Pan-NOx Emissions Group Litigation (Funding Information and Disclosure Hearing)

This ex tempore judgment is given in respect of the applications by various Manufacturer Defendants against the Johnson Law Group (‘JLG’) for disclosure of information about their funding arrangements, in advance of potential applications for security for costs.

The starting point is that JLG accept that, subject to the question of the adequacy of any after-the-event (‘ATE’) insurance to be provided, they have to provide the information sought. On this basis, I order that they are to provide that information, as per the latest draft Order, subject to the provision of adequate ATE insurance, within a period to be determined following further submissions following this judgment.

Secondly, Ms Greaney and her co-counsel rightly submit that the test on the applications before me is whether there is ‘a real risk’ that the ATE insurance is insufficient. If there is ‘a real risk’ then, on the basis of the various authorities summarised in the previous judgment of Constable J and Cockerill J (as she then was) at an earlier stage in the overall PanNox litigation ([2024] EWHC 695(KB)), the application for the type of information sought is likely to be successful. Ms Greaney also submits that to decide whether the amount of ATE insurance offered is, or is not, sufficient (rather than just whether there is a real risk of insufficiency now) would be premature, both in terms of the amount of evidence that is before me and also on the basis that other defendants are not before me.

As to that submission, firstly, I note first that any decision I make relates, and relates only, to JLG. It does not bind other claimants and it does not bind the defendants, other than the applicants to this particular application in the context of this application. It, therefore, follows that it would be open to either other defendants or other claimants to take a different position as to the adequacy of ATE insurance and make such points as they see fit in any later security for costs application.

That said, any points raised in due course which are, in substance, identical to the points that have already been canvassed, and based on evidence that goes no further than the evidence already before me today, it is, at the very least, unlikely that such submissions will persuade the Court to reach a different position. The formal position, is, however, it would be open to them to seek to have a go.

It would also be open on a security for costs application, for a defendant to seek to present different, additional evidence. My instinct is that the likelihood that there is any persuasive or compelling evidence that would lead to a different outcome is low, but, again, I do not shut the door on that as being a possible approach open to the relevant parties.

I do not therefore think it is premature to decide the question of adequacy of the offer made, rather than simply a risk of inadequacy. There are good case management reasons why I should take this approach, not least that it may enable the parties to take a realistic approach to upcoming debates about security for costs and avoid the need for any further hearing.

Turning to the arguments on adequacy, I deal first with the arguments related to wording of the anti-avoidance clause and indeed the insurance as a whole. This argument was maintained by Vauxhall and PCD only, and was the topic of oral submissions by Mr Roy KC on their behalf. The other Manufacturer Defendants do not contend that the wording of the insurance policy, together with the anti-avoidance endorsement, is inadequate protection.

In my view, there is no real risk that the wording of the policy provided by JLG, which has been recently emboldened in its express inclusion of fraud and the breadth of the existing AAE, is inadequate. The specific circumstances relied upon by Mr Roy in his arguments, that some of the claimants of JLG are complaining that they had not been given proper instructions, is a situation which either will not give a right to avoid (given the breadth of the AAE) or will not give rise, factually, to the existence of claimants within the litigation who have not given proper authority to be included within the litigation.

That point, therefore, falls away.

The two remaining points as to adequacy (1) the percentage of incurred costs which should be included and (2) and the cut-off date for the purposes of calculating the prospective costs which ought to be included.

As to the amount, the appropriate proportion of the Defendants’ incurred costs which is adequate is 64%. The basis of that calculation is, in at least broad terms, calculated by reference to the fact that at the point of the first cost management hearing (CMH1), the budgeted costs (for the Lead Defendants) were reduced to 63% of those claimed. These costs amount to about 95% of all the relevant incurred costs. I take 80% of the costs remainder, in respect of which there was a substantially higher degree of success at CMH2. The aggregate of that calculation comes to about 64%.

I regard the best indicator as to the appropriate maximum recovery is likely, on the evidence before me, to be the percentage by which the incurred costs were reduced for the Lead Claimants at the first costs management hearing and applying the same logic to the T3 costs.

As to the cut-off date, it seems to me that the appropriate order is that that ATE is to be regarded as sufficient up to 31 July. Thereafter, from 1 August onwards, the amount of security must increase pro rata to the total on a monthly basis. It is for the relevant parties and their ATE insurers to work out for themselves whether that is something that is capable of being provided.

There must always be adequate security by way of ATE insurance to meet the ratcheted up costs for which protection is required. Whether that is by the ATE insurers insuring, from the outset, the entirety of the sum to the end of Tranche 3. or whether an agreement is reached with the ATE insurer so that premiums can increase as per the increasing protection, that is a matter for the relevant claimants. There is express liberty to apply upon the handing down of the judgment in the PDD trial for a determination as to whether or when some or all of the ATE insurance in place at that point can be re-purposed.