The case management of proceedings in the High Court is governed at all times by the overriding objective which is to enable 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 only should take place first with a trial on quantum proceeding later on, only if the claimant is successful first time around in whole or in part.
It is usually argued that split trials save costs and court time; often expensive expert evidence needed for the quantum element of the proceedings can 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 case1. His Honour Judge Seymour ruled against a split trial despite the claimant’s assertion that costs of around £1m of expert evidence might be saved by this course of action.
The case concerned the claimants’ allegation that a three-year fixed term contract to provide services had been terminated early entitling them to very substantial damages
in the region of £25m. 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 hearing2 a draft Amended Reply was served, the claimant3 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. 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 and for the court to hear evidence on liability only in the original March slot and quantum evidence at a later separate trial.
The Learned 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 not consider which party had caused the delay in the timetable in the first place4 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 was 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 on 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 whilst 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.
Whilst the Judge accepted that instructing experts on quantum may cost as much as £1m, 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 late5 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 the 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 was “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 whilst 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 Learned 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.
This decision comes at the end of a series of reported decisions where the court has refused to order a split trial6 despite possible large costs savings, although 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 outset7 as an appropriate and cost effective way of resolving the dispute.
And, whilst this was not set out explicitly, the potential cost saving carrot dangled by the claimant of £1m, must have been 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 CPR.8 Although given the court’s recent clamp down on “non trivial” delays of any kind it is likely that in the future a sanction would be imposed on the defaulting party earlier on in the timetable so that an application of this nature would not be necessary.
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 proceed9.
Claimants should, of course, 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, whilst 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.