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England and Wales High Court (Chancery Division) Decisions |
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You are here: BAILII >> Databases >> England and Wales High Court (Chancery Division) Decisions >> Digicel (St. Lucia) Ltd & Ors v Cable & Wireless Plc & Ors [2010] EWHC 888 (Ch) (23 April 2010) URL: http://www.bailii.org/ew/cases/EWHC/Ch/2010/888.html Cite as: [2010] 5 Costs LR 709, [2010] EWHC 888 (Ch) |
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CHANCERY DIVISION
Strand, London, WC2A 2LL |
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B e f o r e :
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Digicel (St. Lucia) Limited (a company registered under the laws of St. Lucia) 2) Digicel (SVG) Limited (a company registered under the laws of St. Vincent & the Grenadines) 3) Digicel Grenada Limited (a company registered under the laws of Grenada) 4) Digicel (Barbados) Limited (a company registered under the laws of Barbados) 5) Digicel Cayman Limited (a company registered under the laws of the Cayman Islands) 6) Digicel (Trinidad & Tobago) Limited (a company registered under the laws of Trinidad & Tobago) 7) Digicel (Turks & Caicos) Limited (a company registered under the laws of Turks & Caicos) 8) Digicel Limited (a company registered under the laws of Bermuda) |
Claimants |
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- and - |
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Cable & Wireless Plc Cable & Wireless (West Indies) Limited 3) Cable & Wireless Grenada Limited (a company registered under the laws of Grenada) 4) Cable & Wireless (Barbados) Limited (a company registered under the laws of Barbados) 5) Cable & Wireless (Cayman Islands) Limited (a company registered under the laws of the Cayman Islands) 6) Telecommunications Services of Trinidad & Tobago Limited (a company registered under the laws of Trinidad & Tobago) |
Defendants |
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Lord Grabiner QC, Mr Edmund Nourse & Mr Conall Patton (instructed by Slaughter and May) for the Defendants
Hearing dates: 20th April 2010
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Crown Copyright ©
Mr Justice Morgan :
INTRODUCTION
THE ORDER (APART FROM ISSUES AS TO COSTS)
COSTS
SLU, SVG, GRENADA, BARBADOS AND CAYMAN: COSTS
Court's discretion and circumstances to be taken into account when exercising its discretion as to costs
44.3
(1) The court has discretion as to –
(a) whether costs are payable by one party to another;
(b) the amount of those costs; and
(c) when they are to be paid.
(2) If the court decides to make an order about costs –
(a) the general rule is that the unsuccessful party will be ordered to pay the costs of the successful party; but
(b) the court may make a different order.
(3) The general rule does not apply to the following proceedings –
(a) proceedings in the Court of Appeal on an application or appeal made in connection with proceedings in the Family Division; or
(b) proceedings in the Court of Appeal from a judgment, direction, decision or order given or made in probate proceedings or family proceedings.
(4) In deciding what order (if any) to make about costs, the court must have regard to all the circumstances, including –
(a) the conduct of all the 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 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 his case or a particular allegation or issue; and
(d) whether a claimant who has succeeded in his claim, in whole or in part, exaggerated his claim.
(6) The orders which the court may make under this rule include an order that a party must pay –
(a) a proportion of another party's costs;
(b) a stated amount in respect of another party's costs;
(c) costs from or until a certain date only;
(d) costs incurred before proceedings have begun;
(e) costs relating to particular steps taken in the proceedings;
(f) costs relating only to a distinct part of the proceedings; and
(g) interest on costs from or until a certain date, including a date before judgment.
(7) Where the court would otherwise consider making an order under paragraph (6)(f), it must instead, if practicable, make an order under paragraph (6)(a) or (c).
(8) Where the court has ordered a party to pay costs, it may order an amount to be paid on account before the costs are assessed.
(9) Where a party entitled to costs is also liable to pay costs the court may assess the costs which that party is liable to pay and either –
(a) set off the amount assessed against the amount the party is entitled to be paid and direct him to pay any balance; or
(b) delay the issue of a certificate for the costs to which the party is entitled until he has paid the amount which he is liable to pay.
Basis of assessment
44.4
(1) Where the court is to assess the amount of costs (whether by summary or detailed assessment) it will assess those costs –
(a) on the standard basis; or
(b) on the indemnity basis,
but the court will not in either case allow costs which have been unreasonably incurred or are unreasonable in amount.
(Rule 48.3 sets out how the court decides the amount of costs payable under a contract)
(2) Where the amount of costs is to be assessed on the standard basis, the court will –
(a) only allow costs which are proportionate to the matters in issue; and
(b) resolve any doubt which it may have as to whether costs were reasonably incurred or reasonable and proportionate in amount in favour of the paying party.
