D Pride & Partners v Institute for Animal Health & Ors

On 31^st March 2009 I dismissed the claims of the eighth to fourteenth claimants in this action for reasons set out in the judgment Neutral Citation Number [2009] EWHC 685 (QB). There are now before the court applications for costs, not only in relation to the proceedings of eighth to fourteenth Claimants, but also in relation to proceedings brought by the first to seventh Claimants, and subsequently settled. Brief details of the claims were set out in my judgment at paragraphs 4-6 which are as follows:

The order sought by IAH is as follows:

1.

“Subject to paragraph 2 of the consent order dated 20 February 2009 the first to seventh Claimants shall pay IAH’s costs of the proceedings from 30 August 2008 to the conclusion of the proceedings on the standard basis to be assessed if not agreed;

2.

Save for those costs referred to in paragraph 3 below, the eighth to fourteenth claimants shall pay IAH’s costs of the proceedings from 12 November 2007 to the conclusion of proceedings on the standard basis to be assessed if not agreed;

3.

The eighth to fourteenth claimant shall pay IAH’s costs of and occasioned by preparation of Trial Bundles E1 to 11 on an indemnity basis;

4.

The claimants shall by 4pm on 10 July 2009 pay to IAH the sum of £250,000 on account of IAH’s costs;

5.

IAH shall be entitled to interest on the costs referred to in paragraphs 1, 2 and 3 from the dates on which IAH paid such costs to its solicitors until 26^th June 2009 at the rate of interest lost by IAH which it would otherwise have earned on the monies deposited at its bank and from 26 June 2009 until payment at the judgment debt rate of 8%”.

The significance of 30 August 2008 is that 29 August 2008 was the last date for acceptance of the Part 36 offers made by IAH and Merial on 8 August 2008. The significance of the 12^th November 2007 is that it is the date on which, as IAH submits, the general nature of the claims of the eighth to fourteenth claimants were made clear.

The order sought by Merial is substantially similar to that sought by IAH. The figure they ask to be paid on account is £510,000.

The order sought by DEFRA is that the eighth to fourteenth claimants pay DEFRA’s costs of the proceedings, to be assessed on the standard basis if not agreed. DEFRA adopts the submissions of IAH and Merial in relation to the costs of bundles E1 to E11. It also adopts their submissions as to the rate at which interest should be awarded. DEFRA applies for a payment on account in the sum of £60,000.

The eighth to fourteenth claimants seek an order that the defendants should pay those claimants’ costs relating to what are referred to as Stovin or statutory regime and Marcic defences (Stovin v. Wise [1996] AC 923 and Marcic v Thames Water [2004] 2 AC 42). These were raised and maintained up to the hearing before me, but not advanced before me.

The first to seventh claimants seek orders that the defendants pay: (1) their costs of the action on a standard basis plus interest, and a payment on account of 50% of the total; and (2) their costs of and occasioned by the defendant’s application for summary judgment.

The eighth to fourteenth claimants accept that they should pay some of the defendants’ costs of the application which I granted on 31 March 2009, insofar as those costs relate to the eighth to fourteenth claimants. But they submit that they should not bear any costs relating to the statutory regime/Marcic defence but that, on the contrary, the defendants should pay the costs of the eighth to fourteenth claimants arising out of that point (or alternatively those claimants should not have to pay more than 60% of the defendants costs insofar as those costs relate to the eighth to fourteenth claimant). In addition the eighth to fourteenth claimants submit there should be a further 50% reduction of the costs ordered to be paid to the defendants to reflect the duplication of the defendant’s submissions.

The first to seventh claimants submit they should not bear any of the defendant’s costs of these applications, and the defendants should pay them their costs of and occasioned by the application, which were made against them too, and discontinued only on Friday 20 February 2009, the last day before the start of the hearing on the following Monday.

On 20 February 2009 the first and second defendants (but not DEFRA) entered into a settlement agreement with the first to seventh claimants in accordance with which they paid the entire sum claimed by those claimants. A Consent Order was drawn up which included provision for the discontinuance of the claims of those claimants and the following further orders:

2.

“The First and Second Defendants to pay the reasonable costs incurred prior to the commencement of the proceedings of the first to seventh claimants (inclusive) on the standard basis to be assessed if not agreed, for the avoidance of doubt these costs to include the preparation of the schedule of loss included at Appendix 1 to the Particulars of Claim served in the Proceedings, but not including the costs of preparation and service of the Particulars of Claim themselves;

3.

