Introduction

The case of Various Claimants v. WM Morrison Supermarkets Plc ([2018] EWHC 1123 (QB)) adjudicated by the England and Wales High Court (Queen's Bench Division) on May 16, 2018, delves into complex issues surrounding data protection and the allocation of legal costs in litigation with mixed outcomes.

The Claimants alleged that Morrisons were directly liable under the Data Protection Act for unlawfully disclosing data of 99,998 of its employees. Additionally, they claimed vicarious liability for the actions of an employee, Andrew Skelton, who had disclosed the data. The central issues revolved around whether Morrisons’ liability was absolute under the Data Protection Act or whether it was fault-based, and how costs should be allocated given the partial successes of both parties.

Summary of the Judgment

In his judgment, the High Court found that the Claimants' claims regarding direct liability failed. However, the Court upheld the Claimants' claim for vicarious liability against Morrisons. Consequently, while the Claimants achieved success on the vicarious liability aspect, the direct liability claims did not succeed.

Regarding costs, the trial judge exercised discretion under CPR 44.2(2)(b) to make a proportionate costs order. Recognizing the mixed outcomes of the litigation, the Court decided that the Defendant, Morrisons, should pay 40% of the Claimants' costs. This decision balanced the Claimants' success in part of their case against their failure in another, aligning with principles of fairness and proportionality in cost allocation.

Analysis

Precedents Cited

The judgment extensively references key precedents that shape the Court's approach to costs orders:

• English v Emery Reimbold and Strick Ltd [2002] EWCA Civ 605: This case emphasizes the Court’s reluctance to make "issue-based" costs orders due to the complexity and resource intensity involved in assessing such orders. It advocates for percentage-based orders as a fairer and more practical alternative.
• Multiplex Constructions (UK) Limited v Cleveland Bridge UK Limited [2008] EWHC 2280 (TCC) Jackson J: This judgment outlines eight principles for costs orders, stressing the importance of considering the overall winner in commercial litigation and the starting point that the successful party is entitled to costs.
• Fox v Foundation Piling Limited [2011] EWCA Civ 790: This case critiques the trend of departing too far from the starting point of awarding full costs to the successful party, highlighting the additional costs and uncertainties such departures create.
• AEI Rediffusion Music Limited v Phonographic Performance Limited [1999] WLR 1507: Lord Woolf MR discusses the shift towards separate cost orders reflecting different issues, cautioning against encouraging excessive litigation costs through the "follow the event" principle.

Legal Reasoning

The Court’s legal reasoning pivots on the discretionary power granted under the Civil Procedure Rules (CPR) to determine costs orders. The judge incorporated principles from the cited precedents to evaluate the relative success of the parties and the proportionality of costs incurred.

Recognizing that the Claimants were overall successful due to the vicarious liability finding, the Court did not default to awarding full costs. Instead, it carefully considered the failure of the direct liability claims, which constituted a significant portion of the litigation. By assessing the overlap and distinctness of the issues, the Court determined that a proportionate costs order was the most equitable solution.

The judgment underscores that while the Claimants should generally be entitled to costs for their overall success, adjustments are necessary when there are competing outcomes on different issues. The 40% costs order reflects a balanced approach, acknowledging the Claimants' victory in one aspect while also recognizing the Defendant's success in another.

Impact

This judgment sets a notable precedent in the realm of litigation costs for cases with mixed outcomes. It reinforces the principle that costs orders should align with the relative success of the parties across different issues, rather than adhering strictly to the "follow the event" rule.

Future cases involving partial successes can reference this judgment to argue for proportionate costs orders. It emphasizes judicial discretion in ensuring fairness and discourages the escalation of litigation costs by promoting more nuanced cost assessments.

Complex Concepts Simplified

Direct vs. Vicarious Liability

Direct Liability: This refers to the legal responsibility of an entity (in this case, Morrisons) for its own actions violating the law (e.g., the Data Protection Act).

Vicarious Liability: This extends responsibility to Morrisons for the actions of its employee, Andrew Skelton, who unlawfully disclosed employee data.

Cost Orders in Litigation

Percentage Costs Order: A method of allocating legal costs where one party pays a percentage of the other party's costs, rather than full costs.

Issue-Based Costs Order: A more granular approach where costs are allocated based on specific issues within the case, often leading to increased complexity and resource expenditure.

Conclusion

The judgment in Various Claimants v. WM Morrison Supermarkets Plc is a landmark decision in the context of litigation costs where parties experience mixed outcomes. By awarding a 40% costs order, the Court exemplified a balanced approach to cost allocation, acknowledging the complexities of cases where parties partially succeed or fail on different issues.

This decision reinforces the importance of judicial discretion in upholding fairness and proportionality in costs orders, thereby influencing future legal strategies and the handling of similar cases. It serves as a critical reference point for both litigants and legal practitioners in understanding and navigating the intricacies of cost assessments in multifaceted legal disputes.