Thai Airways International Public Company Ltd v KI Holdings Company Ltd (formerly known as Koito Industries Ltd) and Another (First Defendant/Part 20 Claimant)
| Jurisdiction | England & Wales |
| Judge | Mr Justice Leggatt |
| Judgment Date | 22 May 2015 |
| Neutral Citation | [2015] EWHC 1476 (Comm) |
| Court | Queen's Bench Division (Commercial Court) |
| Date | 22 May 2015 |
| Docket Number | Case No: 2011 Folio 1503 |
2015 EWHC 1476 (Comm)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Royal Courts of Justice
7 Rolls Building
Fetter Lane
London EC4A 1NL
Mr Justice Leggatt
Case No: 2011 Folio 1503
Guy Morpuss QC and Patricia Edwards (instructed by Macfarlanes LLP) for the Claimant
Hilary Heilbron QC and David Scannell (instructed by Wilmer Hale) for the Defendant
Order
42. I will make an order to give effect to the rulings in this judgment based on the draft form of order submitted by Thai's solicitors.
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.
In the light of the judgment which I handed down on 11 May 2015, the parties have made submissions in writing on four consequential issues:
i) The quantum of damages payable to Thai;
ii) Costs;
iii) Interest on damages and costs; and
iv) Permission to appeal.
This judgment gives my rulings on those issues, which the parties have agreed can be decided without a further hearing.
Quantum of damages
On the basis of the findings made in the judgment, the parties have agreed the amounts payable by Koito to Thai as damages, subject to one point. That point relates to the costs incurred in replacing the seats which Koito failed to supply for five A330-300 aircraft. Para 141 of the judgment records these costs as being "€7,242,110 (including installation costs)". The figure of €7,242,110 comprised the price of €5,797,250 paid by Thai to purchase replacement seats from another supplier, ZIM, and "installation costs" of €1,444,860. Thai's written opening submissions for the trial (at para 214) explained that the latter figure included, in addition to a sum of €1,226,484 which Thai paid to Lufthansa to install the seats, a sum of €218,376 which Thai paid for fuel to transport the aircraft back to Bangkok. It was Thai's case that, had it not been for Koito's breaches of contract, Airbus would (at no cost to Thai) have delivered the aircraft with sufficient fuel to fly back to Bangkok. However, in circumstances where the aircraft were delivered without seats and had to be placed in storage, that did not happen: so as well as having to buy replacement seats from ZIM and contract with Lufthansa to install them, Thai had to pay for fuel to transport the aircraft.
The amounts of €5,797,250 and €1,444,860 were both presented in a table attached to Thai's written closing submissions as sums which were not in dispute, and Koito did not in its closing submissions dispute either figure.
Koito has pointed out that the judgment refers at para 185 to "the cost incurred by Thai in installing the ZIM seats" as "agreed to amount to €1,226,484" and says that the figure of €1,444,860 does not feature in the judgment and was not agreed by the experts. On this basis Koito submits that Thai is not entitled to recover the fuel costs of €218,376 which represent the difference between the amounts of €1,226,484 and €1,444,860.
There is nothing in this point. Although the figure of €1,444,860 is not specifically mentioned in the judgment, it is included in the total amount of €7,242,110 recorded in para 141 of the judgment. The amount of €1,226,484 referred to in para 185 was, as I have indicated, the amount paid by Thai for the actual installation of the seats, in addition to which Thai was claiming the costs of purchasing the seats and the fuel costs which were also included in the figure of €7,242,110.
The accounting experts agreed the amount claimed for fuel costs subject to the factual question of whether Airbus would ordinarily have delivered new aircraft with sufficient fuel to fly to Bangkok. To prove that factual point, Thai put in evidence a witness statement from Flight Lieutenant Yuthasit Suwanloy, which was not challenged. Nor did Koito dispute the claim for fuel costs in any submissions made at the trial. I am accordingly satisfied that Thai is entitled to include the relevant amount of €218,376 in the calculation of its damages.