The costs of the First to Seventh Claimants of and associated with the preparation and service of the Particulars of Claim served in these proceedings and all costs subsequent to the commencement of the proceedings, including subsequent steps in the proceedings, are to be reserved pending final judgment or settlement of the proceedings as continued by the eighth to fourteenth claimants”.

In a witness statement dated 16 June 2009 Mr Cusick of Thring Townsend Lee & Pemberton (“TTLP”), the solicitors for all the claimants, states that the total costs of the first to seventh claimants, exclusive of interest and VAT (which they do not claim), amount to £430,259.93. They seek payment on account of £215,000.

In the skeleton argument submitted on behalf of the first to seventh claimant it is said that the defendants should be ordered to pay the costs of the action on a standard basis (plus the interest), since the defendants settled their claims in full the day before the application to strike out their claims was due to be heard. It is submitted that they were fully justified in issuing proceedings, given the manner in which the defendants conducted themselves in the run up to proceedings being issued. It is said that the defendants expressly sought to keep alive the issue of liability, and in response to the issue of proceedings the defendants applied to strike out the claims of the first to seventh claimants. The basis of that application was the point referred to as statutory regime/Marcic which the first to seventh claimant submits was unsustainable.

Mr Cusick made his statement in response to the first witness statement made by Ms Bond of Manches (solicitors to IAH) on 27 March 2009 and of Mr Enock, of Covington & Burling LLP, solicitors for Merial. The correspondence between the parties is referred to by the makers of these witness statements.

The start of the correspondence is a letter dated 12 November 2007 from TTLP sent in similar form to both IAH and Merial. They state:

“we act for the National Farmers Union (NFU) and through the NFU, its members, a number of whom (for present purposes ‘the claimants’) intend to bring proceedings against [IAH and Merial] claiming damages for the losses suffered as a result of the defendants’ conduct in relation to the escape of the foot and mouth disease virus (a virus) from the Pirbright site”.

After reciting the facts as they alleged them to be, and summarising the bases of the claims to be made, TTLP state that the quantum of the losses remains to be worked out. They state that they intend to issue proceedings on behalf of a representative number of claimants “who would be in effect ‘lead’ claimants on the basis that determination of their cases will be dispositive of the legal issues of the remainder of our clients”. They sought the early agreement of IAH and Merial to this approach, and invited them to enter into “consensual and private formal or informal alternative dispute resolution methods including mediation”.

After further correspondence, on 2 July 2008 Manches wrote, on behalf of both IAH and Merial, asking for documentation to support the claims of eight claimants who had been identified. The prospective claimants referred to in the title to that letter became the first to seventh claimants together with one other. The letter continued:

“I understand that each of your clients wishes to be dealt with separately and we are willing to deal with the matter in this way. We anticipate it will be possible to deal with these claims by negotiation.

In the circumstances, we do not think proceedings will be necessary and ask that you will confirm that you will not issue proceedings on behalf of the above clients whist negotiations are continuing….”

On 25 July 2008 TTLP responded. They stated that

“our clients consider it appropriate that all aspects of their claim should be advanced and there is no reason why any settlement discussion should hold up proceedings being issued… We consider that liability for the outbreak ought to have been accepted by both IAH and Merial, and that this should be established without delay in order to proceed to the quantification of loss. Your letter of 2 July 2008 conspicuously keeps liability in issue. In those circumstances, we intend to continue our preparation of proceedings in order to establish liability and obtain proper compensation for our client. This should not affect any settlement discussion. We shall provide you with appropriate quantum material…”

On 8 August 2008 Manches remarked that, in the letter of 25 July 2008, TTLP were failing to differentiate between the claims of those farmers whose livestock were culled (who became the first to seventh claimants) and the others. They stated that their position was that there was a clear distinction in law between the claims of the two groups. They continued:

“In relation to the first group while not admitting liability, our clients are prepared to proceed on the basis that the only issue is as to quantum of their claim. As to the second group we dispute that there is any basis cognisable in law for their claim.”

On the same date solicitors for the IAH and Merial, made the following offer:

“We hereby make a formal offer to settle proceedings pursuant to Part 36.3(2) (a) of the CPR as follows.

Without admission of liability, the proposed defendants herein … hereby agree to pay damages to be assessed if not agreed as if your client had succeeded in establishing liability in its proposed action set out in your letter of 12^th November 2007,on a joint and several basis, together with your reasonable costs on a standard basis to be the subject of detailed assessment if not agreed.

