(In this YAWS version a few editorial alterations have been made to the description of the CPR and Practice Directions, eg references to Part 3.8 have been changed to Rule 3.8, to ensure consistency with the remainder of the site.)
Date: 21st December 2001
Before:
LORD JUSTICE MUMMERY
LORD JUSTICE BUXTON
and
LORD JUSTICE LONGMORE
- and -
CAPE Plc
Respondent
X, Y, Z & ors
Appellants
- and -
SCHERING HEALTH CARE Ltd
Respondent
SAYERS & ors
Appellants
- and -
MERCK
AND SMITHKLINE BEECHAM Plc
Respondent
MMR/MR VACCINE LITIGATION
(substantially prepared by Lord Justice Longmore):
| 1. | Multi-party actions are a comparatively novel feature of English litigation and the courts have attempted over recent years to fashion new types of order to enable viable actions to be brought in situations where a single individual would find it prohibitively expensive to bring proceedings on his or her own. The present appeals arise in three separate multi-party actions; the first is what is known as the MMR/MR litigation in which claims are made for injuries allegedly suffered by children as a result of the administration of vaccine against measles, mumps and rubella (or just measles and rubella); the second action is the oral contraceptive litigation in which claimants seek damages for injuries sustained by the taking of oral contraceptives; the third action is brought by workers in South Africa against the English holding company of the South African subsidiary, which employed them, for injuries suffered as a result of exposure to asbestos. Typically defendants are drug manufacturers, health trusts on whose behalf drugs are prescribed, or other large corporations some of whom (or whose insurers) have deep pockets. Claimants are typically individuals who could not contemplate financing litigation themselves and obtain assistance for that purpose from the Legal Service Commission or, perhaps, under a Conditional Fee Agreement. | ||||||||||||||||||||
| 2. | These actions are difficult, as well as expensive, to run and impose great burdens on the practitioners who conduct them and judges who try them. They can, however, be a service to many who suffer severe injuries and it is the policy of the courts to facilitate such actions in appropriate cases and adapt traditional procedures accordingly. These appeals arise only in relation to the details of cost-sharing orders made in the actions but it is right that the court should be guided by the considerations set out in the Woolf Report on Access to Justice published in July 1996. In chapter 17, paragraph 2 of his report Lord Woolf said this in relation to multi-party actions:- | ||||||||||||||||||||
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| In relation to the costs of multi-party actions Lord Woolf said:- | |||||||||||||||||||||
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| 3. | As a result of the Woolf report Part 19 Section III of the Civil Procedure Rules makes provision for Group Litigation pursuant to a Group Litigation Order and Part 48.6A provides for costs where such an order has been made. We were told that each of the group actions (as we shall now call them) with which we are concerned is now being run in accordance with these Rules. Pursuant to the Rules cost-sharing orders have been made; since the same points arise in each appeal it is sufficient to set out the order of Master Ungley as approved by Bell J in the MMR litigation. | ||||||||||||||||||||
| 4. | The order provided (inter alia):- | ||||||||||||||||||||
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| It will be seen that the provision for quarterly costings mirrors the recommendations of paragraph 57 of Lord Woolf's report. | |||||||||||||||||||||
| 5. | The claimants appeal against this order and ask for a provision in the following form to be inserted (between (c) and (d) in the order above):- | ||||||||||||||||||||
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| and | |||||||||||||||||||||
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| We shall call them the "Costs by common issues order" and "the discontinuers and settlers order" respectively | |||||||||||||||||||||
| 6. | While the issues raised in this appeal are comparatively narrow ones, they are of importance to the parties and this is the first time that the detailed provisions of cost-sharing orders, commonly made at first instance, have been considered by this court. We had the advantage of assistance from witness statements of Mr Colin Stutt of the Legal Services Commission and of 3 solicitors, who have conducted group actions, as well as the assistance of submissions from no less than six leading counsel experienced in this type of litigation. | ||||||||||||||||||||
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Approach of this court | |||||||||||||||||||||
| 7. |
Costs orders
made at the end of a case are very much a matter for the discretion of the
judge who has heard that case. It is only recently that such orders could
be appealed at all without the permission of the judge himself. Such orders
are now appealable provided that permission is obtained from either the judge
or the Court of Appeal but this court is still notoriously reluctant to interfere
with the judge's discretion, see | ||||||||||||||||||||
