England and Wales Court of Appeal (Civil Division) Decisions

“It is now generally recognised, by judges, practitioners and consumer representatives, that there is a need for a new approach both in relation to court procedures and legal aid. The new procedures should achieve the following objectives:

(a) provide access to justice where large numbers of people have been affected by another’s conduct, but individual loss is so small that it makes an individual action economically unviable;

(b) provide expeditious, effective and proportionate methods of resolving cases, where individual damages are large enough to justify individual action but where the number of claimants and the nature of the issues involved mean that the cases cannot be managed satisfactorily in accordance with normal procedure;

(c) achieve a balance between the normal rights of claimants and defendants, to pursue and defend cases individually, and the interests of a group of parties to litigate the action as a whole in an effective manner.”

In relation to the costs of multi-party actions Lord Woolf said:-

“57. If the treatment of costs is not examined from the outset, the result is either subsidiary litigation or protracted problems when the matter comes to taxation. My general proposals for information on costs to be made available at every stage when the managing judge is involved are all the more important in relation to multi-party actions, where many claimants will be legally aided and have no direct control over costs and where costs can escalate dramatically. At every stage in the management of the MPS [multi-party situation] the judge should consider, with the help of the parties, the potential impact on costs of the directions that are contemplated, and whether these are justified in relation to what is at issue. Parties and their legal representatives, as in other cases on the multi-track, should provide information on costs already incurred and be prepared to estimate the cost of proposed further work. It has been suggested that such examination should occur at intervals of three months. That must be for the managing judge to determine in each individual case.”

“15. Save as otherwise ordered:

(a) The liability of each party for and each party’s entitlement to recover costs shall be several and not joint.

(b) Individual costs are those costs and disbursements incurred for and/or in respect of any individual Claimant in relation to matters which are personal to each such Claimant, excluding costs and disbursements incurred for and/or in respect of any claims which may hereafter be selected as lead cases.

(c) Common costs are all costs and disbursements other than individual costs.

(d) The common costs incurred in any quarter by the Claimants and each of the Defendants are to be divided by the number of Claimants pursuing their claims on the first day of the quarter.

(e) If in any quarter a Claimant compromises his/her claim with any one or more of the Defendants on terms which provide for such Defendants to pay that Claimant his/her costs then that Claimant shall be entitled to recover his/her individual costs and his/her several share of the common costs incurred by the Claimants up to the last day of that quarter.

(f) If in any quarter a Claimant discontinues his/her claim against any one or more of the Defendants or it is dismissed by an Order of the Court whereby that Claimant is ordered to pay such Defendants’ costs, then he/she will be liable for his/her individual costs together with his/her several share of the common costs incurred by such Defendants up to the last day of that quarter.

(g) The first quarter under this costs-sharing order shall run from 14 April 1999.

(h) Each of the Claimants shall for the purposes of this Order be treated as if he/she had been a Claimant in the actions as from 14 April 1999.”

It will be seen that the provision for quarterly costings mirrors the recommendations of paragraph 57 of Lord Woolf’s report.

“The order for payment of common costs and disbursements between the parties following any trial of the common issues whether by trial of the lead actions or otherwise shall follow the event and not depend upon the outcome of individual cases or of issues individual to the lead actions unless otherwise ordered.”

and for a provision in the following form to be substituted for (e) and (f):-

“In the event of any claimant discontinuing his/her action or settling his/her action any liability for common costs and disbursements of or in respect of such a claimant shall be determined at the trial of the common issues in the lead actions with permission to apply if such trial does not take place.”

We shall call them the “Costs by common issues order” and “the discontinuers and settlers order” respectively

