Various Claimants v Mercedes-Benz Group AG & Ors [2026] EWHC 1335 (KB)

[2026] EWHC 1335 (KB)Case No QB-2022-002405 and others
IN THE HIGH COURT OF JUSTICE
KING’S BENCH DIVISION
Venue Royal Courts of JusticeDate 4 June 2026
Strand
London
WC2A 2LL
Before
MR JUSTICE CONSTABLESENIOR COSTS JUDGE ROWLEY
Between
VARIOUS CLAIMANTSClaimantMERCEDES-BENZ GROUP AG AND OTHERSDefendantFORD MOTOR COMPANY AND OTHERSDefendantNISSAN MOTOR CO. LTD AND OTHERSDefendantSTELLANTIS AUTO SAS AND OTHERSDefendantAND OTHERSDefendant
Representation: see Appendix 1Hearing Hearing date: 16 April 2026
Approved JudgmentThis judgment was handed down remotely at 10.30am on 4 th June 2026 by circulation to the parties or their representatives by e-mail and by release to the National Archives..............................MR JUSTICE CONSTABLE
[1]This judgment deals with the two phases of the parties’ budgets left outstanding from the Second Costs Management Hearing (“CMH2”) in July 2025. They were considered by the court at a hearing on 16 April 2026 (“CMH3”) with representations from numerous advocates together with Precedents H, Budget Discussion Reports and consolidating spreadsheets.[2]There have already been two Costs Management Hearings (“CMH1” and CMH2) at which the parties’ budgets have been considered. Those budgets are split between(a) costs relating to the preliminary issues hearing, the PDD (liability) trial and the quantum trial and which are referred to as “tranches” one, two and three, and(b) general work done. The Costs Management Order (“CMO”) arising from CMH1 dealt with the First General budget and tranches one (“T1”) and two (“T2”). The CMO from CMH2 dealt with the Second General budget and tranche three (“T3”).[3]Whilst all relevant phases were either agreed or approved at CMH1, there were two phases at CMH2 which were adjourned to a later date. The first concerned the ADR/settlement phase in the Second General budget and on which the court concluded that the parties’ assumptions were so different that no sensible budget could be approved at the time. The second concerned expert evidence in T3. At the time of CMH2, it was unclear that permission was going to be given for the various expert disciplines contended for, and which were due to be considered at a later procedural hearing in January 2026.[4]In fact, the court’s consideration of those expert disciplines was put back until a date shortly after CMH3. This led to the parties putting forward budgets based on contingencies regarding the expert evidence and making oral submissions upon those proposals. Following the hearing to determine the question of expert evidence, the parties were given a further opportunity to make submissions and revise budgets in the light of the decisions made at that hearing. The court indicated at CMH3 that this opportunity would be given to the parties, and this judgment is written with the benefit of those submissions.

The extent of the expert evidence to be budgeted

[5]By its January 2026 CMC Order, the court had granted the parties permission to adduce and rely on written and oral evidence in two fields, namely, Loss Assessment and Mechanical Engineering. Permission only to instruct experts and produce reports had been given in the fields of Software Engineering, Consumer Behaviour and UK Vehicle Valuation and/or Pricing.[6]At the time of the CMH3 hearing, the claimants contended for the use of experts from all five separate fields. Some or all of the defendants challenged the contingent experts in principle, but nevertheless put forward budgets on the basis that they would apply if the court gave permission for such expert evidence to be used at the quantum trial.[7]On 21 April 2026 the court gave permission for the experts of all disciplines to give written and oral evidence and consequently all of the contingent elements need to be considered. The extent of the issues on which such evidence was required was, however, reduced in a number of respects and so required the parties to consider the figures afresh. This did not result, as might have been hoped, in any further agreement regarding the phases. Instead, the parties differed as to the extent of the reductions necessitated by the refocussed issues.

The format of the budgets

[8]Lengthy judgments concerning the CMOs made following CMH1 and CMH2 set out the nature of this litigation, at least from a costs perspective. The detailed description of the background found within those judgments is not repeated. Suffice to say, there are 13 Group Litigation Orders (“GLO”) in respect of collective claims made against various vehicle manufacturers and dealers with a further GLO in place to manage the overall litigation.[9]The phrase “Pan NOx” relates to all of the GLOs in this litigation. The lead GLO was made against Mercedes and additional lead GLOs (known as “ALGLO”s) were made in claims against Ford, Nissan, Renault and Peugeot-Citroen. The remaining GLOs against other car manufacturers and dealers are described as Non-ALGLOs.[10]The claimants’ budgets distinguish between work that is(a) Pan NOx(b) Lead and ALGLO and(c) GLO specific. Some phases of the budgets have been considered to be entirely Pan NOx work. Others, such as the ADR/settlement phase here, are entirely GLO specific. Yet others, such as the Experts phase here, are viewed as being largely concerned with the Lead and ALGLO defendants with the Non-ALGLO defendants playing a more peripheral role. The defendants’ budgets, by comparison, are simpler because they are put forward by each defendant in respect of the claims which it faces.

