COURT MAKES 5% REDUCTION IN SUCCESSFUL CLAIMANT’S COSTS RATHER THAN AN ISSUE BASED COSTS ORDER

This is the fourth look  this blog looks at the judgment in Essex County Council v UBB Waste (Essex) Ltd (No. 3) [2020] EWHC 2387.   This time we are looking at the question of whether there should be a deduction in the claimant’s costs following the defendant being successful on some issues.  A deduction was ordered, but for a small amount and for a limited period.

It is worth noting that the fact that the claimant made a successful Part 36 offer was of some importance on this issue. The 5% deduction that the judge ordered in relation to the claimant’s recoverable costs was only up to the date of the expiry of the claimant’s Part 36 offer.

 

THE CASE

The judge had given judgment for £8 million following a trial.  This hearing related to costs. The defendant had failed to beat a Part 36 offer made by the claimant.   The defendant had been successful, to a small degree (recovering 0.8% of the sums it had sought by counterclaim).  The judgment considers whether a deduction should be made to reflect the defendant’s “success”, and what it should be.

THE JUDGMENT ON THIS ISSUE

7. SHOULD THE COURT RECOGNISE UBB’S PARTIAL SUCCESS?
    1. Mr Stewart argues that the court should recognise UBB’s success in recovering compensation for the cessation of delivery of waste in 2017 by reducing the award of costs in the Authority’s favour to 90%. He supports his argument by pointing to the time taken at trial upon the issue and reminding me that the percentage reduction should reflect not just some credit for UBB’s costs but also the disallowance of the Authority’s costs upon the issue.
    2. Mr Taverner argues that any costs order should simply be an issue-based costs order, alternatively that the percentage reduction in the Authority’s costs should be less than 10%. He points to the fact that UBB’s success on this issue meant that it recovered 0.8% of the sums sought by its counterclaim.
DISCUSSION
    1. Of course, the simple fact that the Authority was not successful on every issue does not of itself mean that the court should deprive it of some proportion of its costs. Nevertheless, I accept that the cessation of deliveries was a discrete issue that involved its own disclosure and a number of witnesses who had no relevant evidence to give in respect of the main issues between the parties. Accordingly, I consider that in principle UBB should have its costs of this issue.
    2. I accept Mr Stewart’s argument that the most appropriate way to give effect to UBB’s partial success on its counterclaim is not, however, to make an issue-based costs order, but instead to make some proportionate reduction in the costs recovered by the Authority. Indeed, the court is sensibly enjoined by r.44.2(7) to prefer a percentage order over an issue-based costs order. As Pumfrey LJ observed in Monsanto Technology LLC v. Cargill International SA [2007] EWHC 3113 (Pat), [2008] F.S.R. 16, such approach will necessarily lack any degree of mathematical precision. It does, however, have the significant benefit of avoiding the cost and complexity of seeking to untangle costs on an issue-by-issue basis in detailed assessment proceedings.
    3. In fixing the appropriate percentage, I take into account the following factors:
82.1 These proceedings were principally about the failure of the facility to pass the Acceptance Tests and whether such failure entitled the Authority to terminate this long-term and valuable contract, or whether the true problem was the composition of the waste and the Authority was itself in breach of contract in failing properly to engage in the Options Review process with a view to remedying the composition issue.
82.2 Although its monetary claim was of secondary importance, the Authority also sought damages of around £9 million in respect of UBB’s unauthorised operation of the QSRF Line.
82.3 Against that, UBB pursued a counterclaim pleaded at £77 million but in fact worth over £100 million by trial.
82.4 The Authority was successful both in its claims for declaratory relief and its monetary claim. While UBB’s principal counterclaim was dismissed, its success on the asbestos issue meant that it recovered around 0.8% of the sums originally sought.
82.5 I accept Mr Stewart’s analysis that the factual evidence occupied a little over one court day at trial. This is helpful in making a broad assessment of the overall importance of the issue, although irrelevant in the sense that, as I explain at paragraph 83 below, I am here dealing only with pre-trial costs.
82.6 Some disclosure was relevant only to the asbestos issue, but it concerned a short period of time in early 2017 and the documents were relatively modest compared to the vast size of the disclosure given upon the main issues.
82.7 While the parties chose to instruct major city law firms, five leading silks and three experienced juniors to litigate the very important issues concerning the future of this £800 million contract, the reasonable and proportionate costs of pursuing a discrete £800,000 counterclaim would have called for a very different approach.
82.8 I am awarding the Authority’s costs on the indemnity basis whereas in fixing the percentage reduction in its recovery I am seeking to identify the appropriate set-off for the costs that would have been recovered on the standard basis had the court instead made an issue-based order. Accordingly, Mr Taverner’s observation that the proposed 10% reduction would, in rough terms, equate to a costs order in UBB’s favour of £1.5 million in respect of its success in recovering compensation of about half that amount is pertinent.
82.9 Further, my order should not just reflect UBB’s reasonable and proportionate costs of litigating the asbestos issue but also the disallowance of the Authority’s own costs on the issue: Monsanto.
    1. Taking all of these matters into account, in my judgment the fair reduction in the Authority’s costs is 5%. Accordingly, I make the following orders:
83.1 UBB will pay 95% of the Authority’s costs incurred to 29 March 2019, such costs to be assessed on the indemnity basis.
83.2 Thereafter, the Authority will recover its costs on the indemnity basis pursuant to r.36.17 without any proportionate deduction. (The Part 36 offer sought to settle both the claim and counterclaim. Since the Authority achieved a judgment that was at least as advantageous as its offer, it should recover costs without deduction from the end of the relevant period.)