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CPR 52.9A was introduced just over a year ago, providing further powers for the Court of Appeal to make orders limiting the level of costs that will be recoverable following the outcome of a Court of Appeal hearing. A year on, Douglas Leach summarises the rule’s impact and looks at two recent decisions clarifying its operation.
The prospect of moving from the costs-free regime of the employment tribunal and EAT to the mainstream civil court costs consequences in the Court of Appeal, is a daunting one for either side in employment cases, but particularly for claimants. In order to address this problem of parties being put off from pursuing strong appeals or resisting weak ones for fear substantial costs being awarded against them, CPR 52.9A was introduced last year and came into force on 1 April 2013.
The pre-existing position
Prior to the introduction of CPR 52.9A, it was possible to secure some deviation from the default costs position (in essence, “loser pays”). The problem was perhaps most commonly experienced by claimants who won at first instance and/or in the EAT, and who were then faced with being respondents in the Court of Appeal: plainly, an appellant employer with substantial resources was in a position to force a settlement simply virtue of obtaining permission to appeal and creating a significant costs risk.
In response to such an eventuality, it was (and remains) sometimes possible to obtain an order under CPR 52.9(1)(c) that permission to appeal should be conditional upon the appellant not seeking costs in the event of winning. That was the order that was made in UNISON v Kelly  IRLR 951 and Manchester College v Hazel  IRLR 563. In those cases, the orders were made because there was a “compelling reason to do so” pursuant to CPR 52.9(2). In fact, particularly in Hazel, the “compelling reason” was actually an agglomeration of reasons which were not individually compelling, and included the fact that the prospective respondents to the appeal had already won in the tribunal and the EAT; had undertaken not to apply for costs themselves if they were to win again in the Court of Appeal; and would not be able to continue litigating (effectively meaning concession of defeat after having won) in the absence of an order.
By contrast, in Eweida v British Airways plc  EWCA Civ 1025, the claimant had lost in the tribunal and the EAT, and failed in her application to the Court of Appeal for two other types of order that could limit the costs risk on appeal: a protective costs order (“PCO”) (under principles developed in the public law context in R (Corner House Research) v Secretary of State for Trade and Industry)  1 WLR 2600 and/or a costs capping order (“CCO”) under CPR 44.18. Both were refused: Eweida was not a case involving a public law claim for the purposes of a PCO, but rather concerned a private interest of an individual employee. There could be no CCO either, because what was CPR 44.18(5)(c) (now CPR 3.19(5)(c) since 1 April 2013) could not be satisfied: the court considered that the risk of disproportionate costs could be adequately controlled by case management and/or detailed assessment of costs after the event.
In Hazel, Jackson LJ expressed the view that the position in the absence of the new CPR52.9A, was “unsatisfactory for a number of reasons” in cases like Eweida where litigants often represent themselves, going on to say that “[i]t is usually unjust to subject such litigants to a risk of adverse costs when they proceed to a higher level. That is particularly so if they win at first instance and are dragged unwillingly into an appeal. It may also be unjust to impose a costs risk if the litigant loses at first instance, but has proper grounds for bringing an appeal”, as was the case in Eweida.
Hazel was decided just as CPR 52.9A was about to come into force, and Jackson LJ pointed out that the new additional rule was intended to address the mischief that arose in Eweida. He described the effect of the new rule as being that, where justice requires, the court can exclude or limit costs recovery where a case moves from a no-costs regime to a full costs-shifting regime. Indeed, while no order under CPR 52.9A could be made in Hazel itself, Jackson LJ considered that it was a “classic case” where it would be appropriate to do so.
Orders pursuant to CPR 52.9(1)(c) and CPR 3.19 are of course still available, but their purposes and the conditions for obtaining them are such that CPR 52.9A presents significant advantages.
CPR 52.9A: the hurdles
The rule provides that in any proceedings in which costs recovery is normally limited or excluded at first instance, an appeal court my make an order that the recoverable costs of an appeal will be limited to the extent which the court specifies (CPR52.9A(1)). The application, which can be made by either side, must be made “as soon as practicable” and will be determined without a hearing unless the court directs otherwise (CPR52.9A(4)). In determining the application, the court will have regard to the following factors: (a) the parties’ means; (b) all the circumstances of the case; and (c) the need to facilitate access to justice (CPR52.9A(2)). CPR52.9A(3) specifies however, that it may not be appropriate to make an order where the appeal raises issues of principle upon which substantial sums may turn.