Time periods

[11]There is an asymmetry in respect of the periods covered by the two phases to be budgeted. In respect of the Experts phase, the incurred work goes back to the beginning of the litigation, in principle. Mechanical Engineering evidence has, for example, been required in T2.The estimated work relates to establishing the claims in quantum rather than e.g., testing vehicles in respect of “Potential Defeat Devices” (“PDD”) for the PDD trial. The estimated work goes up to a point immediately prior to the quantum trial in October 2026. The budgets for the Trial Preparation and Trial phases already include sums for the experts regarding the trial. The experts’ phase here effectively ends when joint statements are concluded and which is currently due to be on 18 September 2026 according to the court’s directions.[12]The ADR phase was budgeted in the First General budget up to the end of the Liability trial (which the parties have agreed to treat as being 1 April 2026and in respect of which judgment is currently reserved). Consequently, there are no incurred costs in this budget and the ADR phase is being budgeted from the notional date of 1 April 2026 until the end of the Quantum trial in December 2026.

Lessons learned

[13]Both judgments handed down by the court have criticised in vehement terms the claimants’ estimated claims for costs said to be reasonably and proportionately required to run this litigation. At CMH2, the claimants argued that they had taken on board the criticisms in the CMH1 judgment when putting forward the further budgeted costs. That was not an approach which the court considered to be successful and concluded, at paragraph 127 of the CMH2 judgment, as follows:
“In conclusion we have, like Constable J and Senior Costs Judge Gordon-Saker, often considered that the defendants’ offered figures for the claimants’ costs are broadly correct. Though on some occasions we have considered both the defendants’ offered figures and their own budgeted figures still to stray considerably on the side of generosity. In respect of the claimants’ budgets, it is plain that the largest reductions stem from the layers of representation, leading to, for example, claims for individual, non-lead firms to audit or replicate work already being done by the Lead firms.”
[14]Similar reassurance was given by Mr Theo Barclay, on behalf of the claimants, at CMH3 that the court’s further strictures in CMH2 had been taken on board. In particular, the “over lawyering” resulting from there often being a number of layers of solicitor representation on the claimant side being involved, was said to have been reduced in a manner similar to the court’s disallowance of much of the work done by solicitors other than in the lead firms.[15]However, this reassurance was vitiated by Mr Barclay’s (correct) acceptance that the extent of counsel time, particularly in relation to the experts’ phase could not be justified and would no doubt be reduced by the court. Given this concession, it was not apparent to us as to why some realistically reduced figures had not been put forward by the time of the hearing so that the court did not have to start from a position which was considered to be unreasonable on all sides. Both Mr Barclay and Mr Simon Teasdale for the claimants indicated that a revised version of the claimants’ budgets would be provided along with any submissions arising from the court’s decisions as to the extent of the expert evidence. PART 2 – EXPERTS’ PHASE Claimants’ Budgets

PART 2 – EXPERTS’ PHASE

[16]Before considering the individual disciplines that make up the overall experts’ phase, there are two general matters to be addressed.

Incurred costs

[17]The first concerns the loss assessment and mechanical engineering disciplines. Permission had previously been granted for the parties to rely upon evidence in these fields and, indeed, the mechanical engineering evidence was central to the PDD trial issues.[18]The claimants have recorded £2,481,298.26 in respect of incurred costs for the mechanical engineering work. The revised estimate of costs estimated to be incurred, following CMH3, is in a very similar sum. Whilst the point is made that mechanical engineering work has already undertaken for T2 (including testing which may be to some extent of general relevance to quantum issues as well as liability), we accept that there are differences between the work required in respect of PDD and the quantum issues. Nevertheless, the sums incurred on mechanical engineering quantum issues to date are substantial.[19]In respect of loss assessment, a similar amount of incurred costs (£2,355,017.34) is claimed, albeit that a lower sum (£1.85 million) is claimed for future work. Notwithstanding that liability, in its broadest sense, has not yet been determined, and the expert evidence upon which the claimants intend to rely has not been obtained, it is again obvious that a very considerable sum has already been spent on assessing the losses alleged.

Proportionate spend?

