Disclosure of documents – Appellants tendering for tunnelling and mining operations – Respondents expecting to be awarded tender – Tender going to wholly owned subsidiary of appellants – Respondents suspecting conspiracy and seeking disclosure of documents – Appellants producing witness statements but adducing no supporting evidence – Judge ordering disclosure of documents and awarding costs of application to respondents – Appellants challenging costs order – Whether judge having sufficient grounds for making costs order – Appeal allowed
The respondents provided specialist mining, tunnelling and other civil engineering services to mining and construction companies, in particular for the appellants.
In 2005, the appellants decided to provide those services in-house and to use their wholly owned subsidiary (C) for that purpose. After confidently expecting that the contract would be awarded on the basis of their tender, the respondents failed in their bid and the contract went instead to C. The respondents suspected that the tendering had not been fairly conducted. Later, they also learnt that their former chief executive (W), while still in their employ, had allegedly given various confidential documents belonging to the respondents to the appellants as part of the collusion purportedly to steal the respondents’ business.
When its suspicions were seemingly confirmed, the respondents applied for disclosure under Part 31.16 of the Civil Procedure Rules. The appellants resisted the application, filing a number of witness statements but providing no documents in support. The judge ordered disclosure against the appellants and C and more limited disclosure against W.
On further argument, he also ordered that the appellants should pay the entire costs of the application on the ground of unreasonable behaviour, although not the costs of complying with the order.
The appellants appealed, contending that in ordering them to pay the costs of the application, the judge had gone farther than the circumstances of the case could possibly justify since they were entitled to resist the application and there were insufficient grounds for ordering them to pay the entirety of the respondents’ costs.
Held: The appeal was allowed.
Under CPR 48.1, the general rule was that a respondent to an application such as the present was normally entitled to its costs. However, the court’s order as to costs had to have regard to all the circumstances, including the extent to which it was reasonable for the party against which the order was sought to oppose the application. The court had previously never gone further than ordering a respondent to an application of the present kind to bear its own costs.
The respondents’ claim against the appellants was not in any way routine so there was no established approach to the investigation nor certainty as to what steps the potential defendant should take. On the grounds that it was reasonable for the appellants to oppose the application, they were entitled to decide upon what basis and with what evidence they wished to do so, provided that they did not take a wholly unreasonable course that unnecessarily increased the costs. Decisions on costs had to reflect the particular facts of the case and to be assessed on the basis that each case was different: Bermuda International Securities Ltd v KPMG [2001] EWCA Civ 269; [2001] Lloyd’s Rep PN 392 considered.
The judge’s exercise of discretion had been flawed and, in exercise of its own discretion, the Court of Appeal’s view was that although there was ample material to justify a departure from the general rule, it could not extend to an order for the appellants to pay the entirety of the respondents’ costs. Thus, the order would be set aside and no order as to costs would be made.
Stephen Moriarty QC (instructed by Nabarro, of Sheffield) appeared for the first to third appellants and (instructed by Gosschalks, of Hull) appeared for the fourth appellant; Charles Béar QC (instructed by Andrew M Jackson, of Hull) for the respondents.
Eileen O’Grady, barrister
