Neutral citation  CAT 1
IN THE COMPETITION APPEAL TRIBUNAL
Case Nos: 1260-1261/3/3/16
London WC1A 2EB
25 January 2018
Mr Robert Palmer and Mr David Gregory (instructed by BT Legal) appeared on behalf of British Telecommunications plc.
Mr Aidan Robertson QC and Ms Julianne Kerr Morrison (instructed by Preiskel & Co LLP) appeared on behalf of CityFibre Infrastructure Holdings plc.
Josh Holmes QC, Mr Mark Vinall and Mr Daniel Cashman appeared on behalf of the Office of Communications.
The rival contentions in outline
Summary of the outcome
Should the starting point be that costs follow the event?
"(a) the conduct of all parties in relation to the proceedings;
(b) any schedule of incurred or estimated costs filed by the parties;
(c) whether a party has succeeded on part of its case, even if that party has not been wholly successful;
(d) any admissible offer to settle made by a party which is drawn to the Tribunal's attention, and which is not a Rule 45 Offer to which costs consequences under rules 48 and 49 apply;
(e) whether costs were proportionately and reasonably incurred; and
(f) whether costs are proportionate and reasonable in amount."
"29. […] It is true, as the Commission has urged, that in a market investigation it is required to bring together and weigh a considerable body of evidence, make factual findings which will often involve complex economic and commercial questions, and apply legal principles to those findings, devising if necessary remedial action to address any AEC identified in the investigation. Typically a report by the Commission following a market investigation will contain a variety of findings and decisions. A market investigation exercise may well have wide and profound effects on the economic and other interests of many citizens and businesses. This can, however, also be the case in a merger assessment. The same can equally be true of many decisions made by Government and other public bodies susceptible to judicial review. Moreover, although the volume and scope of decisions in a single Commission report may render the Commission vulnerable to a legal challenge, neither this nor the existence of wide-ranging powers to investigate possible AECs and devise remedies which can significantly affect many people represents a compelling reason for applying in such cases as a matter of principle (as opposed to on the specific facts of a particular case) a distinct and more indulgent approach to the award of costs against the decision-maker. Generally speaking, no question of such an award would arise unless the exercise of such powers had been shown to be impaired in some respect. Where that occurs the rationale for the Tribunal's starting point in section 120 cases, [that costs follow the event], applies just as much in relation to applications under section 179."
"23. I would accordingly hold that the proper approach to questions of this kind can for convenience be summarised in three propositions:
(1) Section 64(1) confers a discretion upon a magistrates' court to make such order as to costs as it thinks just and reasonable. That provision applies both to the quantum of the costs (if any) to be paid, but also as to the party (if any) which should pay them.
(2) What the court will think just and reasonable will depend on all the relevant facts and circumstances of the case before the court. The court may think it just and reasonable that costs should follow the event, but need not think so in all cases covered by the subsection.
(3) Where a complainant has successfully challenged before justices an administrative decision made by a police or regulatory authority acting honestly, reasonably, properly and on grounds that reasonably appeared to be sound, in exercise of its public duty, the court should consider, in addition to any other relevant fact or circumstances, both (i) the financial prejudice to the particular complainant in the particular circumstances if an order for costs is not made in his favour; and (ii) the need to encourage public authorities to make and stand by honest, reasonable and apparently sound administrative decisions made in the public interest without fear of exposure to undue financial prejudice if the decision is successfully challenged."
"In a case where regulatory or disciplinary bodies, or the police, carrying out regulatory functions, have acted reasonably in opposing the grant of relief, or in pursuing a claim, it seems appropriate that there should not be a presumption that they should pay the other party's costs."
"59. The fact that section 64 [of the Magistrates' Court Act 1980] contains no fetter on the Magistrates' discretion as to whether, and if so to what extent, to award costs in favour of a successful party does not mean that a court of record cannot lay down guidance, or indeed rules, which should apply, at least in the absence of special circumstances. It is clearly desirable that there are general guidelines, but it is equally important that any such guidelines are not too rigid. There is a difficult, if not unfamiliar, balance to be struck, namely between flexibility, so a court can make the order which is most appropriate to the facts of the particular case and the circumstances and behaviour of the particular parties, and certainty, so that parties can know where they are likely to stand in advance, and inconsistency between different courts is kept to a minimum."
