A millionaire barrister who started a crowdfunded lawsuit against taxi app maker Uber over a £1 VAT receipt has lost his attempt to stop Uber claiming legal costs against him.
In a judgment handed down today, Mr Justice Trower rejected both Jolyon Maugham QC's attempt to shield himself from a legal bill of up to £1m and his initial attempt to appeal against that rejection, a big setback for Maugham's two-year legal battle against Uber in London.
In throwing out Maugham's attempt to limit his costs liability to £20,000 in the High Court case he brought against the infamous taxi app, the judge found that Maugham had crowdfunded £107,650 to bring the case, "of which well in excess of 50%" came from "the black cab trade" – including £20,000 from a single unidentified black cab source. Taxi drivers in the British capital see Uber as their main commercial rival.
Had Mr Justice Trower made the protective costs order that Maugham asked him to, the lawyer would have had to pay no more than £20,000 if he lost – giving him a big advantage considering that, in the judge's words, Uber's legal costs "could reach £1m at first instance".
Maugham, a tax lawyer, is currently suing Uber in the High Court over what he says is its failure to give him a VAT receipt for £1.06 on a £6.34 taxi journey, an amount he accepted to be "trivial". This would allow him to reclaim the money from HMRC as a business expense. He argued that the true force of his lawsuit would be to expose Uber London Ltd to liability for extra taxes.
In court papers seen by The Register Maugham's net income was said to be £400,000 a year, something the judge took into account when deciding not to stop Uber from recovering its legal costs if it wins the main case. He also owns two properties.
Uber argues that it "does not itself provide transportation services" and is therefore not subject to VAT on its taxi journeys. If Uber users want VAT receipts, it told the judge that depends "on whether the driver... is registered for VAT". If a court rules that Uber itself is subject to VAT, however, Maugham – who is well known for his campaigning against the 2016 result of the UK's referendum on the EU – claimed he could trigger a £1bn VAT bill against Uber.
This morning Uber and Maugham's legal teams were engaged in further arguments over a potential £157,000 legal bill just for the one-day application hearing on 6 February.
In a statement published by his Good Law Project, Maugham said: "We have grave concerns about the implications of the decision. It is an invitation to private corporations to use the threat of costs liability to dodge legal accountability. It makes it difficult or impossible to hold them to account. It damages the rule of law. And these consequences, we believe, will further undermine popular consent to capitalism."
The case, Maugham QC v Uber London Ltd, continues. ®
In English civil law, a judge who rules against an application in legal proceedings also gives or refuses permission to appeal against that ruling. Even if the judge says no to an appeal, everyone has the right to ask the Court of Appeal to hear them out.
Normally, High Court cases are as much about the legal costs as they are about the actual dispute itself. Once you get into the world of hiring teams of barristers you are looking at spending hundreds of thousands, or even millions, of pounds. If you lose, the default position is that you will also pay the victor's legal costs – hence the existence of protective costs order to try to inject some balance into legal arms races.