Arkin v Borchard Lines Ltd and Others (No 3)
| Jurisdiction | England & Wales |
| Judge | Mr Justice Colman: |
| Judgment Date | 16 December 2003 |
| Neutral Citation | [2003] EWHC 3088 (Comm) |
| Date | 16 December 2003 |
| Court | Queen's Bench Division (Commercial Court) |
| Docket Number | Case No: 1997 Folio No. 956 |
[2003] EWHC 3088 (Comm)
IN THE HIGH COURT OF JUSTICE
QUEENS BENCH DIVISION
COMMERCIAL COURT
Royal Courts of Justice
Strand, London, WC2A 2LL
The Honourable Mr Justice Colman
Case No: 1997 Folio No. 956
Peter Irvin and Sarah Lee (instructed by Messrs Constant and Constant) for the 1 st Defendant
Steven Gee QC and Hugh Mercer (instructed by Messrs Davies Arnold Cooper) for the 2 nd, 3 rd and 4 th Defendants and the 3 rd, 5 th, 8 th and 10 th Part 20 Defendants
Vasanti Selvaratnam QC and Fergus Randolph (instructed by Messrs Berwin Leighton Paisner)
For the 1 st and 6 th Part 20 Defendant
Hearing dates: 16 May 2003 and 25 July 2003
Draft Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
Colman J.
Introduction
At the end of a trial lasting 49 days I gave judgment dismissing the claim for breaches of Articles 81 and 82 of the Rome Treaty and ordered that Borchard should recover 90 per cent of its costs against the Claimant and that the 2–4 defendants – Camomile Lines, Ltd, Furness Withy (Shipping) Ltd and Manchester Lines Ltd – should recover 80 per cent of their costs against the Claimant and pay 8 per cent of the Claimant's costs.
By orders dated 27 July 2001 and 10 August 2001 Borchard obtained permission to join as Part 20 defendants Zim Israel Navigation Company ("Zim"), KNSM, DNOL as well as the existing defendants, Furness Withy and Camomile Lines. Borchard's application for joinder was made about four months before the date then fixed for the trial. There were also other Part 20 defendants who took no part of the trial. The basis of this multiple joinder was that each of the Part 20 defendants was a co-participant in one or both of the conferences at the material time and that each was under an obligation as such or as a matter of law to contribute to or indemnify Borchard if it were held liable to the Claimant. However, Borchard maintained its claim against the Part 20 defendants.
However, the joinder of Zim was brought about for additional reasons. In particular, the Claimant had made specific allegations as to Zim's conduct as amounting to an abuse of the dominant position of the conferences on the UK and North European markets. These allegations related specifically to Zim's conduct on the South Africa – Israel route, the case put forward being that Zim's conduct in that so-called ancillary market was an emanation of the conferences' policy of pressuring Mr Arkin's line into withdrawal from the UK and North European markets. Additionally, it was clear from an early stage in the pre-trial hearings that evidence of central importance to the case against all the other defendants was likely to be in the possession of Zim. This evidence consisted of the minutes of and working documents relating to the FMC committee and the oral testimony of the person who appeared to have played a central part in its operations, Mr Levy, an employee of Zim.
It was against this background that the court raised the question of how the trial could be sensibly conducted in the absence of Zim, which was outside the jurisdiction and whose employees could not be forced to give evidence. A strong indication was given that Zim ought to be joined. Leave was given to Borchard to serve Zim outside the jurisdiction as a necessary or proper party. The 2–4 defendants did not apply for such leave
Borchard's application to join Zim has been criticised by Zim on the grounds that Borchard failed first to attempt to engage the co-operation of Zim in providing documents and witnesses. Whereas it is true that Borchard did not do so and, indeed did not even send a letter before application to serve out, I am satisfied that there was nothing intrinsically unreasonable in joining Zim. In particular, Zim occupied a central position in Mr Arkin's allegations of abusive conduct and, on the face of it, had evidence directly material to those allegations. Secondly, although Zim had given a measure of co-operation to Ms Holmes of the 2–4 defendants' solicitors in the course of her visit to Israel in 2000, it was far from clear whether they had approached the process of disclosure of documents as effectively and searchingly as would have been the case if they had been a party to the proceedings. Thirdly, it was quite unrealistic for Borchard to fight the claim on the basis that if Mr Arkin succeeded, separate proceedings could be pursued against Zim. The risk of inconsistent findings was far too great to leave that to chance.
