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URL: http://www.bailii.org/ew/cases/EWHC/Ch/2011/1370.html
Cite as: [2011] 3 Costs LO 343, [2011] EWHC 1370 (Ch)

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		Neutral Citation Number: [2011] EWHC 1370 (Ch)
		Case No: 10220 of 2008

IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
COMPANIES COURT

Royal Courts of Justice
Strand, London, WC2A 2LL

1/06/2011

B e f o r e :

MR JUSTICE WARREN
____________________

Between:

	IN THE MATTER OF SOUTHERN COUNTIES FRESH FOODS LIMITED AND IN THE MATTER OF THE COMPANIES ACT 1985 COBDEN INVESTMENTS LIMITED	Petitioner
	- and -
	(1) THE RWM PURCHASER LTD (2) SOUTHERN COUNTIES FRESH FOODS LIMITED (3) ROMFORD WHOLESALE MEATS LIMITED	Respondents

____________________

Mr Bernard Weatherill QC & Mr Peter Griffiths (instructed by Messrs Rosenblatt) for the Petitioner
Mr Victor Joffe QC & Mr Timothy Collingwood (instructed by New Media Law LLP) for the Respondents
Hearing dates: 4th & 5th April 2011
____________________

HTML VERSION OF JUDGMENT
____________________

Mr Justice Warren :

Introduction

As we reach what I am sure everyone hopes is the end of this marathon litigation, I now have to deal with the costs of the Petition and the reserved costs of RWM's application for summary judgment or strike-out in relation to certain paragraphs of the Petition. The parties could hardly be further apart. Mr Weatherill submits that CIL should recover the whole of the costs of the litigation, including indemnity costs in relation to certain aspects, together with interest. Mr Joffe submits that RWM should recover 32% of its costs up until the date of handing-down of my main judgment in November 2008 and all of its costs after that date.

The Law

Having said that, there is a considerable amount of common ground about the principles which I have to apply: it is the correct application of those principles which is disputed. I need therefore to identify the correct principles in order to apply them to the facts.

A preliminary point to make is that there are no special principles applicable to unfair prejudice petitions. It is, of course, the case that every case is heavily fact-dependant when it comes to deciding where costs should fall. There are, no doubt, factual features commonly present in unfair prejudice petitions which are not present in other types of litigation and those features will fall to be taken account of when applying established principles.

It does, however, need to be remembered that, in order to be in a position to exercise its discretion concerning the appropriate remedy if unfair prejudice is established, the Court needs to have a full understanding of the background to and the context of the dispute giving rise to allegations of unfair prejudice. Accordingly, a petitioner or a respondent may adduce evidence of facts which are relevant for the Court to know. A petitioner may rely on those facts as amounting to an example of unfair prejudice. The petitioner may establish those facts but fail to demonstrate that they amount to unfair prejudice. It does not follow that, because the petitioner has failed to demonstrate unfair prejudice by reference to those facts, that the incidence of costs is to be decided as if the petitioner had lost the issue to which those facts were relevant. The facts in this type of case would be relevant to the petition as a whole. Of course, the Court must take into account, as one factor in determining what costs order to make, the fact that the petitioner has failed to make out the case of unfair prejudice based on those facts and also the extent to which those facts were in reality only relevant to that claim.

The starting point is section 51 Senior Courts Act 1981 which provides that costs are in the discretion of the court subject to rules of court. This is a wide, although not unlimited, jurisdiction: see Aiden Shipping Ltd v Interbulk Ltd [1986] AC 965. The relevant rules for present purposes are found in CPR 44.3. CPR 44.3(1) affirms the discretion of the court about who is to pay, the amount of the payment and time of payment. If the court decides to make an order for payment – it may decide to make no order at all – the general rule under CPR 44.3(2)(a) is that the unsuccessful party will be ordered to pay the costs of the successful party, but under CPR 44.3(2)(b) the court may make a different order. CPR 44.3 does not lay down, nor does any other rule lay down, how it is to be decided, in cases where it is not obvious, who has been successful or unsuccessful.

CPR 44.3(4) provides that when deciding what (if any) order to make the court must have regard to "all the circumstances" which include

a. the conduct of all parties;

b. whether a party has succeeded on part of his case even if he has not been wholly successful and;

c. any payment into court or admissible offer to settle and which is not a Part 36 Offer.

For this purpose, conduct includes conduct before as well as during the proceedings, whether it was reasonable for a party to raise, pursue or contest a particular allegation or issue, the manner in which a party has pursued or defended his case or a particular allegation or issue and whether a claimant who has succeeded in his claim in whole or in part exaggerated his claim.

The court has a range of orders which it can make which include those set out in CPR 44.3(6). One of those (see paragraph (f)) is an order relating only to a distinct part of the proceedings (otherwise known as an issue based order). Thus, where a successful claimant wins his case overall but loses on a distinct part of his case, the court can preclude recovery by him of his costs referable to that claim and can even order that he pays the costs of the other party referable to that claim. Issue based orders are discouraged. Thus CPR 44.3(7) directs that where the court would otherwise make an issue based order it must instead, if practicable, make an order under CPR 44.3(6)(a) or (c) (that is to say an order for payment of a proportion of another party's costs or an order for payment of costs from or until a certain date only). The policy is to prevent orders being made which will of themselves produce more cost and added difficulty for costs judges who will often need to apportion costs between one issue and another.

In the present case, neither party seeks an issue based order; indeed, they agree that I should not make such an order. Instead, I am invited to make costs orders in respect of different periods which I will identify later. I should say at once that I agree with the parties that I should not make an issue based order. That is not to say that I should not consider whether it would be appropriate to make an issue based costs order: indeed, given the way in which the issues in the present case were argued, it is something which I shall have to consider. But even if an issue based order is otherwise appropriate, I must observe the provisions of CPR 44.3(7).

In respect of part of the period of this litigation, CIL's lawyers, or some of them, have been working under a conditional fee agreement although as I understand it there has been no after the event insurance. The provisions of CPR 44.3A and 44.3B will have to be applied in respect of the costs (if any) payable to CIL. I will need to determine the basis of assessment – standard or indemnity costs – under CPR 44.4.

