"Western Neptune" Et Al, Owners, Demise Charterers & Time Charterers of the Ship v "Philadelphia Express", Owners & Demise Charterers of the Ship

Costs are awarded primarily by reference to the successful party, but the court retains a broad discretion to depart from that starting point. The degree of liability apportioned in a collision is relevant, although it is not by itself determinative. The court may consider settlement proposals, including applicable Part 36 or Part 61 offers, and the parties’ conduct in disclosure. A party’s late disclosure of material documents may justify a reduction in recoverable costs. Where a discrete issue has been contested unsuccessfully and materially increases the costs, a special costs order may be appropriate, but the issue should be incorporated into the overall apportionment where practicable.

The judgment concerned costs following a collision between a survey vessel towing a seismic survey array and the defendants’ vessel. Liability had previously been apportioned two-thirds to one-third in favour of the claimants. The claimants sought all their costs. The defendants relied on the liability apportionment, settlement proposals, late disclosure, and the claimants’ failure on the streamer-diving issue.

The court therefore had to determine how the general starting point in favour of the successful party should be adjusted in light of the liability apportionment, settlement conduct, disclosure conduct and the discrete issue concerning streamer diving.

1. The claimants were the successful party and the starting point under Civil Procedure Rules 1998, CPR Part 44.3, was that they should recover their costs. However, the discretion was flexible and required consideration of all the circumstances, including the parties’ conduct.

2. The one-third finding against the claimants did not, by itself, justify reducing their recoverable costs. It remained a relevant factor, and its weight depended on the degree of responsibility. A materially different apportionment could justify a different costs outcome.

3. Settlement proposals were relevant circumstances. The defendants had made an early offer on 60/40 terms, whereas the claimants’ later 80/20 offer was substantially further from the eventual result and was made after most costs had been incurred.

4. The claimants’ late disclosure of significant documents was an important factor. The documents affected the streamer-diving, lookout and communication issues, and the claimants had not applied to restrict disclosure as disproportionate or immaterial.

5. The streamer-diving issue justified special consideration because the claimants changed their position late, lost on the timing issue, and the issue occupied substantial expert and trial time. Under CPR 43.3(7), however, the issue should, if practicable, be fed into the overall apportionment of costs.

6. The fair outcome was that the claimants recover 65 per cent of their costs, with no order as to the defendants’ costs. The defendants were also ordered to make a payment on account of £250,000.