[20]The second matter concerns the proportion of costs claimed for legal work in comparison to the experts’ own charges. Numerous defendants’ counsel took aim at the amounts claimed for solicitors’ profit costs, counsel’s fees and experts’ charges. The similarity between them led to a description of them being incurred in a “1:1:1” ratio. For example, the amounts claimed for loss assessment prior to CMH3 were £618,000 (profit costs), £620,308.74 (counsel’s fees) and £617,500 (experts’ fees).[21]After numerous attacks upon the unlikely nature of the similar figures being spent by all concerned, Mr Barclay informed the court that the profit costs figures had in fact been reduced so that they were in line with the other two elements. This was done, it was said, in order to claim what was reasonable and proportionate in accordance with the statement of truth on the budgets. It was not therefore some form of reverse engineering in order to get the figures to align by themselves. It was simply that the solicitors were taking a haircut in order to match the other elements.[22]This was not a reassuring explanation and did not meet the substance of the criticism, namely that a ratio of 1:1:1 was itself inappropriate. Previous judicial comments have been made about an inappropriate amount of lawyer time being spent in the curation of expert evidence. It ought not to be the case that the legal fees are anywhere close to twice the amount of the expert fees required to produce the necessary evidence (let alone be above that ratio).

Loss Assessment

[23]Prior to CMH3, the claimants’ budgeted costs for this discipline amounted to £1,855,808.74 in addition to incurred costs of £2,355,017.34. These figures were all included at the Pan NOx level. Following the undertaking to revise counsel fees given at CMH3, counsel’s fees were claimed in the sum of £558,277.87 (a reduction of £62,030.87) whilst the profit costs remained at £618,000 and experts’ fees at £617,500. The overall estimated costs claimed were therefore £1,793,777.87. The defendants’ offer was £1,267,500.[24]The claimants say they have made a “moderate reduction” in counsel’s fees. They contend that the list of issues approved by the court following CMH3 encompasses the majority of the issues set out in the claimants’ original proposal, together with some further issues and further complexities; as such, the budgets have not otherwise been reduced. The defendants make no comment in their post CMC letter regarding this expert.[25]The court has already given permission for what is perhaps the central expert evidence for the quantum trial. But permission has obviously enabled the claimants to embark on obtaining such evidence and substantial costs have already been incurred as described above. In the light of that substantial time and effort, it was, in our view, surprising that the description of what remains to be done by both Mr Barclay and Mr Matthew Parker KC regarding seemingly fundamental questions of methodology had not yet been established.[26]The proposed reduction in the legal fees for obtaining expert evidence presaged by the claimants’ counsel was exactly 10% in this field and that reduced therefore the proportion from being 2:1 to 1.9:1. We were under the impression that something rather more significant – whether actually in relation to counsel or including the solicitors’ fees – was being contemplated by the claimants’ legal team.[27]It is striking that the budgets produced by the Lead and ALGLO defendants suggest that the legal input of solicitors and counsel combined will be no more costly than the expert evidence and on some occasions rather less. We do not rely too heavily upon such budgets, which are inevitably produced on a somewhat speculative basis where the defendants did not consider that evidence was required. But it reinforces our view that the amount of legal input into the claimants’ production of expert evidence is some way beyond what is reasonable between the parties. The fact that the solicitors’ figures have been suppressed for the purposes of the budget also strengthens the view that there is too much input from the legal team into the expert evidence.[28]Taking the experts’ fees figure of £617,500 and doubling it as a starting point to reflect an equal amount for legal fees, we reach a figure which is below the defendants’ offer of £1,267,500. In such circumstances, it is difficult to consider the defendants’ offer to be anything other than a reasonable sum to allow and so we have done so.