Approach of this court

Brief history of cost-sharing orders in group litigation

“Cost Sharing

In principle the plaintiffs, individually and as a group, and the defendants need to know the basis upon which costs liabilities would be spread if an order for costs were made or came into force. The underlying principle should be that costs which it is appropriate to apportion between or for the benefit of plaintiffs should be divided by the total number of relevant plaintiffs. Costs which it is appropriate to apportion could include (a) the defendants’ costs, if one or more of the plaintiffs becomes liable to pay them, and (b) plaintiffs’ central administration costs and other plaintiffs’ costs which are incurred for the benefit of plaintiffs as a whole, rather than for individual plaintiffs. Any plaintiff who joins the group in the future will acquire the benefit of work done in the past and should become potentially liable for apportionable costs liabilities going back to the beginning. Thus the defendant should be potentially liable to each individual plaintiff for that plaintiff’s proper individual costs and for a fraction of the plaintiffs’ central costs whose denominator is the number of plaintiffs in the group. Each plaintiff should be potentially liable for a fraction of the defendants’ costs whose denominator is the number of plaintiffs in the group. If plaintiffs leave the group by settlement or discontinuance before the conclusion of the litigation when a general costs order is made, a calculation should be made to withdraw from the plaintiffs’ central costs and from the defendants’ costs a fraction of each of the then totals whose denominator is the number of plaintiffs then in the group before the departing plaintiff leaves. If the departing plaintiff is to pay the defendants’ costs, the amount will be the amount of the defendants’ costs so withdrawn. If the defendant is to pay the departing plaintiff’s costs, the amount will be the amount withdrawn from the plaintiffs’ central costs plus the departing plaintiff’s proper individual costs. All this would be subject to taxation. This means that costs calculations will need to be made on a quarterly basis, and both the plaintiffs centrally and the defendants need to keep records appropriately.”

“Costs by common issues order”

Discontinuers and settlers order: (1) Settlers

(2) Discontinuers

(1) that group actions were almost inevitably issue-driven in the sense that the court would decide to try in the first instance common issues of fact and/or law as the only practicable way of achieving a fair outcome;

(2) that orders for costs after the trial of common issues would usually (or often) follow the event of such issues;

(3) that it was more consonant with overall justice that orders for costs in relation to common issues should await the determination of such issues rather than being prescribed in advance in the case of discontinuing claimants who might have any number of reasons for discontinuing;

(4) that if the traditional form of order in relation to discontinuing claimants were to be the usual order, even though it was capable of being varied to meet a particular objection, it was an unfair advantage to defendants, who might lose on such common issues, that they should collect orders exempting them from paying costs of those who had discontinued (and indeed orders entitling them to costs in their favour) on the way to that defeat;

(5) that the traditional order was also unfair to claimants, if the class of claimants was enlarged by late joiners, since the discontinuer would be paying a larger proportion of costs as calculated at the end of the relevant quarter than he would if the calculation was made when the trial was completed or the case were settled.

(1) that the provisions for discontinuing claimants made in Master Ungley’s order was in a standard form and had been approved by judges experienced in the field of personal injuries for many years;

(2) that costs orders were always a matter for the judge’s discretion and should not be reversed unless the judge had misdirected himself in law or was clearly wrong;

(3) the fact that these actions were group actions was no reason for departing from the normal rule that a discontinuer should pay the appropriate costs of the action to date;

(4) that claimants would, in any event, want to know the extent of their liability if they proposed to discontinue and should be able to leave the action, pay the costs incurred and forget about it;

(5) that, if no decision as to the discontinuers’ liability for common costs was made until common issues had been determined, there was no incentive on the claimants or their funders to weed out weak cases for early disposal;

(6) that there would be a considerable risk of satellite litigation at the time when costs of common issues came to be determined; if for example it was negligent to market or prescribe a drug or to expose workers to asbestos products only after a certain date, it might be necessary for further issues (eg the degree to which the drug was taken or the workers were exposed before and after the date) to be resolved only for the purpose of determining the incidence of costs

Conclusion on Discontinuers

“In my view, with all these factors in mind, effective case management requires that the parties have, at this early stage, a clear idea of the costs that they will be liable for, subject to any later order, and that provision is made for those persons likely to discontinue or settle early. Master Ungley’s costs order achieves this. Moreover it promotes discipline in the scrutiny and early abandonment of any weak claims. The order proposed on behalf of the Claimants, on the other hand, would leave the liability of any Claimant who discontinued or settled his action at large in respect of his liability (if any) for common costs and disbursements in respect of his claim. It would remain at large until trial of common issues, with liberty to apply if such a trial did not take place. In the circumstances of this case it might remain at large for a considerable period. Like Master Ungley, I regard that as highly undesirable.”

“liability for common costs and disbursements to be determined following the trial of common issues, with permission to apply if such trial does not take place.”

To this extent the claimants’ appeal will be allowed. The orders similar to Master Ungley’s that were appealed in the Afrika and OCP claims need amending in like form. We make no decision about claims which are dismissed by order of the court and there is no reason why Master Ungley’s order should not remain as it is in order to deal with such cases.

Claimants’ Alternative Proposal