Triumph Controls- UK Ltd & Anor v Primus International Holding Company & Ors

In commercial litigation, the party receiving a substantial payment will ordinarily be treated as the overall successful party for costs purposes. The starting point is that the unsuccessful party pays the successful party’s costs. The court must then consider all the circumstances, including success on individual issues, conduct, offers and whether costs were incurred separately on failed issues.

An issues-based order should be approached cautiously. Where issues involve substantial common evidence and investigation, a proportionate reduction may better reflect the outcome. A payment on account should represent a reasonable sum, taking account of the uncertainty of detailed assessment and the costs recoverable on the standard basis.

The claimants obtained judgment and substantial damages against the defendants following long-running commercial litigation concerning alleged breaches of warranties. The claimants succeeded on the central breach issue and on one principal warranty claim, but failed on other claims and sub-issues.

The court determined consequential issues on paper. The issues were whether costs should follow the event or be reduced to reflect the claimants’ partial success, the appropriate payment on account, and the defendants’ application for permission to appeal the earlier merits and quantum findings.

1. Costs outcome. The claimants were the successful party because they obtained substantial damages. They were entitled to recover at least part of their costs.
2. The general rule under CPR 44.2 applied as the starting point. The court considered the parties’ conduct, the claimants’ success on parts of the case, the absence of admissible settlement offers, the reasonableness of the arguments advanced and the extent of overlap between the claims.
3. An issues-based order was not required. The court declined to divide the litigation into numerous issues and sub-issues because the claims shared substantial factual, expert and valuation evidence. The claimants’ unsuccessful arguments were not unreasonable or unarguable.
4. A proportionate order was appropriate because the defendants had successfully defended the Nadcap Warranty Claim. The discrete evidence and court time attributable to that claim justified a reduction, while the common evidence and the claimants’ success on the central issue justified retaining most of the costs. The defendants were ordered to pay 85 per cent of the claimants’ costs, subject to detailed assessment on the standard basis.
5. Under CPR 44.2(7), the defendants were required to make a payment on account. Having regard to the high-level estimate, the absence of an agreed costs budget, the volume of evidence and the uncertainty of detailed assessment, £3 million was a reasonable sum.
6. Permission to appeal was refused. Grounds 1 to 6 sought to challenge factual findings based on the evidence, and ground 7 identified no error in the construction of the SPA. The proposed appeal had no real prospect of success.

The judgment concerned consequential costs, payment on account and permission to appeal following earlier judgments in the same proceedings. Permission to appeal was refused by the High Court.