This offer remains open for 21 days and the two proposed defendants will be liable for the claimant’s costs in accordance with Rule 36.10 if the offer is accepted the liability for costs to extend for a period of 21 days from the date of this offer.

This offer is intended to have the consequences of Part 36. We reserve the right to refer to this letter in respect of any cost application.

Please confirm that a copy of this letter has been sent to your client named above”.

A separate letter was sent in respect of each of the first to seventh claimant. The offers were not accepted.

On 11 September 2008 IAH and Merial made a further offer, but not one purporting to be in accordance with Part 36. It is an open offer to pay:

“damages to be assessed if not agreed as if the … claimants [who are identified as the first to seventh claimants] had succeeded in establishing liability in the proposed action set out in you letter of 12 November 2007, on a joint and several basis, together with reasonable costs on the standard basis to be subject of detailed assessment if not agreed, and in addition at the Court rate of 8% from the date of the cull to the date of payment.

Thus our clients are offering to pay everything that your clients whose cattle have been culled could recover in litigation. Given that in these circumstances there is no conceivable need for your clients in this group to commence litigation at all, there can be no need for pre-action disclosure save in relation to quantum where the obligation falls entirely on you”.

On 12 September 2008 TTLP replied to the without prejudice letters of 8 August. They wrote:

“We are pleased to note your wish to negotiate with some of our clients. However, we do not consider that your letter constitutes an offer that is capable of being accepted within the meaning of Part 36 of the CPR since it is simply and invitation to enter into discussions on quantum. The proposed defendants do not admit liability within their ‘offer’ to any of our clients in respect of any of their claims.

Our client’s draft Particulars of Claim … are now well advanced… we consider that at this stage it is in the interests of all parties for us to proceed to issue the claim promptly in the High Court, and then for negotiations to take place within that framework”.

The same day solicitors for IAH and Merial replied noting that there was still no statement about any of the losses suffered by those farmers whose cattle had been culled and so the only offer which IAH and Merial could make was an offer to discuss quantum. They added “our clients have however offered to compensate your clients in full. We cannot offer a figure until you tell us what those losses are”.

TTLP issued these proceedings and served them on 15 October. On 12 November 2008 the application to strike out was issued.

Following further correspondence, on 22 December 2008 solicitors for IAH and Merial wrote stating that they did not understand why TTLP continued to insist that an admission of liability was a necessary part of any settlement of the claims of the first to seventh claimant. They wrote:

“It is obvious that in circumstances where each Defendant believes if there is any liability it attaches to one of the other Defendants, no Defendant is going to be willing to admit liability. Insisting on such an admission therefore only operates to obstruct a settlement and this cannot be in your client’s interests”.

These letters are exhibited to the witness statement in Ms Bond. She states in para 3.2(c) that ultimately the first to seventh claimants agreed to settle their claims on less favourable terms than those which had been offered prior to the issue of proceedings. These claimants recovered their losses in full, but without admission of liability. The agreement which they reached included a confidentiality provision which would not have applied had the claimants accepted the defendants offer. In addition Ms Bond states that prior to the issue of proceedings TTLP failed to identify a number of matters in particular the identity of individual claimants, and the nature of the loss sustained together with details of the loss. It is submitted for IAH and Merial that this is a failure to comply with the Professional Negligence Pre-Action Protocol, albeit that the claim may not strictly come within the scope of a professional negligence claim.

In his witness statement Mr Cusick refers to offers of ADR which were made in correspondence by TTLP. They were not taken up. As to the letter of 2 July he states:

“It was quite clear to us that the tone of the letter was in effect that whilst they were willing to ‘explore the possibility of settlement’ they were going to go through every conceivable document forensically with a view to wearing down the claimants and trying to reduce the damages that they might recover”.

He added that to continue with proceedings was likely to bring about a more beneficial settlement both in terms of speed and amount. Losses were still accruing and could not be finally quantified. The first to seventh claimants were fully justified initially in proceeding given the manner in which the defendants conducted themselves in the run up to proceedings being issued, in particular in their refusal to admit liability for the outbreak.

Before me no submissions were advanced to the effect that the offer of 8 August 2008 was not an offer within Part 36. No express reference is made to those offers by Mr Cusick. Mr Cusick does not in his witness statement contest Ms Bond’s statement that the settlement ultimately agreed was no more advantageous to the first to seventh claimants than the Part 36 offer made on 8 August.