In the event, Zim played a major part in the trial. This it was clearly entitled to do. It is absolutely axiomatic that a Part 20 defendant is entitled to protect its position by fighting the main action by its own evidence, provided that, in the interests of good case management, it does not unnecessarily take up trial time and cause increased costs by duplication of evidence already adduced by the other parties. There was no such duplication in this trial. Indeed, Zim adduced evidence of facts, disclosed documents and made available factual witnesses – Mr Levy and Mr Stramer who gave oral evidence and Mr Simkin and Mr Apel by written statements – who gave important evidence helpful to the court.
The 2–4 defendants did not join Zim as a Part 20 defendant. Their legal advisers may have taken the view that, even if Zim were not joined, it would have made its documents and employees available as ultimately it did following joinder.
Possibly they foresaw the potential exposure to costs which is the basis of the dispute now before me.
That dispute, between Borchard on the one hand and Zim and the Part 20 defendants represented by Davies Arnold Cooper ("DAC") – KNSM and DNOL who became parties to the proceedings only because Borchard joined them, arises from the fact that Mr Arkin has no resources to satisfy the costs orders that have been made against him and, following the judgment in Arkin v. Borchard (No.2), no costs order has been made against MPC as a non-party funder of Mr Arkin's litigation costs. It is therefore virtually inevitable that none of the defendants will be able to recover any part of the costs orders already made in their favour. Consequently, given that, with the dismissal of Mr Arkin's claim against Borchard, the latter's Part 20 claim against Zim also had to be dismissed, if Borchard were now ordered to pay Zim's costs and left to recover those costs in addition to its own costs against Mr Arkin, the burden of Zim's costs would ultimately fall on Borchard because recovery from Mr Arkin would be impossible. On the other hand, if I were not to order that Zim must look exclusively to Mr Arkin for its costs, the burden of those costs would fall on Zim just in the same way as each of the other defendants will have to bear its own costs.
Mr Peter Irvin has strongly argued on behalf of Borchard that it would be deeply unfair to Borchard if it were left with the burden of Zim's costs. Zim was as much a conference participant as Borchard and other defendants and Mr Arkin could well have chosen to join Zim as co-defendants notwithstanding they were out of the jurisdiction. Borchard therefore reasonably took the course of joining Zim and thereby benefited the other defendants, who together with Borchard, gained access to Zim's evidence. Zim argues that the usual order for Part 20 costs where the main action claim fails is that the Part 20 defendant recovers them from the successful defendant. It was Borchard's choice to join Zim, which was unnecessary in all the circumstances and Borchard must have appreciated that it risked having to bear Zim's costs if its defences against Mr. Arkin succeeded. Indeed, it was well-known to all parties at all times that Mr. Arkin was without significant resources and that he was having "a free ride" as regards the defendant's costs. Further, Zim adduced expert evidence on shipping industry economics from Professor Yarrow, which was of assistance to all the other defendants, including Borchard. Indeed Zim argue that because Borchard chose to call no expert evidence, but instead to rely on the expert evidence adduced by the 2 – 4 defendants and Zim, Borchard should bear the burden of Zim's costs arising out of Mr. Arkin's impecuniosity.
On behalf of those Part 20 defendants whom he represented Mr. Steven Gee QC argued primarily in support of Zim's position, contending that Borchard should be ordered to pay the costs of KNSM and DNOL thereby leaving it to Borchard to attempt to recover those costs from Mr Arkin. However, Mr. Gee also argued for an additional direct costs order in favour of his clients against Mr Arkin which was intended to recover such part of their costs directly as Mr Arkin could satisfy and the balance of their costs from Borchard. It was said that if Borchard became insolvent there was a risk that such costs as it was able to recover from Mr Arkin would never be transmitted to the DAC Part 20 defendants who would have to prove for them in competition with Borchard's other creditors. Finally, as an alternative approach, Mr. Gee submitted that because the defence of all the defendants to Mr Arkin's claim depended heavily on the expert evidence adduced by the 2–4 defendants and the Part 20 defendants, including Zim, all of whom were conference members directly or indirectly exposed to Mr Arkin's claims, and as such were "joint venturers", it would be fair and equitable for each of Borchard, Zim and the 2–4 defendants and Part 20 defendants represented by DAC to bear a share of the total costs of expert evidence,...
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