Bim Kemi AB v Blackburn Chemicals Ltd.

Factual and Procedural Background

This opinion concerns the determination of costs following a judgment on the main appeal regarding a contract dispute originating from a 1994 agreement between the parties. The appellate court held that a binding contract existed, found breaches of contract by one party, and reversed the trial judge’s findings on repudiatory breaches and breach by the other party. Issues relating to costs were adjourned and subsequently referred to the appellate judges for determination.

Legal Issues Presented

1. Which party should be considered the successful party for the purposes of costs following the appeal?
2. Whether costs should be awarded on an indemnity basis or standard basis.
3. How to appropriately reflect the parties’ conduct and specific issues lost or won in the costs order.
4. Whether interest should be awarded on costs already paid and at what rate.
5. Whether certain costs related to damages preparation should be awarded at this stage or deferred.
6. Whether the matter should be remitted to the Technology and Construction Court for further proceedings.

Arguments of the Parties

Appellant's Arguments

• Claimed to be the successful party following the appeal and sought an order for costs of both trial and appeal.
• Requested costs be paid on an indemnity basis due to the other party’s late disclosure and conduct.
• Argued no special costs order should be made regarding the “existence of contract” issue on which they failed, referencing a prior settlement offer on a "drop hands" basis.
• Asserted entitlement to interest on costs at a rate higher than 1% over base rate, based on borrowing costs.
• Requested immediate payment of costs already incurred in the assessment of costs.
• Suggested the case be remitted to the Technology and Construction Court due to adverse findings against their witnesses by the trial judge.

Appellee's Arguments

• Submitted that the case should be regarded as a stalemate with substantial grounds for their position at trial.
• Proposed only a partial costs order on appeal (suggested 50%) and no order for trial costs.
• Argued costs related to damages preparation should be deferred until the conclusion of causation and loss issues.
• Suggested all costs be assessed on a standard basis rather than indemnity.
• Opposed payment of interest on costs, contending it was unusual and unnecessary.
• Did not press opposition to interest on costs orally at hearing.
• Opposed remittal of the case to the Technology and Construction Court.

Table of Precedents Cited

Court's Reasoning and Analysis

The court began by identifying the successful party for costs purposes as the party who prevailed on the substantive issues tried, notwithstanding an unresolved allegation of illegality under EC competition law which was not determined at trial and might benefit the opposing party if upheld. The court treated the litigation thus far as relevant for costs and concluded that the appellant was the successful party overall.

In assessing conduct, the court acknowledged adverse findings against both parties but gave credit to the appellant for making a reasonable settlement offer prior to trial, which the trial judge had not considered. The court found that no penalization of the appellant was warranted on costs grounds.

Regarding the significant issue lost by the appellant—the “no contract” defense—the court accepted the appellant’s justification for running this point due to late disclosure and the strength of the argument before a last-minute amendment. However, as the appellant ultimately lost this issue but benefited from it, the court considered it fair to reflect this in the costs order by requiring the appellant to recover only 75% of their costs.

The court rejected the appellant’s claim for indemnity costs, finding the circumstances did not justify departing from the standard basis.

On interest, the court applied the principle from Jaura v Ahmed that 1% over base rate is the presumptive commercial interest rate, declining to award a higher rate in absence of persuasive evidence. Interest was ordered on costs already paid and on costs to be paid, at specified rates and from appropriate dates.

The court determined that costs related to the issue of damages preparation should be included in the current costs order, but costs related to the assessment of damages should await the outcome of damages assessment.

Finally, the court declined the appellant’s request to remit the case to the Technology and Construction Court, leaving future procedural management to the Commercial Court.

Holding and Implications

The court’s final decision is summarized as follows:

• The appellant is the successful party for the purposes of costs of both the trial and the appeal.
• The appellant is entitled to recover 75% of their costs from the appellee, reflecting the lost “no contract” issue.
• Costs are to be assessed on the standard basis, not indemnity.
• Interest on costs already paid and to be paid is awarded at 1% above base rate, with interest on costs awarded in favor of the appellant running from the date of the trial judge’s order at the judgment rate.
• Certain costs related to damages preparation are included in the current costs order, while costs related to damages assessment are deferred.
• The case will not be remitted to the Technology and Construction Court; procedural management remains with the Commercial Court.

The direct effect is that the appellant recovers the majority of their costs, but the costs order is adjusted to reflect a significant issue lost. No new legal precedent is established; the ruling applies established principles on costs, interest, and conduct in litigation.