Mechanical Engineering

[29]Prior to CMH3, the budgeted costs claimed were £3,234,598.19, together with £2,481,298.26 in respect of incurred costs. Following CMH3, the fees were reduced by, in round terms, £279,000 (profit costs), £364,000 (counsel’s fees) and £144,000 (experts’ fees) totalling a revised estimated figure of £2,445,959.49. The defendants’ offer for this element totalled £1,460,605.[30]The claimants say these reductions result from the removal of the initial joint expert meeting and joint statement. This is said to be counterbalanced to some extent by the permission given to the defendants to serve additional factual witness statements in response to the claimants’ expert report (and which was not previously accounted for). They also comment on the timing of the exchange of reports although it does not appear that this ultimately affects the budget overall. The budget for the Mercedes GLO is singled out as requiring more resource, given the number of core sample vehicles involved compared with the other ALGLOs. This was a point also made in the submissions of Mr Barclay at the hearing. He summarised the defendants’ objections to the claimants’ budget as being simply that it was more expensive than any of the defendants’. This, it was said, was not surprising given the claimants’ expert had to deal with all of the defendants’ vehicles.[31]Mr Barclay also highlighted the Nissan Renault GLO budgeted figure, which was marginally higher than the Mercedes GLO figure and was roughly 1.5 times that of the other ALGLOs. He rejected the criticism by the defendants that the significant costs could not be justified given the significant technical overlap in the issues relevant to separate manufacturers by pointing out that the solicitors representing the defendants had asserted in correspondence, albeit in a different context, that there were significant differences in the technical issues facing the manufacturers.[32]In addition to the 2:1 legal to expert spend, Mr Carlo Taczalski, for the defendants generally on this issue, disputed the extent of the asymmetry between the claimants and defendants. He accepted that the defendants have in-house expertise but denied that this was a substitute for the work needed to be carried out by the CPR Part 35 expert.[33]Mr Taczalski also disputed that the need to deal with more core sample vehicles justified the claimants’ assumption that there would need to be a double allocation of costs to Mercedes. Mr Bailey, for Renault, submitted that there was an unexplained discrepancy in circumstances where the claimants’ mechanical engineering expert fees were 1.5 times the defendants’ experts but the solicitors and counsel fees were double. He submitted that the result is more extreme than the 1:1:1 approach seen elsewhere. Given the limited amount of testing in the Peugeot Citroen GLO, Mr Hogan described the sums claimed against his client for both expert fees and counsel’s fees as ‘surprising’ and the profit costs claimed as ‘arbitrary’.[34]Not least in light of the further testing regime in the context of quantum which has involved mechanical engineers, it is plain that the incurred costs under this heading are more easily explained than for the loss assessment discipline. There is a clear difference in the work required by the mechanical engineering experts in relation to quantum from that which had been required for Tranche 2. Indeed, there is, in fact, little challenge to the experts’ fees themselves as opposed to the fees expected to be required for legal oversight.[35]If we again take, as a starting point, the doubling of the experts’ fees for the various Lead and ALGLOs we reach, in round terms, £680,000 for Mercedes; £340,000 each for PCD and Ford; and £515,000 in respect of Nissan/Renault.[36]It seems to us that this starting point in respect of Mercedes is sufficiently close to the (revised) sum actually sought by the claimants of £718,681.65 for the estimated sum to be allowed as claimed.[37]The same is not true for the remainder of the ALGLO budgets, where the total revised sums sought remain significantly in excess of double the expert fees. We tend to the view that the same sum should be allowed in respect of PCD and Ford given that these manufacturers would appear to be broadly similar (at least in terms of number of sample vehicles). The figure of £340,000 falls squarely between the offers made by the two defendants. We consider that the PCD offer is unrealistic assuming the experts’ fees are allowed as claimed. However, the Ford figure of £400,000 allows for 1 to 1.5 times those experts’ fees for legal fees and we view this as a reasonable sum to be allowed to the claimants rather than the sum being claimed of nearly £500,000.[38]In relation to Nissan/Renault, it appeared that both sides were working on the principle that something in the region of 1.5 times the other ALGLO budgets would be reasonable. We agree, and with that in mind, we have allowed £600,000 in respect of that budget.

Software Engineering

[39]Costs in respect of this expert discipline are claimed at the GLO specific level. Prior to CMH3 the estimated costs claimed were £1,956,800.90. Following CMH3, the estimated costs have been reduced to £759,015.80 based on £234,000 (profit costs), £223,133.70 (counsel’s fees) and £301,882.10 (experts’ fees). This estimated sum is in fact now considerably lower than the £951,128.93 offered by the defendants prior to CMH3. In large part this is explained by the reduction in scope of the evidence allowed.[40]At the CMC, the managing judge ruled that (at least for the time being) there need not be a separate report in addition to a joint report. It is presently anticipated therefore that the software engineers produce a joint report which sufficiently articulates the reasons for any areas of disagreement (anticipated to be limited) in respect of any areas where the software engineers cannot agree.[41]The claimants say that the budgets have been reduced in order to reflect the fact that the software engineering experts have not been asked to prepare any reports but to discuss and seek to agree any disputes or uncertainties regarding the relevant calibrations. The claimants then indicate that the costs for the joint meetings and joint statements will be greater than originally budgeted and so that element has been increased.[42]The defendants say the work required for this evidence is limited to the filing of a joint statement following a meeting between the respective experts. Notwithstanding this, the claimants still seek nearly half of the original budgeted sums even though the cost of preparing an initial report and two responsive reports (as well as two joint statements) is no longer required. The extent of counsel’s fees in the overall sum of £223,133.70 is also criticised as not reflecting the expert led exercise allowed by the court and which would, according to the defendants, require limited counsel input.[43]It is easy to view the work of experts as the preparation of reports and, if necessary, oral evidence at trial. But it is true to say that input into discussions as to how helpful the evidence is, or could be, with further exploration, forms an integral part of the experts’ evidence whether in conference with counsel or otherwise.[44]On the face of it, the reduction of a little over half from the previously contemplated figures seems to us to be a realistic reduction. Nevertheless, we see some force in the defendants’ argument that the proportion of legal time, and in particular counsel input, should be lessened by the reduction in formal documentation needing to be served. On this basis, we consider that the budgeted sum should be £125,000 per ALGLO save for Nissan/Renault where it should be £250,000.

