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	England and Wales High Court (Technology and Construction Court) Decisions
You are here: BAILII >> Databases >> England and Wales High Court (Technology and Construction Court) Decisions >> Claimants v Corby Borough Council [2008] EWHC 619 (TCC) (01 April 2008) URL: http://www.bailii.org/ew/cases/EWHC/TCC/2008/619.html Cite as: [2008] EWHC 619 (TCC)

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IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
TECHNOLOGY AND CONSTRUCTION COURT

		Royal Courts of Justice Strand, London, WC2A 2LL
		April 1st 2008

 


Mr. Justice AKENHEAD:

Introduction

1. The parties apply for costs capping orders in this Group Litigation. The primary issues relate to the amount of the capping.
2. The litigation relates to claims by children born to mothers who lived in or close to Corby during the 1980s or into the 1990s. Corby Borough Council ("the Council") undertook at that time a substantial reclamation at and regeneration ("the Works") of the former site or sites formerly occupied by the British Steel Corporation in and around Corby. It is alleged that the Council did this work negligently with the result that various chemicals, toxins and other agents escaped or were in some way transported so that pregnant mothers became affected by such materials with the consequence that their babies were born with various physical deficiencies.
3. Given the need to investigate the way in which the Works were done, this litigation, started in 2006, was transferred to the TCC and allocated to me as the judge designated to case manage and try the case. The procedural steps and evidence gathering stage is proceeding with witness statements and expert reports due for exchange over the next 3-4 months.
4. The case is clearly a complex one. Although a duty of care is admitted by the Council, breach of duty is denied. The alleged breaches span a period of about ten years. There are major issues as to causation of the deformities.
5. There will be numerous witnesses, both lay and expert. There will be some 5 experts for each side ranging from waste management to toxicology, epidemiology, toxicology, air pollution/safety risk and medical. There is not an exact synchronicity between the expert disciplines on each side.
6. The trial is listed for hearing on liability and causation commencing on 16 February 2009 with a time estimate of 38 working days, or 9 TCC weeks. This trial will not address the individual Claimants' claims as such but will deal with generic issues including findings as to any breaches of duty in connection with the Works and the extent, given the timings, extent and scope of any breaches, that such breaches could in practice cause the types of disability with which the Claimants' cases are concerned. I will call this "The Generic Issues" trial.
7. The issue of cost capping was raised at the first Case Management Conference held before me in London on 18 January 2008. A hearing was fixed in Manchester on 21 February 2008 to address cost capping. That proved somewhat abortive because it emerged that each party had put in costs estimates upon a different basis, with the Claimants' estimate merely addressing the costs up to the end of the Generic Issues trial and that of the Defendant providing for all the costs including those relating to the individual Claimants' issues. However, that hearing produced agreement between the parties that in principle there should be costs capping orders and that after the receipt of further written submissions I could and should deal with the costs capping issues without any further hearing. Further written submissions were submitted.
8. After a further Case Management Conference on 12 March 2008 in Liverpool to deal with more general matters, I asked for comments upon several queries which I had on the costs capping issues which I received by 14 March.

The law

9. The law and practice on costs capping is becoming clearer and more established. It is common or at least not uncommon for costs capping orders to be made in group litigation, probably because in such cases it is even more important than in others for the parties to know and budget for the consequences of losing the case and having to pay the assessed costs of the "winning" party.
10. The power to order costs capping drives from Section 51(3) of the Supreme Court Act 1981 which states that a court shall have:

"… full power to determine by whom and to what extent costs are paid."

This is reflected in CPR 3.1(2) (m) which gives the court the power to make:

"…any…order for the purpose of managing the case and furthering the overriding objective."

11. In AB v Leeds Teaching Hospitals NHS Trust [2003] EWHC 1034, Gage J (as he then was) stated:

"In my judgment, in cases where [group litigation orders] are concerned the desirability of ensuring that costs are kept within bounds makes it unnecessary for the court to require exceptional circumstances to be shown before exercising its discretion to make a costs cap order. I note that in claims in [public interest claims] it has been held that there must be exceptional circumstances before a pre-emptive order for costs is made…However, I see no reason for such a requirement where a costs cap order is sought in a [group litigation order] particularly where there is a risk that costs may become disproportionate and excessive" (Paragraph 19)

"Past experience shows that the costs in group actions have a tendency to spiral out of control…In my judgment the court has a clear duty in such cases to manage the litigation from an early stage to manage the litigation in such a way that one or other party does not allow costs to spiral out of control." (Paragraph 23)

