A group action on behalf of tens of thousands of car buyers over the Volkswagen emissions scandal was today hit with costs of up to £450,000 after a judge ruled that a firm had acted prematurely in bringing the action. Senior Master Fontaine (Barbara Fontaine) was ruling in an application by Volkswagen and associated car makers and dealers claiming reimbursement of costs incurred in a series of hearings last year.
The hearings followed the application for a group litigation order on behalf of buyers of diesel cars who allege they lost out when the company was found to have installed software to enable cars to cheat on emissions tests. The Volkswagen Group says it will vigorously defend the action.
Ruling in Crossley v Volkswagen Aktiengesellschaft today, Senior Master Fontaine found that London private client firm Harcus Sinclair had acted prematurely when it applied for a group litigation order in October 2016. Harcus Sinclair was one of several firms seeking to become lead claimant in the case and became embroiled in a dispute with rival Chesterfield-based Your Lawyers, with which it had a non disclosure agreement. The defendants in the action argued that they incurred heavy costs because the claimants launched their action before they were in a position to proceed.
Fontaine's judgment notes that only eight weeks elapsed between Harcus Sinclair first raising the prospect of a group order and the order being lodged. The defendants claimed that this was too short a time for the action to be coordinated or for meaningful discussions with the defendants.
The claimants submitted that at least 13 firms had been involved 'with very differing ideas as to how the litigation should be progressed. Some of those firms raised eccentric ideas and concerns.' Achieving coordination proved 'extremely challenging'.
Fontaine concludes that the application was issued prematurely and was 'a commercially driven decision for the benefit of [Harcus Sinclair], to protect its position in the litigation'. She ordered that the costs of the defendants be assessed on the indemnity basis. Volkswagen Group said that litigation funders have agreed to pay an initial sum of £168,000 before the end of September and that further costs 'are likely to be in excess of £300,000.
A spokesperson said: 'We have been concerned about the conduct of some claimant firms in relation to this action, which has been disorganised and hindered the efficient progression of the litigation. This judgment clearly supports our view.'
In a statement to the Gazette, Harcus Sinclair said: 'We played no part in the recent VW application which was decided without submissions or evidence from us.
'The decision to issue the application for a group litigation order was made by our former clients following advice from a legal team, including leading counsel. Several factors drove the application, one of which was to reduce the costs risk for the client group as it then stood. The reason for the application for a GLO was not the firm’s commercial self-interest.'
The group action is proceeding and is expected to come to court late next year. Gareth Pope, group litigation lawyer at national firm Slater and Gordon, which claims to represent more than 50,000 VW claimants, said: 'This judgment does not affect the ongoing case. We are continuing to sign up as many affected VW owners as possible before the deadline of 26 October in a bid to hold VW to account.'
Oliver Campbell QC, Alexander Hutton QC and Adam Heppinstall, instructed by Slater and Gordon, appeared for the claimants.
Charles Gibson QC, Prashant Popat QC, Nicholas Bacon QC and Thomas Evans, instructed by Freshfields Bruckhaus Deringer, appeared for Volkswagen, Audi and associated companies; Geraint Webb QC and Noel Dilworth, instructed by Freshfields Bruckhaus Deringer, appeared for Inchcape Retail and Listers Group.