Sandra Bailey and Others v Glaxosmithkline UK Ltd

Hearing date: 15 January 2025

Approved Judgment

This judgment was handed down remotely at 10am on 31 January 2025 by circulation to the parties or their representatives by e-mail and by release to the National Archives.

HON. Mr Justice Bourne

The Hon.

Introduction

This is an application by the Defendant for an extension of the time ordered by Lambert J on 3 July 2020 within which an application could be made for a non-party costs order (“NPCO”), and/or for relief from sanction for its non-compliance with that order. The proposed costs application would be made against Brit UW Ltd (“Brit”), which has been joined as an additional party for these purposes.

An NPCO can be made under section 51(1) of the Senior Courts Act 1981 which provides:

“Subject to the provisions of this or any other Act and to rules of court, the costs of and incidental to all proceedings in the civil division of the Court of Appeal and in the High Court, including the administration of estates and trusts, shall be in the discretion of the court, and the court shall have full power to determine by whom and to what extent the costs are to be paid”;

By way of background:

a. By a Claim Form served on 30 April 2004, several hundred publicly funded Claimants claimed that the Defendant's anti-depressant medication Seroxat was defective and had caused them harm.

b. A Group Litigation Order was made on 9 July 2007.

c. A number of generic issues were listed for a trial commencing on 1 February 2011.

d. However, on 29 November 2010, the Legal Services Commission decided to discharge the Claimants' public funding certificate after considering an advice on the merits from their then leading counsel.

e. That led to 369 Claimants discontinuing their claims, while the remaining 124 challenged the LSC's decision.

f. On 29 January 2015 a review panel rejected that challenge and discharged the public funding certificate.

g. On 22 July 2015, a notice of change of legal representative was served by Fortitude Law, referring to its acceptance of instructions following “discussions with funders and insurers”. It represented 102 Claimants, whilst one more continued as a litigant in person. An adjourned CMC was listed for hearing on 28 October 2015.

h. Solicitors' correspondence between August and October 2015 addressed, among other things, the adequacy of the proposed funding arrangements including any “after the event” (“ATE”) insurance cover for costs liabilities.

i. In letters dated 14 August and 16 October 2015, Fortitude Law stated that ATE insurance had been obtained for the remaining Claimants in respect of adverse costs orders relating to the generic case and represented that there was an adequate initial level of indemnity, with a facility to obtain further cover if required.

j. The Defendant's solicitors questioned those assertions. At the CMC on 28 October 2015, Foskett J required the Claimants to provide further information including a detailed explanation of the contention that there was adequate cover.

k. On 19 November 2015, Brit issued an ATE legal expenses policy to the Claimants.

l. On 26 November 2015, in a witness statement by Mr Hanison in response to Foskett J's order, it was stated that (1) litigation funding had been provided by Managed Legal Solutions Ltd (“MLS”) which exceeded the remaining £500,000 which had previously been available under the public funding certificate and (2) the ATE insurance with Brit would, if necessary, reimburse the Defendant's reasonable costs up to £750,000.

m. On 4 February 2016, Foskett J gave a judgment following the adjourned CMC in which he allowed the proceedings to continue, noting that the ATE insurance meant “that there is the prospect of recovery of at least some of its reasonable recoverable costs by the Defendant if the claims fail or are discontinued”.

n. On 16 June 2017 the Defendant applied for security for costs. On 3 August 2017 MLS's head of investment in a witness statement expressed the view that the ATE policy provided the Defendant with sufficient comfort in respect of the first £750,000 of its costs.

o. On 8 December 2017, Foskett J ordered the Claimants to provide security for costs in the sum of £1.75 million, that sum being half of the Defendant's anticipated recoverable costs up to the start of a trial, less two thirds of the ATE cover, the remaining third being disregarded to reflect the “more than minimal risk” that the insurance policy might be avoided.