Under the old Rules of the Supreme Court, the general rules relating to the costs of unfair prejudice petitions were laid down in Re Elgindata Ltd (No. 2) [1993] BCLC 119 (per Nourse LJ at 124i-125c) as follows:

a. first, as is generally the case, costs are in the discretion of the court;

b. secondly, costs should generally follow the event, except where it appears to the court in all the circumstances that some other order ought to be made;

c. thirdly, the general rule does not cease to apply simply because the successful party has raised some issues or made allegations which have failed;

d. but where the raising of such allegations has caused a significant increase in the length or cost of the proceedings the petitioner may be deprived of the whole or a proportion of those costs; and

e. where a successful petitioner has raised issues or made allegations improperly or unreasonably, the court may not only deprive him of his costs but may order him to pay the whole or a proportion of the unsuccessful respondent's costs.

The position is now governed by the CPR. As well as acting in accordance with CPR 44.3, the Court must, of course, always bear in mind the overriding objective under CPR 1.1 of dealing with cases justly. Mr Weatherill correctly starts with the general position under CPR 44.3(2)(a). He submission then is that Court should only make a different order if would be unjust to adopt the general rule in all the circumstances of the case. This places an onus on an unsuccessful party to justify a departure from the general rule. I do not consider that that is a correct approach. The Court has a discretion, one which is conferred by section 51 and exercised in accordance with the CPR. There may be a range of reasonable and just decisions which the Court can make. If it acts within that range, it is acting properly; and this is so even if the general rule that costs follow the event would be one possible reasonable and just order. The starting point is no doubt the general rule and the Court will then consider what departures from that general rule are appropriate having regard to all the circumstances of the case: see Multiplex Constructions (UK) Ltd v Cleveland Bridge UK Ltd and Cleveland Bridge Dorman Long Engineering Ltd [2008] EWHC 2280 (TCC) at paragraph 72. But that does not cast some particular onus on the unsuccessful party to demonstrate that adopting the general rule would be unjust.

What is the continuing status of Elgindata? Mr Weatherill has referred me to DEG-Deustche v Koshy (2000) 97(11) LSG 38, where Rimer J held (applying Phonographic Performance Ltd v AEI Redifusion Music Ltd [1999] 2 AER 229) that the principles set out in Elgindata remained a good working guide, but should not be applied mechanistically. He confirmed that the starting point was still that the loser should pay. I agree with that; but it does not follow that a departure from that starting point can only be made if remaining at the starting point would be unjust. It must also be read subject to what has been said by the Court of Appeal in later cases.

In particular, there is confirmation of what Lord Woolf had observed in the Phonographic Performance Ltd v AEI Redifusion Music Ltd namely that "it is no longer necessary for a party to have acted unreasonably or improperly to be deprived of his costs of a particular issue on which he has failed".

Thus, in Summit Property v Pitmans [2001] EWCA Civ 2020, the claimant succeeded on liability but failed in the action on a point of law. Longmore LJ (with whom Tuckey LJ agreed) said that it was no longer necessary for a party to have acted unreasonably or improperly before he can be required to pay the costs of the other party of a particular issue on which he (the first party) has failed. In support of that, he referred to Johnsey Estates (1990) Limited v Secretary of State for the Environment [2001] EWCA CIV 6535. In that case Chadwick LJ, giving the judgment of the court set out the principles, in a passage cited by Longmore LJ, as follows:

"The principles applicable in the present case may, I think, be summarised as follows: (i) costs cannot be recovered except under an order of the court; (ii) the question whether to make any order as to costs -- and, if so, what order -- is a matter entrusted to the discretion of the trial judge; (iii) the starting point for the exercise of discretion is that costs should follow the event; nevertheless, (iv) the judge may make different orders for costs in relation to discrete issues -- and, in particular, should consider doing so where a party has been successful on one issue but unsuccessful on another issue and, in that event, may make an order for costs against the party who has been generally successful in the litigation; and (v) the judge may deprive a party of costs on an issue on which he has been successful if satisfied that the party has acted unreasonably in relation to that issue; (vi) an appellate court should not interfere with the judge's exercise of discretion merely because it takes the view that it would have exercised that discretion differently…"

Longmore LJ went on to say this

"17. It is thus a matter of ordinary common sense that if it is appropriate to consider costs on an issue basis at all, it may be appropriate, in a suitably exceptional case, to make an order which not only deprives a successful party of his costs of a particular issue but also an order which requires him to pay the otherwise unsuccessful party's costs of that issue, without it being necessary for the court to decide that allegations have been made improperly or unreasonably."

Chadwick LJ was also one of the judges in Summit Property. He said this at paragraph 27 of his judgment:

" ….An issue based approach requires a judge to consider, issue by issue in relation to those issues to which that approach is to be applied, where the costs on each distinct or discrete issue should fall. If, in relation to any issue in the case before it the court considers that it should adopt an issue based approach to costs, the court must ask itself which party has been successful on that issue. Then, if the costs are to follow the event on that issue, the party who has been unsuccessful on that issue must expect to pay the costs of that issue to the party who has succeeded on that issue. That is the effect of applying the general principle on an issue by issue based approach to costs. Further, there will be cases (of which this is not one) where, on an issue by issue approach, a party who has been successful on an issue may still be denied his costs of that issue because, in the view of the court, he has pursued it unreasonably. The question, therefore, can be re-stated: was the judge entitled to approach the costs in this case on an issue by issue basis? In my view, for the reasons set out by the judge and by Longmore LJ, I am not persuaded that the judge can be criticised for adopting that approach in what he described as an unusual case, having circumstances which were special and particularly strong …"

I addressed the position in my own judgment in Actavis v Merck [2007] EWHC 1625 (Pat):

"9. It seems to me, therefore, that the CPR too recognises in the context of rule 44.3(7)… that issue-based orders are to be avoided. The idea behind them should be reflected instead in an overall adjustment of what otherwise would be payable.

10. If there exist two really distinct issues where one has been lost and one won, it might be appropriate to see the issues as separate from a costs perspective. None the less, an issue based order is to be avoided with the same result roughly being achieved by the percentage reduction. That is in contrast with the position where the winner under the old practice took all as a general rule but subject to the Elgindata exceptions…….

25. It is clear of course that costs issues are heavily fact-based and all at the discretion of the court. It is also clear that the CPR represents a significant shift in approach, but having said that, the starting point, I am sorry to repeat, remains that the winner gets his costs even where there has been issues on which he loses. That must be the correct starting point, particularly in relation to a defendant who is a person brought to the court unwillingly, who is introduced into litigation which he did not wish to be involved in and defends himself and raises all proper points in his defence, although he must act reasonably and proportionally.

