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

IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION

		Royal Courts of Justice Strand, London, WC2A 2LL
		26/01/2018

MR. JUSTICE LEGGATT:

1. In each of these four cases the claimants have obtained a judgment for substantial damages. In each case, the damages awarded were considerably less than the amount claimed, but the defendant had made no offer of settlement under Part 36 of the Civil Procedure Rules. I reject the argument made on the defendant's behalf that there was any unusual difficulty about making such an offer in these cases, although, at the same time, I accept the point that any Part 36 offer would not necessarily have been conclusive, given the special order that was made about the effect of any such offer in the context of this litigation.
2. The claimant in each case is undoubtedly the successful party. It is accepted that the starting point is, accordingly, that unless there is good reason to disapply the general rule, the defendant should be ordered to pay the claimant's costs of the proceedings. The position is complicated in these cases by the fact that the court has made a costs sharing order which distinguishes between the three different categories of costs: common costs, costs of specific issues and costs of individual claims.
3. The specific issue costs were intended to denote the costs incurred on preliminary issues which were ultimately decided by the Supreme Court. Insofar as the definition of one of those specific issues can also be said to encompass costs incurred at the trials of these cases and at a further hearing last October which addressed aspects of the doctrine of Crown act of state, I do not think it would be appropriate to treat those costs any differently from the other costs incurred at these trials.
4. As for common costs, the only dispute between the parties is the extent to which costs of case management hearings which preceded the trials should be treated as common costs, and to what extent they should be treated as costs of the individual claims. On that point, I consider that the claimants' approach is to be preferred. Insofar as costs of hearings after October 2015 related to steps preparatory to the trials of these four claims, they should be categorised as individual costs. Otherwise, they represent common costs. Drawing that distinction will necessarily require assessment. But I do not think that the process of assessment should be an unduly difficult one.
5. The costs that I am now dealing with are the individual costs of the claimants in the four cases which are the subject of the judgment. Those costs, as I have indicated, include all the costs of the two trials.
6. The defendant acknowledges that the claimants have been successful overall, but has argued that the claimants were nevertheless unsuccessful on a number of issues and submit that, in each case, this should be reflected in the order for costs. Save in relation to one issue which I will identify shortly, it is common ground between the parties that, if and to the extent that the court finds merit in the defendant's argument, the more convenient approach, rather than making an issue-based order, is to reduce the costs awarded to the claimant by a suitable percentage.
7. I bear well in mind the point made by Mr Hermer QC on behalf of the claimants, which is amply supported by authority, that there is no automatic rule requiring reduction of a successful party's costs if he loses on one or more issues. Indeed, it is entirely usual in litigation for the winning party to fail on one or more issues without that resulting in any reduction in costs. I also do not think it helpful to attempt to draw up a balance sheet, as it were, of issues on which each side has won or lost as the defendant has done in its skeleton argument. That, in my view, is too mechanistic an approach which takes insufficient account of the point that the failure of a successful party on particular issues does not necessarily justify any reduction in costs. What, in my judgment, the court should be looking at is whether there are any big issues which have occupied a substantial amount of time and cost and were important in the proceedings on which the overall winner has lost.
8. I accept the point made by Mr Sweeting QC on behalf of the defendant that in the context of the present cases I should have in mind not merely the significance of issues for these four claims considered in themselves, but also the broader significance of issues for the disposition of the several hundred further claims which remain in these proceedings.
9. There are two matters which, in my view, justify departure in these cases from the starting point that the claimants should recover the whole of their costs to be assessed on the standard basis. The first is that the claimants have each brought claims in tort and also under the Human Rights Act and, although the claims under the Human Rights Act succeeded, the claims in tort did not. Those claims ultimately failed in their entirety because they were found to be time-barred.
10. There was a substantial overlap between the facts relied on for the purpose of the tort claims and for the purpose of the human rights claims in that both were concerned with whether the claimants had been mistreated and whether they were unlawfully detained. However, that overlap was by no means complete. In particular, the expert evidence on Iraqi law was only relevant to the tort claims. There was also a good deal of legal argument, including on the doctrine of Crown act of state, which was only relevant to the tort claims.
