Pan NOx Emissions Litigations, Re

Costs budgeting is distinct from detailed assessment. The court considers costs phase by phase and does not fix hourly rates, individual hours or disbursements. Agreed budgeted phases ordinarily fall outside the court’s approval function; the court may comment on them, and may decline to make a costs management order if it considers them inappropriate. In exceptional practical circumstances, and with the parties’ agreement, an approved figure may replace an agreed phase total. Proportionality requires consideration of all relevant factors, including complexity, public importance and reputation, but those matters do not provide a blank cheque. In group litigation, the number of claimants gives limited justification for common costs unrelated to claimant numbers. Comparisons between one claimant group’s costs and the aggregate costs of separately represented defendants are generally invalid.

The court considered the costs budgets of the claimants and defendants in extensive group litigation concerning alleged defeat devices in vehicle emissions-control systems. The litigation involved multiple group litigation orders, lead and additional lead defendants, non-lead defendants, technical evidence and staged hearings.

The hearing concerned the principles governing costs management and the reasonableness and proportionality of incurred and estimated costs for the first two tranches and general litigation work. The court also considered the allocation of work between firms, duplication, staffing, expert evidence, disclosure, case management conferences and trial preparation.

1. Costs management. Under Civil Procedure Rules 1998, r 3.15, the court’s approval function concerns unagreed budgeted costs. Agreed phase totals are ordinarily recorded rather than approved, and the court cannot substitute another figure for an agreed total. If dissatisfied, the court may decline to make a costs management order and require revised budgets. In this case, however, the parties agreed that substituted figures could be used. Given the scale of the litigation and the practical consequences of a further budgeting exercise, that approach was justified in the particular circumstances.
2. Costs budgeting is not advance detailed assessment. The court considers budgets phase by phase and does not fix hourly rates or approve particular hours and disbursements. Incurred costs are not approved under r 3.15, but comments may be recorded for later assessment. Approved future budgets generally determine the costs allowed on detailed assessment unless there is good reason to depart from them.
3. Proportionality and reasonableness. The factors in Civil Procedure Rules 1998, r 44.3(5), must be considered together. Complexity, public importance and reputational consequences were relevant, but did not justify the sums claimed. The number of claimants provided little justification for common costs in liability phases where the work was largely unrelated to claimant numbers. The claimed budgets reflected excessive hours, duplication and over-lawyering and were substantially unreasonable and disproportionate.
4. It was generally untenable to compare the claimants’ aggregate costs with the aggregate costs of all separately represented defendants. The defendants had distinct interests, separate disclosure and witness evidence, and separate experts and legal teams. The claimants should ordinarily spend less than all defendants collectively, although their costs might exceed those of an individual defendant.
5. The court also treated the group litigation orders as supporting efficient and substantially exclusive responsibility by lead solicitors. Costs allocated to non-lead firms without adequate explanation were treated as a source of potential duplication. The budgets were therefore reduced substantially across the tranches and general work. The claimants’ estimated costs were reduced from £207,748,907.15 to £51,997,713.75, and the defendants’ aggregate estimated costs from £211,766,177.07 to £113,973,384.37.