Consumer Behaviour

[45]Costs in respect of consumer behaviour are claimed at the Pan NOx level. Prior to CMH3 they were claimed in a total sum of £1,425,823.50. Following CMH3, the experts’ fees continue to be claimed at £473,900, the solicitors’ fees have been reduced by £7,000 to £465,850 and counsel’s fees by roughly £88,000 to £391,166.51. The revised sum of £1,330,916.51 claimed for estimated costs remains considerably more than the £525,000 offered by the defendants for this field.[46]In giving permission for consumer behaviour evidence to be produced at the quantum trial, the managing judge emphasised that the evidence obtained from the consumer behaviour expert was to be non-duplicative to work carried out by the loss assessment expert.[47]The claimants’ post CMC letter confirms that counsel’s fees have been reduced to reflect Mr Barclay’s initial concession but otherwise there have been no material reductions on the basis that the extent of the issues has not changed in terms of the work required.[48]The defendants’ correspondence refers to the claimants’ reduction in profit costs of £7,000, which the defendants say does not reflect the reduction of the seven issues proposed by the claimants to three allowed by the court (and which the defendants say reflect the first four issues proposed by the claimants).[49]The defendants’ offer of little more than one third of the sums claimed by the claimants for this discipline reflects the stark difference in the parties’ views of its utility. However, the court has determined that evidence under this heading is reasonable. Arguments as to utility, when the court may have relied – or not relied at all – on such evidence may be made in due course in the usual way if or when any costs order is made, but that is not relevant for the budgeting exercise once permission has been granted. Whilst the defendants make a valid point regarding the reduction in issues to be dealt with by this expert, their offer allows for little more than the expert’s fees claimed.[50]There certainly ought to be some reduction in the expert’s fees, given the focussing of the issues and the court’s exhortation to avoid duplicating evidence being provided by other experts. That, in our judgment, is also bound to flow through into the associated legal work. Doing the best we can in what is, we suspect, a niche area of expertise, we have allowed a total of £1 million at the Lead/ALGLO level.

UK Vehicle Valuation and/or Pricing

[51]The costs in this expert discipline are also claimed at the Lead/ALGLO level. A total of £938,286.95 for estimated costs was claimed prior to CMH3. Unlike the other disciplines, this sum was made up of four essentially equal parts with “other disbursements” adding to the profit costs, counsel’s fees and experts’ fees. The estimated costs were reduced to £730,333.26 following CMH3. The “other disbursements figure” of £219,300 did not change, but the other three elements were reduced to £175,650 (profit costs), £145,583.26 (counsel’s fees) and £189,800 (experts’ fees). The defendants’ offer for this field was £400,000.[52]At the case management hearing, the managing judge allowed evidence from an expert in this discipline in a considerably reduced scope from that sought by the claimants. Many of the issues proposed by the claimants to be considered by this expert were rejected.[53]The claimants say that the reduction of just over £200,000 reflects the narrowing of the issues which the expert will need to address. Although the number of issues has been reduced from 9 to 1, the claimants submit that, in the redefining of the single issue to be considered by the expert, that issue has nevertheless been significantly expanded and encompasses some of the issues originally set out at issues six and nine. The result is a moderate adjustment to the proposed budget given that the work involved will still be considerable.[54]The defendants referred to the “considerably reduced scope” description in the passage referred to above and further quote the managing judge as saying that the remaining issue was a “very limited question”. The defendants describe the remaining issue as being slightly expanded, rather than the claimants’ description of it. Notwithstanding this description of what remains, the reduction in the claimants’ budgets of just over a fifth did not reflect the reduction in scope, in the defendants’ submission.[55]We think it is clear from the determination made by the managing judge that the court’s intention is to provide the claimants with no more than a facility to combat the inevitable expertise contained inhouse at the defendants regarding the marketing of their products. The description of a “limited question” based on only one of nine questions originally proposed and with almost no amendment does not fit with the claimants’ approach as described in their post CMC letter.[56]The defendants have maintained their offer of £400,000 (which is now more than 50% of the total claimed.) It seems to us that that is an entirely reasonable sum in respect of this element of the budget and we allow it as such.