| 8. | Despite a submission from the defendants to the contrary we look at the present appeals in a different way. The orders under appeal have been inaccurately called "pre-emptive" orders. They are not pre-emptive since they allow for the judge to make a special order in a particular case or a different more general order, if circumstances change. Nevertheless they are orders that are intended to cater for (at least the generality of) future events. If it can be shown that some different order from that which the judge has made would be more appropriate, it would not be right for this court to attach any particular sanctity to the judge's order. That is all the more the case in a jurisdiction which is still a developing jurisdiction, as group litigation is. It is important that any general order as to cost-sharing should be the best available in the circumstances. That is not, of course, to say that the appellant should not bear the normal burden of persuading this court that the judge's order is wrong or, at least, inappropriate for the future conduct of the cases. | ||||||||||||||||||||
| 9. | We are, moreover, not persuaded that merely because in traditional litigation a discontinuing claimant will be required to pay a defendant's costs that that is, of itself, sufficient to justify the judge's order in these group actions. An action which has many claimants is inherently somewhat different from an action in which there is only one claimant, since the action will continue in the same form as currently constituted even after a claimant, for whatever reason, decides to settle or discontinue. | ||||||||||||||||||||
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Brief history of cost-sharing orders in group litigation | |||||||||||||||||||||
| 10. |
The courts have
been developing the concept of cost-sharing orders since | ||||||||||||||||||||
| 11. |
It was May J
in | ||||||||||||||||||||
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| 12. | With this brief introduction to the background of cost-sharing orders, we can examine the submissions made by Lord Brennan QC on behalf of all the claimants in these appeals. | ||||||||||||||||||||
| "Costs by common issues order" | |||||||||||||||||||||
| 13. |
Lord Brennan
submitted that since the Civil Procedure Rules have come into force, the courts
were encouraged to make orders for costs in relation to individual issues
and commonly did so. He referred us to dicta of Lord Woolf MR in | ||||||||||||||||||||
| 14. | Mr Leggatt QC making the relevant submissions on behalf of the defendants on this aspect of the case submitted that the point of the costs-sharing order was not to say what order for costs should be made but to legislate for how costs should be apportioned once a costs order was made. Echoing Lord Brennan's own submissions on the discontinuers and settlers order, he submitted that it would be wrong now to make a presumptive order as to costs at the end of a trial of common issues (even if it was likely that the court would make a issue based order after the trial of such common issues) since the circumstances at the end of a trial will be various and unpredictable. | ||||||||||||||||||||
| 15. | We agree with the submissions of Mr Leggatt. However likely it may be that, if common issues are directed to be tried, the costs of those issues will be ordered to follow the determination of those issues rather than await the individual fate of each claimant's action, it would, in our judgment, be wrong to say now that that should be the presumptive position. If, after all, the resolution of a common issue were to turn out to be entirely or largely academic the court should be free to make whatever appears to be the appropriate order in the circumstances. We therefore dismiss the claimants' appeal insofar as it seeks a costs order by reference to the determination of common issues. | ||||||||||||||||||||
| Discontinuers and settlers order: (1) Settlers | |||||||||||||||||||||
| 16. | We consider that discontinuers and settlers cannot be considered together. As far as those that settle their cases are concerned, they do not usually need any presumptive order as to the incidence of costs since costs will be part of the discussion leading to settlement in any event. If there is an agreement that any defendant is to pay any claimant's costs, paragraph (e) of Master Ungley's order is entirely appropriate and we see no reason to interfere with that part of the order. | ||||||||||||||||||||
| (2) Discontinuers | |||||||||||||||||||||
| 17. | It is discontinuers that give rise to the more difficult problem and it was about them that most of the argument took place. In relation to them Lord Brennan submitted:- | ||||||||||||||||||||
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| 18. | The defendants submitted:- | ||||||||||||||||||||
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| Conclusion on Discontinuers | |||||||||||||||||||||
