Mr Justice Langstaff's review of jurisprudence on issues based costs orders

Various Claimants v Wm Morrisons Supermarket Plc [2017] EWHC 3133 (QB)

The claim –

The claim concerned disclosure of personal data of 99,998 employees of the defendant on a file sharing website. The party responsible for this disclosure, a Mr Andrew Skeleton, held a senior IT position within the defendant company and the affected employees brought claims for compensation for breach of statutory duty. The claimants claimed that the defendant was a) directly liable for disclosure of data relating to 99,998 of their employees and b) vicariously liable for the actions of Mr Andrew Skelton. Following a ten-day trial judgment was handed down on 1st December 2017. It was held that the claims in relation to direct liability failed; however, Mr Justice Langstaff found that the principles of vicarious liability also applied to data protection and the case on vicarious liability succeeded. He was then asked to consider the question of costs.

The costs issues -
The defendant argued that the majority of time and expense incurred was directed toward the issue of direct liability only and that as they had succeeded on this issue the claimants should not be entitled to their costs of the action since they had failed on the preponderant issue. The defendant accepted that the starting point was that the claimants should be entitled to their costs of action but submitted that under CPR 44.2(2)(b) the court may make a different order and pointed to the factors the court should consider in deciding what order (if any) to make on costs set out in CPR 44.2(4).

Mr Justice Langstaff undertook a detailed review of relevant caselaw including –

(1) AEI Rediffusion Music Limited v Phonographic Performance Limited where Lord Woolf MR noted –
‘The most significant change of emphasis of the new Rules is to require courts to be more ready to make separate orders which reflect the outcome of different issues. In doing this the new Rules are affecting a change of practice which has already started. It is now clear that too robust an application of the "follow the event principle" encourages litigants to increase the costs of litigation, since it discourages litigants from being selective as to the points they take. If you recover all your costs so long as you win, you are encouraged to leave no stone unturned in your effort to do so.’

(2) English v Emery Reimbold and Strick Ltd 2002 1 WLR 2409, EWCA Civ 605 where the court of appeal held that an issues based order should only be made where another form of order is insufficient -

‘…we would emphasise that the Civil Procedure Rules requires that an order which allows or disallows costs by reference to certain issues should be made only if other forms of order cannot be made which sufficiently reflect the justice of the case: see Rule 44.3(7), above. In our view there are good reasons for this rule. An order which allows or disallows costs of certain issues creates difficulties at the stage of the assessment of costs because the costs judge will have to master the issue in detail to understand what costs were properly incurred in dealing with it and then analyse the work done by the receiving party's legal advisors to determine whether or not it was attributable to the issue the costs of which had been disallowed…………….In all the circumstances, contrary to what might be thought to be the case, a "percentage" order, under rule 44.3(6)(a), made by the judge who heard the application will often produce a fairer result than an "issues based" order under rule 44.3(6)(f).’

(3) Fox v Foundation Piling Limited where Jackson J observed –
‘…….a growing and unwelcome tendency by first instance courts and, dare I say it, this court as well to depart from the starting point set out in rule 44.3(2)(a) too far and too often. Such an approach may strive for perfect justice in the individual case, but at huge additional cost to the parties and at huge costs to other litigants because of the uncertainty which such an approach generates. This unwelcome trend now manifests itself in (a) numerous first instance hearings in which the only issue is costs and (b) a swarm of appeals to the Court of Appeal about costs…’

The decision -

Mr Justice Langstaff found that the cases in respect of direct liability and vicarious liability were sufficiently distinct for them to be regarded as substantially separate issues; however, he found they were not entirely distinct to the degree that if the trial of one had taken place on its own it would not have involved material utilised in the other. In deciding whether to make a percentage based costs order he considered both the factors referred to in CPR Parts 44(4) and (5) and the extent to which the two cases overlapped.

He accepted that, in general terms, the claimants were the overall winners and should be entitled to costs, including common costs, of those matters which they had to prove to establish vicarious liability, but he went on to state - ‘The claimants have had the indulgence of pursuing claims which were tenuous (to which the defendant early on gave cogent answers), at unnecessary length, pursuing disclosure that was principally related to those claims. The defendant should not in justice be required to pay for this, but rather be made subject to a costs order which reflects the fact that it succeeded in resisting those claims.”

Mr Justice Langstaff considered that what was required was to balance the costs of the losing party in relation to the issues on which they were successful (aside from a proportion of common costs which were truly attributable to vicarious liability) with those of the successful parties on the issues on which they succeeded. He found the claimants were ‘unrealistic in asserting that a maximum of some 20% of time and evidence was spent on the direct liability cases alone, and have considerably overstated the extent of the issues common to both the direct and the vicarious claims.’

The defendants were ordered to pay 40% of the claimants’ costs.

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Noel Heslin

Senior Costs Draftsman

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