Court guidance on when a split trial is appropriate

The recent Commercial Court decision in Jinxin Inc. v Aser Media Pte Ltd & Ors [2022] EWHC 2431 (Comm) provides helpful guidance on when a split trial (i.e. where issues in a case are decided in separate stages) will be ordered by the court. A split trial must deliver clear benefits over a single trial.

Background

The case concerns claims in deceit and a related claim in conspiracy arising out of alleged fraudulent misrepresentations by the Defendants, which are said to have induced the Claimant to enter into a SPA for the purchase of a media sports rights agency that subsequently became insolvent.

At the case management conference, several of the Defendants made an application for a split trial, wherein the issues in the case would be heard in three stages:

1. First trial would exclusively concern the identification of the representations made by the Defendants, their meaning and the extent to which the Claimant was aware of and relied on the alleged representations.
2. Second trial would deal with issues relating to the falsity of the alleged representations, the knowledge and intention of the Defendants and the Defendants’ responsibility for the representations.
3. Third trial would deal with remedies and quantum.

The Court dismissed the Defendants’ application.

The Court’s approach

In his judgment, the Deputy Judge, Peter MacDonald Eggers KC, referred to CPR 3.1(2)(i) and (j) which provide that the Court has discretion to order a split trial to hear separate issues in a case.

The judge also had regard to the decision in Electrical Waste Recycling Group Ltd v Philips Electronics UK Ltd [2012] EWHC 38 (Ch), to assist him exercising his discretion on whether to order a split trial. In that case, Hildyard J stated that the Court should adopt an: “essentially pragmatic balancing exercise in assessing how the case is likely to unfold according to whether there is or is not a split" which included consideration of the following factors:

1. Whether the prospective advantage of saving the costs of an investigation of the issues to be determined at a second trial if the determination of the first trial renders it unnecessary to determine such issues outweighs the likelihood of increased aggregate costs if a further trial is necessary. In other words, whether the costs saving of resolving issues at a first trial outweighs the likelihood of increased aggregate costs if a further trial is necessary.
2. What are likely to be the advantages and disadvantages in terms of trial preparation and management?
3. Whether a split trial will impose unnecessary inconvenience and strain on witnesses who may be required in both trials.
4. Whether a single trial to deal with all issues will lead to excessive complexity and diffusion of issues, or place an undue burden on the Judge hearing the case.
5. Whether a split may cause particular prejudice to one or more of the parties (for example by delaying any ultimate award of compensation or damages).
6. Whether there are difficulties of defining an appropriate split or whether a clean split is possible.
7. What weight is to be given to the risk of duplication, delay and the disadvantage of a bifurcated appellate process?
8. Generally, what is perceived to offer the best course to ensure that the whole matter is adjudicated as fairly, quickly and efficiently as possible?
9. Whether a split trial would assist or discourage mediation and/or settlement.
   
   

The Court’s decision

Despite the Defendants’ estimate that a single trial would collectively cost more than £50 million, the application was dismissed on the following grounds:

1. The representations which formed the basis of the Claimant’s claim were numerous. Unless the Defendants were able to establish that there was no inducement in respect of each and every representation, a further trial was a “very real possibility” (even if the scope of the second trial may be considerably more narrow as a result of the judgment in the first trial).
2. A number of the issues which would have arisen at the first trial were interconnected or interlocked with issues which would arise at the second (and potentially the third) trial such that it would be “more just” if all issues were determined in one trial to enable to Court to decide the issues on a holistic basis. The Court noted that this: “could well give rise to complications at the second trial [if] the Court makes assumptions at the first trial which prove to be unfounded and do not cater for the complexities of the issues and the permutations of the findings which might be made at the second trial”.
3. Given that the scope of evidence required was connected, it was likely that witnesses who would be called on behalf of the Claimant at the first trial, would also be asked to give evidence at the subsequent trials if the first trial was not properly determinative of the issues. This may be unfair to witnesses, particularly if they were required to give evidence twice about the same issues with some distance of time in between.
4. The split trials would not necessarily save the Court or the parties from a complex trial.
5. If the first trial was not entirely determinative, any later trials would be significantly delayed particularly if there were appeals from the decisions made in the first trial.
6. Finally, given the complications which the case involves, the Court was not convinced that there was a “clear justification for ordering split trials” on the basis of the submissions put forward by the Defendants.
   
   

Comment

The application for a split trial in this case was unusual in that the Defendants were seeking an order that the issues be split across three trials as opposed to the more common two trial split between liability and quantum of damages. The decision is a useful reminder that the Court will only order a split trial if there is a “real and substantial advantage” of doing so and if there are “clear benefits” over a single trial. Interestingly, despite ultimately concluding that there was no sufficient justification for a split trial, the judge candidly admitted that he had “wavered in reaching his conclusion”. This appears to be linked to the Defendants’ submission that a single trial was estimated to run for 21 weeks (when compared to 3 weeks for the first trial) and that a single trial would collectively cost the Defendants more than £50 million (versus an equivalent cost of £8 million for the first trial).The impact on the parties’ resources and the challenging demands on the Court’s time evidently played an important part in the balancing exercise that the judge had to undertake in order to reach his decision.

Key takeaway

Parties should keep in mind that split trial orders are a “step out of the norm”. Therefore, when deciding whether to pursue such an application, careful consideration should be given to whether a split trial will, on balance, deliver clear benefits over a single trial. This requires an analysis of factors such as whether it will increase the cost burden on the parties, result in a drain on the Court’s resources, delay the conclusion of the action and/or lead to unanticipated complexities and difficulties in the overall management of the case.