Defendants’ budgets

[57]It was confirmed by counsel to the court during the hearing that, in respect of the T3 expert reports, all of the ALGLO and non-ALGLO defendants’ individual budgets had been agreed, save for Vauxhall. All of the other non-ALGLO defendants had agreed their budget at a maximum of £20,000 for the experts in loss assessment and mechanical engineering. Further sums up to £10,000 had been agreed by those same defendants for the three contingent experts’ disciplines.[58]This left Vauxhall alone in contending for £23,453.56 for the loss assessment and mechanical engineering experts and £11,726.78 in respect of each of the three contingent experts. Ms Collar made oral submissions in support of the non-contingent experts’ budget by making reference to it amounting to less than 30 minutes for considering the main reports and less than 20 minutes for the contingencies. In Ms Collar’s submission, that time could not be reasonably reduced.[59]There is certainly the opportunity for the court to vary sums for different defendants in respect of the same phase in an appropriate case. The difficulty with Ms Collar’s argument, in our view, is that it inevitably leads to a consideration of the hourly rates that are charged in combination with the time claimed. It is trite to say that hourly rates are not set when budgets are considered and therefore it is a slippery slope to consider submissions of this nature in any detail. The task of the court is to set the global figure for each phase and it is a matter for the party thereafter as to what level of lawyer deals with what aspect of the work required.[60]In respect of the contingent experts’ figures, Vauxhall took the same approach as most of the non-ALGLO defendants in estimating the same sum for each of the three contingencies. There were no additional submissions, either in writing or orally, to support what were necessarily broad brush figures.[61]All of the non-ALGLO defendants will have to carry out similar work in respect of considering the expert reports obtained in the Lead and ALGLO cases. There is no good reason, as far as we can see, for Vauxhall to be required to spend more time and effort in this task than any of the other non-ALGLO defendants. The other defendants have either estimated amounts less than £10,000 or £20,000, or been prepared to agree offers, at those sums. We have therefore come to the conclusion that the reasonable sum to allow for Vauxhall’s budget respect of the T3 expert reports is also the combined figure of £50,000 made up of £20,000 and three £10,000 budgets.

Overall

[62]The sums allowed for the Experts’ phase of the T3 are set out in the tables at the end of the judgment but in summary the overall figures are: Claimants – £5,411,181.65 Defendants - £12,858,057.16 PART 3 – ADR / SETTLEMENT DISCUSSIONS PHASE Defendants’ budgets

PART 3 – ADR / SETTLEMENT DISCUSSIONS PHASE

[63]The entirety of the defendants’ budgets for this phase have been agreed by the claimants. That is not surprising if the comments made at paragraph 125 of the CMH2 judgment remained accurate:
“In respect of the ADR / Settlement phase, the claimants have estimated £11 million to be spent between April 2026 and the end of 2026: the defendants have estimated a combined sum of £1.8 million. In the first CMH judgment, the court recorded its surprise at the lack of any engagement by the defendants with the possibility of incurring costs in attempting settlement. After some judicial encouragement, sums were allowed and it is hard not to see the figures put forward for Tranche 3, and the very modest assumptions set out, as being the least the defendants considered would avoid further judicial opprobrium.”
[64]The current defendants’ budgets total £1,687,074.55, representing a reduction of a little over £100,000 from the budget put forward for CMH2. The claimants say that it is not always obvious why there is a variation in the budgets between defendants given the paucity of assumptions set out. However, the claimants’ budget discussion report then says:
“Nevertheless, the Claimants are committed to ensuring that all parties are adequately resourced to engage meaningfully and constructively in ADR/Settlement Discussions and are open to any approach that may, in due course, facilitate a productive resolution of the dispute – including giving the Defendants the benefit of the doubt in their estimates for the ADR phase in this period of budgeting. Accordingly, and notwithstanding the observations above, the Claimants are prepared to agree the totality of the Defendants’ projected future costs in the ADR phase of the Second General Budgets, as sought…”
[65]It does not seem to us that the claimants’ approach of effectively agreeing to whatever the defendants say they require to enter into ADR is one which should be endorsed by the court. This is particularly so where the claimants’ own assumptions for this phase are now much more limited. They accept the defendants’ view that it is unlikely there will be any substantial settlement discussions before the formal PDD judgment is handed down (probably in July). The claimants say that any settlement discussions taking place will be informal rather than via any formal ADR process such as a mediation. Any settlement work is likely to take place prior to the quantum trial beginning in October and that thereafter, the parties will be too busy with the trial to be able to engage in settlement discussions. In any event, no concluded settlement is expected to be reached by the end of the period (31 December 2026), or indeed nor is it expected that any discussions are likely to have reached an advanced stage by then.[66]Given these limitations, we have recalibrated our view of the sufficiency of the defendants’ estimated costs. Rather than being the lowest sum which could be put forward to avoid judicial criticism, we take the view that they are quite generous. As such, they have relevance to the sums claimed by the claimants.

Claimants’ budgets

[67]The total sum claimed by the claimants has reduced markedly from the previous figure of £11 million to one of £1,984,770. Those costs are claimed against the individual GLOs with just over £1 million claimed against the Lead and ALGLOs and just under £900,000 being claimed against the Non-ALGLOs. The defendants offer of £1,211,162 breaks down almost exactly ⅔ / ⅓ between the Lead and ALGLO defendants and the Non-ALGLOs.