26. The task is to identify those cases where the loss on an issue carries the costs sanction ranging from deprivation of costs to an order against the losing party on that issue. The test, as is clear, and from the citations I have already made, is that one no longer has to find improper or unreasonable conduct. Instead, as Longmore LJ puts it, one has to find a suitably exceptional case so far as concerns making adverse orders…"

In the light of CPR44.3(7) and these authorities, Mr Joffe submits that it is clear that generally an issue based order is to be avoided, but that the Court should achieve roughly the same net result by means of a "percentage" order. I agree with that in cases where the Court decides that an issue based order is appropriate in the first place, but decides not to make such an order in the light of CPR 44.3(7).

I have already observed that the CPR say nothing about how to identify the successful party. Mr Weatherill has referred me in that context to Day v Day (Costs) [2006] EWCA Civ 415 where it was suggested that the question of who was the successful party, or the unsuccessful party to an action could be determined by who ultimately wrote the cheque at the end of the day. I do not find that helpful in the context of the present case. I have not been referred to any other authorities which assist in identifying the successful party. I shall consider this aspect further when dealing with the relevant facts of the present case.

Offers to settle and negotiations

One of the most important aspects of the dispute about costs is, I consider, the various offers to settle which have been made by each side at various stages of the litigation. Offers to settle are of great practical important in unfair prejudice petitions. This was addressed in O'Neill v Phillips [1999] 1 WLR 1092 where Lord Hoffmann said this at p 1107:

"But the unfairness does not lie in the exclusion alone but in exclusion without a reasonable offer. If the respondent to a petition has plainly made a reasonable offer, then the exclusion as such will not be unfairly prejudicial and he will be entitled to have the petition struck out. It is therefore very important that participants in such companies should be able to know what counts as a reasonable offer.

In the first place, the offer must be to purchase the shares at a fair value. This will ordinarily be a value representing an equivalent proportion of the total issued share capital, that is, without a discount for its being a minority holding. …….

Secondly, the value, if not agreed, should be determined by a competent expert. The offer in this case to appoint an accountant agreed by the parties or in default nominated by the President of the Institute of Chartered Accountants satisfied this requirement. One would ordinarily expect the costs of the expert to be shared but he should have the power to decide that they should be borne in some different way.

Thirdly, the offer should be to have the value determined by the expert as an expert. I do not think that the offer should provide for the full machinery of arbitration or the half-way house of an expert who gives reasons. The objective should be economy and expedition, even if this carries the possibility of a rough edge for one side or the other (and both parties in this respect take the same risk) compared with a more elaborate procedure….

Fourthly, the offer should, as in this case, provide for equality of arms between the parties. Both should have the same right of access to information about the company which bears upon the value of the shares and both should have the right to make submissions to the expert, though the form (written or oral) which these submissions may take should be left to the discretion of the expert himself.

Fifthly, there is the question of costs. In the present case, when the offer was made after nearly three years of litigation, it could not serve as an independent ground for dismissing the petition, on the assumption that it was otherwise well founded, without an offer of costs. But this does not mean that payment of costs need always be offered. If there is a breakdown in relations between the parties, the majority shareholder should be given a reasonable opportunity to make an offer (which may include time to explore the question of how to raise finance) before he becomes obliged to pay costs. As I have said, the unfairness does not usually consist merely in the fact of the breakdown but in failure to make a suitable offer. And the majority shareholder should have a reasonable time to make the offer before his conduct is treated as unfair. The mere fact that the petitioner has presented his petition before the offer does not mean that the respondent must offer to pay the costs if he was not given a reasonable time."

Quite apart from the special circumstances of an unfair prejudice petition, the court should, in assessing the conduct of the parties with regard to costs, take account of the absence of any intention to settle the matter. In Painting v Oxford [2005] EWCA Civ 161], Maurice Kay LJ said this:

"22…at no stage did Mrs Painting manifest any willingness to negotiate or to put forward a counter-proposal to the Part 36 payment. No one can compel a claimant to take such steps. However to contest and lose an issue of exaggeration without having made ever a counter-proposal is a matter of some significance in this kind of litigation. It must not be assumed that beating a Part 36 payment is conclusive. It is a factor and will often be conclusive, but one has to have regard to all the circumstances of the case…"

Longmore LJ agreed:

"27… that it is relevant that Mrs Painting herself made no attempt to negotiate, made no offer of her own and made no response to the offers of the University. That would not have mattered in pre-CPR days but, to my mind, that now matters very much. Negotiation is supposed to be a two-way street, and a claimant who makes no attempt to negotiate can expect, and should expect, the courts to take that into account when making the appropriate order as to costs…

The Offers

At this stage, I wish to consider the offers actually made by each side which were open to acceptance and, if accepted, would have brought an end to the whole or part of the litigation. Some were open, some were without prejudice save as to costs.

The first offer was a without prejudice offer made by RWM in a letter from its then solicitors, DLA ("DLA"), dated 25 May 2006. This offer (expressed to be pursuant to Part 36) was to purchase CIL's shares in SCFF for £1.7m in cash on delivery of duly executed share transfers and certificates and resignations of the Cobden Directors; that offer was open for acceptance for 21 days and was expressed to include payment of CIL's costs, but after the expiration of 21 days could only be accepted if liability for costs was agreed or (if proceedings had been commenced) with the court's permission.

That offer was not accepted by CIL, which made a counter-offer in a meeting between the parties' respective accountants in May 2006 to accept £3.2m, referred to in a letter dated 13 October 2006 from RWM's solicitors, DLA .

Although nothing came of these offers, they show two things: that the parties were at least talking to each other but that they were not at all close together in money terms.

It may in the light of those figures have come of something of surprise to RWM to receive Ms Gread's Report valuing SCFF at £22 million to £26 million. RWM clearly did not consider SCFF to be worth anything like that even to RWM let alone to a hypothetical purchaser. It accordingly made an open offer in a letter dated 4 December 2007 from DLA to sell its shares to CIL for £9.2 million, to terminate the MoU and to pay the costs to be assessed if not agreed. In other words, they were offering the relief then being sought in the Petition, namely that CIL should be able to purchase RWM's shares in SCFF.

Now, it is to be noted that Ms Gread's valuation was based on assumptions which she had been instructed to make by Matthew. Those assumptions included assumptions that certain commercial arrangements would be agreed between RWM and SCFF without which the valuation could not possibly be sustained. It seems doubtful in the extreme to me that such a valuation could be supported, even if such commercial arrangements could have been agreed, in the light of the other assumptions which were be made about CIL's future trading prospects.

