The High Court ordered the defendants in Fyffes plc’s action to receive the costs of the proceedings, but excluded 80% of their discovery costs and the costs of 25 hearing days. The deductions related to the “dealing issue”, on which the defendants had been unsuccessful.
Miss Justice Laffoy delivered the costs judgment on 10 February 2006, after hearing submissions on 26 January. The underlying proceedings had already been decided; this judgment addressed how the costs should be allocated. It did not change the outcome of the action or award damages.
Under Order 99, rule 1(4) of the Rules of the Superior Courts 1986, costs of an issue of fact or law generally follow the event. The defendants argued they had won overall and should receive their full costs, including reserved costs. Fyffes accepted that the overall event had been decided for the defendants, but asked the court to exclude costs attributable to the dealing issue.
Fyffes argued that the defendants’ position on that issue unnecessarily lengthened the proceedings and increased expense. It also relied on the third defendant’s position as a Fyffes director at relevant times and on pre-proceedings correspondence about the share disposals. The defendants said the issue involved difficult legal principles and inferences from largely uncontroversial facts. They also pointed to the judgment’s observation that the court had not gained the impression that factual witnesses disbelieved the positions they presented.
The court said the usual rule that costs follow the event is tempered by judicial discretion, and that the party seeking to displace the rule bears the burden of doing so. In this case, the litigation was a high-level commercial dispute between two major public companies, so only exceptional circumstances would justify a departure.
Miss Justice Laffoy found such circumstances in the relationship between the shares, the DCC Group and the third defendant. The shares were treated as a DCC Group asset in its consolidated balance sheet, and the profit from their sale accrued to the group. The third defendant had been a Fyffes director on 3 February 2000, which the judge treated as the material date because later sales flowed from what happened then. The defendants’ approach, based on separating legal and beneficial ownership, ignored what the judge considered the reality of the connection between the director, the shareholding and the group. It added considerably to the case’s complexity and duration.
The court chose specific deductions rather than a percentage reduction or an order requiring costs accountants to separate all costs attributable to the dealing issue. The order allowed the defendants their costs except for 80% of the costs of making discovery and the costs of 25 hearing days. The judgment does not state the monetary value of the deductions.