Peugeot-Citroen

[68]The claimants’ claim £192,136 and are offered £168,330 for this phase. Mr Hogan for PCD described the reason for the difference as being the sum claimed for the non-lead firms of £52,836. The defendants’ offer allowed for £29,030 for that work on the assumption that the lead solicitors’ time and disbursements were allowed in full. The claimants’ figure of £52,836 was, according to Mr Hogan, “simply too much.”[69]The lead solicitors’ time in respect of each of the Lead and ALGLO’s budgets is claimed at the same figure and so too are the disbursements. The only variable between those budgets is where there is a steering committee involved, such as in the Mercedes GLO, and the number of non-lead solicitors involved. In respect of the latter, 17 hours per non-lead solicitor has been allowed for in the claimants’ budgets, save for the Johnson Law Group who have been allowed 25.5 hours and who, we were told, are intending to provide a co-ordinating role amongst non-lead solicitors in the GLOs in which they are involved.[70]Mercedes and Ford have agreed figures with the claimants in respect of their budgets. Assuming that the lead solicitors’ time and disbursements have been allowed in full in each, these agreed budgets suggest that Ford have allowed the equivalent non-lead solicitors’ time in full and Mercedes have reduced the non-lead solicitors’ time by roughly 1/3. (This assumption is also based on the steering committee time being allowed in full in respect of Mercedes). The Ford and Mercedes agreements with the claimants suggests that the PCD offer of 55% or thereabouts is a little low and we have allowed £175,000 for this phase.

