High Court ruling on costs management in NOx emissions group litigation

The High Court has handed down its latest ruling in the ongoing NOx emissions litigation, addressing the costs budgets for Tranche 3 of proceedings and the Second General costs period. Mrs Justice Cockerill DBE and Senior Costs Judge Rowley delivered the judgment, following the second Costs Management Hearing (CMH).

The litigation, which consolidates multiple Group Litigation Orders (GLOs) against leading vehicle manufacturers including Mercedes, Ford, Nissan and Stellantis, continues to raise complex procedural and costs management issues. The present decision builds upon the court’s earlier ruling in [2024] EWHC 1728 (KB), with particular focus on claimants’ budgets and the extent to which lessons were absorbed from prior criticism.

At issue were 63 budgets across Tranche 3 and the Second General period, covering a combined 390 costed phases. The sums claimed were substantial: over £55.7 million for the claimants and £75.7 million for the defendants in Tranche 3, with further claims of £19.7 million and £3.6 million respectively for the Second General budgets.

The court reiterated concerns of “over lawyering”, highlighting instances such as 32 fee earners attending case management conferences (CMCs) at a cost exceeding £3.3 million, as well as nearly £1.5 million claimed for the pre-trial review. At trial, nine in-person attendees were claimed alongside extensive remote participation, which the court considered excessive.

A key element of the judgment was the comparison between Tranche 2 and Tranche 3 costs. Tranche 2, focused on prohibited defeat devices, involved a 13-week trial, whereas the forthcoming Tranche 3 quantum trial is listed for eight weeks. The court concluded that Tranche 2 allowances should serve as a baseline, noting that procedural progress and improved cooperation between parties meant Tranche 3 costs ought to be lower, not higher.

The claimants argued that lived experience of Tranche 2 justified higher figures for Tranche 3. The court disagreed, finding the defendants’ position more persuasive. It stressed that where work differed, such as disclosure or statements of case, costs should still be proportionate and generally less demanding than the previous tranche.

The judgment also engaged with whether costs should be set at standard figures or within a range of reasonableness. The court reaffirmed that a 20% tolerance around comparator sums may fall within the proportionate range, but figures exceeding this threshold required specific justification. Several claimant figures were consequently reduced to align with more proportionate levels.

The court scrutinised the role of non-lead firms. While claimants emphasised client choice and the need for multiple firms to remain engaged, defendants argued that only lead firms or steering committees should recover common costs. The court accepted that some duplication was inevitable where steering committees were in place, but insisted that non-lead firms’ common costs should remain “extremely limited”, with most of their work recoverable only as individual, rather than common, costs.

On defendants’ budgets, the court confirmed that parties may present figures lower than actual costs incurred, provided they are reasonable and proportionate. It cited established authority distinguishing between actual costs and recoverable costs, underscoring that excessive actual expenditure does not render inflated budgets recoverable.

For the Tranche 3 CMCs and pre-trial review, the court reduced both sides’ figures, allowing £850,000 for two CMCs and £300,000 for the PTR, lower than sums sought but reflecting the shorter and less complex hearings anticipated compared to Tranche 2.

Overall, the ruling illustrates the judiciary’s determination to maintain proportionate costs management in group litigation of exceptional scale. While recognising the heavy demands of the NOx proceedings, the court consistently trimmed inflated figures, reinforcing that efficiency and proportionality remain the guiding principles of costs budgeting.