“Sanderson” and “Bullock” Orders - Nevil Phillips

Tue, 27 February, 2018

What are they?

  1. "Sanderson" and "Bullock" Orders are each a species of costs order which may be appropriate in circumstances in which a claimant proceeds against multiple defendants. They derive from decisions made at the turn of the 20th Century: Sanderson v. Blyth Theatre Company Limited [1903] 2 KB 533, and Bullock v. London General Omnibus Company [1907] 1 KB 264.

In what circumstances are they relevant?

  • Thus, the orders are relevant where, in the same proceedings, a claimant (C) sues two defendants (D1 & D2) and succeeds against only one of them (e.g. D1).
  • In that scenario, two parties have been successful (C, as against D1; and D2, as against C), and two parties have been unsuccessful (C, as against D2; and D1, as against C). Thus, in simple terms, C is both a receiving party (from D1) and a paying party (to D2).
  •  The general rule as to costs (see CPR 44.2(2)(a)) is that "the unsuccessful party will be ordered to pay the costs of the successful party".
  • In the scenario considered in para 3 above, a straightforward application of the general rule as to costs would have the consequence that C pays D2’s costs (the former having failed in its claim against the latter), and that D1 pays C’s costs (the latter having succeeded against the former).
  • However, the Court has a discretion "as to whether costs are payable by one party to another" (see CPR 44.2(1)(a)), and as to whether to "make a different order" from the general rule (see CPR 44.2.(2)(b)).
  • It is in this regard that the Court may consider making either a "Sanderson" or a "Bullock" Order. Both are intended to streamline the costs consequences of proceedings against multiple defendants, and to avoid the complications which may arise from an application of the general rule as to costs.
  • However, there is no compulsion to make either order, and it is a matter of judicial discretion as to whether any such order is made: Hong v A & R Brown Ltd [1948] 1 K.B. 515.

What is their effect?

A "Sanderson" Order

  • A "Sanderson" Order is simpler than a Bullock Order. It has the effect that D2 (as the successful defendant), where sued in the alternative to another defendant (D1), recovers its costs directly from its unsuccessful co-defendant (i.e. D1) rather than from the claimant.
  • Of a "Sanderson" Order, in King v Zurich Insurance Company [2002] EWCA Civ 598, Keane LJ stated "The judge had to deal with a not uncommon situation where a claimant was unsure which of the defendants would be liable for his injury and where – in the event – he succeeded against one but failed against the other. In the days before the Civil Procedure Rules came into effect, this situation would often be met by a Bullock order… ordering the plaintiff to pay the successful defendant's costs but ordering the unsuccessful defendant to pay those costs over to the plaintiff."

A "Bullock" Order

  • A "Bullock" Order is a variation on the same theme: D2 (as the successful defendant), where sued in the alternative to another defendant (D1), recovers its costs from the claimant (C); and C then recovers the value of D2's costs from D1 (as the unsuccessful Defendant) as part of C's own costs of the claim.
  • Of a "Bullock" Order, in King v Zurich Insurance Company Keane LJ added "The judge had to deal with a not uncommon situation where a claimant was unsure which of the defendants would be liable for his injury and where – in the event – he succeeded against one but failed against the other. In the days before the Civil Procedure Rules came into effect, this situation would often be met by a Bullock order… ordering the plaintiff to pay the successful defendant's costs but ordering the unsuccessful defendant to pay those costs over to the plaintiff."

In what sort of cases are they made?

