Following the introduction of costs budgeting under section II of Part 3 of the Civil Procedure Rules on 1 April 2013, much has been said, written and done about how it has affected Part 7 multi-track litigation in claims worth at least £50,000 where it is compulsory.
To some, costs budgeting has added an additional layer to the already formidable expense of civil litigation by the front-loading of very significant costs in actions which never reach trial.
To others, costs budgeting has delivered a welcome degree of control over what each party can spend and expect to recover in costs if successful, and what the outlay will be if unsuccessful.
Wherever the right answer lies (there may not be one), it is a fact that costs budgeting is here to stay and parties who litigate in the multi-track must now cut their coats according to their cloth when it comes to working out how much the case will cost, and what they can expect to get back from their opponent in costs if they succeed, or pay out if they fail. That way, all parties will have a better handle on just how much a piece of litigation will cost, win or lose. That, at least, is the theory.
However, since 1 April 2013, much less has been said, written and done about costs budgeting in group litigation, but more judicial guidance is now available for those legal representatives who practise in this field. But that is to get ahead of ourselves. Before that, in a costs context, mention needs to be made about why litigation involving multiple claimants is better conducted through a group action, rather than by way of hundreds or even thousands of individual claims.
First, where a number of people have been affected by another’s wrongdoing, but the individual loss is so small as to make a personal action economically unviable, a just remedy is better provided in an action in which all those who have suffered join together in a group. An obvious example is a cruise on the Ocean Wave which goes wrong because the passengers suffer from food poisoning during their holiday.
Next, joining together as a group provides an expeditious, effective and proportionate means of resolving cases where the claims are large enough to justify individual actions, but where the number of claimants are so numerous that the cases cannot be managed satisfactorily other than as a group.
Next, group litigation means that where there are common issues, a handful of claims can be taken as “test” cases, with the remainder being stayed, thereby saving costs until the outcome in those specially chosen claims is known. Once judgment has been obtained in the test cases, it will resolve most of the remaining claims where the issues are similar.
Finally, in terms of representation, rather than having scores of different firms of solicitors dealing with individual claims, a lead firm (in a big case, sometimes more than one) takes charge and assumes overall responsibility for dealing with generic issues, which will include reporting back to the individual claimants about progress from time to time: in that respect, it is usual for a managing judge to be appointed and allocated to the group action, so that there is judicial case and costs management from start to finish.
To provide the mechanism through which group litigation can be run, Section III of CPR 19 was created and has been in force since April 1999. It has turned out to be a veritably busy rule. Many group actions have become household names, often involving high profile celebrities, such as the “phone hacking” litigation. Further afield, there has been the pollution litigation involving 30,000 claimants and nationals of Cote d’Ivoire in Motto v Trafigura which gave rise to the then largest bill ever lodged for detailed assessment at the Senior Courts Costs Office, at a mere £104,707,772.72!
Fast forward a decade, and we now have the British Airways (BA) data breach group litigation, which concerns cyber-attacks made on electronic systems used by BA, resulting in the disclosure of confidential identifiable customer data to those responsible. That includes, but has not been limited to, credit card data belonging to those customers. As a consequence, those affected (said to be as many as 500,000 individuals) have joined together in a group action to advance claims that BA failed to put in place appropriate or sufficient security measures to safeguard their relevant data, contrary to the General Data Protection Regulation (2016/679), thereby causing loss and compensable harm. BA itself had notified their customers of the attack, and the subsequent claims have been made subject to a Group Litigation Order under CPR 19.11, with Saini J being appointed as the managing judge, thereby taking on responsibility for case management including costs management.
In his capacity as managing judge, Saini J has already flexed his judicial costs budgeting muscles in respect of costs incurred by Leigh Day, who are the lead solicitors acting for the claimants (see Weaver and others v British Airways PLC). Pre-budget, the firm spent £443,000 in advertising costs in order to seek out prospective claimants who might wish to join the action. Post-budget, a further £557,000 was said to be needed for future advertising in order to publicise the GLO in accordance with CPR 19.11(3)(c). That request fell on stony ground, Saini J following the decision in Motto, that costs of advertising are expenses which are to be treated as the price of “getting the business in”. As such, they are overheads and are irrecoverable costs which do not fall within the scope of the costs budget.
More recently, however, Saini J has had to decide the costs to be allowed for individual costs in the group (as opposed to the generic costs) for budgeting purposes, which had been sought at £642 per claimant (see Weaver and others v British Airways PLC (No.2)). Of that sum, an approach was advanced which multiplied the claimed average unit cost of a “round robin letter” by the number of individual claimants to whom it was to be sent, being a total of six up to the date of the liability trial, with one minute being allowed for each such communication. Since this was a hearing at which the claimants had retained two silks and a junior counsel, with BA merely a modest duet of silks and no junior, the Man in the Moon might have looked down in wonder at how a judge of the High Court of England and Wales could be engaged in an argument about the price of a letter, also involving, as it did, such an eminent coterie of Queen’s Counsel.
Such an eventuality, however, is not without precedent. Pre costs-budgeting and for the most part, pre email, 20 years ago, Nelson J had to deal with issues about the cost of “round robin” letters in Giambrone v JMC Holidays Ltd, a case involving 652 claimants who had suffered from food poisoning in a Majorcan Hotel. The claimants wanted £10 per letter for adapting and checking generic circular letters. The costs judge allowed 10% of that, a mere one pound. On appeal before Nelson J, argument revolved round “thinking time” on the basis that the £1 allowance provided for only 36 seconds, but when the cost of the postage stamp was deducted, that came down to 24.5 seconds, which was inadequate! The judge agreed, but only to the extent that two minutes per circular letter was appropriate, giving an allowance of £3.30 for each such communication.
Two decades on: what is a “round robin” email (as opposed to a letter involving notepaper, a typist, an envelope and a postage stamp) worth in group litigation?
Not a penny piece according to Saini J in Weaver (No.2). The claimants contended for an allowance of six such emails at one minute each, up to the start of the liability trial. Saini J disagreed. Before him, no evidence had been advanced that the simple electronic sending of identical letters to tens of thousands of individual claimants would each take an average of one minute of chargeable time, still less that the act of undertaking keystroke work in enabling the mailing of already drafted letters to clients whose details were already electronically stored, was chargeable work. It followed that the only recoverable time which would be allowed was that authorised in the generic budget for drafting the “round robin” letter, with nothing to reflect the expense of sending it out.
What is to be drawn from Saini J’s decision? It is that managing judges will take a tough line in order to keep costs within the bounds that they consider to be proportionate. It is also the case that where the managing judge is a High Court judge rather than a judge below that level, there is no realistic possibility of any appeal: it cannot seriously be contemplated that the Court of Appeal will wish to dirty its hands hearing an argument about the costs of an email! It follows that those acting for claimants in group litigation will need to exert extreme care in what they claim for in their budgets if they are not to come away disappointed.
That said, a less-well known aspect to these weighty issues about the costs of a letter or email, is one of career progression. In Giambrone the advocates were Jeffrey Burke QC who became a circuit judge, and Charles Haddon-Cave QC who is now in the Court of Appeal. Does that mean that in a few years, we shall see those Queen’s Counsel who appeared before Saini J in Weaver similarly promoted as Blayney LJ, Proops LJ, Bacon LJ and Williams LJ? Time will no doubt tell, as it always does!
