Case No: 1999 Folio 661
(formerly 1999 A No 77)
IN THE HIGH COURT OF JUSTICE
QUEEN’S BENCH DIVISION
COMMERCIAL COURT
Royal Courts of Justice
Strand, London, WC2A 2LL
Date: 12th December 2000
(1) AMOCO (U.K.) EXPLORATION COMPANY (2) BP AMOCO CORPORATION (3) BP AMOCO PLC (4) AMERADA HESS LIMITED (5) AMERADA HESS CORPORATION (6) ENTERPRISE OIL PLC |
Claimants |
|
- v - | ||
BRITISH AMERICAN OFFSHORE LIMITED |
Defendants |
The Hon. Mr Justice Langley
COPIES OF THIS JUDGMENT ARE AVAILABLE IN WORD 6 for WINDOWS 3.1 ON PROVISION OF A CLEAN DISC. APPLY TO THE CLERK TO THE HONOURABLE MR JUSTICE LANGLEY Telephone 0207-947-6395
Mr Justice Langley:
This is a battle over costs. It arises on the Claimants' application under CPR Part 38 rule 2(2)(a)(ii), issued on 30 March 2000, to discontinue proceedings which it commenced by an Originating Summons dated 26 January 1999. I shall refer to the first Claimant as "Amoco" and to the other Claimants as "the co-venturers". The two Defendant companies, to which I shall refer as "BAO" and "Rowan", are members of the same group of companies. BAO is a subsidiary of Rowan. Rowan is incorporated in Texas. BAO is incorporated in England. BAO was party to an agreement ("the Hire Contract") dated 26 September 1997 with Amoco for BAO to supply and operate a drilling unit in the North Sea for Amoco and the co-venturers. The Hire Contract contained an English law and exclusive English jurisdiction clause. The Originating Summons sought to enforce this clause against BAO and Rowan.
Discontinuance itself is not opposed. But the Claimants seek an Order that BAO pay the costs of the Originating Summons (except for the costs of Rowan's Order 12 rule 8 application) because in effect the Claimants succeeded in obtaining all the relief they sought against BAO on the Summons. BAO resists that and submits that the appropriate order is that Amoco should have its costs up to and including 1 February 1999 insofar as such costs relate to BAO's contract claims in Texas but otherwise no order for costs should be made on the Originating Summons.
On 19 January 1999 Amoco purported to terminate the Hire Contract contending among other things that the drilling unit was supplied late and was unfit for its purpose. That led to a rush to the courts which I described in my judgment handed down on and dated 1 July 1999 on Rowan's Order 12 Rule 8 application. In summary, Amoco issued proceedings (A. No 47) in these courts on 19 January against BAO claiming a declaration that it was entitled to terminate and damages for breach of the Hire Contract. Later the same day BAO and Rowan began proceedings in the courts in Texas, both companies claiming damages for breach of the Hire Contract and for various causes of action in tort.
Amoco sought relief in these courts by way of an anti-suit injunction to prevent BAO and Rowan pursuing the proceedings in Texas. BAO and Rowan sought an order in the Texan courts to restrain Amoco from pursuing its proceedings in these courts.
By an Order dated 22 January 1999 Burton J granted Amoco and the co-venturers ex parte relief by way of an anti-suit injunction. The Order also gave leave for the issue of the Originating Summons, which it is now sought to discontinue, and for the Summons to be served on Rowan out of the jurisdiction. On the same day, the courts in Texas granted BAO and Rowan anti-suit relief in respect of the proceedings in these courts.
The relief sought in the Originating Summons, which was dated 26 January 1999, was an Order against both BAO and Rowan restraining them from:
(a) serving, pursuing or taking any steps in the proceedings commenced as Civil Action No. 99-02626 in the United States District Court of the 269th Judicial District, Harris County, Texas ("the Texan Proceedings") including applying for or serving any restraining orders therein; and
(b) taking any other steps which seek to restrain the proceedings commenced in the Queen's Bench Division of the High Court of Justice between [Amoco] and [BAO] under Case Number 1999 A. No. 47 ("the Original Proceedings") other than in the Original Proceedings themselves; and
(c) commencing, serving or taking any steps in any other legal proceedings in the United States of America or elsewhere (other than the High Court of Justice, London, England) in any way relating to the same subject matter as the Original Proceedings;
and that
each of them do discontinue the Texan Proceedings.
