Costs discounted by 60% to reflect issues on which claimants did not succeed (Various Claimants v Morrisons)

The High Court’s judgment in Various Claimants v Wm Morrison Supermarkets is significant in that this is a group litigation case involving a costs award arising out of a data protection breach. The following analysis considers the factors to be taken into account in making a proportionate costs order in cases where the claimant is not successful on all its heads of claims and the balancing exercise required in the court exercising its discretion. Written by Jon Lord, associate at Weightmans LLP.

Various Claimants v Wm Morrison Supermarkets [2018] EWHC 1123 (QB)

What are the practical implications of this case?

There is no prescriptive formula when it comes to the court exercising its discretion in making a costs order under CPR 44.2. The very first line of Langstaff J’s findings was ‘The award of costs is discretionary’. The range of outcomes was therefore broad—so broad that each party was able to argue that the balance of costs should be in their favour.

The judgment also underlines the general principle that, even where there are distinct issues decided in different ways, the court should first consider (as it is obliged to do under CPR 44.2(6) & (7)) whether it is practicable to order costs to or from a certain date or make a proportionate costs award in order to save complication at detailed assessment.

In this case, neither party contended for an issue-based costs order—the competing arguments centred on how the judge should exercise his discretion.

Another important factor, which does not appear to have been considered in this case, is the application of CPR 3.18 to the assessment of costs. The parties’ costs were managed via budgets in this case and an issue-based order may have rendered them almost redundant as a useful reference point at detailed assessment. Approved budgets may remain effective where a proportionate order is made.

What was the background?

5,518 claimants out of a potential 99,998 employees of Morrisons brought an action arising out of the breach of the Data Protection Act 1998. An employee had made publicly available the personal details of all Morrisons employees—something for which he was convicted in the criminal courts and received a custodial sentence.

The claimants’ claim on liability had two aspects. Firstly they claimed that Morrisons were directly liable under common law (misuse of private information) or for breach of confidence, an equitable action (together, the claims in respect of direct liability). Secondly that Morrisons were vicariously liable for the breach by an employee (the vicarious liability claim).

What did the court decide?

Following a ten day trial, the judge had held that the claims in respect of direct liability failed but the vicarious liability claim succeeded.

The claimants argued that they were successful—the starting point should be that they were entitled to the costs of the entire action. If any discount was warranted it should reflect that the bulk of the costs were common to both liability aspects. They asserted that no more than 20% of the costs were incurred on the direct liability case.

Morrisons argued that the costs of the direct liability claims outweighed those of the vicarious liability claims and that Morrison’s success on that issue should be reflected in the balance of a costs order being made in favour of Morrisons.

The claimants, having succeeded in obtaining a judgment on liability, were judged to be the successful party in accordance with CPR, part 44.2(2)(a). The starting point was therefore that they should receive their costs.

Morrisons’ argument that a balance of costs should be in their favour was dismissed as paying insufficient regard to the starting point.

In arriving at the decision to award the claimant only 40% of their reasonable costs, the judge (in deference to the parties’ arguments) examined the extent to which the liability issues overlapped and where the parties’ attentions had been focused in pleadings and evidence. The judge not only looked at the issues at trial and time spent on each issue there but examined the pleadings, witness evidence and disclosure.

The different cases on liability were said to be sufficiently distinct to be regarded as substantially separate issues but there was some overlap. The claimants’ argument that much of the time was common to both issues was said to be ‘overstated’.

Out of the factors in CPR 44.2(5), the judge took account of the claimants’ conduct in pursuing the direct fault-based claims to the extent that, by the trial, the claimants could have adopted a more focused approach. The pre-trial position was not as clear cut. In the judgment, the claimants were described as having had the indulgence of pursing claims which were tenuous, at unnecessary length and pursuing disclosure related to those claims.

Case details

• Court: High Court, Queen’s Bench Division
• Judge: Langstaff J
• Date of judgment: 16 May 2018

Jon Lord is an associate at Weightmans LLP, and a member of LexisPSL’s Case Analysis Expert Panel. Suitable candidates are welcome to apply to become members of the panel. Please contact caseanalysis@lexisnexis.co.uk.