Arkin v Borchard Lines Ltd & Ors No.3

Part 20 proceedings are separate from the main action, even where they are tried together for case-management reasons. Costs normally follow the event in those proceedings. A court may depart from that approach only in exceptional circumstances. The claimant’s impecuniosity, and the fact that the third party and defendant advanced a common defence, are insufficient by themselves. The court must consider whether maintaining separability would cause substantial injustice, having regard to the nature of the Part 20 issues, the parties’ conduct, any benefit obtained from joinder, and the balance of hardship. Retrospective cost-sharing for evidence is ordinarily inappropriate without agreement.

The claimant’s competition claim against Borchard Lines and other defendants was dismissed. Borchard had joined Zim Israel Navigation Company and other conference members as Part 20 defendants, seeking contribution or indemnity if Borchard were liable. After dismissal of the main claim, the Part 20 claims also failed. The claimant was impecunious, so the dispute concerned whether the Part 20 defendants should recover their costs from Borchard, from the claimant by a cut-through order, or through an order sharing certain expert costs among the defendants.

The central issue was how the court’s discretion as to costs should accommodate the separate nature of Part 20 proceedings and the claimant’s inability to satisfy existing costs orders.

1. Part 20 proceedings are separate. Although Part 20 claims may be tried with the main action as a matter of case management, they remain essentially separate proceedings. The Part 20 defendant is therefore ordinarily entitled to costs against the Part 20 claimant when the Part 20 claim fails. This follows the general rule under CPR 44.3(2)(a) that costs follow the event.
2. Departure is exceptional. The court has a discretion as to the machinery by which costs are recovered. A cut-through order may be justified where maintaining separability would cause substantial injustice, but neither the claimant’s insolvency nor a common interest in defeating the main claim is, alone, an exceptional circumstance. The distinction between co-defendants and Part 20 defendants is material because a Part 20 defendant was sued involuntarily by a defendant with resources and may have distinct issues to meet.
3. Application of the discretion. The Part 20 issues were not co-extensive with the main action. Borchard had pursued joinder without prior cooperation or conditional acceptance discussions and obtained the benefit of Zim’s factual and expert evidence while adducing no expert evidence of its own. These factors supported maintaining the ordinary costs position.
4. Cost-sharing. The court declined to impose retrospective sharing of expert costs among successful defendants. Such sharing may be agreed, but there was no basis for imposing it judicially. The Part 20 defendants were accordingly entitled to costs against Borchard: Zim at 90 per cent and the DAC-represented Part 20 defendants at 80 per cent. Borchard could add those costs to the costs recoverable from the claimant.