Corby Group Litigation v Corby District Council (Costs)

Where group litigation issues have been substantially resolved, the court may make a costs order before the individual claims are concluded. The successful parties will ordinarily recover their costs, subject to the court’s broad discretion and any reduction required by partial success, conduct or inefficiency.

Indemnity costs require conduct taking the case out of the norm; moral reprehensibility is unnecessary, but ordinary unsuccessful litigation is insufficient. A refusal to engage in alternative dispute resolution must be assessed in all the circumstances, including the nature and merits of the dispute, settlement efforts, proportionality, delay and prospects of success. An interim payment on account is discretionary and will ordinarily be based on a cautious estimate of the recoverable costs.

The claimants in group litigation against Corby District Council had succeeded on the common group litigation issues, although individual claims concerning causation and quantum remained to be pursued. The court had previously indicated its conclusions on costs but reserved judgment.

The court determined whether to make a costs order immediately, whether costs should be paid by the defendant, whether they should be assessed on the indemnity or standard basis, whether the recoverable amount should be reduced, and whether an interim payment should be ordered.

1. Costs order. The group litigation was effectively complete and the claimants had substantially won the common issues. It was therefore appropriate to make a costs order before the individual claims were finally resolved. Corby District Council could have protected its position by admitting significant issues but had chosen to contest them.
2. Liability for costs and basis. The defendant was ordered to pay the claimants’ costs. The claimants had not shown conduct justifying indemnity costs. Applying the principles summarised in Colour Quest Ltd v Total Downstream UK PLC [2009] EWHC 823 (Comm), conduct generally had to take the case out of the norm, although moral condemnation was unnecessary. The defendant had a reasonably arguable defence on the broadly pleaded and initially generalised case. Its refusal of ADR was also reasonable when judged at the time, rather than with hindsight.
3. ADR. The approach in Halsey v Milton Keynes General Health NHS Trust [2004] EWCA Civ 576 was applied. There was no presumption in favour of mediation. The fundamental question was whether the refusal was unreasonable, assessed by reference to all the circumstances. Here, the absence of common ground, the defendant’s supporting expert evidence and the claimants’ broad approach justified the refusal.
4. Reduction. The claimants’ scattergun preparation and avoidable loss of trial time justified a 10 per cent reduction. The claimants were therefore entitled to 90 per cent of their costs, to be assessed on the standard basis.
5. Interim payment. An interim payment was discretionary, not automatic. The court followed the approach in Mars UK Ltd v Teknowledge Ltd (Costs) [1999] EWHC 226 (Pat) that a successful party will normally receive a cautious payment on account, subject to all the circumstances, including appeal risk and the parties’ financial positions. The defendant was ordered to pay £1.6 million within 42 days, subject to undertakings to repay if required following an appeal. Interest on costs was postponed for six months.

The judgment itself states that the substantive group litigation judgment had been handed down on 29 July 2009. No lower-court decision or appellate citation is stated.