10 January 2017Print This Post

High Court judge condemns Leigh Day claimants for “deliberate disregard” of court order in £50m+ costs battle

Rolls Building: strong words over TCC case costs

A High Court judge has “unequivocally” condemned claimants represented by group litigation specialists Leigh Day for “deliberate disregard of a court order” in a case where the costs of both sides were estimated at well over £50m.

Ordering indemnity costs, Mr Justice Stuart-Smith said Leigh Day’s costs budget amounted to £24m by September 2014, while the defendant’s costs to date were estimated as “in the region of £34m”.

Stuart-Smith J said the tipping point was the service of a fourth report by an expert, a Dr Card. the claimants’ “deliberate disregard” of the court’s order was “a very serious error of judgment which had extensive consequences in placing unfair additional burdens upon the defendant and the trial process”.

Arroyo and others v Equion Energia, formerly known as BP Exploration (Colombia) [2016] EWHC 3348 (TCC) involved claims by over 100 Colombian farmers that the Ocensa pipeline, built by BP Exploration in the 1990s to carry oil to the coast, had damaged their farms. Stuart-Smith J rejected the claims in a 648-page judgment handed down last summer.

Mr Justice Stuart-Smith said the costs of the group litigation were “huge by any standard”.

He went on: “They run to tens of millions of pounds on each side and dwarf any sums that the claimants might have hoped to recover at trial even on the most optimistic projections.”

Ruling on costs, the judge explained that despite an order limiting the scope of additional expert evidence in the case, the claimants served Dr Card’s fourth report, including “new calculations”, shortly before trial.

“The additional burdens upon the defendant when confronted by what amounted to a new expert case five weeks before trial were substantial and unwarranted.

“The breach was further compounded by failing to provide the workings that lay behind the new calculations until 1 October 2014, the day before the trial started.”

Stuart-Smith J said that, having realised that his calculations were wrong, Dr Card “tried to improve his position” by providing a fifth report four days before he was called to give evidence.

“In doing so he gave an explanation for the new calculations which was seriously misleading. Finally, Leigh Day’s explanation in their letter serving the report was not a fair summary of what had happened and was itself seriously misleading.”

He said the history surrounding the fourth and fifth reports, “which the claimants acknowledge to be ‘most regrettable’, justifies serious and unequivocal condemnation”.

There were other features that supported an award of indemnity costs, such as “various iterations of the schedules of loss which… were beyond the norm both in the inadequacy of their preparation and construction and in their consequences for the progression of the case”.

The judge said an ATE policy for £1.8m taken out by the claimants provided the “explanation for an agreed order” that there should be an interim on payment on account of costs to the defendant of the same amount, but the claimants themselves “could not possibly begin” to discharge more than a “tiny fraction” of the total bill.

Stuart-Smith J ruled that the claimants should pay the defendant’s costs on the standard basis until 28 August 2014 – when Dr Card’s fourth report was served – and after that on the indemnity basis, excluding the costs of the costs hearing itself.

In making the order, Stuart-Smith J said he had not forgotten a submission from the claimants’ counsel that an order for indemnity costs may have a “chilling effect” on access on justice, in cases such as this.

“It should not do so,” he added. “If, however, it has a chilling effect on the sort of failures of which this and the main judgment are critical, it may possibly serve a useful purpose beyond the scope of this litigation.”

A spokesman for Leigh Day said the firm would not be appealing against the costs ruling.

“The claimants are understandably disappointed by the verdict having waited more than eight years for a resolution but consider it important that they had access to a judicial process and the opportunity to give their evidence to a UK court.

“The judge accepted that this was an enormous and exceptionally demanding case by modern standards of litigation. We will continue to bring legitimate cases of importance on behalf of individuals in this country and others against UK multinationals.”

In a separate High Court ruling on indemnity costs, Mr Justice Warby said the “central allegation”, which he found to be “false and malicious”, was that the claimant “had had sex with one of the defendant’s pigs”.

Delivering judgment in Barkhuysen v Hamilton [2016] EWHC 3371 (QB) – a neighbour dispute – Warby J described the case as “happily far outside the norm for civil litigation”, and “a case for indemnity costs par excellence”.

He said the defendant had “attempted to influence the course of justice in the action in her favour by threatening a witness with consequences if he gave evidence against her” and “told a series of serious lies” during the litigation.

“These are too numerous to list here, but they include false allegations that the claimant drove at her, threatening her personal safety, and a false denial that she had made an accusation of paedophilia against someone else with whom she was in dispute.”

Warby J said that, in his judgment in the main action in November last year, he held that the defendant was liable to the claimant for damages for false imprisonment, slander and harassment, and awarded the claimant damages of £32,080.

On costs, Mr Justice Warby said the defendant must pay 90% of the claimant’s costs, to be assessed on the indemnity basis – apart from the costs of the hearing itself.

Additionally, because the claimant had beaten at least one part 36 offer he had made, the defendant was ordered to pay a further £3,280, plus interest on damages and costs from the date of judgment at a rate of 10%.

Warby J further ordered that the defendant make an interim payment of £150,000 on account, with a stay of execution until 16 January 2017.

By Nick Hilborne


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