Liberty Insurance PTE Ltd & Anor v Argo Systems FZE

Where an appeal has established that the appellant was the successful party, the costs of the appeal should ordinarily be determined without awaiting possible future claims, amendments or proceedings involving third parties. Costs of an earlier hearing may be revisited where the appeal has made issues previously won by the respondent irrelevant. The court may summarily assess costs where no specific objection is made and the claimed sums are reasonable, allowing appropriate reductions for unjustified items. It may order repayment of sums paid on account, award interest on that repayment, and direct a further payment on account pending detailed assessment.

This was a costs judgment following the court’s earlier decision on the appeal. The appeal had been allowed in respect of paragraph 1(ii) of the order made by His Honour Judge Mackie QC on 21 February 2011 in the London Mercantile Court.

At the preliminary issues trial, the judge had held that the assured was in breach of a warranty in a voyage policy. Following the appeal, Liberty sought the costs of the appeal, recovery of the costs of the preliminary issues trial, repayment of £27,500 paid on account, interest, and a further payment on account. Argo relied on a possible claim for return of premium under section 84 of the Marine Insurance Act 1906, and a possible claim against its brokers, and argued that costs should await those matters. The central issues were the allocation and assessment of costs in light of the successful appeal.

1. Appeal costs. The court rejected Argo’s submission that liability for the appeal costs should await an application to amend the pleadings for a return-of-premium claim or any claim against the brokers. Liberty had won the appeal and was therefore entitled to its costs. Those costs were summarily assessed because Argo had made no specific objections and the sums claimed were reasonable, save for ten hours claimed for attendance on the party. Half that time was allowed, producing an assessment of £23,860, payable within 28 days.
2. Preliminary issues costs. Although Argo had succeeded on two issues at the earlier trial, those issues had become irrelevant as a result of the appeal. Liberty was therefore entitled to recover three quarters of the costs of the preliminary issues trial. Argo was ordered to repay the £27,500 paid on account.
3. Interest and payment on account. The court accepted that it had jurisdiction to award interest on the sum to be repaid, referring to Multiplex v Cleveland [2008] EWCA 133 at [4] and [7]. The precise rate and timing were left for agreement. A further payment on account of £18,000 was ordered, with the trial costs to be subject to detailed assessment.
4. Unresolved substantive issue. The possible claim for return of premium under section 84 of the Marine Insurance Act 1906 was not determined. The court accepted that permission to amend and the merits of the claim were arguable, so the remaining matters were remitted to the Mercantile Court.

• Court of Appeal (Civil Division): The court allowed the earlier appeal in respect of paragraph 1(ii) of the order of His Honour Judge Mackie QC dated 21 February 2011, then determined the consequential costs issues. All other matters were remitted to the Mercantile Court.
• Queen’s Bench Division, London Mercantile Court: His Honour Judge Mackie QC decided the preliminary issues on 21 February 2011, including that Argo was in breach of a warranty in the voyage policy.