REASONABLE COSTS WERE PROPORTIONATE: MORE THAN MONEY AT STAKE – COSTS NOT REDUCED

In Various Claimants (In Wave  2 of the Mirror Newspapers Hacking Litigation) v MGN Ltd[2018] EWHC B19  Master Saker had to consider the issue of proportionality of costs directly, and held that – on the facts of that case – proportionality made no difference to the reasonable costs that had been agreed.

 

THE CASE

The parties had resolved the issue of damages in the “phone hacking” case. The only issue in dispute was the effect of the proportionality test on some of the claimants’ costs.

THE AGREED REASONABLE COSTS COMPARED TO THE DEFENDANT’S OFFER FOR PROPORTIONATE COSTS

Claimant Damages

agreed

Agreed reasonable Individual base costs,

(excl VAT)

Agreed Common base costs, (excl VAT) Defendant’s  offer for Proportionate Base Costs, (excl VAT)

 

Jackson Scott 85,000 71,173[4] 14,000
Jayne Claire Walton/King 40,000 20,413 7,716 14,000
Alison Griffin 50,000 19,604 7,716 14,000
Patricia Lake-Smith 30,000 30,222 7,716 14,000
Ambigai Sithamparanathan 30,000 45,757[5] 7,716 15,000
Sam Rush 31,000 20,940 7,716 15,000
Chris Hughes 60,000 17,074 7,716 16,000
Nigel Havers 42,000 19,374 7,716 16,000
Polly Ravenscroft 70,000 22,648 7,716 16,000
Suzanne Shaw 75,000 22,776 7,716 16,000

THE TEST

The Master set out the test in CPR 44.3

  1. The post 2013 test of proportionality is provided by rule 44.3 of the Civil Procedure Rules 1998:
(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.

