24.10.2012ADS Aerospace Ltd. v EMS Global Tracking Ltd.  EWHC 2904 (TCC)
Key areas: party’s conduct; mediation; High Court
This was a hearing to determine costs arising from a failed claim.
The Defendant submitted that it should be entitled to all of its costs; the Claimant submitted that the Defendant’s conduct justified a 50% reduction in its costs.
On 10th April 2012, the Defendant offered to settle the claim for £50,000 including costs.
The Claimant did not acknowledge the offer until 31st May 2012, when it responded stating that it considered the offer to be a “nuisance payment”, but suggested that the parties undergo mediation.
The Defendant responded on 1st June 2012, rejecting the offer, stating that the Claimant’s position of wanting the full amount claimed, would mean that mediation would simply do “no more than waste time and (irrecoverable) costs”.
On 7th June 2012, the Claimant offered to settle for £4,246,000 including costs. On 11th June, the Defendant offered to settle the claim for £100,000 including costs.
The Claimant submitted that the Defendant “acted unreasonably” in refusing mediation; the Defendant submitted that given the history of the case, it did act reasonably.
The Court that the Defendant was not unreasonable, given the Claimant’s unwillingness to settle before suggesting mediation; that the Claimant would accept any mediation offer; that the Defendant was willing to settle; that the suggestion of mediation came less than 20 working days before trial; and that the Defendant acted reasonably in its view on liability and quantum.
Overall, the Defendant was awarded its costs on the Standard Basis, with an interim payment of £525,000.
23.10.2012The Procter & Gamble Company v Svenska Cellulosa Aktiebolaget SCA; SCA Hygiene Products Manchester Ltd.  EWHC 2839 (Ch)
Key areas: both parties win some issues; Part 36 offer; Basis of assessment; High Court
This was a hearing to determine costs arising from a main action.
The Claimant submitted that it was the winner because it had obtained 2 of the 3 declarations which it sought, and had reduced its potential outlay from£19 million to a “much lesser sum”.
The Defendant submitted that because the Claimant still had to pay out, it won the claim.
The Court held that on the facts, the Claimant won, and so was entitled to its costs. However, it noted that the issue on which the Claimants lost did cause quite a lot of extra costs to be incurred. The Court held that this justified a 20% reduction in the Claimant’s costs, up to the date of the Claimant’s offer.
In July the Claimant offered to settle for £3 million plus costs. The Parties argued over whether it complied with Part 36. The Court held that not only was it intended to be, it was expressed to be.
The Court then turned to what impact the offer had. It noted that the Claimant had beaten its offer. However, the Judge then stated that on the facts, the Claimant was in fact the “Defendant”, i.e. it was seeking to reduce the amount it owed. As a result, issues over indemnity costs could not apply.
As a result, the Claimant was awarded its costs from the date its offer expired, on the Standard Basis.
The Court also stated that even if the Claimant’s offer was not a Part 36 offer, indemnity costs under CPR 44.3 would not have been awarded.
The Court also ordered the Defendant to make an interim costs payment of £375,000.
However, it should be noted that the Defendant was also given permission to appeal the main action.
22.10.2012Curran v Revenue & Customs  UKFTT 655 (TC)
Key areas: Basis of assessment; party’s conduct; Part 36 offer; First-Tier Tribunal (Tax)
This was an application by the Appellant for costs on the Indemnity Basis; with penalty interest of 8% above base rate.
The case was allocated under r. 10(1)(c) Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009 as a “Complex case”. Therefore, the Tribunal had a general costs-shifting power.
The Appellant submitted that HMRC’s submissions were “thin” or “far-fetched”; that they “advanced a constantly changing case”; and alleged “impropriety over an extended period of time”.
The Tribunal held that as these issues were considered and dismissed in the main ruling, they could not apply for costs purposes. In addition, it held that arguments over the extra work caused by HMRC’s conduct went to proportionality of the Appellant’s costs, not the basis of their assessment.