12. It is usual practice to make mutual costs capping orders (see Tierney v News Group Newspapers Ltd [2006] EWHC 3275). The parties have accepted here that each should be subjected to a cost capping order.
13. Costs capping orders should be made prospectively applying to future costs as opposed to costs already incurred (see for example King v Telegraph Group plc [2005] 1 WLR 2282 at Paragraph 80). The parties have agreed here that the costs capping orders should apply as from 31 January 2008 to reflect the fact that the future costs estimates have been prepared from that date.
14. It is suggested that the task of setting a cap should be done by or assisted by a costs judge (see e.g. King at Paragraph.94). During argument, I suggested that this could well delay matters possibly significantly, and, as the TCC, being a specialist court with extensive experience as to the level of legal and expert resources and of their cost, could well address the level of the costs capping. I could proceed on that basis. I understood that the parties generally did not press the suggestion.
15. There is some authority for the proposition that the Court should not necessarily assess the level of costs for one side by reference to the costs estimate of the other although costs estimates of the other party can be a good guide (see AB). I will and do bear this in mind. Different levels of charging may be justified in relation to solicitors' rates, Counsels' fees and experts' charges to reflect their level of expertise and different times necessary to seek to establish a particular party's case or defence.
16. Various cases suggest that a very detailed exercise can be done in assessing the level of costs to be capped, almost but not quite akin to a costs assessment and that costs can be capped not only overall but by references to individual costs centres.
17. In this case, upon my suggestion, the parties accept that an overall costs cap be fixed, albeit, in fixing such a cap, I must have regard to the constituent elements which make up each parties' submitted costs estimates. This is a sensible approach at least in this case because it is impossible to predict with absolute precision or accuracy how much individual cost heads will end up costing. An overall costs cap allows an element of flexibility as some costs heads may go up or down in practice.

The level of costs in this case

18. It is worth noting what the parties' costs estimates have been as the case and even this application have proceeded:

A. The Claimants' Estimates

(i) 21 June 2007: £421,142 incurred and £423,360 to be incurred. Total £844,502

(ii) 10 December 2007: Total: £1,213,509.

(iii) 31 January 2008: £662,876 incurred and £899,561 to be incurred. Total: £1,562,437. This only covers the costs up to the end of the trial of the Generic Issues

B. The Defendant's Estimate

(i) 25 June 2007: £392,174 incurred and £1,110,772 to be incurred. Total: £1,502,946.

(ii) 10 December 2007: £684,445 incurred and £1,546,042 to be incurred. Total: £2,232,487

(iii) 31 January 2008: £922,385 incurred and £1,591,600. Total: £2,514,025. This relates to all costs up to the end of all issues, that is, generic and quantum issues.

(iv) 31 January 2008: £922,385 incurred and £1,455,647 to be incurred. Total: £2,378,647. This relates to cost up to the end of the trial of the Generic Issues.

19. I have formed the view that it is sensible to apply the costs capping order only in relation to the stage up to the end of the trial of the Generic Issues. This is because it is more difficult to estimate the likely cost of the post Generic Issues stage and because, if the Claimants fail in these proceedings, such costs are irrelevant. If they succeed, then there would be likely to be a much increased chance of the cases resolving themselves. The parties' cost estimates for the post Generic Issues stage are wildly divergent.
20. I have been informed that each party has agreed a Conditional Fee Agreement with its solicitors and that the Claimant has taken out some form of litigation costs insurance. It is accepted, sensibly, that the costs capping should not be on the basis of what either Conditional Fee Agreement would allow the successful party: any costs award will allow, if at all, the success uplift in addition to any costs cap. I do not take into account the Claimants' insurance.
21. It is not surprising that the two latest costs estimates from the parties differ. The Defendant's estimate is likely to be higher for instance because it has many thousands of documents relating to the Works and it has to take detailed statements from many witnesses involved at that time, whilst the Claimant's documents are much more limited and their witness statements (or most of them) will not address the execution of the Works.
22. There are other differences between the costs estimates. For instance, the Claimant's estimate includes for an impending Court of Appeal hearing in April 2008 whilst the Defendants' does not. The Claimants' estimate allows for travel and accommodation costs for solicitors and others whilst the Defendants' does not.
23. It is therefore necessary to make an informed but broad brush approach to the amount of the costs caps to be fixed upon each of the parties.
24. Each party has spent much effort in seeking to undermine the other's cost estimate. I have found that detailed exercise in some respects unhelpful. Thus, Mr Levene for the Claimants has sought to justify why the Defendants' comparable cost estimate of post January 2008 costs should be £657,835 compared with the sum of £1,455,647. This has been done by reference to each cost item in the Defendant's estimate and includes even two figure sum reductions.
25. One can, and I do, draw some assistance from an analysis of the current and earlier costs estimates. One expects all costs estimates which parties submit should, as far as reasonably practicable, be reasonably realistic. Although such estimates are not however to be taken necessarily as a precise calculation in respect of future costs, the Court can assume that they are put forward in good faith as the best estimate at the time. The Court can legitimately be sceptical at a party whose cost estimate change significantly without a good logical reason.
26. I am somewhat sceptical about the Defendant's latest cost estimate, albeit not as to every head of future costs:

(a) It's December 2007 estimate, which was for the disposal of all issues and not just the "Generic Issues", was £1,546,042 for future costs and it is now £1,591,600 albeit some further £300,000 has been incurred between 10 December 2007 and 31 January 2008 and latterly falls into the category of past costs.

