UPL Europe Ltd & Anor v Agchemaccess Chemicals Ltd & Ors

On 26 October 2016 I heard an application made by the claimants for an order that permission for the parties to rely upon chemical expert evidence should be revoked or, alternatively, that the defendants should be directed to provide clarification of the proposed scope of their expert evidence and there should be sequential exchange of expert evidence. Having given further directions in relation to expert evidence, I directed that, as between the claimants and the first and third defendants, issues relating to the costs of the application should be dealt with on the basis of written submissions. I have received written submissions dated 2 November 2016. This judgment deals solely with the costs of the application.

This case concerns the Defendants’ trade in certain Plant Protection Products (“PPPs”). The sale of PPPs in the EU is regulated under Regulation (EC) 1107/2009 concerning the placing of plant protection products on the market and other implementing measures in Member States. In general, pursuant to Article 28, in order to sell a PPP in an EU Member State, a person must have an authorisation from that Member State (under Article 29) or fall within one of the limited exceptions set out in Article 28(2). An exception is made for persons holding a parallel trade permit (“PTP”) granted pursuant to Article 52 by the Member State into which the product is to be sold. Article 52 provides that a PTP will only be granted for a product which is authorised in the Member State of origin and which is “identical” to a product authorised in the Member State into which the product is to be sold (known as the “reference product”). There is some dispute between the parties as to what makes a product ‘identical’ to a reference product for the purposes of Article 52.

The Claimants contend that Article 52(3) requires that to be identical products must not only be sufficiently chemically similar, but must also have a common origin i.e. they must have been “manufactured by the same company or by an associated undertaking or under licence in accordance with the same manufacturing process”. That is made particularly clear by Article 52(9) which says that, where a product is not identical in terms of Article 52(3), it must be authorised under Article 29, that is, the standard authorisation procedure. The Defendants, by contrast, appear to contend that it is sufficient if the products) are “identical in composition”.

On 21 January 2016 Master Clark held a Costs and Case Management hearing. An order was made for the parties to adduce evidence “… in the field of chemical analysis and testing of plant protection to address the question of whether the metamitron based plant protection products formulated and/or supplied by the Defendants are chemically identical to the Claimant’s [sic] 696/l formulation of its authorised post-patent active ingredient known as metamitron ….”. It is obvious from the drafting of the order that careful consideration was given to the need for and the scope of expert evidence. The date for exchange of experts’ reports, as varied by consent orders, was 14 October 2016

On 8 September 2016 Mishcon de Reya acting for the claimants wrote to the two firms of solicitors acting for the defendants’ and suggested that there was, on the view they had taken of the claim, no longer any need for expert evidence. They asked the defendants to provide:

“Your detailed proposals regarding the parties’ chemical expert evidence including the precise products your clients intend to test, the method by which they will be tested, and what they will be tested for.”

There was no reply to that letter. They wrote again on 21 September 2016. Again there was no response. On 27 September 2016 there was a conversation between the solicitors and the letter from Mishcon de Reya dated 5 October 2016 records Isadore Goldman saying that their clients, the first and third defendants, may no longer wish to rely upon expert evidence. Mishcon de Reya’s letter ended with a clear statement that if there was no response to the letter dated 8 September 2016 by 7 October 2016, an application would be made seeking an order that the first and third defendants could not rely upon expert evidence. This threat did not elicit a response and the application was issued on 10 October 2016.

In the written submissions on costs Mr Casey QC who appears for the First and Third Defendants characterised the approach of the claimants as unduly aggressive. It appears to me, however, that the approach adopted by Mishcon de Reya was measured. No reasons have been given for the failure to reply to three requests to engage on the subject of expert evidence.

On 20 October 2016 a witness statement from Mt Simon Loome of Isadore Goldman was provided. He stated for the first time that his clients’ were well advanced in the preparation of their expert evidence, that they had used samples which were available on the market and they were expecting to be able to exchange reports by the revised deadline. There was, however, a continuing refusal to engage on the methodology the parties should use to ensure that the expert evidence of the parties was properly matched in terms of comparable products being tested in a similar way.

