Colour Quest Ltd & Others v Total Downstream Plc & Others
| Jurisdiction | England & Wales |
| Judge | MR JUSTICE DAVID STEEL,Mr Justice David Steel |
| Judgment Date | 22 April 2009 |
| Neutral Citation | [2009] EWHC 823 (Comm) |
| Court | Queen's Bench Division (Commercial Court) |
| Date | 22 April 2009 |
| Docket Number | Case No: 2007 FOLIO NO 1057 |
[2009] EWHC 823 (Comm)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Before: Mr Justice David Steel
Case No: 2007 FOLIO NO 1057
Jonathan Gaisman Q.C. & David Turner & Siobán Healy (instructed by Kennedys) for the Colour Quest Claimants
Lexa Hilliard (instructed by Collins Solicitors) for the Douglas Jessop Claimants
Justin Fenwick Q.C. & Paul Sutherland (instructed by Pinsent Masons LLP) for West London Pipeline and Storage Ltd and United Kingdom Oil Pipelines Ltd
Vernon Flynn Q.C. (instructed by Linklaters L LP) for BP Oil UK Limited
Richard Handyside Q.C. & John Taylor (instructed by Simmons & Simmons) for Shell UK Limited
Lord Grabiner Q.C. & Andrew Bartlett Q.C. & Julian Field & Alan MacLean & Simon Brown & Simon Birt (instructed by Davies Arnold Cooper) for the First and Second Defendants
Philip Edey Q.C. (instructed by Edwards Angell Palmer & Dodge UK LLP) for Hertfordshire Oil Storage Limited
Andrew Popplewell Q.C. & Michael Bools (instructed by Herbert Smith LLP) for Chevron Limited
Hearing dates: 1 & 2 April
Approved 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.
Mr Justice David Steel:
I propose to give a short judgment to deal with some of the matters outstanding from the post-judgment hearing.
Indemnity costs
The first point that I must deal with is the claim for indemnity costs. This was the primary issue between the parties. The costs of the preparation and presentation of the case were very sizeable but so also was the claim. Accordingly no issue of proportionality arises. The only significant difference between making an order on a standard basis as compared with an order on an indemnity basis is accordingly the burden of proof as to the reasonableness of the costs incurred.
Against that background the scale of this hearing in regard to costs (and the attendance of an army of lawyers) was a matter of some concern to the court. The justification was put forward in this way. It was for instance the experience of the claimants' solicitors that in respect of a claim for costs it was typical that a recovery of between 70 and 75% of the sum claimed would be made on a standard basis. It was suggested that the disparity between the costs awarded on a standard basis and those awarded on an indemnity basis might be as much as 20%. Thus, given for instance that the total costs of the claimants was in the region of £16 million, it followed that the sums at stake were very large indeed and thus the cost of the hearing which was estimated at something in the region of £250 per minute rather paled into insignificance.
If this analysis is correct it presents a dispiriting picture. The idea that the mere reversal of the burden of proof can give rise to this level of disparity of outcome is somewhat disturbing. Of course there is likely to be a marked disparity arising in a case where the costs judge is freed from the restraints of proportionality. Equally there may be a marked disparity arising from expenses advanced by a litigant in person or perhaps even in the context of a bill of costs presented by a firm of solicitors who were somewhat inexperienced in litigation. But I do find the idea that the firms engaged in this litigation who are of international renown have somehow exposed themselves to the risk of not recovering millions of pounds of costs for their clients because they might be unable to establish that the costs were reasonably incurred as, put at its lowest, surprising. Accordingly, on the assumption that this application is not made simply in an attempt to stigmatise the defendants and their solicitors, I express the hope that the exercise genuinely merits the money that has been expended upon it.
So far as the legal principles are concerned there is, as might be expected, no significant dispute. The court is required to have regard to all the circumstances including the conduct of the parties. The parties claiming indemnity costs have indeed won on the preliminary issues relating to liability. Accordingly the focus of the debate is upon the defendant's conduct: CPR 44.3. In that context the claimants say that Total unreasonably contested the issues of both negligence and foreseeability and defended these issues in an unreasonable manner.
