International Game Technology Plc v The Gambling Commission
| Jurisdiction | England & Wales |
| Judge | Lord Justice Coulson |
| Judgment Date | 08 September 2023 |
| Neutral Citation | [2023] EWHC 2226 (TCC) |
| Court | King's Bench Division (Technology and Construction Court) |
| Docket Number | Case No: HT-2022-000113 HT-2022-000420 |
and
[2023] EWHC 2226 (TCC)
Lord Justice Coulson
Case No: HT-2022-000113 HT-2022-000420
IN THE HIGH COURT OF JUSTICE
KING'S BENCH DIVISION
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
TECHNOLOGY AND CONSTRUCTION COURT
Royal Courts of Justice, Rolls Building
Fetter Lane, London, EC4A 1NL
Philip Moser KC, Ewan West, and Jen Coyne (instructed by Osborne Clarke LLP) for the Claimants
Sarah Hannaford KC, Rose Grogan and Barney McCay (instructed by Hogan Lovells International LLP) for the Defendant
Charles Hollander KC and Joseph Barrett (instructed by Quinn Emanuel Urquhart & Sullivan UK LLP) for the Interested Parties
Judgment No. 2 (Consequentials)
Hearing date: 30 August 2023
Approved Judgment
This judgment was handed down remotely at 10.30am on 8 September by circulation to the parties or their representatives by e-mail and by release to the National Archives
INTRODUCTION
In my judgment dated 28 July 2023 ( [2023] EWHC 1961 (TCC); [2023] 7 WLR 464), I decided the Preliminary Issue in favour of the defendant (“the Commission”), and concluded that the claimants (collectively referred to as “IGT”) had no standing to challenge the award by the Commission to the interested party (“Allwyn”) of the Licence to run the Fourth National Lottery. There was a further hearing on 30 August 2023 to address consequential matters.
THE RESOLUTION OF THE PROCEEDINGS
There was no dispute between the parties that, in consequence, judgment should be entered for the Commission on the Preliminary Issue, and that claims HT-2022-000113 and HT-2022-000420 (“the claims”) should be dismissed.
That left three outstanding matters:
i) the Commission's claim for an order against IGT for their costs of the claims (including the Preliminary Issue) and for a payment on account of those costs;
ii) Allwyn's claim for an order against IGT for their costs of the claims (including the Preliminary Issue); and
iii) IGT's application for permission to appeal.
At the hearing, I briefly stated my decision on each of those issues, and said I would provide my detailed reasons in a short written judgment.
THE COMMISSION'S COSTS
There was no dispute that IGT must pay the Commission's costs of the claims (to include the costs of the Preliminary Issue), such costs to be assessed on the standard basis if not agreed. As explained in greater detail below, those costs will include IGT's share of what have been called “the common costs”, namely those costs which were incurred by the Commission prior to the discontinuance of the separate claim by Camelot at HT-2022-000106, and in respect of which the Commission say that it is impossible to distinguish or allocate costs as between the separate claims with any greater precision.
The Commission sought a payment on account of their costs. Their solicitors summarised that claim in a letter dated 17 August 2023, with attachments. The Commission's costs total £4,166,797.95, including an allowance of 50% of the common costs. An interim payment is sought in the sum of £2.5 million.
In response, on behalf of IGT, Mr Moser KC accepted in principle that a payment on account should be made, but took various points about the nature of the costs information which had been provided. In particular, he challenged the assumption that IGT were responsible for 50% of the common costs, pointing out that, during the period when Camelot were involved, it was they who were in the forefront of the proceedings, not IGT. He also had some points about the in-house costs claimed by reference to Capital Law, although they were a very modest part of the £4.16 million total. When asked by the court to suggest an alternative figure for the payment on account, Mr Moser suggested that an appropriate figure was £1 million.
The law is summarised in the notes in the White Book 2023 at paragraph 44.2.12. The reasonable sum which must form the basis of any payment on account of costs will usually be an estimate of the likely level of recovery, subject to an appropriate margin to allow for error in the estimation: see Excalibur Ventures LLC v Texas Keystone Inc [2015] EWHC 566 (Comm). The process is necessarily rough and ready because there has been no detailed assessment, but justice requires an amount to be identified and paid on account, rather than making the successful party wait for the completion of the potentially lengthy assessment process.
