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Elliott Phillips and Paul Grant review a judgment of the Gibraltar Supreme Court grappling with an application for adverse costs against a regulator in the context of a high-stakes telecommunications appeal (Gibtelecom Ltd v (1) Gibraltar Regulatory Authority (2) Gibfibre Limited [2019] CIVAP/006).

On 22 May, the Gibraltar Supreme Court presided over a costs hearing following a successful regulatory appeal by Gibtelecom Limited against the decision of the Gibraltar Regulatory Authority of 19 July 2019, which had required Gibtelecom to provide Gibfibre Limited – a rival provider of broadband services – with a leased line to access a data centre hosting several servers for customers including online and gaming companies on the Rock. The Decision followed Gibfibre’s complaint that denial of this access by Gibtelecom was anti-competitive. On appeal, Mr. Justice Restano quashed the GRA’s decision and remitted the matter to the GRA for reconsideration.

As the successful party, Gibtelecom sought its costs against the GRA on a joint and several basis. Alternatively, it sought an order that costs be apportioned between the GRA and Gibfibre.

Relevant legal principles

As a starting point, the parties agreed that the “general rule”, that costs followed the event, applied to costs decisions in the Supreme Court of Gibraltar by virtue of Rule 44.2 of the Civil Procedure Rules. The parties were also in agreement that the judgment of Lady Rose in CMA v Flynn Pharma [2022] UKSC 14 was binding authority for the proposition that there was no generally applicable principle or presumption that all public bodies should enjoy a protected cost position when they lost a case which they had brought or defended, even if they had done so in the exercise of their public functions in the public interest.

Gibtelecom (with whom Gibfibre agreed) argued inter alia that there was no good reason to depart from the general rule that costs should follow the event and that, even if it were necessary to show that the GRA had acted unreasonably in the present case (which it was not), the GRA had in fact done so in defending the appeal to the bitter end. Gibtelecom also contended that there was no evidence of a “chilling effect” which might otherwise shield a public body from an adverse costs order.

For its part, Gibfibre argued that its position was akin to that of an ‘intervenor’ or ‘interested party’ and that it should at most be ordered to pay those costs which Gibtelecom would not incurred but for Gibfibre’s addition as a party to the proceedings. Further, that it should not be burdened with any costs arising after its withdrawal from the appeal on 12 December 2022 (approximately two months before the appeal hearing).

Although it was the unsuccessful party in the appeal, the GRA resisted the order for costs sought by Gibtelecom on various grounds. Relying upon on the line of authorities started with City of Bradford Metropolitan District Council v Booth [2000] 164 JP 485, DC these factors included the fact that the GRA is a public body, that the appeal arose from a statutory adjudication function that it undertook, and that it had acted reasonably throughout.

The judgment of Mr Justice Restano

In ordering that Gibtelecom should have its costs of the appeal, Mr Justice Restano reasoned that a departure from the general rule that costs should follow the event was not justified in this case. Citing the judgment of the Supreme Court of England and Wales in Flynn Pharma, the judge held that:

i. the correct approach was for the Court to be guided by, and to carry out an assessment under CPR r.44.2;

ii. the fact that the appeal arose from a statutory adjudication undertaken by the GRA did not of itself mean that the case fell into a category of exceptional cases by which the court should incline against the ordering of costs against the GRA in a manner consistent with the Booth line of authorities. Rather, this formed only part of the context in which the question of costs fell to be decided under CPR r.44.2;

iii. the GRA had failed to show that a ‘chilling effect’ had been established in the present case and that it was not, therefore, a factor to be given any real weight in the court’s evaluation on costs;

iv. whilst it was not necessary for Gibtelecom to establish that the GRA had acted unreasonably, the GRA’s defence of the appeal had nevertheless “complicated rather than facilitated” the appeal and that its approach to the hearing could not accurately be said to have been non-adversarial.

Commentary

In similar fashion to Flynn Pharma, this latest judgment rejects the expansion of the proposition that public policy dictates that some public bodies in Gibraltar require protection from adverse costs awards in order to safeguard their proper functioning. Nonetheless, as established in Booth and the line of authority which followed, the risk of a chilling effect remains an important factor to be considered by the Court.

Elliott Phillips is a partner and Paul Grant is an associate of Signature Litigation. Both were instructed to appear on behalf of GibFibre.