11. I accept that the claimants succeeded on a number of sub-issues in the tort claims, but I am rejecting what I have described as a balance sheet approach and am looking at success and failure at a higher level than that. In addition, although the court is not for the most part concerned with the quantum of the claimants' recovery, I do not think it irrelevant to take some account of the fact that the failure of the tort claims had a substantial effect on the level of damages awarded in these four cases and is likely to have a similar effect on the amount recoverable in many other cases too.
12. In the cases of Alseran and Al-Waheed, the fact that the tort claims failed is, in my view, the only factor which makes it appropriate to depart from the general rule in relation to the liability for costs. In my view, an appropriate discount to reflect the failure of the tort claims is 15 per cent and, accordingly, in the cases of Alseran and Al-Waheed, the defendant will be ordered to pay 85 per cent of the claimants' costs.
13. In the cases of MRE and KSU, the same factor applies, but there is also a further factor which it is common ground justifies some reduction in the costs awarded to the claimants – albeit that the extent to which those costs should be reduced is in dispute. That is the fact that a major area of dispute – indeed, I think it does not go too far to say the main area, at least of factual dispute – at the trials was the identity of the forces who captured and detained the claimants. That issue was of major importance – not least because the claimants gave evidence which was not ultimately disputed that they had suffered abuse, whilst detained overnight on a ship which belonged to the same nation as the capturing forces, which was of a different order of seriousness than the mistreatment which was the subject of their claims that succeeded.
14. The claimants lost on that issue because I held that they had failed to prove that the forces who captured them and detained them overnight on the large warship where they were mistreated were British forces as opposed to forces of the United States. That issue occupied a very large proportion of the amount of time at trial and most of the factual evidence at the trial was directed to that issue.
15. The claimants have criticised the disclosure given by the defendant on that issue and emphasise the fact that a very substantial body of evidence served by the defendant on that issue was not served timeously but emerged on a piecemeal basis, both at the start of the trial, during the trial and indeed after the trial had ended. I think there is force in that criticism, and the fact that disclosure of documents and production of evidence occurred in that way must undoubtedly have increased the costs incurred by the claimants in dealing with that issue – which is a matter which I should take into account.
16. I do not think any inference can be drawn, however, that if disclosure had been given and evidence served sooner, the claimants would not have contested that issue or that their approach to it would have differed. Nor do I go so far as to say that the defendant's conduct was unreasonable and should be marked on that account in the order made as to costs. I also consider that there is force in the points made by Mr Sweeting QC, first of all that the defendant's task was to some extent inevitably responsive because it was seeking to demonstrate a negative, namely, that it was not UK forces who had captured the claimants. That meant that whenever, for example, another ship was identified as a possible candidate for the ship on which the claimants were detained, documents and evidence relating to that ship and its layout became relevant.
17. I also think it right to say, as Mr Sweeting pointed out, that the evidence which probably ultimately turned out to be of greatest significance on that issue was evidence about the presence of US forces operating in the relevant area and evidence about the uniforms and equipment, etc, of forces of the United States. None of that evidence was within the possession or control of the defendant. Therefore, the criticisms made by the claimants of the defendant's delay in providing disclosure and production of evidence do not apply to that critical part of the evidence bearing on the issue.
18. I have considered carefully the defendant's primary proposal which is that the court should, on this particular issue, make an issue-based order providing that there be no order relating to the costs of the issue of the identity of the forces who captured and initially detained the claimants. I have concluded, however, that the difficulty and complication that would be involved in applying such an issue-based order and separating, for example, such part of the costs of the claimants' evidence as related to that issue from that part which related to other issues in the case outweighs the advantage of the apparently greater level of precision that such an order would produce. Any division of the costs between that issue and other issues would, in any event, involve judgments of a somewhat arbitrary nature.
