s use of a conditional fee agreement was recognized as permissible under the Tribunal’s jurisdiction, and the recoverability of the success fee element was left to detailed assessment, with observations that a 100% uplift might not be reasonable given the narrow definition of success in the CFA.

The Tribunal rejected the OFT’s arguments for special protection from costs orders, referencing authorities that public bodies are generally liable for costs when unsuccessful. It also declined to apply principles from administrative licensing or disciplinary cases to penalty appeals, noting their distinct nature as criminal penalties under the European Convention on Human Rights.

Finally, the Tribunal ordered a payment on account of Hays’ costs of £200,000, leaving detailed assessment of all costs to the costs judge. It reserved the costs of Eden Brown’s costs application for the costs judge as well, and declined to make a costs order on Hays’ costs application given the mixed outcome.

Holding and Implications

The Tribunal’s final decision was to ORDER that:

• Both appellants, Eden Brown and Hays, are entitled to recover a substantial proportion of their reasonable and proportionate costs from the OFT, reflecting their partial successes in the appeals.
• Hays may recover 65% of its costs after disallowing costs related to a second QC and expert accountant, subject to detailed assessment.
• Eden Brown may recover 80% of its costs before uplift, with the recoverability and reasonableness of its CFA success fee to be determined on detailed assessment.
• A payment on account of £200,000 is to be made to Hays within 21 days.
• The costs of the appellants’ applications for costs are reserved to the costs judge, except that no order is made on Hays’ costs application.

There are no broader novel legal principles established beyond reaffirming that the general principle of costs following the event applies equally to penalty-only appeals before the Tribunal. The Tribunal rejected the OFT’s submission for special protection in penalty appeals and emphasized the importance of proportionality and issue-based assessment of success for costs awards. The decision clarifies the Tribunal’s approach to costs in penalty appeals, including the treatment of CFAs and the recoverability of related success fees.