In Baker & Ors v Volkswagen Aktiengesellschaft & Ors (VW NOx Emissions Group Litigation) [2022] EWHC 810 (QB) Senior Master Fontaine refused the applicants’ application for relief from sanctions in relation to their inclusion in a register for a Group Litigation Order.


The applicants wanted to be part of litigation established by a Group Litigation Order in the VW Emissions Group Litigation.  The applicant claims were represented by one firm of solicitors and they had not joined the action earlier as a result of a complex procedural history. The Master refused an application for a declaration that these litigants should be deemed to be included in the Group Register. The Master then considered the applicants’ application for relief from sanctions.


Having refused the application for a declaration the Master considered the applicants’ application for relief from sanctions so that they could join the GLO.  This application was dismissed.

The application for relief from sanction
The legal principles applicable to the July 2019 application
    1. CPR 3.9 provides as follows:
“(1) on an application for relief from any sanction imposed for a failure to comply with any rule, practice direction or court order, the court will consider all the circumstances of the case, so as to enable it to deal justly with the application, including the need –
(a) for litigation to be conducted efficiently and at a proportionate cost; and
(b) to enforce compliance with rules, practice directions and orders.
(2) An application must be supported by evidence.”
    1. The Court of Appeal gave guidance as to the application of CPR 3.9 in Denton v TH White Ltd [2014] EWCA Civ 906 [2014] 1 WLR 3296. It directed that an application for relief from sanction should be addressed in three stages. The first stage is to identify and assess the seriousness and significance of the breach. The second stage is to consider why the default occurred. The third stage is to evaluate all the circumstances of the case, so as to enable the court to deal justly with the application, including CPR 3.9 (1) (a) and (b).
The seriousness and significance of the breach
    1. I was referred to British Gas Trading Ltd v Oak Cash and Carry Ltd [2016] 1 WLR 4530 at [34] – [44]. The court held that in assessing the seriousness or significance of the breach of an unless order it was also necessary to look at the underlying breach. It was not possible to look at an unless order in isolation. However, the very fact that a party has failed to comply with an unless order undoubtedly indicates that the breach is serious and significant.
    1. The earlier Court of Appeal decision in Mitchell v News Group Newspapers Ltd [2014] 1 WLR 795 gave some examples of what amounts to a good reason, and stated (at [43]) that “…good reasons are likely to arise from circumstances outside the control of the party in default…”
    1. If not otherwise obvious, it is apparent from a number of group litigation decisions that failure to join a group register prior to a cut-off date is clearly a serious and significant breach of a court order: PIP Breast Implant Litigation [2014] EWHC 1641 (QB) per Thirlwell J. (as she then was) at [17]. [22], [25] and [30]; Kimathi & ors v The Foreign & Commonwealth Office [2017] EWHC 939 (QB) per Stewart J. at 49(b)] and [51] (citing Thirlwell J, in PIP Breast Implant Litigation with approval). In his judgment dated 6 March 2019 in this litigation ([2019] EWHC 698 (QB)), Waksman J. emphasised the importance of cut-off dates (at [4]) and held that the failure by a number of Claimants to serve their claims before the cut-off date was a significant breach (at [7]). It is hardly likely that a second breach of an extended cut-off date would not equally, if not more so, be a serious and significant breach. The failure to comply with an unless order also indicates that the breach of the order is serious and significant. The second failure was even more serious because by the time the July 2019 application was listed for a hearing, the preliminary issues trial had been heard and judgment handed down, and there had been a determination in respect of the selection of lead claimants/cases. I refer to Waksman J.’s judgment of 6 March (referred to above) at [6] where he refers to a Claimant’s Schedule of Information as being the “critical document which is required for the purposes of selection” required “with a firm deadline of 12 April 2019“. As the ERM Claimants were not included in the Group Register by that date or the cut-off date of 18 April 2019, they could not be included in the pool of Claimants from whom selection of lead cases could be made.
Whether there was a good reason for the breach
    1. Wilson 3 puts the blame for the failure for the ERM Claimants to join the Group Register squarely on LD’s insistence that the data for populating the Group Register be provided in the Excel template format, and relies on the fact that there is no order in the GLO requiring the data to be provided in that format. It is said at paragraph 39 that:
“The reason for the non-compliance was that the ERM &Co Claimants legitimately took the view that they had complied with the provisions of the GLO.”
