Sirketi v Kupeli & Ors

In complex group litigation, the party receiving money is not necessarily the successful party for costs purposes. The court must evaluate the litigation as a whole. It should consider the parties’ respective success on preliminary and generic issues, lead claims and individual claims, together with the consequences for the remaining claims.

Where opposing parties have each achieved considerable success, identifying one overall winner may be artificial. The court may instead make no order as to costs. Relevant conduct may include a failure to disclose material documents promptly and an unreasonable refusal to engage in settlement discussions, including a failure to make an appropriate Calderbank offer.

The airline faced 838 joined claims arising from its alleged failure to carry passengers affected by the collapse of another airline. A preliminary trial determined generic issues and selected lead claims. The airline succeeded on every preliminary issue and on most claims, while some claimants established contractual liability and recovered damages.

Whipple J subsequently treated the claimants as the successful party because they would receive money from the airline. By [2016] EWHC 1478 (QB), she ordered the airline to pay 33% of their costs and £225,000 on account.

The airline appealed. The principal issue was how success should be assessed under rule 44.2 of the Civil Procedure Rules 1998 following a trial within complex, non-GLO group litigation.

1. Appeal allowed. The judge erred in principle by treating the claimants’ receipt of money as the determinative indication of success. That approach did not reflect the reality of this group litigation and entitled the Court of Appeal to exercise the costs discretion afresh.

2. The identity of the successful party under rule 44.2 of the Civil Procedure Rules 1998 requires a fact-specific evaluation of the litigation as a whole. In an ordinary money claim between two parties, the direction of payment may provide a clear and useful indication. It is too crude when applied determinatively to complex group litigation.

3. A group claim remains a collection of individual claims, particularly where there is no group litigation order. The court must consider success on the preliminary and generic issues, the lead claims and the individual claims. It must also examine the trial’s consequences for unresolved claims. Here, the airline had succeeded on all preliminary issues, on the majority of the lead claims and categories, and in 792 individual claims. The claimants nevertheless succeeded on an important contractual issue, two lead claims and the principal factual issue concerning the reliability of the airline’s records.

4. Where substantial success lies on both sides, the search for an overall winner may be fruitless. Rule 44.2 permits the court to make a different order from the usual order requiring the unsuccessful party to pay the successful party’s costs. Where honours are fairly even, no order as to costs may be just.

5. The judge was entitled to take account of the airline’s late disclosure of flight logbooks. She was also entitled to consider its failure to engage in settlement discussions. Although the absence of a Part 36 offer was not itself material, failure to make an appropriate Calderbank offer could be relevant.

6. The parties’ success was fairly even. Any slight advantage enjoyed by the airline was offset by its conduct. The order requiring it to pay 33% of the claimants’ costs was quashed and replaced with no order as to the costs of the preliminary trial. Davis LJ agreed with Hickinbottom LJ.

1. Court of Appeal (Civil Division): By [2018] EWCA Civ 1264, allowed the airline’s appeal, quashed the order requiring payment of 33% of the claimants’ costs and substituted no order as to costs.
2. High Court, Queen’s Bench Division: By [2016] EWHC 1478 (QB), Whipple J held that the claimants were the successful party and ordered the airline to pay 33% of their reasonable costs of the preliminary trial on the standard basis.
3. High Court, Queen’s Bench Division: By [2016] EWHC 930 (QB), Whipple J determined the preliminary issues and lead claims. The airline succeeded on the regulatory and most contractual claims, while two groups of lead claimants recovered damages for breach of contract.