Jones & Ors v Secretary of State for Energy And Climate Change & Ors [2012] EWHC 3647 (QB)

[2012] EWHC 3647 (QB)Case No HQ09X03547
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
Venue Royal Courts of Justice, Strand, London, WC2A 2LLDate 21/12/2012
Before
THE HONOURABLE MRS JUSTICE SWIFT DBE
Between
JEFFREY JONES AND OTHERSClaimants
Mr David Allan QC, Mr Ivan Bowley and Mr Benjamin Williams (instructed by Hugh James) for ClaimantsMr Ronald Walker QC, Mr Robert O’Leary and Ms Judith Ayling (instructed by Nabarro) for DefendantsHearing Hearing date: 23 October 2012
Judgment

THE BACKGROUND

[1]On 23 October 2012, I handed down judgment in the eight lead claims of the Phurnacite Workers Group Litigation (PWGL). At the hearing, I received written and oral submissions about issues relating to costs. Before me were witness statements from Ms Kathryn Singh, the partner at Hugh James solicitors with conduct of the claimants’ case, and from Mr Carl Dray of Nabarro LLP who has conduct of the PWGL on behalf of the defendants. In view of the very large sums of money involved and the importance of the issues to the parties, I have taken time to consider before delivering this written judgment.[2]There are currently 183 claimants (including the eight lead claimants) with claims registered under the PWGL Group Litigation Order (GLO). Their claims are for non-malignant respiratory disease (namely chronic obstructive pulmonary disease (COPD) and chronic bronchitis (CB)) and/or malignant disease (namely lung cancer, bladder cancer and skin cancer) allegedly caused by exposure to dust and/or fume in the course of their work at the Abercwmboi Phurnacite Works, Aberaman, Cynon Valley, South Wales (the Phurnacite Plant). Some claimants have made claims for more than one disease. For the purposes of the trial, I directed that each party should choose one lead claim for non-malignant respiratory disease and one lead claim for each of lung cancer, bladder cancer and skin cancer. Where a lead claimant had made a claim in respect of more than one medical condition, I directed that all their claims should be dealt with at the trial of the lead claims.

The lead claims

[3]The outcome of the lead claims is set out below in tabular form. Claimant Outcome Ernest Noel Carhart, deceased Succeeded in lung cancer and COPD claims. Failed in CB claim. No limitation defence. Raymond Davies, deceased Succeeded in lung cancer claim. Discretion exercised under section 33 of the 1980 Act. John Griffiths, deceased Failed in claims for lung cancer, COPD and CB. Ronald Lyndhurst Jenkins, deceased Failed in bladder cancer claim. Claims for COPD and CB abandoned before trial. David Samuel Jones Failed in BCC claim. Claims for COPD and CB abandoned before trial. David Middle Failed in skin cancer and CB claims. Frederick John Richards Failed in bladder cancer claim. Succeeded in COPD and CB claims. Discretion exercised under section 33 of the 1980 Act. Michael Douglas Robson, deceased Succeeded in COPD claim. Discretion exercised under section 33 of the 1980 Act THE COSTS OF THE ACTION Common and individual costs The relevant provisions

THE COSTS OF THE ACTION

[4]CPR 48.6A applies where the court has made a GLO. CPR 48.6A(2) defines the meaning of “individual costs” and “common costs” for the purposes of group litigation. CPR 48.6A(2) provides:
“In this rule- (a) “individual costs” means costs incurred in relation to an individual claim on the group register; (b) “common costs” means- (i) costs incurred in relation to the GLO issues; (ii) individual costs incurred in a claim while it is proceeding as a test claim; and (iii) costs incurred by the lead solicitor in administering the group litigation; and (c) “group litigant” means a claimant or defendant, as the case may be, whose claim is entered on the group register.” (a) “individual costs” means costs incurred in relation to an individual claim on the group register; (b) “common costs” means- (i) costs incurred in relation to the GLO issues; (ii) individual costs incurred in a claim while it is proceeding as a test claim; and (iii) costs incurred by the lead solicitor in administering the group litigation; and (c) “group litigant” means a claimant or defendant, as the case may be, whose claim is entered on the group register.”
[5]The provisions of CPR 48.6A(2) were reflected in the GLO made in the PWGL. Both Schedules of the PWGL Group Register (Schedule A containing claims for non-malignant respiratory disease and Schedule B containing claims for lung, bladder and skin cancer) included the following definitions: “Individual costs are those costs and disbursements incurred for and/or in respect of any individual Claimant in relation to matters which are personal to each such Claimant, excluding costs and disbursements incurred for and/or in respect of any claims which may hereafter be selected as test or lead cases.” and “Common costs are all costs and disbursements other than individual costs.”

and

[6]The effect of the provisions is that those individual costs personal to the lead claims that were incurred before the claims were designated as lead claims will follow the event in the usual way. However, all costs other than the individual costs will form part of the common costs of the action. Entitlement to those common costs will be determined as part of the costs of the action as a whole. The general approach to the determination of costs The relevant provisions

