High Court gives guidance on the new test of Proportionality

Summary

The parties were able to agree the reasonable base costs, and reasonable and proportionate common costs of every Claimant in the Wave 1 litigation. They were also able to agree the proportionate costs of all but 10 Claimants in the Wave 1 litigation. In his judgment dated 1 June 2018 the Senior Costs Judge held that the agreed reasonable costs of the remaining 10 Claimants were also proportionate.

These were claims brought against the Defendant newspaper for damages and other relief in respect of breach of privacy through phone hacking and blagging over a period of many years. Of the 10 claims, two has been Representative Claimants whose claims went to trial. The remaining eight Claimants has settled prior to trial, between service of Particulars of Claim and service of the Defence.

The court was asked to consider whether the reasonable individual agreed costs were also proportionate.

Simon Browne QC represented the Claimants and Jamie Carpenter for the Defendant

 

Background

In the substantive litigation, claims were brought by hundreds of Claimants against the Defendant newspaper. They sought damages and other ancillary relief in respect of breach of privacy through phone hacking and blagging, undertaken over a period of many years by the Defendant. Wave 1 was the first cluster of claims to be brought, comprising of 28 Claimants. Mr Justice Mann following trial found the Defendant had breached the claimants’ privacy, with MGN’s behaviour amounting to an enormous intrusion.[1] The Court of Appeal agreed, with Lady Justice Arden commenting:

“Employees of MGN repeatedly engaged in disgraceful actions and ransacked the respondents’ voicemail to produce in many cases demeaning articles about wholly innocent members of the public in order to create stories for MGN’s newspapers. They appear to have been totally uncaring about the real distress and damage to relationships caused by their callous actions.”[2]

Costs proceedings

The parties were able to agree the reasonable individual base costs, and reasonable and proportionate common costs of every Claimant in the Wave 1 litigation. They were also able to agree the proportionate costs of all but 10 Claimants in the Wave 1 litigation. Of the 10 claims, two had been Representative Claimants whose claims went to trial. The remaining eight Claimants has settled prior to trial, between service of Particulars of Claim and service of the Defence. The total value of damages in the claims was £540,750.

The agreed reasonable individual base costs amounted to £508,814 for all ten claims. The Claimants submitted this was a proportionate figure. The Defendant had offered a total sum of £225,000 as a proportionate figure. The Senior Costs Judge was asked to determine the proportionate costs of the ten claims.

CPR 1998

It was agreed that the post-LASPO proportionality test applied to each of the claims in issue:

Rule 44.3 of the Civil Procedure Rules

(2) Where the amount of costs is to be assessed on the standard basis, the court will –

(a)   only allow costs which are proportionate to the matters in issue. Costs which are disproportionate in amount may be disallowed or reduced even if they were reasonably or necessarily incurred; and

(b)   resolve any doubt which it may have as to whether costs were reasonably and proportionately incurred or were reasonable and proportionate in amount in favour of the paying party.

[…]

(5) Costs incurred are proportionate if they bear a reasonable relationship to –

(a)   the sums in issue in the proceedings;

(b)   the value of any non-monetary relief in issue in the proceedings;

(c)    the complexity of the litigation;

(d)   any additional work generated by the conduct of the paying party; and

(e)   any wider factors involved in the proceedings, such as reputation or public importance.

Judgment

The Judge held that it was also necessary to consider the common costs (£61,976 per Claimant) when deciding on the proportionality of the individual base costs.

However, he rejected the Defendant’s argument that in relation to the five factors set out in 44.3(5)(a)-(e), the primary consideration was the value of the claim, the remaining factors being secondary. The Judge gave each factor equal weight. In relation to each factor the Judge held as follows:

(a)   the sums in issue in the proceedings;

The Senior Costs Judge rejected the Defendant’s argument that the best evidence of the sums in issue was the amount of damages that were agreed, as opposed to what the Claimants (a) claimed in their Claim Form, or (b) would have gone on to win had they proceeded to trial. He found that “In the present case it is reasonable to assume that, had the settled claims proceeded to trial, the awards of damages would have been significantly greater than the sums that were agreed” (paragraph 45).

(b)   the value of any non-monetary relief in issue in the proceedings;

Contrary to the Defendant’s assertion, the judge found that “the Claimants were not motivated principally by their claims for damages. They were motivated principally by the desire to hold the Defendant to account. These claims were simply not just about damages. In my judgment the value of the non-monetary relief in issue in the proceedings, taken as a whole, was substantial and at least as great as the sums in issue” (paragraphs 57 and 58).

(c)    the complexity of the litigation;

The Judge held “this was complex litigation in the High Court. The Defendant instructed leading and junior counsel at the trial” (paragraph 60).

(d)   any additional work generated by the conduct of the paying party; and

The Judge held that the “conduct” referred to in (d) must be the conduct in the litigation rather than the conduct which gave rise to the action. However the conduct does not need to amount to “misconduct”. No additional work was caused by the conduct of the Defendant, despite the fact that the claims were fought vigorously.

(e)   any wider factors involved in the proceedings, such as reputation or public importance.

The Senior Costs Judge found that it was clear that the words “such as” indicated that the reference to reputation and public importance served only as examples and that it was open to the court to consider wider issues. In addition to finding that the claims were undoubtedly of public importance and that the reputations of the Claimants were engaged, the Senior Costs Judge considered it appropriate to take into account the vindication the Claimants sought to obtain in pursuing the litigation:

“In the face of the Defendant’s denial, the Claimants pursued difficult claims to bring the Defendant to account for its disgraceful behaviour. These claims were not about claiming compensation for an injury. They were about seeking vindication for the Claimants’ position that they were the victims of appalling breaches of privacy by a national newspaper group motivated only by commercial gain” (paragraph 73).

Conclusion

What is of note is the Senior Costs Judge’s finding that “financial value is but one of the five factors” to be taken into account and that “the rule does not prevent the recovery of costs in an amount greater than the sums in issue” (paragraph 75). He stresses in particular that although not an issue in this case, “costs can be proportionate even though they exceed damages” (paragraph 76).

Additionally, it remains to be seen what kind of conduct would amount to that “generating additional work” for the purposes of factor (d). The Defendant’s conduct throughout litigation had a direct bearing on the proportionality of the claims, causing additional costs to be incurred in relentlessly pursuing interlocutory applications at every possible opportunity. It is difficult to imagine what kind of conduct, which does not amount to misconduct, that the Senior Costs Judge had in mind.

[1] Representative Claimants v. MGN Ltd [2015] EWHC 1482 (Ch)

[2] Representative Claimants v. MGN Ltd [2015] EWCA Civ 1291

View here for the Judgement

2018-09-12T17:24:22+00:00 August 7th, 2018|News, Uncategorized|0 Comments

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