There were some suggestions in argument that nevertheless the first to seventh claimants obtained a benefit from issuing proceedings. Had they not done so they might have recovered less that they did. Moreover, I note that the claims of each claimant are made up of a number of different figures (twelve in the case of the first claimant). It is not usual for a court after an assessment of damages to uphold in its entirety a claim consisting of so many items of such diverse kinds. So, although neither Ms Bond nor Ms Cusick said as much, it would be reasonable to infer from the letter of 22 December 2008 that the first to seventh claimants might have obtained by the settlement higher compensation than they would have been awarded on an assessment by the court.

CPR Part 36.14 provides for the cost consequences following judgment it includes the following:

“(1)

This rule applies where upon judgment being entered a claimant fails to obtain a judgment more advantageous than a defendant’s Part 36 offer…

(2)

… Where rule 36.14 (1) (a) applies, the court will, unless it considers it unjust to do so, order that the defendant is entitled to (a) his costs from the date the relevant period expired; and (b) interest on those costs…

(4)

In considering whether it would be unjust to make the orders referred to in (2) …above the court will take into account all the circumstances of the case including (a) the terms of any Part 36 offer; (b) the stage in the proceedings when any Part 36 offer was made, including in particular how long the trial started the offer was made; (c) the information available to the parties at the time when the Part 36 offer was made; (d) the conduct of the parties with regard to the giving or refusing to give information for the purposes of enabling the offer to be made or evaluated”.

In relation to the first to seventh claimants I have also had regard to CPR 44.3(4) ( c) which provides that in deciding what order (if any) to make about costs, the court must have regard to all the circumstances, including any admissible offer to settle made by a party which is drawn to the court’s attention and which is not an offer to which cost consequences under Part 36 apply. I have had regard to the offers dated 2 July 11 September.

If the claims advanced and settled in full were greater than the entitlement in law of each claimant in question, then it seems to me that that is not an advantage contemplated by part 36.14 in the phrase “a judgment more advantageous”. The overriding objective is for the court to deal with cases justly: CPR 1.1. There may be cases where a claimant is able to persuade a defendant to pay the claimant more than the claimant’s legal entitlement, or to pay his legal entitlement more quickly than he would otherwise do, in circumstances where the cost of contesting that entitlement would not be worth incurring. It seems to me that the provisions of Part 36 should be construed as designed to protect a defendant from claims being pursued on such a basis, and not to reward, in orders for costs, claimants who do pursue claims on such a basis.

As noted in the letters of 8 August, Part 36.3(2)(a) provides that a Part 36 offer may be made at anytime including before the commencement of proceedings. Given the information that was available to Merial and IAH at that time, the offer they made was the best offer that they could have made. They were not obliged to admit liability, and, given that liability was an issue between themselves and DEFRA, there was no reasonable basis upon which the claimants could require such an admission as they did. That will not be so in all types of actions. There are some types of actions, most notably defamation actions, where establishment of liability may be more important than the monetary compensation. This case, on the other hand, is entirely about compensation. Given the offers made as early as 2 July 2008, and the settlement in fact reached, ADR would have served no purpose.

Further, the first to seventh claimants submit that I should not make any award of costs in favour of the defendants, but should make an award of costs in favour of the first to seventh claimants, in respect of the costs of and occasioned by the applications to strike out their claims. They make this submission, in particular, on the basis of the statutory regime/Marcic point. It is submitted for these claimants that that application was unsustainable against all the claimants, but in particular against the first to seventh claimants.

I am in no position to express a view upon that submission, because, although I received skeleton or written submissions in which the submissions for both parties were set out extensively, no oral submissions were addressed to me by either side on the point, and I have not myself attempted to reach a view upon the point. If I were to have reached a view for the purpose of the order for costs, it seems to me it would have been necessary for the arguments to be fully deployed, thereby defeating the purpose of saving costs, which, according to the defendants, is the reason why the point was not deployed. Once settlement had been reached with the first to seventh claimants, so submit the defendants, there was no point in pursuing these arguments insofar as they related to the eighth to fourteenth claimants. The defendants had other and better points which they wished to pursue, and upon they were ultimately successful. There was no other occasion to pursue these points against the first to sevenths claimants following the settlement.

Mr Lord submits that if the court is otherwise minded to take the view which I have taken in relation to the Part 36 offer in this case, that is not a licence to a defendant to conduct the proceedings unreasonably, after his Part 36 offer has been made and has expired without being accepted. I accept that submission in principle. However, I am not able to apply it in this case because I have not formed a view one way or the other on the strike out application, in so far as it was made against the first to seventh claimants.