The general approach to the determination of costs

[7]The general approach to the determination of costs is set out in CPR 44. CPR 44.3 provides:
“(1) The court has discretion as to- (a) whether costs are payable by one party to another; (b) the amount of those costs; and (c) when they are to be paid. (2) If the court decides to make an order about costs- (a) the general rule is that the unsuccessful party will be ordered to pay the costs of the successful party; but (b) the court may make a different order. [(3) is not relevant for these purposes.] (4) In deciding what order (if any) to make about costs, the court must have regard to all the circumstances, including- (a) the conduct of all the parties; (b) whether a party has succeeded on part of his case, even if he has not been wholly successful; and (c) any payment into court or admissible offer to settle made by a party which is drawn to the court's attention, and which is not an offer to which costs consequences under Part 36 apply. (5) The conduct of the parties includes- (a) conduct before, as well as during, the proceedings, and in particular the extent to which the parties followed the Practice Direction (Pre-Action Conduct) or any relevant pre-action protocol; (b) whether it was reasonable for a party to raise, pursue or contest a particular allegation or issue; (c) the manner in which a party has pursued or defended his case or a particular allegation or issue; (d) whether a claimant who has succeeded in his claim, in whole or in part, exaggerated his claim. (6) The orders which the court may make under this rule include an order that a party must pay- (a) a proportion of another party's costs; (b) a stated amount in respect of another party's costs; (c) costs from or until a certain date only; (d) costs incurred before proceedings have begun; (e) costs relating to particular steps taken in the proceedings; (f) costs relating only to a distinct part of the proceedings; and (g) interest on costs from or until a certain date, including a date before judgment. (7) Where the court would otherwise consider making an order under paragraph (6)(f), it must instead, if practicable, make an order under paragraph (6)(a) or (c). [(8) and (9) are not relevant for these purposes].”
These provisions must form the starting point of my considerations. (a) whether costs are payable by one party to another; (b) the amount of those costs; and (c) when they are to be paid. (2) If the court decides to make an order about costs- (a) the general rule is that the unsuccessful party will be ordered to pay the costs of the successful party; but (b) the court may make a different order. [(3) is not relevant for these purposes.] (4) In deciding what order (if any) to make about costs, the court must have regard to all the circumstances, including- (a) the conduct of all the parties; (b) whether a party has succeeded on part of his case, even if he has not been wholly successful; and (c) any payment into court or admissible offer to settle made by a party which is drawn to the court's attention, and which is not an offer to which costs consequences under Part 36 apply. (5) The conduct of the parties includes- (a) conduct before, as well as during, the proceedings, and in particular the extent to which the parties followed the Practice Direction (Pre-Action Conduct) or any relevant pre-action protocol; (b) whether it was reasonable for a party to raise, pursue or contest a particular allegation or issue; (c) the manner in which a party has pursued or defended his case or a particular allegation or issue; (d) whether a claimant who has succeeded in his claim, in whole or in part, exaggerated his claim. (6) The orders which the court may make under this rule include an order that a party must pay- (a) a proportion of another party's costs; (b) a stated amount in respect of another party's costs; (c) costs from or until a certain date only; (d) costs incurred before proceedings have begun; (e) costs relating to particular steps taken in the proceedings; (f) costs relating only to a distinct part of the proceedings; and (g) interest on costs from or until a certain date, including a date before judgment. (7) Where the court would otherwise consider making an order under paragraph (6)(f), it must instead, if practicable, make an order under paragraph (6)(a) or (c). [(8) and (9) are not relevant for these purposes].”

An issue-based or a percentage approach?

[8]Despite their differing contentions on the costs issues, the parties were in full agreement about one matter, namely that I should not attempt to make an issue-based order for costs pursuant to CPR 44.3(6)(f). They agreed that, in the event that I decide to award the claimants less than the full amount of their costs, I should instead express my award by reference to the percentage of the total costs (as eventually assessed) to which they should be entitled. I am confident that the parties were right to advocate this approach. The making of an order awarding costs on an issue by issue basis would, in the context of this litigation, present extremely complex problems for the judge carrying out the detailed assessment of costs and would in all probability add significantly to the costs of the assessment exercise.

The approach to be adopted

[9]The claimants contended that, in order to determine which party was successful, I should look at the outcome of the trial of the lead claims and make a broad assessment in the context of the PWGL as a whole. They submitted that such an assessment must inevitably lead to the conclusion that the claimants were the successful party.[10]The claimants said that, having reached that conclusion, I should then apply the principles set out in the relevant provisions of the CPR in order to determine whether the claimants’ costs should be reduced to reflect the fact that they lost on certain issues, in particular the causation of bladder cancer and basal cell carcinoma (BCC), the type of non-melanoma skin cancer (NMSC) from which the relevant lead claimants had suffered. They contended that no such reduction should in fact be made and that they should receive the whole of their costs relating to the generic issues. In the event that I do not accept their primary submission, they argued that any reduction in the claimants’ costs should be very modest indeed.[11]The defendants urged me to take a different approach. They submitted that it is inappropriate in group litigation to look at success in terms of the litigation as a whole. They argued that, instead, I should look separately at each of the main generic issues decided at the trial and then decide, in respect of each issue, which party had ‘won’ and to what extent. They argued that, having made my decisions in respect of each issue, I should then determine the overall percentage of costs payable to the claimants. I shall refer later in this judgment to the findings the defendants invited me to make.[12]CPR 44.3 sets out the way in which the court should approach the determination of costs. It provides that the general rule is that the unsuccessful party will be ordered to pay the costs of the successful party. There is no provision in the CPR which indicates that a different approach should be adopted when determining costs in group litigation. Accordingly, it seems to me that I must follow the general approach and begin by deciding which party was successful in the litigation.[13]The first question to be asked therefore is: who is the successful party?

Who is the successful party?

