England and Wales Court of Appeal (Civil Division) Decisions

Bristol-Myers Squibb Company v. Baker Norton Pharmaceuticals Inc and Napro Biotherapeutics Inc [2001] EWCA Civ 414 (28th March, 2001)

Case No: A3/2001/6001

Neutral Citation Number: [2001] EWCA Civ 414

IN THE SUPREME COURT OF JUDICATURE

COURT OF APPEAL (CIVIL DIVISION)

ON APPEAL FROM CHANCERY DIVISION

Mr JUSTICE JACOB

Royal Courts of Justice

Strand, London, WC2A 2LL

Wednesday 28th March 2001

LORD JUSTICE ALDOUS:

1. This application arises from the order made by this Court on 23rd May 2000. The appeal was by Bristol Myers Squibb Company who were the patentees of EP (UK) 0584001. The respondents to that appeal were the defendants, Baker Norton Pharmaceuticals Inc and Napro Biotherapeutics Inc.

2. In the proceedings Bristol Myers alleged that the patent had been infringed by the defendants. The defendants denied infringement and contended that the patent was invalid. The judge held the patent invalid and made an appropriate order. This application revolves around his order for costs which was in these terms:

"3. that the Plaintiff/Respondent shall pay the First Defendant's costs of the action and counterclaim and shall pay the Second Defendant's costs of the Petition and action and counterclaim, such costs to be taxed if not agreed, save that from 6th February 1998:

(i) the First and Second Defendants shall each be entitled to their separate costs:

(a) of and relating to the preparation of their expert evidence

(b) of and relating to the preparation of pleadings (including responses to requests for admissions) correspondence and discovery relating to the issue of infringement.

(ii) otherwise, the First and Second Defendants shall recover only the one set of costs between them, to be taxed as if only one firm of solicitors were acting for both parties and the parties were represented by one leading and one junior counsel, and how that one set of costs is split between the First and Second Defendants is a matter for them."

3. In essence the judge ordered that Bristol Myers should pay both defendants' costs up to 6th February 1998 and thereafter, subject to an exception, they should be limited to one set of costs. The effect of that order was that each of the defendants would be able to recover part of their total costs which for the purposes of this appeal can be estimated at about 70% of their total costs, subject to detailed assessment. It also meant that interest on the amount assessed to be due became payable from the date of the judge's judgment.

4. The judge gave Bristol Myers permission to appeal and the defendants leave to cross-appeal against his order for costs.

5. Both Bristol Myers and the defendants took advantage of that permission. In the judgments of this Court ([2001] RPC 1), this Court affirmed the conclusion of the judge that the patent was invalid and therefore dismissed the appeal, but allowed the cross-appeal.

6. The argument before this Court on the cross-appeal concerned the restriction imposed by the judge that prevented both defendants from recovering all their costs subject to detailed assessment. In my judgment on the costs issue, a judgment which was endorsed by the other members of the Court, I said:

"The judge gave leave to appeal against his order for costs. He ordered the appellants to pay the respondents' costs. However with two exceptions he imposed a limitation that from 6th February "the first and second defendants shall recover only 1 set of costs between them, to be taxed as if only one firm of solicitors were acting for both parties and the parties were represented by one leading and one junior counsel, and how that one set of costs is split between the first and second defendants is a matter for them"."

7. I went on to set out the reasons that the judge gave for restricting the costs recoverable after 6th February 1998 and then pointed out the difficulties that such an order imposed. My conclusion was as follows:

"Mr Waugh [counsel for Bristol Myers] supported the judge's conclusion that from February 1998 the appellants should only be liable to pay one set of costs as that was the amount that it was reasonable for a claimant to pay. I disagree. A losing claimant should ordinarily pay the costs reasonably incurred by the parties that he takes proceedings against. What costs are reasonably incurred by one or more defendants should be ascertained by the costs judge who carries out the assessment. Upon such an assessment duplication and failure to co-operate can be seen and adjustments made accordingly. To decide what costs were reasonably incurred by defendants by considering what costs a losing client should pay, amounts to pre-judging the results of a detailed assessment without considering the facts. The judge's conclusion involved, by implication, a decision that the costs of one or both of the respondents had been unreasonably incurred. That could not have been inferred from the fact that they had separate solicitors and counsel and he had no evidence before him to enable him to reach that decision. No such conclusion could be reached without looking at the full picture which of course would be done by the costs judge on a detailed assessment.

