Various Claimants v Mercedes-Benz Group AG & Ors

In costs budgeting for complex group litigation, an earlier approved budget is an important starting point, particularly where it concerns the same litigation and legal teams. Differences in the work required may justify a lower or higher figure, but substantial departures require specific justification. A figure within 20% of a reasonable comparator may fall within a reasonable and proportionate range; a greater departure ordinarily requires particular reasoning.

Budgeting concerns the sums reasonably and proportionately recoverable from the opponent, not necessarily the party’s full actual expenditure. The court may approve phase totals without approving each constituent assumption. Where the scope of expert evidence or settlement work remains fundamentally uncertain, those phases may appropriately be left unbudgeted and reconsidered later.

The judgment concerned the costs management order following the second costs management hearing in consolidated and intended group litigation concerning vehicle NOx emissions. The court considered 63 budgets for Tranche 3, covering causation and loss issues intended for trial in 2026, and for a second period of general costs.

The parties disputed whether the figures allowed for Tranche 2 should guide the new budgets, the extent of representation and duplication on the claimants’ side, the appropriate treatment of common costs, and the reasonableness and proportionality of individual phases. The court also considered whether expert reports and ADR or settlement costs could be sensibly budgeted at that stage.

1. Starting point and comparison with earlier budgets. The amounts allowed for Tranche 2, which had not been varied, were an obvious starting point for considering the work required in Tranche 3. Because the later work was generally less complex and the litigation was operating more smoothly, the court generally expected lower rather than higher costs. Differences in the work required could justify departure from the earlier figures.
2. Reasonable and proportionate range. Costs budgeting permits a broad range of figures capable of being reasonable and proportionate. A figure within 20% of a reasonable comparator may fall within that range. Figures more than 20% above the comparator require specific reasoning to justify them. The court applied that approach to adjust numerous disputed phases.
3. Common and individual costs. The purpose of lead solicitors and steering committees is to conduct common work efficiently. Non-lead firms’ common costs should be extremely limited and ordinarily confined to work that benefits the litigation itself. Keeping abreast of developments for individual client advice is generally a solicitor-and-client matter. Work on an individual statement should not generate more time between the parties than if the client had instructed a lead firm.
4. Actual and recoverable costs. A party may place in its budget sums below the costs actually incurred, provided the budget remains a fair and accurate statement of the incurred and estimated costs which it would be reasonable and proportionate to incur in the litigation. The relevant question for budgeting was whether the sums put before the court were reasonable and proportionate. Greater actual expenditure became relevant to the opponent only in the context of an indemnity costs order following conduct out of the norm.
5. Phase totals and uncertainty. The court was approving phase totals rather than each constituent assumption. It therefore did not need to decide whether a particular solicitor or lead solicitor should take an individual statement, provided the total remained reasonable and proportionate. Expert reports were left unbudgeted because the extent and utility of the proposed evidence remained unresolved. ADR and settlement costs were also left unbudgeted because the parties’ assumptions were too far apart to permit sensible budgeting.
6. The court approved the specified Tranche 3 and Second General figures, leaving the Expert Reports and ADR or Settlement phases for reconsideration in January 2026.

This was a first-instance costs management decision. It followed the first costs management hearing decision in the same litigation, reported at [2024] EWHC 1728 (KB).