[14]I was referred to a number of authorities on this issue. It is clear from those authorities that the question of who is the “successful party” must be determined by reference to the litigation as a whole: see for example Rix LJ in Kastor Navigation Co. Ltd. v Axa Global Risks [2004] EWCA Civ 215 at paragraph 143). “Success” for the purposes of the CPR is “not a technical term, but a result in real life” and “is a matter for the exercise of common sense”: see Lightman J in BCCI v Ali (No 4) 149 NLJ 1734 at paragraph 7.[15]The claimants succeeded in establishing that the defendants had been in breach of duty and had exposed their employees at the Phurnacite Plant to harmful levels of dust and carcinogenic substances (including benzo[a]pyrene (BaP)) throughout the whole period of operation at the Phurnacite Plant. I found that, for the whole of that period, the defendants should have been aware of the potentially harmful effects of the dust and fume to which their employees were exposed.[16]I concluded that exposure to dust at the Phurnacite Plant had given rise to COPD and/or CB in some of the lead claimants. In those cases where I did not find causation proved, it was generally because I was not satisfied on a balance of probabilities that the claimant had developed the relevant symptoms at a time sufficiently proximate to his exposure to dust and/or fume at the Phurnacite Plant. I also concluded that, where a claimant had had sufficient exposure to carcinogenic substances contained in the dust and fume at the Phurnacite Plant to double the risk of developing lung cancer, causation had been established. Four of the lead claimants succeeded in establishing that the defendant’ breach of duty had caused their lung cancer, COPD and/or CB and were awarded damages. Of the 175 non-lead claims on the Group Register, 166 claims are for one or more of those three diseases. Following my judgment, those claims will now be able to proceed although whether or not they are successful will of course depend on the precise circumstances of each individual case.[17]In the case of both bladder cancer and BCC, I found that the claimants had failed to establish on a balance of probabilities the necessary causal link between their conditions and exposure to the carcinogenic substances contained in the dust and fume at the Phurnacite Plant. Nine of the 175 claims are for those diseases alone and will be unable to proceed further as a result of the outcome of the lead claims. In cases of squamous cell carcinoma (SCC), a different type of NMSC from which some of the claimants in the PWGL suffered, the issue of causation will depend on the claimant’s individual circumstances, as referred to at paragraph 10.58 of the generic Phurnacite judgment.[18]In the case of all but two of the lead claimants, the defendants contended that their claims were statute-barred under the provisions of the Limitation Act 1980 (the 1980 Act). In the Phurnacite judgment, I considered generic issues relating to both date of knowledge and to the exercise of my discretion under section 33 of the 1980 Act. I then went on to consider the issues relating specifically to three of the lead claimants. I did not deal with limitation in the three lead claims which failed entirely on the issue of causation and the issue was not raised in the case of one of the successful claimants. In each case, I found that the claimant’s date of knowledge arose more than three years before the commencement of proceedings. In all three cases, I concluded that it would be equitable to allow the claim to proceed.[19]It seems to me clear that, viewed overall, the claimants were the successful party at trial and are prima facie entitled to their costs. In accepting that they have some liability in costs to the claimants, the defendants have in fact implicitly accepted the fact of the claimants’ overall success.

Should there be a reduction in the claimant’s entitlement to costs?

[20]The next question is whether the claimants should receive the whole of their costs of the action or whether those costs should be reduced to reflect those issues in respect of which they were unsuccessful or only partially successful. In considering this question I have in mind in particular the provisions of CPR 44.3(3), (4) and (5).[21]The claimants contended the fact that they did not succeed on every issue and argument at trial is not of itself a reason for reducing the percentage of costs to which they are entitled. They submitted that it is virtually inevitable, in litigation as complex as the PWGL, that the successful party will lose some issues along the way. In support of that submission, they relied upon observations by Gloster J in HLB Kidsons v Lloyds Underwriters [2008] EWHC 2699 (Comm) at paragraph 11 of her judgment:
“There is no automatic rule requiring reduction of a successful party's costs if he loses on one or more issues. In any litigation, especially complex litigation such as the present case, any winning party is likely to fail on one or more issues in the case. As Simon Brown LJ said in Budgen v Andrew Gardner Partnership [2002] EWCA Civ 1125 at paragraph 35: “the court can properly have regard to the fact that in almost every case even the winner is likely to fail on some issues”
. Likewise in Travellers' Casualtyv Sun Life [2006] EWHC 2885 (Comm), Clarke J said at paragraph 12:
“If the successful Claimant has lost out on a number of issues it may be inappropriate to make separate orders for costs in respect of issues upon which he has failed, unless the points were unreasonably taken. It is a fortunate litigant who wins on every point.””
In HLB Kidsons, Gloster J went on to make separate orders in respect of two discrete issues which the winning party had abandoned either at trial or at an earlier stage of the case. “If the successful Claimant has lost out on a number of issues it may be inappropriate to make separate orders for costs in respect of issues upon which he has failed, unless the points were unreasonably taken. It is a fortunate litigant who wins on every point.””[22]The claimants cited also the words of Jackson LJ in a personal injury case, Fox v Foundation Piling [2011] CP Rep 41 (CA), at paragraph 48:
“… in a personal injury action the fact that the claimant has won on some issues and lost on other issues along the way is not normally a reason for depriving the claimant of part of his costs: see Goodwin v Bennett UK Limited [2008] EWCA Civ. 1658.”
[23]The claimants accept that it may sometimes be appropriate to reduce a successful party’s costs in circumstances where there has been no unreasonable behaviour: for example, where the party has pursued inessential or weak points. However, they say that in this case the claimants did not pursue weak issues and their decision to investigate and pursue the issues on which they initially failed was not in any way unreasonable.[24]Having considered the principles to be applied, it is necessary to look in a little more detail at the course and outcome of the generic issues determined at trial.