The Court also held that even though both parties had made offers that were not accepted, CPR Part 36 was not relevant because of the parties’ respective positions.
Overall, the Appellant was awarded its costs on the Standard Basis, with an interim payment of £650,000.00.
10.10.2012Simmons v Castle  EWCA Civ 1288
Key areas: success fee; Court of Appeal
This was an application by the First Interested Party (the Association of British Insurers, the “ABI”) for the Court to re-open its ruling relating to the 10% increase in damages that will occur when the Jackson reforms come into force in April 2013. Specifically paragraphs 19-20 of the earlier ruling were challenged.
The ABI submitted that the 10% increase (intended to compensate Claimant’s on CFAs for which success fees will be irrecoverable) should not apply to clients who will still be able to claim success fees due to their CFA pre-dating the changes.
A Second Interested Party (the Association of Personal Injury Lawyers, the “APIL”), submitted that the Court should reject the challenge, because the original ruling was a simple solution; and that all parties win and lose by the proposed changes.
The Third Interested Party (the Personal Injuries Bar Association, the “PIBA”) took a neutral stance, but submitted that the 10% increase should be left to potential changes to the CPR.
The Court dismissed PIBA’s suggestion that the matter should be left to the CPR because the parties need to know where they stand.
The Court held that ABI’s submissions were sensible in principle, given the trade-off between an increase in damages, and irrecoverable success fees. APIL suggested that this could lead to satellite litigation: where a party dies after the changes come into place, but were already on a CFA; or where a client changes solicitors. Both arguments were rejected.
As a result, the Court allowed the amendments sought to the original judgment.
09.10.2012Ross River Ltd.; Blue River LP v Waverly Commercial Ltd.; Barnett  EWHC 3006 (Ch)
Key areas: both parties win some issues; apportionment of costs; High Court
This hearing was to determine costs arising from a main action. The Claimants had been awarded £1.04 million under a contract.
The Claimants’ costs totalled £2.1 million; the Defendants’ totalled £1.25 million.
The Claimants sought all of their costs on the Indemnity Basis against both Defendants, the first of which is in liquidation.
The First Defendant submitted that the claims should be split into 3 separate issues on a 10%:10%:80% basis, and they should only be liable for the first set, with no order for costs on the second set, with the Claimants liable for the third set. Overall, it submitted that the Claimants should pay 70% of its costs on the Indemnity Basis.
The Second Defendant stated that he should have all of his costs on the Indemnity Basis.
The Judge noted that the Pleadings had been amended on numerous occasions throughout, but stated that the Defendants were “uncooperative at many stages”, and that the Second Defendant had been “inconsistent”.
It was held that the First Defendant should pay 50% of the Claimants’ costs relating to the original claim. For the second set of Pleadings, the Judge noted that they were amended due to the Defendants’ stance, and so, again, First Defendant should pay 50% of the Claimants’ costs. On the third set, the Judge noted that the Claimants were “overwhelmingly more successful”, but both parties won some issues. However, the Claimants were awarded 100% of their costs for this set of Pleadings. All of these were on the Standard Basis.
On the Second Defendant, the Judge held that he did have a duty to the Claimant, but to a lesser extent than what the Claimants suggested. However, given that overall the claim against him failed, no order for costs was made.
09.10.2012Beasley v Alexander  EWHC 2715 (QB)
Key areas: split trial; Part 36 offer; High Court
This was a hearing to determine costs resulting from a split-trial on liability, in which the Defendant was found liable. The parties were unable to agree whether a payment on account should be made.
The Defendant submitted that due to CPR 36.13(2), costs should not be determined until the end of the case. However, the Claimant submitted that its use of “’until the case has been decided” covered split-trials.
The Court held that the phrase had a clear meaning: that “the case” meant the whole “proceedings”, not “part of a case”.
However, the Judge expressed regret that he was not able to consider any offers that related to contributory negligence for costs purposes, even though he would be in a good position to do so.
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