Ministry of Defence v AB & Ors

This is a judgment of the Court supplementary to our main judgment. Its purpose is to explain the order which we have made consequent upon our main judgment.

We refuse the respondents’ application for permission to appeal. In each case and on each topic, the conclusion we have expressed is the unanimous judgment of each member of the Court. We consider that the law of limitation has been well trodden in recent years. It must be for the Supreme Court to decide whether we have gone wrong and/or whether the law requires further elucidation.

Foskett J awarded the claimants their costs of and incidental to the hearing before him. That covered the limitation issue and the strike out/summary judgment issues. On this appeal, the MOD has succeeded on limitation but has failed on strike out/summary judgment for procedural reasons. Foskett J’s order must be reversed to a large extent as the MOD has now effectively succeeded. However, there are some issues on which the MOD has not succeeded here or below and we think it right that those factors should be reflected in the costs order. We do not wish to make an issue based order, which is very expensive at assessment. Rather we prefer to take a broad brush approach to the costs consequences of those issues on which the MOD failed. We consider that the MOD should recover 90% of its costs below.

Our order reflects the extent to which time was spent before Foskett J on the strike out/summary judgment issues. A good deal of Foskett J’s judgment is taken up with these issues but that is because Foskett J chose to deal with causation in that context rather than in the context of section 33 of the Limitation Act. Causation would have had to be considered in any event and we think that the hearing was not greatly extended by consideration of these issues. We think also that we should take account of the fact that the MOD could (and should in our view) have issued application notices to bring summary judgment formally before the Court.

Within that assessment, we have taken into account the fact that the MOD failed in its attempt to persuade the Court that the delay was such as to render a fair trial impossible. We consider that virtually all the ground covered for that purpose was necessarily covered for the purpose of showing that delay had caused real prejudice, an issue on which the MOD succeeded in this Court.

We have also taken into account the fact that the claimants failed on a submission under section 14, which the judge called the issue of his ‘preferred view’. He was attracted to this submission but felt that it was not open to him to adopt it in the light of existing authority. On the claimants’ cross-appeal, this Court has held that the initial submission was without merit.

For the avoidance of doubt, we do not think it right to reduce the MOD’s entitlement because, in the end, the single lead claimant Mrs Sinfield has succeeded. First, the costs specifically attributable to her part of the limitation hearing were insignificant. Second, the claimants’ team should have realised earlier (by obtaining medical evidence when choosing their proposed lead cases) that Mr Sinfield’s anaemia was not a significant condition which could be causally related to exposure to radiation. Although they have never formally abandoned their contentions, they appear to have realised that they could not pursue the claim in respect of anaemia when they received the defendant’s medical evidence. If that had been appreciated at an earlier stage, the claimants’ team would have realised that the Sinfield case was only for Non-Hodgkin’s lymphoma and did not give rise to any real limitation issue. They should have made an appropriate admission. No such admission was ever made and the MOD never had any real opportunity to save costs by admitting that the claim was not statute-barred. We wish to make it clear that, under the Group Litigation Order, the costs of the lead claimants are common costs and Mrs Sinfield personally will not suffer any disadvantage because there is no costs order which specifically reflects her success on the limitation and summary judgment issues.

The MOD should have its costs of the appeal. We have considered making a modest reduction to reflect the fact that it failed to persuade the Court that it had been appropriate to ask the Court to deal with summary judgment without the issue of an application notice. However, this aspect of the appeal was very largely concerned with causation, which had to be considered in any event. We have also considered whether we should exclude any costs which the MOD might have expended in respect of the appeal in the case of Sinfield. The MOD did not contest the judge’s holding on limitation; it sought only to persuade us to give summary judgment because the claim could not succeed on causation. We declined to entertain that argument because we had held that the MOD should have issued notices of application in each lead case. In the context of the appeal as a whole, the time and effort expended on Sinfield was utterly trivial. For those reasons we do not think that it is right to reduce the MOD’s costs of the appeal.

The parties agree that, in respect of the nine lead cases which have failed and been dismissed, the MOD should be entitled to an order for the costs of the actions, other than those incurred in connection with the limitation issues and the appeal to this Court. The MOD has asked also for an order in respect of Mrs Sinfield’s claim but accepting that it should not be effective until its application for summary judgment, which it intends to lodge very soon, has been heard. We decline so to order. The case of Mrs Sinfield remains alive just as do all the remaining non-lead cases. If and when that claim is dismissed or discontinued there will be an opportunity for the MOD to obtain an order for the costs of the action, as provided for by the Group Litigation Order.

Foskett J ordered the MOD to pay Rosenblatt £7.5 million on account of costs. That was duly paid and there is no doubt that it will have to be repaid unless the Supreme Court allows an appeal. We have made an order for repayment subject to two sets of conditions.

First, Rosenblatt have asked for time in which to make this repayment. They have suggested that half of it should be paid in instalments spread over 12 months. They explain the need for this by what we can loosely describe as cash flow difficulties. It appears that, contrary to the warning which Foskett J gave them as to the possible need to repay this large sum, it has in large measure been disbursed. We are not without sympathy for Rosenblatt’s position in that we recognise the cash-flow difficulties faced by solicitors who take on expensive litigation on a ‘no win no fee’ basis. However we also recognise that the MOD (and therefore the state) would suffer by being kept out of its money for so long a period. Interest may compensate to some extent but it cannot take account of the fall in the value of money which might well occur in the next 12 months. Accordingly, we order that repayment be made in two instalments: half within 28 days of our order and the other half two months later.

The second condition is that the second instalment of repayment will be stayed pending consideration by the Supreme Court of the respondents’ application for permission to appeal. If the application for permission is refused, the second instalment will be payable 14 days after such refusal. If it is granted, we stay payment of the second instalment pending determination of the appeal subject to the Supreme Court making a different order. Thus we are ordering the almost immediate repayment of half the sum regardless of the outcome of the application for permission to appeal. We do so because we consider that the payment on account ordered by Foskett J was very generous to Rosenblatt. It was generous first because it amounted to over 65% of their schedule of costs and second because Foskett J himself granted permission to appeal and must therefore have realised that the order in favour of Rosenblatt might be reversed. We now think that the costs order in favour of the MOD is solid which is why we refuse permission to appeal. We acknowledge that the Supreme Court might grant permission and if they do so, our costs order might be reversed. But, if permission is granted, we do not think that it is fair to the MOD that Rosenblatt should remain, for a substantial period, in possession of so large a sum to which their final entitlement must be in doubt.

Our order for repayment includes interest from the date on which payment was made at the rate of 2% above base rate. The respondents contended that the rate should be 1% above base rate as suggested in ‘Civil Procedure’ (the White Book). The MOD asked for 2% above base rate as base is only 0.5% at present and has been for most of the period in question. It is not possible to borrow at 1.5% interest even for large organisations and even for Government.

The rate of interest to be awarded is discretionary. We have consulted the judges of the Commercial Court who we understand have recently agreed that their former practice of awarding 1% above base rate is not realistic in current economic conditions. We agree. We are also aware that this Court has awarded 2% above base rate in a recent appeal.

The MOD has applied for a payment on account of its costs here and below. It seeks £2.25 million and has served draft schedules of costs of the limitation issues up to the hearing below and for the conduct of the appeal. Those schedules appear to us, at first sight, to be reasonable and we are prepared to make the order requested which represents about 40% of the total approximate bill. There should be no cash flow difficulties for Rosenblatt as this sum should be payable under its ATE policy of insurance.