At the hearing the claimants did not press for the principal relief sought in the application or that expert evidence should be produced sequentially with the defendants providing their evidence first. Instead, the hearing gave the court an opportunity to review the issues to which expert evidence related and to give further directions for its production. The order required the claimants and the first and third defendants (the other defendants are not intending to rely upon expert evidence) to engage in discussions about expert evidence, for the parties to meet with their experts and to try to agree upon the scope of and methodology for producing expert evidence and the preparation of a joint statement. The parties are entitled to return to the court for further directions in the event of disagreement.

The parties’ position on costs, broadly summarised, are:

In my judgment this is a plain case in which an order for costs should be made in favour of the claimants. The failure of the first and third defendants to answer the letters from Mishcon de Reya has not been explained and the characterisation of the claimants’ approach as unduly aggressive bears no relation to reality. The letters to which there was no response were measured and sensible. Furthermore, the claimants were encouraged to the view that expert evidence may not be needed. It was necessary for the issue to be brought to the court for a determination because there was a lack of engagement by the first and third defendants. It was then necessary for there to be a hearing in view of their apparent attempt to wrong-foot the claimants by producing expert evidence without any consideration of its scope and the methodology for its production.

In almost every case where expert evidence is permitted by exchange of reports it is desirable for there to be discussion about the scope of the issues under consideration; and in a case where scientific analysis is needed an attempt should be made to agree what is to be analysed and by what method (unless the approach is well established and unlikely to be contentious). This is to ensure that, as far as possible, the reports are properly matched or, as it is sometimes put, they are not as if ‘ships passing in the night’. This engagement may incur modest additional cost but is likely overall to save costs. Whether the discussion is best held between the lawyers or between the experts (or both) will depend upon the case and the issues which arise. It is clear, however, that in every case the parties must co-operate in the process of producing expert evidence with a view to ensuring, as far as possible that the exercise is properly focussed. The result should be that the reports are shorter and deal only with the core issues upon which expert evidence is required.

This is not a new approach. It is one regularly directed in the Chancery Division and elsewhere and was recommended by Briggs LJ in the Chancery Modernisation Review: Final Report [6.28 to 6.34]. In my judgment, the court when granting permission for expert evidence should give consideration to giving a direction for a discussion to be held well before exchange of reports, although it may well be sufficient in more straightforward cases for that discussion to take place without a face to face meeting.

Although the order giving permission for expert evidence in this case was admirably precise, it should have been clear to the first and third defendants that active discussion was required before the experts produced reports and it is unacceptable that they ignored letters and proceeded without any proper engagement. They also failed to comply with their duty under CPR 1.3 and the court is entitled to take their conduct into account when considering the costs of the application (CPR 44.2(4)).

It is of course right that the application was put forward seeking orders which the claimants did not pursue at the hearing. It might be said that the terms of the order sought were over-ambitious in seeking as the primary relief that permission for expert evidence should be revoked. However, the secondary relief sought in the alternative is not very different to the order made by the court. Instead of the Defendants being required to identify the scope of their expert evidence in a letter, there is to be a meeting for that purpose. In addition, as something of an afterthought at the hearing, the claimants made much of the need to agree upon a methodology and this is also to be considered before reports are produced.

I have considered whether the claimants should recover 100% of their costs or whether there should be a deduction to reflect the fact that there was a degree of re-positioning between the issue of the application and the hearing. I have concluded that a modest adjustment should be made because the primary relief sought was, rightly, not pursued.

The first and third defendants will pay 85% of the claimants’ costs of the application on the standard basis and the costs should be summarily assessed.

I have the claimants’ costs schedule and the first and third defendants have presciently provided their observations on it. I take account of the need to resolve any doubts in favour of the paying party. The order for costs relates to the application and not the correspondence leading up to its issue because that correspondence, and the telephone call, concerned the claimants’ attempt to progress the claim. That work is not part of the application. I therefore discount the claim in relation to attendances on others. I also discount the claim for correspondence element in attendances on others. The other main adjustment is to allow a claim for only one fee earner at the hearing. I summarily assess the costs at £17,425.00. 85% of that figure is £14,821.25.

I direct that the claimants should lodge a draft order reflecting this determination.