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The Court of Appeal has overturned the Competition Appeal Tribunal’s approach to awarding costs against Ofcom in telecommunications appeals.

The Competition Appeal Tribunal hears appeals from Ofcom’s decisions regarding electronic communications. After BT successfully appealed Ofcom’s Business Connectivity Market Review decision, the Tribunal ordered Ofcom to pay approximately 50% of BT’s costs of the appeal. It adopted the starting point of “costs follow the event”.

Ofcom appealed to the Court of Appeal against the costs order, arguing that the Tribunal had adopted the wrong starting point. Unlike the Civil Procedure Rules, the Tribunal’s rules do not specify a presumption that costs should follow the event. Case law in various other areas of regulatory activity holds that there should be no presumption that a regulatory body reasonably carrying out its functions before a court or tribunal should be ordered to pay the costs if it is unsuccessful (e.g. R (Perinpanathan) v. City of Westminster Magistrates’ Court [2010] EWCA Civ 40).

The Court of Appeal (Sir Geoffrey Vos C, Leggatt and Haddon Cave LJJ) allowed Ofcom’s appeal. They held that the Tribunal was wrong to dismiss the relevance of the principles in cases such as Perinpanathan, and should have asked itself whether there were specific circumstances of the costs regime which made those principles inapplicable. The Tribunal had also given inadequate weight to its own previous decisions.

The Court said that “if Ofcom has acted purely in its regulatory capacity in prosecuting or resisting a claim before the CAT and its actions are reasonable and in the public interest, it is hard to see why one would start with a predisposition to award costs against it, even if it were unsuccessful.”

The Court of Appeal therefore remitted the case for the Tribunal to reconsider the applicable starting point, having regard to the correct legal principles, the specific industry position, and its own procedural rules.

The Court also observed that the Tribunal had made the same error in Tesco plc v. The Competition Commission [2009] CAT 26, in which the Commission was ordered to pay Tesco’s costs following a successful judicial review under s.179(1) of the Enterprise Act 2002. The judgment therefore raises the possibility that any new approach adopted by the Tribunal will also affect the starting point for applications for costs against the regulator (now the Competition and Markets Authority) in cases of that kind.

Dinah Rose QC and Mark Vinall acted for Ofcom.

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