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High Court dismisses claims for recovery of advertising costs in group litigation

Posted on 17 February 2021

We have previously written about the British Airways (BA) data security failings that led, in October 2020, to a fine of £20 million by the Information Commissioner's Office (ICO). The ICO investigation arose after BA was the subject of a cyber attack in 2018, in which the personal and payment details of some 500,000 individuals were affected. BA notified these individuals that their data might have been compromised as a result of the breach (after determining that it had an obligation to make this notification, under Article 34 of the General Data Protection Regulation (GDPR)). Even before the ICO's decision, multiple damages claims had been lodged against BA in the High Court. In October 2019 BA sought, and was granted, a Group Litigation Order (GLO) consolidating the claims into one set of proceedings (to be known as the "British Airways Data Event Group Litigation"). The claimants seek compensation under the GDPR, as well as the Data Protection Acts of 1998 and 2018, for, variously, pecuniary loss, loss of control of data and/or distress.

The proceedings are ongoing. Amongst other things, the GLO provided that the lead solicitors for the claimants were to publicise the GLO in the form set out in the schedule to the GLO. However, at an interim hearing earlier this month, the matter of costs associated with advertising came before the Court. In addition to the publication costs stated in the GLO, the claimants had spent £433,000 advertising the litigation to the wider public, and intended to incur a further £557,000. They sought to include these sums in their costs budget. The claimants said that the costs were relevant to an issue in the claim and/or attributable to the paying party's conduct. BA argued that the costs of publicising the action were in fact general overheads of the claimants' solicitors and should not be recoverable.

The judge agreed with BA, concluding that it was 'clear as a matter of binding authority that these are not recoverable costs'. Quoting from the case of Motto v Trafigura [2012] 1 WLR 657, he said that 'The expenses of getting business, whether advertising to the public as potential clients, making a presentation to a potential client, or discussing a possible instruction with a potential client, should not normally be treated as attributable to, and payable by, the ultimate client or clients.' He therefore held that the costs were 'not for the account of BA, should BA be unsuccessful in the litigation.'

A copy of the judgment can be found here.

Getting the word out

With the exception of certain competition claims, and some claims brought under the representative parties provisions of Part 19.6 of the Civil Procedure Rules (CPR), the group litigation regime in England and Wales is largely 'opt-in'. It requires that the claimants are individually contacted and signed up in order for the claim to proceed. The number of claimants that might practically be required in order to proceed with a claim will depend on a number of factors, not least the cost of running the action. Due to advertising restrictions in place around the provision of legal services, it is not possible for solicitors to directly approach or market to the potential claimants of an action, whether by targeted advertising or direct communication. In most circumstances, the only way in which potential claimants could come to know about an action is via non-targeted marketing from the claimants' solicitors publicising the action. The claimants would then have to contact the solicitors to discuss their potential claim.

Although communicating with a particular class might be straightforward in some instances, in cases like this one, the class of potential claimants is so wide that it is hard to imagine a way in which the action could be communicated to them without publicity and advertising via mass media. Consider, for example, the UK Financial Conduct Authority's (FCA) advertising campaign for the mis-selling of Payment Protection Insurance (PPI). As at November 2019 the FCA had incurred approximately £42 million in advertising costs, a sum which it levied from the 18 financial institutions that had reported over 100,000 PPI related complaints each, with their agreement. Reportedly, the advertising campaign reached two-thirds of the UK adult population by April 2020.

In the absence of an alternative form of contacting potential claimants, it seems at odds with the overriding objective of access to justice that potential claimants might not be contacted and therefore may not be able to recover their losses due to the claimants' solicitor's budget limitations (or those of a third party funder). It remains to be seen what impact this will have, if any, on the class size of claimants in future group litigation.

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