"50. In our judgment the considerations contained in the passage from Tesco […] are also applicable to a case such as the present, and the position and duties of Ofcom as a sectoral regulator, although clearly a relevant factor, do not justify "applying … as a matter of principle (as opposed to on the specific facts of a particular case) a distinct and more indulgent approach to the award of costs against the decision-maker." In order to provide the balance, referred to by Lord Neuberger [in Perinpanathan], between sufficient flexibility to enable the Tribunal to do what is just in a particular case, and an appropriate degree of predictability, we consider that the starting point in cases such as the present should be that costs follow the event, even where Ofcom is the loser in the appeal. This approach aligns the present case with the starting point adopted by the Tribunal in most categories of case with which it deals, is consistent with the approach generally found in civil litigation, including, in particular, other public law cases, and provides ample flexibility to reach a just conclusion in each case. Using this starting point is justified in such cases as the present given that regulatory decisions of this kind often have very significant effects on the commercial interests of the regulated entity and sometimes also on the vital interests of other parties (as, for example, claimed by FAPL in the present case). The appeal route is the only recourse available to those affected by a decision which they consider to be erroneous or invalid."
"98. Decisions of co-ordinate Courts.
There is no statute or common law rule by which one Court is bound to abide by the decision of another Court of co-ordinate jurisdiction. Where, however, a judge of first instance after consideration has come to a definite decision on a matter arising out of a complicated and difficult enactment, the opinion has been expressed that a second judge of first instance of co-ordinate jurisdiction should follow that decision; and the modern practice is that a judge of first instance will as a matter of judicial comity usually follow the decision of another judge of first instance unless he is convinced that that judgment was wrong …"
(Gloster J's emphasis)
Gloster J went on at  to  of her judgment to conclude that, although doubts had been raised in her mind about the correctness of Burton J's judgment, the appropriate course for her to take – in the interests of judicial comity and deployment of judicial resources – was to follow Burton J's judgment as she had not been convinced that that decision was incorrect. She did, however, grant permission to appeal in order that the matter could be tested in the Court of Appeal.
"It is axiomatic that all such starting points are just that – the point at which the court begins the process of taking account of the specific factors arising in the individual case before it – and there can be no presumption that a starting point will also be the finishing point. All relevant circumstances of each case will need to be considered if the case is to be dealt with justly. The Tribunal's decision in relation to costs/expenses can be affected by any one or more of an almost infinite variety of factors, whose weight may well vary depending upon the particular facts. Beyond recognising that success or failure overall or on particular issues, the parties' conduct in relation to the proceedings, the nature, purpose and subject-matter of the proceedings, and any offers of settlement are always likely to be candidates for consideration, the factors are too many and too varied to render it sensible to attempt to identify them exhaustively."
The rival contentions
|Issue||Result for BT|
|Product market definition|
|Issue 1 – quantitative SSNIP||Lost|
|Issues 2 and 3 (Overall)||Won|
|Issues 2.6 and 3.6 Internal documents / CP pricing||Won|
|Issues 2.5 and 3.5 Price sensitivity||Lost|
|Issues 2.3 and 3.3 Price differentials||Won*|
|Significant numbers of users with 2G demand||Won*|
|Issues 2.2 and 3.2 Migration trends||Lost|
|Issues 2.4 and 3.4 Switching costs||Lost|
|Issues 4 and 5||Not decided|
|Geographic market definition|
|Issue 6 (Overall)||Won|
|Issue 6.1 Boundary test formulation||Not decided|
|Issue 6.2 Buffer distance||Not decided|
|Issue 6.3 Fibre flex points||Not decided|
|Issue 6.4 Large business sites||Lost|
|Issue 6.5(i) Microwave||Lost|
|Issue 6.5(ii) EFM||Won|
|Issue 6.6 Postcode sectors||Lost|
|Issue 7 Cumulative sensitivity analysis||Lost|
|Issue 8 Competitive core||Won|
The insertion of * in relation to two of the issues upon which BT succeeded in relation to the product market definition indicate issues in relation to which some of the material evidence supplied to Ofcom by BT during the administrative phase was later found to have been inaccurate.
