Boehringer Ingelheim KG & Anor v Swingward Ltd

Following our judgment on 21^st February the appeals and cross-appeals were adjourned for the reasons given in [66] of the judgment to await the result of the Austrian reference referred to. The parties agreed inter alia that the appellants/defendants should, despite the adjournment, be at liberty to apply for an order for their costs of the proceedings to date.

Following a period in which they tried but failed to resolve the matter by agreement the defendants have made such an application. The parties have agreed that the court can resolve this matter on the papers without the need for an oral hearing.

Unfortunately the result of the Austrian reference is still some way off. It is too far away for it to be right for us simply to await that result. We think it right to make a ruling now, but one that allows for the possibility (which we think unlikely) that the reference would make a difference to the result.

There were two defendants, Swingward and Dowelhurst. Dowelhurst has gone into administration. So if we ordered any payment to it, we should work on the assumption that it would not be paid back.

It follows that that any award we make in respect of Dowelhurst should be in respect of matters which cannot be affected by the Austrian decision.

There were several different claimants, with differing complaints. There was no order for consolidation and it makes sense to consider the position as regards each claimant separately.

Moreover it is not possible to do other than take a fairly, indeed very, broad brush approach.

Lilly only sued Dowelhurst and only in respect of re-boxing. It has lost on the basis that the re-boxing was not damaging on the facts and the BMS conditions were complied with. Dowelhurst contends it should have 100% of its costs and we should make an interim award now.

The basis for that contention is that Dowelhurst won on all existing conditions. If there is an extra one provided by the Austrian case that should make no difference to the position up to now.

Dowelhurst also say we can and should make an interim payment order – because the points it won on will remain “won” whatever the Austrian reference decides. So it does not matter that it probably would not be able to repay – it will never have to in respect of its “won” points.

We think there is a lot to be said for this. But it is going too far to say that Dowelhurst should have 100% of its costs of an action which it may in the end lose – there are general costs of an action which it might in the end lose.

So we have decided to award Dowelhurst 80% of its costs here and below to date, with liberty to apply for the remaining 20% after the ECJ decides the Austrian reference. Such costs are to be assessed if not agreed.

We also award Dowelhurst interest on this as asked because this sum will likewise not be repayable.

As to an interim payment, we think the appropriate proportion is 50%. There is no requirement for an undertaking to repay because it is not really possible that the ultimate exact figure will be lower than this.

Put shortly, our findings are that Dowelhurst have done nothing wrong, have been sued at vast expense for years, and on the basis of the material and arguments advanced against it, has succeeded. Postponing all questions of costs is not good enough.

The estimated costs of Dowelhurst and Swingward together overall are between £1.2 and £1.3m. These will have to be assessed, but for present purposes we will work on the lower estimate, £1.2m. Mr Arnold QC suggests we apportion the costs amongst the various claimants giving use the percentages we use the in the calculations below. He does not make any submission as to how any awarded costs are to be apportioned as between Dowelhurst and Swingward – though Swingward were not sued by Lilly at all. He attributes 20% of the Defendants’ costs to Lilly – that works out thus:

We do not apportion the costs as between Swingward and Dowelhurst. We have no material so to do and there is an obvious possible conflict between the two parties. So the order will be for payment to the Defendants’ solicitors as solicitors for both parties, with liberty to apply to a Chancery Judge in the event of a dispute between them.

The position as regards SKB is the same save that the proportion of costs attributed to SKB is 15%. So it works out as follows:

The position as regards the other claimants, Boehringer and Glaxo is more complicated. Below they succeeded on some points (notice, particularly) and lost on others (including passing off and re-stickering). Mr Arnold says the position is the same as for Lilly save that an allowance for the notice issue should be made. He submits that the defendants should have 95% of costs. Mr Silverleaf submits the figure should be 90%.

Following our reasoning for Lilly, there should be the same result, subject to an allowance for the point on which the defendants lost, i.e. “notice.” We think it most unlikely that 5% of the Claimants’ costs were taken up with the notice point which in any event formed only a minor aspect of the case, legally and commercially. So we accept Mr Arnold’s figure and award the defendants 95% of their relevant costs against these Claimants.

This works out in the following way.

It was suggested that we should deal with the “Austrian” deduction rather differently – by awarding the defendants 80% of the full costs now and leaving 15% to await a post-ECJ Austrian judgment application. Given that as regards these two claimants the Defendants are only getting 95% of their costs that would leave them with only 15% more to apply for, whereas in the case of the other claimants they have 20% more to apply for. We did not adopt this approach. The intention is that the Defendants must await the decision for 20% of their recoverable costs in the case of all claimants.

As in the case of Lilly there will be an interest order against the other claimants.

The order would be without prejudice to whatever cost sharing agreement there may be between the three non-Lilly claimants with liberty to apply to a Chancery Judge in the event of a dispute between these claimants as to their appropriate proportions.

Likewise we do not apportion entitlement as between Swingward and Dowelhurst and there is a similar liberty to apply.

We believe this ruling will enable to the parties to draw up an order. In the event of any further dispute the parties are to apply in writing on or before 8^th August 2008 to Jacob LJ who will make any necessary further ruling.