I would discharge the costs order made by the judge upon the basis that he approached the issues between the parties on the wrong basis. Successful parties are ordinarily entitled to their costs reasonably incurred. If there be evidence before the judge that certain costs do not fall within that category, then they should be disallowed. In this case there was no such evidence and therefore the matter had to be left to the costs judge when carrying out the detailed assessment. Of course it is always open to the judge to draw attention in his judgment to matters which he believes require particular investigation during assessment. I would therefore substitute for the judge's orders as to costs an appropriate order for the costs of the respondents to be paid by the appellants.

Conclusion

The judge rightly concluded that the patent was invalid and ordered its revocation. I would therefore dismiss the appeal. I would allow the cross-appeal on costs."

8. When the judgments were handed down there was placed before the Court an agreed form of order. It ordered that the appeal should be dismissed and the patent should be revoked. As to the cross-appeal it said:

"3. the Respondents' cross-appeal be allowed and paragraph 3 of the order of the Honourable Mr Justice Jacob dated Thursday 1st October 1998 be set aside;

4. the Appellant/Claimant shall pay the First Defendant/Respondent's costs of the action and counterclaim and shall pay the Petitioners/Second Defendant/Respondent's costs of the Petition and the action and counterclaim such costs to be assessed if not agreed;

5. the Appellant/Claimant shall pay the Respondents' costs of the appeal and cross-appeal such costs to be assessed if not agreed; ...."

It should be noted that that order set aside the judge's order as to costs and provided that both defendants should recover their costs of the trial subject to a detailed assessment.

9. As was pointed out in my judgment, the costs judge needed to consider whether the defendants had been guilty of unnecessary duplication. He therefore might have restricted the defendants' to recovery of 70% of their costs as contemplated by the order of the judge, but the order potentially allowed each defendant to recover 100% of its costs subject to a detailed assessment.

10. Because the Court of Appeal order set aside the order on costs made by the judge, it had the effect of ordering that interest should run from the date of the Court of Appeal order. That meant that the amount of interest that had accrued pursuant to the judge's judgment up to the date of the Court of Appeal order had been lost. The judgment of the Court of Appeal therefore deprived the successful party of interest that had accrued during the time between the order made by the judge and that of the Court of Appeal. Although no exact figures can be placed on the amount of interest that had accrued, the evidence suggests that it could be around £50,000.

11. Mr Whittle on behalf of the respondents submitted that it had never been the intention of this Court to deprive his clients of interest that had accrued. The sole issue before the Court of Appeal was whether the restriction to recovery of one set of costs between the defendants was justified. This Court had concluded that it was not and therefore the appropriate order to meet that intention was one which varied the judge's order by deleting the restriction. That would have entitled the defendants to interest from the date of the judge's order on the costs recoverable under that order and interest upon any additional amount of costs recoverable by reason of the Court of Appeal order from the date of that order.

12. Mr Whittle submitted that this Court had power to correct its order, to a form which met the intention of this Court under the slip rule. It is in these terms:

"40.12(1) The court may at any time correct an accidental slip or omission in a judgment or order.

(2) A party may apply for a correction without notice."

13. Mr Whittle submitted that it had never been the intention of the Court to deprive the defendants of a right to accrued interest. The Court of Appeal had only considered whether the restriction imposed by the judge was correct. It had concluded that both defendants should have been assessed their costs subject to the detailed assessment. The intention of the Court was to make an order to reflect that conclusion and the failure to do so was, he submitted, an accidental slip or omission.

14. In his skeleton argument Mr Whittle also argued that the Court should alter its judgment so as to enable interest to be recovered upon all the costs from the date of the judge's order. He submitted that such an order was possible under rule 40.8 CPR which provides:

"40.8 Time from which interest begins to run

(1) Where interest is payable on a judgment pursuant to section 17 of the Judgments Act 1838 or section 74 of the County Courts Act 1984, the interest shall begin to run from the date that judgment is given unless--

(a) a rule in another Part or a practice direction makes different provision; or

(b) the court orders otherwise.

(2) The court may order that interest shall begin to run from a date before the date that judgment is given."

15. Mr Whittle, rightly in my view, did not press his clients' case that an order under rule 40.8 was appropriate in this case. The Court of Appeal were not asked to consider rule 40.8 when making its order. It did not decide that interest on its judgment should run from a date before judgment was given. To use the provisions of rule 40.8 after the judgment had been drawn up would not be appropriate, as the amendment could not be an accidental slip or omission. It would amount to second thoughts on an issue not raised. Such an order is in my view clearly distinguishable from an order which varied the judge's order instead of setting part of it aside, thereby maintaining an accrued right to interest.