The grounds on which this relief was sought were that:
(1) the Texan Proceedings are vexatious and oppressive;
(2) the Texan Proceedings have been brought in breach of a jurisdiction clause providing for the exclusive jurisdiction of the English Courts in a contract dated 26th September 1997 between [Amoco] and [BAO] ("the Agreement");
(3) England is the natural and/or appropriate forum for proceedings in relation to the Agreement both between the parties to that contract (between whom there are already English proceedings under Action 1999 A. No. 47) and those whom they may each allege to have procured or facilitated breaches thereof.
The relief was therefore targeted at all claims by both BAO and Rowan in Texas whether brought in contract or tort.
The matter came back before Burton J on 29 January 1999 and the hearing led eventually to a consent order dated 3 February. Whilst Rowan made it clear that it intended to challenge the jurisdiction of the court both Rowan and BAO acknowledged their "mistake" in seeking to pursue the contract claims in Texas. The mistake by Rowan was to assert that it was a party to and so had claims under the contract. The mistake by BAO was that it had violated the exclusive jurisdiction clause in the Hire Contract.
As a result BAO undertook to seek the discharge of the Texas anti-suit court order and undertook not to pursue and to procure that Rowan did not pursue any claims under the Hire Contract in the Texan courts or any other courts than these courts. On that basis, the anti-suit injunctions in both jurisdictions were to be discharged. On 1 February, prior to the drawing of the consent order, both BAO and Rowan amended their claims in Texas to remove some of the claims for breach of the Hire Contract and Amoco was removed as a Defendant to the Texas proceedings. The claim still asserted "the wrongful termination" of the Hire Contract. It also claimed specific performance of the Hire Contract until a further amendment deleted this claim on 19 February. Both BAO and Rowan also maintained their claims in tort. The co-venturers were Defendants to those claims. It is to 1 February that BAO accepts Amoco is entitled to its costs of the Originating Summons insofar as those costs relate to BAO's claims under the Hire Contract. Thereafter there has been no issue that these courts are the proper and only forum for the resolution of all the contractual claims. They are to be heard at a trial commencing on 22 January 2001 estimated to last 20 weeks.
On 5 March 1999 Rowan made its application under RSC Order 12 rule 8 for an Order setting aside service upon it of the Originating Summons. The basis of the application was that no ground for service existed under RSC Order 11 rule 1(1) and/or that as a matter of discretion the relief should be granted.
There followed a debate between the solicitors for the parties about how to progress both the Originating Summons and the Order 12 rule 8 application. Amoco proposed a standstill on evidence relating to the Originating Summons pending the Order 12 rule 8 application. BAO and Rowan did not agree. The consequence was a consent order dated 16 March 1999. Rowan was to serve its evidence in support of its application and Amoco its evidence in support of the Summons by the same date, 19 March, and further directions were given for reply evidence. With agreed extensions of time, the timetable was followed. In particular evidence in support of both matters was served by each party on 31 March. Rowan was understandably anxious to avoid submitting to the jurisdiction and provision for evidence on the Originating Summons was limited to BAO.
The basis on which BAO and Rowan's solicitors insisted on evidence being served by Amoco in support of the Originating Summons was that the Rules required it and they were entitled to know Amoco's substantive case so it could be addressed on Rowan's application under Order 12 rule 8. Amoco's solicitors position was that the Originating Summons itself together with the evidence served in support of the application for an interim injunction made clear the grounds on which the relief was sought and that as logic dictated that the Order 12 rule 8 application be heard first they were concerned that unnecessary work might be caused in serving evidence before the parties before the court had been ascertained.
In the event, in compliance with the consent order, both parties served voluminous evidence simultaneously, including evidence on Texan law. BAO and Rowan had no apparent difficulty in doing so arising from any real uncertainty as to the nature of Amoco's case on the Originating Summons.
It follows that neither Rowan nor BAO can sensibly suggest that the further pursuit of the Originating Summons (and the costs related to it) after 1 February was unnecessary or unreasonable, albeit as regards Rowan it would not proceed if the Order 12 rule 8 application succeeded. Indeed, in my judgment, if there was anything unreasonable in the exchange of correspondence, it was the rejection of what I consider to have been a sensible suggestion by Amoco's solicitors.