| 19. | We have already stated our negative reaction to the defendants first 3 arguments. We have, further, concluded in the light of the parties' submissions that an inherent injustice to claimants and an inappropriate advantage to defendants is indeed liable to occur if the current form of order in relation to discontinuing claimants remains the norm. This is because a group action of the kind with which we are concerned in the present case is essentially different from the typical action where a single claimant (or a limited number of claimants) brings an action. Usually in such typical actions all issues of liability will be tried together whereas it is likely that in group actions certain common or generic issues will be tried on their own, before it is possible or sensible to apply the results to individual claimants. Meanwhile there may be many different reasons why claimants may decide to leave the group once the action has started. Of course, one reason may be that an individual claimant realises that his case is hopeless. But to have a prima facie rule that any discontinuing claimant should have a crystallised inability to recover common costs and a potential liability for the common costs of defendants at the end of the quarter in which he discontinues is too blunt an instrument and is unnecessarily favourable to defendants, when it is as yet unknown whether the claimants as a whole are to be successful in the common issues which are to be tried. | ||||||||||||||||||||
| 20. | A prima facie rule tends to become the accepted rule, especially if it is necessary to incur the expense of going to the judge and asking, against opposition, for a different order. It is therefore not merely more sensible but also more consonant with justice that both the recoverability of common costs and the liability (if any) of discontinuing claimants for costs of common issues should be determined at the same time as orders for common costs are made in respect of those common issues. The court then has a full picture and can make whatever order is just in all the circumstances. We were given a number of worked examples which we need not set out, but the striking feature of the order in its current form is that defendants who lose on general issues will never pay that proportion of common costs attributable to discontinuing claimants. Whereas that may, in the event, be a correct order, it is not right now to decide that it is, or even to say that it will be the right order unless the judge decides otherwise. | ||||||||||||||||||||
| 21. | It is also noteworthy that, in one of the few examples of group litigation which progressed to a final decision (the British Coal Chronic Obstructive Pulmonary Disease Litigation), Turner J ordered the defendants to pay the costs of claimants, who had not discontinued and persevered to the end of litigation, but lost their cases on their own individual facts. No doubt any such order as that would be highly exceptional but it shows the wisdom of not having any a priori rule for discontinuing claimants in group actions which takes effect before the outcome of common issues is known. | ||||||||||||||||||||
| 22. | Bell J recorded that, as at the date of his judgment (3rd November 2000), there were only 16 discontinuers out of a total of 269 claimants who had sued the first defendants. The number in relation to the other defendants is much the same. It looks therefore that, at any rate in the MMR litigation, the problem of discontinuers is not an enormous one. But we bear in mind paragraphs 27 and 28 of Mr Stutt's written statement in which he says that it may be difficult for the Legal Services Commission to fulfil its statutory duty to obtain the best value for money if a significant proportion of costs expended will be irrecoverable regardless of success on common issues. We think Bell J (whose judgment was followed in the judgments in the other cases under appeal) was right to regard the problem as a matter of principle. He summed up his views in paragraph 41 of his judgment, dealing with both discontinuers and settlers:- | ||||||||||||||||||||
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| 23. | The views of Bell J are entitled to great respect and, if we thought that the problems raised by discontinuers were just a matter of case management, we would not interfere. As it seems to us, however, the possible injustice to discontinuers and correspondingly premature advantage to defendants of the relevant paragraphs of Master Ungley's order go beyond mere case management considerations and should be addressed as a matter of principle. The judge says that it is important that the parties have "a clear idea of the costs that they will be liable for". In the context of discontinuers, he is referring here to claimants who discontinue, but his concern is somewhat difficult to follow in the case of a legally aided claimant who is not himself going to be responsible for the defendants' costs at all. The judge's concern is more apt for a non legally aided claimant (none of whom apparently exist in the MMR litigation), but such a claimant can always, if he wishes, offer to pay his appropriate proportion of common costs if he wants to leave the litigation and pay costs at once. The judge also says that it is highly undesirable that a claimant's potential liability for common costs should remain at large for a considerable period but this is just a more emphatic way of making the same point. | ||||||||||||||||||||
