Rotam Agrochemical Company Ltd & Anor v GAT Microencapsulation GmbH

For costs purposes, the party receiving a payment is often, but not invariably, the successful party. The court must determine which party won as a matter of substance and reality. A claimant who recovers only a small fraction of a substantially larger claim, and succeeds only on an alternative claim which was inconsistent with its principal case, may not be the successful party. The absence of a Part 36 or Calderbank offer does not necessarily alter that conclusion where an offer would have been rejected as a ritual act. The general rule that the unsuccessful party pays the successful party’s costs remains subject to all the circumstances, including partial success, conduct, abandoned issues and unreasonable or disproportionate litigation. A percentage order may reflect those matters.

After a trial concerning alleged contractual collaboration and data-transfer agreements, tortious misrepresentation and unjust enrichment, Rotam failed on its principal contractual and tortious claims but recovered €291,087.03 on an alternative unjust-enrichment claim. The court then had to determine the appropriate costs order.

Rotam argued that, because it had received a monetary award, it was the successful party and should receive its costs subject to a reduction. GAT argued that it was the successful party because Rotam recovered only about 2–3% of its damages claim and failed on the claims which represented the substance of the litigation. The central issue was which party had won in substance and reality, and what order should follow under CPR 44.2.

1. Successful party. The court held that the starting point under CPR 44.2 was to identify which party had won as a matter of substance and reality. Receipt of money was a strong indicator in many cases, but there was no inflexible rule that the recipient must be treated as successful. A party ordered to pay money may nevertheless have won in substance.
2. GAT was the successful party. Rotam recovered only about 2% of its original claim and 3% of its reduced claim. Its recovery was far exceeded by its costs. The unjust-enrichment claim was alternative and succeeded only because Rotam’s principal contractual claims failed. It was not the prize for which Rotam had fought the action.
3. The absence of a Part 36 or Calderbank offer did not change the result. By the time unjust enrichment was pleaded, substantial costs had already been incurred on unfounded causes of action. An offer on the eventual sum, coupled with an adverse costs position on the principal claims, would have been rejected and would have been a ritual act.
4. Under CPR 44.2(2)(a), the general rule was therefore that GAT should receive its costs. The court nevertheless had to reflect GAT’s failure on unjust enrichment, its abandonment of the Austrian-law case, its unsuccessful Confidentiality Agreement argument, and unsatisfactory production of documents during trial. Rotam was ordered to pay 50% of GAT’s costs, assessed on the standard basis.
5. GAT was entitled in principle to a payment on account of costs. The amount was to be agreed, or determined on written submissions if necessary.