Mercedes: Lead GLO
The High Court has again taken an axe to the claimants’ costs budgets in the ‘Dieselgate’ group litigation, saying the lawyers have not fully learned the lessons from when it happened last year.
Mrs Justice Cockerill, sitting with Senior Costs Judge Rowley, allowed costs of £22.5m [1] for the claimants for the next stage of the case, 45% of the £50m they had put in their budget.
The defendants were allowed just under £50m, 77% of the £64m they had budgeted.
The main causes of the cuts to the claimants’ budgets were “over-lawyering” and “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”.
This costs management decision was less severe, both in the reductions and particularly the language used, than last year’s joint ruling [2] by another of the managing judges of the litigation, Mr Justice Constable, and then Senior Costs Judge Gordon-Saker.
They slashed by 75% the £208m in future costs put forward in the claimants’ budget and suggested that the balance of incurred costs were likely to have been subject to similar “over-lawyering”. They used words like “absurd” and “staggering” to describe the costs being racked up.
This is the English courts’ largest-ever costs budgeting exercise in relation to 13 group litigation orders (GLOs) against motor manufacturers and others, such as dealerships and finance companies, over the use of so-called defeat devices whose alleged goal was to cheat emissions tests. The Mercedes case is the lead GLO and there are three additional lead GLOs.
The claimants contend that the litigation is worth at least £6bn, on the basis of damages of £4,000 per car, a figure the defendants dispute. Last year’s ruling noted that the Volkswagen claim settled in 2022 at a figure that equated to just over £2,000 per claimant [3].
Last year’s budget covered the first two tranches of the litigation – tranche 1 was a preliminary issue hearing that went the way of the claimants [4] last autumn, while tranche 2 is next month’s trial about the defeat devices. It also covered general costs incurred outside of the tranches.
The latest decision concerns the costs of the third tranche, dealing with causation and loss – with trial set for autumn 2026 – along with a second period of general costs covering nine months next year.
Pogust Goodhead is the lead solicitor on four of the GLOs, and jointly with Leigh Day on eight more. For one (Vauxhall), it is Milberg and KP Law. Twenty law firms are involved in total.
The claimants argued that they had taken on board the numerous criticisms in last year’s decision – the defendants said they had not.
Whilst the court accepted that the claimants had sought to improve the level of detail they provided, “the repeated and generalised nature of the text left a gap in correlating that description of the work to be done and the specific amount of time claimed in any particular budget. Regrettably, therefore, the amplified description did not materially assist the court in the manner hoped by the claimants”.
The judges said the criticism of “over lawyering” in the first costs management judgment had not prevented the claimants seeking to justify large numbers of attendees at the case management conferences (CMCs), pre-trial hearing and trial as being reasonable.
It was “frankly remarkable” that they sought in-person and remote attendance for 30 fee-earners throughout two CMCs, totalling 5,585 hours at a cost of £3.3m.
The judges said: “Nine were said to be the core team who would be present at court. The other 21 would be remote but with the benefit of the real time transcription.
“This was said by [counsel Simon] Teasdale for the claimants, with an admirably straight face, to be necessary in order to deal immediately with any matters arising. Such an approach is plainly not realistic: nine members of a team should be more than ample to deal with any points arising and the need for any ‘full time’ remote attendance is hard to discern.”
For the trial, they sought nine attendees in person, including two partners for each of the two lead firms, each charging 10 hour days, along with remote attendance of a further six partners, six grade B fee-earners, six grade C and three grade D, all on eight-hour days.
The court accepted the defendants’ general proposition that, as the tranche 2 trial was longer than the tranche 3 trial, the latter’s costs should be lower than the former’s, especially since there had been a “considerable improvement in the co-operation between the parties”.
The common costs claimed by the non-lead law firms “should be extremely limited”, Cockerill J said. “The nub of the work they are asked to do is to look after their client and that work ought to be claimed within the individual costs and not the common costs.”
The court decided not to approve budgets for two phases at this stage: expert reports in the tranche 3 budgets, as the extent of evidence needed had still to be decided, and the ADR phase in the general budgets, because the parties were still “so far apart as to what, if anything, may occur” and there was no prospect of negotiations any time soon.