Costs News

21 April 2021
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Amending party should not automatically pay costs of amendments to pleadings

The costs of amendments to pleadings should not automatically be paid by the party seeking to make them, a High Court judge has ruled.

Mr Justice Mann said that if the amendments were effectively caused by the other side, then the normal rule should not be followed – but it did not necessarily mean the amending party should receive its costs either.

He was ruling in Various Claimants v MGN Ltd [2021] EWHC 771 (Ch), a phone-hacking case with 29 claimants, including the likes of footballers Glenn Hoddle, Peter Crouch, Ryan Giggs (pictured) and Stan Collymore.

Various of the claimants sought to amend their claims by adding the names of associates they said were also hacked in a bid to discover information.

MGN did not oppose the amendments but said the normal rule should apply, namely that it should have the costs of and occasioned by the amendments.

The claimants – “somewhat surprisingly”, the judge said – argued for costs on the basis that the amendments were caused by the defendant giving inadequate and late disclosure which identified the new associates.

The normal or usual rule as to costs of amendments comes from Taylor v Burton [2014] EWCA Civ 21, as applied by Mr Roger Ter Haar QC in Beynatov v Credit Suisse Securities (Europe) [2020] EWHC 3328 (QB).

It was not “an inevitable order”, however, Mann J said. “If it is the case (and it is) that the normal order is that the amended against party should have the costs of and occasioned by the amendment, then there must be some reason for it.

“I have been unable to find that reason articulated in authority but, in my view, it must be that in the normal case a party's change of tack in the course of litigation is of that party's own volition, and it is right that the other party should have the costs of that voluntary change, particularly where the amending party might have included the amendments in the initial pleading.”

But that would “not necessarily apply” if – as was the case here – the reason the amending party sought to amend was because the new information was important and came to light “only as a result of disclosure by the amended against party and the amending party cannot be expected to have pleaded it at the outset, particularly where it is said that there has been a cover-up of the activity in question”.

Mann J acknowledged that, since the operations against the claimants were conducted covertly, their failure to identify affected associates until disclosure was “entirely understandable”.

But it did not follow that the claimants should have their costs, at least at this stage, he went on.

“Mr Sherborne [for the claimants] said that the defendant is to blame because if the generic disclosure, from which the new associates emerged, had been given earlier then the pleading would have been done at the outset, which means that the late pleading is the defendant's fault and they should pay for it.

“I am not satisfied that that simple analysis is universally true on the facts but, in any event, I do not think that his order is the appropriate one.

“In order to reflect the position in this particular litigation, with all its oddities… I consider that the right order to make in relation to the costs of and occasioned by the amendment is that the costs should be costs reserved.

“That would enable a trial judge to make an appropriate order against the claimants should it turn out, for example, that in fact the new associate should have been pleaded from the outset, or that the new associate was in fact inappropriately pleaded; or to make an order against the defendant if it transpires that there was a very good reason for the new associate not having been pleaded at the outset; or to make some other order.

“This would mean that at the end of a trial the costs orders might get a bit fiddly, but it is an order which works better justice than either of the orders proposed by the parties. Costs in the case would not really work the same degree of justice.”

MGN said it could have raised specific objections to some of the new associates but chose not to do so bearing in mind the number of other issues arising at the hearing.

The judge said: “That is a sensible attitude in the context of this litigation. Such arguments as he might have wished to raise under this head are still available to him in due course under my proposed order. It would certainly be unfair to the defendant to make the order proposed by Mr Sherborne.”

David Sherborne and Julian Santos (instructed by Shoosmiths) for the claimants. Richard Munden and Ben Gallop (instructed by RPC) for the defendant.

 

Picture credit: By Gordon Flood. Used under Creative Commons Attribution 2.0 Generic licence, cropped.

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