Winlink Marketing Ltd v The Liverpool Football Club & Athletic Grounds Ltd
| Jurisdiction | England & Wales |
| Judge | Pelling |
| Judgment Date | 21 September 2020 |
| Neutral Citation | [2020] EWHC B1 Comm |
| Court | High Court |
| Docket Number | Case No: LM-2019-000198 |
| Date | 21 September 2020 |
[2020] EWHC B1 Comm
Royal Courts of Justice, Rolls Building
Fetter Lane, London, EC4A 1NL
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
LONDON CIRCUIT COMMERCIAL COURT (QBD)
HIS HONOUR JUDGE Pelling QC
SITTING AS A JUDGE OF THE HIGH COURT
Case No: LM-2019-000198
Mr Andrew Sutcliffe QC and Mr William Day (instructed by BLM Solicitors) for the Claimant
Mr Robert Anderson QC and Mr Theo Barclay (instructed by DLA Piper UK LLP) for the Defendant
Hearing date: 14 September 2020
COSTS RULING
HH Judge Pelling QC:
Introduction
This is a ruling following detailed costs submissions made by the parties at a hearing on 14 September 2020 at which the substantive judgment in these proceedings was handed down. Normally costs issues in a case of this sort will be dealt with orally. However the parties occupied the time of the court from 10.30 until 13.20 and I was due to commence the hearing of another matter at 14.00 that day so I had no choice but to reserve this issue. It is not my intention that this ruling should descend to the sort of detail to be found in the submissions.
The Outcome of the Trial
Readers of this Ruling are referred to the substantive Judgment ( [2020] EWHC 2271 (Comm)). In summary until shortly before the trial there were four issues to be determined:
i) A No Agreement issue – it being contended by the Defendant (“LFC”) that there was no signed copy of the agreement of which it was aware that had been signed on its behalf;
ii) An Out of Time issue – it being contended by LFC that the underlying agreement said to entitle the Claimant (“WML”) to a commission under the agreement that it sued on (“ IA”) was entered into after the expiry of the Introduction Period as specified in Clause 1.1.8 of the IA;
iii) An issue as to whether either as a matter of construction or implication, the IA was subject to a requirement that WML be the Effective Cause of the sponsorship agreement in respect of which it claimed commission under the IA; and
iv) Whether, if the answer to (iii) was affirmative, WML was an Effective Cause of the sponsorship agreement in respect of which it claimed commission under the IA.
Of these issues, Issue (i) was abandoned by LFC on the Friday before trial. WML succeeded in the result in relation to Issue (ii) but not on the basis of the construction for which it contended – see Judgment, paragraphs 34 – 48. This was an issue of construction that did not generate significant costs prior to trial other than in relation to pleadings and took up a relatively limited amount of time at trial. LFC was successful in relation to Issue (iii) – see Judgment, paragraphs 49–65 – and Issue (iv) – see Judgment, paragraphs 66–90. In reality issues (iii) and (iv) were the main issues for trial and factually the trial was concerned almost exclusively with evidence relevant to (iv).
Offers to Settle Prior to Trial
The only offer to settle made by any party prior to trial was by LFC by a letter dated 5 May 2020. The letter was in Calderbank terms not CPR Part 36 terms. Having set out a summary of the law and facts as LFC's solicitors perceived them to be, the letter offered to agree that each side should bear their own costs provided that the claim was discontinued before 09.00 on 11 May 2020. In the event that the offer was not accepted, LFC reserved the right to bring the attention of the court to the letter when the question of costs came to be determined and asserted that it would claim its costs on the indemnity basis. Mr Anderson QC relied on the letter whilst making clear that he was not seeking costs to be assessed on the indemnity (as opposed to the standard) basis.
Applicable Principles
The applicable principles are those set out in CPR r. 44.2 namely:
“ Court's discretion as to costs
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 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; 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 m(6)(a) or (c) instead.”
Mr Anderson QC submitted and I accept that the summary of general principle set out in Para 44.2.10 in Vol. 1 of the current edition of the White Book correctly summarises the current practice in relation to applications for costs orders that depart from the General Rule. In summary:
“Propositions that may be derived from the authorities and which may be stated with a degree of confidence are as follows.
1. The rules themselves impose no requirement to the effect that an issue-based costs order should be made only “ in a suitably exceptional case”, and none is to be implied, although “ there needs to be a reason based on justice” for departing from the general rule, and that the question of the extent to which costs of a particular issue are to be disallowed should be left to the evaluation and discretion of the judge, “ by reference to the justice and circumstances of the particular case” …
2. The reasonableness of taking failed points can be taken into account, and the extra costs associated with them should be considered …
3. Where the circumstances of the case require an issue-based order in the form of an order expressed by reference to the costs of the issue, that is what the judge should make; however, generally, because of the practical difficulties which this causes, the judge should hesitate before doing so and, where practicable, the order should be expressed as a percentage or with reference to a distinct period of time …
4. There is no automatic rule requiring an issue-based costs order in the form of a reduction of a successful party's costs if he loses on one or more issues … The mere fact that the successful party was not successful on every last issue cannot, of itself, justify an issue-based costs order …
5. The courts recognise that in any litigation, especially complex commercial litigation but including personal injury litigation, any winning party is likely to fail on one or more issues in the case (possibly issues on which the losing party could have taken steps to protect himself, at least to an extent, to costs liability).”
Parties' Submissions
LFC submits that it has been the successful party and should recover the whole of its costs to be assessed at a detailed assessment if not agreed on the basis that it was the successful party, applying the General Rule set out in CPR r.44.2(2)(a).
WML submits that LFC should pay costs of the No Agreement Defence and the Out of Time Defence, alternatively that there be a proportionate discount on Liverpool's costs to reflect the outcome on those Defences; and a further cost sanction be applied against LFC to reflect its conduct in respect of disclosure and evidence relating to the case more generally. It submits that the combined effect of these points should lead to the conclusion either that there should be no order as to costs or failing that, there should be an order permitting LFC to recover no more than 30% of its otherwise recoverable costs.
The No Agreement Defence
Although Mr Sutcliffe characterised this as LFC's primary defence until it was dropped on the Friday before trial, I consider that is to over-state its importance. It was the logically first in time defence. I accept that in addressing this issue, WML incurred significant cost though how much is not anywhere in evidence. Thus the proportion of the total costs of the parties attributable to that issue is one I will have to evaluate without the assistance of any evidence on the issue. Had WML wished to make good its contention that 40% of its total costs were attributable to that issue then it could and should have filed evidence to that effect. Mr Sutcliffe submitted that I should (a) disallow 40% of LFC's total costs by reference to this issue and (b) award WML 40% of its total costs by reference to the same issue. Assuming the costs of each party were similar in amount and there was a set off, Mr Sutcliffe was driven to...
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