19. I consider that the better course is the simpler one of reflecting, albeit at a very broad level based on my impression as the trial judge of the amount of resources likely to have been devoted to that issue, the proportion of costs which should be attributed to it. The conclusion I reach is that, reducing the costs recoverable by the claimants to take account of the failure on that issue and of their failure on the tort claims, the appropriate order to make is that MRE and KSU should be awarded 50 per cent of their individual costs.
20. The claimants ask the court to make an order for an interim payment on account of the costs awarded to them. In support of that application, they have produced two schedules containing estimates of the costs of, respectively, the claims of Alseran and Al-Waheed and the claims of MRE and KSU. Those schedules are extremely skeletal, consisting in each case of one single piece of paper, and give no real insight into the costs which underlie the headline figures. For example, they do not even identify the amount of counsel's brief fees which one would normally expect to see on schedules of this kind.
21. Nevertheless, these schedules do give a very broad indication of the level of costs incurred and I can apply my own impression as the trial judge of the amount of work and time that must have been expended in preparing and conducting these cases. The estimates provided do, I consider, give me a sufficient basis on which to award interim payments – albeit, that the lack of information justifies a greater discount than might otherwise have been appropriate because of the level of uncertainty that it generates about the sums ultimately likely to be awarded on assessment.
22. Set against that is the point which Mr Hermer QC fairly makes which is that the claimants in these cases have been represented on a conditional fee basis and that there is good reason to expect that, even if not 100 per cent, a very substantial uplift on costs will be found on assessment to have been appropriate. The interim payments sought by the claimants are founded on the base figures, without taking into account that uplift, and that gives a very considerable margin when assessing the amount of an appropriate interim payment.
23. I have been invited by Mr Hermer to make some general observations about the litigation which may assist the costs judge in assessing whether costs incurred were reasonable and proportionate and I think it right that I should do so. There are five points that I would make that I consider ought to be taken into account in any detailed assessment of costs. The first is that, as Mr Hermer rightly emphasised, these four cases were tried as lead cases and the object of these trials was, so far as possible, not simply to decide the individual claims, but to produce guidance which will assist in settling or disposing of the some 600 further claims which follow these lead cases in the litigation. It is right, in my view, to take into account in assessing the proportionality of costs the fact that these are lead cases and that the decisions in these cases have significance for the whole cohort of claims or a substantial number of them.
24. Secondly, it is undoubtedly right to say that these cases were cases of very great legal and factual complexity. Although some of the difficult legal issues were tried as preliminary issues and have since made their way to the Supreme Court, there were a considerable number of further difficult legal issues which needed to be decided at these trials. The cases are also of considerable factual complexity, increased by the fact that a long time has now elapsed since the relevant events took place, and by the fact that these events occurred in wartime.
25. The third factor relevant in considering proportionality is the undoubted difficulty of obtaining evidence from individuals living in Iraq. The claimants and their witnesses live in places which are dangerous and unsafe to visit, thus requiring arrangements to be made for them to be interviewed in third countries. Furthermore, they do not speak English and come from a very different cultural background. The claimants were also, in each case, individuals who were agreed by the expert psychiatrists to be suffering from continuing post-traumatic stress disorder. The task of interviewing them about very sensitive events was clearly a difficult one and I would like to pay tribute, in that context, to the thoroughness of the witness statements served on behalf of the claimants, which must reasonably and necessarily have taken a very substantial amount of preparation.
26. The fourth point that I would make is that I do not consider that reference to the costs incurred by the defendant is of any real relevance in considering the reasonableness and proportionality of the claimants' costs. Not only has the defendant been conducting the litigation on a very different basis as a government department, but the nature of its task was fundamentally different from that of the claimants and did not, for example, involve the process of taking instructions and evidence from Iraq.
