GB Gas Holdings Ltd (Claimant v Accenture (UK) Ltd and Others (Defendants
| Jurisdiction | England & Wales |
| Judgment Date | 10 November 2010 |
| Neutral Citation | [2010] EWHC 2928 (Comm) |
| Docket Number | Claim No.: 2008 Folio 397 |
| Court | Queen's Bench Division (Commercial Court) |
| Date | 10 November 2010 |
[2010] EWHC 2928 (Comm)
Before: The Honourable Mr Justice Hamblin
Claim No.: 2008 Folio 397
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Ms Sonia Tolaney (Instructed by Linklaters LLP) appeared on behalf of the Claimant (Respondent)
Ms Philippa Hopkins (Instructed by Freshfields Bruckhaus Deringer LLP) appeared on behalf of the Defendants (Appellants)
MR JUSTICE HAMBLEN: This is an application by the Claimants for an order pursuant to liberty to apply reserved to the parties by paragraph 2 of the order of the Honourable Field J dated 2 December 2009 that the costs of and occasioned by the trial of preliminary issues shall be assessed by way of detailed assessment forthwith. The reason given in the application notice for THE application is that the Court of Appeal has now disposed of the Defendants' appeal and has further ordered that 95 per cent of the Claimants' costs of the appeal be paid by the Defendants and, therefore, in all the circumstances, it is just and convenient and would occasion no hardship to the Defendants for an assessment of preliminary issue costs to take place at the same time as and not after the assessment of the appeal costs.
The background to this matter is that it involves major litigation between the Claimants Centrica and the Defendants Accenture arising out of an agreement for the design, supply, installation and maintenance of a new IT system, which was to include an automated billing system. Centrica contends that Accenture failed to design and supply a functional billing system that met the specified requirements/objectives. Indeed it submits that it had the opposite effect and caused significant financial and reputations damage to Centrica's business and that, far from receiving the benefits from it, Centrica has instead suffered losses of over £220 million attributable to the defective billing system allegedly supplied by Accenture.
In particular it is Centrica's case that the billing system is not “free from material design and material programming and material implementation errors”, as Accenture warranted that it would be, and they contend the billing system contained “Fundamental Defects” within the meaning of the agreement for which Accenture is liable up to the amount of an agreed cap on liability of approximately £90 million.
The preliminary issues assigned by Field J and by the Court of Appeal essentially addressed the ambit of the warranties given by Accenture in the amended agreement and the extent of Accenture's liability in damages for breach of those warranties.
The preliminary issues numbered 10 and were heard at a trial before Field J which took place over five days in June and July 2009, and judgment was given on 6 and 23 November 2009. As a result of that judgment, Field J made the following costs order:
“The costs of and occasioned by the trial of preliminary issues 1-10 above resulting in judgments of the Honourable Mr Justice Field handed down on 6 and 23 November 2009 shall be the Claimants' costs in any event with the assessment of such costs to take place upon the conclusion of the main trial, save that there is liberty to apply in respect of the timing of this assessment.”
The Court of Appeal hearing took place between 9 and 11 June 2010. Judgment was given on 30 July 2010 dismissing the appeal, and the court made the following order in respect of costs:
“The Appellant shall pay 95 per cent of the Respondent's costs of the appeal to be assessed on the standard basis if not agreed.”
On 25 August 2010 the Claimants' solicitors wrote to the Defendants' solicitors proposing that costs should be assessed forthwith if not agreed, in relation to both the costs of a trial by Field J and the costs of the appeal. It then set out in generalised terms the costs at first instance and the appeal. The first instance costs in the schedule came to some £4,145,000 and was put forward on the basis that it was “assumed that all legal, technical and relevant expert costs incurred between 1 October 2008 and 31 July 2009 relate to the preliminary issues phase”. The appeal costs, again on a summary basis, were put at a figure of £814,000.
The Defendants did not agree that there should be assessment forthwith of these costs and they did not agree the costs; hence the present application.
I shall deal first with the application for detailed assessment of the first instance trial costs. Centrica contends that these costs should be awarded. They make reference to the judgment of Aikens J in a case called Greencore (UK) Holdings Plc v Elementis Plc [2005] EWHC 2139, where he said as follows:
“Notwithstanding that, in my view it is clear that the Claimants have won on the points that were argued at the preliminary issues trial and, in my view, the general approach in this court when preliminary issues have been ordered and fought out is that the successful party should have its costs and should be entitled to have those costs assessed. That makes commercial sense and, if there is to be an adjustment in the future because the other side wins the trial eventually, that can be accommodated.
“It is not suggested that either side here is impecunious, so that if costs are awarded and paid for by the Defendants to the Claimants and subsequently Defendants recover costs in relation to the main trial they would be out of pocket because they would not be able recover costs back from the Claimants. Accordingly I order an immediate assessment.”
Centrica contends that that approach, which is said to be the general approach of this court, should be followed in this case. They also refer to the notes to CPR 47.1 which acknowledge that costs may be ordered to be assessed before the conclusion of the proceedings, particularly where they concern discrete issues and they submit that this is just such a case. There has here been a discrete phase in the proceedings concerning the preliminary issues and substantial costs have been incurred. They have an order in their favour and they should be paid them without having to wait until what may be some time before the proceedings are finally concluded.
The Defendants submit that it would be inappropriate to order immediate assessment for a number of reasons. Firstly, they say that any detailed assessment of the first instance trial costs would be difficult,time-consuming and expensive. They submit that there is a major issue in this case as to exactly what costs are referable to the preliminary issue and what costs are or may be referable to the main trial issues and that a substantial exercise of disentangling would need to be carried out.
It is certainly true that the costs as presented in Linklaters' letter of 25 August are put on a very simplistic time basis and involves no attempt to differentiate the costs within that time period which may be solely referable to the preliminary issue. It is assumed that they all are. I accept that the disentangling exercise in this case is likely to be substantial and this is reflected in the fact that the estimate given for any detailed assessment hearing is of some one to two weeks with costs on each side of a quarter of a million pounds or more.
Secondly, the Defendants submit that it is unclear when any such detailed assessment exercise can be done. The information they have been provided is that a two-week detailed assessment would be unlikely to take place until the autumn of 2011, which would mean it would coincide with the trial date. The case has been set down for trial for 16 weeks commencing October of next year.
The Claimants' information is that such an assessment could take place in April or May. However, the Defendants point out that no hearing can be fixed under CPR 40.2 until there has been a bill of costs and identification of the points in dispute, and that we are some way away from that occurring and that therefore there can be no certainty that April/May dates would in fact be the date even if they are available.
Thirdly, the Defendants submit that, even if the detailed assessment was to take place in April/May of next year, it would still involve significant disruption to the parties at a time when they would...
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