p. The trial commenced on 29 April 2019 before Lambert J. An issue as to the Claimants' case on defect arose during opening and was decided in the Defendant's favour on day 3 of the trial, for reasons given in a judgment on 9 May 2019. Permission to appeal was refused by the Court of Appeal on 4 December 2019 and by the Supreme Court on 24 January 2020.

q. On 7 May 2020, the Claimants by their counsel submitted to judgment dismissing the claims, subject only to arguments as to costs.

r. On 3 July 2020 Lambert J ordered that judgment be entered. She also ordered the Claimants to pay costs to the Defendant on the indemnity basis up to 21 June 2018 and on the standard basis thereafter. Each claimant was liable for his/her individual costs and his/her share of the common costs. The judge ordered a payment on account of £4.5 million but the question of time for that payment was adjourned generally with liberty to restore.

s. Paragraph 5 of that order contained the deadline which the Defendant now seeks to extend:

“The Defendant shall make any application for a third party costs order (including but not limited to any application for the payment out, to the Defendant, of monies currently standing in Court as security for the Defendant's costs), if so advised, no later than 4pm on 31 July 2020. Any such application shall include the Defendant's proposed directions and timetable, and shall be placed before Lambert J for directions for the filing of any evidence by the parties to that application and for the hearing of that application. Such application may include an application to restore the question of when the payment ordered in paragraph 4 should be made. For the avoidance of all doubt, any such application should be served on the Claimants' solicitors.”

t. In September 2020 MLS and its owner, a Mr Hunt, agreed to pay £5 million, including the money paid into court as security for costs, to the Defendant in settlement of their liability for costs.

The further events leading to the Defendant's application for a non-party costs order against Brit were the following:

a. In addition to the monies recovered from MLS and its owner, the Defendant had incurred an estimated £4,381,029 in costs between 1 October 2015 and 3 July 2020.

b. On 29 July 2020 its solicitors wrote to Fortitude Law asking whether the Claimants had made a claim under the policy and, if so, the status of the claim.

c. On 13 November 2020 Fortitude Law confirmed that the Claimants had made a claim, and on 9 December 2020 they indicated that an update was being chased via the insurance broker.

d. On 5 January 2021 the Defendant's solicitors sent a chasing email to Fortitude Law but received no response.

e. On 6 August 2021 and again on 2 September 2021 the Defendant's solicitors wrote directly to Brit, asking it to confirm the Claimants' insurance cover and the status of their claim under the policy.

f. On 7 September 2021, CMS Cameron McKenna Nabarro Olswang LLP (“CMS”) acknowledged receipt of those letters and stated that CMS was advising Brit in relation to the Seroxat Group Litigation. In a telephone call on that date, CMS would not confirm the position that Brit was taking in relation to the Claimants' insurance claim, or the status of that claim, but said that CMS were investigating the case and advising Brit and had been trying without success to contact Fortitude Law, and asked the Defendant to cooperate by sharing any relevant information.

g. The Defendant's solicitors sent chasing letters or emails to CMS on 26 October 2021 (providing documents containing information requested by Brit), 12 January 2022, 20 April 2023 and 16 May 2023.

h. A substantive response was received on 25 May 2023, stating that Brit to the best of its knowledge had not received any claim from the insured Claimants and “has not confirmed insurance cover under the ATE policy in the absence of any claim by the insured Claimants”.

The application notice was issued on 16 August 2023.

There have since been some regrettable delays in its handling by the Court, for which the parties are not responsible.

For the purpose of today's hearing, it is not disputed that the Defendant has a properly arguable application against Brit for a non-party costs order. The possibility of seeking a direct costs order against an insurer which had voluntarily taken on an obligation to indemnify the unsuccessful party against a liability for adverse costs was recognised by the Court of Appeal in Murphy v Young & Co.'s Brewery [1997] 1 WLR 1591, 1601. In the present case, the ATE policy was a relevant factor when the Court decided whether the proceedings could continue in 2015, and when the Court decided the amount of the security which MLS would be required to provide. Although the merits of the NPCO application are or will be disputed, no further consideration of the merits is appropriate at...