Costs News

02 April 2020
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Shorter trial scheme: Size of costs not enough to displace summary assessment

The “mere fact” that a party has incurred substantial costs for the trial of a preliminary issue in a case running under the shorter trials scheme is not enough to displace the general rule in favour of summary assessment, the High Court has ruled.

Eli Lilly and Co (Claimant/Part 20 Defendant) v Genentech Inc (Defendant) [2020] EWHC 564 (Pat) is a dispute between the parties over a patent that is very similar to one they have already litigated over, which led to the defendant’s patent being revoked.

Roger Wyand QC, sitting as a deputy High Court judge, considered the costs following the trial of a preliminary issue and application for summary judgment. The claimant was largely, but not wholly, successful.

The shorter trials scheme provides that, save in exceptional circumstances, the court will make a summary assessment of the costs of the party in whose favour any order for costs is made; rules 44.2(8), 44.7(1)(b) and part 47 do not apply.

The total costs of the action to date were £855,000 for Lilly and £675,000 for Genentech, which argued that the size of these costs were “exceptional circumstances”.

Mr Wyand said: “I agree that these figures are large for what was a two-day hearing. However, I do not believe that this makes the circumstances exceptional. The mere fact that substantial costs have been incurred is not, of itself, exceptional. The preliminary issue was an attempt to avoid a trial on the same scale as the first action on which the parties incurred, between them, costs of approximately £11m.”

Lilly said its costs of the whole action, excluding those issues it lost, were £800,000. But Genentech argued that it would be wrong to order it to pay this because, should it succeed on the issues that were still live, it would be the commercial winner of the action. Rather, Genentech submitted that it should only have to pay the costs of the trial and should receive its costs for the issues it won as set-off. The judge agreed with the defendant’s approach.

Lilly’s cost schedule divided out the costs by time periods, rather than general action and trial costs. The first three time periods were for pre-action preparation up to the directions hearing where the preliminary issue trial was ordered. These amounted to £200,000 and the judge said it was “reasonable to treat these costs as the general costs of the action”. This left £600,000 as Lilly’s costs of the trial, and Mr Wyand ordered Genentech to pay £400,000 on the basis of what both sides would be likely to recover on detailed assessment, having found that the £121,000 it claimed for the issues where it won were not reasonable or proportionate.

Andrew Waugh QC, Jeffrey Chapman QC (instructed by Allen and Overy) for the claimant. Stephen Moriarty QC, Michael Tappin QC (instructed by Marks and Clerk Law) for the defendant.

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