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You are here: BAILII >> Databases >> High Court of Ireland Decisions >> CDB Aviation Lease Finance Designated Activity Company & Ors v Lloyds Insurance Company SA & Ors (Approved) [2025] IEHC 243 (28 April 2025) URL: https://www.bailii.org/ie/cases/IEHC/2025/2025IEHC243.html Cite as: [2025] IEHC 243 |
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THE HIGH COURT COMMERCIAL
[2025] IEHC 243
2022 No. 5759P
BETWEEN:
CDB AVIATION LEASE FINANCE DESIGNATED ACTIVITY COMPANY,
GY AVIATION LEASE 1818 CO., LIMITED,
GY AVIATION LEASE 1830 CO., LIMITED,
GY AVIATION LEASE 1817 CO., LIMITED,
GY AVIATION LEASE 1852 CO., LIMITED,
GY AVIATION LEASE 1702 CO., LIMITED,
GY AVIATION LEASE 0906 CO., LIMITED,
GY AVIATION LEASE 1856 CO., LIMITED,
GY AVIATION LEASE 1712 CO., LIMITED, and
GY AVIATION LEASE 1713 CO., LIMITED.
Plaintiffs
-and-
(1) LLOYD'S INSURANCE COMPANY S.A.,
(2) CHUBB EUROPEAN GROUP SE,
(3) SCOR EUROPE SE,
(4) GLOBAL AEROSPACE UNDERWRITING MANAGERS LIMITED,
(5) GLOBAL AEROSPACE UNDERWRITING MANAGERS (EUROPE) SAS,
(6) GREAT LAKES INSURANCE SE,
(7) BERKSHIRE HATHAWAY EUROPEAN INSURANCE DAC,
(8) TOKIO MARINE EUROPE S.A.,
(9) MAPFRE ESPANA, COMPANIA DE SEGUROS Y REASEGUROS, S.A.,
(10) MSIG INSURANCE EUROPE AG,
(11) HDI GLOBAL SPECIALTY SE,
(12) SWISS RE INTERNATIONAL SE,
(13) FIDELIS INSURANCE IRELAND DESIGNATED ACTIVITY COMPANY,
(14) STARR EUROPE INSURANCE LIMITED,
(15) SWISS RE INTERNATIONAL SE,
(16) AXIS SPECIALTY EUROPE SE,
(17) HDI GLOBAL SPECIALTY SE,
(18) PICC PROPERTY AND CASUALTY COMPANY LIMITED,
(19) PING AN PROPERTY & CASUALTY INSURANCE COMPANY OF CHINA, (20) CHINA PACIFIC PROPERTY INSURANCE CO LTD, and
(21) TAIPING GENERAL INSURANCE ZHEJIANG BRANCH CO LTD.
Defendants
JUDGMENT of Ms. Justice Eileen Roberts delivered on 28 April 2025
1. This judgment concerns the contested claim for legal costs made by certain defendants in these proceedings [1] against the plaintiffs in the circumstances outlined below.
2. I propose to first set out in brief terms the general background relevant to the present application. I will then address the relevant legal provisions and caselaw followed by a summary and analysis of the detailed arguments made by the parties in respect of legal costs. Finally, I will set out the terms of the orders to be made.
The general background relevant to the present application
3. The plaintiffs (together or individually described in this judgment as "CDB") are commercial entities who lease a portfolio of aircraft (including engines) to airline operators and parties throughout the world, including various public and privately owned airlines based in Russia.
4. On 24 February 2022, Russia invaded Ukraine (the "Invasion"). At the date of the Invasion CDB's portfolio included 15 aircraft leased to various airlines based in Russia.
5. On 25 February 2022, extensive EU sanctions were adopted against Russia in response to the Invasion. These sanctions contained a comprehensive set of restrictive measures targeting the Russian aviation sector. The sanctions implemented a ban on the delivery of aircraft and spare parts to the Russian Federation and required all existing leases of aircraft with Russian entities to be terminated by 28 March 2022. The sanctions also banned the insurance and maintenance of these aircraft. CDB, in common with other aircraft lessors bound by the sanctions, commenced efforts to recover their aircraft leased to Russian airlines.
6. Ultimately, CDB were successful in recovering six aircraft from Russian lessors. Those recovered aircraft comprised one aircraft leased to Smartavia which was recovered in France and five aircraft leased to Nordwind which were recovered/repossessed in other jurisdictions outside Russia. This left CDB with nine aircraft leased to Russian Airlines - four to Aeroflot, one to Nordstar, one to S7, one to Nordwind and two to Ural (the "Aircraft").
7. CDB say that, despite demands having been lawfully made by them for the return of the Aircraft in response to the sanctions introduced immediately after the Invasion, the Aircraft were not returned by the Russian lessees. CDB issued the present proceedings claiming an indemnity under their insurance policy for the agreed value of the Aircraft which remain in Russia.
