A law firm which “prematurely” issued a group litigation order (GLO) application to bring VW emissions claims ahead of other firms has been hit with an indemnity costs order by the High Court.
Senior Master Fontaine said the “most likely explanation” for the manner in which London firm Harcus Sinclair “issued and pursued the application” was because of its desire to “obtain a commercial advantage in the litigation”.
Master Fontaine said indemnity costs orders were appropriate when the facts of the case or conduct of the parties took the situation “away from the norm”, and it was clear that the circumstances of the GLO application were “were well outside the norm”.
She went on: “First, and most significantly, because it led to the consequential costs incurred throughout most of 2017, the GLO application was issued prematurely, pursued inappropriately when it should have been stayed, and in the face of cogently expressed grounds given by the VW defendants and some of the other claimant groups.
“It was thus outside the norm in the sense that it happens rarely, and indeed had never been experienced by me in any of the group litigation I have dealt with, nor am I aware of any occurrences from judgments in similar cases.”
Master Fontaine said Harcus Sinclair and Chesterfield firm Your Lawyers entered into a non-disclosure agreement, as a “preparatory step” in negotiations for an agreement on “some form of collaboration” regarding claimant representation in the proposed VW emissions group litigation.
Following a “fundamental dispute” between the parties, the High Court ruled in November last year that Your Lawyers was entitled to an injunction preventing Harcus Sinclair from acting for its group of claimants for six years.
Slater & Gordon – which had been working with Harcus Sinclair – and Leigh Day were appointed as lead solicitors for the group earlier this year, with Your Lawyers joining them on the steering committee.
Delivering judgment in Crossley v Volkswagen Aktiengesellschaft and others  EWHC 2308 (QB), she said the VW defendants argued that if the GLO application had not been issued prematurely, or “continued to be advanced when it was inappropriate to do so”, it would have progressed without Harcus Sinclair being appointed lead solicitors, “on a largely agreed basis between the majority of the claimant firms and claimant groups, and with a measure of agreement” with the VW defendants.
“Any outstanding issues could have been addressed at a single hearing. It is submitted that all the work that occurred between October 2016 and 1 December 2017 was unnecessary, and incurred costs which the relevant claimants ought to pay to the VW defendants.”
The VW defendants applied for indemnity costs for four hearings between November 2016 and November 2017, an application to adjourn and preparation for a vacated hearing. The VW dealer defendants applied for indemnity costs for three of the four hearings.
The master recounted that there were only eight weeks between Harcus Sinclair first raising the prospect of a GLO and the GLO application being lodged, despite correspondence from VW’s lawyers “stating repeatedly that such an application would be unreasonable, premature, would cause unnecessary complexity and confusion, would increase the costs of the litigation, would be a breach of the pre-action protocol and that ‘We have received no sensible or co-ordinated proposals as to how the GLO might be managed’.
“Therefore… it was patently and objectively clear that the necessary and expected degree of coordination had not been achieved in that very short space of time, nor had there been any meaningful discussion with the VW Defendants, which could only have followed if the claimants had presented a united coordinated approach.”
Harcus Sinclair argued that the litigation involved a claim by over 50,000 claimants, represented by at 13 firms “with different aims and very differing ideas” as to how the litigation should be progressed.
“Some of those firms raised eccentric ideas and concerns, and the different firms had varying and sometimes conflicting views as to the causes of action and against which defendants to pursue them.
“Accordingly achieving co-ordination of those different firms has proved extremely challenging.”
Harcus Sinclair also said that, until early 2018, it had the only group with funding and “thus the only group in a position to prosecute the claim”.
However, Master Fontaine granted the VW and VW dealer defendants indemnity costs for all hearings apart from the one on 27 November 2017, since it was likely that a directions hearing would have been needed before hearing of the GLO application.
She added that a payment on account of costs had been agreed.