16. Mr Turner who appeared on behalf of Bristol Myers drew to our attention the difficulties that the costs judge would have when carrying out the detailed assessment if interest were to run from the date of the judge's judgment pursuant to his order and from the date of the Court of Appeal judgment pursuant to that order. I accept there will be difficulties, but they will not be insurmountable as it will be possible to adopt a method using a running total.

17. Mr Turner went on to submit that this Court had no jurisdiction to amend the order in the way sought by the defendants. He submitted that the mistake, if there was one, was a mistake as to the legal effect of the order of the Court of Appeal and therefore could not be an accidental slip or omission within rule 40.12.

18. To support that submission Mr Turner referred us to Molnlycke AB v Proctor and Gamble Ltd [1993] FSR 154. In that case the judge ordered that there be an inquiry as to damages and that the defendant should pay the plaintiff's costs of the action and counterclaim, such costs to be taxed. When the order was made it was the understanding of counsel and the trial judge that the order would entitle the plaintiffs to an immediate taxation and payment of costs. Subsequently the defendants contended that since the action was continuing, the plaintiffs were not entitled to tax their costs until the conclusion of the inquiry as to damages. The plaintiffs therefore applied to the judge for a ruling that they were entitled to an immediate taxation and, in the alternative, for amendment of the order to make it clear that taxation could take place immediately with payment of the costs thereafter. The judge decided that the effect of his order was that taxation and payment could be carried out forthwith. He therefore did not need to consider the alternative submission. However he said this at page 161:

"In this case, the reason why amendment under the slip rule would be required is that the conventional order for costs, which I considered that I was making, and which counsel considered that they were asking for, had a different legal effect under Order 62, rule 8, from that which was assumed. It would seem to me that a mistake as to the legal effect of such a conventional order would come within the principle established by the Court of Appeal in Bentley v O'Sullivan and Hulbert & Another v Thurston and would not therefore be susceptible for amendment under Order 20, rule 11. Had it therefore been necessary, I would have concluded that I had no jurisdiction to accede to the alteration for which the plaintiffs were asking."

19. In Bentley v O'Sullivan [1925] WN 95 an order had been made that the plaintiff should recover his costs to be taxed if not agreed. Upon taxation the plaintiff sought to recover costs on the High Court scale in the absence of a certificate to that effect. The matter was mentioned to the special referee and he was asked to amend his report by inserting after the words "costs to be taxed" the words "on the High Court scale". The referee made that amendment. The Court of Appeal held that he was not entitled to make that amendment. Lord Justice Banks said:

"It would be unwise to lay down rules purporting to be of universal application that Order xxviii, rule 11, should be applied with extreme caution, because it be of the worst example if that rule was loosely used to the purpose of altering a stupid mistake, a purpose for which it was never intended. If ever Dorrell v Norton (supra) came before the Court of Appeal for consideration it would be a question to be argued whether that case could be supported. In the present case there was no "accidental slip". What was done was done deliberately. The special referee did not realise in making his original order that it was not carrying out his intention. He made the order deliberately and therefore had no jurisdiction to make the amendment."

I suspect that that was a case of second thoughts.

20. The second case relied on by Mr Justice Morritt in the Molnlycke case, Hulbert v Thurston [1931] WN 171, concerned a personal injury action in which the infant plaintiff obtained judgment in his favour for damages to be awarded. On appeal that judgment was reversed and judgment was entered in favour of the defendant "with the costs including the costs of this appeal". The costs having been taxed, the defendant's solicitor proposed to issue a writ of fi. fa. against the infant plaintiff's next friend, but was told that that was not possible as no order had been made against him. There followed an application for the order to be amended. Scrutton LJ pointed out that when the court had allowed the appeal of the defendant it was asked to order that judgment should be entered for her with costs. That was the order drawn up. The report then states:

"In his opinion the addition now asked for was not one that could be made under the slip rule. That rule was intended for the correction of an order which, as drawn up, did not express that which was decided by the Court. It was quite possible that an order in the terms now asked for might have been made if an application had been made at the time, but no such application was made."

This deficiency was an attempt to amend an order after second thoughts.

