Case Nos: CL-2022-000294; CL-2022-000557; - [2025] EWHC 2529 (Comm)

Who should bear HFW AR Insurers’ Costs?

The next issue is whether AerCap should bear the costs which I have decided HFW AR Insurers should recover in full itself, or whether those costs should be paid, in whole or in part, by War Risks Insurers; and, if they should be borne by War Risks Insurers whether that should be by means of a Sanderson or a Bullock order.

I was referred to the decision of the Court of Appeal in Irvine v Commissioner of the Police for the Metropolis [2005] EWCA Civ 139 for guidance as to the circumstances in which the court may make an order making an unsuccessful defendant responsible for the costs of a successful defendant. At [22] – [31] Peter Gibson LJ said this:

“[22] There is no doubt that the jurisdiction to make a Bullock or Sanderson order has survived the introduction of the CPR, though the exercise of discretion to make such an order must be guided by the overriding objective and the specific provisions of Rule 44.3. The jurisdiction is a useful one. It is designed to avoid the injustice that when a claimant does not know which of two or more defendants should be sued for a wrong done to the claimant, he can join those whom it is reasonable to join and avoid having what he recovers in damages from the unsuccessful defendant eroded or eliminated by the order for costs against the claimant in respect of his action against the successful defendant or defendants. However, it must also be recognised that it is a strong order, capable of working injustice to the defendant against whom the claim has succeeded, to be made liable not only for the claimant's costs of the action against that defendant, but also the costs of the other defendants whom the claimant has chosen to join but against whom the claimant has failed.

[23] The court has a wide discretion over costs, and even where a claimant reasonably brings proceedings against two separate defendants and succeeds against one and fails against the other, there is no rule of law compelling the court to make a Bullock or Sanderson order (see Hong v A&R Brown Ltd [1948] 1 KB 515). That case demonstrates that the court must also consider whether it would work injustice on an unsuccessful defendant to make him liable for the costs of another defendant against whom the claimant has failed.

[24] The circumstances in which the court makes such an order are stated in the White Book 2004, paragraph 44.3.8, as follows:

“Where a claimant sues two defendants in the alternative and succeeds against only one, the court has a discretion to order the unsuccessful defendant to pay the successful defendant's costs.”

[25] I stress the words “in the alternative”. That accords with the way the jurisdiction is expressed in both the Bullock and the Sanderson cases, and by Lord Brandon, giving the only reasoned judgment in the House of Lords, in Bankamerica Finance Ltd v Nock [1988] AC 1002, at page 1011, where the fact that the claims against the two defendants in that case were in substance alternative claims, on which the claimant was bound to succeed on one and could not have succeeded on both, was relied on as showing that the court had power to make a Bullock or Sanderson order.

[26] Such is the width of the language of Rule 44.3(1) that I do not suggest that the court has no power to order one defendant to pay the costs of another defendant, even when the claims are not in the alternative. But that is not the ordinary circumstances for a Bullock or Sanderson order. The judge had this in mind when she said that this was not a classic case for making the order.

[27] A further factor in determining whether a Bullock or Sanderson order is appropriate is whether the causes of action relied on against the defendants are connected with each other. In Mulready v JH & W Bell Ltd [1953] 2 All ER 215, the first defendant had contracted with the second defendant to construct a factory for the second defendant. The first defendant employed a sub-contractor to do part of the work. The plaintiff, an employee of the sub-contractor, fell from the factory roof, sustaining serious injury. He successfully sued the first defendant for breach of duty under the Building Regulations for failing to take suitable precautions to prevent him falling. He unsuccessfully sued the second defendant for breach of duty under the Factories Act in failing to provide means to ensure his safety while working on the roof. The trial judge, Pearson J, made a Bullock order. This court set that order aside because the causes of action against the defendants were different and depended on different facts. Lord Goddard, giving the judgment of this court (himself, Birkett and Hodson LJJ), said this at page 219:

“A Bullock order is appropriate where a plaintiff is in doubt as to which of two persons is responsible for the act or acts of negligence which caused his injury, the most common instance being, of course, where a third person is injured in a collision between two vehicles and where the accident is, therefore, caused by the negligence of one or the other, or both. It does not appear to us that it is an appropriate order to make where a plaintiff is alleging perfectly independent causes of action against two defendants where the breaches of duty alleged are in no way connected the one with the other.”

