Sugar Hut Group Ltd & others v AJ Insurance
| Jurisdiction | England & Wales |
| Judge | Mr Justice Eder |
| Judgment Date | 19 November 2014 |
| Neutral Citation | [2014] EWHC 3775 (Comm) |
| Court | Queen's Bench Division (Commercial Court) |
| Date | 19 November 2014 |
| Docket Number | Case No: 2011 Folio 1386 |
[2014] EWHC 3775 (Comm)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Royal Courts of Justice, Rolls Building
Fetter Lane, London, EC4A 1NL
Mr Justice Eder
Case No: 2011 Folio 1386
Mr Richard Slade QC (instructed by Thomas Cooper LLP) for the Claimant
Mr Angus Piper (instructed by Caytons Law) for the Defendant
Hearing dates: 10 November 2014
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.
On 20 October 2014 I delivered my main Judgment in these proceedings. In summary, I upheld the claimants' claim for Business Interruption ("BI") losses and also interest (which I assessed in the sum of 5% p.a.). Thereafter, the parties agreed an order reflecting the terms of that Judgment. In summary, the broad result of my Judgment as reflected in that order was that the claimants were entitled to recover damages inclusive of interest in the sum of £1,090,021.02 from the defendant. Given that the defendant had previously made payments on account of £383,000 (1 June 2013) and £430,000 (3 February 2014), this left an outstanding balance due pursuant to the Judgment of £277,021.02.
Of these sums, the amount of principal due in respect of BI losses amounted to £568,670 gross. This was the sum which the parties calculated was due and payable in respect of such losses in accordance with my Judgment.
This present Judgment concerns costs. I heard the parties' submissions in that regard on 10 November 2014. At the end of that hearing, I informed the parties of my decision. My reasons are set out below.
It was common ground that the Court had a discretion as to costs as regulated, in effect, by CPR44.2. In essence, Mr Slade QC on behalf of the claimants, submitted that under CPR 44.2(2)(a), the general rule is that the unsuccessful party will be ordered to pay the costs of the successful party; that there are no relevant Part 36 offers to be considered or any other matters which should persuade the court to depart from this general rule so as to deprive the claimants of any part of their costs; and that the claimants should have interest paid on their costs until judgment.
I accept that under CPR 44.2(2)(a) the general rule is as stated by Mr Slade although, as expressly contemplated by CPR44(2)(2)(b), the Court may make a different order. I also accept, of course, that the claimants here are properly regarded as the successful party in these proceedings. In that context, I was referred to a number of authorities including the decision of Gloster J in HLB Kidsons v Lloyds Underwriters [2008] 3 CLR 427, in particular at paras 10–11 where she stated as follows:
" 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 para 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). InKastor 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 para 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 266at 268. As Longmore LJ said inBarnes v Time Talk [2003] BLR 331at para 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 para 3 per Mann J.
11. There is no automatic rule requiring reduction of a successful party's costs if he loses on one or more issues. In any litigation, especially complex litigation such as the present case, any winning party is likely to fail on one or more issues in the case. As Simon Brown LJ said in Budgen v Andrew Gardner Partnership [2002] EWCA Civ 1125 at para 35: "the court can properly have regard to the fact that in almost every case even the winner is likely to fail on some issues". Likewise in Travellers' Casualty (supra), Clarke J said at para 12:
"If the successful claimant has lost out on a number of issues it may be inappropriate to make separate orders for costs in respect of issues upon which he has failed, unless the points were unreasonably taken. It is a fortunate litigant who wins on every point.""
I fully agree with the views there expressed. In particular, I agree, of course, that although the Court may depart from the general rule, it remains appropriate to give "real weight" to the overall success of the winning party. However, in accordance with CPR44.2 and in the exercise of my discretion, it seems to me that there is very good reason here to depart from the general rule in two main respects.
First, CPR 44.2(4)(b) provides, in effect, that in deciding what order to make about costs, the court will have regard to all the circumstances including " whether a party has succeeded on part of its case, even if that party has not been wholly successful". In that context it is important to bear in mind that my main Judgment was not concerned with liability. That had been agreed between the parties some time ago shortly before a trial on liability was due to take place. As recorded in paragraph 4 of my main Judgment, the defendant conceded liability on the terms set out in a consent order which provided, in effect, that the defendant would pay an agreed 65% of the claimants' losses. My main Judgment was concerned therefore not with liability but with quantum. In that context, it seems to me important to recognise that there were a number of discrete claims – in particular (i) losses at Fulham and Hertford (claimed at £171,677); (ii) wages/phone costs, alternative accommodation and redundancy costs (£139,466): and (iii) the claim for the Marriot invoices (£19,275), in respect of all of which I awarded £nil: see paragraphs 48–56 of my main Judgment.
As stated by Gloster J in Kidsons at para 11, there is, of course, no automatic rule requiring reduction of a successful party's costs if he loses on one or more issues; and in any litigation, any winning party is likely perhaps to fail on one or more issues in the case. Nevertheless, it seems to me that these items that I have just referred to not only involved substantial amounts of money totalling approximately £320,000 and, as such, represented a significant element of the overall claim but all gave rise to discrete issues involving not only disclosure but also both factual and expert evidence.
Second, it seems to me important to recognise that in advancing their claim for BI losses, the claimants relied heavily on what I referred to in my main Judgment as Mr Brown's second perspective ("P2"). This was based upon the actual turnover achieved post-fire after the Club had reopened in August 2010. On any view, the P2 exercise was not one which might be said to be minor or peripheral. On the contrary, it formed a very important and discrete element in the claim advanced on behalf of the claimants in respect of which much time and effort was expended by both parties. In particular, it formed an important part of Mr Norcoss's evidence as well as the detailed expert evidence of Mr Brown and the responsive expert evidence of Mr Stanbury. In the event, I rejected the P2 exercise in its entirety: see paragraphs 39–41 of my main Judgment.
Notwithstanding, Mr Slade submitted that there should be no reduction in the costs to be awarded to the claimants. In particular, he emphasised what Gloster J had said in paragraph 11 of Kidsons; that to allow any reduction would be to chop too finely and to fail to give proper real weight to the fact that the claimants were the successful parties. I bear these submissions well in mind....
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