Britned Development Ltd v ABB AB & Anor

The court has a broad discretion to determine costs, subject to the Civil Procedure Rules. The unsuccessful party normally pays the successful party’s costs, but that is only the starting point. The court must consider all the circumstances, including conduct, partial success, admissible settlement offers and the appropriate form of order.

A withdrawn Part 36 offer does not attract the automatic consequences of Part 36. It remains a factor under CPR 44, but it does not automatically reverse the incidence of costs. Where issues are substantially intertwined, an issues-based order may be inappropriate. The court may instead allow the successful party no costs, or only a discounted recovery, to reflect its relative failure.

Following judgment and a supplemental judgment concerning a cartel damages claim, the court considered consequential costs. The existence of the cartel and ABB’s liability had already been established, leaving quantification as the principal dispute.

BritNed recovered damages but substantially less than its own Part 36 offer. ABB had made a Part 36 offer which BritNed did not beat, but ABB withdrew that offer after trial and before judgment. The issues included overcharge, lost profit, a regulatory cap and compound interest. The central questions were which party was successful, what significance should be given to the parties’ offers, and whether costs should be allocated by issue.

1. Applicable discretion. The court’s powers under Civil Procedure Rules CPR 44 are broad. The usual starting point is that the unsuccessful party pays the successful party’s costs, but the court must consider all the circumstances. Relevant matters include conduct, partial success, admissible offers outside Part 36, and the form of order appropriate to the case.
2. Success and relative failure. BritNed was the successful party because it recovered damages. The fact that it recovered substantially less than it claimed did not determine the incidence of costs. It was relevant instead to the amount of costs recoverable, because BritNed’s central overcharge analysis had substantially failed.
3. Withdrawn offer. ABB’s withdrawn Part 36 offer did not produce the automatic costs consequences of Civil Procedure Rules Part 36. Under CPR 36.11(3), an offer remaining on the table could not have been accepted without the court’s permission in the relevant circumstances. Once withdrawn, the offer was only a factor under CPR 44. A non-Part 36 offer, including a withdrawn Part 36 offer, does not carry an automatic read-across of Part 36 consequences.
4. Issues-based order. The four issues were substantially intertwined, with the overcharge claim central and the other claims largely consequential. It was therefore neither just nor practicable to allocate costs issue-by-issue. The court would have applied a substantial discount, approximately 40 per cent, to BritNed’s costs to reflect its relative failure, had a costs order otherwise been made in its favour.
5. Disposition. The withdrawn offer was insufficient to reverse the incidence of costs, particularly given the difficulty of quantification. Nevertheless, it would be unjust for ABB to pay any of BritNed’s costs because ABB had made an early commercial offer which BritNed failed to beat. The order was that there be no order as to costs, including the costs of the costs hearing.