Landmark privacy case highlights interesting costs issues article banner image

The decision in the recent case of Gulati and others v MGN Ltd has been highly publicised.  The claimants (most of whom were well-known celebrities) brought claims against MGN Ltd (the company that owns The Mirror) for incidents of phone-hacking.  The claimants alleged that the phone-hacking breached their right to respect for their private and family lives.  The claimants were successful in their claims and were awarded substantial damages, ranging from £72,500 to £260,250.


The judge gave a detailed analysis of the law of privacy and the damages that can be awarded in such cases.  It is a notable case because the damages awarded were substantially higher than the damages awarded in previously reported privacy cases.  In addition, the case raised some interesting points on the impact of offers of settlement on costs.


One of the claimants sought to argue that she should recover indemnity costs as a result of an offer of settlement that she had made earlier in the proceedings.  It was not disputed that The Mirror should pay her costs of the proceedings on the standard basis (in line with the usual rule in litigation that the losing party pays the successful party’s costs).  The difference between awards for standard and indemnity costs is that, generally speaking, an award of indemnity costs results in a much higher percentage of costs being recovered from the opponent.


The claimant in question tried to rely on a Part 36 offer of settlement that she had subsequently withdrawn.  A Part 36 offer is a particular type of offer which is a useful tool in litigation to encourage the parties to settle the dispute.  If a claimant makes a Part 36 offer that is not accepted by the defendant and then goes on to be awarded damages at trial that equal or beat the offer, there are a number of costs consequences that follow, including an award of indemnity costs in favour of the claimant.


It is important to note, however, that these costs consequences will not apply where a Part 36 offer is withdrawn, as in this case.  The claimant argued that her Part 36 offer should still be taken into account.  She also sought to argue that the defendant’s conduct during the proceedings had been unreasonable.  In the end, the judge declined to make an award of indemnity costs.


Claimants should therefore carefully consider matters before they decide to withdraw a Part 36 offer, as it could lead to the loss of the very beneficial costs consequences that such an offer potentially brings.


If you are involved in a dispute and would like advice on this or a related topic, please contact Catherine Mathews.  Catherine deals with defamation cases as well as commercial and contract litigation.  She regularly advises clients on the best way to try to reach an early settlement and has experience of many different forms of alternative dispute resolution, including mediation, adjudication and arbitration.  Catherine is a partner in the Dispute Resolution Team in Exeter.  She is listed as a leader in her field in Chambers 2015.