Breach of duty and exposure levels

[25]Breach of duty and the levels of the claimants’ exposure to harmful dust and carcinogenic substances were the major issues in the lead cases, both at the preparation stage and at trial. The issues involved an examination of working conditions at the Phurnacite Plant over a period of almost 50 years. It was necessary for the purposes of the lead claims to look at working conditions in most areas of the Phurnacite Plant and at a range of jobs carried out in those areas. There was a large amount of lay witness evidence concerning the nature of the various processes carried out at the Phurnacite Plant, the working conditions of employees working in different capacities and relating to changes to working practices and conditions over the years.[26]The issue of whether the defendants had taken all practicable measures to protect their employees was ‘live’ until the very end of the trial, when it was abandoned. Even then, the defendants still contended for an apportionment of exposure to dust and fume as between tortious and non-tortious exposure. They argued that, even if they had taken all practicable measures to reduce dust and fume levels at the Phurnacite Plant, there was nevertheless an ‘irreducible minimum’ level of dust and fume which would inevitably have been generated by the Phurnacite manufacturing process and to which the claimants would have been exposed. They contended that the irreducible minimum level of non-tortious exposure (i.e. exposure which would have occurred without any breach of duty on their part), would have been as much as 33% - or, at the least, 25% - of the level of dust and fume to which the claimants were actually exposed. One obvious way in which the defendants might have reduced the dust and fume levels to which their employees were exposed was by the provision of respiratory protective equipment (RPE). Because of the contentions being made by the defendants about the ‘irreducible minimum’, it was necessary to examine with considerable care the long and somewhat tortuous history of the provision of RPE at the Phurnacite Plant throughout the period of its operation.[27]Had the defendants’ argument on the ‘irreducible minimum’ succeeded, it may well be that the tortious levels of exposure would not have been sufficient to ‘double the risk’ of developing lung cancer in any of the lead lung cancer claims. As it was, I concluded that the defendants had failed to produce convincing evidence that there was a minimum level of exposure that was unavoidable and, if so, to establish what that level had been.[28]An extensive disclosure exercise was carried out by both parties. This exercise gave rise to a huge quantity of documents relating to the issue of breach of duty and exposure levels which were eventually reduced to nine lever arch files of core documents for use at trial. The remainder of the documents were available on CD. Three technical experts reported on the issues of breach of duty and exposure levels. Their evidence (including the documents and literature on which they relied) extended to almost 30 lever arch files. The eventual findings on exposure levels were of course crucial to my eventual decisions in respect of causation of non-malignant respiratory disease and lung cancer in the individual cases.[29]The defendants conceded that the claimants won the issue of breach of duty to the extent of 100%. They accepted also that the claimants were successful in establishing exposure to harmful levels of dust and carcinogenic substances. However, they contended that, on that issue, the claimants’ success was only partial because, at trial, I preferred the evidence of one of the defendants’ witnesses, Professor Jones, to that of the claimants’ witness, Professor Syred. The defendants argued that a good deal of time at trial was taken up with Professor Syred’s evidence and with cross-examination of Professor Jones on the basis of Professor Syred’s evidence. They contended that, for that reason, the claimants should be regarded as having succeeded on the issue to the extent of only 70%. The claimants’ case was that they had been wholly successful in establishing the presence of harmful levels of exposure to dust and carcinogenic substances which formed the basis of my decisions on the causation of non-malignant respiratory disease and lung cancer.

Causation of non-malignant respiratory disease

[30]In his witness statement, Mr Dray asserted that there had ‘never’ been any substantial dispute of principle as to the issue of causation of non-malignant respiratory disease. This was not in fact the case since causation was denied in the Generic Defence. At the costs hearing, Mr Walker explained that Mr Dray had intended to suggest that, by the time of the trial when the relevant experts had produced their Joint Statement, no real dispute of principle had existed.[31]It is correct that, by the time of the trial, there was a significant amount of agreement between Dr Rudd, the claimants’ respiratory physician, and Professor Jones, who gave evidence on this issue for the defendants, as to the link between employment on coke oven work and an increase in the risk of COPD and CB, as demonstrated by the epidemiological evidence. However, they differed in their application of the epidemiological evidence to the circumstances of exposure at the Phurnacite Plant and in the approach to be adopted when assessing the effect of that exposure on an individual claimant. I set out those differences of approach at paragraphs 11.16-11.23 of the generic Phurnacite judgment.[32]Professor Jones’ approach to assessing the effect of exposure to dust on an individual claimant had been based on levels of respirable dust. I heard a good deal of evidence at trial about the levels of respirable dust to which the claimants might have been exposed. However, I came to the conclusion that the assessments of respirable dust made by both Professor Syred and Professor Jones (the third expert, Mr Stear, did not attempt such an assessment) were too uncertain to be relied upon. In the event, I accepted the ‘broad brush’ approach advocated by Dr Rudd (with some modification) in preference to the method advanced by Professor Jones.

Causation of lung cancer

[33]In their Generic Defence, the defendants denied that exposure to dust or fume at the Phurnacite Plant had caused any of the relevant lead claimants to develop lung cancer. Certain limited admissions were made about the potential for polyaromatic hydrocarbons (such as BaP) to cause some types of cancer but those admissions were not such as to avoid the necessity for causation to be fully investigated and proved. At their joint meeting, Dr Rudd and Professor Jones agreed on the total exposure to BaP that would have given rise to a ‘doubling of risk’ for lung cancer. However, at trial, there was disagreement between Dr Rudd on the one hand and the defendants’ experts, Professor Jones and Dr Falk, on the other, as to the application of the current medical knowledge on carcinogenesis to the principles of legal causation. In the event, I rejected the claimants’ contention, based on the evidence of Dr Rudd, that the relevant lead claimants had proved that their exposure had made a ‘material contribution’ to their lung cancer. Instead, I applied the ‘doubling of risk’ test favoured by the defendants.[34]The defendants argued that, because I had rejected the claimants’ approach to the issue of legal causation of lung cancer, the claimants had failed completely on that issue. The claimants rejected that suggestion. They pointed out that the defendants’ case at trial was that the claimants could not succeed in proving that their exposure to BaP had been sufficient to ‘double the risk’ of them developing lung cancer. In the event, however, the claimants had been successful in establishing causation in two of the three lead lung cancer claims. In the third, I found that the claimant had failed in establishing that her late husband’s total exposure to BaP was sufficient to fulfil the ‘doubling of risk’ test.

Causation of bladder cancer

[35]The claimants failed to establish to the required standard that exposure to dust or fume at the Phurnacite Plant had the potential to cause bladder cancer. The defendants contended that they are entitled to a reduction in the claimants’ entitlement to costs of a percentage equivalent to the whole of both sides’ costs relating to this issue.[36]The claimants contended that no such reduction is appropriate. They argued that all the claimants in the PWGL had been exposed to dust and fume containing carcinogenic substances as a result of the defendants’ breach of duty. A number of those claimants (including the two relevant lead claimants) had developed bladder cancer. An epidemiological study published by the Institute of Medicine in 1987, which examined mortality from various types of cancer at the Phurnacite Plant, had found an increased number of cases of bladder cancer amongst workers at the Phurnacite Plant, compared with the number that would have been expected, although the numbers were small and the results not statistically significant. The claimants had obtained medical evidence from a consultant urological surgeon who was supportive of their case. The claimants argued that, in the circumstances, their action in raising, pursuing and contesting the issue of bladder cancer cannot be regarded as in any way perverse or unreasonable. Their primary submission was that no reduction at all should be made in their entitlement to costs as a result of their failure on the issue. In the event that I did not accept that submission, they argued that any reduction should be modest and should relate only to the claimants’ entitlement to costs after a specified date (such as the date of the exchange of experts’ reports on the bladder cancer issue) after which it might be said that the claimants should have appreciated the risks associated with continuing to contest the issue.[37]The defendants submitted that it would be wrong for me to decide against making a reduction in the claimants’ costs on the ground that it was “not unreasonable” to pursue the claims for bladder cancer to trial or up to a certain point before trial. They said that, since the claimants had failed on that issue, they should suffer the usual penalty in costs. They argued that, in many cases, it would be possible to argue that it had not been unreasonable for an unsuccessful party to contest a particular issue up to a certain point in the case. However, it was not that consideration which determined the issue of costs. Moreover, in the context of the PWGL, it might equally be argued that it had been reasonable for the defendants to contest – at least up to a certain point – some of the issues on which they had ultimately failed, so that it was arguable that they should not be penalised in costs for doing so. The defendants submitted that the approach advocated by the claimants was contrary to the usual practice and unworkable.