(Factors which the court may take into account are set out in rule 44.5)
(3) Where the amount of costs is to be assessed on the indemnity basis, the court will resolve any doubt which it may have as to whether costs were reasonably incurred or were reasonable in amount in favour of the receiving party.
(4) Where –
(a) the court makes an order about costs without indicating the basis on which the costs are to be assessed; or
(b) the court makes an order for costs to be assessed on a basis other than the standard basis or the indemnity basis, the costs will be assessed on the standard basis.
(5) Omitted
(6) Where the amount of a solicitor's remuneration in respect of non-contentious business is regulated by any general orders made under the Solicitors Act 19741, the amount of the costs to be allowed in respect of any such business which falls to be assessed by the court will be decided in accordance with those general orders rather than this rule and rule 44.5.
Factors to be taken into account in deciding the amount of costs
44.5
(1) The court is to have regard to all the circumstances in deciding whether costs were –
(a) if it is assessing costs on the standard basis –
(i) proportionately and reasonably incurred; or
(ii) were proportionate and reasonable in amount, or
(b) if it is assessing costs on the indemnity basis –
(i) unreasonably incurred; or
(ii) unreasonable in amount.
(2) In particular the court must give effect to any orders which have already been made.
(3) The court must also have regard to –
(a) the conduct of all the parties, including in particular –
(i) conduct before, as well as during, the proceedings; and
(ii) the efforts made, if any, before and during the proceedings in order to try to resolve the dispute;
(b) the amount or value of any money or property involved;
(c) the importance of the matter to all the parties;
(d) the particular complexity of the matter or the difficulty or novelty of the questions raised;
(e) the skill, effort, specialised knowledge and responsibility involved;
(f) the time spent on the case; and
(g) the place where and the circumstances in which work or any part of it was done.
(Rule 35.4(4) gives the court power to limit the amount that a party may recover with regard to the fees and expenses of an expert)
[26] Against that background one comes to the notorious and, on its facts, extreme, case of Three Rivers DC v Bank of England [2006] EWHC 816 (Comm), [2006] All ER (D) 175 (Apr) in which Tomlinson J made an indemnity costs order against the claimant and in doing so, set out (at [25]) a helpful summary of what he considered to be matters relevant to be taken into account in deciding whether to make an indemnity costs order in the following words:
'(1) The court should have regard to all the circumstances of the case and the discretion to award indemnity costs is extremely wide.
(2) The critical requirement before an indemnity order can be made in the successful defendant's favour is that there must be some conduct or some circumstance which takes the case out of the norm.
(3) Insofar as the conduct of the unsuccessful claimant is relied on as a ground for ordering indemnity costs, the test is not conduct attracting moral condemnation, which is an a fortiori ground, but rather unreasonableness.
(4) The court can and should have regard to the conduct of an unsuccessful claimant during the proceedings, both before and during the trial, as well as whether it was reasonable for the claimant to raise and pursue particular allegations and the manner in which the claimant pursued its case and its allegations.
(5) Where a claim is speculative, weak, opportunistic or thin, a claimant who chooses to pursue it is taking a high risk and can expect to pay indemnity costs if it fails.
(6) A fortiori, where the claim includes allegations of dishonesty, let alone allegations of conduct meriting an award to the claimant of exemplary damages, and those allegations are pursued aggressively inter alia by hostile cross-examination.
(7) Where the unsuccessful allegations are the subject of extensive publicity, especially where it has been courted by the unsuccessful claimant, that is a further ground.
(8) The following circumstances take a case out of the norm and justify an order for indemnity costs, particularly when taken in combination with the fact that a defendant has discontinued only at a very late stage in proceedings: (a) where the claimant advances and aggressively pursues serious and wide-ranging allegations of dishonesty or impropriety over an extended period of time; (b) where the claimant advances and aggressively pursues such allegations, despite the lack of any foundation in the documentary evidence for those allegations, and maintains the allegations, without apology, to the bitter end; (c) where the claimant actively seeks to court publicity for its serious allegations both before and during the trial in the international, national and local media; (d) where the claimant, by its conduct, turns a case into an unprecedented factual inquiry by the pursuit of an unjustified case; (e) where the claimant pursues a claim which is, to put it most charitably, thin and, in some respects, far-fetched; (f) where the claimant pursues a claim which is irreconcilable with the contemporaneous documents; (g) where a claimant commences and pursues large-scale and expensive litigation in circumstances calculated to exert commercial pressure on a defendant, and during the course of the trial of the action, the claimant resorts to advancing a constantly changing case in order to justify the allegations which it has made, only then to suffer a resounding defeat.'
[27] I would, however, make the following comments on this summary.