Accordingly, in my judgment no particular provision should be made in the order for costs in relation to the statutory regime/Marcic point in relation to the first to seventh claimants.

In my judgment it would be unjust if I were not to make the order for costs sought by IAH and Merial. Accordingly, I shall make it. I do not need to consider separately the point made in relation to the Pre-Action Protocol. The first to seventh claimants should pay the costs of IAH and Merial in respect of the proceedings by the first to seventh claimants other than those costs provided for in the settlement agreement referred to above. The claimants should not recover their costs, whether for the preparation and service of the Particulars of Claim or for the strike out application.

There remains the question of the claimant’s application for an interim payment in respect of the costs which each of the seven of them are entitled to under paragraph 2 of the consent order. Mr Cusick does not apportion his estimate of a total of £430,259 for the costs of these claimants between those costs to which the first to sevenths claimants are contractually entitled and those which are reserved to me. In these circumstances it is not possible for me to quantify an interim payment. On receipt of this judgment it may be open to the first to seventh claimants to put forward a figure on the basis of which an order for interim payment could properly be made.

Mr Cusick observes that the argument on the statutory regime/Marcic point took up eight pages of IAH’s skeleton (almost a third of its length) and twenty six pages of the claimants’ “Written Submissions”. That document was 129 pages in length. Merial simply adopted IAH’s submissions in a two line paragraph. DEFRA advanced a related argument under Stovin v. Wise [1996] AC 923 over about two pages of an eight page skeleton argument.

Mr Beloff notes that the written argument for the eighth to fourteenth claimants, and indeed the Particulars of Claim, set out in detail the statutory regime. I referred to parts of the regime in the judgment. Mr Beloff submits that in the circumstances, although the argument which he did not pursue would have extended the scope of the hearing; it would not have done so substantially, and in any event not to the extent suggested by Mr Cusick.

Mr Cusick stresses in relation to the eighth to the fourteenth defendants, as he did in relation to the first to seventh claimants, the lack of merit which he attributes to the point. For reasons I have already given, I can form no view on that contention.

Mr Beloff submits that for the purposes of CPR 44.3(2) the eighth to fourteenth claimants are the unsuccessful parties who, according to the general principle, should be ordered to pay the costs of the defendants, who were the successful parties. The eighth to fourteenth claimants submit that I should have regard to all the circumstances including those set out in CPR 44.3(4) and (5).

Mr Beloff drew my attention to a number of authorities in which guidance is given on the application of CPR 44.3(2). I do not need to refer to them. It is plain beyond doubt in this case that the defendants are the successful parties and the eighth to fourteenth claimants are the unsuccessful parties. The only question is whether the statutory regime/Marcic point should count as a separate issue of such significance as to make it just that I should make a separate order, or apportionment, in respect of it.

Although the defendants have not been successful on that issue, neither have they been unsuccessful. Mr Adam submits that the defendants should not be worse off by having reserved and not argued the point than they would have been if they had argued it and lost. He submits that even if they had argued it and lost it would not have been treated as a point of sufficient magnitude among the many other issues in the case so as to merit a reduction in costs.

Mr Wilkinson submits that the fact that during the course of hearing submissions of Mr Beloff and Mr Sumption he decided that it was no longer necessary or appropriate to advance the additional argument on Stovin should not put DEFRA in a worse position than if he had argued it.

The regime as to costs under the CPR is undoubtedly designed to discourage parties from taking unnecessary and time consuming points. But the court should also be careful not to discourage parties from keeping all their points under review and from deciding not to advance one of a number of points, even if that decision is made at a very late stage. There may be cases in which the omission to advance a point may indicate to the court that it should never have been proposed in the first place. That is not this case.

In my judgment no separate order should be made in relation to the statutory regime/Marcic/Stovin point.

Mr Cusick notes that the arguments of IAH and Merial in their applications for summary judgment substantially overlapped, and in parts their skeleton arguments were similar. He states there was no reason why IAH, Merial and DEFRA needed to duplicate their submissions, and could not simply have divided up the arguments. At the hearing the defendants adopted each other’s submissions on the three torts. There were seven counsel among the defendants incurring separate costs. There was no reason why, he said, they should not have done in respect of all of the points what Merial did in respect of the statutory regime/Marcic point, mamely simply to adopt another defendant’s argument.