  • The orders tend to be made in circumstances where proceedings are begun against multiple defendants because a claimant is unsure (at the time of commencing) of which defendant to sue, and where a time-bar is looming (meaning that the claimant is reluctant to take the chance of suing the wrong defendant, only to find that its claim against the correct defendant is time-barred when suit is finally commenced against the latter).
  • As a result, the orders occur mostly in tort cases. There is much less scope for them in contractual disputes (in which, by virtue of the bilateral nature of the relationship, there is rarely uncertainty as to the identity of the correct defendant and, accordingly, seldom reason for a second defendant to be party to the claim).
  • Indeed, it has been suggested that the orders are appropriate only where the reason for the claimant commencing against two defendants is that it did not know which party was properly at fault: see Whitehead v Searle [2007] EWHC 2046 (QB). However, this has very recently been called into question at first instance – see below.
  • "Sanderson" Orders are more commonly made in cased where the claimant enjoys Legal Aid (because, in the situation described in para 3 above, they remove the need for the State to pay the costs of the successful defendant in the first instance).
  • Where a claimant fails against both defendants (even where D1 blames D2 for causing the loss in respect of which C sues both), there is, of course, no scope for a "Sanderson" or "Bullock" Order: see Beoco Ltd v Alfa Laval Co Ltd [1995] 1 Q.B. 137; McGlinn v Waltham Contractors Ltd [2007] EWHC 698.

What is their rationale?

  • The Court of Appeal explained in Irvine v Commissioner of Police for the Metropolis [2005] EWCA Civ 129 that the rationale for the discretion to make "Sanderson" or "Bullock" Orders is the scope to avoid injustice to a claimant in the circumstances described above, i.e. where C does not know which of two or more defendants should be sued for a wrong done, and faces the unpalatable prospect of depleting or exhausting any recovery in damages from D1 by reason of the effect of an order for costs against C in respect of the (unsuccessful or ultimately superfluous) action against D2.
  • However, it has also been acknowledged that the discretion must be exercised with care, given that its exercise has the effect of making D1 liable for the costs of more than just the claimant (and, therefore, more than just one party): see again Irvine v Commissioner of Police for the Metropolis.

What justifies the exercise of the discretion to make them?

  • Where a claimant succeeds against one of the defendants (in contrast to the position referred to in para 15 above), earlier authorities suggested that a "Sanderson" or "Bullock" Order might more readily be made in circumstances where it could be shown that one defendant had blamed the other for the claimant's loss. In that event, the claimant could argue with force that it was right to commence proceedings against both defendants in order to avoid the risk that a claim against D1 failed and a claim against D2 became time-barred in the interim.
  • However, more recent decisions have suggested that there is no certainty in this assumption and that the exercise of the discretion in favour of the orders is more unpredictable.
  • As it is, the touchstone of the exercise of the discretion is the need to have regard to the Overriding Objective in CPR 1, and the need to comply with the specific provisions of CPR 44.2: see again Irvine v Commissioner of Police for the Metropolis.
  • The effect of this is that there are no rigid parameters which govern the exercise of the discretion. Rather, its exercise must be guided by regard to a variety of factors which must be weighed before the decision is made to render one defendant liable for the costs of another.
  • There are two leading authorities which now provide the most valuable guidance: Irvine v Commissioner of Police for the Metropolis (supra), and Moon v Garrett [2006] EWCA Civ 1121. Other authorities tend merely to illustrate the more nuanced exercise of the discretion in practice.
  • In Irvine v Commissioner of Police for the Metropolis it was held by the Court of Appeal that, where an action founded on either contract or tort against two defendants is successful against one and unsuccessful against the other:
    1. The Court has a discretion to order the unsuccessful defendant to pay the successful defendant’s costs.

    2. This may be done in one of two ways: either (i) by way of a "Sanderson" Order (ordering the unsuccessful defendant to pay costs directly to the successful defendant), or (ii) by way of a "Bullock" Order (ordering the claimant to pay the successful defendant’s costs, and then permitting the claimant to add them to the costs ordered to be paid to him by the unsuccessful defendant).

    3. However, neither order is appropriate in favour of a claimant who has sued more than one defendant where the causes of action against each are quite distinct, or where the respective claims are not alternative, or are based on quite distinct sets of facts.

