Albion Water Ltd & Ors v Water Services Regulation Authority, Court of Appeal - United Kingdom Competition Appeals Tribunal, January 08, 2007, [2007] CAT 1

Resolution Date:January 08, 2007
Issuing Organization:United Kingdom Competition Appeals Tribunal
Actores:Albion Water Ltd & Ors v Water Services Regulation Authority

Neutral citation [2007] CAT 1Case No: 1046/2/4/04IN THE COMPETITION APPEAL TRIBUNAL1034/2/4/04(IR)Victoria HouseBloomsbury PlaceLondon WC1A 2EB8 January 2007Before:Sir Christopher Bellamy (President)The Honourable Antony LewisProfessor John PickeringSitting as a Tribunal in England and WalesBETWEEN:ALBION WATER LIMITEDand WATERLEVEL LIMITEDAppellantssupported byAQUAVITAE (UK) LIMITEDIntervener-v-WATER SERVICES REGULATION AUTHORITY(formerly the Director General of Water Services)Respondentsupported by (1) DWR CYMRU CYFYNGEDIGand(2) UNITED UTILITIES WATER PLCIntervenersJUDGMENT ON COSTS (SHOTTON PAPER) APPEARANCESDr. Jeremy Bryan, Managing Director of Albion Water Limited, and subsequently Rhodri Thompson QC and John O'Flaherty appeared on behalf of Albion Water Limited.Rupert Anderson QC and Valentina Sloane (instructed by the Treasury Solicitor on behalf of Director of Legal Services, OFWAT) appeared on behalf of the respondent.Christopher Vajda QC and Meredith Pickford (instructed by Wilmer Hale) appeared on behalf of Dwr Cymru Cyfyngedig.4 I introduction1. Following an interim judgment on 22 December 2005 [2005] CAT 40, the Tribunal gave judgment in Case no. 1046 on 6 October 2006 [2006] CAT 23 (``the main judgment''). In a further judgment of 18 December 2006 [2006] CAT 36, the Tribunal made a number of declarations and orders and continued an order for interim relief made on 20 November 2006. To the extent that the latter order arises in part under the parallel interim measures Case no. 1034(IR), we deal in this judgment with the costs of both cases, without drawing any distinction between them. However, the vast majority of the costs arise in the main case, which is Case no. 1046. We are not concerned here with the costs of Case no. 1031, introduced before the Tribunal on 2 April 2004, which never proceeded beyond the early stages. Case no. 1031 was effectively overtaken by Cases no 1034(IR) and 1046. 2. In its judgment of 18 December 2006, the Tribunal: set aside numerous parts of the contested Decision; found that Dwr Cymru had a dominant position in the relevant market; referred certain matters back to the Authority; and decided that Dwr Cymru had abused its dominant position by imposing a margin squeeze. Albion was, therefore, to a large extent successful in this appeal. 3. This judgment deals with the issue of costs. We note, as a general observation, that the Authority and Dwr Cymru between them appear to have incurred costs of some £2 to £3 million in unsuccessfully defending the appeal. Albion, the successful appellant, now seeks to recover costs of approximately one-tenth of that amount. Albion's application for costs is, however, strongly opposed by the Authority and Dwr Cymru.4. The Tribunal's jurisdiction to award costs is set out in Rule 55 of the Competition Appeal Tribunal Rules SI 2003/1372 (the ``Tribunal's Rules''). Rule 55 provides as follows: `` - (1) For the purposes of these rules ``costs'' means costs and expenses recoverable in proceedings before the Supreme Court of England and Wales, the Court of Session, or the Supreme Court of Northern Ireland (2) The Tribunal may at its discretion, subject to paragraph (3), at any stage of the proceedings, make any order it thinks fit in relation to the payment of costs by one party to another in respect of the whole or part of the proceedings and, in determining how much the party is required to pay, the Tribunal may take account of the conduct of all parties in relation to the proceedings. (3) Any party against whom an order for costs is made shall, if the Tribunal so directs, pay to any other party a lump sum by way of costs, or such proportion of the costs as may be just. The Tribunal may assess the sum to be paid pursuant to any order made under paragraph (2) above or may direct that it be assessed by the President, a chairman or the Registrar or dealt with by the detailed assessment of the costs by a costs officer of the Supreme Court or a taxing officer of the Supreme Court of Northern Ireland or by the Auditor of the Court of Session''5. Rule 55 gives the Tribunal a wide discretion as to costs, as discussed in a number of the Tribunal's previous decisions, including Hutchison 3G (UK) Limited v. Office of Communications [2006] CAT 8, and Racecourse Association and British Horseracing Board v. OFT [2006] CAT 1. There is no rule that costs follow the event but, subject to other considerations, the fact that a party has won is a starting point for considering the exercise of the Tribunal's discretion: Racecourse Association, cited above, at paragraphs 7 to 9. Each case will depend on its particular facts and circumstances: Hutchison 3G, at paragraph 42. In this still developing jurisdiction, the Tribunal is proceeding on a case-by-case basis dealing with different, and not always foreseeable, circumstances as they arise. Some of the Tribunal's previous decisions on costs are referred to in Celesio AG v. OFT [2006] CAT 20, at paragraph 18. 