Causation of skin cancer

[38]The claimants failed to establish to the required standard that the carcinogenic substances contained in the pitch to which the relevant lead claimants had been exposed at the Phurnacite Plant were capable of causing BCC. The defendants contended that they are entitled to a reduction in the claimants’ entitlement to costs of a percentage equivalent to the whole of both sides cost relating to this issue.[39]It has been known for many years that pitch is carcinogenic to skin. In their Generic Defence, the defendants admitted that exposure to a sufficient quantity of pitch was capable of causing skin cancer. They admitted also that they had had knowledge of that fact at all times material to the group litigation. At that stage in the litigation, no distinction was being drawn between BCC and other types of NMSC, in particular SCC which the defendants accept is clearly linked to exposure to pitch. The defendants’ position on BCC became clear only when the Report of their medical expert, Dr Falk, was disclosed in July 2011.[40]The claimants’ arguments on this issue were similar to those raised by them in relation to bladder cancer. They relied on the additional features of the known link between skin cancer and exposure to pitch and the admissions contained in the Generic Defence to support their argument that there should be no reduction in the claimants’ entitlement to costs in respect of this issue or, alternatively, a very modest reduction from, say, a date shortly after the exchange of experts’ reports. The defendants objected to this approach for the reasons I have previously explained in connection with the issue of causation of bladder cancer.

Limitation

[41]In each of the three lead claims where the limitation defence was raised, I found that the claimant’s date of knowledge for the purposes of the 1980 Act had arisen more than three years before the commencement of proceedings. In all three cases I exercised my discretion under section 33 of the 1980 Act to disapply the primary limitation period. The defendants contended that the issue of limitation arose only because of the claimants’ delay in bringing proceedings and that time was taken up by evidence relating to the issue of date of knowledge on which the three claimants failed. They suggested that the claimants should be regarded as having succeeded on limitation only to the extent of 80% and that their entitlement to costs should be subject to a reduction to reflect that fact.[42]The claimants pointed out that the defendants raised the limitation defence under the 1980 Act. In two of the lead claims, they placed reliance also on the Limitation Act 1939 although that reliance was abandoned during the trial. No culpable delay was found on the part of the three lead claimants and they all succeeded in persuading me to disapply the primary limitation period. The claimants therefore contended that no reduction should be made in relation to their entitlement to costs in relation to the conduct or outcome of the limitation issue.

The absence of Part 36 or other offers and mediation

[43]The claimants argued that I should take into account the fact that the defendants made no offers to settle either the lead claims or the litigation as a whole. Furthermore, the claimants offered to take part in mediation in December 2008. The defendants responded by saying that mediation would be premature although they did not rule it out at a later stage. The issue was never followed up and no mediation took place. The claimants point out that these factors were relevant to my consideration of the defendants’ conduct under the provisions of CPR 44.3 (4) (a). They relied on Halsey v Milton Keynes General NHS Trust [2004] 1 WLR 3002 and the criteria set out by the Court of Appeal in that case in order to determine whether the failure to mediate was unreasonable. The claimants contended that mediation might have resolved some of the issues in the claim and would have been a sensible investment having regard to the costs incurred in contesting the case.[44]The defendants responded by emphasising the difficulties in group litigation of making effective Part 36 offers. They said that, in practice, it would not have been feasible to make offers in the claims that were to form part of the lead action. There would have been obvious difficulties also in making offers, whether on a monetary or percentage basis, directed at specific groups of specific claims without having undertaken any investigation of those claims.[45]As to mediation, the defendants submitted that, at the time the claimants raised the possibility, the parties did not know how many claimants would be involved in the litigation or what the strength of the claims would be. The defendants had no expert evidence so were wholly unable at that stage to assess issues such as causation. They argued that they did not act unreasonably in declining involvement in mediation at that early stage. Thereafter, the matter was not raised for discussion.[46]There are significant practical problems in making appropriate offers in group litigation such as this and the defendants’ failure to do so cannot in my view be regarded as unreasonable. As to mediation, I can well understand that, at the time it was mooted, the defendants felt that they were not properly equipped to embark upon a mediation process. The claimants were much further advanced in their investigations of the claims at that time and any mediation would have been very one-sided. In the circumstances, I do not consider that their failure to engage in mediation then or to follow up the offer at a later stage was unreasonable. There was in my view little or no prospect of issues such as breach of duty, exposure levels, medical causation and limitation being settled by way of mediation and it is highly unlikely that mediation would have proved successful. I do not consider that, in the circumstances of the PWGL, the defendants’ failure to make any offer of settlement or to engage in mediation is something that I should weigh in the balance against them when considering whether there should be a reduction in the claimants’ entitlement to costs.

