Bates & Ors v Post Office Ltd (No.5 : Common Issues Costs)

In group litigation, the court may determine and order payment of costs for a discrete group of common issues before the litigation as a whole concludes. Making such an order does not demonstrate pre-judgment of the ultimate outcome. The costs discretion must reflect the structure and management of the particular litigation, including the parties’ relative success and conduct that unnecessarily increased the complexity or length of a trial. A strict arithmetical approach to issues won and lost is inappropriate. Where costs are awarded, payment on account is ordinarily assessed by reference to the approved costs budget, subject to a realistic allowance for uncertainty. Costs budgeting does not remove the need for summary or detailed assessment.

The proceedings formed part of a group litigation order concerning claims by sub-postmasters and sub-postmistresses against Post Office Limited. A previous judgment, Bates v Post Office Ltd [2019] EWHC 606 (QB), determined 23 common issues concerning the parties’ contractual and agency relationships.

The court considered consequential applications concerning the costs of that trial. The issues were whether costs should be reserved until the end of the group litigation, which party should pay them and in what proportion, whether assessment should be on the standard or indemnity basis, the appropriate payment on account, and whether detailed assessment was required.

1. Costs need not be reserved. The court had a broad discretion under CPR Parts 44 and 46. Group litigation is a special case, and the appropriate costs order depends on the case-management structure, the issues tried and the circumstances of the particular litigation. It was permissible, and appropriate, to decide the costs of the Common Issues trial at that stage. Doing so did not suggest that the court had predetermined the outcome of the remaining claims.
2. The analogy with preliminary issues in ordinary litigation was not decisive. The Common Issues were distinct, affected the group generally and formed the foundation of the parties’ contractual relationships. CPR Part 46.6 required the costs referable to GLO issues to be identified, and 100% of these costs were attributable to GLO issues.
3. The Claimants had the better of the issues, but had not been wholly successful. The court rejected both a purely numerical approach based on success on seven of 23 issues and the Claimants’ contention that no reduction was appropriate. The Claimants’ recoverable costs were reduced by 10%. In fixing that percentage, the court considered both the Post Office’s success on some issues and its unnecessary and extensive challenge to systemic facts concerning branch accounting and the operation of Horizon, which materially increased the length and complexity of the trial.
4. The costs were to be assessed on the standard basis. The conduct relied on for indemnity costs had already been taken into account in fixing the percentage reduction, and double counting would be wrong.
5. The court ordered interim payments on account of £2.79 million for budgeted costs and £1.77 million for incurred costs before 13 April 2018, in each case together with VAT and the relevant 1% amount. The approved costs budget was the appropriate starting point for the payment on account, but the figures remained estimates pending assessment.
6. Detailed assessment was required for costs awarded both before and after the costs management order. A payment on account did not constitute final assessment, and costs budgeting did not create a third route dispensing with summary or detailed assessment. The parties were invited to submit an agreed order.

First-instance consequential costs judgment in ongoing group litigation. The judgment refers to earlier judgments in the same litigation, including [2019] EWHC 606 (QB), but those decisions are not separately modelled as cited authorities because they arise from the same dispute.