“The costs can be proportionate even though they exceed the damages”, says the Senior Costs Judge Master Gordon-Saker
Various Claimants (In Wave 1 of the Mirror Newspapers Hacking Litigation) v MGN Ltd  EWHC B13 (Costs) (1 June 2018)
The Court has found that “The rule does not prevent the recovery of costs in an amount greater than the sums in issue in the proceedings. Had that been intended it could easily have been stated. Financial value is but one of the five factors and so there will be cases where, by reason of the other four factors, the costs are proportionate even though they exceed the sums in issue.”
The Senior Costs Judge Master Gordon-Saker was assessing the costs to be payable to 10 Claimants in “phone hacking” cases.
Following commencement of assessment proceedings, the parties were able to agree the reasonable base costs of each of the Claimants. They were also able to agree a figure for the reasonable and proportionate common costs. The issue before the Court was what effect, if any, the post-2013 test of proportionality had on the agreed costs of the individual Claimants.
Master Gordon-Saker set out, and went through, the five factors in CPR 44.3(5) against which to assess proportionality.
Turning first to the sums at issue, he said that “in the present case it is reasonable to assume that, had the settled claims proceeded to trial, the awards of damages would have been significantly greater than the sums that were agreed” (only two of the cases went to trial; the rest settled).
He also found the several elements of valuable non-monetary relief and submitted that “the value of the non-monetary relief in issue in the proceedings, taken as a whole, was substantial and at least as great as the sums in issue”.
Turning to the complexity of the litigation, the Master said: “A lazy, but arguably foolproof, way of determining the complexity of a case is to consider the amount of time which the court was willing to devote to it. The trial of the representative claims lasted 13 days in the High Court and resulted in a reserved judgment which runs for 712 paragraphs over 223 pages. Had liability not been admitted 6 months before the trial, the trial and the judgment would doubtless both have been longer.” Therefore he continued: “In my judgment this was complex litigation in the High Court.”
Regarding any additional work generated by the conduct of the paying party, Master Gordon-Saker rejected the argument that “conduct” meant the conduct that gave rise to the litigation. The conduct that was being considered was the conduct of the litigation. He said: “The Defendant fought these claims vigorously and did not concede liability at the earliest opportunity. As a consequence it will have to pay a greater sum in costs than if it had not fought the claims so vigorously or had conceded liability earlier. However I am not persuaded that this stance or the matters listed in the Claimant’s written submissions caused additional work in relation to the individual claims.”
However, the Master found that there were a number of wider factors involved in the proceedings, including their “significant public importance”, the reputations of the Claimants and the vindication they had obtained by bringing their cases.
As a result, Master Gordon-Saker dismissed the Defendant’s submission that the sums in issue and the value of the non-monetary relief were the primary factors. He noted that “Rule 44.3(5) does not identify any of the five factors as being more important than the others” and concluded that all of the individual costs claimed were proportionate.
Whilst prior to providing his judgment Master Gordon-Saker stated that this judgment should not be taken as any attempt at providing guidance, the decision he reached is significant in that it confirms that all factors under CPR 44.3(5) are equal and as important as one another when proportionality is considered.
Tanya Bland, Law Costing Ltd
20th July 2018