Ted Baker Plc and Another v Axa Insurance UK Plc and Others
| Jurisdiction | England & Wales |
| Judge | Mr Justice Eder |
| Judgment Date | 29 June 2012 |
| Neutral Citation | [2012] EWHC 1779 (Comm) |
| Court | Queen's Bench Division (Commercial Court) |
| Docket Number | Case No: 2010 FOLIO 209 |
| Date | 29 June 2012 |
[2012] EWHC 1779 (Comm)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Royal Courts of Justice
Strand, London, WC2A 2LL
Mr Justice Eder
Case No: 2010 FOLIO 209
Stephen Cogley QC and Tim Marland (instructed by Browne Jacobson) for the Claimants
Jeremy Nicholson QC and James Medd (instructed by Kennedys) for the Defendants
Hearing dates: 18, 22 June 2012
Introduction
Following my judgment in relation to certain preliminary issues which I delivered on 25 May 2012, this judgment now deals with costs. In particular, the claimants apply for an order that the defendants pay to the claimants the costs of the preliminary issues to be assessed unless otherwise agreed. According to a schedule put before the court these costs are said to be approximately £660,000; and the claimants seek an order for an interim payment.
The court's discretion with regard to costs is set out in CPR Part 44.3. For the purposes of CPR Part 44.3 (2) there is and could be no dispute but that the claimants are to be regarded as the successful party in relation to the preliminary issues which I determined; and that subject to the three points that I deal with below the claimants would be entitled to an order for costs in their favour.
The three points that arise for consideration are as follows. First, the defendants contend that I should make no order for costs at all at this stage and adjourn all questions of costs until after determination of the further issues which are still outstanding, including certain further issues in relation to liability and also quantum. Second, the defendants contend that in any event, they should not have to pay a proportion of any costs that might be ordered against them on the grounds of the claimants' unreasonable conduct in respect of disclosure. That has now been accepted by the claimants. It has also been agreed between the parties that this should be reflected in an order which would, in effect, permit the defendants to deduct the sum of £20,000 from any order as to costs that might be made against them. Third, the first defendants contend that in any event, the court should order that the claimants pay on an indemnity basis the costs wasted and thrown away by their failure until just before trial to admit that the risk was co-insured (the "co-insurance costs"). I take each of these two outstanding points in turn.
A. Should the court make an order for the costs of the preliminary issues now?
I deal first with this threshold issue. The defendants accept that the claimants have clearly been successful on the preliminary issues. However, they submit both that it does not follow that the costs should simply follow the event and that it is not possible for the court to deal with these costs fairly at this stage. In particular, the defendants submit that it is clear on the authorities that the appropriate order is to reserve the costs until after trial of the remaining issues on liability and quantum – when the court will be able to decide who has succeeded or failed overall in the action, and to what extent, and also by comparison with any Part 36 or other relevant offers of settlement which the court can then consider.
Split trial
In support of such submission, the first main point advanced by the defendants is that regardless of any Part 36 or other relevant offers of settlement that might have been made, it may be proper for the court to defer any order for the costs of a split trial of the issues of liability; and in the present case that is indeed the order that should be made. In particular, the defendants rely on the decision of the Court of Appeal in Weill Mean v Fiddler Holdings [2003] EWCA Civ 1058. In that case, following a trial on liability, a decision by the trial judge to reserve costs was upheld by the Court of Appeal even though the trial had determined all issues on liability and there was no question of any offers of settlement which might have affected costs. However, in my judgment, it would be quite wrong to regard that case as establishing any general rule that in the case of a split trial the court should ordinarily reserve the question of costs until the end of the case. On the contrary, although that was indeed the decision of the trial judge in that case and although that decision was upheld by the Court of Appeal, it is quite clear that the Court of Appeal did so with some hesitation and on the rather narrow basis that it was not possible to say that the judge's decision was clearly one which he was not entitled to reach – see paragraph 32 of the judgment of Lightman J with whom Ward and Tuckey LJJ agreed. As to the proper approach of the court in such circumstances, Lightman J further stated as follows:
"33. The fact that only nominal damages are awarded after a single trial of the issues of liability and damages in the circumstances of a particular case may constitute grounds for refusing the claimant his costs or his full costs of the issue of liability. There is much to be said for the view that the incidence of costs should be the same whether or not for case management reasons there has been an order for a split trial and whether or not the order for a split trial was made on the initiative of the claimant or the defendant. If this is so, in the case where there is a split trial and it is left uncertain until conclusion of the trial on quantum whether the claimant will recover more than nominal damages, it may be proper for the trial judge to defer making any order for the costs of the trial of the issue of liability until the final outcome of the action is known. This may be the case whenever the judge considers that there is a real possibility that the outcome of the assessment of damages may affect the merits of the parties' entitlement to the costs of the issue of liability. If the Judge forms the view that it does, he must consider carefully whether justice to the defendant requires him to postpone any decision on costs until the final outcome of the action is known. I do not think that the Judge's decision in the exercise of his discretion to follow this course in this case and postpone the decision on costs can or should be disturbed."
The main point advanced by the defendants here is that regardless of any Part 36 or other offers of settlement (as to which see below) which might have been made, there is at least a possibility (and the defendants would say a strong probability) that the claimants will fail on one or more of the remaining issues with regard to liability which remain outstanding alternatively, even if successful on liability, the quantum of any claim will be zero. In such circumstances, the defendants contend that the claimants will not or at least may not be entitled to recover their costs in relation to the trial of preliminary issues which has just been completed.
I do not accept that submission in the particular circumstances of the present case. On the assumption that (i) all issues had been determined in a single trial and (ii) the defendants will succeed on one or more issues of liability and/or quantum and subject to the further point raised by the defendants in relation to possible "offers" that I consider further below, I can see no real prospect of the court depriving the claimants of the costs that have been incurred in relation to the preliminary issues that I have just determined. If that is right, the fact that there has been a split trial should not make any difference. These preliminary issues were entirely discrete and it was always open for the defendants, if they so wished, to concede these particular points. On the contrary, these preliminary issues have had to be determined in the course of what has been a protracted trial involving evidence from no less than 22 witnesses. As stated above, the claimants have incurred substantial costs which according to the schedule put before the court total in excess of £660,000. In my judgment, the claimants are in principle entitled to those costs even if they may ultimately fail on other issues of liability or make no more than a nil recovery, subject only to the further point raised by the defendants in relation to possible settlement offers which I now turn to consider.
Possible settlement offers
The second main point advanced by the defendants is that in deciding what order for costs should be made in relation to the preliminary issues, the court should take into account any offers of settlement that may have been made either by the defendants or the claimants whether under CPR Part 36 or otherwise; and this can only properly be done at the end of the case when the terms of any such offer can be disclosed and then considered by the court.
In support of that submission the defendants relied on a number of authorities including HSS Hire Services Group v BMB Builders Merchants [2005] 1 WLR 3158; Intense Investments v Development Ventures [2006] EWHC 1628 (TCC); Multiplex Constructions (UK) v Cleveland Bridge UK and Anr [2007] EWHC 659 (TCC); Shepherds Investments v Walters and others [2007] EWCA Civ. 292, 6 Costs LR 837. As to these authorities, the high point of the defendants' case is the passage in para 35 of the judgment of Waller LJ in HSS v BMB:
"35. In my view Part 36.19 does not allow for the disclosure of the amount of a payment in. On its language it allows simply the disclosure of the fact that there has been one or the fact that there has not. The consequences of that being the correct interpretation of Part 36.19 seem to me to be as follows. If the court is told that there has been no payment in, then the court is...
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