Bates v Post Office: Costs hit £25m as both parties warned about spending

Parties in the epic Bates v Post Office litigation battle have been warned their costs will continue to be closely scrutinised, after the bill edged towards an estimated £25m. 

In Bates & Ors v Post Office Ltd (No.5 : Common Issues Costs), the Honourable Mr Justice Fraser said his concerns over costs have increased this year, with the Post Office’s costs now exceeding £13m and the claimants’ outlay, backed by third-party funding, said to be similar. 

His latest judgment was to decide whether to award interim costs based on one of several trials in the litigation. The claimants’ were largely successful in this particular trial and will be paid more than £4.5m. 

It was revealed in the judgment that the parties originally agreed to report to the court whenever their costs increased by £250,000: this threshold has now been doubled because reports came in so frequently. 

The group litigation is part way through the Horizon Issues trial, where sub-postmasters and mistresses seek damages for the introduction of a new IT system, and Fraser J warned both sides that the court will look closely at what is being spent. ‘During a trial is not the time for a detailed discussion with the parties about the level of their expenditure on litigation costs,’ he said. ‘However, once that trial is over, the parties should be prepared for a further and detailed costs management discussion with the court. Costs of this order cannot pass without comment.’

The judge confirmed that the Post Office has already agreed to pay £300,000 in respect of the costs of a failed application earlier this year to have him recused. The Post Office’s own costs of the recusal application were over £212,000, which included £34,165 for solicitors and £174,815 for counsel.  

The Common Issues trial, as the court referred to it, sought to resolve 23 matters relating to different contracts. It was tried over a month at the end of 2018, and the Post Office has asked the court to reserve the cost of that trial. An order now, rather than at the very end of litigation, ‘would demonstrate a pre-determination as to the overall outcome’, the Post Office submitted.  

But the judge was concerned this submission was a ‘veiled or implied threat’, mirroring the Post Office’s approach to its recusal application – namely, claiming that any interim decision would suggest the overall outcome had already been decided.  

Fraser J said it was ‘entirely conventional’ for costs orders to be made where litigation is dealt with in stages. He added: ‘I make it clear (once again) that I have no such pre-determined view on any matters yet to be fully tried.’ He continued: ‘The claimants would not be on an equal footing with the Post Office, a publicly funded body, if I reserved the costs of the Common Issues trial until the very end of the litigation.’ 

Noting that the Post Office succeeded on seven of the 23 common issues on trial, he awarded the claimants, who are backed by Therium Capital, their costs subject to a 10% reduction.