HT-2021-000466 - [2024] EWHC 2110 (TCC)

The first question which I must answer is: who was the successful and who was the unsuccessful party?

I was referred to a number of authorities. I need do no more than to refer to the relatively recent judgment of Jefford J. in Vainker v Marbank Construction Ltd [2024] EWHC 1686 (TCC) in which she said this (at paragraphs [24] to [26]):

24.

For SCd Mr Fowler advances a number of arguments as to how the court could and should address the issue of costs recoverable, if any, from SCd. As I indicated above in relation to Marbank, I leave aside for the moment the issues relating to M&M. Mr Fowler relies on the helpful summary of the authorities in Pigot v The Environment Agency [2020] EWHC 1444 Ch, a decision of Mr Stephen Jourdan QC sitting as a Judge of the High Court.

25.

At paragraph 5 the Deputy High Court Judge said this:

"The principles which guide the court in applying those rules where one party has succeeded overall but has lost on one or more issues and the unsuccessful party seeks an issue-based costs order have been considered in many cases." He then set out the multiple cases that he had been referred to which wholly or largely reflect the cases referred to in the White Book note which Mr Crowley relies upon. He then said this at paragraph 6:

"I would summarise those principles as follows:

(1)

The mere fact that the successful party was not successful on every issue does not, of itself, justify an issue-based costs order. In any litigation, there are likely to be issues which involve reviewing the same, or overlapping, sets of facts and where it is therefore difficult to untangle the costs of one issue from another. The mere fact that the successful party has lost on one or more issues does not by itself normally make it appropriate to deprive them of their costs.

(2)

Such an order may be appropriate if there is a discrete or distinct issue, the raising of which caused additional costs to be incurred. Such an order may also be appropriate if the overall costs were materially increased by the unreasonable raising of one or more issues on which the successful party failed.

(3)

Where there is a discrete issue which caused additional costs to be incurred, if the issue was raised reasonably, the successful party is likely to be deprived of its costs of the issue. If the issue was raised unreasonably the successful party is likely also to be ordered to pay the costs of the issue incurred by the unsuccessful party. An issue may be treated as having been raised unreasonably if it is hopeless and ought never to have been pursued.

(4)

Where an issue-based costs order is appropriate, the court should attempt to reflect it by ordering payment of a proportion of the receiving party's costs if that is practicable.

(5)

An issue-based costs order should reflect the extent to which the costs were increased by the raising of the issue; costs which would have been incurred even if the issue had not been raised should be paid by the unsuccessful party.

(6)

Before making an issue-based costs order, it is important to stand back and ask whether, applying the principles set out in CPR Rule 44.2, it is in all the circumstances of the case the right result. The aim must always be to make an order that reflects the overall justice of the case."

26.

The summary differs slightly from the White Book note which I have quoted. In my view, paragraph 3 is slightly overstated, but it may be that it is moderated by sub-paragraph (6) and the exhortation to stand back and consider the justice of the case. I say that it is slightly overstated because there may be many cases where a party is deprived of its costs on an issue on which it was unsuccessful and which can be regarded as a discrete issue, but it is a matter of discretion, and to say that a party may be deprived of its costs, rather than is likely to be deprived of its costs, is a principle of more general application. As I have said in dealing with Marbank, a case which comprises a list of discrete defects and discrete claims under a final account is more likely to be looked at as a whole rather than as a series of distinct claims and counterclaims. Also, as Mr Crowley submitted, the defendant's primary means of providing costs protection is to make an appropriate Part 36 offer on the whole of the claim or making discrete offers on parts of the claim. Those latter two points are ones which should clearly be borne in mind in considering all the circumstances of the case and the just result.

In my judgment IRDL was the successful party:

In reaching that conclusion, I have considered Ms Piercy’s submission that it was difficult for Arcadis to make an offer any earlier because of a lack of documentation.

In my main judgment I have accepted that there were deficiencies in the documentation (see paragraph 167 in respect of the evidence as to module damage; paragraphs 205 and 206 in respect of progress of the works; paragraph 357 in respect of details of failed or renegotiated transactions). In respect of the module damage, this lack of documentation resulted in the claim failing. In respect of progress of the works, Arcadis succeeded in establishing that the dominant cause of delay to the project related to the modules; and in respect of the failed or renegotiated transactions, the amount awarded was relatively limited. Thus in the event the lack of documentation did not disadvantage Arcadis in the final determination of the case.

The question therefore is whether the late disclosure prevented Arcadis from making an earlier offer. Ms Piercy submits that disclosure consisted in large measure of a “document dump” in September 2023 (paragraph 63.1 of her skeleton argument). It is difficult for me to assess what problems were presented by the timing and mode of disclosure, but it seems to me that on the heads of claim which succeeded before me, the necessary disclosure would have been limited and fairly easy to discern.

The conclusion I come to is that it would have been possible for Arcadis and its advisers to have made at least a broad assessment of the value of the claim well before February 2024. Accordingly, in reaching the conclusion that IRDL is the successful party, I have rejected the suggestion that the failure to make any offer prior to February 2024 can be justified by lack of relevant documentation. By February 2024 Arcadis had had the benefit of discussions between the quantum experts and had filed Mr Huntley’s Quantum Report: Arcadis had sufficient material by then to assess the value of the claims made.

Accordingly, the starting point is that the unsuccessful party, Arcadis, should pay the costs of the successful party, IRDL. But I must consider whether to make an exception to that general principle.

Ms Piercy submitted that IRDL lost three circumscribed issues which took up a lot of time in the evidence and the trial, namely:

As to the third of these issues, in the event IRDL has succeeded in some measure in its claim, and I do not accept that any significant additional costs were incurred by its attempt to obtain a higher award.

However, in respect of the first two issues I do accept that in each case significant costs were incurred by IRDL putting forward a case upon which it lost. In both cases the amounts turning on the issue were substantial and both took up time and money in being investigated and argued.

Ms Piercy has carried out an exercise which she argues justifies an award of costs in favour of Arcadis – she submits that IRDL should pay 30% of Arcadis’s costs.

I reject that extreme suggestion: however I do accept that the award of costs in IRDL’s favour should be tempered by a reduction to reflect the issues upon which Arcadis succeeded. Standing back and looking at the justice of the case, I determine that Arcadis should pay IRDL 60% of its costs of the action.