Not having those commercial arrangements in place, it is not surprising that CIL refused the offer. Whether the valuation was put forward by CIL as a genuine figure on which it would base the amount which it would pay for the purchase of RWM's shares or whether it was a tactic designed to establish a large value for the shares on the footing that RWM would eventually purchase CIL's shares I do not know and do not need to decide. The offer and its rejection clearly had some impact on CIL's approach to the Petition: it sought, and obtained, leave to amend the Petition to seek in the alternative an order that RWM purchase CIL's shares. A sale and purchase in that direction, it will be remembered and as I mentioned in the Main Judgment, was something which CIL had been seeking at a time well before the Petition was presented. I will take account, in reaching my decision on costs, of CIL's approach to this valuation and the instructions given to Ms Gread in preparing her Report. But I do not consider that the offer, and its rejection, is one which had the consequence of eliminating any unfair prejudice in accordance with the approach of Lord Hoffmann in O'Neil. It may be that it was not sensible for CIL to have put forward the valuation which it did and that will be reflected in my costs order. But it does not follow that CIL was not able to draw back when it understood the consequences and to adopt the different approach which it did.

The next offer was again made by RWM. It was contained in letter (without prejudice save as to costs) from DLA to Rosenblatt dated 14 January 2008. This followed on from Rosenblatt's letter dated 10 January 2008 indicating that CIL intended to seek, in the alternative, an order that RWM purchase CIL's shares and enclosing a draft amended Petition. On the next day, 11 January, Rosenblatt served Ms Gread's Supplementary Report. The offer was as follows:

a. to purchase the shares at a price to be determined by independent valuation "on the conventional basis"and;

b. the trial be limited to determining the extent, if any, to which the affairs of SCFF had been conducted in an unfairly prejudicial manner with account taken of any decrease in value found to have resulted.

The offer was silent on the matter of costs. The offer, it is important to note, came just over 6 weeks before the commencement of the trial. By that time it must surely be that a large proportion of the work required for this mammoth litigation had been carried out and the cost incurred, including preparation of nearly all of the expert evidence. CIL were expecting that the court would adjudicate on the competing opinions of the experts. On the CIL side, the Cobden family, and no doubt Matthew in particular, and their lawyers had their minds on preparation for trial. This offer came quite late in the day although not, I accept, at the last moment. The offer was rejected by Rosenblatt in a letter dated 21 January 2008. That letter asked what was meant by "an independent valuation on the conventional basis" but went on in any case to reject the offer because it would not limit the scope of the issues to be determined. The court would still be required to determine which of the breaches pleaded at paragraph 39 of the Re-Amended Petition amounted to unfairly prejudicial conduct. An independent valuer would then conduct a valuation of the shares. RWM did not respond to the question of what was meant by the conventional basis. But it is now said by Mr Joffe that it meant the usual basis applicable where there is an order to buy or sell, namely without discount for a 50% or minority holding. He also says that there was no need to answer the question since the offer had been rejected in any event.

It was clearly recognised by RWM when making the offer that there would still need to be some sort of trial even if its proposals were accepted. RWM envisaged that trial as determining what unfair prejudice there had been and then making adjustments to reflect that unfair prejudice. Mr Joffe submits that the costs of an independent valuation and a more limited trial would clearly have been less than the costs of the actual trial. It is not obvious to me that that would be so. The trial would have had to be quite extensive in any case. And given that there had to be a trial, there is great force in the argument that CIL should be entitled to test the valuation evidence from Mr Grantham by a judicial process rather than have its case decided by a valuer acting as an expert; this is all the more so given the comparatively late stage at which the offer was made.

There is also this difficulty facing RWM. In respect of some complaints made by CIL and alleged to amount to unfair prejudice, I decided that the facts on which the complaints rested were made out but that they did not amount to unfair prejudice. But at the same time, I held that they should be reflected in an adjustment to the valuation. One example is the rent review. What, one might ask, would have been the position in relation to the rent review issue if CIL had accepted RWM's offer? The offer, on its face, would not appear to allow for such an adjustment and, if that is right, it cannot be asserted that CIL should have accepted the offer. But even if RWM had been prepared to accept that the rent review complaint (and this is only one example) could have been addressed in the litigation and an appropriate adjustment made, it can be seen that the scope of the litigation would not have been restricted to matters amounting to unfair prejudice. Further, in order to see what matters did and did not amount to unfair prejudice or, absent unfair prejudice, did or did not justify a financial adjustment, it would have been necessary to go into the background and the detail of the various issues. It would still have been necessary to investigate the extent of the directors' fiduciary duties; it would still have been necessary to determine the true meaning of the various contractual documents which were so hotly disputed. It is no answer to all of this, in my view, to say that these were all matters of valuation which, had the offer been accepted, the valuer could and would have decided. Many of the issues raised were not simply questions of value but raised legal issues which it was more appropriate for the Court rather than a valuer to resolve. The rent review issue again provides an example. The real dispute was not the figure which would have resulted had a rent review been notionally effected in the past; rather, it was whether the value of the shares in SCFF or the compensation due should reflect past rent reviews at all.

Further, as noted, the offer said nothing about costs. It is not in every case that an offer must include an offer to pay the Petitioner's costs. Lord Hoffmann addressed this in the last passage which I have quoted in paragraph 21 above. A respondent has to be given a reasonable time in which to formulate an offer. But where a respondent has had ample time to formulate an offer but does not do so with the result that the petitioner has had to incur costs, it could not, I think, normally be said that the petitioner has acted unreasonably in refusing an offer which says nothing about costs.

In the present case, there would, on any view, have been highly contentious litigation. It cannot, in my judgment, be said, in those circumstances and in circumstances where the litigation would have raised many of the issues which were in fact raised and where the offer came quite late in the day and after the experts had prepared their report, that the offer was one which cured the unfair prejudice or one which CIL should have accepted. The absence of an offer to pay costs reinforces that conclusion; indeed, it would, in my view, even standing by itself be fatal to RWM's contentions. In my judgment, CIL was not unreasonable in refusing to accept the offer.

Accordingly, I do not consider that RWM can rely on the offer as a knock-out blow to CIL's application for costs let alone as entitling it to recover its own costs. That is not to say that the offer is irrelevant. It is relevant to the complaints made by each side against the other about their alleged failures to negotiate.