    4. The matters which were relevant to (although not exhaustively determinative of) the exercise of the discretion included (i) most importantly, whether it had been reasonable for the claimant to pursue the successful defendant; (ii) the connection (if any) between the causes of action advanced against the respective defendants); (iii) whether the claims were made in the alternative (that being the scenario at which a "Sanderson" Order is primarily directed; although the fact that the claims were not truly alternatives does not preclude the court from ordering D1 to pay D2’s costs); (iv) the success or otherwise of the claimant; and (v) whether one defendant had blamed another.

    5. The Judge had been correct to state "It does seem to me that this is a case where, as in all cases, parties and their legal teams have to take a careful and close look at the basis on which they seek to bring in another party to proceedings and to make a judgment for themselves on the basis of the information available to them as to whether or not they are likely to succeed in claims against those parties. They cannot expect, simply because one party seeks to lay the blame at the door of another, that they can necessarily pursue that other party at the expense of the one who is pointing the finger. Parties must give careful thought to how they are going to pursue their claims."

    6. Accordingly, the trial judge (where she had found to the effect that, although the claimant had succeeded against the first defendant, he had failed to establish a sustainable claim against the second defendant, and in relation to the third defendant it was only sued in the alternative 15 months after the proceedings had started: the claimant had produced no cogent evidence in support of his claim against it) had been entitled to refuse a "Sanderson Order" and to conclude that, although the first defendant should pay the costs of the claimant, the claimant should pay the costs of the two defendants against which his claims in negligence had failed.

  • In Moon v Garrett, the claimant, in the course of delivering concrete blocks to the first defendant’s premises, fell and rolled into a pit. The claimant brought his claim both against the first defendant and his own employers, but only succeeded against the first defendant. The Judge made a "Bullock" Order against D2 and D3 in favour of D1, despite D1's unreasonable denial of liability and the fact that he blamed C's employers (D2 and D3) in correspondence. The Court of Appeal (in upholding the Judge) held that, where an action founded in tort against two defendants is successful against one and unsuccessful against the other:

    1. There is no hard and fast rule as to when it is appropriate to make a "Sanderson" or a "Bullock" order as to costs.

    2. In making a "Sanderson" Order, the judge took into account the way in which the first defendant had responded to the claim, both in laying blame on the employers and in making a threat that he was asset-less.

    3. In these circumstances, it would be hard if the claimant ended up paying the costs of the defendant employer against whom he had not succeeded.

  • Thus, as Waller LJ observed:

    "It seems to me that ... there are no hard and fast rules as to when it is appropriate to made a Bullock or Sanderson Order. The Court takes into account the fact that, if a Claimant has behaved reasonably in suing two Defendants, it would be harsh if he ends up paying the costs of the Defendant against whom he has not succeeded. Equally, if it was not reasonable to join one Defendant because the cause of action was practically unsustainable, it would be unjust to make a Co-Defendant pay those Defendants’ costs. Those costs should be paid by a Claimant. It will always be a factor where one Defendant has sought to blame another.

    The fact that cases were in the alternative so far as they are made against two Defendants would be material, but the fact that claims were not truly alternative does not mean that the Court does not have the power to order one Defendant to pay the costs of another. The question of who should pay whose costs is peculiarly one for the discretion of the Trial Judge."

  • These decisions suggest that the dominant consideration is whether the decision to commence against D2 was reasonable.

  • If the decision was not reasonable, C cannot seek to pass to D1 the burden in costs payable to D2 by C.

Where the decision was reasonable, that will not of itself justify an order that D1 should pay D2’s costs, either by way of a "Sanderson" Order or a "Bullock" Order.

  • Indeed, even if the decision to proceed against D2 was reasonable, the court will weigh in the balance the position of D1. If D1 has not caused or contributed to the decision to commence against D2, that will weigh against a "Sanderson" or "Bullock" Order.

  • However, it has been suggested in New Zealand that, by the same token, the latter principle operates in reverse: see Lane Group Ltd v D I & L Paterson Ltd [2000] 1 N.Z.L.R. 129.

  • Likewise, where (i) the claimant recovers from D1 substantially less than the amount originally claimed, and (ii) that creates a risk that the costs recoverable by C from D1 will be less than those payable by C to D2, that risk may justify a refusal to make either a "Sanderson" or "Bullock" Order: see again Whitehead v Searle.

