Various Claimants v MGN Ltd
| Jurisdiction | England & Wales |
| Judge | Mr Justice Mann |
| Judgment Date | 25 July 2016 |
| Neutral Citation | [2016] EWHC 1894 (Ch) |
| Docket Number | Case No: Various as listed in the 2 Group Register |
| Court | Chancery Division |
| Date | 25 July 2016 |
[2016] EWHC 1894 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Royal Courts of Justice
Rolls Building, 7 Rolls Buildings
Fetter Lane, London EC4A 1NL
Mr Justice Mann
Case No: Various as listed in the 2 nd Group Register
Mr Simon Browne QC, Mr David Sherborne and Mr Jeremy Reed (instructed by Atkins Thomson as Lead Solicitors) for the Claimants
Mr Alexander Hutton QC and Mr George McDonald (instructed by RPC LLP) for the Defendant
Hearing date: Thursday 21 st July 2016
Introduction and the nature of the dispute with which this judgment deals
This judgment gives my reasons for the decision that I pronounced on the morning of Thursday 21 st July 2016.
This is a costs management hearing in this managed litigation. Earlier costs budgets have been agreed, but those budgets do not cover the entire litigation up to trial and further budgets have been exchanged to take the managed cases up to, but not through, the trial stage. The claimants have agreed the defendants' budgets. The defendants have not agreed the claimants' budgets and practically every item in those budgets is disputed. Some of the disputes are particular to the items in question. Others are more over-arching disputes on points which are akin to questions of principle. This judgment deals with one of them, namely the extent to which budgeting should encompass additional liabilities (uplift and ATE insurance premiums) where, as here, a party (the claimants) has entered a conditional fee agreement ("CFA") with its lawyers. The cases with which this judgment is concerned are cases based on privacy and publication, and so are cases in which recovery of additional liabilities from the paying party is still possible.
Not everything about the costs budgeting is the subject of disagreement. The parties have agreed that there should be separate budgets for common costs and for the costs relating solely to individual claims, and they have agreed how individual claims should be categorised for costs budgeting purposes. Common costs are what their name suggests – costs which relate to activities which are carried out for the benefit of the claimants as a whole, as opposed to activities done solely in relation to individual claims. They are one category of costs to which budgeting is to apply. So far as individual costs are concerned, the parties have agreed on a system of template budgeting. Rather than preparing budgets for each individual case (which would, on present figures, involve the preparation of more than 30 budgets, with more to come as further claims are brought), the parties have agreed to operate on the footing of three template budgets. Each of the cases is to be treated as falling into one of three categories, depending on the number of articles on which the claim is based and/or the level of dispute between the parties judged by reference to the number of articles which are or are not agreed by the defendant as having a source in illicit information gathering. The details of the split do not matter for the purposes of this judgment.
There will, regrettably, have to be an item by item consideration of practically all the items in all the budgets in due course, which, judging by the levels of dispute, will be very time-consuming. However, this judgment is not concerned with those disputes. It is concerned with an important overarching point which is the extent to which additional liabilities should be covered by the costs budget. The position of the claimants is that all additional liabilities are outside the scope of the costs budgeting exercise. The exercise should relate only to base costs. The position of the defendant is that the figures allowed in the costs budgeting exercise should cover additional liabilities (both uplift and ATE insurance premiums).
The parties' arguments
The argument and technique of the claimants can be relatively easily set out. They say that the proper approach, which excludes a consideration of additional liabilities for costs budgeting purposes, is clear from the provisions of the CPR and the relevant Practice Direction (and especially the terms of Precedent H). Furthermore, there are insuperable practical problems in seeking justly to provide for the additional liabilities at the costs budgeting stage because the claimants are under no obligation to disclose the terms of the CFAs (and in particular the uplift) before the end of a trial, or the terms of their ATE insurance (and in particular the premiums and the stages at which the premiums accrue). Without that information one cannot sensibly introduce them into a costs budgeting calculation. The only basis on which costs budgeting can be sensibly carried out is the basis on which it has always hitherto been carried out in CFA cases which is to apply it to base costs only.
The approach of the defendant is one which does not ostensibly require disclosure of the nature and amount of additional liabilities in a way which contravenes the present system, which does not require that disclosure. Its focus is very much on notions of proportionality. Mr Alexander Hutton QC, who appeared for the defendant, set out the correct approach in his skeleton argument in the following terms. He says that the court should adopt the following procedure, which he described as being "akin to the approach on detailed assessment":
"a. Decide Common Costs budgets using a test of reasonableness;
b. Decide the reasonable level of base costs for each phase in each Individual Template Costs budget (having regard to amount to about four Common Costs);
c. Then stand back and consider a proportionate amount to be allowed overall for the individual Template Costs budgets (having regard to the share of Common Costs). Any deductions as a result of the 'standing back' exercise are to be applied pro-rata across each phase;
d. The approved figures will then identify a reasonable and proportionate amount. If there has been a reduction on the grounds of proportionality (by the 'standing back' exercise) then the resulting figure will be the maximum sum which is proportionate: in those circumstances, it is contended, no additional liabilities can be recovered in addition to that maximum proportionate sum; and
e. The only circumstances where additional liabilities could be recoverable in addition would be if the court considers that the amounts determined as reasonable were also proportionate (i.e. without any reductions at the standing-backstage). In that scenario, the defendant suggests that proportionality would need to be reconsidered by a costs judge on assessment to include additional liabilities as the maximum proportionate sum may be greater than the base costs figure alone."
This approach is heavily based on what is submitted to be the proper application of proportionality to post-April 2013 cases (which all the present cases are). From that time on the rules as to proportionality have changed. The concept occupies a higher position now on an assessment, as is demonstrated by CPR 44.3(2) which provides
"(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; …"
This is said to have led to the approach of the costs judge (Master Gordon-Saker) in the post-action assessment in BNM v MGN Ltd (3 rd June 2016) when he...
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Catherine King v Basildon & Thurrock University Hospitals NHS Foundation Trust
...remaining three parts of the bill even though in principle they are recoverable throughout. But, as Mann J clearly demonstrates in Various Claimants v MGN [2016] EWHC 1894 (Ch) at paragraphs 19 and 20, that is the likely effect of otherwise recoverable additional liabilities being included ......
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Bernard Murrells (Executor of the Estate of Jill Murrells deceased) v Cambridge University NHS Foundation Trust
...of " costs" in new CPR 44.1 in cases where additional liabilities are claimed. Courts do not costs manage additional liabilities ( Various Claimants v MGN [2016] EWHC 1894 (Ch)). If the Defendant were right (and "costs" had a wider meaning), then there would need to be an assessment of prop......