Assessment of any reduction to be made

[47]The defendants submitted that the claimants’ entitlement to generic costs should be assessed by applying the defendants’ suggested percentage of success for each issue to the time spent at the trial on that issue. The relevant calculations are set out in Mr Dray’s witness statement and I shall not rehearse them here. The result of that exercise would be that the claimants would receive an overall percentage of 43.63% of their costs of the generic issues. The defendants conceded that the figure of 43.63% should be rounded up to 50% in order to reflect the overall success of the claimants on the generic issues.[48]The defendants suggested that I should then carry out a similar exercise in respect of the issues in respect of which they had been successful. They argued that they should be regarded as having ‘won’ all the contested issues relating to medical causation and that they are therefore entitled to 100% of their costs in respect of those issues.[49]The defendants further contended that, to the extent that they were successful in the lead claims, they should be entitled to their costs. The claims of four of the lead claimants (Mr Griffiths, Mr Jenkins, Mr Jones and Mr Middle) were wholly unsuccessful. Thus, the defendants said, they are in principle entitled to all the costs of those claims. However, they acknowledged that the evidence in those claims assisted in establishing breach of duty and the relevant exposure levels. For that reason, they suggested that a reduction of 25% should be made, reducing their entitlement to 75% of the costs of the four claims.[50]The claims of two of the lead claimants, Mr Davies and Mr Robson, were wholly successful. Nevertheless, the defendants contended for a reduction of 5% in the costs payable to the claimants on the basis that both claimants had ‘failed’ on the issue of date of knowledge. The cases of Mr Carhart and Mr Richards were partially successful, in that they succeeded in respect of one disease but failed in relation to another. The defendants contended that the claimants should be entitled to 50% of the costs of those claims.[51]Having compared the base costs of the claimants and the defendants, the defendants contended that, in order to reflect their own entitlement to costs and disbursements, the overall costs payable to the claimants should be reduced by 10%. They therefore, submitted that I should make an order directing them to pay 40% of the claimants’ costs of the action.[52]The claimants criticised this approach in a number of respects. They argued that it is not appropriate to use the time spent on generic issues at trial as a surrogate for the work done on the same issues throughout the course of the group litigation. A large amount of the costs of the group litigation were incurred before the trial, not necessarily in the same proportions as the time spent on those issues at trial. The claimants argued that the proper approach, if a reduction in the claimants’ entitlement to costs were to be made, is to take a broad approach to the assessment of that reduction.

