England and Wales High Court (Chancery Division) Decisions

IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
MANCHESTER DISTRICT REGISTRY

		Royal Courts of Justice Strand, London, WC2A 2LL
		8th April 2009

Mr. Justice Lewison:

1. The vast majority of evidence, argument and value concerned the claims for breach of contract and breach of fiduciary duty. Opal was successful in striking out or obtaining summary judgement on those claims. There are two remaining claims that I have allowed to go to trial. Those claims took up little time in preparing evidence or argument and are (on Openair's own assessment) worth less than 5 per cent of the claims on which Opal succeeded. Overall, therefore, Opal were undoubtedly the successful party. The starting point for any costs order must be that Openair must pay Opal's costs. However, I must also consider whether to make an adjustment in order to reflect the fact that Opal were not completely successful. Two questions arise:

i) Should Opal be deprived of its costs of the issues on which it lost and

ii) If so, should Opal also be ordered to pay Openair's costs of those issues?

2. The issues in question were discrete issues. As Mr Booth points out, the main issue appeared to be whether Openair had received a particular letter. Opal succeeded in demonstrating that it had. The reason why Opal were not successful on the issues that I allowed to go to trial was because of certain points on the construction of the contractual documents which were not the subject of evidence and were barely the subject of argument. It was not unreasonable for Opal to apply for summary judgment on those issues even though they ultimately failed. Moreover, I have not decided those issues in Openair's favour: I have merely decided that they should go to trial. Ultimately Opal may yet succeed on those issues.
3. In all those circumstances I consider that Opal should be deprived of only a small part of its costs; and that I should not require Opal to pay Openair's costs of those issues. I rule, therefore, that Openair must pay 90 per cent of Opal's costs.
4. Opal say that the costs should be assessed on the indemnity basis rather than the usual standard basis. The principal differences between the two measures are:

i) On an assessment on the indemnity basis proportionality has no part to play and

ii) In deciding whether costs were reasonably incurred any doubt is resolved in favour of the receiving party.

5. Mr Booth says that the following features take this case out of the norm and justify an award of costs on the indemnity basis:

i) "Hugely complicated" issues of contract and European law were raised in pursuit of an inflated claim when the basis of that claim was utterly erroneous.

ii) Openair threatened to apply for indemnity costs against Opal in the event that Opal's claim to strike out failed.

iii) Openair accused Opal of improper conduct consisting of illegality and anti- competitive conduct.

6. In my judgment:

i) Although the issues of European law were complicated, the Floe decision in the CAT gave some encouragement to Openair. The contractual issues were not complicated at all. That is why I was able to decide them summarily. The fact that a substantial part of a case has failed at the stage of summary judgment does not warrant an award of indemnity costs. The whole point of summary procedures is to stop hopeless cases from going to trial. The giving of summary judgment against a party who has a hopeless case is itself the norm.

ii) Although there is some superficial attraction in the "sauce for the goose" argument, it is only superficial. The fact that one party threatens another with a possible application for indemnity costs does not mean that it is right to accede to that application or to conclude that there is some sort of tacit agreement that costs will be awarded on the indemnity basis.

iii) The accusations of illegality and anti-competitive conduct no doubt increased the heat, but they were not part of the material on which I had to rule.

7. These factors do not in my judgment justify an award of costs on the indemnity basis. Moreover I am concerned about the effect of removing the requirement of proportionality from any assessment of costs. It is true that even on the indemnity basis costs must be reasonably incurred; but the requirement of proportionality is a useful brake on the escalation of costs. I rule, therefore, that Openair must pay 90 per cent of Opal's costs to be assessed on the standard basis if not agreed.
8. It is the usual practice to order an interim payment on account of costs. In the present case Openair has provided security for costs in the shape of an insurance policy. The policy is in the sum of £75,000. Opal estimates its costs in the sum of £109,000-odd. I will order an interim payment of £50,000 to be paid within 21 days.
9. I have also allowed certain amendments to the Particulars of Claim. Openair must pay the costs thrown away by those amendments on the standard basis.
10. Openair seek permission to appeal. Ms Anderson has suggested a number of respects in which she says my judgment is open to criticism. However, I would not have given summary judgment if I had concluded that there was doubt about the position. I do not consider that the suggested grounds of appeal have a real prospect of success; and I do not consider that there is any other compelling reason why I should grant permission to appeal. I therefore refuse permission to appeal.
11. What is left of the case should be case managed in Manchester. I will order the case to be transferred to the Manchester District Registry for further directions.