Tribunal draws on Australian experience to ensure post-settlement unpaid costs are reasonable
The Competition Appeal Tribunal (CAT) has appointed former Senior Costs Judge Andrew Gordon-Saker as an independent expert to assess the outstanding own-client costs in the landmark collective action brought against Mastercard.
It drew on the experience of Australia in doing so, given its courts’ greater experience in dealing with class action settlements.
The CAT this week issued an 80-page ruling approving the £200m settlement of what was originally a £14bn claim headed by Walter Merricks over the fees retailers paid for Mastercard processing card transactions, and how the money is to be distributed.
“Although the settlement has secured a positive payment, the outcome of the present case is very far from a success for a class of some 44m claimants,” it observed.
The claim’s funder, Innsworth Capital, has so far paid out around £40m in costs and other expenses, which will be reimbursed from the settlement sum, plus a 50% profit figure. But the CAT noted that certain of Mr Merricks’ costs, worth several million pounds, remained to be determined but Innsworth had no incentive to challenge them as it would be reimbursed in any event.
“We will appoint retired judge Andrew Gordon-Saker as an independent expert to assess the reasonableness of these legal costs on a solicitor-own client basis and of the expert fees,” the CAT said.
It stressed that the lawyers will not be required to repay any fees they have already received.
The CAT ordered Mr Merricks to instruct his solicitor to submit detailed bills and to cooperate with the assessment. Mr Gordon-Saker will also be asked to assess the reasonableness of certain costs incurred by Innsworth too and it will similarly be instructed to co-operate.
Both sides will be entitled to recover their reasonable costs of the assessment process, which Mr Gordon-Saker will assess as well.
He will submit his report to the tribunal, on which the parties may comment, “and the tribunal will then determine in the light of that report what sums to allow for these costs”.
The CAT said both Mr Merricks and Innsworth contended that it had no power to order a costs assessment. “However, those submissions appear to be directed at an assessment by the court under the Solicitors Act 1974. We emphasise that the process directed by this judgment is wholly different.
The CAT explained that appointing an independent expert under the CAT rules like this was similar to the practice of the Australian courts to appoint a ‘costs referee’ to advise on the level of costs to be deducted from a settlement of class proceedings.
“The Australian courts have acquired substantial experience of class actions over three decades. Although obviously not binding on the tribunal, their practice is instructive for what here, in particular as regards the appropriate approach for the settlement approval process, is still a developing jurisdiction.”
It added that the tribunal’s responsibility towards class members when asked to approve a proposed settlement of opt-out collective proceedings bore “some analogy” to the responsibility of the court when asked to approve the proposed settlement of a claim by a child.
“This provision is not restricted to adverse costs but applies also to the own solicitor costs of a child (or protected party). And the fact that the child appears by a litigation friend who may have authorised the costs does not affect the operation of the rule.
“Indeed, where a litigation friend has paid the costs on behalf of the child and seeks reimbursement, the same principle applies: CPR r. 21.12. Not only is there accordingly some analogy with the course we are adopting for these opt-out collective proceedings, but this shows that Innsworth is mistaken in its submission that the power of the High Court to make orders about or for the assessment of solicitor-own client costs ‘are restricted to solicitor-own client costs proceedings under part III of the Solicitors Act 1974’.”
Mr Gordon-Saker’s fees will be paid out of the settlement sum too.
Mark Brealey KC (instructed by Willkie Farr & Gallagher) for the class representative. Sonia Tolaney KC, Matthew Cook KC and Owain Draper (instructed by Freshfields) for the defendants. Charles Béar KC and Bibek Mukherjee (instructed by Akin Gump) for the first intervener. Gerard Rothschild (instructed by Clare Carter of the Access to Justice Foundation) on behalf of the second intervener (written submissions only).