BAO and Rowan were due to serve evidence in response to Amoco's evidence in support of the Originating Summons by 17 May 1999. On that date their solicitors notified Amoco's solicitors that BAO had decided to withdraw completely from the proceedings in Texas. The effect was, of course, that BAO was no longer to pursue even the claims in tort in Texas. That was confirmed by a further amendment to the Texan proceedings made on 18 May. Despite this, evidence was served on 17 May both in further support of the Order 12 rule 8 application and on behalf of BAO in the Originating Summons.
The context in which this occurred was that on 30 April further directions had been given for the hearing of both the Order 12 rule 8 application and the Originating Summons. The directions provided for the Order 12 rule 8 application to be heard first in May and, subject to that, for the Summons claiming a final anti-suit injunction to be heard in June.
The Order 12 rule 8 application was heard by me on 25 and 26 May. Following the supply of a draft to the parties in the usual way, the final judgment was handed down on 1 July 1999. Rowan was successful. By an Order dated 1 July I set aside service of the Originating Summons upon and the proceedings against Rowan. I also ordered Amoco to pay Rowan's costs of the application.
So far as material to this judgment I should record that:
(1) The fact that, shortly before the hearing, BAO had withdrawn completely from the Texan proceedings was a plank in Rowan's submissions both that it could not be a necessary and proper party to proceedings against BAO within Order 11 rule 1(1)(c) (because there was nothing left in the claim against BAO) and that it would not be right retrospectively to remedy any defects in the procedure followed by Amoco (not serving BAO before seeking leave to serve Rowan). The matter is referred to at pages 17 to 18 of my judgment. It follows from this, and from the context in which it occurred and the lack of any other explanation for it, that BAO's decision to withdraw from the Texan proceedings was itself material to the Order 12 rule 8 application. The withdrawal also reflected a real "victory" for Amoco as regards the relief claimed in the Originating Summons which of course extended to BAO's continuing claims in tort in Texas.
(2) The order made that Amoco pay the costs of the application extends to all Rowan's costs attributable to the Order 12 rule 8 application . BAO had itself no role to play in that application. There is, perhaps inevitably, a major dispute between the parties about what costs do properly fall within the order. Rowan has claimed costs in excess of £450,000. The dispute is already under consideration by a Costs Judge and the evidence shows that the Judge is very much alive to and is addressing the need for and difficulty of apportionment which arises. Each party considers the other is trying to steal a march; in Amoco's case by seeking the present order intending to emasculate the effect of my 1 July order or in Rowan's case by seeking to resist the present order so as to inflate its recovery under my order.
(3) Whilst it is agreed that the Texan courts will respect and recognise the decision of these courts on the issues arising under the Hire Contract it is not agreed that if Amoco succeeds on those issues in effect it must also inevitably succeed on all the tortious claims presently before the Texan courts. That said, I think it must be commonsense, is apparent from the Texas proceedings, and was recognised in the course of Rowan's submissions to me on the Order 12 rule 8 application, that such an outcome would leave Rowan with real and obvious difficulties in sustaining those claims. That too, in my judgment, represents a substantial "victory" for Amoco, albeit not the total victory sought against Rowan of preventing it claiming any relief in Texas.
There is no dispute that since the Order on 1 July 1999 no substantial costs have been incurred on the Originating Summons other than those arising from the present application.
Amoco submits that it has obtained against BAO the relief it sought in the Originating Summons and thus should have the costs of obtaining that result. The contract claims were removed from the Texas proceedings on 1 February 1999. But the tort claims by BAO were only removed from those proceedings on 17 May 1999. Their removal was an important part of the relief sought. Amoco submits that this was a belated recognition by Rowan and BAO that all BAO's claims fell within the exclusive jurisdiction clause or were dependant upon the outcome of the contract claims, and the concession was made for that reason and in order to assist Rowan's case on the Order 12 rule 8 application. But this occurred only after considerable costs had been incurred on the Originating Summons at the insistence of BAO and Rowan. True it is that Amoco sought the same relief in the Originating Summons against Rowan and "succeeded" only as regards the contract claims by Rowan (with effect on 1 February) but that success will also substantially affect the tort claims. An order is sought only that BAO pays Amoco's costs, and the order that Rowan be paid its own costs of the Order 12 rule 8 application is not challenged, but gives rise to questions of apportionment which, whilst they may be difficult to resolve, are just the sort of matter Costs Judges are well able to deal with and accustomed to doing so. Difficulty of assessment or apportionment should not dictate an unjust or inappropriate costs order. The detailed assessment of the costs of the Order 12 rule 8 application is due to be heard over 8 days commencing on 12th July 2001 and Amoco submits it is sensible that the hearing should also address the costs of the Originating Summons insofar as they may also be ordered to be assessed.
