Simpkin v The Berkeley Group Holdings Plc

A preliminary issue or split trial may be ordered where a focused issue has a realistic prospect of being decisive or potentially decisive. The court should consider fairness, proportionality, costs, the overriding objective and the use of judicial resources. It may determine initially whether a contractual discretionary decision was lawful and, if necessary, what decision should follow from the material already available, while leaving wider factual issues for a later stage. Costs budgeting may be ordered in a very substantial claim where it promotes proportionality and gives a financially weaker party clearer control over litigation exposure.

The claimant, a former finance director within the defendant’s group, challenged decisions refusing him good-leaver treatment under incentive schemes. He alleged that the contractual discretions had been exercised unlawfully, including through an unfair process and reliance on untested allegations.

The applications concerned case management rather than final determination of the merits. The claimant sought a preliminary issue or split trial confined principally to the reasons recorded in the minutes of the decision-making meetings, together with an order for costs budgeting. The defendant contended that wider factual evidence was necessary.

1. Preliminary issue or split trial. The court accepted in principle that the claimant’s case could be tried in a confined preliminary hearing. The proposed issues were whether the reasons recorded in the minutes justified refusing good-leaver treatment, whether the decision was unlawful, and, if so, whether the material in the minutes showed that the claimant ought to have been treated as a good leaver.
2. The court was not required at this stage to determine whether the claimant’s contractual or public-law arguments would ultimately succeed. Those arguments were sufficiently arguable to justify a focused trial. The approach avoided committing substantial judicial time to extensive evidence which might prove irrelevant.
3. The court considered the principles in Steele v Steele [2001] C.P. Rep 106, particularly the importance of an issue being decisive or potentially decisive. The trial judge would decide what further evidence was necessary. The proposed structure did not necessarily prevent the decision-makers from giving evidence, but would initially exclude examination of the truth of all wider allegations and other matters said to have influenced the decisions.
4. The principles summarised from Braganza v BP Shipping Ltd [2015] 1 WLR 1661 showed that the claimant’s challenge was arguable. A contractual discretion affecting both parties’ rights may be subject to an implied obligation of good faith and rational decision-making, including proper attention to relevant matters and exclusion of extraneous matters. The court did not finally decide the scope of the available relief.
5. Costs budgeting. Costs budgeting was ordered under rule 3.12(1A) of the Civil Procedure Rules 1998. The size of the claim did not preclude budgeting. It would assist the claimant and potential litigation funders or insurers to understand the financial risk, promote proportionality, and restrain excessive expenditure. A judge would conduct the budgeting hearing with advice and assistance from a Queen’s Bench Master.
6. The parties were invited to agree directions and the mechanics of the preliminary trial. The court also urged mediation, but made no final merits determination.

not stated in the judgment.