Costs which exceed sums in issue can be proportionate says High Court

Linzi Walker – Costs Lawyer

Linzi Walker, Costs Lawyer at PIC reports.

Introduction

This relates to the ruling on costs by Master Gordon-Saker in relation to the Mirror Group Newspapers phone hacking litigation. The hearing was delayed until the Court of Appeal handed down judgment in BNM v MGN.

Summary

Master Gordon-Saker was ruling on the costs of 10 Claimants where proportionality of their costs was in issue.

The Claimants included footballer Paul Gascoigne, Nicola Horlick and Peter Andre who were victims of the phone hacking by Mirror Group Newspapers (MGN).

The claims were all about seeking vindication as victims of breaches of privacy by a national newspaper group. Only Paul Gascoigne’s and Alan Yentob’s cases went to Trial, the rest settled. Paul Gascoigne was awarded the highest damages of the group at £188,250.00. The total damages were £540,750.00. Paul Gascoigne also claimed the highest amount of costs at £239,543 but had agreed reasonable base costs of £158,614.00. MGN offered just £80,000.00.

The agreed reasonable base costs for all the cases totalled £508,814.00. MGN’s offers totalled just £225,000.00. In addition, £61,976.00 per Claimant had been agreed as proportionate.

Master Gordon-Saker went through the five factors in CPR 44.3 –

(5) Costs incurred are proportionate if they bear a reasonable relationship to –

  1. The sums in issue in the proceedings
  2. The value of any non-monetary relief in issue in the proceedings
  3. The complexity of the litigation
  4. Any additional work generated by the conduct of the paying party; and
  5. Any wider factors involved in the proceedings, such as reputation or public importance.

In respect of sums of issue, the Judge said “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”

Several elements of non-monetary relief, such as undertakings to delete and not republish articles derived from hacking, statements in open Court and the judgment following trial were found and his impression was that the Claimants’ “were not motivated principally by their claims for damages. They were motivated principally by the desire to hold the Defendant to account. 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.”

Although Master Gordon-Saker acknowledged that the litigation was complex, the conduct of MGN did not meet the test of generating any additional work.

A number of wider factors were involved, including significant public importance, the reputations of the Claimants and the vindication they had obtained by bringing their cases.

As a result, Master Gordon-Saker concluded that all the individual costs were proportionate, stating “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. In my Judgment, this is such a case”

Conclusion

Financial value is just one of the five factors. This judgment is not intended to provide wider guidance however it does highlight that the Post LASPO proportionality test is not just about damages and costs can be proportionate even if the sums in issue are exceeded.

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