Rotam Agrochemical Company Ltd v Gat Microencapsulation Gmbh (formerly Gat Microencapsulation Ag)
| Jurisdiction | England & Wales |
| Judge | Mr Justice Butcher |
| Judgment Date | 08 November 2018 |
| Neutral Citation | [2018] EWHC 3006 (Comm) |
| Court | Queen's Bench Division (Commercial Court) |
| Docket Number | Case No: CL-2015-000548 |
| Date | 08 November 2018 |
[2018] EWHC 3006 (Comm)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Royal Courts of Justice
Strand, London, WC2A 2LL
Mr Justice Butcher
Case No: CL-2015-000548
Anneliese Day QC and Christopher Langley (instructed by Trowers & Hamlins) for the Claimants
Hugo Cuddigan QC and Chris Aikens (instructed by Waterfront Solicitors LLP) for the Defendant
Hearing date: 31 October 2018
JUDGMENT COSTS
Introduction
On 25 October 2018 I delivered judgment after the trial of this matter. As is apparent from my judgment the Claimants, to whom I will refer as “Rotam”, failed in their case that there had been a contractual collaboration agreement, and that there had been a binding data transfer agreement, and also in their claim based on tortious misrepresentation, but succeeded in their claim in unjust enrichment. This meant that they were entitled to a recovery of €291,087.03, but not more.
That judgment has given rise to an issue as to costs. The parties contend for very different orders as to costs.
The parties' positions
Rotam contends that they are the successful party. They say that they should therefore have their costs, subject to a percentage reduction to take account of their failure on some issues, which they contend should be of no more than 25%. They say that they are the successful party, and that there is no reason to depart from the general position that costs should be awarded to the successful party, and in particular they draw attention to: (a) the fact that the Defendant, to whom I will refer as “GAT”, made no offer; (b) the fact that the unjust enrichment case, and GAT's defence to it, involved a consideration of many of the same matters as were raised by a consideration of the contractual claims; and (c) that GAT abandoned reliance on Austrian law at the beginning of the hearing, a matter on which, Rotam contend, considerable costs had been incurred.
By contrast, GAT says that it is the successful party. It says that Rotam's aim in the action was always to seek to make a recovery in respect of their contractual (and/or tortious) claims. Their claims in respect of those causes of action were for damages initially quantified as $16.4 million, and thereafter at $11.3 million. Rotam had instead succeeded only on an alternative claim, the factual basis of which had been contrary to its factual case in the action, which had been that there had been a binding collaboration and/or data transfer agreement, and which only yielded a recovery of some 3% of the amount claimed by way of damages in contract or tort. It says that the fact that it made no offer is not relevant, as any offer in the amount of the sums eventually awarded would have been rejected out of hand, and in any event, it was impossible to have made a Part 36 offer other than on the basis that it forewent an entitlement to costs in relation to matters on which it was ultimately successful. The appropriate order was, accordingly, that GAT should be awarded its costs, subject to a reduction to take account of Rotam's success in relation to unjust enrichment. GAT's contention was that this would result in GAT being awarded around 90% of its costs.
CPR 44.2
The starting point is the terms of CPR Part 44.2. It provides as follows:
44.2 (1) The court has discretion as to—
(a) whether costs are payable by one party to another;
(b) the amount of those costs; and
(c) when they are to be paid.
(2) If the court decides to make an order about costs—
(a) the general rule is that the unsuccessful party will be ordered to pay the costs of the successful party; but
(b) the court may make a different order.
…
(4) In deciding what order (if any) to make about costs, the court will have regard to all the circumstances, including–
(a) the conduct of all the parties;
(b) whether a party has succeeded on part of its case, even if that party has not been wholly successful; and
(c) any admissible offer to settle made by a party which is drawn to the court's attention, and which is not an offer to which costs consequences under Part 36 apply.
(5) The conduct of the parties includes—
(a) conduct before, as well as during, the proceedings …
(b) whether it was reasonable for a party to raise, pursue or contest a particular allegation or issue;
(c) the manner in which a party has pursued or defended its case or a particular allegation or issue; and
(d) whether a claimant who has succeeded in the claim, in whole or in part, exaggerated its claim.
(6) The orders which the court may make under this rule include an order that a party must pay—
(a) a proportion of another party's costs;
(b) a stated amount in respect of another party's costs;
(c) costs from or until a certain date only;
(d) costs incurred before proceedings have begun;
(e) costs relating to particular steps taken in the proceedings;
(f) costs relating only to a distinct part of the proceedings; and
(g) interest on costs from or until a certain date, including a date before judgment.
(7) Before the court considers making an order under paragraph 6(f), it will consider whether it is practicable to make an order under paragraph 6(a) or (c) instead.
…
Authorities referred to by the parties
The parties are at one in contending that the first matter which I should consider is which was the “successful party”. In support of their differing contentions as to which was the successful party they rely, however, on two different strands of authority.
Thus, GAT contends that the correct approach is to identify who, in the words of Sir Thomas Bingham MR in Roache v News Group Newspapers Ltd [1998] EMLR 161, “as a matter of substance and reality has won”. It contends that this will involve asking, to quote further from Sir Thomas Bingham's judgment:
“Has the plaintiff won anything of value which he could not have won without fighting the action through to the finish? Has the defendant substantially denied the plaintiff the prize which the plaintiff fought the action to win?”
GAT further relied on the decision of the majority of the Court of Appeal in Medway Primary Care Trust v Marcus [2011] 5 Costs LR 808, which it described as “the leading authority” in the area. In that case, the claimant had sought £525,000 in respect of an allegedly negligent amputation, but had lost on the issue of causation, and been awarded only £2000 for pain and suffering in relation to admitted breaches of duty. The trial judge had awarded the claimant 50% of his costs. The majority of the Court of Appeal found that this was an error of principle, and substituted an order that the claimant pay 75% of the defendant's costs.
GAT referred to the fact that in Medway v Marcus the majority had placed reliance on the earlier case of Oksuzoglu v Kay [1998] 2 All ER 361, where the plaintiff had claimed that the amputation of his leg was due to negligence on the part of his medical practitioners. He had failed on causation, but been awarded some £5000 for pain and suffering and various expenses. The Court of Appeal had ordered that the defendants should recover 90% of their costs of the trial of the issues of liability and causation. The majority of the Court of Appeal in Medway v Marcus had referred to and relied on a passage of Brooke LJ's judgment in Oksuzoglu v Kay in which, after considering a number of other authorities, he had said (at paragraph [58]):
“In this line of cases, where the plaintiff only recovers between 1% and 3% of his original claim (sometimes, but not always, after a late amendment) the court is entitled to ask itself: ‘Who was essentially the winning party?’ It will not be distracted from making a just order as to costs by the absence of a payment into court which the plaintiff would obviously not have accepted … or where the defendants did not have a proper opportunity to make a payment into court which obviously would not have been accepted … Although all these cases are different, in the present case the substantive lis between the parties on the trial of the preliminary issues related to the big claim on which the plaintiff wholly failed.”
GAT further particularly relied upon the judgment of Tomlinson LJ, especially at paragraphs [47] and [49–51]. In paragraph [47] Tomlinson LJ had stated that, given that the claimant had only recovered £2000 and had not recovered compensation for the loss of his lower leg, it was “beyond argument” that the defendant “substantially denied the claimant … the prize for which he fought the action to win”. In paragraphs [49–51] Tomlinson LJ had said that it would not have been...
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