In consequence, the sums which Koito will be ordered to pay to Thai as damages are US$82,732,284, €19,857,165 and THB 4,640,417.
Costs
It is quite clear that Thai is the successful party. The dispute in this case, as in almost all commercial cases, has been all about money and Thai has been awarded a very large amount of money as damages. The ordinary consequence of that outcome is of course that Koito must pay the costs of the successful party. Koito did nothing to protect itself against that consequence by making any admissible offer to settle the claim, whether under Part 36 or otherwise, which has been drawn to the court's attention. Thai, on the other hand, did make an offer under Part 36 in a letter dated 24 October 2013. By that letter, Thai offered to accept payment of US$36m in settlement of its claim and Koito's counterclaim. Koito chose not to accept the offer and in the event Thai has obtained a judgment for nearly three times the amount which it offered to accept.
In these circumstances Thai relies on CPR 36.17(4), which stipulates that, where the claimant obtains a judgment against the defendant which is better in money terms than the proposals contained in a claimant's Part 36 offer:
"the court must, unless it considers it unjust to do so, order that the claimant is entitled to –
(a) interest on the whole or part of any sum of money (excluding interest) awarded, at a rate not exceeding 10% above base rate for some or all of the period starting with the date on which the relevant period expired;
(b) costs … on the indemnity basis from the date on which the relevant period expired;
(c) interest on those costs at a rate not exceeding 10% above base rate; and
(d) … an additional amount, which shall not exceed £75,000 …"
The relevant period for accepting Thai's offer expired on 15 November 2013. I shall return to items (a), (c) and (d), which Thai also claims. In relation to costs, Thai relies on CPR 36.17(4)(b) pursuant to which Thai is entitled to all its costs of the proceedings, to be assessed on the indemnity basis, from 15 November 2013, unless the court considers it unjust to make such an order.
Even if Thai had not made this Part 36 offer, I should have considered it appropriate in this case to apply the general rule and order Koito to pay Thai's costs of the proceedings. Although Thai has not succeeded on every single issue, it has been overwhelmingly successful on the points which mattered most in terms of financial recovery – in particular, the entitlement to recover the costs of the Jet leases (apart from the third year) and most of the sub-issues which affected that claim. Apart from the correct legal approach to "betterment", which did not ultimately affect the result of the Jet lease claim, the issues on which Koito succeeded were very much secondary issues both in terms of the time which they occupied at the trial and their financial consequences. The point has often been made that in any complex commercial litigation the successful party is unlikely to succeed on every issue and should not necessarily be deprived of part of its costs on that account. Moreover, even if I might otherwise have made some very modest percentage reduction in the costs awarded, I do not think it appropriate to do so in circumstances where (a) throughout the proceedings until it abandoned its defences very shortly before the trial, Koito was contesting liability as well as the quantum of damages and (b) thereafter Koito was continuing to dispute that it was liable to pay any money at all to Thai (and was doing so against the background of Thai's Part 36 offer).
The next question is whether Thai is entitled to its costs on the indemnity basis for the period after 15 November 2013. As mentioned, the presumption embodied in CPR 36.17(4) is that such an order should be made, unless the court considers that it would be unjust to do so. In so far as Koito has submitted, therefore, that it had "sound reasons" for not accepting Thai's offer and that it was "not unreasonable" for Koito not to accept the offer, that is not the applicable test: see Matthews v Metal Improvements Co Inc [2007] EWCA Civ 215, paras 32–34.
In considering whether it would be it unjust to make an order under CPR 36.17(4), the court is required by CPR 36.17(5) to take into account all the circumstances of the case including certain specified matters. Those matters include the stage in the proceedings when the offer was made, the information available to the parties at the time when the offer was made, and the conduct of the parties with regard to the giving of or refusing to give information for the purpose of enabling the offer to be made or evaluated.
Koito has argued that it would be unjust to make an order under CPR 36.17(4), in particular because Thai allegedly failed to disclose the evidence relied on in support of its claim in a timely way.
I do not feel able to judge, nor do I think it necessary to decide, whether Thai...
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