The market definition issue costs
The remedy issue costs
(1) a portion of BT's expert and factual evidence, specifically the expert evidence of Dr Daniel Maldoom and the factual evidence of Mr Alan McGuire, dealt exclusively with the remedy elements of BT's appeal.
(2) BT's notice of appeal, reply and skeleton argument dealt separately with the market definition issues and the remedy issues under different section headings.
The hearing on 20 November 2017
(1) order Ofcom to pay its costs of the challenges to the remedy elements of Ofcom's Final Statement which were non-specified price control matters (these points, as with BT's remedy challenges, were not determined by us in light of the Judgment); and
(2) revisit an order we made on 29 June 2017 ordering CityFibre to pay Ofcom's costs of defending grounds 3 and 4(b) of its notice of appeal (these grounds were referred to the CMA for determination by our order of 29 November 2016 and were determined against CityFibre by the CMA on 11 April 2017).
Costs of the remedy challenge
The June 2017 Order
39. In my judgment, this jurisprudence permits the following conclusions to be drawn:
(i) [… CPR 3.1(7)] is apparently broad and unfettered, but considerations of finality, the undesirability of allowing litigants to have two bites at the cherry, and the need to avoid undermining the concept of appeal, all push towards a principled curtailment of an otherwise apparently open discretion. Whether that curtailment goes even further in the case of a final order does not arise in this appeal.
(ii) The cases all warn against an attempt at an exhaustive definition of the circumstances in which a principled exercise of the discretion may arise. Subject to that, however, the jurisprudence has laid down firm guidance as to the primary circumstances in which the discretion may, as a matter of principle, be appropriately exercised, namely normally only (a) where there has been a material change of circumstances since the order was made, or (b) where the facts on which the original decision was made were (innocently or otherwise) misstated.
(v) Similarly, questions may arise as to whether the misstatement (or omission) is conscious or unconscious; and whether the facts (or arguments) were known or unknown, knowable or unknowable. These, as it seems to me, are also factors going to discretion: but where the facts or arguments are known or ought to have been known as at the time of the original order, it is unlikely that the order can be revisited, and that must be still more strongly the case where the decision not to mention them is conscious or deliberate.
"This meant that there was a risk that the entire CMA process would be overtaken by events."
"41. … it may well be that there is room within CPR 3.1(7) for a prompt recourse back to a court to deal with a matter which ought to have been dealt with in an order but which in genuine error was overlooked (by parties and the court) and which the purposes behind the overriding objective, above all the interests of justice and the efficient management of litigation, would favour giving proper consideration to on the materials already before the court. This would not be a second consideration of something which had already been considered once (as would typically arise in a change of circumstances situation), but would be giving consideration to something for the first time. On that basis, the power within the rule would not be invoked in order to give a party a second bite of the cherry, or to avoid the need for an appeal, but to deal with something which, once the question is raised, is more or less obvious, on the materials already before the court.
42. I emphasise however the word "prompt" which I have used above. The court would be unlikely to be prepared to assist an applicant once much time had gone by. With the passing of time is likely to come prejudice for a respondent who is entitled to go forward in reliance on the order that the court has made. Promptness in application is inherent in many of the rules of court: for instance in applying for an appeal, or in seeking relief against sanctions (see CPR 3.9(1)(b)). Indeed, the checklist within CPR 3.9(1) must be of general relevance, mutatis mutandis, as factors going to the exercise of any discretion to vary or revoke an order."
|Mr Justice Snowden
|Dr Clive Elphick||Professor John Cubbin|
|Charles Dhanowa O.B.E., Q.C. (Hon)
|Date: 25 January 2018|
|Abbreviation||Paragraph of Judgment|
|CityFibre / CF||14(2)|