A Senior Costs Judge in the Mirror Group Newspapers (MGN) phone hacking litigation has recently held that the proportionality test does not prevent the recovery of costs that are higher than the sums in issue in litigation.
Whilst expressly stating that nothing in his judgment should be taken as an attempt to provide guidance in relation to the proportionality test, Master Gordon-Saker did make it clear that the level of damages recovered was not determinative of whether or not the costs were proportionate.
The case concerned group litigation brought by numerous celebrities including the likes of footballer Paul Gascoigne and singer Peter Andre as a result of having their phones unlawfully hacked by a national newspaper.
The agreed reasonable base costs for all the cases totalled £508,814 against which MGN’s offers totalled £225,000.00. In addition, common costs of £61,976 per Claimant had been agreed as proportionate and 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) in order to assess proportionality.
As regards the sums at issue, he 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”.
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 and statements in open court were also considered to be relevant factors.
Despite MGN’s attempts to suggest that the claims were primarily focused on the recovery of damages, Master Gordon-Saker 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…”. In his view the value of the non-monetary relief in issue in the proceedings was substantial and at least as great as the sums in issue.
The litigation was complex which was a further relevant factor as were a number of wider factors involved in the proceedings, such as 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 the costs claimed were proportionate to the matters in issue.
“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…”