In a second witness statement dated 19 June 2009, and made in response to Mr Cusick’s statement, Mr Enock states that there was in fact no co-operation between the defendants in the preparation of their respective skeleton arguments. That is not disputed.

As to the conduct of the oral hearing, counsel did not repeat any submissions unnecessarily, and did adopt each others submissions where appropriate. The upshot was that Mr Wilkinson, in particular, coming third in the list of defendants, had very little to say on those points in respect of which DEFRA’s position was similar to that of the other two defendants. It follows that the only criticisms that could be made against the defendants is in relation to the preparation of their skeleton argument. Each of these three defendants was joined by the claimants as a matter of the claimants’ choice. It is not a case where, had the claimants’ case been successful at all, it would necessarily have succeeded against all three. On the contrary, the positions of IAH and Merial, so far as the facts are concerned, appeared to me to be likely to be quite different, at least on one possible view. And so far as the law is concerned, the positions of IAH and Merial, on the one hand, and DEFRA on the other, were clearly very different indeed. DEFRA’s position was also quite different on the facts from the positions of the other two defendants.

It is true that the defendants each chose to be represented by solicitors and counsel who could be expected to advance all possible arguments with the greatest skill. Nevertheless, a party faced with a claim of this magnitude, and of this originality in terms of the law, cannot reasonably be expected to entrust its defence to a legal team appointed by a co-defendant with a conflicting interest. The duty of care said to have been owed in this case was said to be owed to all the livestock farmers in England and Wales. The claim was brought, as stated in the initial letter, on behalf of a sample of seven claimants, the eighth to fourteenth, whose livestock had not been culled, and supported by the NFU. Had the claim been successful, the damages would undoubtedly been in many millions of pounds.

The originality of the claim, appreciated from the outset, was that, in order to succeed, the eighth to fourteenth claimants had to overcome the obstacle presented by such very well established and well known authorities as Weller v Foot and Mouth Disease Research Institute (1966) 1 QB 569. It is well known that the history of the law of negligence during the twentieth century has shown a number of developments in which what had previously been thought to be established law was found not to be so. The House of Lords has even departed from previous decisions. This case was advanced by arguments on the law which could be justified in their breadth and detail, if at all, only on the footing that the case was expected to be taken to an appellate court. In the event I have been told that no permission to appeal is, or is to be, sought. That could certainly not have been predicted by the defendants at any stage.

Accordingly, I reject the submission that there was such duplication of representation on the part of the defendants in this case that I ought to deprive one or more of them of the costs to which they would otherwise be entitled.

Directions in respect of preparation for the hearing before me were agreed between the parties on 10 December 2008. The order provided that IAH should circulate a draft index for the hearing bundle no later than 29 January 2009; that the three defendants should serve their skeleton arguments no later than 6 February 2009; and that IAH should file an agreed hearing bundle no later than 13 February 2009. The claimants were also to serve their skeleton argument no later than 13 February 2009. So, it was agreed that IAH should receive all parties’ list of authorities no later than 13 February 2009, and IAH would prepare and copy bundles on the basis that each of the other parties undertook to share the cost equally.

The defendants complied with the agreement. The claimants served their 129 page written submission in accordance with the timetable. But Ms Bond complained that that document cited some 117 authorities in addition to those already cited by the defendants. Ms Bond had received no advance warning of this large number of additional authorities. No list was attached, and her firm had to go through the written submission line by line to identify the additional authorities. Ms Bond’s assistants prepared an index for the claimant’s authorities over the weekend. On Monday 16 February 2009, TTLP were asked if they would identify the authorities on which they were most reliant in order to limit copying. In their letter of that date Manches observed that the claimant’s argument must clearly have taken some time to prepare and it should have been possible to give advance warning of the number of additional authorities. The writer said that formulating the index had taken over six hours work. Some of the cases from foreign jurisdictions were to be sourced from the Bodleian library. The copying charges for this quantity of paper were estimated to amount to £1200 + VAT per set of authorities, plus the professional time taken in sourcing, checking, preparing and supervision.

Responding on the same day, TTLP stated that they understood “the logistical issues” but did not accept that there was any basis for criticising the claimants. They stated that all their citations were relevant and material and they did not accept that they had taken a disproportionate approach to meeting the wide ranging and complex attack on the claimants pleaded case. They offered to try and find copies of these authorities which IAH’s solicitors could not find.

