THE DANGERS OF SERVING A NOTICE OF NON-ADMISSION: LEADS TO INDEMNITY COSTS BEING AWARDED

Another aspect of the judgment in Duke of Sussex & Ors v MGN Ltd (Re Costs) [2024] EWHC 274 (Ch) was the defendant’s conduct in serving a notice of non-admission.  Service of the notice led to considerable extra costs being incurred.   A large number of the documents “not admitted” were the same as documents provided by the defendant. The judge identified this as a tactical move. It led to the costs associated with the non-admission being paid on the indemnity basis.

“MGN’s conduct was a failure to comply with the overriding objective. It is unnecessary to go further, as I have formed the view that the costs associated with the exercise, which are substantial and which of course were not budgeted, should be paid by MGN to the claimants, to be assessed on the indemnity basis.”

THE CASE

The judge was considering the issue of costs having given judgment in a phone hacking trial.   Shortly before witness statements were served the defendant served a notice of non-admission in relation to a large number of the claimants’ documents.   This non-admission was withdrawn, except for three documents, late in the evening before the trial.  The judge was considering the costs consequences of this.

THE JUDGMENT ON THIS ISSUE

 

    1. There was an additional head of costs that the claimants sought, relating to a notice of non-admission of the authenticity of 141 documents disclosed by the claimants during the litigation. This was served by MGN on 10 March 2023, being the last possible date for doing so under CPR rule 32.19, being the date of service of the last batch of witness statements. No explanation for the notice was given at the time.
    1. The effect was that, on the day when any new generic witness statements for trial were to be exchanged, the claimants had to start to investigate the provenance of these documents and seek to obtain further evidence to prove their authenticity. 69 of the 141 documents turned out to be materially the same as documents that MGN itself had disclosed. 5 new witness statements were prepared and served by the claimants, with an application for permission to rely on them. An additional trial bundle of 1,200 pages was prepared.
    1. At about 9pm on the day before the trial started, MGN wrote abandoning its authenticity challenge save in relation to 3 documents that two of the witnesses had provided to the claimants. The witness statement of one of these witnesses was then not challenged in any respect, and Mr Green KC told me on day 1 of the trial that MGN had no positive case to advance about the 3 documents but was simply putting the claimants to proof. No further explanation of why the notice was served was given.
    1. In the absence of explanation, I draw the conclusion that it was served simply because the rules allowed it to be served, and in the knowledge that the claimants would have to divert resources from the orderly preparation for trial to deal with a new evidential problem. Preparation for trial since the start of 2023 had featured assertions from each side that they were desperately short of time or resources to comply with the directions for trial of so many articles, as well as the generic claim issues, and then to prepare for the pre-trial review and the start of the trial itself. Every deadline for compliance was hard fought over. Both legal teams were up against it, and MGN knew that any substantial additional work required would create a real difficulty. MGN’s conduct was a failure to comply with the overriding objective. It is unnecessary to go further, as I have formed the view that the costs associated with the exercise, which are substantial and which of course were not budgeted, should be paid by MGN to the claimants, to be assessed on the indemnity basis.
    1. I note in passing that the Commercial Court Guide states at para E4.1(a) that rule 32.19:
“requires notice to be served within 7 days of disclosure of the document or, if later, by the latest date for serving witness statements. The latter time limit will typically apply, unless the document is disclosed late, but as a matter of proper practice notice under rule 32.19 should normally be served well before the deadline for witness statements so that the party required to prove the document can take that into account when considering what witness statement evidence to obtain.”
The reason why the rule permits notice to be given as late as the final date for exchange of witness statements eludes me, but the good sense of what the Commercial Court Guide states is self-evident.