| 24. | More generally, the respondents argued that it was detrimental to the discontinuing claimants themselves to have their potential liability left unresolved and in doubt until the end of the trial, perhaps some years distant. To that, Lord Brennan reasonably replied that it was for claimants and their advisers to decide what was best for them. Whilst the court should of course withhold a solution sought by the claimants if it would be unfair to the defendants or contrary to the requirements of public policy, it could hardy do so simply because it thought that the claimants were not acting in their own best interests. And so far as defendants are concerned, in practical terms an order for immediate payment obtained against legally aided claimants, who form the vast majority of those with whom we are concerned, will not in fact be immediately enforced. | ||||||||||||||||||||
| 25. | The judge also refers to a matter much emphasised by Mr Prynne QC and Mr Fenwick QC for the defendants that an immediate order for costs in respect of discontinuing claimants will promote "discipline in the scrutiny and early abandonment of any weak claims". We are not persuaded by this argument, attractive as counsel made it sound. To begin with, counsel and solicitors have no business advising that claimants with weak cases should join the register of the relevant group in the first place. And as Lord Brennan reminded us, serious professional obligations rest on both solicitors and counsel who act in legally-aided cases to ensure that the Legal Services Commission is kept informed of the state of the case, and that unmeritorious cases do not continue to receive support. But secondly no one suggests that a notice of discontinuance will have no attraction for a claimant with a weak case. The proposed alteration to Master Ungley's order relates only to common costs. Claimants will still wish to discontinue in order to cease incurring individual costs which will not be recoverable from defendants and indeed to stop defendants continuing to incur costs in relation to individual issues, for which the claimant will or may be liable at the end of the day. Moreover, service of notice of discontinuance will operate to draw a line at the end of the quarter in relation to common costs even if no decision is then made as to the liability for such costs. There will thus still be an incentive for claimants to discontinue weak cases in any event. | ||||||||||||||||||||
| 26. | The "discipline" argument is, therefore, not persuasive as a matter of fact. We should, however, also add that, even if the argument were more convincing in itself, we would have needed also to be convinced of its real necessity before acting on it. When an order is unfair to claimants, as we believe the order of Bell J to be, strong reasons of policy or case management would be required before that order is nonetheless maintained. | ||||||||||||||||||||
| 27. | Lastly, we consider Mr Prynne's concern about satellite litigation arising on questions of costs to be exaggerated. If costs cannot be determined after trial of common issues, that will usually be because the issues themselves need refining and not because costs need to be resolved. | ||||||||||||||||||||
| 28. | For these reasons we consider that paragraph (15)(f) of Master Ungley's order, insofar as it relates to discontinuers, needs amending by the deletion of the words "together with his/her several share of the common costs" and the addition at the end of the paragraph of the words after a semi-colon:- | ||||||||||||||||||||
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| To this extent the claimants' appeal will be allowed. The orders similar to Master Ungley's that were appealed in the Afrika and OCP claims need amending in like form. We make no decision about claims which are dismissed by order of the court and there is no reason why Master Ungley's order should not remain as it is in order to deal with such cases. | |||||||||||||||||||||
| Claimants' Alternative Proposal | |||||||||||||||||||||
| 29. | At a very late date Lord Brennan put forward a suggestion (as Appendix 3 to his reply skeleton) to the effect that there should be an order that the claimants' solicitors in the lead actions (rather than all the claimants severally) should be entitled to recover the common costs of common issues incurred when such costs were ordered to be paid by the defendants. Whatever merits any such order might have, it seems to us that it offends against the indemnity principle whereby a party awarded costs of litigation cannot recover more than he is himself obliged to pay in respect of the costs of the litigation. This principle has been subject to criticism; indeed we understand that at the Costs Conference which took place on 30th November/1st December 2001 organised by the Civil Justice Council it was the almost unanimous view of those taking part (who included Lord Phillips MR and May LJ) that the indemnity principle should be abolished, provided that at the same time positive statutory provisions can be enacted identifying the basis upon which an award of costs can be made. It was also their view, with which we respectfully agree, that this can only be done by primary legislation. In these circumstances we do not think it right to give Lord Brennan's alternative proposal any further consideration. |