IAH’s solicitors produced 17 copies of each of the 117 cases in addition to the bundles of authorities and other bundles already prepared. These are bundles E1 to E11. In her witness statement, Ms Bond noted that the hearing was estimated for three days, and that in the event very few of the additional authorities were referred to. The earlier ones amongst them were least referred to. She, and subsequently, Mr Beloff referred to Tombstone Limited v. Raja [2008] EWCA Civ 1444. At paras 122 to 128 Mummery, Dyson and Maurice Kay LJJ criticised the excessive length and complexity of the appellant’s written argument in that case. The court noted that practitioners that ignore practice directions on skeleton arguments are at risk. The court referred to CPR 52 PD para 5.10: “each point should be stated as concisely as the nature of the case allows”. The corresponding provision applicable to the Queens Bench Division is the Queens Bench Guide to be found in volume 2 of the White Book, para 1B-51 para 7.11.12. It states that “a skeleton argument should; (1) concisely summarise the party’s submissions in relation to each of the issues, (2) cite the main authorities relied on which may be attached…”.

The court went on to state:

“Skeleton arguments are aids to oral advocacy. They are not written briefs which are used in some jurisdictions as substitutes for all advocacy”.

Mr Beloff submitted that the citation of authority was wholly unreasonable. He also referred to the Practice Direction (Citation of Authoritie)s [2001] 1WLR 1001 paras 2 to 3:.

“[2] The latter issue is a matter of rapidly increasing importance. Recent and continuing efforts to increase the efficiency, and thus reduce the cost, of litigation, whilst maintaining the interests of justice, will be threatened if courts are burdened with a weight of inappropriate and unnecessary authority, and if advocates are uncertain as to the extent to which it is necessary to deploy authorities in the argument of any given case.

[3] With a view to limiting the citation of previous authority to cases that are relevant and useful to the court, this practice direction lays down a number of rules as to what material may be cited, and the manner in which that cited material should be handled by advocates. These rules are in large part such as many courts already follow in pursuit of their general discretion in the management of litigation. However, it is now desirable to promote uniformity of practice by the same rules being followed by all courts.”

No party referred to para 8. The Claimants might have considered this when requesting the preparation of authorities bundles:

“[8.1] Advocates will in future be required to state, in respect of each authority that they wish to cite, the proposition of law that the authority demonstrates, and the parts of the judgment that support that proposition. If it is sought to cite more than one authority in support of a given proposition, advocates must state the reason for taking that course.

[8.2] The demonstration referred to in paragraph 8.1 will be required to be contained in any skeleton argument and in any appellant's or respondent's notice in respect of each authority referred to in that skeleton or notice.

[8.3] Any bundle or list of authorities prepared for the use of any court must in future bear a certification by the advocate responsible for arguing the case that the requirements of this paragraph have been complied with in respect of each authority included.

[8.4] The statements referred to in paragraph 8.1 should not materially add to the length of submissions or of skeleton arguments, but should be sufficient to demonstrate, in the context of the advocate's argument, the relevance of the authority or authorities to that argument and that the citation is necessary for a proper presentation of that argument.”

Ms Bond states that the cost of the bundles prepared for use at the hearing before me amounted to £73,615. In relation to the claimant’s authorities in particular, approximately 150,000 pages were produced in total at a cost of approximately £37,500. Some 442 lever arch files were used at a cost of £1211 and in excess of 220 horrs of professional time (in addition to time spent by administrative staff) was spent in organising copying checking and supervising the entire process. Her staff attempted to find a copying bureau to do the work in both London and Oxford. The only suitable firms to provide such a service declined to do so on the grounds that they had insufficient time to do so. Ms Bond’s firm mobilised junior staff. She states that some of what was produced was necessary but that at a rough estimate about £16,000 of the total professional cost and approximately £15,000 of photocopying costs were wasted as a result of over citation. Accordingly the defendants seek costs on an indemnity basis in respect of these costs.

Mr Cusick explains that the claimants were justified in their approach to the case law. He refers to the scope of the issues of law and in particular to the statutory regime/Marcic defence. Implicitly referring to the originality of the claimants’ case in law, he stated that “it is essential … to have to deal with each of the legal ‘building blocks’ that make up the tort of negligence,…” He states that the detail of the written submissions and the scope of the authorities referred to were intended to reduce the amount of time taken up in court with oral arguments. He states that about 50 authorities were referred to in oral argument and makes other points which it is not necessary for me to set out.