THE MASTER’S DECISION: IN THE CASE PROPORTIONALITY MADE NO DIFFERENCE

The Master considered the arguments in relation to proportionality.
The relevance of the common base costs
38.              In my judgment on the proportionality of the Wave 1 costs I concluded that I must also have regard to the sums agreed for the relevant shares of common costs, but that I should bear in mind that these sums had also been agreed as proportionate. Neither side sought to dissuade me from continuing that approach.
The sums in issue
39.              The difficulty with the Defendant’s argument that the sum in issue is the difference between the parties, is that in any case there is a point when nothing is in issue (judgment or settlement). There is also a point when everything that is being claimed is potentially in issue (before the claim is first responded to). The difference between the parties will vary over the life of the claim.
40.              It seems to me that the purpose of the words “sums in issue” is to reflect the value of the claim as viewed by the parties during the currency of the claim. It is intentionally not as narrow as the sum awarded or agreed.
41.              For the reasons that I gave in my Wave 1 judgment on proportionality, it seems to me that one has to take a broad view of the sums in issue.
42.              By Wave 2, the approach of the court to the calculation of damages was known. So to that extent there would have been less uncertainty. But there would have remained uncertainty as to how many articles could be proved by any individual claimant to have been the result of phone hacking.
43.              Of these 10 claims, 5 settled for sums in the range of £50,000 to £100,000 and 5 settled for sums in the range of £25,000 to £50,000. None of the Wave 2 Claimants as a whole settled for less than £25,000 and the highest sum agreed was £201,000.
44.              The values on the claim forms were put at higher figures than in the Wave 1 claims: £100,000 (in the case of Miss Sithamparanathan), £150,000 or £200,000.
45.              The figure at which a claim settles will always be within or below the sums in issue in the case. I think that it would be reasonable to take a band of £30,000 to £50,000 as the sums in issue for the 5 claims which settled below £50,000 and a band of £50,000 to £100,000 for the 5 claims which settled at and above £50,000.
 The value of any non-monetary relief in issue in the proceedings
46.              In addition to damages these Claimants also sought injunctions to restrain further hacking of their phones and the republication of the articles about them. In most cases an undertaking not to intercept voicemail was given by the Defendant.
47.              As far as I can tell statements in open court were provided for only 4 of these Claimants (Ms Walton, the Hon. Nigel Havers, Ms Shaw and Ms Griffin). The statements outline the nature of the intrusion and include the apology of the Defendant for that intrusion.
48.              Again I cannot accept Mr McDonald’s submission that the non-monetary relief in issue is the difference between what the Claimants were seeking and what, if anything, the Defendant was offering. It seems to me that what was in issue was what was being claimed. That remained in issue until the conclusion of the case.
49.              I accept that the Claimants in Wave 2 did not benefit from a judgment which explained what had happened. Although, had these claims not settled, that is something that they would have received.
50.              It seems to me that the injunctions that were sought and the undertakings, statements in open court and apologies that were given were of substantial value. These claims were not just about damages.
The complexity of the litigation
51.              Although the methodology for the calculation of damages was resolved in the Wave 1 judgment and subsequent decision of the Court of Appeal, and although there had been a general acceptance of wrongdoing by the Defendant, I do not accept that these claims were straightforward.
52.              The need to establish the articles which resulted from information derived from phone hacking, the number and nature of the interlocutory hearings and the estimated length of the trials (10 days for groups of 4 or 5 cases) take these cases out of any comparison with the straightforward or run-of-the-mill. I accept that much of the complexity will relate to work which would fall within common costs, but, where the common work is complex, inevitably the work on the individual cases will also be made more complex.
Any additional work generated by the conduct of the paying party
53.              I do not think that any significant additional work was caused by the conduct of the Defendant. This was hard-fought litigation with fairly major interlocutory skirmishes. The Defendant’s change in stance was perhaps the inevitable consequence of the decision in the Wave 1 claims that the damages would be calculated by reference to the number of articles. It was a different battle-field to Wave 1, but it was not conduct which generated additional work.
54.              The Defendant could have reduced the costs bill that it faces by settling earlier or making earlier admissions. But this did not generate additional work. It generated the work that would be required in any case where liability was in dispute either wholly or in part.
Any wider factors involved in the proceedings, such as reputation or public importance
55.              It seems to me that exactly the same wider factors were involved in Wave 2 as were involved in Wave 1.
56.              These cases were of significant public importance, even though the Defendant’s conduct had been laid bare in the Wave 1 judgment. The number of people whose privacy was invaded and the extent of the deplorable conduct of the Defendant made these claims of continuing public interest and importance.
57.              The reputations of these Claimants were involved. The articles published cast them in a negative light. The statement made in open court in the cases of Ms Griffin, Ms Shaw and the Hon. Nigel Havers, exemplifies that.
58.              There was also a degree of vindication. I accept that this was less of a factor than in Wave 1 where, until the Defendant made admissions, the Claimants were seeking to prove criminal misconduct by a national newspaper in the face of its denials. But the Wave 2 Claimants were faced with denials and non-admissions in relation to particular articles.
Are the individual costs proportionate?
59.              I should take into account that the costs which have been agreed as reasonable include the costs of drawing the bills and court fees. In the case of Mr Scott the cost of drafting the bill was claimed at just over £7,000. In the case of Ms Sithamparanathan, the base costs claimed for drafting and checking the bill were over £7,700 and the court fee on issue was £1,390.
60.              In only 2 cases are the agreed reasonable costs (including the agreed reasonable and proportionate common costs) higher than the agreed damages: Ms Lake-Smith and Ms Sithamparanathan. However the sums in issue are but one of the factors and in the present cases it seems to me that the court should take into account also the value of the non-monetary relief in issue, the complexity and the wider factors.
61.              Both Mr Browne QC and Mr McDonald made specific submissions in relation to the cases of Mr Scott and Ms Sithamparanathan, where the agreed reasonable costs were significantly higher than in the other cases. The reason for the difference in these two cases is likely to be that in each the client instructed solicitors who were not acting for any other claimant in this litigation. That is not, it seems to me, relevant to the question of proportionality; although it may have been relevant to the question of reasonableness.
62.              However it seems to me that even in these two cases the reasonable costs (together, in the case of Miss Sithamparanathan, with  the agreed common costs) are not disproportionate having regard in particular to the sums in issue, the value of the non-monetary relief, the complexity and the wider factors. In both cases the total agreed base costs compare favourably to the total agreed base costs of the 10 Wave 1 Claimants where proportionality was in issue.
63.              It follows that in relation to the other 8 Wave 2 Claimants, where the agreed figures are significantly lower, I cannot conclude that the agreed reasonable individual costs (taking into account the agreed reasonable and proportionate base costs) are disproportionate.
64.              Accordingly in my judgment there is no basis for allowing lower figures than those which the parties have agreed as reasonable.
Success fees
65.              It also follows that as the base costs need not be reduced on the grounds of proportionality applying the post-2013 test, the proportionality of the success fees does not come into question.