A CLEVER PLOY: HIRE EXPENSIVE LAWYERS AND THEN ARGUE COSTS ARE DISPROPORTIONAL

The decision of Mr Justice Foskett  in Vilca -v- Xtrata Limited [2016] EWHC 389 (QB) is interesting for a number of reasons, in particular relating to disclosure and case management. Here I want to look at the judge’s consideration of arguments relating to proportionality in particular.  The judge’s observations on the role of the parties in relation to disclosure are equally important.

“To the extent that it is relevant to look at the defendants’ costs by way of comparison with the total value of the claim, it should, in my view, be by reference to the likely recoverable costs. Unless that approach is adopted the engagement of expensive lawyers by a multinational company facing a claim by a group of those alleging injury or damage at a modest level will invariably result in the suggestion that “the game is not worth the candle” and disproportion will become a self-fulfilling prophecy.”

“a generally accommodating response to disclosure may play better in the reputational stakes than a perceived narrow and unforthcoming approach. The end result of an unforthcoming approach may be that the trial judge draws adverse inferences against the party being unforthcoming.”

THE CASE

The 22 claimants were bringing civil actions against the defendants following two deaths and many injuries following disturbances at a mine. The issue is whether the defendants have any legal responsibility for those acts.

The judge was asked to consider issues relating to disclosure.

ISSUES OF PROPORTIONALITY

1. It is said, in the first instance, that the total value of the claims brought by the various claimants is, under Peruvian damages principles, only about US$250,000. The suggestion by the defendants is that their total costs by the end of the trial will be in the region of £5.2 million and that, accordingly, there is an obvious disproportion.

2. In the first place, I think it is right to say, as Mr Béar suggests, that the defendants have chosen, perfectly understandably, solicitors who will provide them with a Rolls-Royce service at a commensurate level of cost. Whether costs in that region would be held to be recoverable if the defendants were to succeed is, of course, a different matter. To the extent that it is relevant to look at the defendants’ costs by way of comparison with the total value of the claim, it should, in my view, be by reference to the likely recoverable costs. Unless that approach is adopted the engagement of expensive lawyers by a multinational company facing a claim by a group of those alleging injury or damage at a modest level will invariably result in the suggestion that “the game is not worth the candle” and disproportion will become a self-fulfilling prophecy.

3. Secondly, whilst I do not suggest that the kind of comparison to which I have just referred is irrelevant, when it comes to weighing the balance of proportionality it must not be forgotten that two human lives were lost in what occurred during the disturbances and a number of individuals were severely injured. Whilst it is quite right to say that this case is not a public inquiry into what took place, the very fact that lives were lost and serious injuries occurred is enough to weigh heavily in the balance even if the damages recoverable are relatively modest. Mr Béar is right to say in this connection that the defendants subscribe to the Voluntary Principles to which I have referred and (not his words, but mine) something more than lip-service to those principles is demanded.

4. That said, the claimants have apparently been advised that, under Peruvian law, their claims are worth over £5.2m. I am not in a position to say whether the defendants are right about this or the claimants are right about it.

5. In this context as well, it is said on behalf of the defendants that a large part of the overall cost so far has been incurred as a result of the disclosure investigations. Whilst there may be an argument about the quantum of the potentially recoverable costs incurred, it is not surprising, in my view, that disclosure is a time- and cost-consuming process in this case: it is the way in which the claimants may secure sufficient evidence to be able to proceed with the case. Again, that is a factor to be considered.

6. Those giving Linklaters instructions on behalf of the defendants, and who are doubtless concerned about reputational damage associated with this case, may need to bear in mind that a generally accommodating response to disclosure may play better in the reputational stakes than a perceived narrow and unforthcoming approach. The end result of an unforthcoming approach may be that the trial judge draws adverse inferences against the party being unforthcoming.

7. However, the other side of the picture is that, whilst it is entirely appropriate for the claimants’ advisers to seek disclosure of potentially relevant documents, it does not require pursuit of the electronic equivalent of every conceivable piece of paper that might tell, one way or the other, about the nature of the involvement of the defendants with the PNP. A comprehensive “no stone unturned” approach cannot be justified. Some sense of balance must be retained.

A WARNING SHOT IN RELATION TO DISCLOSURE

1. At the moment, the instructions of those instructing Linklaters seem to be to limit disclosure as much as possible. There is, of course, a perfectly understandable costs element to instructions of that nature and also an understandable concern that sensitive documents that go beyond what it is reasonable or necessary to disclose should not be disclosed. However, whatever the legal or factual merits of the case advanced for the claimants, its nature is tolerably clear and the kind of document that is potentially relevant to it is also tolerably clear. The defendants would be ill-advised to give the appearance of being reluctant to cooperate in the process of making these documents available. It may be of assistance for a copy of this judgment to be made available to them. Some aspects of what has been sought on the claimants’ behalf have gone beyond what is reasonable or necessary (certainly at this stage), but there are a number of areas where appropriate requests have been made which have been rebuffed.