8. The defendants are insurers who, at the time of the Invasion, provided certain insurance cover to CDB (on a contingent and/or possessed basis) relating to CDB's worldwide leasing operations. Coverage was provided to CDB under the relevant composite policy providing "all risks" coverage, which excluded identified "war risk perils". Separate coverage was provided for the excluded war risk perils as part of CDB's composite insurance policy. Some defendants provided CDB with all risks cover only ("All Risk Insurers"), some defendants provided CDB with war risk cover only ("War Risk Insurers") and some defendants provided both types of cover to CDB (Mixed Insurers"). The defendants in each case were severally liable for their respective shares of the risk they assumed to CDB.
9. Other aircraft lessors who had leased aircraft to Russian entities also experienced similar issues to CDB in relation to the return of their aircraft. Those other aircraft lessors also issued proceedings in the Irish courts against their insurers (many of whom were the same entities as the defendants in these CDB proceedings. Cover was provided by All Risk Insurers, War Risk Insurers and Mixed Insurers to those other lessors in a similar manner as to CDB). In total, six separate sets of proceedings (including these CDB proceedings) were initially case-managed together in the Commercial Court and, by agreement of all parties, were then listed for trial on a concurrent basis (the "Aviation Proceedings"). The wordings of the insurance policies in each case were not identical but were sufficiently alike as to justify hearing those claims together in the interests of efficiency. Evidence tendered by one plaintiff in the Aviation Proceedings was adopted and tendered on behalf of all plaintiffs and likewise as between the insurers who were All Risk Insurers and (although not always) as between the War Risk Insurers inter se (some of whom were Mixed Insurers), with overlap on certain issues between all the defendants and between the plaintiffs and the All Risk Insurers.
10. The trial of the Aviation Proceedings commenced on 11 June 2024. The Aviation Proceedings concerned a total of 88 aircraft and 2 aircraft engines, with values claimed in the region of €2.5 billion across the six sets of claims. There was an unprecedented number of legal teams involved in those proceedings, reflecting the number of parties, the range and complexity of the legal issues and the monetary amounts at stake. Following active case management, the Court secured high levels of cooperation between various groups of legal teams representing those parties with similar interests - for example, joint submissions were made by certain groups and overlap in the cross-examination of witnesses by parties with similar interests was not permitted.
11. In the Aviation Proceedings each of the plaintiffs' primary plea was that their aircraft were "lost" (within the meaning of the various applicable policies) by reason of one or more war risk perils. Thus, the primary claim advanced by CDB in the present proceedings was for an indemnity on foot of their war risk cover against those defendants who were their War Risk Insurers (including the Mixed Insurers in respect of whatever war risk cover they had underwritten). An alternative claim was made in the Aviation Proceedings by all the plaintiffs (including CDB in the present proceedings) that, if the claimed losses were not caused by one or more war risk perils, then the plaintiffs in the Aviation Proceedings were entitled to an indemnity under their all risks cover from their All Risk Insurers (including those Mixed Insurers in respect of whatever all risks cover they had underwritten).
12. In common with all plaintiffs in the Aviation Proceedings, CDB's all risks policy expressly excluded the identified war risk perils underwritten by the War Risk Insurers/Mixed Insurers. The interplay between the all risks cover and the war risk cover meant that CDB could only ever successfully claim on one type of cover. If CDB succeeded on war risk cover, they could not also succeed on all risks cover (which expressly excluded war risk perils). Of course, it was possible that CDB might not succeed under either cover. Despite its name, all risks cover is not all-encompassing. It covers fortuitous loss and damage to property arising from risks other than those excluded by the terms of the policy. It affords no cover in respect of non-fortuitous events. CDB made alternative claims against their various insurers, as they were entitled to do. But CDB could not recover under both their all risks cover and their war risk cover in respect of the same loss of their Aircraft.
13. All defendants in the Aviation Proceedings strenuously defended those proceedings. Nevertheless, during the course of the trial certain settlements were reached at various times between individual plaintiffs and defendants in the Aviation Proceedings (including in the present CDB proceedings). All settlements were confidential - with the proceedings being struck out as between the parties to the settlements and, importantly for present purposes, an agreement that no orders as to costs would be made and that any previous costs orders would be vacated.
14. It was not until Day 92 of the trial on 20 March 2025, after the conclusion of the evidence in the Aviation Proceedings, that the Court was advised that all the various claims had been or were in the process of being settled between the parties save for the resolution of matters between CDB and some of the defendants in these proceedings - comprising the first defendant, Lloyds Insurance Company SA (with the exception of TMK as one of the Syndicates within Lloyds which settled); the fourth defendant, Global Aerospace Underwriting Managers Limited; the fifth defendant, Global Aerospace Underwriting Managers (Europe) SAS; the sixth defendant, Great Lakes Insurance SE; the seventh defendant, Berkshire Hathaway European Insurance DAC; the eighth defendant, Tokio Marine Europe SA; the ninth defendant, Mapfre Espana Compania De Seguros Y Reaseguros SA; the tenth defendant, MSIG Insurance Europe AG; the fourteenth defendant, Starr Europe Insurance Limited; the sixteenth defendant, AXIS Speciality Europe SE; the twentieth defendant, China Pacific Property Insurance Company Limited, and the twenty-first defendant, Taiping General Insurance Zhejiang Branch Company Limited (each a "Remaining All Risk Defendant" and together the "Remaining All Risk Defendants").
