Hamad M Aldrees & Partners v Rotex Europe Ltd

In assessing costs after a substantial damages claim produces a much smaller recovery, the court must identify the successful party by examining the litigation as a whole and its substance. The amount recovered is important but not conclusive. The court should consider the issues won and lost, the value of the recovery, the real prize pursued, and the parties’ conduct, including any failure to make a reasonable early offer.

Interest under Senior Courts Act 1981, section 35A, is a broad-brush compensatory assessment. The conventional starting point is Bank of England base rate plus 1%, but the court may depart from it where the evidence makes another rate fair.

The claimant pursued contractual claims concerning the performance of machines supplied by the defendant. Following the principal judgment, the claimant recovered approximately £700,000, substantially less than the sum claimed, while the defendant’s counterclaim failed.

This judgment determined consequential matters: whether a further 15% production uplift should be allowed, the appropriate interest rate and period, costs, and permission to appeal. The central issues were how to assess interest fairly, who was the successful party for costs purposes, and how the parties’ issue-based success and litigation conduct should affect the costs order.

1. Further 15% uplift. The claimant was not entitled to add a further 15% to production figures for the period before each machine entered commercial production. The court had already shown considerable indulgence by permitting the claim to be reformulated. That exercise was not a basis for further development of the claim. The proposed uplift would also risk compensating the claimant by reference to throughput exceeding the contractual figure. The existing assessment was left undisturbed.
2. Interest. The court adopted the broad-brush approach summarised in Britned Developments v ABB [2018] EWHC 2913 (Ch). Interest is compensatory, not punitive. Under section 35A of the Senior Courts Act 1981, the court has a broad discretion to award simple interest at a fair rate. The conventional starting point is base rate plus 1%, but evidence of the claimant’s funding circumstances may justify departure. Interest was awarded from 1 January 2014 at 3.25% until 31 December 2014 and thereafter at 4% until payment.
3. Costs. The general rule that the unsuccessful party pays the successful party’s costs remains the starting point, but success is a fact-specific assessment of the litigation as a whole. The party who pays money is not invariably the unsuccessful party. Here, the claimant recovered a sum of real value and the defendant lost its counterclaim, but the claimant failed on substantial aspects of its claim and recovered only about 2% of the amount claimed. The defendant’s failure to make an appropriate early offer was significant. Applying a nuanced issue-based assessment, the defendant was ordered to pay 20% of the claimant’s costs.
4. Permission to appeal. The proposed grounds concerned primary findings of fact and the refusal to extend damages over the lifetime of the machines. There was no real prospect of success and no other compelling reason for an appeal. Permission was refused.

Not an appeal. The judgment determined costs and other consequential matters following the court’s earlier substantive judgment in the same proceedings.