Royal Courts of Justice
Strand, London, WC2A 2LL
Before :
MR JUSTICE DAVID STEEL
Between :
THE OWNERS, DEMISE CHARTERERS AND TIME CHARTERERS OF THE SHIP “WESTERN NEPTUNE” ET AL | Claimants |
- and - | |
THE OWNERS AND DEMISE CHARTERERS OF THE SHIP “PHILADELPHIA EXPRESS” | Defendants |
Jeremy Russell Q.C. & Gemma Morgan (instructed by Holman Fenwick Willan) for the Claimants
Nigel Cooper (instructed by Swinnerton Moore Solicitors) for the Defendants
Hearing dates: 25 June 2009
Judgment
Judgment in relation to Costs
In my judgment on liability handed down on 25 June 2009, I apportioned liability ⅔rds / ⅓rd in favour of the Claimants. The Claimants now seek an order for payment of the entirety of their costs. The Defendants contend that the Claimants should only recover a proportion of their costs having regard to my apportionment of responsibility and to alleged unsatisfactory conduct on the part of the Claimants in regard to such matters as settlement proposals and disclosure. The Defendants also submit that the Claimants should pay the Defendants’ costs in regard to the issue relating to streamer diving.
The proceedings arose out of a collision in September 2007 when the Defendants’ vessel ST LOUIS EXPRESS struck the survey array being towed by the Claimants’ survey vessel WESTERN NEPTUNE. There was no damage to ST LOUIS EXPRESS as a consequence of the collision and accordingly the Defendants made no counterclaim. In contrast the Claimants claim was substantial. It was put forward at about £25 million and, although the quantum has yet to be determined, I treat that figure as properly arguable.
The resolution of the issue of liability was greatly assisted by the output from a Voyage Data Recorder on board ST LOUIS EXPRESS. In short there was no difficulty in making findings of primary fact. The primary issue, the Defendants having accepted the preponderance of blame, was whether WESTERN NEPTUNE was also in part to blame.
The claim form was issued in November 2007 following which it is of note that the Defendants made an offer to settle as early as 18 April 2008. This proposed an apportionment of 60/40 in favour of WESTERN NEPTUNE with costs in the same proportions (although at that stage any legal costs must have been small). Following filing of Collision Statements of Case by both parties in May 2008, a CMC took place on 20 June 2008. The ensuing order made provision for disclosure by 18 July 2008, exchange of witness statements by 18 September 2008, and the exchange of experts’ reports on the topic of procedures and mechanics of diving seismic streamers by 17 October 2008. Shortly after the CMC the trial was fixed for 9 March 2009 with an estimate of 6 days.
Matters thereafter proceeded broadly as ordered during which there were various without prejudice negotiations. But it was not until 20 January 2009 that an offer of settlement was made by the Claimants. This was on the basis of apportionment of liability 80/20 in favour of WESTERN NEPTUNE together with payment of the Claimants’ costs (which were no doubt by then substantial). Various further directions were given at a restored CMC on 26 January 2009. These included leave for the Claimants to amend their case on the point of impact and for a sequential exchange of expert reports on the topic.
The trial duly started on 9 March 2009 and was completed on 17 March 2007 (although the total hearing time was only 4 ½ days). The Master of WESTERN NEPTUNE gave oral evidence followed by the expert evidence that emerged pursuant to the order on the restored CMC (the other expert material having lead to substantial agreement). There was then a break for the preparation of final speeches.
Despite the modest scale of these proceedings the Claimants’ costs are said to be very substantial. A schedule provided at the costs hearing put this figure at over £1 million. In the light of this figure and the detailed written and oral submissions made on the costs issue, I thought it right to take time to consider my judgment.
The court’s discretion as to the award of costs must be exercised in accord with CPR Part 44.3. The relevant principles can be shortly summarised as follows:
The party receiving entitlement to payment by virtue of the judgment is the successful or winning party.
The starting point is that the successful party is entitled to an order for costs.
Any consideration of a departure form the starting point must have regard to all the circumstances of the case including the conduct of the parties: see e.g. The Krysia [2008] EWHC 1880 (Admlty).
The circumstances which it is legitimate to have regard to include the parties approach to negotiations and any Part 36 offers made: Multiplex Construction Ltd v Cleveland Bridge UK Ltd [2008] EWHC 2280 (TCC).