It can readily be seen that the bar has been lowered in comparison with the position under CPR52.9(1)(c): the “compelling reason” requirement is absent, and a broader discretion is available. While an application under CPR 52.9A in Hazel was viewed by Jackson LJ as “bound to succeed”, the inference must be that something less than the combination of factors in Hazel would still lead to a successful application, given that the more difficult to obtain order under CPR 52.9(1)(c) was in fact made in that case.
The advantage over the CCO under CPR 3.19 is that the order under that rule is primarily aimed at merely preventing the party with substantially greater means from running up disproportionate costs. Whereas, CPR 52.9A gets straight to the heart of the problem where litigants in the employment tribunal (and other costs-free jurisdictions) are concerned, in providing a broad discretion potentially facilitating orders that costs will not be recoverable at all.
It is already known that Jackson LJ regarded Hazel as a classic case for an order under CPR52.9A. However, two more recent cases have shed further light on the operation of the new rule.
In JJ Food Service Ltd v Zulhayir  CP Rep 15, the Court of Appeal allowed an appeal against the decision of the EAT below, on 16 October 2013. A costs hearing took place on 31 October, at which Mr Zulhayir’s application under CPR 52.9A was considered, and rejected. This was on the simple basis that the application had not been made “as soon as practicable” pursuant to CPR 52.9A(4). The chronology was that JJ Food Service had been granted permission to appeal on 22 February. CPR 52.9A came into force on 1 April 2013. Mr Zulhayir was representing himself until 7 May, and professed to have been unaware of his right to make the application. His solicitor was on holiday from 16-29 May, and the application was eventually made on 18 June.
In Rimer LJ’s view, Mr Zulhayir’s ignorance of his rights between 1 April and 7 May did not mean that it was not “practicable” to have made the application. Further, his solicitors’ failure to make the application between 7 May and 18 June was inexplicable. There was no question of making an order under CPR 52.9A. It is quite clear therefore that time is of the essence, but Zulhayir does not make clear just how much time a party has to make the application.
Jackson LJ gave some further guidance more recently in JE (Jamaica) v Secretary of State for the Home Department  EWCA Civ 192. In that case, the appellant applied for an order under CPR 52.9A, (a) that the respondent reimburse the appellant’s court fees whatever the outcome; (b) that the respondent should not recover its costs if it were to win (save for misconduct by the appellant); but (c) that in the event of winning, the appellant should recover its costs in full or in part in the usual way. Essentially, as Jackson LJ described it, what was sought was a “one way costs-shifting order”.
In Jackson LJ’s view, the application was based on a misconception about CPR 52.9A which needed to be exposed as a matter of urgency. He was clear that the rule does not contemplate an order in favour of just one party: CPR 52.9A(1) facilitates limiting the “recoverable costs of an appeal”, being the costs incurred by the winner, whichever party that may be. Often parties will not want to apply for such an order, because they will want to recover their costs in the event of winning, but that is a choice that the parties will have to make in each case. Essentially, according to Jackson LJ, CPR 52.9A “enables the appeal court to put in place a similar regime to that which applied in the court or tribunal below”.
The second point the court dealt with was again the question of what it means to make the application “as soon as practicable”. In JE, the application was not made until the eve of the appeal hearing, and this was a further reason for dismissing it. Jackson LJ gave some additional guidance however, clarifying that “as soon as practicable” does not mean “immediately”, but rather permits a reasonable time to consider the position. If an appellant wishes to make an application, it would perhaps be convenient to do so as part of the appellant’s notice, although that is not a requirement. At the latest, and/or if the respondent wishes to make an application, it will need to be made promptly after being notified that permission has been granted.
For many parties involved in employment tribunal litigation, proceeding to the Court of Appeal may be perceived as impossible, regardless of the merits of the case, purely because of the costs risk. CPR 52.9A presents the most straightforward means of preserving the tribunal approach to costs so as to make continuing the case a viable proposition in many cases. Given the virtual impossibility of challenging the court’s decision on an application because of its broad discretionary nature, a body of case law providing further guidance on when the criteria for an order will be satisfied is unlikely to develop, but this trial and error approach need not cause too many problems if applications are made early: if the application is rejected, the disappointed party will be able to take stock before incurring any significant costs in dealing with the substantive appeal.
This article was first published in ELA Briefing (August 2014), Vol.21, No.7, p.15