Relevant factors to be taken into account can include the likelihood of the recovery of the total costs or the likely proportion to be recovered; the difficulty, if any, that may be faced in recovering the costs; the likelihood of a successful appeal; and the means of the parties. However, it was not suggested that any of those matters were of relevance here. Accordingly, I am obliged to endeavour to identify an amount which, on any view, the Commission will recover by way of costs.
I am in no doubt that the sum of £1 million suggested by Mr Moser would be a significant underestimate of the amount the Commission will recover. Even assuming that he is right, and IGT will not be obliged to pay 50% of the common costs, I note that the IGT-only costs are estimated to come to a total in excess of £1.8 million on their own. Furthermore, it is inevitable that IGT will have to pay at least some of the common costs, which separately amount to almost £1.5 million.
Taking the necessary broad-brush approach, I have concluded that the appropriate amount by way of an interim payment is £2.1 million. That is essentially 50% of the total costs incurred by the Commission. I am in no doubt that they will recover at least that sum on assessment. That interim payment must be paid by 4pm on 13 September 2023.
ALLWYN'S COSTS
Allwyn also seek an order that IGT should pay their costs, and are content with an order in the same terms as the order in respect of the Commission's costs. They do not seek an interim payment.
On behalf of Allwyn, Mr Hollander KC accepted that the recovery of an Interested Party's costs is far from automatic. However, he said that, by reference to the authorities, Allwyn have demonstrated specific features of this case which justified their separate representation, and they have fully participated in the resolution of these claims with the express permission of the case managing judge, O'Farrell J. In response, Mr Moser objected to an order making IGT liable for Allwyn's costs. His focus was on the costs of the Preliminary Issue, in respect of which, he said, with all proper politeness, that Allwyn's contribution was nugatory.
I start with the law. The underlying principles were set out in the speech of Lord Lloyd of Berwick in Bolton Metropolitan District Council & Ors v SoS for the Environment [1995] 1 WLR 1176. That was a case concerned with planning, where the developer successfully sought its costs (in the House of Lords and below) of defending the Secretary of State's original planning decision. Lord Lloyd said at 1178H:
“The developer will not normally be entitled to his costs unless he can show that there was likely to be a separate issue on which it was entitled to be heard, that is to say an issue not covered by Counsel for the Secretary of State; or unless he had an interest which requires separate representation. The mere fact that he is the developer will not of itself justify a second set of costs in every case.”
The House of Lords concluded that the developer had made out its claim for costs. This was because: (i) “the case raised difficult questions of principle”; (ii) “the scale of the development, and the importance of the outcome for the developers, were both of exceptional size and weight”; (iii) it was an unusual case because the opposition came, not from the local authority, but from a neighbouring authority supported financially by a consortium of major commercial interests.
There are a number of subsequent decisions at first instance in which this approach has been followed, including R (Smeaton) v SoS for Health [2002] 2 FLR 146 and Group M (UK) Limited v Cabinet Office [2014] EWHC 3863 (TCC). Recently, the relevant principles have been helpfully summarised by Fraser J in Bechtel Limited High Speed Two (HS2) Limited v Balfour Beatty Group Limited & Ors [2021] EWHC 640 (TCC) at paragraph 25:
“25. I draw the following principles from the court's power to order costs, and the decision in Bolton, which I consider are of general application to costs applications by interested parties in procurement challenges. They are as follows:
1. The court evidently has power to order costs under the statute, and such costs are discretionary. The power must however be exercised in accordance with the Civil Procedure Rules, and in particular CPR Part 44 which deals with costs (and Part 44.2 dealing with the court's discretion as to costs).
2. Ordinarily, an interested party (who for these purposes will usually be the winning bidder) must be able to show that there is a separate issue on which he was entitled to be heard, that is to say an issue not covered by the contracting authority; or that he has an interest which requires separate representation, in order to recover costs.
3. The mere fact that a party has won the bid does not automatically entitle him either to become an interested party in the litigation, or indeed, to recovery of his costs if the challenge by the claimant fails.
4. The court will, for procurement proceedings under the Regulations, when granting a winning bidder the status of...
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