15. The date for filing final submissions on the evidence was extended to allow those submissions to be tailored to the then position that the only claim being advanced in the Aviation Proceedings was by CDB under their all risks cover as against the Remaining All Risk Defendants only.
16. By letter dated 25 March 2025, CDB's solicitors wrote to the solicitors for the Remaining All Risk Defendants stating:
"Unfortunately, we have been unable to come to a satisfactory agreement in relation to the balance of the All Risk insurers represented by your firm (the "remaining All Risks Insurers"). The remaining All Risks Insurers account for 28% of the All Risks cover.
Having reached satisfactory resolution with the War Risks, the Mixed Risks insurers and certain of your clients, our clients do not now propose to pursue their alternative claim against the remaining All Risks insurers.
In the circumstances, we propose advising the Court at the first appropriate opportunity that our clients' claim will not proceed against the remaining All Risks insurers."
17. The solicitors for the Remaining All Risk Insurers responded by letter dated 26 March stating that:
" We note that your client does not now propose to deliver its revised written submissions or proceed to make any closing arguments and instead seeks to simply step away from their wholly unsuccessful attempt to recover against our clients.
Our clients have been obliged to defend these proceedings at very considerable effort and expense since they were commenced in 2022. Your clients' decision to drop its claim against the remaining All Risk insurers plainly gives rise to costs consequences."
18. Counsel for CDB confirmed to the court on 26 March 2025 (being Day 93 of the trial) that CDB were not proceeding with their claim against the Remaining All Risk Defendants. There remained however a dispute over legal costs between those parties. The Court heard arguments regarding that costs dispute on 2 April. In essence, CDB urged the Court to exercise its discretion to make no order as to costs in what they allege to be the special circumstances of this case, or alternatively to make a costs order on a capped basis. The Remaining All Risk Defendants claimed an entitlement to their costs [2] in circumstances where the proceedings were discontinued against them by CDB and where they say there are no circumstances in which this Court should depart from the usual default position on costs in those circumstances. This judgment confirms the Court's findings in relation to the costs hearing on 2 April.
The relevant provisions and caselaw dealing with legal costs.
19. The general legal provisions which now apply to the determination of legal costs are sections 168 and 169 of the Legal Services and Regulation Act 2015 (the "2015 Act') and the recast O. 99 introduced by the Rules of the Superior Courts (Costs) Order 2019 SI 584/2019. The relevant sections of the 2015 Act came into force on 7 October 2019 and the new provisions of O.99 took effect from 3 December 2019.
20. It is accepted by all parties that this is a case governed by the provisions of s.169(4) of the 2015 Act. S. 169(4) provides as follows:
"Unless the court before which civil proceedings were commenced orders
otherwise, or the parties to those proceedings agree otherwise, a party who
discontinues or abandons the proceedings after they are commenced
(including discontinuance or abandonment of an appeal) is liable to pay the
reasonable costs of every other party who has incurred costs in the defence of
the civil proceedings concerned until the discontinuance or abandonment."
21. Discontinuance of legal proceedings is also dealt with in Order 26 of the Rules of the Superior Courts ("RSC").
22. Other relevant provisions include s.169 (1) and (2) of the 2015 Act which provide as follows :
"(1) A party who is entirely successful in civil proceedings is entitled to an award
of costs against a party who is not successful in those proceedings, unless the
court orders otherwise, having regard to the particular nature and
circumstances of the case, and the conduct of the proceedings by the parties,
including—
(a) conduct before and during the proceedings,
(b) whether it was reasonable for a party to raise, pursue or contest one or
more issues in the proceedings,
(c) the manner in which the parties conducted all or any part of their cases,
(d) whether a successful party exaggerated his or her claim,
(e) whether a party made a payment into court and the date of that
payment,
(f) whether a party made an offer to settle the matter the subject of the
proceedings, and if so, the date, terms and circumstances of that offer,
and
(g) where the parties were invited by the court to settle the claim (whether
by mediation or otherwise) and the court considers that one or more
than one of the parties was or were unreasonable in refusing to engage
in the settlement discussions or in mediation.
(2) Where the court orders that a party who is entirely successful in civil proceedings
is not entitled to an award of costs against a party who is not successful in those
proceedings, it shall give reasons for that order."
23. O. 99, r. 2(1) of RSC now provides that, subject to the provisions of statute (including sections 168 and 169 of the 2015 Act) and except as otherwise provided by the RSC:
"2. (1) The costs of and incidental to every proceeding in the Superior Courts
shall be in the discretion of those Courts respectively."
24. O. 99, r.3(1) RSC now provides, inter alia:
"The High Court, in considering the awarding of the costs of any action or step in any
proceedings, ......shall have regard to the matters set out in section 169(1) of the 2015 Act, where applicable."
25. In Chubb European Group SE v. Health Insurance Authority [2022] 2 IR 734, Murray
J. considered that the appropriate principles could be summarised as follows (at para 19):
"(a) The general discretion of the court in connection with the ordering of costs is preserved (s. 168(1) (a) and 0.99, r. 2(1) RSC).