6. In this case, the Tribunal sits as a tribunal in England and Wales. Under Rule 55(1), the relevant recoverable costs and expenses are, therefore, those that are recoverable before the Supreme Court of England and Wales, pursuant to the Civil Procedure Rules 1998, as amended (``the CPR'').II Submissions of the parties and backgroundAlbion's application for costs- General 7. By an application dated 18 October 2006, Albion seeks an order that the Authority and/or Dwr Cymru should pay 100 per cent of Albion's costs, to include the internal management and administrative costs incurred by Albion in pursuing the appeal, in addition to its external legal costs. Albion considers that it succeeded on all the principal issues before the Tribunal. 8. As to the exercise of the Tribunal's discretion, Albion invites the Tribunal to take account of the fact that the decision of the Authority, taken after a lengthy investigation, has been shown to be flawed in almost all its findings; based on an inadequate investigation; reliant on a number of flawed legal premises; and contrary to the policy underlying the 1998 Act. Albion submits that the Tribunal should also take into account the general importance of the issues decided in this case, both for the water industry and for competition law more widely. Albion further submits that the Tribunal should have regard to the behaviour of both the Authority and Dwr Cymru throughout the course of this litigation. Albion refers to what it contends to be: (i) the undue delay between Albion notifying its complaint to the Authority on 8 March 2001, and the publication of the Authority's decision on 26 May 2004; (ii) the unwillingness of the Authority and Dwr Cymru to provide evidence to the Tribunal during the proceedings; (iii) the conduct of the Authority and Dwr Cymru in causing the proceedings before the Tribunal to be more protracted, complex and costly than necessary; (iv) the late change in position by the Authority and Dwr Cymru in relation to avoidable retail costs and ECPR; and (v) the apparent resistance of the Authority to competition and to water efficiency. Albion also relies on damage caused to it by the Decision, and the imbalance of resources between the parties.- Albion's internal costs 9. As regards its internal costs, Albion submits that during the course of the proceedings Dr Bryan, its Managing Director, has performed the role of litigant in person as well as that of instructing solicitor, expert witness and witness of fact. He has been assisted in those respects by Mr Jeffery and Mr Knaggs, also directors of Albion. Whilst the legal costs of the appeal have been limited to the direct costs of instructing counsel, Albion has directly borne the total costs of administrative support and expert input. Accordingly, it should be entitled to recover its own internal costs occasioned by the appeal. Albion relies on CPR 48.6 and refers to the Litigants in Person (Costs and Expenses) Act 1975. According to Albion, that Act applies to the Tribunal by virtue of Rule 55 of the Tribunal's Rules.10. Albion further seeks to recover the costs of Dr Bryan, Mr Jeffery and Mr Knaggs, as in-house experts. Albion refers to Re Nossen's Patent [1969] 1 All ER 775; Admiral Management Services Ltd v. Para-Protect Europe Ltd [2002] EWHC 233 (Ch), [2003] 2 All ER 1017; and Richards & Wallington (Plant Hire) Ltd v. Monk & Co Ltd [1984] Costs LR (Core Vol) 79. According to Albion, Dr Bryan's experience and qualifications fully justify him being characterised as an expert. As to other costs and expenses, Albion considers that the work done was equivalent to the function performed by the in-house legal teams of the Authority and United Utilities.11. In respect of the roles of Dr Bryan, Mr Jeffery and Mr Knaggs, Dr Bryan confirms that they are all directors of Albion Water and its parent company, Waterlevel. The directors are employed by Waterlevel, and their services are charged to Albion by a monthly inter-company charge, which is varied to ensure that Albion is cash positive at all times. In order to estimate Albion's internal costs, in his witness statement dated 3 November 2006 Dr Bryan identified the time committed by its directors under seven headings: advice to counsel, information analysis, attendance on counsel, attendance on the other side, administration, witness statements, case management conferences and hearings. That time has then been used to calculate costs, on the basis of the recovery of salary, plus employer's national insurance. Using that formula, Dr Bryan states that his hourly rate amounted to £56.65 per hour, with the hourly rates of both Messrs Jeffery and Knaggs being £35.40. Dr Bryan adds that, had he calculated an hourly rate for the directors on the basis of the external supply of their services, their rates would have been £169.94 per hour for Dr Bryan, and £106.21 per hour for Mr Jeffery and Mr Knaggs. Dr Bryan submits...

To continue reading