The next offer was contained in a letter dated 16 January 2009 (after the handing down of the Main Judgment) from Rosenblatt, by which CIL estimated the equity value of SCFF to be in the order of £8m plus compensation, a figure very close to that eventually determined by me. CIL made an open offer to sell its shares in SCFF for £4.5m; as regards costs, CIL offered to accept £1.5m or for the issue of costs to be determined by the Court.

The next offer was contained in a without prejudice save as to costs letter from Rosenblatt dated 16 January 2009. CIL offered to sell its shares in SCFF for £3.5m; as with the earlier open offer, CIL offered to accept £1.5m for its costs or for the issue of costs to be determined by the Court.

By a letter dated 19 January 2009 from DLA, RWM rejected CIL's open offer. And in a without prejudice save as to costs letter of the same date, RWM rejected CIL's without prejudice save as to costs offer and made a counter offer to pay the aggregate sum (inclusive of costs) of £2.5m for CIL's shares in both SCFF and RWM Dorset.

By a letter dated 29 May 2009 (after I had sent a draft of my Supplemental Judgment to the parties), CIL made a further open offer to sell its shares in SCFF for £4.25m, with the issue of costs to be determined by the Court.

By a letter dated 2 June 2009, DLA said that there was "little if any advantage in experts proceeding to finalise their valuation" until the Supplemental Judgment was handed down; they asked for details as to how CIL calculated the £4.25m offer. CIL provided that calculation on the same day.

By a letter dated 8 June 2009, RWM rejected CIL's open offer of £4.25m and put forward three valuations for SCFF ranging between £1.86m and £3.36m; these were figures for 100% of the shares in SCFF, not just CIL's shares. The parties, it can be seen, were miles apart.

By a without prejudice save as to costs letter dated 29 October 2009, RWM offered to value CIL's shares in SCFF at £2m. The offer was to buy at that price, with no order as to costs on the Petition. The Appeal and Cross Appeal were to be withdrawn with no order as to costs and Matthew was to withdraw his claim for unfair dismissal.

This offer was increased to £2.3m plus a payment of £500,000 on account of costs on 6 January 2010 and otherwise on the same terms as the earlier offer.

In the end, I determined that the equity value of SCFF (including SCS) was £7.9m. The historic compensation came out at £1.1m with the result that the total value was £9m so that CIL's shares in SCFF were valued at £4.5m. Mr Weatherill makes the following observations which are, as matters of fact, correct although I will need to consider what costs implications follow in a moment. He says that CIL therefore

a. beat its own offer to sell for £3.2m made before the Petition was presented;

b. beat all of RWM's admissible offers to purchase by a very substantial margin;

c. obtained the same result as its open offer of £4.5m made on 16 January 2009; and

d. beat its own open offer to sell for £4.25m made on 29 May 2009.

In the light of that Mr Weatherill submits that, put simply, CIL was successful on its Petition, and to an extent which far outstripped RWM's assessment of what it ought to have been required to pay for CIL's shares (including compensation for unfairly prejudicial conduct which was denied throughout). That is a fair submission. But it does not follow that CIL should therefore be entitled to the whole of its costs of the litigation, although it obviously has a very strong case for recovering its costs from the date of offer made on 16 January 2009. I pick that date rather than 29 May 2009 since the figure of £4.5m under paragraph c. in the preceding paragraph included costs of £1.5m but RWM was given the option of having the court determine the costs; in effect, there was an offer to sell for £3.5m plus costs to be assessed.

The three Periods

The parties have addressed their submissions by reference to different periods. Period 1 is the period beginning with the earliest pre-Petition date from which costs might properly be recovered up to the date of the handing-down of the Main Judgment on 20 November 2008. Included in Period 1 are the reserved costs of RWM's application to strike out parts of the Petition. Period 2 runs from the end of Period 1 until the date of the handing-down of my Supplementary Judgment on 17 June 2009. Period 3 runs from the end of Period 2 until the handing down of my judgment on valuation issues on 17 December 2010. In the event, oral argument did not really distinguish between Periods 2 and 3. It was helpful to receive submissions directed at these different periods. I thought at one stage that it would not be possible to compartmentalise them entirely so as to treat the costs in Period 1 and in Periods 2 and 3 entirely separately. But I have in the end concluded that it is possible to do so and propose to adopt that approach. This is essentially because the costs incurred in Periods 2 and 3 were incurred in relation to issues which really arose as items giving rise to costs only as a result of the Main Judgment. It is possible to see those costs as relating to issues which should be the subject of an issue based order but applying CPR 44.3(6)(c) pursuant to CPR 44.3(7). I would add at this point that nobody thought it necessary to separate out the period from the date of the main Judgment up to 16 January 2009 when CIL made the offers mentioned above: any costs incurred in that period were very small.

Who was the successful party?

Clearly CIL is the successful party in the sense that it has obtained the relief which it sought in the amended Petition and has obtained more for its shares in SCFF than was ever on offer from RWM. But equally clearly it has been less than wholly successful in that it failed to establish many of its allegations of unfair prejudice although, in some instances, the facts established had financial implications for valuation or compensation. It is a somewhat arid question whether CIL qualifies as the "successful party" for the purposes of CPR 44.3(2). Even if it is, the success is clearly qualified and my costs order must reflect that fact. It does not make any difference to the end result whether my starting point is that CIL should have its costs and then go on to consider how its lack of success on some issues is to be reflected in my costs order, or whether I simply make a judgment about where costs should fall taking into account as one factor that CIL has achieved what it set out to achieve, namely an order that RWM purchase its shares in CIL at a proper value.

Conduct of the litigation

This was hard-fought litigation with hardly a stone left unturned. Apart from suggestions from each side that the other was unwilling to negotiate in a sensible way (or at all), I have to say that, from time to time, both sides took positions which were not entirely reasonable and conducted the litigation in a way which might be perceived as oppressive. On CIL's sides I have in mind particularly the way in which the initial valuation evidence was produced on instructions from Matthew which CIL was not able to establish. Further, one of the main complaints concerning the cow trade continued to be pushed when, realistically, CIL should not have continued with it. It was a claim which rested in hope and speculation. On the other side, CIL had to face an application for summary judgment or alternatively to strike out parts of the Petition which was withdrawn. It can now be seen to have been without merit, but even as the evidence stood at the time, it is surprising to me that it was made. However, RWM was faced with a mass of allegations and complaints and it was entitled to meet them. It cannot be criticised for the fact that this resulted in lengthy pleadings and a vast amount of evidence.