(b) In considering the awarding of costs of any action, the court should "have
regard to" the provisions of s.169(1) (0.99, r. 3(1) RSC).
(c) In a case where the party seeking costs has been 'entirely successful in
those proceedings', the party so succeeding 'is entitled' to an award of costs
against the unsuccessful party unless the court orders otherwise (s. 169(1)).
(d) In determining whether to 'order otherwise', the court should have regard to
the 'nature and circumstances of the case' and 'the conduct of the proceedings
by the parties'(s. 169( 1)).
(e) Further, the matters to which the court shall have regard in deciding whether
to so order otherwise include the conduct of the parties before and during the
proceedings, and whether it was reasonable for a party to raise, pursue or
contest one or more issues (s.169(1)(a) and (b))......
(h) In the exercise of its discretion, the court may order the payment of a portion
of a party's costs, or costs from or until a specified date (s.168(2)(a))."
26. The Court was also referred to the decision of the Court of Appeal in Word Perfect Translation Services Ltd v Minister for Public Expenditure and Reform [2023] IECA 189 where the Court of Appeal confirmed (at para 94) that the 2015 Act does not impose a requirement on an entirely successful party seeking its costs to demonstrate that it conducted the litigation in the most cost-effective manner possible. Of course, a court may reduce or disallow costs where the conduct of the litigation has led to an unreasonable increase in legal costs due, for example, to the number of unsuccessful or unnecessary pleas or applications. However, the Court of Appeal stated that: "It must also be borne in mind that the costs hearing ought not to be an exercise in nit-picking and a broad-brush-stroke approach must be taken. If it is not, there is a danger that costs applications will spiral out of control and have implications for the overall administration of justice."
27. In Shell E & P Ireland Ltd v McGrath (No. 3) [2007] 4 IR 277, 301, Laffoy J held at para 52 (without determining the merits of the claim) that, where proceedings were discontinued:
"[J]ust provision in relation to costs would allow the defendants their costs to date. Such provision would be consistent with the rationale which obviously underlies the provision contained in O. 26, r. 1 in relation to the costs of early discontinuance, which is that, by initiating and prosecuting the proceedings to the date of discontinuance, the plaintiff has created the situation in which the defendant has had to incur the costs of defending the proceedings."
28. In Callagy v Minister for Education Unreported Supreme Court, 23 May 2003, Keane CJ in an ex tempore judgment stated at page 6 :
"[W]hile he was perfectly entitled to discontinue the proceedings, in my view it must inevitably follow, as always follows in circumstances such as that, that a plaintiff who elects to begin proceedings and then abandons them for whatever reason must pay the defendants' costs. If he wants the defendant to pay the costs he must be prepared to go on the full length of the proceedings, obtain the relief that he sought and then invite the court to award costs in the ordinary way as following the event."
29. The clear default position under Irish law therefore is that a party who has a claim discontinued against it is an entirely successful party in legal proceedings and, as such, is entitled to an order for its costs against the party who discontinued the claim, unless the Court exercises its discretion to direct otherwise having regard to the (non-exhaustive) factors enumerated in s.169(1) of the 2015 Act. I am satisfied that ss. 168 and 169 and O.99 provide the Court with a wide discretion in relation to costs, taking account of the context of any particular case. If the Court exercises its discretion against a party who has been entirely successful, then the Court must set out its reasons for departing from the default rule. In my view this requirement indicates that the Court, though having a wide discretion, must not depart from the default rule on a whim or without good reason(s) specific to the proceedings that can be clearly articulated by the Court. [3]
30. As CDB have discontinued or abandoned their claim in full against the Remaining All Risk Defendants, the default legal position under s.169(4) of the 2015 Act is that CDB "is liable to pay the reasonable costs" of the Remaining All Risk Defendants. It follows from the abandonment of the claim against them that the Remaining All Risk Defendants have been "entirely successful" in these proceedings, thus making them "entitled to an award of costs" unless the Court orders otherwise. It does not matter to that analysis when the decision to abandon the claim was made or what level of legal costs had been incurred up to the date of abandonment of the claim.
31. Because CDB settled with the other defendants in these proceedings (including those who were their War Risk Insurers), CDB are the only remaining party against whom an adverse costs order might be made in favour of the Remaining All Risk Defendants.
32. Accepting that the Court retains a discretion in relation to the awarding of legal costs, the key issue for the Court in this case is whether the Court can be persuaded to exercise its discretion to depart from the default rule having regard to the particular circumstances of this case. I turn now to consider the arguments advanced by CDB (and disputed by the Remaining All Risk Defendants) as to why the Court should be so persuaded.
The arguments advanced by CDB and the Remaining All Risk Defendants.
33. CDB make the following arguments as to why the court should not make an order for legal costs in favour of the Remaining All Risk Defendants - or should make a modified or capped order for legal costs. In doing so they urge the Court to consider certain of the factors outlined in s.169 (1) of the 2015 Act as well as the overall nature of the proceedings.