[28] Mr Featherby sought to distinguish this case on the basis that the first defendant had not sought to put the blame on the second defendant; but, as is apparent from the passage which I have cited, that is only a difference in fact and the reasoning of this court did not depend on that.

[29] I do not say that this factor is necessarily determinative, but it is a relevant consideration. The judge was of course fully aware in the present cause of what was the cause of action on which the claimant had succeeded and on what causes of action the claimant had failed.

[30] An important consideration which the court should have in mind when exercising the discretion whether to make a Bullock or Sanderson order is the reasonableness of the claimant's conduct in joining and pursuing a claim against the defendant against whom the claimant did not succeed. The case of Besterman v British Motor Cab Company Ltd [1914] 3 KB 181 provides the classic example of when it is appropriate to make the order. The plaintiff was injured in a collision between a taxi and a bus and did not know which was at fault, and sued the owner of the taxi as well as the owner of the bus.

[31] A significant factor is likely to be whether one defendant puts the blame on another defendant. But as Mr Featherby rightly conceded, the fact that one defendant blames another does not in itself make the joinder of the other reasonable. It must depend on the facts available to the claimant, and in particular whether the claimant can sustain a claim against the other defendant. Defendants frequently blame others when things go wrong, but it does not follow that the claimant is thereby given liberty to sue the others at the expense of the defendant against whom the claimant succeeds.”

For AerCap Mr Midwinter KC submitted that all the matters mentioned in that case and other recent authorities as to making a Bullock or Sanderson order appropriate were present here. It had been reasonable for there to be joinder of both sets of insurers; the claims against them were in the alternative; the claims against the two sets of insurers were connected with each other; and the insurers had laid the responsibility on each other. For War Risks Insurers, Mr Waller KC stressed that Peter Gibson LJ had referred to a Bullock or Sanderson order as being a ‘strong order’, and one which is capable of working injustice. He also stressed that the present is not a case in which it could properly be said that AerCap had not known which defendant to sue: it had as much if not more information about the cause of any loss of the aircraft as the defendants.

I am of the clear view that the responsibility for the costs of HFW AR Insurers should be split between AerCap and War Risks Insurers; and that while there should be an order passing some of the liability for HFW AR Insurers’ costs to War Risks Insurers, it should not apply to all those costs.

Thus, War Risks Insurers are correct to say that it was AerCap which first pleaded a positive case as to the loss being caused by an all risks peril, and it pursued All Risks Insurers by way of its primary case. AerCap also called expert and factual evidence designed to support that primary case. Yet, on the other hand, the issue of peril was very much one which was contested between the two sets of insurers. Even if AerCap had been neutral about peril, or put a war risks peril as its primary case (as DAE did), it seems highly likely that the same issue would have been debated, in much the same way, as occurred at the trial. Moreover, part of the effort of those representing HFW AR Insurers in the AerCap claim was directed to meeting the arguments of war risks insurers which, strictly, were advanced in other claims (of DAE, Merx etc) which were being tried at the same time. In my judgment, the fair apportionment is that AerCap should bear 35% and War Risks Insurers should bear 65% of the proportion of HFW AR Insurers’ costs which I have decided they should recover (viz. 90%).

In relation to the form of the order by which the War Risks Insurers are to be answerable for 65% (of 90%) of HFW AR Insurers’ costs, I considered that the simplest and best solution was that there should be a Sanderson order.

I should further clarify that in making a Sanderson Order that War Risks Insurers should pay 65% of (90% of) HFW AR Insurers’ costs, I do not include within the category of relevant War Risks Insurers either Swiss Re or Chubb. They cannot be regarded as having contested the issue of peril with AR Insurers. It should be LIC (as representative defendant, and those war risks defendants whom LIC represents) and Fidelis which are each severally responsible for their shares of HFW AR Insurers’ costs; and those shares should, for the avoidance of doubt, be grossed up to include Swiss Re and Chubb’s war risks lines.