[28] Where one is dealing with the losing party's conduct, the minimum nature of that conduct required to engage the court's discretion would seem, except in very rare cases, to be a significant level of unreasonableness or otherwise inappropriate conduct in its widest sense in relation to that party's pre-litigation dealings with the winning party or in relation to the commencement or conduct of the litigation itself. It is important to distinguish in Tomlinson J's formulation of relevant considerations between that underlying concept and his identification of examples of more specific patterns of conduct capable of rendering a party's overall conduct relevantly unreasonable or inappropriate. Grounds (4) to (8) inclusive are specific examples of conduct which, taken alone, or in combination, may in all the surrounding circumstances often be capable of giving rise to a conclusion that the losing party's conduct has been so unreasonable or inappropriate overall as to justify an order which gives him a more effective costs indemnity than would be the case under the standard order. But in each case in which the costs of the whole litigation are under consideration, the conduct adversely criticised must be looked at in the context of the entire litigation and a view taken as to whether the level of unreasonableness or inappropriateness is in all the circumstances high enough to engage such an order. This approach leaves entirely intact the approach to indemnity costs orders envisaged by Lord Woolf CJ in the Excelsior Commercial and Industrial Holdings case [2002] CP Rep 67 at [31], such as the case of a losing party involved in a test case with no other interest than resolution of the issue or, I would add, in the context of commercial litigation, the case of banks not parties to proceedings or other non-parties who are obliged to incur expenses in giving effect to freezing injunctions for in such cases it is not the character of the loser's conduct that engages the court's discretion but the justice of the circumstances in which the receiving party has become involved in the proceedings.
[29] Finally, I would refer to observations of Christopher Clarke J in Balmoral Group Ltd v Borealis (UK) Ltd [2006] EWHC 2531 (Comm) at [1], [2006] All ER (D) 183 (Oct) at [1], in which, having adopted Tomlinson J's summary, he said this:
'The discretion is a wide one to be determined in the light of all the circumstances of the case. To award costs against an unsuccessful party on an indemnity scale is a departure from the norm. There must, therefore, be something--whether it be the conduct of the claimant or the circumstances of the case--which takes the case outside the norm. It is not necessary that the claimant should be guilty of dishonesty or moral blame. Unreasonableness in the conduct of the proceedings and the raising of particular allegations, or in the manner of raising them may suffice. So may the pursuit of a speculative claim involving a high risk of failure or the making of allegations of dishonesty that turn out to be misconceived, or the conduct of an extensive publicity campaign designed to drive the other party to settlement. The making of a grossly exaggerated claim may also be a ground for indemnity costs.'
[30] Here again, it is important not to lose sight of the essential requirement of unreasonable or inappropriate conduct overall and not to treat examples of such which may amount to such conduct as necessarily constituting it.
i) The Claimants did not comply with the Pre-Action Practice Direction and made no attempt to send a letter before action;ii) The Claimants courted widespread publicity for their allegations;
iii) The Claimants made serious allegations, which were unwarranted and pursued them to the bitter end;
iv) The claims were speculative, weak, opportunistic and/or thin;
v) The Claimants' case was constantly changing;
vi) The Claimants' disclosure and evidence were unsatisfactory;
vii) The quantum of the claim was grossly exaggerated and publicised at an exaggerated level.
The Claimants did not comply with the Pre-Action Practice Direction and made no attempt to send a letter before action
The Claimants courted widespread publicity for their allegations
The Claimants made serious allegations, which were unwarranted and pursued them to the bitter end
The claims were speculative, weak, opportunistic and/or thin
The Claimants' case was constantly changing
The Claimants' disclosure and evidence was unsatisfactory
The quantum of the claim was grossly exaggerated and publicised at an exaggerated level
My assessment at this stage
T&T: COSTS
i) even though the claim in T&T was dismissed in its entirety, it is open to the court to "disallow" part of the Defendants' costs to reflect the fact that the Defendants lost on certain issues;ii) the disallowance of costs for this reason can reflect three distinct matters;
iii) the first matter is that the Defendants incurred costs on the issue which they lost; if they had not fought that issue, they would not have incurred those costs;
iv) the second matter is that the Claimants incurred costs on the issue which they won; if the Defendants had not fought that issue, the Claimants would not have incurred those costs;
v) the third matter is that where the Defendants were guilty of misconduct in a relevant respect, it is open to the court to impose a penalty in relation to their ability to recover costs; in the present case, the penalty might be the disallowance of a part of their costs and/or the denial to the Defendants of an assessment on the indemnity basis to which they might otherwise have been entitled.
TCI: COSTS
THE APPROPRIATE ORDER FOR COSTS
PAYMENT ON ACCOUNT
INTEREST ON COSTS
AN EXTENSION OF TIME
THE COSTS OF THE HEARING ON COSTS