Discussion and conclusions

[53]I accept the claimants’ submission that it would be inappropriate, when considering whether there should be any reduction in the claimants’ entitlement to costs, and if so how much, for me to look only at what happened at trial. A good deal of the work of investigation, the assembling of documents and the collection of lay and expert evidence took place before the trial and the work spent on each of the generic issues at that stage was not necessarily proportionate to the time spent on the issue at trial. It seems to me that I must consider the work done on the litigation as a whole.[54]There is no doubt that a very large proportion of the work done – and therefore the costs incurred - related to the issues of breach of statutory duty and exposure levels. I do not accept the defendants’ submission to the effect that, because at trial I preferred the evidence of Professor Jones to that of Professor Syred, the claimants should be considered to have “failed” to the extent of 30% on the issue of exposure levels. The events at trial formed only a small part of the whole picture. The reality is that the claimants succeeded in identifying, collecting and presenting the documentary and other evidence that enabled four of the lead claimants to establish that they, and others with similar work histories, had been exposed to levels of dust such as to give rise to the risk of non-malignant respiratory disease and/or to levels of carcinogenic substances with the potential to cause lung cancer. In any event, whilst it is true that I accepted Professor Jones’ general approach in preference to both the other technical witnesses, I did not accept his initial calculations in their entirety but instead requested him to re-work them using a number of different assumptions based on my evidential findings. I can see no basis for making any reduction in the claimants’ entitlement to costs on the ground that there was a ‘failure’ in connection with the issue of exposure levels.[55]On the issue of causation of non-malignant respiratory disease, I had some difficulty understanding the submissions made by the defendants. They appeared to be suggesting that the claimants had failed on this issue to the extent of 100% which plainly did not represent the reality of the position. Once again, it seems to me that the defendants were concentrating exclusively on the events at trial, rather than looking at the course and outcome of the issue as a whole. Even at trial, however, there were still live issues on which the claimants succeeded overall. I can see no basis for making any reduction in the claimants’ entitlement to costs on the ground that there was a ‘failure’ in connection with this issue.[56]The dispute relating to the proper approach to legal causation in the context of lung cancer, which I resolved in the defendants’ favour, was conducted in the context of the emerging medical knowledge of the process of carcinogenesis and the uncertainties created by the recent case law on causation. Yet again, the defendants’ contention that they had succeeded wholly on this issue took no account at all of the reality which was that, throughout the course of the litigation, they had denied that exposure to harmful substances at the Phurnacite Plant was capable of causing lung cancer, whereas the claimants succeeded in establishing causation in two out of the three lead lung cancer claims. (It should be noted that the lead case of Griffiths, which failed on causation, had not originally been selected as a lung cancer claim.) In the context of the preparatory work that had been undertaken on this issue and the evidence that had been collected, the legal argument constituted a very small part of the work done and the costs incurred. It seems to me that the dispute can properly be regarded as relating to one of those issues referred to in the cases of HLB Kidsons; Budgen; and Travellers’ Casualty which a party might be expected to lose en route to overall success. I do not consider it appropriate to make any reduction in the claimants’ entitlement to costs to reflect the outcome of that dispute.[57]In two of the three lead claims where I dealt with the issue of limitation, I found that the claimants had been unaware until a late stage that they were able to make a common law claim in respect of their injuries. In the third case, I found that the claimant had not been aware for several years after her father’s death from lung cancer that his death might have been caused by exposure to harmful substances at the Phurnacite Plant. In all three cases, I found that delay had not been culpable. In two of the three claims, it was accepted (at least by the time of final submissions) that the claimant’s date of knowledge had arisen on a date prior to three years before the commencement of proceedings. Despite that concession, it was necessary in both claims for me to hear evidence about, and make findings in respect of, date of knowledge in order to determine the section 33 issue. In the circumstances, I do not consider it appropriate to make a reduction in the claimants’ entitlement to costs in respect of their conduct of, or the outcome of, the issue of date of knowledge.[58]That leaves the issues of causation of bladder cancer and skin cancer. These were discrete issues which required separate investigation and evidence. The issue of bladder cancer in particular occupied a significant proportion of the technical and medical evidence (both written and oral), albeit a very much smaller proportion than the issues of breach of duty and exposure levels. The defendants were wholly successful on these two issues. Under CPR 44.3. (4)(d), I am required to have regard to “whether a party has succeeded on part of his case, even if he has not been wholly successful”. Plainly, the defendants succeeded on this part of their case.[59]Under CPR 44.3(4)(a) and (5)(b). I am also required to consider “whether it was reasonable for a party to raise, pursue or contest a particular allegation or issue”. I have considered the claimants’ submissions that it was reasonable for them to raise, investigate and pursue the claims for bladder cancer and BCC. I have some sympathy with those submissions. I understand that it would have been difficult for the claimants’ legal advisers not to have undertaken an investigation into the causation of the two diseases. I recognise that, in the case of the claim for skin cancer, the claimants may have been reassured by the general admission made by the defendants in their Generic Defence. I find it understandable that, having obtained favourable expert advice, they should have decided to pursue the issues, at least up to the time of the exchange of expert evidence. Even at that stage, I would not characterise their behaviour in pursuing the issues to trial as ‘unreasonable’. They were in possession of favourable medical evidence, albeit, as it turned out, that evidence was not as strong as they had thought. Consequently, it could be said, as the claimants contended, that they acted reasonably within the meaning of CPR 44.3(5) (b).[60]The difficulty with that argument, as the defendants point out, is that it could be applied to every case where the unsuccessful party has not acted unreasonably in pursuing an issue and even, in a closely fought case, to both parties to the same action. Its application would involve a minute examination of the reasonableness or otherwise of decisions taken by both parties at different times in the proceedings and would in practice be wholly unworkable. Moreover, if the reasonableness of proceeding were to be the determining factor, the outcome of such an examination would often run counter to the general principle that costs follow the event.[61]Thus, whilst I accept that the claimants’ actions in continuing to pursue the claims for bladder cancer and BCC may well have been reasonable, I nevertheless consider that, bearing in mind the other factors that I am required to take into account and given the significance of those causation issues and the costs incurred in investigating and contesting them, the interests of justice require that there should be some reduction in the claimants’ entitlement to costs in order to reflect the fact that the defendants succeeded on those issues. That reduction should take account of the costs expended by both parties on investigating and contesting the issues and should not be confined to a particular period of the litigation. I bear in mind that the costs incurred by the defendants throughout the PWGL have been significantly less than those incurred by the claimants and I take that fact into account when determining the appropriate reduction to be made.[62]So far as the lead claims are concerned, I bear in mind that, in the cases of Jenkins, Jones, Middle and Richards, individual costs relating to the issue of causation of bladder cancer or BCC will have been incurred by both parties during the period after the four claims were designated as lead claims and will therefore form part of the common costs of the action under the provisions of CPR 48.6A(2). I have taken those costs into account when assessing the appropriate reduction to be made in the claimant’s entitlement to costs. To the extent that any of the other lead claims failed in whole or in part, I do not consider that any reduction in the claimants’ entitlement to common costs would be appropriate. Those claims served their purpose in assisting the court to determine the issues of breach of duty and exposure levels and also afforded guidance on the parameters by which the remainder of claims in the PWGL should be resolved. The claims for non-malignant respiratory disease which were abandoned or failed at trial in the cases of Carhart, Jenkins, Jones and Middle were not the claims in respect of which those cases had been selected as lead cases. They were subsidiary claims which formed part of the trial of the lead claims (or would have done if they had not been abandoned) only as a result of my direction that the lead claims should be tried in their entirety.[63]I do not consider that the exercise conducted by Mr Dray, which was based on the time spent on the various issues at trial, provides a reliable guide to the appropriate reduction in the claimants’ entitlement to costs. It seems to me that I must make a broad brush assessment of the appropriate percentage reduction, based on my knowledge of the case as a whole and taking into account the factors I have mentioned. Doing the best I can, I assess the appropriate reduction at 20%.[64]I therefore make an order that the defendants should pay 80% of the claimants’ costs of the action as assessed. INTEREST ON DISBURSEMENTS The claim for interest

INTEREST ON DISBURSEMENTS

[65]The costs and disbursements payable by the defendants will be subject to interest from the date of the judgment in the usual way. However, the claimants sought an order that the defendants should also pay interest on the disbursements that had been paid by their solicitors, Hugh James, from the date of payment of the relevant sums to the date of the judgment. During that period, I am told that substantial sums were paid out by Hugh James, mainly to cover experts’ and counsels’ fees. In general, the claimants would not be entitled to interest on those sums since they have not been personally out of pocket. However, the claimants contended that they have an obligation to pay interest on the sums paid out by Hugh James on their behalf. That obligation is said to arise as a result of written ‘disbursement funding agreements’ made between Hugh James and individual claimants. It appears that, by those agreements, Hugh James agreed to fund the disbursements on the condition that, at the conclusion of the case, the claimants paid interest (‘the credit charge’) on the relevant sums at the rate of 4% above base rate.[66]At the costs hearing on 23 October 2012, the defendants argued that the determination of the claimants’ application for interest on disbursements should be deferred to a date in the future. They had only recently been notified of the application, the grounds on which it was made and the authorities relied upon by the claimants. They sought time to consider the arguments raised by the claimants. In the circumstances, their application seemed entirely reasonable. A date for the hearing of the application has now been set for 25 March 2013, when a CMC for the remainder of the claims in the PWGL will also take place.

Disclosure

[67]In the meantime, the defendants sought an order for disclosure of certain documents relevant to the application for interest on disbursements.

