Imperial Chemical Industries Ltd v Merit Merrell Technology Ltd

An adjournment should be granted where late disclosure of material documents places the opposing party in an impossible position when preparing for trial. In exercising its discretion on costs, the court may consider the parties’ conduct, the causes of the adjournment and offers made in relation to the application. An offer which has expired cannot be accepted, and a purported acceptance on materially different terms may amount to a counter-offer. Where one party’s conduct substantially causes the adjournment, that party may be ordered to pay the other party’s costs. Costs arising from a related application may instead be made costs in the case where that fairly reflects its separate contribution to the procedural difficulties.

The proceedings arose from the termination of a construction contract for works at a paint processing plant. The matter had been divided into liability and quantum trials. Shortly before the listed liability trial, the claimant served substantially expanded disclosure, including previously privileged documents and technical reports relevant to alleged welding defects and termination.

The defendant applied to adjourn the liability trial. It also made an offer to vacate the hearing, with each party bearing its own costs of the adjournment and application. The claimant purported to accept after the offer had expired and sought to leave costs unresolved. The court therefore had to determine whether the trial should be adjourned and how the costs of the adjournment and related witness-statement application should be allocated.

1. Adjournment. The liability trial was adjourned from November to April. The late disclosure had increased the disclosed documents from approximately 4,000–5,000 to more than 30,000 and included material directly relevant to the pleaded defects and expert evidence. In those circumstances the defendant was placed in an impossible position in preparing for trial.
2. Contractual effect of the offer. The defendant’s offer was open only until 2 pm on 11 October. The claimant’s purported acceptance at 3.45 pm could not accept an offer which had expired. In any event, the claimant’s terms left costs unresolved and therefore amounted, if anything, to a counter-offer which the defendant had not accepted.
3. Costs discretion. The court could have regard to offers made by the parties when deciding costs. The claimant had delayed seeking further time and had failed to accept a sensible offer within time. Its conduct had placed the defendant in the position requiring the adjournment. The claimant was therefore ordered to pay the defendant’s costs of and arising from the adjournment and of the adjournment application.
4. Witness statements. The witness-statement application had contributed to the procedural difficulties but had also become part of the adjournment application. In the interests of fairness, the costs relating to that application were ordered to be costs in the case.