Destination is Litigation
This article which concerns the ruling in Weaver v British Airways Plc [2021] EWHC 217 (QB) first appeared in the April 2021 edition of Litigation Funding magazine and is reproduced here with their kind permission. For further details on how to subscribe click here >
Background
The litigation concerns claims for damages brought against the Defendant, British Airways ("BA"), as a result of a cyber-attack on BA's electronic systems, identified in September 2018. That attack affected systems containing customer personal data on BA's website and on its mobile application. BA denies the claim in its entirety and, specifically denies that the alleged breaches were causally relevant to the compromising of customer data and whether any of the Claimants had suffered compensable harm because of the breaches.
The matter went before Mr Justice Saini on three occasions for a Costs & Case Management Conference (CCMC) to address a number of issues including the recoverability of advertising costs incurred, or to be incurred by the Claimants' solicitors, in publicising the claims in the media along with the level of individual costs to be allowed for each claimant. A particular issue of consideration was how should "updating" or "round-robin" letters be treated.
Briefly, so as to get individuals to join the litigation, the firm representing the Claimants had incurred costs in the sum of £443,000, by undertaking a very substantial media campaign and then sought an additional £557,000 on future advertising. The Court was therefore asked to consider whether the costs were recoverable as a matter of principle and could be claimed within the costs budget.
On the issue of "round robin" emails, the Claimants had budgeted for "a minimum of six [emails]… claimed at a cost of one minute per update per claimant." The cost of drafting the email itself had been claimed in the common costs budget, therefore this time was simply for sending the email itself. To put this cost into perspective, if there were 40,000 claimants, the claim for the physical act of sending 6 emails would have equated to a cost £12m (including VAT) at the grade D rates claimed of £250.00 per hour.
Claimants' position
The Claimants said there were well established principles and relied upon a number of cases including Ross v Owners of the Bowbelle (Review of Taxation under RSC Order 62 Rule 35) 2 Lloyd's Reports 196 (Note), as well as the well-known case Re Gibson's Settlement Trusts [1981] Ch 1789, which set out that the advertising costs constituted work done "for use and service in the litigation". In addition, it was argued that the costs were relevant to the issue in the claim and attributable to the paying party's conduct.
On the issue of the emails the Claimants said that there was an evidential basis for allowing 1 minute per Claimant to send an email.
Defendants' position
On the other hand, the Defendant argued that the advertising costs were not recoverable and relied upon the principals provided in the Court of Appeal decision of Motto v Trafigura [2012] 1 WLR 657 (CA). The Defendants' sought to distinguish costs incurred pursuant to paragraph 41 of the Group Litigation Order ("the GLO"), which made provision for the lead solicitors to take reasonable steps to publicise the GLO and advertising costs, which Lord Neuberger MR at paragraph 110 precluded.On the issue of the emails, the Defendants referred to Langstaff J's judgment in Various Claimants v Morrisons (unrep.12 January 2017) at paras.22-27.
Decision
In Mr Justice Saini's judgement, on the issue of advertising this matter drew direct comparisons to the case before Lord Neuberger MR and as a result he found that as a point of principle, the advertising costs claimed were not recoverable costs but rather "general overheads". He went on to say "[T]he costs which have been incurred and which are to be incurred by the Claimants solicitors are, in my view, essentially general overheads, albeit that they are incurred in the context of a GLO. They [are] more accurately described as the costs incurred by the claimant solicitors of "getting the business in". They are not for the account of BA, should BA be unsuccessful in the litigation."
In respect of the "round robin" emails the Judge determined there was no evidential basis for adopting a per capita approach, as the cost of drafting the email was already claimed within the generic costs budget and therefore, all that was left was the act of sending the email. He was not satisfied that the costs were reasonable or proportionate and that it should be straightforward to send these emails to Claimants whose details were already stored on the case management system. Accordingly, nothing was allowed for the sums claimed for these updating emails.
Conclusion
The judgment addresses a number of important issues in for, the two discussed above being reaffirmation of the principle that marketing expenses are not costs and the consideration of how to treat electronically generated generic letters.
The former decision makes clear, when dealing with group litigation matters that, whilst costs are recoverable for publication under CPR r. 19.11(3)(c), there can be a clear and expensive distinction between costs incurred in publishing the GLO and substantial media campaigns, used by the Claimants' solicitors for the purpose of getting clients to 'sign up'.
The latter makes clear that, with the advent of case management systems, automation and email, there is certainly a case to be made that where there is absence of any input from a fee earner an email/letter out may not be chargeable.
More broadly, could this be the beginning of the end of the six-minute unit charge in matters other than multiparty claims? Now that there is the application of technology in almost every practice, available at a price-point that isn't prohibitive, and with the increase in the use of time saving software, such as voice recognition software, there is at least an argument that the six-minute unit has had its day.
Contact Simon Murray, William Mackenzie or Chris Stephenson for more information.
