KGM v News Group Newspapers Ltd & Ors

In deciding whether costs should be paid on the standard or indemnity basis, the court must consider whether, and to what extent, it is reasonable for the losing party to pay them. A party’s right to separate representation and choice of lawyers does not automatically justify recovery on an indemnity basis. Where parties could properly have been represented by the same counsel, and no sufficiently good reason for separate representation is shown, their costs may be limited to the standard basis.

The appellant appealed from proceedings in the Queen’s Bench Division Administrative Court before Mr Justice Eady. The respondents included two parties whose participation in the appeal was disputed. The court noted that the appeal concerned, among other matters, whether an injunction was appropriate without a specific threat to publish. The appellant accepted liability for the respondents’ costs. The issue determined in this judgment was whether the second and third respondents should receive their costs on the standard or indemnity basis.

1. The appellant accepted that he was liable for the costs of all three respondents. The first respondent accepted that its costs should be assessed on the standard basis.
2. The second and third respondents argued that they should receive indemnity costs because their participation was unnecessary: whichever way the appeal was decided, no effective rights against them would be determined. The court accepted that this was an attractive argument, although it was not entirely clear, in light of a connected decision by Mr Justice Eady which was also under appeal, that they could have withdrawn from the appeal.
3. The fact that parties have a right to separate representation and to choose their lawyers does not determine the extent to which the losing party should bear those costs, particularly on the indemnity basis. The relevant question is whether it is reasonable for the paying party to pay the costs claimed.
4. The court considered that, if the second and third respondents were right that they need not have participated, the basic issue could have been addressed by one counsel on their behalf. Even if the threat-to-publish issue required consideration, there was no sufficiently good reason for each respondent to be separately represented.
5. Although the judge granting permission to appeal had considered that the issue involving the second and third respondents justified consideration, the manner in which the arguments had advanced did not warrant indemnity costs. The second and third respondents were therefore each awarded their respective costs on the standard basis.

1. Court of Appeal (Civil Division): determined the costs issue and ordered the second and third respondents to have their respective costs on the standard basis: [2011] EWCA Civ 933.
2. Queen’s Bench Division Administrative Court: proceedings before Mr Justice Eady, including a connected decision which was also under appeal.