AB & Ors v British Coal Corporation & Ors

In a court-supervised mass claims scheme, the supervising court may require compensatory financial consequences for delay where this is necessary to give effect to the scheme and further the overriding objective. This power may exist even though the arrangements are not formally group litigation. The payment must remain compensatory and may be calculated by an agreed or standardised formula. The supervising judge, rather than the appellate court, should devise the appropriate scheme. Contractual costs provisions are construed according to the current costs regime, so they may permit success fees unless the agreement expressly excludes them.

Thousands of former British Coal employees pursued vibration-induced injury claims through a claims-handling agreement between the Department of Trade and Industry and the Claimants’ Solicitors Group. Court proceedings were stayed and the claims were supervised through practice directions and review hearings. Mitting J ruled that he lacked jurisdiction to require interest payments for claims delayed by Capita, and held that the agreement permitted recovery of success fees. The claimants appealed on the supervising judge’s jurisdiction and the defendants appealed on success fees. The central issues were whether the court could impose compensatory financial consequences for delay and how the agreement’s references to costs should be construed.

Disposition. The Court of Appeal dismissed both appeals. The claimants succeeded on the jurisdictional issue, but the court declined to make the specific general order for interest sought. The defendants’ appeal against the success-fee ruling was dismissed.

1. Supervisory power. Pill LJ held that the claims-handling agreement, the stays, the practice directions and the court’s continuing supervision showed a sustained intention to resolve the claims outside ordinary court proceedings. Although the scheme was not formally group litigation and no group litigation order had been made under the Civil Procedure Rules 1998, the agreement had to be read in that procedural context. The fairness, efficiency and overriding-objective considerations applicable to group litigation applied by analogy.
2. Financial consequences for delay. The supervising judge could require a scheme involving payments to claimants whose claims were stalled. Such payments were compensation for being kept out of an award, not an unenforceable contractual penalty. Because the scheme used standardised compensation, an agreed formula could be appropriate and compensation need not be calculated scientifically in every case. The defendants’ concessions that delay could give rise to contractual damages, recoverable before the supervising judge without a fresh claim form, reinforced that conclusion.
3. Proper forum. The parties should attempt to agree the procedure. If they failed, the supervising judge was the appropriate decision-maker because of his wider knowledge of the litigation. The Court of Appeal should not impose a general order for interest at 8 per cent or any other rate.
4. Success fees. The word costs in the 2005 agreement bore its current meaning under the Civil Procedure Rules 1998, rather than being frozen at the meaning it had in 1999. The costs regime therefore permitted the possibility of a success fee. Section 12.1 did not create a blanket exclusion, and the supervising judge could consider proper success fees, potentially with guidance from a costs judge or through test cases.
5. Supplementary observations. Rix LJ considered that the provision requiring unsuccessful claimants to bear their own costs qualified the general meaning of costs, so success fees should not include the costs of unsuccessful claims. Arden LJ emphasised that monetary sanctions under the Civil Procedure Rules 1998 are ordinarily compensatory in a broad sense and that the supervising judge’s powers under CPR 3.1(m) were wide, subject to acting judicially. She expressed no concluded view on Rix LJ’s detailed costs qualification because it had not been fully argued.

1. Court of Appeal (Civil Division): dismissed both appeals. It held that the supervising judge had jurisdiction to require a compensatory scheme for delayed claims, but declined to make the particular general interest order sought. It upheld the construction permitting consideration of success fees.
2. High Court, Newcastle-upon-Tyne District Registry (Mitting J): on 12 April 2006, held that he lacked jurisdiction to order interest for claims stalled at Capita and held that the claims-handling agreement permitted recovery of success fees.