    1. Mr Wilson does not attempt to provide any explanation why, knowing that the extended cut-off date of 18 April 2019 under the General Applications Order for entry on the Group Register was looming, ERM took no action to provide the required data to LD before that extended cut-off date.
    1. Neither Mr Makin nor Mr Wilson, even if they were working under the misapprehension that the Schedules of Information to be served on the Defendants, and the provision of data to LD in order to populate the Group Register amounted to the same thing, address why they took such an intransigent approach to the issue, and how they anticipated that LD would be able to manage the practical task of extracting data from the Schedules of Information and populating each separate template form with that data in a manageable way and over a reasonable timescale for some 15,400 Claimants. They have not said that there was any difficulty in their being able to provide the data in the Excel spreadsheet format, and it appears that there was not as they eventually provided it on 5 July 2019. Ms Yamin’s evidence (as summarised above) is that LD provided support and assistance to any Claimant firms who had any difficulty in completing the template spreadsheets (Yamin 3 §23) and that all of the other nine Claimant firms were able to provide their clients’ data in that form (Yamin 3 §25).
    1. Makin 4 at §§11-16 appears to suggest that ERM were not prepared to complete the template spreadsheet with their clients’ data because they regarded this as “…generic work to be undertaken by lead solicitors, who will (if the claims are successful) claim the costs of compiling such as generic/common costs from the Defendants.” This in my view is clearly wrong, as both LD and the Defendants submitted. The work of each Claimant firm in obtaining the data from their own clients, and completing the template spreadsheet to be submitted to the Lead Solicitors, is individual claimant work. It is only the work of the Lead Solicitors in entering that data onto the Group Register that is included in common costs. Such an approach also fails to address how LD could possibly enter manually the data for 15,400 Claimants provided piecemeal in three separate pdf documents for each Claimant. In any event, that is hardly a good reason for failing to ensure, for the second time, that the ERM Claimants were included on the Group Register. Arguments about classification of costs could have taken place after the Group Register was served.
    1. With regard to the failure to take any steps to list the July 2019 application since its issue on 4 July 2019, Mr Makin states at paragraph 29:
“ERM & Co has no knowledge of the listing arrangements following the sending of the application dated 4 July 2019 to the Court.”
And at paragraph 32 and 33 provides the following information:
“32. Covid-19 had an obvious effect on the progress of all cases before the court; many in-person hearings were either postponed or listed as virtual hearings (albeit with considerable delays).
33. Mr Philip Engelman, who had represented the ERM & Co Claimants has not been able to continue to be instructed. He suffered from ill-health and was not able to continue with attended court work and ceased to practice from his Chambers at Cloisters.”
    1. This is an entirely inadequate explanation for the failure to take any steps to list the July 2019 application for over two and a half years. In July 2019 there was no Covid 19 pandemic. The first lockdown Regulations were introduced in this country on 23 March 2020. In this court hearings then continued remotely, first by Skype and then by Microsoft Teams. None of the hearings listed before me during any of the period since that date were adjourned for reasons of the Covid pandemic, unless one or other or both of the parties themselves requested it and the court agreed. The failure to issue the application in the Central Office of the High Court is unexplained. If that had been done in July 2019 the application would have been listed and heard by October 2019, well ahead of the beginning of the Covid pandemic. If at any time ERM had contacted the court to ask for the matter to be listed they would have been advised to file a Masters’ appointment form providing the parties’ available dates and time estimates so that a hearing could be listed. In fact, the court record shows that my clerk requested ERM to provide such an appointment form in September 2019 after the July 2019 application was received from the Liverpool District Registry. No other information is recorded on the court file until 2 February 2022 shortly after I discovered the application, corresponded with the parties and arranged for the application to be listed only a month later.
    1. The fact that Counsel of choice had retired from practice does not explain why alternative counsel could not be instructed over a two and a half year period.
    1. I have concluded that there was no good reason for the breach. The reason for the breach was ERM’s failure to comply with its obligations to the court and to act reasonably and proportionately in the group litigation. It had the means to enable the ERM Claimants to be included on the Group Register just as much as the other Claimant firms, and the circumstances leading to the breach were entirely within its control.
All the circumstances
    1. The two circumstances specifically mentioned in CPR 3.9 are:
i) the need for litigation to be conducted efficiently and at proportionate cost; and
ii) the need to enforce compliance with rules, practice directions and court orders.
    1. Other circumstances include whether the application for relief from sanction was made promptly: British Gas Trading Ltd at [52]-[61]; Diriye v Bojaj [2021] 1 WLR 1277 at [65].