1. Conduct prior to the proceedings
34. CDB say that at no stage prior to the institution of these proceedings, did any of the defendants, including the Remaining All Risk Defendants, ever indicate their decision in respect of the initial insurance claim made by CDB on 18 July 2022. CDB say they thus had no choice but to institute these proceedings against all the defendants, comprising the full suite of insurers under both their war risk and all risks cover. CDB argue that this failure by the Remaining All Risk Defendants to properly investigate and engage with CDB's claim at the outset necessitated the institution of these proceedings against them and so the Remaining All Risk Defendants should not be entitled to any award of costs arising from the litigation. CDB say that these failures arose for all the insurers involved and should be viewed in the context that a fundamental commercial purpose of insurance policies is that an insured is paid quickly where an insured event occurs.
35. The Remaining All Risk Defendants deny this failure to engage. It is worth noting that there is no finding by this Court that there was any breach of duty by the Remaining All Risk Defendants or indeed by any defendant.
36. CDB's argument on this point does not persuade me that the Court should depart from the default costs position in this case. The Remaining All Risk Defendants certainly engaged with CDB's claim once these proceedings issued - CDB nonetheless continued to prosecute the proceedings against them. The Remaining All Risk Defendants in their pleadings strongly denied the claims against them and they produced and dealt with evidence and witnesses at the trial consistent with that position. At no time before the conclusion of the evidence did CDB, knowing the position adopted by the Remaining All Risk Defendants, opt to release them from the proceedings. While CDB were of course entitled to take that approach, there was a costs risk inherent in this decision if CDB (as came to pass) did not ultimately succeed in their claim against the Remaining All Risk Defendants.
2. Failure to engage a 50/50 Settlement Clause
37. CDB argues that its cover was provided by both the War Risk Insurers and the All Risk Insurers on the basis of a 50/50 Provisional Claims Settlement clause in the following terms:
"In the event of loss of or damage to any property insured hereunder and where
agreement is reached between Insurers participating in Section One/Two and
Section Three hereunder that the Insured has a valid claim under one or other
Section where nevertheless it cannot be resolved within 21 days from the date
of occurrence as to which Section is liable, each of the aforementioned groups
of Insurers agree, WITHOUT PREJUDICE to their liability, to advance to the
Insured 50% of such amount as may be mutually agreed between them until
such time as final settlement of the claim is agreed."
38. CDB say that the effect of this clause is that the All Risk Insurers ought to have indemnified CDB for 50% of their claim and sought to recover their contribution pursuant to the provisions of the 50/50 clause. In failing to do so, the Remaining All Risk Defendants created a necessity for CDB to institute and maintain these proceedings and incur the costs thereof.
39. Inherent in CDB's general complaint on conduct is that the defendants as a whole did not engage and agree liability amongst themselves but instead forced CDB to pursue each insurer separately and on an alternative basis. CDB are correct that this is what happened. The respective defendants each maintained that the insurance cover they underwrote was simply not responsive to the circumstances of CDB's claims. Whether the defendants or some of them were correct in taking that approach would have been a matter for the Court's judgment on the merits had the Aviation Proceedings not been resolved between the parties. I cannot in this judgment on costs make any findings on the merits of arguments or issues that were raised in the trial of the Aviation Proceedings but were not required to be determined by the Court.
40. CDB say by reference to the 50/50 Settlement Clause that it was intended to provide seamless cover to CDB. This is disputed by the Remaining All Risk Defendants. In any event it is clear that on the plain wording of this clause it only operated where all insurers "agree" that CDB "has a valid claim under one or other Section" of the composite policy. In fact, the defendants never agreed this either with CDB or amongst themselves. While each maintained that the other was responsible to indemnify CDB, the All Risk Insurers also denied that their cover was responsive even if the war risk cover had not been engaged. In particular,they argued that the Aircraft had not been physically lost or damaged. [4] This also illustrates that there was no acceptance that there had been "loss of or damage to any property insured hereunder". I cannot, in light of the withdrawal of CDB's claim against the Remaining All Risk Defendants, now determine whether that position was justified (nor whether, as pleaded, the Remaining All Risk Insurers breached obligations of good faith to CDB). As a matter of fact, the stated preconditions of agreement needed for the operation of the 50/50 clause do not appear to have arisen in relation to CDB's claim.
41. The Remaining All Risk Defendants also deny that the 50/50 clause was in any event binding on CDB who they say were not a party to it. They say this clause appears in the "Information" section of Willis Towers Watson's letter to CDB dated 22 July 2022 and not in the All Risks policy. They say that CDB did not plead this clause nor was it part of the agreed list of issues in the Aviation Proceedings. CDB say the clause is operative and had it been complied with by the remaining All Risk Insurers it would have avoided the need for CDB to have sued them.
42. Even if the 50/50 clause was binding and available to the parties (and I can make no finding on that), it is clear to me that this clause was not intended to mandate that all contested claims be paid out immediately and then arbitrated between insurers. This is not what it says. On its plain wording the 50/50 clause was not engaged at all in the circumstances of this case - the insurers never accepted that CDB had an entitlement to recover under one or other section of their policy. Neither did the Remaining All Risk Defendants accept that they had a liability to CDB and any suggestion they had has now been withdrawn. This clause therefore does not provide a basis for this Court to depart from the default position in respect of the allocation of legal costs to a party who has been entirely successful in legal proceedings.
