Ted Baker Plc and Another v Axa Insurance UK Plc and Others
| Jurisdiction | England & Wales |
| Judge | Mr Justice Eder |
| Judgment Date | 11 December 2014 |
| Neutral Citation | [2014] EWHC 4178 (Comm) |
| Docket Number | Case No: 2010 Folio 209 |
| Court | Queen's Bench Division (Commercial Court) |
| Date | 11 December 2014 |
[2014] EWHC 4178 (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: 2010 Folio 209
Mr Stephen Cogley QC and Mr Tim Marland (instructed by Browne Jacobson) for the Claimants
Mr Jeremy Nicholson QC and Mr James Medd (instructed by Kennedys) for the Defendants
Hearing dates: 21 November 2014
Approved Judgment on Costs
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.
This Judgment deals with the question of costs in these proceedings.
I have now delivered three main Judgments in this case. The first ("Part 1") concerned a number of preliminary issues in relation to liability: see [2012] EWHC 1406 (Comm). In summary I held that the relevant insurance policies covered "employee theft". Further, I held that the claimants were not estopped by convention from relying on such construction. I also rejected the claims advanced on behalf of the various defendants for rectification and damages and, so far as the second and third defendants were concerned, also rejected their claims that they were entitled to avoid the contracts of insurance on grounds of misrepresentation and/or non-disclosure. (A late application for permission to appeal was refused by the Court of Appeal: see [2014] EWCA Civ 134.)
Following that Judgment, I delivered my second Judgment which dealt, in particular, with the question of costs: see [2012] EWHC 1779 (Comm). The result of such second Judgment is summarised in paragraph 4 of my Order dated 29 June 2012:
" 4. The costs of the above issues shall be reserved for final determination until after the case has been decided or further order save that it is hereby declared that subject to any offers of settlement that might have been made (whether pursuant to CPR Part 36 or otherwise) (i) the defendants shall pay to the claimants the costs of the preliminary issues to be assessed in detail if not agreed less the sum of £20,000 in respect of disclosure and (ii) the claimants shall pay to the defendants the costs in respect of the co-insurance issues on an indemnity basis to be assessed in detail if not agreed."
More recently, I delivered my third main Judgment ("Part 2") dealing with further issues concerning claims co-operation and also quantum: see [2014] EWHC 3548 (Comm).
In paragraph 32 of that last Judgment, I noted that the costs in the case had spiralled both in absolute terms and out of all proportion to the amount which was then in dispute. As there stated, although the claim had reduced, until at least shortly before the trial of Part 2, to some £904,000, I was told that up to 16 June 2014 excluding the costs of the appeal and ignoring the costs of that trial, after that date, the claimants' costs were some £2.53m and the defendants' costs some £1.8m. On that basis, I said that together with the costs of that trial, I would guess that the total combined costs bill will probably exceed £5m. I was wrong. In fact, it now appears that that figure is an under-estimate. I have now been informed that together with VAT the total combined costs bill in these proceedings excluding the costs of the appeal exceed £6m and are probably nearer to £7m. As I stated in paragraph 32 of my third Judgment, I regard this as an appalling state of affairs which brings no credit to modern commercial litigation.
As to the issues which now arise with regard to costs, the parties are (as ever) far apart. On behalf of the defendants, Mr Nicholson QC submitted that the claimants should pay the defendants' costs of the proceedings in particular because:
i) The defendants are the successful parties in the proceedings. The claimants' claims have been dismissed; and the claimants have not succeeded on any part of their case to any useful effect.
ii) Moreover (as described below), the defendants made reasonable offers of settlement under CPR Part 36 and/or CPR 44.2(4)(c) at an early stage of the proceedings and before the preliminary issues trial; and the claimants have failed to obtain a judgment more advantageous than any of those issues.
Further, Mr Nicholson submitted that the costs of the proceedings have been substantially larger than they should have been because of what he submitted was the claimants' unreasonable conduct and that this should be reflected in an order for costs on the indemnity basis in respect of (i) the co-insurance issues; and (ii) disclosure of documents and information which was the subject matter of previous applications. Finally, Mr Nicholson submitted that the claimants should also pay, in accordance with the CPR (i) interest on the defendants' costs of the proceedings incurred after 29 July 2010 (21 days after the date of the defendants' first Part 36 Offer on 8 July 2010); and (ii) a reasonable sum on account of the defendants' costs in the sum of £1.5m (representing approximately 50% of the defendants' total costs including VAT).
In large part, the orders sought by the defendants are disputed by the claimants. In particular, Mr Cogley QC on behalf of the claimants submitted that the claimants should be entitled to the costs of Part 1 because they were the "successful party" in respect of such "event"; and that there should be a substantial percentage reduction of the defendants' costs in relation to Part 2. Certain of the other matters are also disputed as referred to below.
So far as material, the relevant CPR provisions (Part 36.14) are as follows:
" (1) … this rule applies where upon judgment being entered –
(a) a claimant fails to obtain a judgment more advantageous than a defendant's Part 36 offer; …
(1A) For the purposes of paragraph (1), in relation to any money claim or money element of a claim, "more advantageous" means better in money terms by any amount, however small, and "at least as advantageous" shall be construed accordingly.
(2) … where rule 36.14(1)(a) applies, the court will, unless it considers it unjust to do so, order that the defendant is entitled to –
(a) costs from the date on which the relevant period expired; and
(b) interest on those costs.
…
(4) In considering whether it would be unjust to make the orders referred to in paragraphs (2) … above, the court will take into account all the circumstances of the case including –
(a) the terms of any Part 36 offer;
(b) the stage in the proceedings when any Part 36 offer was made, including in particular how long before the trial started the offer was made;
(c) the information available to the parties at the time when the Part 36 offer was made; and
(d) the conduct of the parties with regard to the giving or refusing to give information for the purposes of enabling the offer to be made or evaluated.
(5) Where the court awards interest under this rule and also awards interest on the same sum and for the same period under any other power, the total rate of interest may not exceed 10% above base rate (GL). …"
Under Part 44 Rule 2:
" (1) The court has discretion as to –
(a) whether costs are payable by one party to another;
(b) the amount of those costs;
…
(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 and in particular the extent to which the parties followed the Practice Direction – Pre-Action Conduct or any relevant pre-action protocol;
(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;
…
(8) Where the court orders a party to pay costs subject to detailed assessment, it will order that party to pay a reasonable sum on account of costs, unless there is good reason not to do so."
Under Part 44 Rule 3:
" (1) Where the court is to assess the amount of costs (whether by summary or detailed assessment) it will assess those costs –
(a) on the standard basis; or
(b) on the indemnity basis,
but the court will not in either case allow costs which have been unreasonably incurred or are unreasonable in amount.
…"
As referred to above, the defendants made various offers of settlement in the course of the proceedings. In particular, on 8 July 2010, the defendants made an offer under CPR 36 in the sum of £50,000 (the "first offer"). This carried with it an offer to pay the claimants' costs to which the claimants would have been entitled under CPR 36.10(1) if they had accepted it. This offer was made at an early stage of the action: less than five months after commencement of the action on 23 February 2010 and some 8 months before the order for preliminary issues made on 18 March 2011. Mr Nicholson submitted that this provided the defendants with protection against the whole of the costs of the preliminary issues...
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The View From The Bench
...oral hearing. Sixth, the level of costs remains a matter of very great concern, notwithstanding the Jackson reforms. Ted Baker v Axa [2014] EWHC 4178 (Comm) - where total costs (approaching £7 million) far exceeded the amount in dispute (by the start of the trial approximately £1 million) -......