QUEEN'S BENCH DIVISION
Strand, London, WC2A 2LL
B e f o r e :
| Various Claimants
|- and -
|Wm Morrison Supermarkets PLC
Ms Anya Proops QC, Mr Benjamin Williams QC & Mr Rupert Paines (instructed by DWF LLP) for the Defendant
Hearing date: 8th February 2018
Crown Copyright ©
MR JUSTICE LANGSTAFF:
"…we would emphasise that the Civil Procedure Rules requires that an order which allows or disallows costs by reference to certain issues should be made only if other forms of order cannot be made which sufficiently reflect the justice of the case: see Rule 44.3(7), above. In our view there are good reasons for this rule. An order which allows or disallows costs of certain issues creates difficulties at the stage of the assessment of costs because the costs judge will have to master the issue in detail to understand what costs were properly incurred in dealing with it and then analyse the work done by the receiving party's legal advisors to determine whether or not it was attributable to the issue the costs of which had been disallowed. All this adds to the costs of assessment and to the amount of time absorbed in dealing with costs on this basis. The costs incurred on assessment may thus be disproportionate to the benefit gained. In all the circumstances, contrary to what might be thought to be the case, a "percentage" order, under rule 44.3(6)(a), made by the judge who heard the application will often produce a fairer result than an "issues based" order under rule 44.3(6)(f). Moreover such an order is consistent with the overriding objective of the Civil Procedural Rules. 116. In general the question of what costs order is appropriate is one for the discretion of the judge and an appellate court would be slow to interfere in its exercise. But the considerations mentioned in the preceding paragraphs are ones which a judge should bear in mind when considering what form of order ought to be made in order properly to apply rule 44.3(7). These considerations will in most cases lead to the conclusion that an "issues based" order ought not to be made. Wherever practicable, therefore, the judge should endeavour to form a view as to the percentage of costs to which the winning party should be entitled or alternatively whether justice would be sufficiently done by awarding costs from or until a particular date only, as suggested by rule 44.3(6)(c)."
"(i) In commercial litigation where each party has claims and asserts that a balance is owing in its own favour, the party which ends up receiving payment should generally be characterised as the overall winner of the entire action.
(ii) In considering how to exercise its discretion the court should take as its starting point the general rule that the successful party is entitled to an order for costs.
(iii) The judge must then consider what departures are required from that starting point, having regard to all the circumstances of the case.
(iv) Where the circumstances of the case require an issue based costs order, that is what the judge should make. However, the judge should hesitate before doing so, because of the practical difficulties which this causes and because of the steer given by rule 44.3(7).
(v) In many cases the judge can and should reflect the relative success of the parties on different issues by making a proportionate costs order…
(viii) In assessing a proportionate costs order the judge should consider what costs are referable to each issue and what costs are common to several issues. It will often be reasonable for the overall winner to recover not only the costs specific to the issues which he has won but also the common costs."
"In Widlake (a reference to Widlake v BAA Limited  EWCA Civ 1256) the facts were so extreme that the successful party was ordered to bear all of its own costs."
"The most significant change of emphasis of the new Rules is to require courts to be more ready to make separate orders which reflect the outcome of different issues. In doing this the new Rules are affecting a change of practice which has already started. It is now clear that too robust an application of the "follow the event principle" encourages litigants to increase the costs of litigation, since it discourages litigants from being selective as to the points they take. If you recover all your costs so long as you win, you are encouraged to leave no stone unturned in your effort to do so."
"..a growing and unwelcome tendency by first instance courts and, dare I say it, this court as well to depart from the starting point set out in rule 44.3(2)(a) too far and too often. Such an approach may strive for perfect justice in the individual case, but at huge additional cost to the parties and at huge costs to other litigants because of the uncertainty which such an approach generates. This unwelcome trend now manifests itself in (a) numerous first instance hearings in which the only issue is costs and (b) a swarm of appeals to the Court of Appeal about costs…"
12.1. The Claimants won overall; (that is undisputed).
12.2. The Claimants lost on the issues of direct liability (that, too, is not in issue).
"Further or alternatively in all the premises Mr Skelton's actions were committed within the scope of his employment by the Defendant and the Defendant is therefore vicariously liable for them."
Factors to which the court should have regard
14. Parts 44(4) and (5) of the CPR provides so far as relevant as follows:-
"(4) In deciding what order (if any) to make about costs, the court will have regard to all the circumstances, including—
(a) the conduct of all the parties;
(b) whether a party has succeeded on part of its case, even if that party has not been wholly successful; and
(c) any admissible offer to settle made by a party which is drawn to the court's attention, and which is not an offer to which costs consequences under Part 36 apply.
(5) The conduct of the parties includes—
(a) conduct before, as well as during, the proceedings and in particular the extent to which the parties followed the Practice Direction—Pre-Action Conduct or any relevant pre-action protocol;
(b) whether it was reasonable for a party to raise, pursue or contest a particular allegation or issue;
(c) the manner in which a party has pursued or defended its case or a particular allegation or issue; and
(d) whether a claimant who has succeeded in the claim, in whole or in part, exaggerated its claim."
(a) reject Morrisons' argument that there should be a net costs order in the Defendant's favour; this pays insufficient regard to the starting point
(b) reject Morrisons' fall-back argument that each side should bear its own costs; I see the Claimants as winners more than the Defendant,
(c) also reject the Claimants' arguments that they should have the entirety, or alternatively a very high percentage of their costs of the action: they are unrealistic in asserting that a maximum of some 20% of time and evidence was spent on the direct liability cases alone, and have considerably overstated the extent of the issues common to both the direct and the vicarious claims. Instead, and overall, I have come to the conclusion that the proper order is that the Defendant pays the Claimants 40% of their costs of the action, to be assessed if not agreed.