3. Maintenance of Issues in the proceedings
43. CDB argue that the Remaining All Risk Defendants pursued and maintained inappropriate points, only withdrawing those points very late on in the proceedings. CDB refer to the fact that it was not until Day 56 that the All Risk Insurers formally accepted that all the CDB entities were insureds or that the All Risk Insurers were not maintaining a failure of mitigation point. Generally, CDB complain that they were put on proof of many issues that ought to have been accepted by the defendants, including the Remaining All Risk Defendants.
44. The correspondence shows that the All Risk Insurers had at a much earlier time (in July 2024) indicated that they would consent to the removal of identified issues from the agreed list of issues provided that there was consent from all parties to do so. That consent was not forthcoming. This was one of the complicating features of the Aviation Proceedings- the multiplicity of parties and issues made it difficult to achieve agreement on any single issue as parties did not wish to agree issues without reference to each other. Some issues were more controversial in relation to certain plaintiffs and certain defendants and issues were generally interdependent to a larger degree than would usually arise. The All Risk Insurers did provide a detailed response on agreeing outstanding issues by letter dated 26 November 2024. CDB say many of these were basic issues which ought to have been admitted from the outset particularly given the duty of good faith on insurers.
45. CDB point out that on day 7 of the trial counsel for the All Risk Insurers confirmed that the All Risk Insurers were no longer arguing that the plaintiffs in the Aviation Proceedings failed to satisfy the requirement for contingent cover by reason of the fact that termination notices had been served by those plaintiffs [5].
46. CDB say that defences relating to UK and US Sanctions were only dropped by All Risk Insurers at a late stage.
47. Complaint is also made by CDB that the Remaining All Risk Defendants (in common with the All Risk Insurers) took positions that were at odds with the positions they
adopted in similar litigation in London where All Risk Insurers accepted that a loss had occurred and that the leasing of aircraft was validly terminated. While the Court encouraged a similar approach to be adopted in the Aviation Proceedings as was adopted in London where that would narrow the issues, I accept that the cases had some important differences in terms of parties and pleas. Parties were entitled to maintain their pleaded positions in the Aviation Proceedings, facing the consequences of doing so if they were ultimately found unsuccessful.
48. The Remaining All Risk Defendants say that the identity of the insureds across all six proceedings in the Aviation Proceedings was not entirely straightforward and took some time to resolve. They point out that CDB do not identify additional material or any additional hearing time or trial preparation arising from issues dropped by way of defence. It is the case that CDB had to meet all of these issues against their primary opponents, the War Risk Insurers.
49. The Court cannot speculate or make determinations as to the outcome of these issues had they been litigated to a conclusion, as these claims have all been settled. Nor can the Court be asked to assess the pleadings or anticipate the outcome of the litigation in London. The Court cannot be invited to speculate or hypothesise as to which arguments advanced by CDB or the Remaining All Risk Defendants would have succeeded, had this case proceeded to conclusion.
50. While I accept that some points of defence or requirement for formal proofs were withdrawn by the Remaining All Risk Defendants (as part of the All Risk Insurers), I do not believe it likely that material additional costs were incurred by CDB as a result of those points being maintained by the Remaining All Risk Defendants. The point in relation to contingent cover was dropped by the All Risk Insurers during the course of opening submissions at a very early stage of the trial. The other points were maintained for longer but were maintained by all defendants and had to be dealt with by CDB in any event in advancing their primary claim against the War Risk Insurers. I do not believe it likely that material additional costs arose because the Remaining All Risk Defendants kept a consistent position with other defendants. Even if some additional costs were incurred due to arguments maintained by the Remaining All Risk Defendants (and I have no evidence of this), I am satisfied that taking the broad brush approach advocated by the Court of Appeal in Word Perfect, that any such increase would have been immaterial in the overall context of the legal costs incurred where all defendants maintained the same position and where generally these points were argued much more forcefully by the War Risk Insurers, against whom CDB's primary claim was made.
51. I am not persuaded therefore that these arguments should justify this Court departing from the default position on awarding legal costs for discontinued proceedings.
4. The unusual nature of the Aviation Proceedings
52. As previously explained, six cases (including these CDB proceedings) ran as one unitary trial, based on the same evidence and engaging the same legal principles. Not only were the Aviation Proceedings heard concurrently, but all six sets of proceedings were case managed together and discovery was ordered in identical terms in each of the cases. Evidence in one case was evidence in all cases.
53. CDB notes that the All Risk Insurers across all proceedings were represented by two law firms who between them operated as one seamless team, dividing the work of the case between them. [6] This was evident to the Court, for example, in how the respective teams treated the examination of witnesses on behalf of the All Risk Insurers generally.
54. CDB says that the position is even more convoluted and unusual in that all of the Remaining All Risk Defendants (save for China Pacific and Taiping) were represented by both of these law firms. CDB says that China Pacific and Taiping, though represented by only one firm, would also have had the benefit of the other firm's input as part of the co-operation between the two firms and the manner in which they chose to run their collective case as a single coalesced team. Most of the Remaining All Risk Defendants were also parties to at least some of the other proceedings comprised in the Aviation Proceedings– and indeed they settled their involvement in those proceedings on the basis that there would be no order as to costs made in those proceedings.