If I had been considering this point in isolation, I would have been minded to accept the submissions of IAH. The claimants’ “written submissions” are not in any sense a skeleton argument. They contain over 100 pages of legal argument and analysis which relates to the torts of negligence and nuisance. They resemble in style a text book more than a skeleton, including detailed footnotes. This is not what the Queens Bench Guide envisages.

I must look at the matter in its totality. The figures referred to by Ms Bond are large, but as a proportion of the overall costs, that is regrettably not the case. There must be a better way of preparing authorities for use in court, but if so, this judgment is not the place in which to explore it. Having made the decisions that I have on other matters, it seems to me that it would be disproportionate to make an order indemnity costs in respect of this particular item. Since the eighth to fourteenth claimants are not entitle be paid their costs, I do not have to consider whether to allow the costs of these bundles in any order in their favour.

I have sympathy for Ms Bond and her team, and for their clients to whom the bills will be sent. But that is not a reason for taking a different view.

There is no dispute that there should be a payment on account. Mr Cusick accepts that in principle a payment of a figure of 50% is appropriate.

IAH simply ask for the sum of £250,000. It has not been suggested that that is an inappropriate figure. Merial ask for £510,000. Mr Enock in his witness statement states that Merial has already paid in excess of £1m and that there are outstanding invoices to the order of £50,000 or more. In addition they have paid experts, scientific advisors fees for their advice. The total paid, he states, will therefore be at least £1.14 m subject to interest. This is inclusive of VAT. Again no submissions have been addressed to me as to the make up of this figure. As for DEFRA, Miss Hodgson their solicitor estimates their costs at the proceedings as being in the region of £135,000 and asked for a payment on account of costs in the sum of £60,000.

I shall make orders for interim payments of costs in the sums sought by each of the defendants.

CPR Part 44(6)(g) provides that the court may make an order that a party must pay interest on costs from or until a certain date including a date before judgment. In Douglas v. Hello! [2004] EWHC 63 (Ch) para 24 Lindsay J said that:

“… It seems to me that the more appropriate dates when one is seeking to measure the extent to which a party has been out of pocket, would be the dates on which invoices were actually paid. As to when such interest should stop, it seems to me that the appropriate time would be when interest on costs is replaced by judgment interest. In my judgement it is right to award the claimants interest on assessed costs… the rate is to be base rate from time to time plus 1.5 %....”

Accordingly, IAH ask for interest on its costs at the rate lost by it which it would otherwise have earned on the monies deposited at its bank, from the date from which it paid such costs to its solicitors until 26^th June 2009, and from 26 June 2009 until payment at the judgment debt rate of 8%.

The reason that IAH and the other defendants ask for a higher rate than a percentage above base rate is that base rate has fallen so low at the present time. Their solicitors have written a letter setting out a schedule of the rates obtained by IAH for funds on deposit for the relevant period. For the period 2007 to November 2008 the rate is within the range 5.32% to 6.3%, for the succeeding months it starts at 2.82% and drops to 2.14% for April 2009 rising to 1.7% in May 2009.

Mr Adam informs me that in the Buncefield litigation (referred to below) David Steel J was asked to award interest at a higher rate but declined to do so, awarding instead base rate plus 1%. Mr Adam asked me to take a different approach. He asks for LIBOR plus 1%.

The three defendants in this case are respectively a large commercial enterprise, a charity, and a government department. There is no evidence before me as to what their respective costs of borrowing may be, and I would expect no such evidence.

Since it is impossible to arrive at a figure which represents what each party has had to pay, or what it has lost, in terms of interest in respect of money paid to its solicitors, I see no reason to departing from the usual rate of base rate plus 1%.

There is however a separate point in relation to the date at which Judgment Act rate of 8% should be payable. Mr Adam asked for Judgment Act rate as of the date of this hearing. Mr Cusick had suggested it should be as from the date of payment or, if earlier, 14 days from the dates that costs are agreed or assessed. Mr Adams objects that that would in effect be to allow the eighth to fourteenth claimants to borrow a substantial sum from the defendants at base plus 1% for as long as the costs assessment period lasts. Thus there would be little incentive to agree the costs. However, as an alternative, he submits the court should order a postponement of the starting of judgment at interest for a fixed period so that the lower rate continues up until that period. He referred me to the decision of David Steele J in Colourquest v. Total [2009] EWHC 823 paras 40 to 43.

The Buncefield litigation was on a much larger scale than the three day hearing before me. However, I respectfully agree with the approach of David Steel J and shall order that the starting date of Judgment Act interest shall be in accordance with CPR 40.8, be extended, in the present case by 4 months.