Costs can be proportionate even if they exceed damages, Senior Costs Judge says

Gascoigne: Highest costs and damages

The proportionality test does not prevent the recovery of costs that are higher than the sums at issue in litigation, the Senior Costs Judge has said in allowing such a recovery by a host of celebrities awarded damages in the Mirror Group Newspapers (MGN) phone hacking litigation.

Master Gordon-Saker said the value of the non-monetary relief and other factors at play in the case “justify the conclusion that the costs can be proportionate even though they exceed the damages”.

“In the face of the defendant’s denial, the claimants pursued difficult claims to bring the defendant to account for its disgraceful behaviour,” he said.

“These claims were not about claiming compensation for injury. They were about seeking vindication for the claimants’ position that they were the victims of appalling breaches of privacy by a national newspaper group motivated only by commercial gain.”

He was ruling on the costs of 10 claimants where the proportionality of their costs remained at issue. The hearing was delayed until the Court of Appeal handed down judgment in BNM v MGN, but in the event it did not address the application of the test to base costs.

However, noting that “anything said about proportionality, at whatever judicial level, is subjected to anxious scrutiny”, Master Gordon-Saker stressed that nothing in his judgment should be taken as an attempt to provide guidance.

The group included the likes of footballer Paul Gascoigne, businesswoman Nicola Horlick, actor Christopher Eccleston, singer Peter Andre and Robert Willis, the PA to film star Jude Law.

Only Mr Gascoigne’s case and that of BBC executive Alan Yentob went to trial; the rest settled. Mr Gascogine was awarded the highest damages of the group (£188,250) and Mr Andre the lowest (£15,000) – across the cases, the total damages were £540,750.

Mr Gascoigne also claimed the highest amount of costs, £239,543, but had agreed reasonable base costs of £158,614. MGN offered £80,000.

The agreed reasonable base costs for all the cases totalled £508,814, and MGN’s offers added up to £225,000. In addition, common costs of £61,976 per claimant had been agreed as proportionate. Master Gordon-Saker said he would take this into account when deciding whether the overall individual costs awards were proportionate.

He then went through the five factors in CPR 44.3(5) against which to assess proportionality.

Turning first to the sums at issue, the judge said that “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”.

The judge found several elements of valuable non-monetary relief, such as undertakings to delete and not republish articles derived from hacking, orders for delivery up of documents, statements in open court and the judgment following trial.

He said 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.”

The litigation was complex, he continued, but the conduct of MGN – even though he said this did not have to be misconduct – did not meet the test of generating any additional work.

There were also a number of wider factors involved in the proceedings, including their “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 of the individual costs claimed were proportionate. “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…

“I cannot conclude that the total costs of Mr Gascogine of £220,590… are disproportionate in a claim which proceeded to a 13-day trial and resulted in an award of damages of £188,250.

“The costs of the other claimants are lower and I would reach the same conclusion, even though for some the sums in issue were lower.”

Philip Daval-Bowden, managing partner of Masters Legal Costs Services, acted for the claimants on the costs issues. The solicitors were Atkins Thompson and counsel Simon Browne QC.

Mr Daval-Bowden said: “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.”

Jamie Carpenter, instructed by City firm RPC, represented MGN.

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