COST BITES 74: CLAIMANTS HAVE TO PAY THE COSTS OF DISCONTINUED APPLICATION FOR A GROUP LITIGATION ORDER: COUNTING THE COPPERS

In Beck & Ors v Police Federation of England and Wales (Re Costs) [2023] EWHC 685 (KB) Senior Master Fontaine held that the claimants should pay the costs of an – abandoned – application for a Group Litigation Order.

“I consider that the Claimants should have recognised at an earlier stage that these proceedings may not necessarily be most proportionately managed by a GLO, and at least engaged with the Defendant’s proposal at an earlier point.”

THE CASE

Some 10,000 – 13,000 claimants were bringing an action against the defendant.  The claimants applied for a Group Litigation Order. In the event this application was not pursued and the parties agreed to an agreed “lead claimant” model. The issue being determined was the costs liability for the application for a GLO.

THE BACKGROUND

The judge set out the discussions between the parties in relation to the appropriate means of litigating the matter.

xi) In a further letter of 6 January 2023 KP commented on OC’s reference to the then recent decision in Lloyd v Google [2021] UKSC 50, and enclosed a copy of the front sheet of the issued claim form (specifically stated not to be by way of service).
xii) On 10 February 2023, KP wrote as follows:
“As regards to the GLO application itself, we have had the opportunity to consider several recent decisions concerning the management of group claims, including those of Trower J. in Edward Moon & Ors v Link Fund Solutions [2022] EWHC 3344(Ch) and O’Farrell J. in Municipio De Mariana v BHP Group (UK) Ltd & Anor [2022] EWHC 330 (TCC). While we remain of the view that a GLO application is the most appropriate way to manage the issues arising from this group litigation, we will also be inviting the court in the alternative to make directions for the effective management of the claims, both existing and anticipated. We will aim to provide you with further details of these proposed alternative directions in due course, so that you will have sufficient time to consider them ahead of the hearing listed for 13-14 March.”
xiii) And in their letter dated 24 February 2023 KP wrote:
“3. Having considered your clients evidence and the recent case law, it seems to us but it ought to be possible for the parties to identify common ground and directions for the sensible future management of these claims, irrespective of whether such directions are made within the framework of a formal GLO. we therefore invite you to consider the attached draught order and, in advance of the party’s finalising their skeleton arguments, to identify what parts of the proposed order are in substance disputed.
………
“5. Accordingly, while we remain of the view that a GLO based on established practise an rules would be the most cost effective and efficient way to manage this litigation, we are anxious not to waste the court’s time with arguments that are about form rather than substance, and our clients are very keen for these claims to be progressed. Accordingly, we invite you to consider these proposals and draught directions and indicate what matters are in dispute. We would also be content to discuss the points, without prejudice or otherwise, with a view to ensuring that the hearing on 13 March can focus on the points at the court actually needs to determine.”

THE POSITION OF EACH PARTY IN RELATION TO THE COSTS APPLICATION

The defendant’s position was that the claimants should pay the costs of the GLO application. The claimants case was that this should be costs in the case.

    1. The Defendant’s position, as set out in OC’s letter of 6 March 2023, is that its approach since OC’s letter of 5 August 2022 had been that the litigation should proceed on the basis of non GLO lead claimant model and that the Claimants had strongly objected to this proposal up to KP’s letter of 10 February 2023. It is submitted that KP must have been aware of the possibility of an alternative approach to multi party claims, having represented claimants in the case of Bennett and ors v Equifax Ltd [2022] EWHC 2168 (QB), also a multi party data breach claim, where the court expressed concerns as to whether a GLO was the appropriate course, declined to make a GLO, recommended that further discussions take place, and a CMC be listed before a managing judge to determine whether it was preferable to proceed by way of a managed multi party claim or a GLO.
    1. The Claimants’ position is that the threshold criteria for making a GLO under CPR 19.11 is satisfied in this litigation, but following the decisions in Moon and Municipio De Mariana, referred to above, where the court had approved an alternative approach to a GLO, they took the view that they were prepared to take a pragmatic approach as to how the claims were to be case managed rather than waste the court’s time in argument. In the event the parties were able to reach agreement on many issues in terms of the draft order and the hearing time was able to be reduced from two days to one day. The Claimants consider that in such circumstances the appropriate order should be that there be costs in the case.

 

THE DECISION

It was decided that the claimants should pay the costs of the GLO application. However only some 50% of the costs of the hearing were related to the GLO, the court being asked to determine other procedural issues.  The judge stated the costs were high and did not award the 60% claimed on account of costs.