27. The fifth and last point that I make is one which weighs somewhat in the opposite direction to the four other points that I have made in relation to the assessment of costs. This is that it is necessary in these cases, as it always is, to distinguish when assessing costs between those costs which it is fair to visit on the other party and those costs which have, so to speak, been incurred for the benefit of a party itself, in deciding how best to advance its own interests. It would be wrong to lose sight of the fact that the claimants' representatives themselves had an interest in the outcome of this litigation because of the way in which it has been funded. They have undoubtedly adopted in their conduct of the claims what I think could fairly be described as a Rolls Royce approach. The court has been a beneficiary of that and I do not mean to be at all ungrateful when I say that I consider that there is an element of the costs incurred by the claimants which, in my view, is over and above the level of expenditure which should properly be recovered from the other party. For example, it is apparent from the number of counsel who were instructed, in particular at the first trial, that the level of legal resources devoted to these cases goes far beyond what might be described as the basic level necessary to ensure that the case is competently presented. I drew the distinction which I have just identified in a judgment that I gave in the case of Kazakhstan Kagazy Plc v Zhunus [2015] EWHC 404 (Comm) at paragraph 13. It will be for the costs judge to apply that distinction in the context of these cases.
28. Coming back to the appropriate level of an interim payment in these cases, the approach I think it right to adopt, which is admittedly crude and a necessarily conservative one, is to take a figure of approximately half the estimated costs shown in the schedule for each of the two trials and then to discount it by the percentage of costs awarded. That produces an interim payment in relation to the first trial of the schedule 1 claims of £1.75 million and in relation to the costs of the schedule 2 claims of £750,000. Adding those two sums together, I will make an order for an interim payment in the sum of £2.5 million.
29. Certain other minor points were raised in the defendant's draft order. I have already indicated that the application for costs to be assessed in the cases of Al Idani, Khalaf and Al-Bashir should be dealt with on another day. The point about interest on costs is not agreed. I will deal with it in connection with drawing up the order.
(After further submissions)
30. On 14 December 2017 I handed down a long judgment giving the reasons for my decisions in the four cases which have been tried as lead cases in this litigation. On the same day an order was made in terms agreed between the parties recording the decisions. In each case judgment was entered for the claimant for a sum of damages. The claimants have not applied for permission to appeal from any of the decisions, nor has the defendant. However, the defendant has applied for permission to appeal from certain conclusions reached in the judgment about the application of the doctrine known as Crown act of state.
31. I mean no discourtesy to the defendant's representatives in expressing my view that this application suffers from a fundamental flaw. Under section 16 of the Senior Courts Act 1981, the Court of Appeal has jurisdiction to hear and determine appeals from any judgment or order of the High Court. However, the defendant is not seeking to appeal from the court's judgment or order in these cases. The term "judgment" in section 16 refers to a final order made by the court after a trial and not to a judgment in the wider sense of a document which gives the reasons for the court's order.
32. The defendant recognises that, if the conclusions on the question of Crown act of state which it wishes to challenge were found to be wrong, that would have no effect on the judgment or order of the court in any of the four cases. That is because Crown act of state was relied on by the defendant as a defence to the claims made by the claimants in tort, and those claims were all entirely defeated in any event, as they were held to be time barred. The claims on which each claimant succeeded and obtained a judgment for damages were claims under the Human Rights Act, to which it is common ground that the doctrine of Crown act of state does not apply. As the appeal which the defendant seeks permission to bring is therefore not an appeal from any judgment or order of the court, the Court of Appeal would have no jurisdiction to hear it.
33. The defendant's response to that fatal objection is to ask the court to vary the order of 14 December 2017 so as to include in the order a declaration as to the parties' rights in respect of the defence of Crown act of state from which the defendant could then seek to appeal. It was submitted that the court has power to make such a declaration pursuant to CPR rule 40.20 which is headed "Declaratory judgments" and provides that "The court may make binding declarations whether or not any other remedy is claimed."
34. I am not persuaded that the court does have power to give a declaratory judgment after the order containing the judgment has been sealed. It is impossible to say that the non-inclusion in the order of a declaration on the question of Crown act of state was an accidental slip or omission which can therefore be corrected under CPR 40.12, the slip rule. Nor does the case fall within the range of circumstances in which it is appropriate to exercise the power of the court under CPR 3.17 to vary a final order. As summarised by Rix LJ in the case of Tibbles v SIG Plc [2012] EWCA Civ 518 at paragraph 39, the primary circumstances in which the power under CPR 3.17 may in principle appropriately be exercised are: (a) where there has been a material change of circumstances since the order was made, or (b) where the facts on which the original decision was made were innocently or otherwise mis-stated. Neither of those circumstances applies here. Nor is there any other extraordinary circumstance which could justify invoking the power such as a manifest mistake in the formulation of the order.
