Gower Chemicals Group Litigation v Gower Chemicals Ltd & Anor

Under paragraph 40.14 of the Costs Practice Direction, a Costs Judge has a discretion to require a receiving party to elect between disclosing a privileged document and relying on other evidence. The discretion should be exercised flexibly and does not require a rigid, staged procedure.

An election may be required where a real and relevant issue arises, particularly where substantial costs are claimed for undisclosed expert reports and the paying party reasonably seeks to inspect them and comment. Fairness and equality of arms generally require that material relied upon by one party is available to the other, subject to privilege and proportionality. A paying party cannot compel an election merely by rejecting an informal procedure.

The claimants appealed from a decision of Master Wright, sitting as a Costs Judge, in the detailed assessment of costs arising from group litigation concerning chemical exposure. The claimants sought recovery of substantial costs for expert reports which had been obtained but not disclosed in the underlying litigation.

The Master directed the claimants to elect either to disclose the reports to the defendants and rely on their contents, or to decline disclosure and rely on other evidence. The central issues were whether a genuine issue had been identified, whether the Master had to inspect the reports before making that direction, and whether the direction was fair, just and proportionate under paragraph 40.14 of the Costs Practice Direction.

1. Appeal dismissed. The Master had properly exercised the discretion conferred by paragraph 40.14 of the Costs Practice Direction.
2. A real and relevant issue had been identified. The dispute was not a fishing expedition. The reports had not been used or disclosed in the underlying litigation, substantial costs were claimed for them, and the claimants’ case had materially changed after new leading counsel was instructed. These circumstances raised genuine questions about duplication, value and recoverability.
3. Fairness and equality of arms required the defendants to have an opportunity to see and address the contents of the reports if the claimants wished to rely on them. It would have been unfair for the Master to inspect potentially relevant material and then decide either the election issue or recoverability without allowing the defendants to comment.
4. The Master was not required first to inspect the reports, assess their importance, or follow the five-stage procedure proposed by the claimants. Costs Judges have wide and flexible discretionary powers. The appropriate approach depends on the circumstances, including the stage reached in the assessment, the nature and importance of the documents, the sums claimed and proportionality.
5. Paragraph 40.14 does not permit a paying party automatically to compel an election simply by rejecting an informal procedure. In this case, however, the defendants had previously accepted the informal approach and sought disclosure only when substantial sums were claimed for undisclosed expert reports. The direction was therefore justified. The complaint that the ruling should have been confined to one bill item also failed.

• High Court (Queen’s Bench Division): dismissed the appeal from Master Wright’s decision of 4 September 2007 in the detailed assessment of costs.