Dexia Crediop S.p.A v Comune Di Prato
| Jurisdiction | England & Wales |
| Judge | Mr. Justice Walker |
| Judgment Date | 12 January 2017 |
| Neutral Citation | [2017] EWHC 252 (Comm) |
| Docket Number | Case No: CL-2010-000481 |
| Court | Queen's Bench Division (Commercial Court) |
| Date | 12 January 2017 |
[2017] EWHC 252 (Comm)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
The Rolls Building
7 Rolls Buildings
Fetter Lane
London EC4A 1NL
Mr. Justice Walker
Case No: CL-2010-000481
Mr. Richard Handyside QC and Mr. Rupert Allen (instructed by Allen & Overy LLP) appeared for the Claimant
Mr. Jonathan Davies-Jones and Mr. Christopher Burdin (instructed by Seddons) appeared for the Defendant
Hearing date for argument on consequential orders: 12 January 2017
Approved JUDGMENT ON COSTS
My judgment dated 25 June 2015 dealt with local government law and financial services law defences to the main claim in these proceedings. I shall refer to it as the "main claim judgment".
The main claim judgment did not deal with other defences. Nor did it deal with the counterclaim. The reason for this was that the parties' closing submissions at trial had had to deal with a wide range of possible outcomes. They had not focused on particular features of the conclusions that in the event I reached on the first of the financial services law defences. The matter was restored for further argument in relation to those features and their consequences. On 10 November 2016 I handed down my judgment on issues not dealt with in the main claim judgment. In the body of that judgment I referred to it as the "judgment on remaining issues". For convenience today, I shall refer to it as "the 2016 judgment".
Certain aspects of the orders to be made in consequence of the 2016 judgment were not in dispute. My order dated 10 November 2016, which I shall refer to as "the 2016 order", dealt with those aspects in this way:
(1) it determined the restitutionary consequences flowing from the 2016 judgment and in particular, it allowed an alternative restitutionary claim;
(2) it allowed a restitutionary counterclaim;
(3) it dismissed other counterclaims; and
(4) it reserved the costs and granted a stay of execution pending today's hearing.
When making that order, I was much assisted by a joint note from the parties. The note explained that, as regards the consequences of the 2016 judgment, certain issues remained in dispute. I indicated to the parties earlier today that I proposed to hear argument on those issues in stages. Stage 1 would be argument on the appropriate primary costs order to be made. Stage 2 would be argument on subsidiary costs orders. Stage 3 would be argument on permission to appeal, and stage 4 would be argument on whether there should be a stay of execution. The parties were content with this proposal and argument has proceeded accordingly.
The legal teams involved today are those which appeared at the trial. Mr. Richard Handyside QC and Mr. Rupert Allen and their instructing solicitors Allen & Overy comprise the legal team for the claimant, which I shall refer to as "Dexia". Mr. Jonathan Davies-Jones QC and Mr. Christopher Burdin and their instructing solicitors Seddons Solicitors comprise the legal team for the defendant, which I shall refer to as "Prato". I thank the legal teams for the considerable assistance which has been provided to me by them.
I have now heard argument on stage 1 and accordingly give my judgment on the appropriate primary costs order to be made. The statements of case gave rise to numerous issues. Almost without exception those issues were highly complex. In the main claim judgment and the 2016 judgment some of those issues were decided in Dexia's favour and some were decided in Prato's favour. Neither party suggests that the whole of the costs should be paid by one party to the other. Both parties say that an order should be made on a proportional basis, but they do not agree on the proportions and who should pay them. Dexia asserts that the appropriate order is that Prato should pay 90% of Dexia's costs and that Dexia should pay 10% of Prato's costs, and that those amounts should be netted off. Prato proposes that an order should be made under which it would recover from Dexia 70% of its costs. In the present judgment I refer to the dispute between the parties in this regard as a dispute about the "primary" costs order so as to distinguish it from "subsidiary" costs matters such as whether there should be an interim payment on account.
My powers in relation to the primary costs order are governed by CPR 44.2 which comprises eight paragraphs. Under paragraph (1), I have a discretion as to whether costs are payable by one party to another. The general rule when exercising that discretion is set out in paragraph (2). The general rule is that the unsuccessful party will be ordered to pay the costs of the successful party.