However, Mr Weatherill identifies three areas where he contends that RWM's actions were oppressive and designed to exhaust both CIL's will to fight and its ability to fund the litigation. There areas are:

a. RWM's Request for Further Information;

b. RWM's application for summary judgment/striking out of the petition;

c. RWM's oppositions to CIL's application to amend the Petition (to seek, among other matters an order that RWM should purchase CIL's shares in SCFF) and to join RWM Ltd.

I take those in turn.

Request for further information: RWM served an extremely lengthy Part 18 Request on 1 February 2007 seeking a large amount of information. It was met by a response on 2 April 2007 running to some 88 pages. Mr Weatherill complains that the requests were neither concise nor strictly confined to matters which were reasonably necessary and proportionate to enable RWM to prepare its own case or to understand the case it had to meet, as required by paragraph 1.2 of the PD to Part 18 PD. He says that the request was plainly dictated by a strategy of attrition aimed at forcing CIL to incur costs which RWM must be taken to know it could ill afford. Significant costs were indeed incurred in answering the requests. PwC had to attend the abattoir twice to obtain the financial information but when they arrived on the second occasion, they were given a disk containing the financial data, which could have been done in the beginning. The answers supplied were hardly, if at all, referred to in the course of the trial.

I do not think that it is fair to say that this request for information was dictated by a strategy such as Mr Weatherill asserts. It was, I accept, a very long and detailed request and it is possible to criticise it for being overlong and too detailed. To the extent that CIL obtains an order for costs, its own expense in answering the request will be covered. But I do not consider that the request was improper in the sense that impropriety should be reflected in the costs order which I make.

Application for summary judgment/strike out: On 26 February 2007, Mr Registrar Jaques gave directions all the way down to trial. Notwithstanding that, and without any warning, RWM applied on 8 March 2007 for summary judgment on a number of allegations in the Petition on the grounds that CIL had no real prospect of succeeding, the allegations disclosed no reasonable grounds for bringing the claim and/or amounted to an abuse of the Court's process and sought, in the alternative an order that those allegations to be struck out. There then followed an exchange of witness statements. At DLA's invitation the application was dismissed with costs reserved to the Trial Judge. I will return to the reserved costs of the application later. But at this stage, I need only say that I consider that RWM's conduct in relation to the application is to be reflected in the appropriate order to be made in respect of the application itself. RWM's conduct was not, in my view, such as to warrant further reflection in the overall costs order which should be made in relation to the main part of the litigation. In any case, RWM's conduct was not quite as Mr Weatherill would paint it. I shall say more about this when dealing with the reserved costs of the application.

Application to amend the Petition and join RWM Ltd: On 1 October 2007, CIL applied to amend the Petition (to seek among other things an order that the MoU be terminated) and to join RWM. This was resisted, leading to an exchange of more witness statements. In relation to the MoU, RWM argued that the Court did not have jurisdiction to grant such relief and that such relief would contravene Human Rights legislation. Mr Weatherill contends that such resistance must have been on the basis that there was no real prospect of succeeding but, despite that, these points were not even argued at trial. This is not quite fair to RWM. The termination of the MoU as part of the relief sought did not really feature at trial either way; either there was going to be a purchase of CIL's shares by RWM (in which case the MoU did not matter at all save as to valuation issues) or there was going to be a purchase of RWM's shares by CIL (in which case termination of the MoU would be a matter for the decision of the SCFF board controlled by CIL). In any case, Mr Weatherill's point, even if it is a good one, should be met by an appropriate costs order in relation to the application. RWM's conduct was again not, in my view, such as to warrant further reflection in the overall costs order which should be made in relation to the main part of the litigation. In any case, Mr Joffe points out that RWM's opposition went wider than that which Mr Weatherill identifies. RWM's position was that new allegations of unfair prejudice which it was sought to add were unnecessary because they could succeed only if the existing grounds succeeded. He also points out that RWM won on virtually every new issue raised in that CIL failed to establish unfair prejudice in relation to them.

Mediation and negotiations

An unreasonable failure to mediate is usually of significance where an unsuccessful party seeks to deprive an unreasonable successful party from recovering all or some of his costs. An unreasonable failure of an unsuccessful party to mediate is not usually relevant because the general rule will, in any case, be that the successful party receives its costs and it is unlikely that such a failure would of itself ever justify an indemnity costs order if one would not otherwise be made. However, if the court makes an issue based costs order, or if it applies a percentage reduction under CPR 44.3(7), then an unreasonable failure to mediate by the paying party could have an impact on the amount of any percentage reduction to which he would otherwise be entitled. An unreasonable failure to mediate might also have an impact where the Court is considering making a percentage order under CPR 44.3(6)(a) quite apart from the requirement of CPR 44.3(7). It is therefore necessary in the present case to consider whether either party refused to mediate and if so whether such refusal was unreasonable.

Thus Mr Weatherill submits that RWM, which he identifies as the unsuccessful party, acted unreasonably in refusing to agree to mediation, thereby depriving CIL, which he identifies as the successful party, of the opportunity to narrow the issues and (in effect) forcing it to proceed with all of its allegations. It did so at its own risk and there should be no deduction from the costs otherwise payable to CIL because CIL may not have won on every single point.

It is almost as if the parties have been involved in different cases, such different perceptions do they have. Mr Weatherill complains that RWM refused to engage in mediation at an early stage; indeed, having said it would mediate, it then refused to do so. It is, for once, easy to see what actually happened since the proposals for mediation are contained in the correspondence. It is just that the parties have entirely conflicting views about what that correspondence means.

CIL's letter before action was dated 25 September 2006. It sought from RWM an offer for RWM to purchase CIL's shares and stated that if no offer was made the petition would be presented. DLA sent a substantial letter to Rosenblatt dated 13 October 2006. It included this paragraph:

"The Heffers accept that there has been an irretrievable breakdown in their relationship with the Cobdens and that the only alternative to a just and equitable winding-up of the Company, is for the one shareholder to purchase the other shareholders shares. Unfortunately there is a large gap that needs to be bridged, the Heffers having offered £1,700,000 and the Cobdens holding out for £3,200,000. The alternative may be for each party to commission expert reports which failing agreement can be referred to a single arbitrator for final determination. We will be happy also to consider mediation."

