In an important decision in November 2016, the Insurance Appeals Tribunal (the "IAT") published in the press the text of its decision in relation to the jurisdiction to award costs in an appeal from a regulatory decision and appeal to the IAT under the Insurance Act 1978 (the "Act").
Normally in civil litigation the rule is that costs follow the event, and the substantial winner is entitled to an award of costs representing the costs reasonably incurred in the prosecution or defence of the proceedings. The issue arose after the unsuccessful appeal of a party who had been sanctioned by the Insurance Tribunal as to whether the same general rule applied under the statutory formula , which is worded in a wider and more permissive way, allowing the IAT the power to award costs as it "thinks fit" under section 44 D (1) of the Act.
Although it is unsurprising that the different and wider language attracted a more generous and flexible approach, there is no general rule that the winner gets his, her or its costs.
It will always be a matter of discretion, and so the point will be open for argument in every case. On an appeal from a regulatory decision, this may be important, because the factors which may be taken into account in deciding the right order in any case will always be variable. But the strengths of the case made on appeal, the degree of general application of principle decided, and the merits of the case will all be factors to weighed. The IAT is supposed to be more user friendly and industry based, so that the process is less like a court procedure. Parties should not be discouraged from taking reasonable points on appeal by the threat or risk of an adverse costs order.
In the particular case, even though the breach of the undertaking involved was fairly obvious and straightforward, no order for costs was made against the unsuccessful appellant.
The same approach might well be taken in relation to regulatory proceedings in other contexts. For example under section 29 the Proceeds of Crime ( Supervision and Enforcement ) Act 2008, a similar provision applies which permits the tribunal to award costs; however, there is a separate provision which identifies the factors to be taken into account when exercising that power, including whether the party has acted unreasonably, frivolously or vexatiously.
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