BAO submits that once it was accepted that the contract claims were not to be pursued in Texas the Originating Summons failed because Amoco's real objective was to bring an end to the proceedings in Texas altogether and it did not do so. The evidence formally served in the Originating Summons was in fact deployed (as it was) on the Order 12 rule 8 application; any costs attributable to the Originating Summons alone would be insignificant and it would in any event be wrong that any such costs incurred as regards Rowan should be paid by BAO or indeed Rowan. It was also submitted that because it was a difficult task to apportion the costs between the Originating Summons and the Order 12 rule 8 application and an impossible or at least difficult task to apportion the costs of the Originating Summons between BAO and Rowan, the court should take a pragmatic approach and make the order for which BAO contended.
The matter is one for my discretion. Although CPR Part 38 rule 6 provides that unless the court otherwise orders a claimant who discontinues is liable for the costs, that is I think (as the Notes to the White Book state) because a claimant who discontinues is, as a general rule, conceding that he has lost or cannot win. But it follows that if the claimant can show he has won or would have won or some other good reason for a different order then he may do so.
In my judgment Amoco's submissions are much to be preferred. I think BAO's submissions attempt to avoid or circumscribe an apportionment of the overall costs which properly reflects the differing outcomes of the various court proceedings. Rowan "won" the Order 12 rule 8 application. The costs attributable to that it is entitled to be paid. In substance BAO "lost" the Originating Summons proceedings. It withdrew from the Texas proceedings. That was exactly the substantive relief Amoco had sought against it. But it withdrew only on 17 May and after insisting on the service of evidence and itself serving evidence in the Summons. By withdrawing BAO in effect conceded the substance of Amoco's claim to the relief it sought on the Originating Summons. Indeed Rowan acknowledged as much at the hearing in May 1999 (see paragraph 52 of Mr Greeno's 1st witness statement). Moreover in my judgment Rowan also in effect lost a major battle by conceding the priority of the claims in contract to be tried in these courts and because of the impact an adverse decision will also have on the tort claims in Texas. It did not lose the war because it was successful on the Order 12 rule 8 application but if it recovers, as it will, the costs of that application that in my judgment meets the justice of its case.
I acknowledge that difficulties of apportionment arise both where costs may properly be attributable to the Order 12 rule 8 application and the Originating Summons and where it may be arguable that costs incurred in the Originating Summons were incurred in the claims against Rowan and not BAO. But that is not in my judgment a good reason for refusing to make the order which I consider fairly reflects the overall merits. I accept Mr Rosen's submission that where a claimant succeeds against one but not another defendant a court may generally, or at least will not infrequently, order the losing defendant to bear all the claimant's costs except such costs as are referable only to the claim against the successful defendant. Such an order does involve the losing defendant paying costs which are incurred in matters material to both defendants but is (or may be) just as all those costs were nonetheless incurred to achieve the success against him. In this case Amoco seeks no order for costs against Rowan and Rowan seeks no order for costs against Amoco in the Originating Summons, and, despite the difficulties of apportionment, I also accept that such questions not infrequently arise for Costs Judges who are experienced in addressing them.
I shall therefore grant Amoco the order it seeks. In doing so and whilst expecting the parties to agree or address me upon the precise form of an Order I should make clear that
(1) My costs order made on 1 July stands: the costs of the Order 12 rule 8 application (and the two related applications) are to be paid by the Claimants to Rowan as ordered.
(2) The costs of the Originating Summons are to be paid by BAO to Amoco save for any costs which relate only to the claims made against Rowan in the Originating Summons in respect of which no order is made. Costs which relate to the claims against both BAO and Rowan are to be paid by BAO.
(3) Insofar as any costs are attributable to both the Order 12 rule 8 application and the Originating Summons they fall to be apportioned in accordance with (1) and (2).
I do not think it right to order that the resulting detailed assessment should be dealt with at the same time as the assessment of Rowan's costs of the Order 12 rule 8 application but simply to record that the commonsense of doing so strikes me as obvious and compelling on the information before me. On that basis the matter should I think be left to the parties and of course the Costs Judge to determine how it is appropriate to proceed.