Introduction
Facts
Decision
Witnesses of fact
Costs savings?
Comment


Introduction

The case management of High Court proceedings is governed at all times by the overriding objective of enabling the court to deal with cases justly and at proportionate cost. In appropriate circumstances, this will involve directing that a trial on issues of liability take place first, with a trial on quantum subsequently proceeding only if the claimant succeeds the first time around (in whole or in part).

It is usually argued that split trials save costs and court time; expensive expert evidence needed for the quantum element of the proceedings can often be avoided and fewer days out of the court diary need to be allocated. This can also result in an earlier slot for the trial being fixed. However, in a recent case(1) Judge Seymour ruled against a split trial, despite the claimant's assertion that costs of around £1 million in expert evidence might be saved by this course of action.

Facts

The case concerned the original two claimants' allegation that a three-year fixed term contract to provide services had been terminated early, entitling them to substantial damages in the region of £25 million. These services included the construction of an internet television channel on which the defendant's filmed conferences would be installed. The defendant maintained that it had properly terminated the contract for repudiatory breach of its terms, which included implied terms; it was said, by way of defence, that the claimants' employees or consultants had seriously misled both members of the public and the defendant in its sales practices, leading to considerable damage to the defendant's reputation and brand.

Twelve witnesses of fact and two expert witnesses on quantum on each side were scheduled to give evidence and the trial was fixed for 10 days, to begin in March 2014. However, shortly before the hearing,(2) a draft amended reply was served, the remaining claimant(3) disclosed 600 documents and the parties agreed that the exchange of statements of witnesses of fact would therefore need to be postponed.

Both parties asked the court to order that a trial on liability and quantum should not go ahead in March 2014. The defendant consulted the court listing office and determined that the trial could be accommodated in Autumn 2014 were it to be postponed; however, the claimant's preference was for a split trial, with the court hearing evidence on liability only in the original March slot and on quantum evidence at a later separate trial.

Decision

The judge emphasised that "each case is different", that he had a wide discretion and that he would consider all the circumstances of the case. However, he said that:

"when considering whether it is appropriate to direct a split trial with liability proceeding in March 2014 and quantum at a later date, one starts from the point that in the ordinary way a trial in this court is the trial of all issues of liability and quantum. Consequently there is, as it seems to me, a burden on a party contending for a different type of trial to satisfy the court that that is appropriate. The court, I think, must be cautious before deciding upon a type of trial different from the ordinary type of trial."

He also made it clear that he would focus on the proper case management of the claim moving forward and would not consider which party had caused the delay in the timetable in the first place.(4)

Witnesses of fact

The judge stated:

"It is, I think, an important feature of this case that some of the claims depend not upon the termination of the agreement between the relevant parties but upon alleged breaches during the currency of the contractual relationship. That will necessitate appropriate witnesses being called on behalf of the defendant who were engaged in that relationship and are able to deal with the allegations of alleged breach during that period."

Another important consideration was whether witnesses of fact would have to appear twice if the trial were split and the claimant won on liability.

The claimant maintained that none of his witnesses, except the claimant himself, would have anything to say which would be relevant to a quantum trial. The defendant disagreed; the claimant's damages claim included figures for post-termination anticipated profits, but these were based on the claimant's actual profits while the parties were working together and on various assumptions regarding how the parties would work together over the three-year period of the contract. The defendant wanted an opportunity to cross-examine the claimant's witnesses when quantum issues were being determined; the risk that he would be prevented from so doing could not be adequately dealt with by transcripts of the liability trial evidence being used at the quantum trial.

Costs savings?

While the judge accepted that instructing experts on quantum may cost as much as £1 million, he considered "how likely it is that those savings can be achieved in the real world". Given that the claim form had been issued very late(5) and a long damages schedule had been served (with the assistance of expert advice), he held that substantial sums of money had most likely already been spent.

Timing and benefit to parties

The claimant had argued that he wanted resolution sooner rather than later, particularly given the sums he had expended and the pressure of the proceedings. However, the judge thought it "almost inevitable" that the claimant would appeal if unsuccessful on liability. This would lead to a quantum trial being heard considerably later than the court could accommodate a trial on both issues of liability and quantum.

Another real danger was a "two track piece of litigation", where an appeal might be pursued on liability while the court was expected to hear the quantum trial at first instance. On the other hand, a trial in Autumn 2014 could dispose of all issues.

It was emphasised that proportionality was important, but the judge said that it was not "appropriate to elevate that consideration above all of the others which [he had] so far identified". He concluded that it would be "unfair and unjust in fact to both parties" to split the trial.

Comment

This decision comes at the end of a series of reported decisions in which the court has refused to order a split trial(6) despite possible large costs savings. However, particularly relevant in this case was that the claimant's application came about because the original trial date could not be met; it was not a situation where any party had considered a split trial from the outset(7) as an appropriate and cost-effective way to resolve the dispute. Although it was not set out explicitly, the potential cost-saving carrot of around £1 million dangled by the claimant had to be measured against the quantum of the claim asserted.

Also notable is that the judge accepted the assertion that the trial date could not be met from leading counsel for both parties, given the stage of preparation, despite the apparently high hurdle of "exceptional circumstances" set out in the Civil Procedure Rules.(8) Although given the court's recent clampdown on "non trivial" delays of any kind, it is likely that in the future a penalty will be imposed on the defaulting party earlier on in the timetable so that an application of this nature would be unnecessary.

There are obvious parallels with the authorities relating to the basis on which a trial of a preliminary issue should be ordered; in those cases, guidelines have been set down for when the court will be persuaded that this is the appropriate way to proceed.(9)

Claimants should always consider carefully when formulating their claims whether they have the resources to follow them through to the end; this decision is a reminder that while claims must be pursued "at proportionate cost", they must also be pursued "justly" and the court will therefore not allow the prospect of costs savings – even substantial savings – to override all other considerations.

For further information on this topic please contact Abigail Silver or Geraldine Elliott at RPC by telephone (+44 20 3060 6000), fax (+44 20 3060 7000) or email (abigail.silver@rpc.co.uk or geraldine.elliott@rpc.co.uk). The RPC website can be accessed at www.rpc.co.uk.

Endnotes

(1) Robert Graham Loughridge v The Financial Times Ltd [2013] EWHC 4415 (QB).

(2) Which took place on December 2 2013.

(3) By this point the Internet Broadcasting Corporation had discontinued, but remained a third party to, the proceedings.

(4) There had been a considerable delay to the timetable fixed some months previously.

(5) Just before the end of the six-year limitation period.

(6) See, for example, Electrical Waste Recycling Group Ltd v Philips Electronics UK Ltd [2011] EWHC 3747 and [2012] EWHC 38.

(7) Or from the case management conference stage.

(8) See Practice Direction 7.4(1) to Civil Procedure Rule 29 and Scriven v Scriven [2013] EWCA 4223 Ch. See also Civil Procedure Rule 3.1(2)(b) and Fitzroy Robinson Ltd v Mentmore Towers Ltd [2009] EWHC 3070 (TCC) for a useful list of factors for adjourning a trial (pre-April 1 2013 Civil Procedure Rules reforms).

(9) Preliminary issues are usually reserved for cases in which a point of law can be heard first of all against an agreed series of facts, which is likely to determine the matter once and for all without the need for a trial; but see the factors set out in Steel v Steel [2001] CP Rep 106.