Bombardier Transportation UK Ltd v Merseytravel (No. 3: Costs) (Rev 1)

INTRODUCTION

On 12 April 2017, in judgment [2017] EWHC 726 (TCC), I granted Bombardier’s application to amend an earlier consent order in respect of the disclosure of what was called Highly Sensitive Documentation (“HSD”). The HSD included elements of Stadler’s successful tender. As the relevant Authority, Merseytravel had adopted a neutral stance towards Bombardier’s application, but Stadler indicated through them that they were opposed to it.

Accordingly, following my judgment on the substantive issues, a question arose as to the costs of the application. For the reasons set out in the earlier judgment, it was not appropriate to order Merseytravel to pay Bombardier’s costs, despite the fact that Bombardier had been successful. Prima facie, it seemed to me that Bombardier were right and that those costs should be borne by Stadler but, since Stadler had not appeared at the original hearing, I said that I would consider any submissions that they made and resolve the costs issue on paper.

I have been provided with three sets of written submissions, and a full file of authorities. Although the sums at stake are relatively modest (Bombardier’s full claim is for £37,710), the application raises a potentially important point in procurement cases about the potential liability for costs of a non-party, who will often be, as in this case, the successful tenderer.

THE RELEVANT PRINCIPLES OF LAW

The relevant principles of law relating to the liability of a non-party for costs, pursuant to s.51(3) of the Senior Courts Act 1981, were summarised by the Privy Council in Dymocks Franchise Systems (NSW) Pty v John Todd and Others [2004] UKPC 39. Lord Brown of Eaton-under-Heywood said at paragraph 25(1):

“Although costs orders against non-parties are to be regarded as “exceptional”, exceptional in this context means no more than outside the ordinary run of cases where parties pursue or defend claims for their own benefit and at their own expense. The ultimate question in any such “exceptional” case is whether in all the circumstances it is just to make the order. It must be recognised that this is inevitably to some extent a fact-specific jurisdiction and that there will often be a number of different considerations in play, some militating in favour of an order, some against.”

In paragraph 25(3) of the same judgment, Lord Brown stressed, that what was often important in any consideration of such orders was whether the party against whom the order was sought was “the real party” to the litigation, which he said was a concept repeatedly invoked throughout the jurisprudence. That point was repeated by Moore-Bick LJ in Deutsche Bank AG v Sebastian Holdings Inc and another [2016] EWCA Civ 23. Later in his judgment in that case, Moore-Bick LJ said:

“These principles have been applied in a number of subsequent cases, but it is unnecessary to consider them in detail because they all turn to a greater or lesser degree on their own facts. When an order for costs is sought against a third party, the critical factor in each case is the nature and degree of his connection with the proceedings, since that will ultimately determine whether it is appropriate to adopt a summary procedure of the kind envisaged in the authorities, leading to what Neuberger L.J. in Gray v Going Places Leisure Travel Ltd [2005] EWCA Civ 189 described as "the overall order made by the court at the conclusion of the trial." It is important to note, however, that, contrary to Mr. Cogley's submission, the guidance given in Symphony v Hodgson [1994] QB 179 has not been regarded as immutable, but has been developed and modified in subsequent cases to reflect the differing circumstances under which applications for orders of this kind have been made.”

The Court of Appeal have repeatedly said that the trial judge has a wide discretion when considering costs orders against a non-party: see the judgments of Longmore LJ in Petromec Inc v Petrolio Brasileiro SA Petrobras [2006] EWCA Civ 1038, and Chadwick LJ in Alan Phillips Associates Limited v Terence Edward Dowling [2007] EWCA Civ 64. Indeed, in the latter case, at paragraph 31, Moses LJ noted that “there is now an abundance of authority on the absence of any need for abundant authority on the principles which should guide a judge as to whether to make a third party order for costs.”

I should add for completeness that I was referred to a number of cases involving non-parties who have funded litigation. Those give rise to particular issues which do not directly apply here. Stadler were, of course, not funding the litigation in any way.

