England and Wales High Court (Queen's Bench Division) Decisions

IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION

		Royal Courts of Justice Rolls Building Fetter Lane, London, EC4A 1NL
		30 July 2014

The Hon. Mr Justice Coulson:

INTRODUCTION

1. This short Judgment is concerned only with the costs of the preliminary issues, which were the subject of my Judgment at [2014] EWHC 2257 (QB). The claimants seek their costs of the three day hearing. The defendant maintains that the costs of the preliminary issues should be reserved to the trial judge.

PRINCIPLES

2. The general rule is that the unsuccessful party will be ordered to pay the costs of the successful party: CPR 44.2(2)(a).
3. Where liability is heard before quantum, or there is a trial of preliminary issues, the judge can award costs to the successful party, although there may be circumstances in which it is premature to make an order for costs ahead of the findings on an inquiry on damages or on account for profits (see Shepherds Investments v Walters [2007] 6 Costs LR 837).
4. The successful party after a trial of preliminary issues or a split trial on liability is likely to be awarded his costs "in the absence of special circumstances" (see Weill v Mean Fiddler Holdings Ltd [2003] EWCA Civ 1058, paragraph 31, although in that case a decision to reserve costs was upheld by the Court of Appeal).

SUCCESSFUL PARTY?

5. In my judgment, the claimants were the successful party. They established the existence of possessions under A1P1; they established interference; and they won on the issues of justification and causation/loss. They were described as the successful party by the editors when the judgment was recorded on Lawtel and Westlaw.
6. They were not, however, entirely successful, and the arguments on which they lost – specifically that relating to incomplete contracts – were not insignificant. On the contrary, my ruling that completed contracts give rise to a claim, but incomplete contracts do not, is likely to reduce substantially the overall value of this claim.

SHOULD THE CLAIMANTS BE DEPRIVED OF THEIR COSTS?

7. Should the claimants be deprived of their costs because so many matters remain outstanding, to be resolved at the eventual trial? In my view, they should not. There are four reasons for this.
8. In Ted Baker v Axa Insurance [2012] Costs LR 1023, Eder J said, when allowing a similar application by successful claimants, that "these preliminary issues were extremely discrete and it was always open for the defendants, if they so wished, to concede these particular point." In my judgment, precisely the same applies in the present case. Instead the defendant fought each point. That is sufficient, on its own, to decide the costs issue in the claimants' favour.
9. The arrangement in the present case, whereby some of the Facts were Assumed rather than Agreed, is not unusual for a preliminary issues hearing, and certainly does not amount to special circumstances justifying the departure from the usual rule at CPR 44.2. Moreover, Assumed Facts 49 and 50, the important matters assumed in the claimants' favour, seem to me (on the basis of the documents I have seen so far) to be probably correct.
10. I consider that my findings on the preliminary issues make it all but inevitable that the claimants will recover something of value from these proceedings, either through settlement or the longer process of a fully litigated claim. That doubtless explains why the defendant denied the entirety of the claimants' claims. In those circumstances, the claimants' victory on the preliminary issues deserves to be marked in costs.
11. It is inappropriate for these costs to be reserved because that would mean, first, that the issue as to the incidence of the costs of the preliminary issues would be decided far into the future and, second, because it would allow the defendant to postpone the fixing of its potential costs liability, to the detriment of the claimants. Justice delayed is justice denied.
12. For all these reasons, therefore, I consider that the claimants are entitled to the costs of the preliminary issues.

ARE THE CLAIMANTS ENTITLED TO THE ENTIRETY OF THEIR COSTS?

13. In my view, the claimants are not entitled to the entirety of their costs. Although they won on each of the four issues, they put their case on possessions in an extremely broad way, such that it encompassed both completed contracts and incomplete, potential contracts in the future. I found against the claimants in respect of that latter element of their claim.
14. The size and scope of that issue should not be underestimated. It was an important aspect of the claimants' claim, both financially and as a matter of principle. The argument was put in all three ways (namely marketable goodwill, legitimate expectation and an asset), and took up a not insignificant part of the hearing and a not insignificant part of the preparation of the Judgment. In those circumstances, although the claimants were the successful party, their loss on this issue should also be reflected in any order for costs.
15. The authorities make plain that courts should avoid, wherever possible, costs orders based on success or failure on particular issues. Those same authorities stress that the best way of dealing with such matters is by way of a percentage deduction. Having considered the matter broadly, I consider that the claimants' loss on the issue of incomplete contracts should be reflected in a 20% deduction from their costs. In other words, I rule that the claimants are entitled to 80% of the costs of, and incurred in connection with, the preliminary issues. The order should be drawn up accordingly.