Rosenblatt responded on 26 October 2006. In the light of RWM's willingness to consider mediation, they did not consider it productive to respond in detail to DLA's letter, considering that "the parties' efforts be directed towards a formal mediation of the matter in order to avoid recourse to the Courts". They put forward the names of three proposed mediators and suggested dates when the mediation might be held.

DLA's response (which, it will be seen, was something of a surprise to Rosenblatt) came on 2 November 2006. It contained this:

"Our offer of mediation was, of course, in the context of trying to agree with your clients a price for their shareholding. It was not in the context of your allegations of unfair prejudice and their breach of fiduciary duties."

Rosenblatt wrote back on 13 November 2006 expressing their surprise, asserting that DLA's offer of mediation had clearly been in the context of CIL's allegations of unfair prejudice and breach of fiduciary duty. I am bound to say that it must have been perfectly clear to DLA that any negotiated or mediated disposal of the dispute between the families would have to deal with those allegations. It is hardly likely that the Cobdens would be prepared to sell their shares as if the complaints which they had clearly articulated had not been made. Returning to the letter, Rosenblatt insisted that any mediation must be on the basis that there were no preconditions but equally not on the basis that RWM accepted all the allegations against it. They pointed out that any valuer would in any event have to have regard to CIL's allegations in forming a view as to the value of SCFF's shares. The letter ended by stating that CIL and one of the previously nominated mediators were available to attend a mediation on a number of given dates.

DLA responded on 20 November 2006 making it perfectly plain that mediation was not considered appropriate in respect of CIL's allegations because (i) the allegations were considered spurious, and (ii) they had never been particularised. They said that RWM would "agree to a mediation if, but only if, the PwC valuation totally ignores your clients' allegations". The choice, they said, was clear. Either CIL must mediate on that basis or CIL's claim must be fully particularised in compliance with the pre-action protocol "so that our clients can properly address the allegations in anticipation of the matter becoming the subject of litigation. It is possible that at that point mediation would be appropriate in order to avoid litigation".

By their reply dated 21 November 2006 Rosenblatt noted RWM's "refusal to mediate". They stated that CIL's case had been fully particularised its claim and that they were instructing counsel to draft the petition. No mediation took place.

I attach no significance at all to the early letters in that chain. Whether or not DLA's first letter was an offer to mediate the whole dispute or was restricted to valuation does not matter. The important point is that, by the end of this chain, it was clear that the dispute which needed to be resolved did include the allegations of unfair prejudice and breach of trust and that, if mediation was to take place at all, it would need to deal with those aspects.

Mr Joffe says that Rosenblatt's letter dated 21 November 2006 is not correct in two respects. First, he says that it was wrong to say that RWM was refusing to mediate. On the contrary, he says that RWM was willing to mediate; it would do so either on the basis that the allegations of unfair prejudice and breach of duty were ignored or would be considered after the case had been fully particularised. Secondly, he says that it was not right to say that CIL's case had been fully particularised. As to that, it is no doubt true that the case was not particularised in the way that it would be in a petition and supporting evidence and perhaps not even to the extent that it would be in accordance with the pre-action protocol.

As to those points, it is obvious, if I may say so, that CIL were not going to mediate on the first basis. The question is whether RWM ought, acting reasonably, to have agreed to a mediation without the need for a more detailed exposition of CIL's case. One point of mediation is to avoid the cost of litigation – and that includes preliminary steps in litigation. Within a mediation, as both of the firms of solicitors involved would know, position papers are exchanged. By the time parties arrive at mediation, their complaints and defences to them will be known. Or, if there is a complaint which has not been raised, the other party could feel justifiable aggrieved if the complainant sought to extend the mediation to include new material. In taking the attitude which it did, RWM was in effect setting down a pre-condition for mediation which required CIL to take the first steps in that litigation by implementing a protocol which DLA clearly considered would need implementing and which had not yet been implemented. Even when that had happened, there was only the prospect that mediation might be appropriate. If this was not a refusal to mediate, it was the most grudging acceptance that it might become appropriate. It would, in any case, have been possible to proceed to mediation; and if that had been done, RWM would have been acting perfectly reasonably if it had required to see CIL's full position paper well before the mediation and in time to prepare its own response.

I take account of all that in reaching my decision on costs. I should say, however, that I am very sceptical that mediation would have brought about a settlement. The parties were not close. Mr Weatherill said the gap was "only" £1.5m and very little had been incurred by way of costs. But £1.5m was a large percentage of the figures which the parties were putting forward (£3.2m and £1.7m). The Heffers were never going to accept that they had behaved unfairly in any way. They were never going to accept (rightly) most of Matthew's complaints about the cow trade, but nor were they going to accept any breach of duty on their own part. Perhaps there would have been give and take (perhaps an unfortunate expression for me to use in the context of the arguments and the Main Judgment on the topic "give and take") on some issues but closing all of the gap would have been a formidable task at that stage.

My scepticism reflects a number of matters. One of those is the personalities involved. I have already said enough in the Main Judgment about the witnesses and the way in which the two families interacted to show that enormous hurdles would need to be overcome to get them to speak the same language, let alone reach a concordat.

There were no doubt other opportunities to mediate but neither side ever raised the issue again. However, it was raised when the appeals from the Main Judgment were proceeding in the Court of Appeal. Thus, by letter dated 30 December 2009, the parties were notified by the Civil Appeals Office that Etherton LJ recommended that this matter (by then a very different matter from the one before me) was suitable for mediation. By a without prejudice save as to costs letter dated 11 January 2010, Rosenblatt notified New Media Law LLP (who were by then acting for RWM in place of DLA ) that "our client remains willing to attempt to settle this matter and we confirm that our client is willing to attempt mediation…". Rosenblatt suggested two possible mediators and asked New Media Law to confirm whether RWM was willing to attend a mediation.

By letter dated 3 February 2010, New Media Law declined to mediate. They did so in the context of a refusal by CIL of RWM's latest offer without a counter-offer being made. They wrote:

"For the moment we see no benefit to be gained from embarking on mediation which in our view cannot achieve anything that cannot be achieved by straightforward dialogue. Nevertheless, we would invite you to explain to us why you appear to favour mediation over dialogue so that we may reconsider the position with our clients."

No such explanation was provided and no mediation took place. I do not consider that in declining to mediate at this stage and in these circumstances RWM can be said to have acted unreasonably. My decision on costs will reflect that view.