(b) Something "odd" has happened to Counsels' fees over the various estimates. For all Counsel fees in December 2007, £400,000 was allowed whilst now some £600,000 is allowed up to the end of the Generic Issues trial. That is a very substantial increase which is not simply explicable by an assertion that the earlier estimates were base upon a shorter trial and a smaller number of Claimants. A 36 day trial has now been allowed. But it must have been obvious that, with the 40 witnesses earlier estimated from the Defendant alone, this was always going to be a substantial trial. The number of claimants has increased but it has long been anticipated that it would rise. So far as I can ascertain, only £37,500 of the overall element for Counsels' fees relates to the individual quantum trial relating to 23 Claimants; that seems to me to be very low indeed and casts doubt on the allocation of Counsels' fees to the end of the Generic Issues trial.

(c) Some 1465 hours are asserted for future documents work with 570 of them being partner's time. By the end of January, one would have expected much of the work on documents to have been done. Indeed under that rubric in the costs incurred section of the latest estimates some 3,500 hours have been worked on this aspect. Whilst there are no doubt documents running into the hundreds of thousands, I doubt very much whether another 1465 hours on documents are needed. It would be most unlikely that post 31 January 2008, partners' rates at the level suggested would be justifiable on costs assessment for much of such work.

(d) Whilst I do not doubt that the solicitors' rates put forward in the estimates represent what has been agreed, I have some doubts as to whether an uplift of 125% on the applicable base rates for Manchester would be justifiable on any ultimate costs assessment. The chargeable rates were approximately doubled in May 2007, doubtless by agreement.

(e) There is generally a substantial amount of partner's time in the costs estimate. Whilst that is a matter for the Defendant, it is less likely that such a large amount of time at partner's rates will be allowed on any final assessment of costs.

(f) The costs of witness statement preparation seems very high given that out of 20 proposed witnesses 12 witness statements have been served. 845 hours are estimated for this further work.

There are also some missing items such as solicitors' expenses for the trial and the costs of the impending Court of Appeal hearing.

27. There are some criticisms of the Claimants' estimates such as the fact that too much partner time is estimated. Similar considerations apply with regard to this as set out above.

Decision

28. So far as the Claimants are concerned, I have formed the view that it is broadly acceptable but, to reflect the view about the partner time, I have formed the opinion that a reduction of 5% would be a legitimate cap to impose subject to a contingency to which I will return below. This reduction would result in a figure of £855,000 rounded up.
29. In respect of the Defendant, the reduction to reflect all the comments set out above must be more than 5%. I consider that a reduction of 20% is reasonable, subject to the question of contingency. That would produce a sum of £1,175,000 rounded up to reflect the Court of Appeal costs and trial solicitors' expenses.
30. The parties agree that it would be sensible to add a contingency to these estimates. A contingency is a fair and sensible allowance to make given the nature of the litigation and the likely encountering of expenditure or increase in levels of expenditure which is probably inevitable even if it can not be specifically now foreseen. I suggested the figure of 10% to the parties as a possible allowance, but, having considered further emailed submissions on the matter, that is too high in circumstances where the parties are able to provide relatively precise estimates of future costs. I consider that 5% is realistic.
31. Thus the cost caps which I will impose are as follows:

A. The Claimants: £900,000

B. The Defendant: £1,250,000

As will be apparent, I have rounded these figures up.

32. Of course the parties have liberty to apply to the Court for adjustment of the costs caps if, unforeseeably and beyond the reasonable control of the party in question, circumstances so change or new circumstances arise such that there is a genuine need to adjust the figures.
33. It was suggested by the Defendant that I should make a provisional cost cap. I see no advantage to that as it will simply stretch out the costs capping exercise which has gone on long enough, as it is.
34. The Claimants' cost cap is inclusive of VAT. The Defendant's cost cap is exclusive of VAT on the basis, as I understand, that no VAT will be payable by the Claimant on the Defendant's costs if a costs order is made in favour of the Defendant. I will give permission to apply however on this issue if I am wrong in my understanding. Such application should be made by 15^th April 2008.