Lottery: Conduct caused disruption to court and other parties
The High Court has awarded indemnity costs over a failed £1bn challenge to the award of the National Lottery so as to mark its disapproval of the claimants’ “extraordinary” litigation conduct.
Mrs Justice Joanna Smith highlighted their “poor and unparticularised pleadings, their abandonment of claims, the prejudice and disruption caused by these abandonments, the extent of the unpleaded and fluctuating allegations and the weak and speculative nature of the claims”.
The New Lottery Company, set up by Northern & Shell, challenged the Gambling Commission’s decision to award the licence to run the National Lottery to Allwyn, with Camelot the runner-up. Both were interested parties (IPs) to the case.
The claimants described it as “the most financially significant procurement process in UK history”, seeking £1bn in damages and a declaration that the award of the licence was ineffective.
They were represented by three KCs, two juniors and City law firm BCLP.
In her ruling last month dismissing the claim, the judge said criticised the “unfocused” approach to the case, which led to numerous issues being dropped throughout the trial.
“In many cases, the issues were not dropped until it was specifically drawn to the claimants’ attention by the court or by the other parties that they had not been addressed in the claimants’ written closing submissions or that there no longer seemed to be any viable basis on which they could be maintained.”
She described this as “inexcusable” given the legal resources available to the claimants.
“To describe this as surprising, given the nature and alleged value of this claim, would be an under-statement.”
The Gambling Commission and Allwyn sought their costs on the indemnity basis. In her ruling on this, published yesterday [1], Smith J said “one would expect such a significant and substantial claim to be advanced in a serious, responsible, and proper manner. That was not, in fact, what happened”.
She cited the “numerous serious and wide-ranging allegations (including of impropriety and dishonesty) made by the claimants running through the litigation from the outset”, many of which “were only dropped shortly before or at the trial in wholly unsatisfactory and unreasonable circumstances”.
The judge noted that the claimants had never sought to explain why they abandoned so many issues, “nor has any reason been given by them for what I consider to be a cavalier and highly unusual and unreasonable way of proceeding”.
The scale of this caused “very significant disruption” to the court and the other parties.
Smith J said it was not just the claimants’ conduct at trial that justified indemnity costs, “because that conduct is itself a consequence of the highly unreasonable way in which these proceedings have been advanced and pursued from the beginning.
“The pleadings were inadequate and unparticularised from the outset, the claims were weak and none of these issues was remedied prior to trial. The pleadings gave no proper indication to the defendant and the IPs as to the case that they must meet.”
The conduct “plainly warrants an order for indemnity costs in relation to the entirety of the proceedings. Further… there is a need to mark disapproval on the part of the court of such extraordinary conduct by the making of such an order.”
The judge rejected the claimants’ submission that she should take account of the “extremely high” level of the defendant and IPs’ costs in making the decision – she indicated that the Gambling Commission’s costs were about £20m.
“There is nothing in the authorities to suggest that proportionality is a relevant factor in considering whether to make an order for indemnity costs and I am inclined to think that it is not.
“If a party has conducted itself in a highly unreasonable fashion which is out of the norm so as to justify the award of indemnity costs, that party has forfeited the right to any assessment based on arguments of proportionality.”
Smith J also dismissed the claimants’ argument that the Gambling Commission should not have all of its costs because its approach to disclosure had substantially increased the costs of all parties.
“Having regard to all the circumstances of this case, I consider justice to require that the defendant, as the winning party, should be entitled to recover all of its costs,” she said.