Sayers v Merck SmithKline Beecham plc (X v Schering Health Care Ltd, Afrika v Cape Plc)

In group litigation, a costs-sharing order should not crystallise a claimant’s liability for common costs merely because the claimant discontinues during an interim accounting period. Liability for common costs should ordinarily be decided when the court determines the costs of the common issues, after their outcome is known, with permission to apply if no such trial occurs. A general order that common-issue costs will follow the event should not be made in advance, since the issues may prove academic or their significance may change. Settlements are different: where a defendant agrees to pay a settling claimant’s costs, the existing individual and several-share provisions may stand. Future-oriented costs-sharing orders in developing group litigation remain reviewable on their merits.

Three appeals concerned costs-sharing orders in group actions: the MMR/MR vaccine litigation, oral contraceptive litigation, and asbestos claims by South African workers against an English holding company. The orders had been made by Master Ungley and approved by Bell J, and the actions were being conducted under group litigation provisions in the Civil Procedure Rules. The claimants sought an advance order that common-issue costs would follow the determination of those issues. They also sought to defer the common-cost liability of discontinuers and settlers until that stage. The central questions were whether those presumptive provisions were appropriate and how common costs should be allocated when claimants left the group.

Appeals allowed in part. The judgment of the Court, substantially prepared by Lord Justice Longmore, dealt with the three appeals together.

1. Appellate approach. Costs orders are ordinarily discretionary, and the Court of Appeal remains reluctant to interfere: see Johnsey Estates (1990) Ltd v Secretary of State for the Environment [2000] EWCA Civ 6535. However, these were forward-looking orders intended to regulate future events in a developing group-litigation jurisdiction. The court therefore had to consider whether the orders were the most appropriate available, without treating them as having any special sanctity. The appellants retained the ordinary burden of showing that the orders were wrong or inappropriate.
2. Common issues. The court rejected the proposed presumptive order that costs of common issues should follow the result of those issues. Even if that outcome appeared likely, a common issue might prove wholly or largely academic. The court should remain free to make the order appropriate in the circumstances when the issues have been tried. The appeal was dismissed on this point.
3. Settlers. Settlers normally negotiate costs as part of the settlement. Where a defendant agrees to pay a claimant’s costs, paragraph 15(e) of Master Ungley’s order was appropriate. No alteration was required for settlers.
4. Discontinuers. Group litigation differs materially from ordinary litigation because generic issues may be tried separately from individual issues, and claimants may leave the group for varied reasons. A prima facie rule fixing a discontinuer’s recoverability and liability for common costs at the end of the relevant quarter was too blunt and gave defendants a premature advantage before the outcome of the common issues was known. Paragraph 15(f) was therefore amended by removing liability for the discontinuer’s share of common costs and providing that liability should be determined after the trial of the common issues, with permission to apply if no such trial occurred. The order remained unchanged for claims dismissed by order of the court.
5. Alternative proposal and final orders. The proposal that solicitors in lead actions should recover common costs offended the indemnity principle, under which a party awarded costs cannot recover more than it is obliged to pay. The proposal was not considered further. The respondents were ordered to pay 75 per cent of the appeal costs; there was no order for costs concerning Mr Fenwick’s clients, and permission to appeal to the House of Lords was refused.

• Court of Appeal (Civil Division): [2001] EWCA Civ 2017. The appeals were allowed in part. The proposed common-issues costs order was refused, the provision concerning discontinuers was amended, and the provision concerning settlers was maintained.
• High Court of Justice, Queen’s Bench Division: Master Ungley made the costs-sharing order in the MMR litigation, and Bell J approved it. Similar orders in the Afrika and oral contraceptive claims were also under appeal. No citation for the lower-court decisions is stated in the judgment.