Conditional fee agreements

[68]In her witness statement prepared for the purpose of the costs hearing, Ms Singh referred to the conditional fee agreements (CFAs) entered into by the claimants and Hugh James. This section of Ms Singh’s witness statement was written in response to a request by the defendants in the course of correspondence for disclosure of those part of the claimants’ CFAs which established the claimants’ obligation to pay costs, an obligation which was necessary to found their application for an interim award of costs on account.[69]Ms Singh had indicated in the course of the correspondence that, whilst the PWGL was still proceeding, the claimants would resist disclosure of the CFAs on the ground that it would be unfair for the defendants to be made privy to the sensitive information about such matters as the assessment of risk contained in the CFAs. It was in response to that indication that the defendants had made clear that they would be prepared to accept disclosure of the relevant provisions of the CFAs only.[70]At paragraph 38 of her witness statement, Ms Singh stated:
“What follows is intended to demonstrate that costs are indeed payable at this stage and does not constitute a waiver of privilege or confidentiality in the documents which actually constitute the claimants’ funding arrangements.”
[71]At paragraph 39, she stated:
“Under the terms of the CFAs disbursements are always payable. In this case, substantial disbursements have been paid as the case proceeds by Hugh James on the claimant’s behalves. These payments have been made pursuant to disbursement funding loan agreements, under which interest is payable on advances at 4% above the base rate…”
. The claimants referred to that paragraph in their Skeleton Argument dealing with interest on disbursements.[72]In their Position Paper dealing with the claim for interest, the defendants sought disclosure of the CFAs in the four successful lead claims. It appeared that the defendants were seeking disclosure of the entirety of the CFAs and argument at the costs hearing proceeded on that basis. However, towards the end of the hearing, it became clear that the defendants were not seeking disclosure of the four CFAs in their entirety, only those provisions relating to the obligations to pay disbursements and to pay credit charges on disbursements. They were content for all other provisions contained in the CFAs to be redacted.[73]In those circumstances, it seems to me unnecessary to consider in great detail the submissions made by the parties on this point. The defendants’ case was that, since the CFAs had been referred to in Ms Singh’s witness statement, the defendants were prima facie entitled to inspection of them pursuant to the provisions of CPR 31.14.1B. Furthermore, since at paragraph 39 of her witness statement, Ms Singh placed specific reliance on the provisions relating to disbursements contended in the CFAs, the defendants submitted that it was not open to the claimants to claim privilege for those documents. The claimants contended that the reference to the CFAs in Ms Singh’s statement was limited, was tangential only to the issue of interest on disbursements and was not such as to give rise to a waiver of privilege.[74]It seems to me clear that, in referring to the CFAs in her witness statement, Ms Singh was placing reliance on the provisions relating to the obligation to pay disbursements and therefore (despite her assertion in the statement to the contrary) was waiving privilege in respect of those provisions. However, I consider that the waiver of privilege extended to those provisions alone. At the time Ms Singh made her witness statement, the defendants had already acknowledged in correspondence that they were not seeking disclosure of the CFAs as a whole, merely disclosure of “relevant clauses”. In seeking partial disclosure, the defendants were recognising – as they did at the costs hearing – that it would be possible to separate out the relevant provisions from the rest of the subject matter of the CFAs, disclosure of which would potentially cause prejudice to the claimants.[75]I therefore order that the claimants shall disclose and make available for inspection the CFAs relating to the four lead claimants, Carhart, Davies, Richards and Robson, such inspection to be limited to those provisions of the CFAs relating to the obligation to pay disbursements and interest or credit charges thereon.

Disbursement funding agreements

[76]Specimen disbursement funding agreements of the type said to have been entered into by the claimants were annexed to Ms Singh’s witness statement. These were unsigned and did not relate to any of the lead claimants. It is accepted that the defendants are entitled to inspect the executed agreements relating to the four successful lead claimants and I so order.

Correspondence between solicitors and claimants

[77]The defendants also sought disclosure of all correspondence passing between Hugh James and the four claimants at or about the date the disbursement funding agreements were entered into. They argued that such disclosure was necessary in order to enable the defendants to satisfy themselves that the responsibility which the specimen credit agreements placed on the claimants to pay the credit charges to Hugh James if the claim was successful constituted a genuine obligation. The suggestion was that there might be collateral correspondence making clear that, in reality, the claimants would never have to pay the credit charges to Hugh James.[78]Counsel for the claimants expressed concern at the suggestion that Hugh James had acted improperly by providing, by way of a side letter, reassurance to the claimants that they would never under any circumstances have to repay the credit charges. He submitted that there was no evidence at all that this was the case and that the defendants were inviting the court to sanction a “fishing expedition” permitting inspection of documents that were plainly the subject of legal professional privilege.[79]I accept the claimants’ submissions on this point. There is no reason whatsoever to believe that Hugh James have acted in any way improperly and there has been no waiver or abrogation of the privilege that undoubtedly attaches to the correspondence. There is no basis on which I could order disclosure of that correspondence.

Particulars of the disbursements and of the claim for interest thereon

[80]The defendants also sought, in relation to each disbursement in respect of which interest is to be claimed, disclosure of the specific disbursements in respect of which the claim for interest is advanced and the date of the relevant payment. The claimants suggested that it was premature and unnecessary for such particulars to be provided at this stage.[81]I consider that it would be helpful to know the precise nature and extent of the disbursements that are being considered at the forthcoming hearing. There was some uncertainty on this point – at least in my mind – at the costs hearing and it is important that all parties know exactly what is being considered. I cannot believe that there will be any great difficulty in collecting this information and placing it in a comprehensible form. It will be required for the assessment of costs in any event. I therefore order that particulars are provided in respect of each separate disbursement for which a claim for interest is being made of(a) the nature of the payment (e.g. expert’s fees, counsel’s fees, etc.);(b) if the disbursement was made in respect of an individual claimant, the identity of that claimant;(c) the identity of the person to whom the relevant payment was made and (b) the date of the payment. It would assist if this information were to be placed in schedule form.[82]I did not understand that the defendants were seeking details of the amount of interest claimed in respect of each disbursement. If they were, I would not have ordered it at this stage since there is little point in incurring the expense of making the necessary calculations when they might in the event prove unnecessary.[83]I would ask the parties to prepare an agreed order and submit it to me for approval before 4pm on 17 December 2013.

Cited in 1 later judgment