C&S Associates UK Ltd v Enterprise Insurance Company Plc

Costs following preliminary issues may be reserved where a Part 36 offer may affect the eventual order. The court may nevertheless make immediate provisos requiring a party to pay costs caused by inadmissible expert evidence or unnecessary trial bundles. Deliberate non-compliance with directions concerning expert evidence may justify disallowing the preparation costs in full. Where both parties have achieved substantial successes, the court may treat the result as broadly a score draw. Case management directions should be based on realistic estimates of the parties’ claims and the likely costs of proposed procedures, with alternative dispute resolution considered where appropriate.

The judgment dealt with consequential matters after the trial of seven preliminary issues between C&S Associates UK Ltd and Enterprise Insurance Company Plc. The preliminary issues had been determined in the earlier judgment reported at [2015] EWHC 3757 (Comm). The court was asked to determine the incidence of costs, including the effect of a Part 36 offer, and the appropriate procedure for progressing claims concerning thousands of individual matters handled under the parties’ contract. The central questions were which party should be regarded as successful, whether particular costs should be disallowed immediately, and whether a representative-sample procedure should be ordered.

1. Costs. The costs of the preliminary issues were reserved because the terms of a Part 36 offer might affect the eventual order. C&S was nevertheless required to bear the costs of preparing Mr Lewis’s first report in full and 80% of the costs of preparing the trial bundles.
2. The report contained extensive material on the merits of Enterprise’s counterclaim, although that evidence was inadmissible and permission had not been given for it. The court considered that C&S had deliberately chosen to adduce evidence outside the permitted scope. It was appropriate to mark the court’s disapproval immediately and to make C&S bear the report costs in their entirety.
3. The same reasoning applied to the bundles. Twenty-nine bundles concerned individual claims that were not properly relevant to the preliminary issues, and only one was briefly opened at trial. The fact that disclosure had been ordered did not make inclusion in the trial bundles reasonable or necessary. The 80% allocation recognised that approximately 20% of the bundles would have been required in any event.
4. Both parties had achieved significant successes. C&S succeeded on the validity of Enterprise’s termination ground and on some contractual issues, while Enterprise succeeded on the effect of the variation and its entitlement to restrict or refuse new claims. The result was therefore approximately a score draw. This assessment was provisional and would not bind the judge ultimately determining costs.
5. Future conduct. The court declined to establish immediately a representative-sample procedure for the 11,995 claims. Before further directions, the parties were required to provide realistic assessments of the likely quantum of their claims and the likely costs of proposed procedures, with an explanation of their bases. A case management hearing was directed, subject to deferral if the parties chose to explore ADR.

First-instance consequential judgment following the trial of preliminary issues and the earlier judgment at [2015] EWHC 3757 (Comm). No appeal history is stated.