LENGTHY BUNDLES AND INTERIM COSTS: OBSERVATIONS FROM THE TECHNOLOGY & CONSTRUCTION COURT

The two judgments of Mr Justice Akenhead in the Secretary of State for the Home Environment -v- Raythean Systems Limited [2014] EWHC 4375 (TCC) and [2015] EWHC 311 (TCC) contain some familiar motifs in relation to the size of bundles, length of witness statements and skeleton arguments and costs.

THE CASE

The claimant was seeking to set aside an arbitration award on the grounds of serious irregularity.

KEY POINTS

  • Many of the documents provided were probably unnecessary.
  • The parties should be aware they are litigating in a specialist court.
  • An order for 80% of costs was made rather than an issue based costs order.
  • Interim costs were set based on the lowest likely award on assessment.

THE COURT BUNDLES

In the first decision the judge considered the amount of documentation that was placed before him.

  1. The parties have provided the Court with some 3,400 pages of documentation as well as 42 legal authorities. The prose parts of the witness statements run to 137 pages and of the skeleton arguments to 155 pages. The law and practice is largely agreed, albeit that there are some minor variants, upon which the case will probably not depend. Apart from the award, I have been referred in argument to no more than about 200 pages of the exhibits to the statements. Whilst one understands the potential impact of an application such as this succeeding or not and the desire of parties to leave no actual or imagined stones unturned, there should be a great appreciation of the need to limit the material for such an application and its defence to what is really and positively relevant, particularly where the parties are before a specialist court which has specific experience of the type of contract with which the application is concerned.

COSTS

The second judgment contains a discussion in relatino to costs.

Costs

  1. The position of Y in relation to costs is that it has succeeded in successfully challenging the award and secured the setting aside which it argued was the appropriate remedy. Z’s position is that it succeeded on 4 of the 6 Grounds originally advanced (one Quantum Ground was abandoned by Y) and that, although this might be a case for an issues based order, the most appropriate order is no order as to costs.
  2. There can be no doubt that Y has overall been successful on this application. The general rule (CPR Part 44.2) is that the unsuccessful party will be ordered to pay the costs of the successful party.
  3. An issues based cost order would create substantial difficulties for a Costs Judge. Leaving aside the Quantum Ground which was abandoned well before skeleton arguments were exchanged, there was a clear overlap between the Liability Grounds and between the Quantum Grounds. In relation to the Liability Grounds, even if the only ground pursued had been Liability Ground 2, the parties would still need to have addressed the Court, at least as a matter of background, about the argument raised in Liability Ground 1. Similarly, the points which were the subject matter of Quantum Grounds 1 and 2 would need to have been explained to the Court at the very least to explain the tribunal’s reasoning in getting to a cost basis for the unjust enrichment claim.
  4. In my judgment, it would be impractical to make an issues based disposition and it would be wholly inappropriate and unfair to make no order as to costs in the alternative because that simply does not begin to reflect the overall outcome.
  5. However, within the submissions of Counsel for Z, there is a legitimate kernel of a good point which is, essentially, that at least some time and cost must have been incurred by Z in dealing exclusively with issues which Y either lost or abandoned. I cannot see that a fair allowance for this could reasonably exceed 20% to allow for Y not recovering its costs and for Z’s costs of and relating to such issues. I therefore propose to order that Z should pay 80% of Y’s costs of these proceedings. Assessment will have to be by way of a detailed assessment, as is common ground.
  6. Y seeks payment of an amount of costs, based on its (very summary) bill of costs submitted to the Court. This totals £364,977.78. Although in purely monetary terms, this represents a small proportion of the amount in issue (some £185m) and is not in that sense disproportionate, it still seems to be a very large sum for what was involved. 756 hours of solicitors’ time were deployed, including 152 hours of trainee and paralegal time. 4 Counsel (2 QCs and 2 juniors) were deployed. One needs to bear in mind that all (or almost all) Counsel and solicitors for Y were, so far as I am aware, involved with the arbitration and would have had a very detailed working knowledge of the case and the arguments, albeit that such knowledge was possibly dampened by the lapse of time between the closing submissions and the award. In considering an interim payment on account, CPR Part 44.2(8) now requires the Court where a detailed assessment is ordered to order the paying party “to pay a reasonable sum on account of costs unless there is a good reason not to do so”. There is no good reason in this case. In fixing an amount, the Court has to identify a figure which broadly might be the lowest reasonable amount which might be recoverable on the detailed assessment. That is necessarily going to be an approximation and, indeed, it may turn out to be substantially lower than the Costs Judge, having heard all the arguments and justifications advanced on the detailed assessment, may ultimately fix. The object of an interim payment on account is obviously to compensate the payee party for its costs and at least to make a substantial contribution towards what its final costs entitlement may prove to be.
  7. Doing the best that I can (and with a vestigial bill of costs it is difficult), I start with the figure of £364,977.78; if Y was entitled to 100% of its costs on a standard basis, allowing for both proportionality (based on the exercise upon which Y embarked) and the likely detailed assessment which could well reduce the costs by anything up to 1/3, I would have allowed 50% of that total. However, as I have reduced Y’s entitlement to 80%, the net entitlement to an interim payment on account will be 40% of the total, namely £146,000 (which is a rounded figure).
  8. Decision

The award will be set aside for resolution by a different arbitral tribunal. Z will pay 80% of Y’s costs of the proceedings, to be assessed on the standard basis. Z shall pay Y by way of an interim payment on account of costs £146,000.

RELATED POSTS ON  TRIAL BUNDLES

Strangely (or maybe not) the posts on preparing trial bundles are the most read posts on this blog.

ON INTERIM COSTS

 

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