Paragraph (2) notes, however, that the court may make a different order where that is required to do justice. Under paragraph (4), in deciding what order (if any) to make about costs, the court is to have regard to all the circumstances. Paragraph 4(b) notes that these circumstances include whether a party has succeeded on part of its case, even if that party has not been wholly successful.
Paragraph 4(a) also notes that the circumstances include the conduct of all the parties, something which is in turn the subject of paragraph (5). Under paragraph 5(b) the conduct of the parties includes whether it was reasonable for a party to raise, pursue or contest a particular allegation or issue. Under paragraph 5(c) the conduct of the parties also includes the manner in which a party has pursued or defended its case or a particular allegation or issue.
As to the remaining paragraphs, at this stage I mention only paragraph 6(a) under which the court may make an order that a party pay a proportion of another party's costs.
At one stage in argument this morning it was suggested by Prato that the order which it sought was an order in accordance with the general rule. I do not agree. The general rule is that the unsuccessful party should pay to the successful party the whole of the costs of the matter that has been tried. This can be seen from the judgment of Lord Woolf M.R. in A.E.I. Rediffusion Music Ltd v Phonographic Performance Ltd [1999] 1 WLR 1507, 1522. That judgment was given at a stage when the Civil Procedure Rules had been made but had not yet come into force. In that regard Lord Woolf said at page 1522:
I draw attention to the new Rules because, while they make clear that the general rule remains, that the successful party will normally be entitled to costs, they at the same time indicate the wide range of considerations which will result in the court making different orders as to costs. From 26 April 1999 the 'follow the event principle' will still play a significant role, but it will be a starting point from which a court can readily depart. This is also the position prior to the new Rules coming into force. The most significant change of emphasis of the new Rules is to require courts to be more ready to make separate orders which reflect the outcome of different issues. In doing this the new Rules are reflecting a change of practice which has already started. It is now clear that too robust an application of the 'follow the event principle' encourages litigants to increase the costs of litigation, since it discourages litigants from being selective as to the points they make. If you recover all your costs as long as you win, you are encouraged to leave no stone unturned in your effort to do so.
In circumstances where both parties agree that there should be a departure from the general rule, I can deal briefly with the principles governing whether the court should take that course. Those principles were discussed by Gloster J in HLB Kidsons v Lloyd's Underwriters [2007] EWHC 2699 (Comm), [2008] 3 Costs LR 427 at paragraphs 10 and 11:
10. The principles applicable as to costs were not in contention. The court's discretion as to costs is a wide one. The aim always is to 'make an order that reflects the overall justice of the case' ( Travellers' Casualty v Sun Life [2006] EWHC 2885 (Comm) at paragraph 11 per Clarke J. As Mr. Kealey submitted, the general rule remains that costs should follow the event, i.e. that 'the unsuccessful party will be ordered to pay the costs of the successful party': CPR 44.3(2). In Kastor Navigation v Axa Global Risks [2004] 2 Lloyd's Rep 119, the Court of Appeal affirmed the general rule and noted that the question of who is the 'successful party' for the purposes of the general rule must be determined by reference to the litigation as a whole; see paragraph 143, per Rix LJ. The court may, of course, depart from the general rule, but it remains appropriate to give 'real weight' to the overall success of the winning party: Scholes Windows v Magnet (No 2) [2000] ECDR 266 at 268. As Longmore LJ said in Barnes v Time Talk [2003] BLR 331 at paragraph 28, it is important to identify at the outset who is the 'successful party'. Only then is the court likely to approach costs from the right perspective. The question of who is the successful party 'is a matter for the exercise of common sense': BCCI v Ali (No 4) 149 NLJ 1222, per Lightman J. Success, for the purposes of the CPR, is 'not a technical term but a result in real life' ( BCCI v Ali (No 4) (supra)). The matter must be looked at 'in a realistic … and … commercially sensible way': Fulham Leisure Holdings v Nicholson Graham & Jones [2006] EWHC 2428 (Ch) at paragraph 3 per Mann J.
11. There is no automatic rule requiring reduction of a successful party's costs if [that party] loses on one or more issues. In any litigation, especially complex litigation such as the present case, any...
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