DECISION

There were three elements to Bombardier’s original application to vary the earlier consent order. By far the most important was the application that disclosure of the HSD should be made to all those within the confidentiality ring, not just the lawyers, because of the difficulties that they were having in understanding elements of the Stadler tender. I acceded to that application, and also to an application involving the disclosure of the HSD in an electronic native format. Although I said that it was “finely balanced”, I declined the third element of the application, which concerned whether or not a named individual should be added to the confidentiality ring.

I went on to conclude that Stadler were prima facie responsible for the costs incurred by Bombardier. This was because I thought that they ought to have agreed the two elements of the application which were successful. I pointed out that some of their objections were unreasonable and others were contrary to the terms of the original consent order. In addition, I expressed my unhappiness that Stadler had sought to describe Bombardier’s application as “a tactic routinely deployed by the claimant…to gain access to highly confidential and sensitive material”. Stadler went on to allege that, in their view, Bombardier was seeking to deliberately misuse confidential information to “give [Bombardier] an entirely improper competitive advantage”. I rejected this serious allegation out of hand; it was wholly unjustified on the evidence.

I had thought that Stadler would endeavour to address these issues in their submissions on costs, but they have not done so. Instead, their solicitors have simply maintained that their stance was a reasonable and fair one for a commercial non-party to adopt. They say that, in order for Stadler to be the subject of an adverse costs order, the court must conclude that they were responsible for exceptional or unreasonable behaviour. They also submit that their actions did not take up court time and that Bombardier would have needed to have made an application in any event.

I reject Stadler’s submissions for the following reasons:

For those reasons, I conclude that, on the facts of this case, I should exercise my discretion in favour of Bombardier and make an order for costs against Stadler. Of course, such an order will not always be justified against a non-party; it will always turn on the facts. But in procurement cases, successful tenderers will need to consider carefully the balance between, on the one hand, the undoubted confidentiality of their tender documents and, on the other, the need for a proper and fair disposition of the unsuccessful tenderer’s challenge. In circumstances where confidentiality rings are common (as in this case), a non-party will need very good evidence before it suggests that the claimant is seeking the documentation for its own commercial advantage, rather than for the purposes of the litigation. Stadler had simply no evidence of that kind at all.

OTHER MATTERS

Stadler took a variety of other points on the costs bill, which was in the total sum of £37,710.

First, they complained about the number of fee earners involved. That is not a sustainable objection in this case, where there is no evidence of duplication; there is no criticism of the hourly rates charged; and the bulk of the work was done by the Grade C solicitor.

The second complaint is that Bombardier was represented by a QC. The complaint here appears to be that, because Merseytravel were neutral and Stadler did not attend the hearing, a QC was not necessary. That opposition is misconceived. Until 36 hours before the hearing, everyone assumed that Stadler were going to attend. Moreover, just because Merseytravel were neutral and Stadler did not attend, that did not somehow make this application straightforward; indeed, on one view, it made it more difficult for Bombardier, because they had to deal with Stadler’s opposition through a third party.

Thirdly, Stadler submit that the costs order ought to reflect the fact that Bombardier’s application was only successful on two out of the three variations that they sought. Bombardier says that it is not appropriate for costs orders of this kind to be apportioned in that way.

On this final point, I think there is some force in Stadler’s submission. I consider that the application in respect of the named individual, having been unsuccessful, ought not to attract a costs order. However, by the same token, I recognise that any costs incurred in relation to that part of the application were modest: the vast bulk of the costs in this case were incurred because of the (successful) application in respect of the HSD.

Accordingly, considering that matter in the round, I make a deduction of £2,710 from the total, meaning that the costs would be reduced to £35,000. I note that Stadler take no other point on the quantum of the costs. Accordingly, I order that Stadler should pay Bombardier’s costs of the disclosure application, summarily assessed in the sum of £35,000.

I apologise for the delay in dealing with this matter. There was a miscommunication in the court office which erroneously led me to conclude that I no longer needed to deal with Bombardier’s application on paper.