It is accepted that whilst there is no requirement to establish conduct which is deserving of moral condemnation (though in fact both the claimants and Chevron do so contend) there must at least be conduct which takes the case out of the norm: Excelsior Commercial v. Salisbury Hammer Aspden & Johnson [2002] EWCA Civ 879. It follows that the trial judge is well placed to make an assessment of the relevant criteria.
In this context I have also been referred to the following additional cases which also afford useful guidance.
i) In Brawley v. Marcynski (No 2) [2003] 1 WLR 813, Longmore LJ considered (paragraph 13) that the effect of recent authority was that “it may be appropriate to make an award of indemnity costs where there is little or no stigma to be attached to the manner in which the losing party has conducted the litigation … But … indemnity costs are, more usually, awarded when, as here, the judge disapproves of a party's conduct in the litigation”.
ii) “Where a claim is speculative, weak, opportunistic or thin, a Claimant who chooses to pursue it is taking a high risk and can expect to pay indemnity costs if it fails.” Three Rivers District Council v. BCCI and the Bank of England [2006] EWHC 816 (Comm)paragraph 25 per Tomlinson J.
iii) To like effect Langley J in Amoco UK Exploration v BAO [2002] 1 BLR 135 stated at paragraph 6:
“There is in my judgment a sound basis for concluding that Amoco conducted itself throughout the relevant events on the basis that its commercial interests took precedence over the rights and wrongs of the situation and that it was prepared to risk the outcome of litigation should BAO resist the pressures upon it and take on the challenge … If a party embarks on or brings upon itself litigation of the magnitude of this litigation in such circumstances and suffers a resounding defeat, involving the rejection of much of the evidence adduced in support of its case, in my judgment that provides a proper basis on which it is appropriate to award costs on an indemnity basis”.
Negligence
I turn first to the claimants claim for indemnity costs on the issue of negligence. So far as this is concerned it is accepted by Total that an order for indemnity costs on this issue would be justified up to 22 April 2008. This concession is presumably based on the fact that from the outset Total was aware from its own internal investigation that the supervisor on duty was mistaken as to the identity of the pipeline filling the relevant tank (a factor which was not revealed until July 2008 when the court ordered disclosure in relation to the internal investigation). Indeed by May 2006 this same in-house enquiry had also revealed that the accident was attributable to an overflow from Tank 912 on which, unknown to the supervisor, the gauge had stuck.
Proceedings were instituted in January 2007. The defence was filed in May 2007 together with the appropriate statement of truth. This denied fault. In fact a denial of fault was maintained for a further two years. Leaving aside any appropriate reservations about the identity of the supervisor's employer (i.e. whether to Total or HOSL) this was unreasonable to a marked extent sufficient to justify the award of the indemnity costs.
An admission was finally extracted on 22 April 2008. But it was in very guarded terms: “The Total defendants admit that there was negligence on the part of the relevant member of staff on duty at the terminal as supervisor at the time of the incident in failing to appreciate before the incident occurred that the 2800i servo-gauge on Tank 912 had become stuck and that Tank 912 could become full during his shift”. Not surprisingly the claimants pressed for elucidation both as to the stand that was being taken by HOSL on the topic and also, more to the point, as to whether the admission encompassed fault in allowing the escape of some 300 tonnes of petrol. Whilst the position of HOSL was confirmed on 1 May it was not until 23 May that the position as regards responsibility of the escape was finally confirmed. In my judgement it is appropriate that the claimants should recover indemnity costs in regard to the issue of negligence up to that date.
Foreseeablity
I turn now to the issue of the foreseeability. It was the claimants' case that Total's position was not simply unreasonable but in effect dishonest. This proposition was advanced on the basis that want of foreseeability was put in issue when it was known to be an indefensible proposition and that Total's stance on it was akin to its shuteye approach to the issue of negligence.
It is fair to say that prior to June 2008 Total's position on the issue was somewhat confused. In particular it was not at all clear whether any explosion was accepted as a foreseeable consequence of the overspill and, even if so, what the extent of any foreseeable overpressure damage was.
In June 2008 it was conceded by Total that an explosion was foreseeable...
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