INCURRED COSTS, PROPORTIONALITY AND BUDGETING MEANS A CASE SHOULD NOT BE STRUCK OUT
The previous post looked at the issue of incurred costs and budgeting. Some interesting points were raised in the very complex case of King Felix Sunday Bebor Berebon & others -v- The Shell Petroleum Development Company of Nigeria Limited [2017] EWHC 1579. Mr Justice Coulson rejected an argument that the action should be struck out because of the potential expense and complexity. However he made it clear that costs management was essential and the court could take into account incurred costs.
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“I certainly share the concerns about the potential expense of this litigation, but I am positive that this can be dealt with by the adoption of stringent costs management powers… Proper cost management orders will need to be put in place if the action is to continue and although those can only deal with the costs to be incurred in the future, the approved budget for those costs can of course reflect the costs which have already been incurred”
THE CASE
After a trial in 2014 the parties had entered into a mediation whereby the defendant agreed to carry out remedial work following oil spills. That work had not been carried out out. The defendant stated that this as because violence and threats had prevented the clean-up from going ahead. The proceedings had been stayed. The claimants applied to lift the stay.
There were issues as to whether the claimants now had title to bring the action and the defendant argued that the application to lift the stay was a nullity.
THE COSTS
The judge observed that extensive costs had been incurred simply on the application to lift the stay.
“Unhappily, the application to lift the stay, and the defendant’s opposition to that application, have generated seven lever arch files of material and a total costs bill said to be in the order of £280,000. Worse still, it was the defendant’s principal submission that, after all that, the application to lift the stay should be adjourned.”
THE APPLICATION TO STRIKE OUT
The judge considered an argument that the expensive nature of the litigation was a ground to strike it out.
6. THE APPLICATION TO STRIKE OUT
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The Parties’ Submissions
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It was the defendant’s case that, whatever happens in respect of the application to lift the stay, the proceedings ought to be struck out. A number of matters were raised. The defendant’s principal point was the question of obstruction to the remediation process, which I have already addressed, in the context of the application to lift the stay, in Section 5 above. In addition, other points were taken in Mr Meltzer’s twelfth statement as to the expense/complexity of the claim, and the justiciability of the claim, it being said that the claim may violate the doctrine of the foreign act of state or might require the court to reach a conclusion as to title to foreign land.
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On these other points, Mr Hermer said that the extensive or expensive nature of the litigation could not be a proper ground for striking out and that the justiciability arguments could be preliminary issues but not grounds to strike out.
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Expense/Complex Nature of the Litigation
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I was unclear as to the extent to which, on behalf of the defendant, Mr Webb was submitting that these proceedings were an abuse of the process of the court because they were so extensive and/or expensive. To the extent that he was, I reject that submission. This litigation is no more complex than the similar litigation successfully managed and tried by Stuart-Smith J which resulted in his lengthy judgment in Pedro Emiro Florez Arroyo and others v Equion Energia Limited (formerly known as BP Exploration Company (Colombia) Limited) [2016] EWHC 1699 (TCC).
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I certainly share the concerns about the potential expense of this litigation, but I am positive that this can be dealt with by the adoption of stringent costs management powers. I made plain to the parties during the hearing that a total sum of £280,000 in respect of this one day application was excessive. Proper cost management orders will need to be put in place if the action is to continue and although those can only deal with the costs to be incurred in the future, the approved budget for those costs can of course reflect the costs which have already been incurred (see CIP Properties Ltd v Gallifird Try Infrastructure Ltd [2015] EWHC 481 (TCC)).
It’s absurd that Leigh Day and firms like them should be allowed to bring these cases in the UK courts simply because it enables them to extract gigantic costs (except when they fail spectacularly as in the absurd Ocensa Group Pipeline Litigation).
They should quite clearly be brought in the courts of the country where the alleged damage happened instead of taking up weeks of desperately scarce court time in London.
But of course that wouldn’t be as profitable, would it?