PodCost with Nick Bacon KC

The first topic of discussion is litigation funding.

Nick begins by discussing the failure of the Litigation Funding Agreements (Enforceability) Bill, which was derailed by the general election. Drafting the bill and gaining cross-party support took significant effort. It is hoped that the new government will address the issues caused by the Supreme Court’s decision in PACCAR without getting bogged down and delayed by more wide-ranging reforms of the civil and criminal justice system.

Resolving the issues created by the PACCAR judgment is crucial, because many cases, especially in the Competition Appeal Tribunal, are currently stayed. Fixing PACCAR would clear these cases; otherwise, the arguments will need to be resolved by the senior courts.

During the bill's progress, it was agreed that there would be a separate review to consider whether litigation funders should be regulated. The Civil Justice Council (CJC) review is underway. Nick is part of the working group which aims to deliver an interim report by summer’s end and a full report next year – which will then be followed by a wider consultation. There is a consensus that litigation funding is vital for access to justice and the CJC review is focussing on regulation and not the principle of whether litigation funding should exist.

Nick and Jeremy agree that the timing of the Post Office enquiry was significant. It provided a working example of how litigation funding can provide access to justice for claimants who would not have been able to litigate without it.

Jeremy mentions that the European Union is currently looking at the regulation of third-party funding, but it is a long way away from introducing any form of regulation.

Andy references the first instance decision of the Competition Appeal Tribunal in the case of Gutmann v Apple, where the tribunal suggested that, depending on the facts of the case, funding and legal costs might be paid from and therefore dilute actual damages, allowing funders not to have to rely only on unclaimed damages for recovery of their premium. There are several other supportive judgments, but some argue that the Tribunal lacks this power. The trio discusses the increased risk for litigation funders and the knock-on effect on premiums if funders can only be paid from unclaimed damages.

Nick highlights that the Competition Appeal Tribunal is currently beset by appeals and judicial reviews which cause delays and are “not good for business”.

Nick, Jeremy and Andy deal in short order with two costs decisions which illustrate the approach of the judiciary to deciding costs issues:

1.             International Game Technology plc and others v The Gambling Commission and Others

A preliminary issue was decided in favour of the Defendant and the Defendant was awarded its costs. A payment on account of £2.1M was ordered in favour of the Defendant, which represented about half of the total claim for costs. Lord Justice Coulson, after reviewing the case law, concluded that he was “obliged to identify an amount which ‘on any view’ the receiving party would recover on assessment”.

Whilst it is difficult to distil principles from this decision, if a receiving party can provide more than bald figures to the court and can present their costs in a way which the court will appreciate, it is likely to fare better when it comes to the amount of a payment on account.

2.             Otto and Others v Inner Mongolia Happy Lamb Catering Management Company Ltd and Others 

This was the decision of HHJ Matthews on the summary assessment of the costs of an application for an interim injunction. It appears to be the only costs decision to date which considers whether remote working has an impact on guideline hourly rates.

It seems that litigators are more likely to be working in their offices or to have hybrid working arrangements than we thought would be the case in the immediate aftermath of the pandemic. The possible effect of North-shoring is considered, and Andy predicts that the type of work (heavy commercial vs. lower value) may become more significant than the location of the work (e.g. Leeds vs. Canary Wharf). Returning to expense of time calculations seems unlikely.

Lastly, Nick, Jeremy and Andy examine the recent budgeting decision in the Pan NOx Emissions Litigations. Nick and Andy are both involved in this group litigation where there was ‘standing room only’ for costs counsel and costs lawyers during the three-day budgeting hearing which took place in June.

The litigation involves alleged emissions defeat devices in cars. If liability is established, the damages are projected to be modest, but the costs will be ‘extraordinary’. It is a classic example of a case where the costs of funding and the costs of litigation are, in terms of the economics, front and centre.

Nick represents many of the Defendants, and Practico are instructed by five of the vehicle manufacturing groups. In Nick’s words, the work required was ‘off the scale’ and the case has ‘set new standards.’ It has been an ‘excellent display’ of how the Defendants were able to co-ordinate and collaborate in the lead up to what was a ‘remarkable’ hearing which resulted in the Claimants’ budgets being reduced by 75%.

All agree that the case should dispel the notion that more typical cases cannot be budgeted or that budgeting very large cases is a waste of time.

Nick concludes by praising the court’s level of preparedness in this complex case. Senior Costs Judge Gordon-Saker sat with Mr Justice Constable, the Managing Judge. They took away the submissions made by the parties and in a very short time arrived at the figures to be allowed. It was a powerful display of what can be achieved even in the most challenging of circumstances.

Our next PodCost guest will be the Senior Costs Judge Andrew Gordon-Saker, and this case may very well be mentioned again during that discussion.

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