Failure to negotiate

On the other hand, Mr Joffe submits that CIL unreasonably refused to engage in any meaningful process of negotiation which might have led to a settlement of the dispute at various times both before and after the Petition was presented. Applying the principles set out in Painting v Oxford (see paragraphs 22 and 23 above) he submits that this behaviour must be taken into account and weighed in the balance against CIL. Mr Joffe relies on the offer, which I have already discussed, made by RWM to sell it shares to CIL for £9.2m in December 2007. I have already discussed that offer and other offers by RWM in some detail. To repeat, I do not consider that the offer, and its rejection, was one which had the consequence of eliminating any unfair prejudice in accordance with the approach of Lord Hoffmann in O'Neill. It may be that it was not sensible for CIL to have put forward the valuation which it did and that will be reflected in my costs order.

Mr Joffe also relies on what he describes as CIL's rejection of RWM's attempt to resolve matters at a board meeting of SCFF. It will be remembered that one of CIL's complaints (to be found in paragraph 39(15) of the Re-Amended Petition) was that the RWM Directors would not attend board meetings of SCFF. That, of course, was a historic complaint but it could be put right by a meeting at which everyone did attend.

What in fact happened was that the RWM Directors gave notice of an SCFF board meeting for 13 February 2008. This was called to discuss the same agenda items as were on the agenda for the cancelled board meeting in June 2007 including (i) considering a resolution to serve notice on RWML to terminate the MoU; (ii) considering taking action against RWML in relation to its unauthorised use and occupation of various parts of SCFF's land; (iii) considering a resolution for SCFF to cease procuring lambs for RWM Dorset; (iv) considering a resolution for SCFF to cease financing the procurement of lambs for RWM Dorset; (v) transport; and (vi) any other business.

DLA wrote a letter dated 12 February 2008 to Rosenblatt. Mr Joffe describes the letter this way. DLA made it clear, he says, that the RWM Directors hoped to meet with the Cobden Directors in order to achieve some measure of resolution of the issues between them with regard to the matters contained in the agenda first promulgated by the Cobden Directors. This was an opportunity to resolve at least some of the issues between the parties and obviously, he says, might have led to further negotiations to settle the whole matter. I comment that this seems to view the SCFF board meeting as an appropriate forum for the discussion of matters nothing to do with the business of SCFF, something about which the RWM Directors complain in relation to Matthew whom they have accused from time to time of hijacking such meetings to further the Cobden family agenda.

The attempt to hold a board meeting was however rejected by Rosenblatt' letter dated 15 February 2008. Mr Joffe has included the following (incomplete) extract from that letter in his skeleton argument:

"We fundamentally disagree with your expressed belief that the stage has been reached when the issues between our respective clients can properly be discussed and that it is in the interests of [SCFF] for a board meeting to be convened to consider the agenda items which have been tabled for discussion…In any event, Matthew Cobden is not in a position to attend any board meeting before he has given evidence. He is the Petitioner's appointed representative for the purposes of these proceedings and is necessarily busily engaged in re-familiarising himself with all the documents in the case…Furthermore he is actively talking to a possible new customer and organising finance for the purpose of the purchase of [RWM's] shares…There is simply no time available for Matthew to attend board meetings…Furthermore the Cobden Directors find board meetings extremely unsettling to put it mildly…Accordingly, the Cobden Directors are not able to attend a board meeting next week…"

This letter, according to Mr Joffe, was the clearest possible indication that the Cobden Directors were not interested in settlement even of part of the claim but only in litigation. That is also something which is relevant to the costs order the Court should make.

I think it is appropriate to be rather more circumspect. As Mr Weatherill points out - and a passage to this effect was contained in the same paragraph of the letter as the excerpts quoted Mr Joffe – DLA had said in a letter as long before this as 30 October 2007 that the RWM Directors intended to convene a board meeting as soon as practicable. That appeared also in a draft Amended Defence. On 28 January 2008, Rosenblatt sought delivery of a final form of the Amended Defence supported by a statement of truth. It was only after that request, compliance with which would have reminded RWM of its intention, that the meeting was convened. RWM had left it over 3 months since the October 2007 letter before sending out notice of a meeting, a meeting which was to be held within 2 weeks of the trial date. As Rosenblatt fairly observe "It could not have come at a worse time". I consider that the Cobden Directors were acting perfectly reasonably in refusing to attend that meeting.

The issues raised requiring resolution: Period 1

I have already addressed in general terms the relevant provisions of the CPR and some of the case law. As already noted, the courts are directed to make percentage costs orders (or costs for specified periods) instead of issue based orders when it is practicable to do so. However, that is not the only occasion on which the court can make a percentage based order. The court has power to make such an order under CPR 44.3(6) and should do so if that is the fair, just and proportionate response. As will be seen in a moment, I propose to make a percentage order in the present case in respect of Period 1. But I do so pursuant to my power under CPR 44.3(6) rather than under CPR 44.3(7). I do so because I see such an order as a fair, just and proportionate response to the way in which the litigation has been conducted and in the light of the outcomes. I would find it very difficult to arrive at a reasoned conclusion if I were compelled to adopt an issue based determination and then apply CPR 44.3(7). This is because there are simply too many uncertainties: I need to take a very broad brush approach indeed.

The difficulties with the issue based approach include these:

a. Although it is clear where CIL has succeeded in establishing unfair prejudice, it is far less clear to say where it has been a successful party. I have already mentioned complaints which had a financial impact on valuation or compensation but where the complaint of unfair prejudice was not established.

b. There is overlapping of factual material relevant to more than one issue.

c. It is not easy to compartmentalise all the factual material into (i) common background (ii) material relevant to only one "issue" or (iii) material relevant to more than one "issue" (in which case CIL may have won one issue and lost another).

d. Time and expenses were spent on issues (see for instance paragraphs 83, 84 and 85 below) on which CIL can be seen, in many respects, to have been successful and yet it is not clear the extent to which that has fed through into success on an "issue" in respect of which a separate costs order might be made.

e. Most importantly of all, there is no sensible way of making even a rough and ready assessment of the proportion of the costs which might be attributable to each "issue" so as to arrive at an overall percentage which, taking the rough with the smooth, reflects that assessment. This difficulty arises at two levels. Firstly, it arises in ascertaining what part of the overall costs were attributable to specific issues which could in theory be subject to issue based orders; secondly, it arises in ascertaining what part of the issue based costs were attributable to a particular issue. The difficulty is illustrated by reference to the Schedule referred to in paragraph 91 below and I will enlarge on this point later.