21. Morritt J was not referred to Adam & Harvey Ltd v International Maritime Supplies Co. Ltd [1967] 1 WLR 445. In that case the plaintiffs claimed £5,000 due under an agreement. Summary judgment was sought, but the Master granted the defendants leave to defend on condition that they paid the £5,000 into court within 28 days. The defendants unsuccessfully appealed to the judge. The defendants appealed to the Court of Appeal who allowed the appeal and granted the defendants unconditional leave to defend the action. During the course of the argument as to costs in the Court of Appeal, the Court indicated that there was to be no immediate taxation. However the order just stated that the costs should be paid. Pursuant to that order the defendants taxed their costs and applied for payment, despite the fact that the action had not been determined. Harman LJ giving a judgment agreed to by the other members of the Court pointed out that it had never been the intention of the court to make an order that there should be taxation and payment of costs forthwith. He said:

"As far as I am concerned, as I say, I did not intend - I do not remember that much about it - that there should be this exceptional order for payment of costs at once, but that costs should be in any event those of the successful appellant. That was the order I intended to pronounce and I thought I had done so. But I see there is some room for mistake owing to the fact that after I had made the observation which showed I did not intend an immediate taxation, an application was made which could have had that result and was so interpreted by the associate. I think that is a slip and I think it is a slip which can be amended under RSC Ord. 20, r. 11, because inadvertently the order as drawn did not express the intention of the court owing to a misunderstanding between the associate and the court which pronounced it. I am not blaming anybody for it, except perhaps myself for not being more vigilant in the matter. I am sure of what I intended and I think we have jurisdiction to give effect to that intention, and I would so hold."

22. Morritt J was also not referred to the judgments of this Court in Mutual Shipping Corporation v Bayshore Shipping Co. [1985] 1 Lloyd's LR 189. In that case the arbitrator had a made an award which transposed the names of the parties. This Court decided that such an error could be corrected under the applicable slip rule. Sir John Donaldson M.R. said at page 193:

"The High Court Slip Rule (RSC 0.20.r.11) which is similarly worded, was considered only recently by this Court in R v. Cripps ex parte Muldoon [1984] 1 QB 686. We there pointed out the width of the power, but also drew attention to the fact that it does not enable the Court to have second thoughts (p. 697).

It is the distinction between having second thoughts or intentions and correcting an award or judgment to give true effect to first thoughts or intentions, which creates the problem. Neither an arbitrator nor a judge can make any claim to infallibility. If he assesses the evidence wrongly or misconstrues or misappreciates the law, the resulting award or judgment will be erroneous, but it cannot be corrected either under s. 17 or under o. 20, r. 11. It cannot normally even be corrected under section 22. The remedy is to appeal, if a right of appeal exists. The skilled arbitrator or Judge may be tempted to describe this as an accidental slip, but this is a natural form of self-exculpation. It is not an accidental slip. It is an intended decision which the arbitrator or Judge later accepts as having been erroneous."

23. Robert Goff LJ having considered the cases said this at page 195:

"In none of the last five cases I have cited did the judgment or order as drawn fail to give effect to the intention of the Court at the time when it was drawn. In each case there was, however, an error in the judgment or order arising from an accidental slip or omission - by a party, or by his Counsel, or by his solicitor. Furthermore, there is authority that if a Court makes an order in certain words which do not have the effect which the Court intended them to have, that order may be corrected under the slip rule to make it accord with the Court's actual intention: see Adam & Harvey Ltd v International Maritime Supplies Co-ordination drawings Ltd [1967] 1 WLR 445."

24. Robert Goff LJ went on:

"I do not think it would be right for me to attempt in this judgment to define what is meant by "accidental slip or omission": the animal is I suspect, usually recognizable when it appears on the scene."

25. Those cases establish that the slip rule cannot enable a court to have second or additional thoughts. Once the order is drawn up any mistakes must be corrected by an appellate court. However it is possible under the slip rule to amend an order to give effect to the intention of the Court. If the last two cases referred to above had been cited in Molnlycke, I believe the obiter statement made by the judge would have been expressed differently.

26. In the present case the only issue raised on the cross-appeal was whether the restriction placed by the judge was appropriate. At no time was that part of the judge's order that required Bristol Myers to pay the defendants' costs challenged and it was not the intention of this Court to alter that part of the order. The intention of this Court was to remove the restriction; not to alter the general right to costs that had been ordered. Thus the correct order allowing the cross-appeal should have left the part of the order of the judge which was not challenged in the form in which it existed.

27. I reject Mr Turner's submission that the mistake was as to the legal effect of the order. The legal effect was not in issue. In my view the terms of the order did not meet the intention of the Court contained in the judgments and that had an unexpected legal effect. The order setting aside the whole of the judge's order on costs was an accidental slip which can and should be corrected under r.40.12. The intention of the Court was to vary the judge's order so as to remove the restriction.

28. I would therefore accede to the application of the defendants and would order that that order of 23rd May 2000 be amended accordingly.

LORD JUSTICE LAWS:

29. I agree.

MR JUSTICE BLACKBURNE:

30. I also agree.