55. CDB argue that such is the degree of overlap in the manner of the defence of the six separate proceedings that the starting position must be that CDB cannot be liable for more than one sixth of the overall costs incurred by the All Risk Insurers in their defence of the Aviation Proceedings which ran as one unitary trial.
56. CDB further says that consideration must also be had to the total percentage of the CDB all risks cover provided by the Remaining All Risk Defendants. In fact, the Remaining All Risk Defendants provide between them only 28% of CDB's all risk cover. [7] The balance of CDB's all risks cover was provided either by defendants who were represented by another law firm or by defendants represented by the same law firm as the Remaining All Risk Defendants, each of whom settled with CDB on the basis that proceedings would be struck out with no orders as to costs.
57. The argument thus runs that considering the insurance coverage percentages, the Remaining All Risk Defendants (who comprise one third of the All Risk Insurers represented by the same law firm) could not be entitled to recover more than one third of the one sixth portion of the overall costs of the Aviation Proceedings - for clarity, one sixth is 16.67% and one third of 16.67% is 5.56%. This is the maximum percentage of the costs (of the All Risks Insurers in the Aviation Proceedings) that CDB says it should be ordered to pay to the Remaining All Risk Defendants.
58. The Remaining All Risk Defendants, while recognising the size and complexity of the Aviation Proceedings and how they were run, do not accept that the proceedings were so unusual as to justify a departure from the normal default costs rules where a party discontinues legal proceedings against another. They stress that the application before the Court is simply for the costs of the Remaining All Risks Defendants incurred in the defence of these CDB proceedings and not for the costs incurred by them or by any other party in any of the other Aviation Proceedings which ran alongside and shared evidence with, the CDB proceedings.
59. The Remaining All Risk Defendants reject any suggestion that their costs should be limited or capped as suggested by CDB and say this approach would be fundamentally flawed and wrong in principle. They say that the overall costs incurred by the All Risk Insurers in their defence of the Aircraft Proceedings are not known by the parties to the CDB litigation, or by the Court, and cannot properly be the subject of adjudication in the context of the CDB proceedings.
60. Furthermore, they say that for the Court to apply a further percentage reduction, based on the percentage of cover metric suggested by CDB, would be double counting and result in a windfall for CDB.
61. In the context of a formal adjudication, the Legal Costs Adjudicator would have the benefit of a full bill of costs and the assistance of legal costs accountants with an opportunity to thoroughly examine how the costs claimed by the Remaining All Risks Defendants have been calculated and charged. This Court has none of this information.
62. It would in my view be too simplistic and in fact incorrect to cap the costs of the Remaining All Risk Defendants in the manner suggested by CDB. The All Risk Insurers were not the same in each of the six cases and some of the Remaining All Risk Defendants were not parties to the other proceedings. Different All Risk Insurers settled with their insureds at different times and were represented by different firms. In light of the settlements achieved, I do not envisage any circumstances where an omnibus bill for all the All Risk Insurers would or could be presented across all six cases. Yet this is what is suggested would form the starting point from which to limit the Remaining All Risk Defendants' costs in these proceedings to one sixth of the overall costs of the All Risk Insurers in defending the Aviation Proceedings. This cannot be a correct (or even an achievable) starting point for the assessment of costs - rather that starting point should be the costs actually paid or payable by the Remaining All Risk Defendants in relation to these CDB proceedings only, as reflected in a signed bill of costs particularised as required by the 2015 Act.
63. In reality, there were costs savings achieved by running the Aviation Proceedings as a concurrent trial - for example the same stenographer was engaged across six cases. The sharing of costs will be reflected in the level of costs that the Remaining All Risk Defendants are liable to pay in these CDB proceedings. I understand from counsel that in respect of each Remaining All Risk Defendant their liability for costs will depend inter alia on the number of them remaining at any given time in the CDB proceedings as well as the percentage risk held by each. The specifics of that for each Remaining All Risk Defendant will have to be explained and calculated in the bill of costs prepared.
64. I am therefore not in favour of imposing the cap or limit suggested by CDB by reference to the Aviation Proceedings - which have now settled in their entirety save for the present dispute on costs. To do so would, I believe, trespass on the expertise of the Legal Costs Adjudicator who is statutorily charged with assessing the quantum of costs recoverable on foot of court orders. I do not believe that I would be assisting the adjudication process at all in providing such a cap or direction. The Legal Costs Adjudicator is in a unique position to assess the work actually done on behalf of the Remaining All Risk Defendants and has both the necessary skills and statutory powers (under s.156 of the 2015 Act) to do so.
Conclusion and Orders to be made
65. From the inception of these proceedings, CDB knowingly took the risk that if they succeeded on their primary claim against their War Risk Insurers, they would fail against their All Risk Insurers (including the Remaining All Risk Defendants). This is because proving that CDB suffered a loss by reason of a war risk peril would result in the loss being covered by the war risks policies and thus being excluded from the all risks policies. CDB made a tactical decision to sue the Remaining All Risk Defendants and to keep them in the proceedings until discontinuing against them on Day 93. CDB were fully entitled to litigate in this manner, but they must bear the costs consequences of their decision to do so.