    1. Clearly the conduct of ERM is not conducive to the requirements of either of the circumstances mentioned in CPR 3.9. The application itself was not made promptly; it took some 2 ½ months for ERM to issue the application and their failure to take any steps to list the application over 2 ½ years would be sufficient on its own not to grant relief from sanction: see British Gas at [61], where the lack of promptness was described by Jackson LJ as “the critical factor” in relation to a delay of just over a month, and Diriye at [65].
    1. Mr Makin states in his evidence (Makin 4 at §§ 24-28) that there is no prejudice to the Defendants for the ERM Claimants to be included in the Group Register. That is only one of the factors for consideration at the third stage of the test, but in any event it is not, in my view, correct. It is contrary to the efficient progress of group litigation for one group of Claimants to effectively remove themselves from the group for a period of now almost three years (since April 2019), and for that Claimant group to take advantage of a preliminary issue trial determined in the Claimants’ favour, with no risk of an adverse finding incurred because they were not on the Group Register, and to benefit from the selection process for lead cases without making themselves available for selection. Waksman J. regarded the fact that the Lead Claimant selection process had not yet been completed in March 2019 as a decisive factor in his decision to grant relief from sanction to those Claimants whose applications were not made by consent: see his judgment [2019] EWHC 686 (QB) at [6] and [13].
    1. The other relevant circumstances in this case are as follows:
i) the fact that this was a second breach by the ERM Claimants of the requirement to provide data in a manner that would enable them to be included on the Group Register;
ii) the complete lack of cooperation by ERM with the Lead Solicitors to enable them to fulfil their obligations to establish, manage and maintain the Group Register; it is obvious that Claimant solicitors need to co-operate with each other and with the Lead Solicitors in group litigation, and this is particularly the case, as here, where claimant numbers are in tens of thousands;
iii) the wholly unjustified attempt to blame LD for their own failings, which I regard as reprehensible, and I make it clear that I am satisfied that LD fulfilled all its obligations as Lead Solicitors to establish and maintain the Group Register and did so in an appropriate and efficient manner;
iv) Mr Wilson’s failure to address in his witness statement the numerous occasions when the agreed format had been communicated to the Claimant firms since 25 July 2018, and why no objection had been taken by ERM either at the meeting with all Claimant firms or at any time, nor why the ERM Claimant data was provided (in the wrong format) so late, 13 days after the deadline set by LD, and when it would have been obvious that LD would not have been able to carry out the work required to include the ERM Claimants in the Group Register before the cut-off date; I accept that is information that relates entirely to the March 2019 application, for which relief from sanction was granted by consent, but it is relevant to all the circumstances, and is also a ground relied upon by the ERM Claimants in the July 2019 application;
v) the fact that the group litigation has progressed significantly since March 2019; Mr Blain gives evidence as to what has occurred during that period: there has been a trial of preliminary issues, there has been a selection of lead claimants, there have been two strike out/summary judgment applications brought by both Claimants and Defendants, and the ERM Claimants would benefit from the decisions in their favour without having participated in the costs risks of such trial and applications; there will be a 6 month trial commencing in January 2023 after a case management period of some 4 years;
vi) the suggestion made in submissions by Counsel for the Defendants that ERM may have taken a tactical decision not to progress the July 2019 application pending the outcome of the preliminary issue trial, which was not addressed by Counsel for the ERM Claimants in his reply submissions, so it remains a possibility that a considered decision may have been taken not to proceed with the July 2019 application, particularly where the evidence addressing the delay is simply not credible as a good reason for such delay;
vii) the conduct of ERM in this litigation, which has been dilatory, inefficient uncooperative, disregarding of court orders and inconsistent with their obligations to their clients and to the court.
    1. Taking all those matters into consideration, it would not be just to grant the ERM Claimants relief from sanction. I can do no better than quote Thirlwell J. (as she then was) in the PIP Breast Implant Litigation at [30] when she said:
“…the applications are hopeless. To grant them would undermine the discipline of this litigation. The cut-off date would be rendered meaningless. Such prejudice as there may prove to the applicants may be laid at the door of their solicitors.”
    1. I therefore dismiss the application.
  1. It would follow under the general rule in CPR 44.2 (2) (a) that the ERM Claimants are liable to pay the costs of the Defendants and of LD of and occasioned by the application. There is no opposition to the application of the general rule by the ERM Claimants and the amounts of costs payable to the Defendants and LD have now been agreed.