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Even if costs exceed damages, they can still be proportionate

By David Chase, Senior Underwriter.

Two judgments in the phone hacking litigation handed down in June and August 2018 have been of particular interest to us of late, namely ‘Various Claimants in Waves 1 and 2 of the Mirror Newspapers Hacking Litigation vs MGN Limited, Case No: AGS/1600058’.

The five factors that Master Gordon-Saker had to take into account when considering the question of proportionality in both judgments are set out in Rule 44.3(5)(a)-(e) of the Civil Procedure Rules. These factors include: the sums in issue in the proceedings, the value of any non-monetary relief in issue in the proceedings, the complexity of the litigation, any additional work generated by the conduct of the paying party and any wider factors involved in the proceedings, such as reputation or public importance.

In our view the Rule doesn’t prevent the recovery of costs in a sum greater than the amounts in issue in the proceedings. Financial value is but one of the factors and, by taking into account the other four factors, in some cases the costs will be judged to be proportionate – even though they exceed the damages. All the factors have equal weight.

We believe some important points flow from Master Gordon-Saker’s analysis; which can be of wider application:

1. The “Sums in issue in the proceedings” mean “the range of figures realistically in dispute between the parties” – May v Wavell Group Ltd [2016] 3 Costs LO 455. A judge should take a broad view and consider the claim value stated on the claim form rather than the claim’s settlement amount, the fact that the sums in issue can change as the claim progresses, and that at a point in a case the sums in issue must be at least the amount awarded or agreed.

2. When looking at the value of any non-monetary relief, due to the range of difficulty a judge should again take a broad view. This could range from a straightforward valuation on an order for the transfer of property or shares, to a more difficult valuation on an injunction or an undertaking. Valuable non-monetary relief (such as in these cases) might include injunctions, undertakings to delete and not republish articles derived from hacking, order for delivery up of documents, apologies, statements in open court and a judgment following trial.

3. In reviewing whether or not a piece of litigation is complex it should be adjudged how difficult it was to piece together the evidence, any limitation issue and whether related parallel proceedings were being run. In addition, how much court time should be devoted to a case, and did the Defendant instruct both leading and junior counsel for the trial?

4. A judge should consider the paying party’s conduct (not including misconduct), rather than the conduct, which gave rise to the cause of action, since the claimant will be compensated in damages or other relief. Factors such as the Defendant fighting the claim vigorously and not conceding liability at the earliest opportunity should not persuade a judge that this has necessarily caused additional work. However it will of course mean that the Defendant will have to pay a greater sum in costs than they would otherwise have had to.

5. Wider factors to be taken into account – there is no exhaustive list and it would include public importance, reputation (even if what was published was not defamatory or untrue) and the vindication that the claimants would achieve by pursuing the proceedings and holding the defendant to account.

Temple Legal Protection’s tried and tested ATE insurance product was used for these phone hacking cases (and many other cases previously and currently) and the ATE premiums for these cases were settled prior to this recent judgment.

Previous related costs decisions have been perceived to be inconsistent. In the absence of specific guidance from the Court of Appeal or a higher court, Master Gordon-Saker has now made some helpful observations in his judgments which should assist costs judges when they are assessing proportionality.

Philip Daval-Bowden, managing partner of Masters Legal Costs Services, acted for the claimants on the costs issues and commented as follows:
“Although the Senior Costs Judge stresses that this judgment is not intended to provide wider guidance, it does make very clear that the post LASPO proportionality test is not simply about damages and the conclusion is important that costs can be proportionate even if they exceed the sums in issue…” 

“What was surprising was the defendant’s attempt to argue that these claims were primarily about damages and, as a result, the costs were disproportionate – ignoring the fact that this litigation concerned the uncovering of a long-running and covert criminal conspiracy.”

The solicitors view:

Mark Thomson of Atkins Thomson commented as follows:

“We rely on the robust and proven nature of the ATE insurance cover from Temple and the ATE premium levels have withstood many previous challenges. Temple’s ATE cover and disbursement funding gives our litigators and our clients the confidence to pursue claims. The insurance cover and disbursement funding provided by Temple for this type of litigation has become a benchmark in enabling access to justice.”

To find out about litigation/ATE insurance for media and privacy litigation for your firm and clients please call our commercial team on 01483 577877 or email