Are there any more recent illustrations of them being made in practice?

  • There are recent examples of the discretion to make "Sanderson" and "Bullock" Orders being invoked.
  • In Dixon v Blindley Heath Investments Ltd [2016] EWCA Civ 548, the Court of Appeal observed that the fact that the claimant was not suing two or more defendants for the same loss was not a powerful factor against the making of an order. It echoed that it will be relevant (but not determinative) that one of two or more defendants sued has blamed the other. It further recorded that the fact that the claimant's case against one group of defendants (in effect, for rescission and/or damages) was inconsistent with its claims against another group of defendants (seeking registration of the transfer of shares) was not necessarily "a disqualifying feature".

  • In Jabang v Wadman and Ors [2017] EWHC 1993 (QB), the High Court determined (contrary to what was suggested at first instance in Whitehead v Searle – see para 13 above) that "Bullock" Orders are not limited to those cases where the claimant does not know which party is at fault.

  • There, C succeeded in his claim against the D2, but not against the D3, D4 and D5. He accepted that he should be ordered to pay the costs of D3 and D4, but argued for a "Bullock" Order in his favour (mean that D2 would indemnify him for his liability to pay those costs to D3 and D4).

  • D2 submitted that it would not be fair to make a "Bullock" Order, contending that the case was not one in which C had to sue more than one defendant because he was unsure which of them had caused his loss (and relying upon what was stated in Whitehead v Searle – see para 13 above).

  • However, Nicol J identified "a number of difficulties with that submission".

  • First, the underlying judgment in Whitehead v Searle was reversed by the Court of Appeal and, thus, there was no reason for the Court of Appeal to review the statement of principle. That did not mean that such statement was correct.

  • Second, the statement of principle in Whitehead v Searle "sits uncomfortably" with what Waller LJ stated in Moon v Garrett (see para 26(4) above).

  • Third, in Whitehead v Searle the Court was in any event dealing with a situation where both defendants succeeded in defending a large part of the claim, and that was not the case in Jabang v Wadman.

  • Nicol J therefore concluded that a "Bullock" Order was appropriate in (or despite) circumstances where (i) the claims against D3 and D4 were not unreasonable, (ii) they were not alternative claims, (iii) no one defendant was blaming another, but (iv) if D2 had accepted his responsibility at the outset, there would have been no claim brought against the other defendants. He stated that "Weighing all the factors, it seems to me to be fair, right and consistent with the overriding objective that the second defendant should ultimately bear the costs of the third and fourth defendants."

Can they be made in arbitration proceedings?

  • There is no practical scope for "Sanderson" or "Bullock" Orders in ordinary commercial (i.e. non-statutory or court-operated arbitration proceedings). That is because the jurisdiction of commercial arbitrators (as to costs, and otherwise) is contractual in its origin and scope. Thus, there is no legal basis for an arbitral tribunal to make costs affecting any party beyond those who are bound by the contractual agreement to arbitrate.
  • It is for that reason that, ordinarily, costs as between parties to "string" arbitrations are only recoverable as damages, and according to the ordinary principles of causation and remoteness which govern the same: see The Antaios [1981] 2 Lloyd’s Rep 284; The Vakis T [2004] 2 Lloyd’s Rep 465; Occidental Chartering Inc v Progress Bulk Carriers Ltd [2012] EWHC 3515 (Comm). There is, therefore, ordinarily no jurisdiction (and, ergo, no discretion) on the part of any arbitral tribunal to order one respondent to bear the costs of another (directly or indirectly).

 

Nevil Phillips

Nevil Phillips is among the most highly-regarded advocates at the Commercial Bar. He has consistently been listed for many years as a first-ranked Leading Junior in Commodities, Trade & Customs and shipping by The Legal 500, Legal 500 Asia Pacific, Chambers UK, Chambers Global, Who's Who Legal, and Best Lawyers where he has been variously cited as:

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