66. While various arguments were advanced by CDB, I do not believe that they displace the statutory entitlement of the Remaining All Risk Defendants to an order for their costs in circumstances where CDB have fully withdrawn their claim, leaving the Remaining All Risk Defendants as the entirely successful party. This is without prejudice to the entitlement of CDB to fully contest the quantum of those costs on adjudication.
67. Of course, CDB are correct that the Remaining All Risk Defendants cannot be entitled to recover in these proceedings costs properly incurred in respect of their defence of any other proceedings. Insofar as costs were shared or allocated between the individual proceedings comprising the Aviation Proceedings and shared or allocated between individual parties, CDB must get the full benefit of those costs savings in calculating what is payable by the Remaining All Risk Defendants for these CDB proceedings. The Remaining All Risk Defendants cannot recover costs (their own or of any other party) which, as part of a settlement, have expressly been agreed should not be recovered. The Remaining All Risk Defendants cannot achieve a windfall (direct or indirect) by way of a costs order in these proceedings. I do not understand the Remaining All Risk Defendants to dispute these points.
68. For the reasons set out I will not impose a cap on costs as suggested by CDB. Schedule 1 of the 2015 Act sets out the principles to be applied by a Legal Costs Adjudicator when adjudicating a bill of costs. All costs claimed will have to be examined fully to ensure that they were reasonably incurred and are reasonable in amount. S.155(3) of the 2015 Act expressly confirms that the Legal Costs Adjudicator shall, to the extent which he or she considers it necessary to do so, consider and have regard to the entire case or matter to which the adjudication relates and the context in which the costs arise. In the normal manner of costs adjudications, the Remaining All Risk Defendants will have to justify/vouch all costs claimed in relation to these proceedings only and CDB will be entitled to make whatever submissions they wish to the Legal Costs Adjudicator to have aspects of those costs disallowed or reduced, whether for reason of duplication or otherwise.
69. For the reasons outlined, I make an Order awarding the costs of these proceedings to the Remaining All Risks Defendants as against CDB (to include any reserved costs) on a party and party basis, same to be adjudicated in default of agreement. For the avoidance of any doubt this order is made in favour of (i) Lloyd's Insurance Company SA (excluding TMK Syndicate); (ii) Global Aerospace Underwriting Managers Limited; (iii) Global Aerospace Underwriting Managers (Europe) SAS; (iv) Great Lakes Insurance SE; (v) Berkshire Hathaway European Insurance DAC; (vi) Tokio Marine Europe SA; (vii) Mapfre Espana Compania De Seguros Y Reaseguros SA; (viii) MSIG Insurance Europe AG; (ix) Starr Europe Insurance Limited; (x) Axis Speciality Europe SE; (xi) China Pacific Property Insurance Company Limited and (xii) Taiping General Insurance Zhejiang Branch Company Limited; each in their capacity as an All Risks Insurer only.
70. I also make an order formally striking out these proceedings as against the Remaining All Risk Defendants in circumstances where CDB have withdrawn their claim against them.
71. Finally, I was advised of an open offer having been made by CDB on the eve of the costs hearing in respect of what they say is a reasonable figure for any liability they could have for costs. This figure was not acceptable to the Remaining All Risk Defendants. The open offer is potentially a matter of relevance to the Legal Costs Adjudicator in due course but was not relevant to the Court's determination on liability for costs. I make no comment on this figure and do not have any information or evidence on which I could do so. I do however encourage the parties to continue to engage with each other on quantum and to take all steps open to them to avoid or minimise the need for a formal adjudication process with all the additional expense and time commitment this will entail for the parties.
[1] Identified and defined in para 14 as "the Remaining All Risk Defendants".
[2] Expressed to include reserved costs, discovery to include the e-discovery platform provider, overnight transcript and contribution to TrialView. - Transcript Day 94 p5 ln13-15
[3] As, for example in the case of In the matter of AB [2024] IEHC 361 where Barniville P noted that costs in wardship proceedings are subject to additional considerations that may be superimposed on the
court's normal costs jurisdiction - and where he provided specific reasons to make no costs order against the HSE in para 115 of his judgment.
[4] § 4(a) of the Third Amended Defence of the All Risk Insurers in these proceedings:
"The Aircraft are not alleged to have been, and have not been, physically lost or
damaged. The Plaintiffs have not been permanently and/or irretrievably deprived of
possession of the Aircraft. If relevant, the recovery of the Aircraft within a reasonable
time has not become unlikely or uncertain, or sufficiently unlikely or uncertain as to
constitute a "physical loss" within the meaning of Coverage One of Section One of the
Primary Policy."
[5] Transcript Day 7, Transcript p 87 lines 1-3
[6] Para 28 CDB legal submissions dated 31 March 2025
[7] That percentage may be 34% when one takes into account part of the remaining Lloyd's Syndicates