Discussion
    1. It is clear from the relevant correspondence that there were considerable discussions on many legal issues and case management issues, as would be expected in a claim with (at that time) some 10,000 to 13,000 Claimants with the potential for many more to join. I regard those discussions as part of the management of the claim on both sides in litigation where there are multiple parties. These concerned matters such as liability under the GDPR, the effect of liability concessions by the Defendant, disclosure, how lead claimants should be selected and so forth, and should be costs in the case.
    1. The general rule in an application under CPR 44.2 (2) is that the unsuccessful party pays the costs of the successful party, but the court can make a different order. In my judgment there are grounds to make a different order here, but I consider that the Claimants should bear a proportion of the Defendant’s costs related to the application. I set out my reasons below for that decision, and for my decision as to the proportion of costs that I consider is appropriate and fair to both parties.
    1. I accept that the proceedings meet the threshold requirements for a GLO to be made, but the court has a discretion as to whether a GLO should be made even where those threshold requirements are met. CPR 19BPD Para. 2.3 says:
“In considering whether to apply for a GLO, the applicant should consider whether any other order would be more appropriate. In particular he should consider whether, in the circumstances of the case, it would be more appropriate for –
(1) the claims to be consolidated; or
(2) II the rules in Section II of Part 19 (representative parties) to be used.”
    1. I consider that the Claimants should have recognised at an earlier stage that these proceedings may not necessarily be most proportionately managed by a GLO, and at least engaged with the Defendant’s proposal at an earlier point. The facts of this claim are not dissimilar to those in Equifax, where a very large proportion of claims fell into a category of less serious data breaches, for which the likely damages, if the claims were to succeed, would be likely to be very low, under £1,000, or may not succeed at all, so there were legitimate concerns about incurring the upfront, not insubstantial, costs of establishing and maintaining the group register, advertising, providing individual particulars of claim or schedules of information from all Claimants, at least until there was some judicial guidance on quantum in respect of various categories of claim. In these proceeding, the evidence in Hayes 3 at §§21-23 is that (at the date that statement was made) some 82% of claims fall in categories that the Claimants’ solicitors have identified as being ‘Moderate’ and ‘Less Severe’, only 1% in the ‘Severe’ category and 17% in the ‘Moderately Severe’ category. So there is a similar concern that until there is some guidance by way of trials of various lead Claimants’ claims for damages, it will not be known what value such claims are likely to have, or indeed how many claims in that c. 82% of claims will be likely to be viable. However I also recognise that the court did not dismiss the application for a GLO in Equifax, but gave directions to the parties to consider further issues before a CMC before a managing judge, who should then be better informed as to whether the claims should be managed by way of a GLO or not.
    1. I do not criticise the Claimants for entering into correspondence over a relatively long period. There were many issues to discuss as well as the format of case management, and it is usual for views to develop and for parties on each side to move from what are sometimes entrenched positions as the correspondence and discussions develop. There are also several letters chasing the Defendant for a response on various issues which prolonged the period of discussions.
    1. There is something of a red herring introduced on the issue of whether a “lead claimant model” was opposed by the Claimants. In Hayes 4 at §26, submitted on behalf of the Claimants, it is said: “We have never been opposed to the identification of lead claims in principle…”. Clearly a lead claimant model can be, and usually is, used as a case management tool in multi party litigation, whether a GLO is in place or not. It is possible that the parties had a misunderstanding of each other’s position on this issue.
    1. The matters dealt with between the parties to the application, until the Claimants accepted that they would not seek to proceed with a GLO, dealt with many other case management issues as well as whether the order to be made would be in the form of a GLO or not, and I consider that allowance should be made for that. It may be that such matters are excluded from the statement of costs, although that seems unlikely given the very substantial amount of over £282,000 that is claimed in the Defendant’s statement of costs.
    1. In the circumstances I consider that the Claimants should pay 50% of the Defendant’s costs of the GLO application. The hearing would have been required in any event because there were a number of issues between the parties that had to be determined. The principle of whether or not there should be a GLO had been conceded so there was no need to deal with that issue, save for submissions on the costs of the application, which did not take up a very substantial part of the hearing. I consider that a 50% proportion, a percentage arrived at after examining the correspondence and hearing submissions, but on a broad brush approach to avoid the time and cost of an issues based examination of costs, is sufficient to cover that part of the hearing that dealt with submissions on costs, and accordingly the costs of the hearing should be costs in the case.
    1. The Defendant’s statement of costs amounts to £282,894, inclusive of VAT, which is a extremely high figure. Leading and junior Counsel’s fees for the hearing are £56,500 plus VAT, namely £67,800. Solicitors’ time for attending the hearing totals £6,129 plus VAT, namely £7,354.80. When those amounts are deducted the total reduces to £207,739.20. Of that figure 50% is £103,869.60. The Defendant seeks an interim payment of 60%, but as mentioned above I regard those costs as very high. For example £119,480 is included for work on documents, three Grade A fee earners are engaged as well as two Grade Bs and a Grade D. I note also that one of the Grade A fee earners and the Grade D fee earner hourly rates are in excess of the Guideline hourly rates. Accordingly I consider that an interim payment of just under 50% would be more appropriate, namely £50,000.