Nissan/Renault

[71]The claimants’ figures in relation to the Nissan/Renault GLO are double the other ALGLOs in respect of lead solicitors’ time and disbursements and total the sum of £406,816. Nissan have offered £235,000 and Renault have offered £221,846. At first blush, the defendants have offered at least as much as is being claimed by the claimants and it might be expected that the claimed figure would therefore be agreed. However, according to footnote 41 of the claimants’ skeleton argument:
“The Nissan/Renault Defendants make separate and different offers, but ones which (as the Claimants understand that from past experience) are not capable of being accepted without the agreement of the other. In practice, this means that the lower of the two offers is the only one which the claimants could actually accept.”
[72]In submissions, Mr Teasdale did not shy away from the doubling of the figures under this phase and pointed to the defendants’ budget discussion reports which indicated that, at least as far as Renault were concerned, there would not be any coordination between the defendants in respect of settlement. If the defendants were to go in different directions, then there was no justification for suggesting that the claimants’ costs in this ALGLO should be similar to those in the other ALGLOs. Whilst he contended for the doubling figures in their entirety, Mr Teasdale indicated that in any event, the figures would be higher than those agreed in the Mercedes GLO.[73]Although Mr Bailey, for these defendants, criticised the claimants’ methodology, it did not appear to us that he put forward any alternative theory as to how the existence of two separate OEMs in one ALGLO should be dealt with. Nor did he deal expressly with the claimants’ footnote. The defendants’ position was maintained as per the budgets.[74]The budgeted figures for these defendants are £200,840.00 (Nissan); £7,675.00 (Nissan authorised dealerships) and £144,966.30 (Renault), making a total of £353,481.30. Based on these figures agreed between the parties, it would appear that the defendants expect to spend approximately 1.5 times more than they consider is reasonable for the claimants to spend in respect of any settlement negotiations.[75]There are numerous possibilities as to the methodology of any settlement reached between the claimants and some or all of the defendants. The estimated figures are therefore particularly broadbrush in this phase. We do not think there is any great purpose, therefore, in considering whether doubling the claimants’ figures in order to cope with two separate OEMs is precisely the correct approach. But it seems to us unlikely that the claimants will spend less than the defendants in such negotiations. Consequently, we consider that £350,000, representing essentially the same sum as claimed by the defendants overall, is the reasonable and proportionate sum for this phase. BMW / Hyundai/Kia / Vauxhall / Volvo / JLR / FCA & Suzuki / VW & Porsche[76]The non-ALGLO defendants all offered the sum of £50,000 to the claimants in the budget discussion reports in respect of each GLO specific budget. By the time of the hearing, Toyota had agreed a sum of £69,450, i.e. the sum claimed by the claimants, but the remaining seven budgets were not agreed. The sums claimed by the claimants in those budgets ranged from £75,400 to £149,363. The lowest three budgets (including Toyota) had been reduced following a decision by the claimants to reflect the fact that in those budgets, only one of the lead solicitor firms was instructed by the claimants. As such, less work was likely to be done. Overall, the claimants did not accept that simply halving the time claimed was appropriate.[77]The other five budgets were much closer in range (between £121,486 and £149,363) and, as with the ALGLO budgets, they were based on a standard figure for the lead solicitors and for counsel’s fees. Those figures were reduced, e.g. the lead solicitors’ time had come down from 280 hours to 150 hours. As with the ALGLO budgets, these non-ALGLO budgets varied depending upon the amount of non-lead solicitors’ time involved. They contained the same amounts of time as for the ALGLO budgets in respect of each individual non-lead solicitor.[78]The non-ALGLO defendants’ own budgets generally ranged between £40,000 and £70,000 with Volvo (£82,827.50) and Vauxhall (£103,836.91) being the outliers.[79]The defendants’ offer of £50,000 on the claimants’ budget per non-ALGLO defendant was said to be based upon the allowances made in the CMH1 judgment regarding this phase. However, as Mr Teasdale pointed out, the figures in fact varied quite considerably, with, for example, the budget in the Vauxhall GLO being allowed at £100,000 whereas in the Toyota GLO it was £20,000, which perhaps reflected the suggestion that it ought to be at the lower end of the sums involved given the comparative simplicity of any settlement mechanism. We consider it is difficult to say any standard figure ought properly to apply in this phase. Even a regimented methodology for settlement of individual claims would require more time where there are considerably more claimants than in others. We therefore reject the defendants’ beguiling approach of simply allowing a standard figure here.[80]Nevertheless, we consider the defendants’ ⅔ / ⅓ approach between ALGLO and non-ALGLO defendants to be a more appropriate division than allowed for in the 55/45 figures proposed by the claimants and we have moved the sums allowed towards the defendants’ split. As Mr Kapoor submitted on behalf of the defendants on this subject, any settlement of these claims is likely to be based on a framework which cascades from the lead and ALGLO defendants to the non-ALGLO defendants, at least in its general shape.[81]We also agree with the general thrust of the defendants that any negotiation would have to be dealt with in a compressed period. Until the PDD judgment is available for consideration, little or no negotiating is likely. Once the quantum trial has commenced, the scope for industry in respect of settlement is also constrained. We acknowledge Mr Teasdale’s comments that if there is traction in the manner of any negotiations, then significant time may be spent in seeking to resolve the claims. Equally, there may be little or no traction and our task is not to budget on a worst case, if that is the correct terminology, approach.[82]Balancing these various factors, and having allowed £975,986 in respect of the ALGLO budgets for this phase, we have allowed the sum of £649,450 as set out in the following table in respect of the non-ALGLO defendants. We have allowed a maximum of £75,000 in respect of the single lead firm defendants and allocated the remainder so as to achieve a figure which is approximately 60% / 40% overall. Claimants’ ADR Non ALGLO Toyota £69,450 BMW £97,000 Hyundai/Kia £75,000 Vauxhall £94,500 Volvo £74,500 JLR £79,000 FCA + Suzuki £75,000 VW + Porsche £85,000 Total £649,450[83]The overall sums therefore allowed for the ADR / Settlement Discussions phase of the Second General Budget are: Claimants – £1,625,436.00 Defendants - £1,687,074.55 Claimants' Tranche 3 Costs Budgets Agreed/Allowed Lead & ALGLO £2,667,500.00 Sub-total £2,667,500.00 Mercedes £843,681.65 Peugeot-Citroen (PCD) £525,000.00 Ford £525,000.00 Nissan £850,000.00 Renault Sub-total £2,743,681.65 Toyota £0.00 BMW £0.00 Hyundai/Kia £0.00 Vauxhall £0.00 Volvo £0.00 JLR £0.00 FCA + Suzuki £0.00 VW + Porsche £0.00 Sub-total £0.00 GRAND TOTAL £5,411,181.65 Defendants' Tranche 3 Costs Budgets Total Agreed/ Allowed Mercedes £2,786,060.00 Ford £3,082,505.00 Nissan £2,088,595.00 Nissan Authorised Dealerships £5,798.50 Renault £2,190,673.00 Peugeot-Citroen (PCD) £2,242,786.10 Sub-total £12,396,417.60 Toyota £43,750.00 BMW £50,000.00 Hyundai/Kia £50,000.00 Vauxhall £50,000.00 Volvo £50,000.00 JLR £47,917.80 BMW Authorised Dealerships £0.00 FCA £39,368.36 Suzuki £34,525.00 VW £50,000.00 Porsche £46,078.40 Sub-total £461,639.56 GRAND TOTAL £12,858,057.16 APPENDIX 1 – REPRESENTATION CLAIMANTS THEO BARCLAY SIMON TEASDALE MATTHEW PARKER KC DEFENDANTS MERCEDES - CARLO TACZALSKI FORD - NICOLA GREANEY KC, MATTHEW WASZAK RENAULT - STEPHEN BAILEY NISSAN - SHAMAN KAPOOR PCD - ANDREW HOGAN BMW - MARTYN GRIFFITHS FCA - CLEARY GOTTLIEB STEEN & HAMILTON LLP HYUNDAI-KIA - MARTYN GRIFFITHS JLR - DANIEL LAKING PORSCHE - DOUGLAS MAXWELL SUZUKI - JAMES PARTRIDGE TOYOTA - SOPHIE WEBER VAUXHALL - CLEARY GOTTLIEB STEEN & HAMILTON LLP VOLVO - PAUL HUGHES VW - THOMAS EVANS