England and Wales Court of Appeal (Civil Division) Decisions

IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM QUEEN'S BENCH DIVISION,
LONDON MERCANTILE COURT
HIS HONOUR JUDGE MACKIE QC
2009FOLIO236

		Royal Courts of Justice Strand, London, WC2A 2LL
		21/12/2011

1. This is the judgment of the court on costs issues that arise following our judgment in the main appeal whereby we allowed the appeal in respect of paragraph 1(ii) of the order of HHJ Mackie QC dated 21 February 2011.
2. The appellant ("Liberty") claims: (i) the costs of the appeal, which it says should be summarily assessed at £25,235; (ii) the costs of the preliminary issues hearing before Judge Mackie; and so (iii) the repayment of the costs paid on account by Liberty to the respondent to the appeal ("Argo") following the judge's order on the preliminary issues, together with interest on that payment on account. Liberty had paid £27,500 on account pursuant to an order made by Judge Mackie. In addition Liberty seeks (iv) a payment of £18,000 on account of its costs with respect to the preliminary issues trial.
3. At the preliminary issues trial Judge Mackie held that Argo was in breach of a warranty in the voyage policy. As a result of the appeal it will be declared that Liberty has not waived that breach. It might be thought that any action by Argo, as the assured under the voyage policy, would therefore be at an end. However counsel for Argo now raises (for the first time) the alternative argument that Argo is entitled to the return of its premium (which was US$130,000) pursuant to section 84 of the Marine Insurance Act 1906. It is argued that Argo is entitled to the return of this premium because the breach of warranty occurred the moment the contract of insurance was made (because the towing terms had already been agreed), yet, under the terms of the policy, the insurers would not go on risk under the policy until the start of the tow. Therefore, it is argued, "the consideration for the payment of the premium" had totally failed, so that, in the words of section 84, the premium "…is thereupon returnable to the assured". It is accepted by counsel for Argo this claim has not yet been made in the Mercantile court proceedings and that permission to amend the proceedings would be needed to raise this new argument. However, counsel for Liberty accepts that the question of whether Argo can obtain permission to amend and whether this claim for the return of the premium is good or not are both arguable points. It is therefore accepted that this court is not in a position to make an order that the current action be dismissed. It is agreed that the matter must, to that extent, be remitted to the Mercantile court.
4. Because of this potential further claim by Argo, counsel for Argo has submitted that the question of whether Argo should have to pay the costs of the appeal should await the outcome of its application to amend its pleadings so as to make its claim for the return of the premium from Liberty. Argo also pointed out that it may have a claim against its brokers LSR. It was therefore submitted on behalf of Argo that the issue of Argo's liability for Liberty's costs of the appeal should await the outcome of those two potential claims. In the alternative, it was submitted on behalf of Argo that if it should be liable for Liberty's costs of the appeal, then this court should summarily asses those costs, but should do so on the basis of 70% of the amount claimed. It is said that this would be the amount that would be awarded should there be a detailed assessment of the costs.
5. So far as the costs of the preliminary issues trial are concerned, it is submitted on behalf of Argo that Argo won on two points (affirmation and no right to claim damages for misrepresentation when the insurers had affirmed the policy) so that Argo should only have to pay the costs of the points on which it lost.
6. We have considered all these arguments and our conclusions are as follows: first, we reject the argument that any decision on who should bear the costs of the appeal should await the outcome of Argo's application for permission to amend its pleadings to raise the return of premium claim or any decision as to whether to pursue LSR. Secondly, it is evident, in our view, that Liberty was the winner of the appeal. Accordingly we award Liberty the costs of the appeal.
7. Thirdly, we will assess those costs summarily. Argo did not make any specific objections to the sum claimed by Liberty. The question is whether or not those sums are reasonable. In our view the costs are all reasonable sums apart from the ten hours claimed for "attendance on party". We allow half that time, so that Liberty can claim £1375 in respect of that item. We therefore assess the total costs of the appeal at £23,860 and that is the sum that Argo must pay. Argo will have 28 days from the date of this judgment in which to pay.
8. Fourthly, as for the costs of the preliminary issues trial, it is true that Argo won on two issues. However those are now irrelevant as a result of our decision on the appeal. Accordingly, in our view Liberty is entitled to recover three quarters of the costs of the preliminary issues trial. Thus Argo must now repay to Liberty the sum of £27,500 that Liberty paid to Argo on account of costs of that trial. Liberty has suggested that the sum should be accompanied by interest at "US prime rate". Argo does not oppose that basis for interest and there is no doubt that this court has jurisdiction to award interest on the sum to be repaid: Multiplex v. Cleveland [2008] EWCA 133 at [4] and [7]. The precise rate and timing of interest must be agreed between the parties. Fifthly we accept the proposition that Argo should make a payment on account in respect of Liberty's costs of the preliminary issues trial. We assess a payment on account of £18,000 as a reasonable sum. Sixthly, the costs of the preliminary issues trial will be the subject of a detailed assessment.
9. We confirm that all other matters are to be remitted to the Mercantile Court.
10. The parties will draw up an order to reflect our decision on all these issues.