18 November 2014Print This Post

High Court slashes Google trial budget but says it’s too late for costs capping

Google: surprising level of costs

The High Court has refused to make a costs-capping order in a case against Google because the case was so close to trial and so much had already been spent at a level which made detailed assessment inevitable.

However, Mr Justice Edis slashed three items of Google’s budget for the trial, while expressing his surprise at just how much the company had already racked up.

Hegglin v Person(s) Unknown & Google Inc [2014] EWHC 3793 (QB), whose trial is listed for next Monday, involves a claim over untrue allegations of serious criminal behaviour made against the claimant, which appear prominently on Google searches.

Though it appears both sides know the author of the allegations, this person – the first defendant – is not uninvolved in the proceedings.

The judge said the facts of the case were simply although there was scope for argument about what the law of England requires Google to do, which is why the trial is listed for five days.

The claimant’s total budget came in at £604,000, split between costs incurred of £283,000 and costs estimated thereafter of £321,000. Google’s budget was nearly £1.7m, with £910,000 already incurred.

“I find the figures provided by the second defendant surprising,” said the judge. “This is a five-month period and a factually simple (although legally complex) case. It seems to me that the difference between the two budgets raises a concern about the proportionality of the second defendant’s overall figure and that that figure itself, viewed in isolation, also suggests that it is not proportionate to the true nature of the dispute.”

He identified some areas of the budget “where money may have been spent in a way which means that if any order for costs is ever made against the claimant significant parts of the second defendant’s costs should be disallowed”.

While acknowledging the arguments for a cap, the judge noted that the claimant could have acted more quickly in applying for one – between Google’s budget being served and the hearing, the incurred costs had risen to £1.25m. “This feature of the case limits the power of the court to act prospectively to ensure that costs are properly budgeted and managed.”

He accepted Google’s argument that the stage of the proceedings has been reached where no costs capping order should be granted because it could only affect future costs and the bulk of the costs have already been incurred. Further, the threshold criterion in rule 3.19(5)(c)(ii) could not be overcome by the claimant because detailed assessment would provide effective control over the risk of the expenditure of disproportionate sums.

Edis J said: “I am anticipating that the costs judge on any detailed assessment will start with the same level of astonishment as I felt when reading the costs statement supplied by the second defendant. The sums appear to me to be so high that the detailed assessment in this case will be conducted in such a way that it will represent a real protection to the claimant against having to pay disproportionate costs if he should lose at trial.”

However, he was more sympathetic to the claimant’s application for a costs management order amending Google’s budget to match the claimant’s. “This is not a costs cap by another route, because the status of any such order is defined by CPR 3.18. It does not limit the costs recoverable unless varied. It is, instead, a matter to which the court on the detailed assessment will have regard and from which it will not depart unless satisfied that there is good reason to do so.”

By rule 3.15, such an order must be made unless “the court… is satisfied that the litigation can be conducted justly and at proportionate cost in accordance with the overriding objective without such an order being made”.

Edis J said: “I am far from satisfied that this litigation has been, or will be, conducted at proportionate cost by the second defendant.”

He therefore reduced Google’s budgeted brief fee of £247,000 to match the claimant’s £98,000, which he described as “a very significant outlay” as it was.

He cut Google’s solicitors’ costs for the trial from £237,000 to £125,000, as against the claimant’s solicitors’ budget of £100,000, and reduced Google’s £59,000 budget for dealing with the claimant’s expert report – a 50-page document where there is no application or evidence in reply – to £25,000. The judge emphasised that he was not approving any other item of the budget.

“Of course, I do not criticise the second defendant or its lawyers for agreeing these terms: I am concerned about what level of costs might be recoverable from the claimant should he lose at trial, which is a different question. Large commercial organisations are free to agree whatever terms they like when they retain lawyers.”

He awarded the claimant 75% of his costs of the application because although the costs cap application was “optimistic”, “he persuaded me that he was right in his principal complaint, which was that the costs of the second defendant were disproportionate”.

 

By Neil Rose


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