The Claimant’s position is straightforward. They were (and this is common ground) the successful party and thus the starting point is that they are entitled to their costs. The fact that they have been found ⅓ to blame for the collision and thus can only recover ⅔ of their claim is not of itself a sufficient reason to reduce the level of recoverable costs: see The Antares II [1996] 2 Lloyd’s Rep. 482 at p498; The Krysia supra para 30.
Pausing here, I do not quibble with the proposition. But it does not follow that the relative apportionment of liability is not a relevant factor albeit not determinative. If the apportionment had been 90% in favour of ST LOUIS EXPRESS, such may well have justified a different approach. It is a question of degree.
The logical extension of the Claimants’ argument (and they did not shrink from it) is that, in stark contrast, where there is a counterclaim, however modest, an apportionment of costs in accordance with the allocation of liability would be the default position. It was also the Claimants’ approach that Part 36 offers (or more accurately any Part 61 offers in a collision action) where there is no counterclaim can only be relevant in two ways:
The Claimants fail to do better than the Defendants’ Part 61 offer and thus the Defendants are entitled to all their costs from 21 days after the date of the offer.
The Defendants fail to do better than the Claimants Part 61 offer and thus the Claimants are entitled to all their costs on an indemnity basis.
In my judgment the court’s discretion, even allowing for the starting point, is much more flexible than this analysis suggests and there are a number of circumstances which justify departing from the starting point in the present case. First as regards proposals for settlement:-
The Claimants have recovered a substantial proportion of their claim but have been found to be the authors of their own misfortune to a significant degree.
The Defendants offered to settle the case on 60/40 terms in April 2008. The outcome of the trial a year later was to achieve an improvement of only 6.6%.
The Claimants offer to settle on 80/20 terms only emerged nearly a year later by which time the bulk of the costs had been incurred.
This offer was substantially wider of the mark than the Defendants’ offer. It would have imposed liability for £3.5 million more than the judgment will impose.
There is then the issue of disclosure. There was substantial amount of late disclosure on the part of the claimants. The Claimants supplementary list of documents was served on the very eve of the trial and encompassed (i) documents disclosed between 10 August 2008 and 6 February 2009 and (ii) documents disclosed after 6 February 2009. These materials included a number of highly significant documents including:
The Captain’s statement recording the conversation between the Master and OOW of WESTERN NEPTUNE after the collision.
Internal documents of the Claimants dealing with streamer diving.
Internal documents identifying changes in practice after the collision.
Exchanges relating to the adequacies of the lookout of FURORE.
This late disclosure had an important bearing on the issues. In particular it helped undermine the alleged difficulty in diving the streamers or doing so in time to avoid collision. They also gave significant support to the Defendants’ case on faulty look out and inadequate communication on the part of WESTERN NEPTUNE.
It may well be that the scope of the disclosure sought by the Defendants was unduly wide. Indeed judging by the contents of the trial bundles (most of which were never opened) that is probably so. But the Claimants never made any application to the court so as to restrict the scope of disclosure sought as being immaterial or disproportionate. The important thing for present purposes that one of the material circumstances as regards costs is the conduct of the Claimants in not disclosing highly relevant material until a late stage.
Before turning to consider such allowance on costs which would be appropriate against that background I must turn to the issue of streamer diving. The Defendants’ submission was that I should approach this issue as an entirely separate item. Since, it was submitted, the Defendants had won on the issue, a special order would be justified in regard to it.
I accept that proposition:
The Claimants’ position changed very late in the day from a stance that diving was not practical to a position that diving could not be achieved in time.
In any event it was newly contended that the point of contact was such that diving would have made no difference and thus any fault was not causative.
The Claimants lost on the timing issue.
Although the Claimants won on the position of impact it was a somewhat pyrrhic victory as I held that the damage would nonetheless have been substantial.
It follows, in my judgment, that a special order would be justified on this topic. But not only is the point intimately tied up with the disclosure issue but also it is clear from CPR 43.3(7) that the court should, if practicable, feed the matter into the question of apportionment. For this purpose, it must be noted the diving issue represented the bulk of expert evidence and occupied a significant proportion of the trial although the level of cost involved is by no means clear.
Having regard to all the circumstances outlined above I conclude that a fair outcome is that the Claimants should recover 65% of their costs with no order as regards the Defendants’ costs.
As regards a payment on account, I have already referred to the Claimants’ assessment of their costs. I confess that the level of expenditure, having regard to the modest scale of the case, struck me as disturbingly high. But that is a matter for the costs Judge. The calculation of the minimum sum recoverable is not easy. I think the justice of the matter is met by a payment on account of £250,000.