35. Even if, contrary to my view, the court could in principle now vary the order of 14 December 2017, I do not think it would be right to do so. In my view, there is no good reason to make the declaration now sought by the defendant, and if the defendant had asked for such a declaration to be included in the order when it was being drawn up, I would have refused that request. That is first of all because the defendant has never made any claim in these proceedings for declaratory relief. There is no counterclaim in any of these cases seeking any declaration and not once was it ever suggested in argument in the course of the proceedings that any declaration was being sought. The first time when that suggestion was put forward was after the judgment had been given.
36. In the second place, these are not cases in which a declaration is, in my opinion, an appropriate remedy. The claims have not been brought to establish rights of the parties for the purpose of regulating dealings between them or establishing some point of principle for the future. These are personal injury claims brought by the claimants to recover monetary compensation for injuries allegedly caused to them by unlawful acts of the defendant. In particular, the Crown act of state defence, as I have indicated, related exclusively to the claims for damages in tort. True it is that the claimants raised a considerable number of interesting and difficult points of law, but that is not a sufficient reason to make views expressed by the court on any of those points the subject of a declaratory judgment – all the more so when the view taken on the point in question made no difference to the outcome of the case. The only reason which the defendant has for asking the court to make a declaration is to enable it to bring an appeal. But that is to put the cart before the horse.
37. Looking at the matter more broadly, permitting the defendant to appeal on the question of Crown act of state, even if the court had power to do so, would, in my view, waste the time of the Court of Appeal and be unjust to the claimants. There is no reason why they should have to bear the costs of arguing a point on appeal which would not alter the outcome of the cases, however the point was decided. Nor can I see how, if there is no appeal, the defendant will be prejudiced.
38. It is said by counsel for the defendant that the same point may arise in some other cases where the claim in tort was brought in time, including the cases of HTF and ZMS which are currently pending. The point will only, in fact, arise in those cases if it is found that the claimant's detention violated article 5 of the European Convention, which the defendant disputes. But if such a finding is made, and if the judge reaches the same conclusion as I have reached on Crown act of state, then that will be the appropriate occasion for an appeal. There is no warrant for any appeal in the present cases where the point is entirely academic. The defendant's application for permission to appeal is therefore misconceived and permission must be refused.
(After further submissions)
39. It is common ground that there should now be a pause in the litigation whilst the claimants' solicitors review the remaining cases in the light of the judgment – a process which I take to be already underway. At the end of it they should identify those claims which are still being pursued and any which are no longer to be pursued by the claimants. There is a difference about how long should be allowed for that process. I see no reason to reject the estimate given by Mr Day of how long is reasonably required, and I therefore think it right that the information should be provided by the appropriate date at the end of April.
40. Thereafter, it is obviously to be hoped, certainly by the court, that the parties will seek to settle in the light of the principles established by the judgment as many of the outstanding claims as possible. But I take the view, rightly or wrongly, that that process will be assisted rather than hindered by resuming the exchange of information. I therefore consider that that should resume in the month of May.
41. It is common ground that there should then be a case management conference, which I think should be on the earliest available date after the beginning of June, to consider the future conduct of the litigation, insofar as claims have not been resolved. As for costs management, I do not think that it would be useful to divert resources from the task of reviewing the claims to engage in argument about the costs incurred in doing so. The claimants will, I am sure, have well in mind the need to keep those costs to the minimum consistent with an appropriate review, in the interests of facilitating settlement of the claims.
42. I therefore will not make any order for the service of costs budgets at this stage. I think the directions should include a direction setting a date in advance of the case management conference by which the parties should discuss the way forward in the litigation. If no common approach is reached, they should then each formulate their own proposals for the further disposal of the claims. That can, I hope, be built into the draft order which I invite counsel to prepare.