High Court considers principles relating to cut-off dates and the costs of advertising in group litigation

In a procedural judgment in the British Airways Data Event Group Litigation, the High Court has granted a modest extension to the cut-off date for claimants to join the litigation, and has confirmed that the costs of substantial media advertising to attract claimants will not be recoverable if the claims succeed: Weaver v British Airways Plc [2021] EWHC 217 (QB).

The decision emphasises the importance of cut-off dates in providing defendants with some degree of certainty as to the extent of their potential exposure in the litigation - even if they cannot provide ultimate certainty because there may be additional claims down the line (subject to questions of limitation) either in the same action or in separate proceedings. As the decision highlights, any litigant's decisions as to resource allocation, and (crucially) settlement, will be fundamentally dependant on the size and extent of the claimant group and the extent of its potential exposure. The court had to balance that benefit against other relevant factors, most significantly access to justice which would be promoted by a later cut-off date.

The decision also acts as a reminder that the costs of getting business are not recoverable in litigation. That includes the costs of advertising for potential clients to join group litigation, to the extent that goes beyond the costs of taking reasonable steps to publicise the group litigation order as may be required under the terms of the order itself.

For further discussion of these issues see Class Actions in England and Wales, written by lawyers from this firm and published in 2018 by Sweet & Maxwell, which the judge said he had been referred to in considering these issues.

Background

The underlying litigation, the British Airways Data Event Group Litigation, concerns claims for damages resulting from a cyber-attack on BA's electronic systems which was identified in September 2018 and affected BA's systems containing customer personal data.

The claimants allege that the attack succeeded as a result of BA failing to put in place appropriate security measures, and that they suffered harm in the form of distress and/or pecuniary loss and/or loss of control of data. BA denies the claims.

As at the beginning of February 2021, some 23,000 claimants had signed with the lead solicitors or other claimant firms, but this still represented only some 5% of the 500,000 or so individuals who received notifications from BA and are therefore in principle eligible to bring a claim.

In a judgment following a recent costs and case management conference (CCMC), the court determined two issues:

1. The claimants' application to extend the "cut-off" date for claimants to join the litigation: The group litigation order ("GLO") made in October 2019 had specified, by consent, a cut-off date of 17 January 2021 for entry onto the Group Register. This was later extended to 3 April 2021. The claimants applied to extend the cut-off date to a date expiring one year after the proposed trial on liability. BA opposed any further variation of the cut-off date.
2. The recoverability of advertising costs incurred by the claimants' solicitors in publicising the claims: The claimants' costs budget included a claim for future advertising costs of £557,000, and referred to £443,000 that had already been incurred. A threshold point was argued in relation to the recoverability of those costs as a matter of principle.

Decision

The High Court (Saini J) granted a modest two-month extension of the cut-off date, to 3 June 2021, and held that the advertising costs were not recoverable and therefore fell out of the budget.

Cut-off date

Having reviewed the relevant case law, the judge described the decision whether to impose a cut-off date, or to maintain or vary a cut-off date, as essentially a pragmatic case management decision which has to be guided by the overriding objective in CPR 1.1.

He did not accept the claimants' submission that the court should consider the question as at the date of the hearing, putting aside what had happened earlier. The correct approach was to require the claimants to justify a departure from what had previously been ordered and agreed - though if a variation would further the overriding objective, the mere fact that there had been a prior agreement or order would not present a substantial hurdle.

The judge agreed, in principle, that an extension would promote access to justice (as well as proportionality and a saving of costs), but that had to be balanced against the reason for imposing cut-off dates, including to promote settlement which is part of the overriding objective.

As a matter of principle, BA was entitled to know the extent of its potential exposure, even though the case was only at the liability stage, including because it would fundamentally influence the approach that a party in BA's position would take in settlement discussions. The judge accepted that a cut-off date would not provide ultimate certainty, because of the potential for new claims outside the group, but there was still a substantial value in the certainty it would provide.

The judge therefore rejected the claimants' submission that the cut-off date should be extended to one year after commencement of the liability trial, as that would create a very substantial level of uncertainty.

Balancing the aims of providing certainty against ensuring that there was access to justice for those who might wish to join the litigation in the relatively near future, the judge extended the cut-off for a two month period to allow the claimant solicitors' "recent burst of advertising" to bear fruit. Any claimants who wished to join the litigation after that date would have to apply to do so.

Advertising costs

The judge noted that the GLO provided, at paragraph 41, for the lead solicitors to take reasonable steps to publicise the GLO in accordance with CPR Rule 19.11(3)(c), by reference to a form of advertisement scheduled to the GLO.

The advertising costs referred to in the budget arose from very substantial media publicity of the proceedings. The court accepted BA's submission that, as a matter of law, these costs are not recoverable (save for the costs incurred pursuant to paragraph 41 of the GLO). That was the effect of the Court of Appeal's decision in Motto v Trafigura [2012] 1 WLR 657 (CA), which found that the expenses of getting business, including advertising to the public as potential clients, should not normally be treated as chargeable to the client. Instead, they should be treated as part of a solicitor's general overheads.

That applied equally to the costs of advertising in this case, albeit that they arose in the context of a GLO. They were not costs incurred pursuant to paragraph 41 of the GLO, but were more accurately described as costs of "getting the business in" and would not be recoverable from BA if the claimants succeeded in the litigation.