Clearwell International Ltd v MSL Group Holdings Ltd & Anor

This is an appeal by Clearwell International Ltd (“Clearwell”) against the order of Sir Raymond Jack dated 6^th January 2012 whereby following a five day trial he granted judgment in favour of the Second and Third Respondents (“Mr Clark” and “Mr Lauretti”) respectively for £50,619.90 each plus interest.

The current proceedings were brought by MSL Group Holdings (“MSL”) and Messrs Clark and Lauretti in respect of their shares of the final instalment of payments due from Clearwell. This was based on an alleged agreement that was reached orally on 12^th December 2006.

As I have said the decision of Sir Raymond Jack was to grant judgment in favour of Messrs Clark and Lauretti in the sum of £50,619.90 each.

The judgment was handed down on 6^th January 2012. On 20^th February 2012 the learned Judge considered Clearwell’s application for permission to appeal. His judgment on that shows that Clearwell was seeking to appeal on 3 heads. The first was that the case as determined by him departed from the Respondents’ pleaded case as Claimants and that they should have been limited to the case as it was alleged to have been. The second ground was that he was wrong to hold that a legally binding agreement was entered into on 12^th December 2006. The third ground was that whatever the agreement was its performance involved an unlawful distribution of assets contrary to various provisions in the Companies Act 1985.

He granted permission to appeal in respect of the argument of unlawful distribution but refused permission to appeal in respect of the scope of the pleading and the challenge to his finding that there was an agreement as alleged by the Claimants.

Clearwell appealed the decision on the grounds on which the learned Judge gave permission to appeal and sought permission to appeal the other grounds. It set out 5 grounds of appeal. Of those grounds of appeal, 1 was the complaint about the pleading, 2 was the unlawful distribution argument, 3 was a further allegation that the Judge wrongly concluded that the agreement if it was established was legal. Ground 4 was a challenge to the factual findings of the Judge that there was an agreement concluded on 12^th December 2006 and ground 5 was an alternative argument that he was wrong to conclude as a matter of law that a binding agreement was concluded between Mr Clark and Mr Lauretti and Dr Stefanini (who owned nearly 74% of the shares in Clearwell and effectively controls it).

The detailed background to the case can be found in the learned Judge’s judgment. It need not be set out in my judgment.

The claims arose out of the licensing of a patent held by a different company Hydropath Holdings Ltd the use of which with an electric current prevents pipes from furring up with deposits of solids from liquids which they are carrying. Hydropath is controlled by Dr Stefanini. He wanted to market the technology to the oil industry and he started working to that end with a Mr Andrew Bowley (who dropped out of the picture in late 2004 and has not taken any part in the proceedings) and later Mr Clark and Mr Lauretti. By the time of the agreement contended for by the Claimants, Dr Stefanini owned nearly 74% of the shares and Mr Clark and Mr Lauretti each held 13%. Less than 1% was still held by Mr Bowley although his shares for all practical purposes had no value and the reality is that Dr Stefanini and Mr Clark and Mr Lauretti, holding as they did over 99% of the shares, would collectively be able to make any decision on behalf of Clearwell. However Dr Stefanini, because he did not have 75% of the shares, was not in a position to procure a special resolution without the concurrence of either Mr Clark or Mr Lauretti but of course he was able to control any meeting of the shareholders and the passing of any ordinary resolution. From 8^th May 2006 Clearwell’s directors were Messrs Clark, Lauretti and Dr Stefanini.

A licence under the patent was granted to another company, Weatherford Global Products Ltd.

Weatherford is a provider of advanced products and services in oil and natural gas industry. It proposed to market the technology and sell equipment utilising it to the oil industry. On 9^th August 2005 Hydropath had entered into a Licence Agreement with Clearwell granting it an exclusive licence with a right to sub-licence the technology. The next day Clearwell granted Weatherford a sub-license, with Hydropath acting as its guarantor under which $600,000 was payable for exclusivity for one year. If Weatherford served a notice to extend the licence $5,000,000 was then payable. A separate agreement was entered into whereby Clearwell (which had no employees, office or other premises) was to provide services to Weatherford in connection with the technology.

Weatherford paid $600,000 to Clearwell on 5^th August 2005. It was paid out by Clearwell as to 30% to Hydropath (i.e. Dr Stefanini) 30% to Monitoring Services (UK) Ltd, a company controlled by Mr Clark, 30% to Lightseal Ltd, a company controlled by Mr Bowley, and 10% to Mr Lauretti. The Hydropath payment was described in Clearwell’s accounts as commission with the other payments treated as consultancy fees. The payments were treated as rewards to the 4 men for negotiating the original agreement with Weatherford and were agreed between them.

On 15^th November 2006 variations were agreed to the agreement with Weatherford which provided the basis on which Weatherford was prepared to exercise its option to extend the exclusive sub-licence. Instead of the original single down payment of $5,000,000 on exercise of the option there were to be 4 payments as follows:-

To bring the total to the original $5,000,000 an additional $1,000,000 was to be paid by Weatherford to Hydropath as a down payment for future orders or equipment. In addition to these sums substantial payments were expected in respect of commissions and royalties. Clause 5.5 of the Licence Agreement capped commissions at $5,000,000.

The Claimants contended (and the Judge so found) that on 12^th December 2006 a meeting took place with Dr Stefanini, Mr Clark and Mr Lauretti. It was alleged (and the Judge so found) that they agreed that Dr Stefanini would have $1,200,000 from the $2,500,000, and Mr Clark and Mr Lauretti would each receive $500,000, leaving a balance of $300,000. It was also agreed that all further instalments should be divided in accordance with the shareholdings. That was the main factual issue which the Court was required to determine at trial and the learned Judge determined it in favour of the Claimants.

On 18^th December 2006 Clearwell invoiced Weatherford for $2,500,000. MSL also invoiced Clearwell £301,391 (the sterling equivalent of $500,000) plus VAT as “consultancy fees to assist in negotiations on Weatherford Licence fee”. Hydropath invoiced Clearwell for £723,340 (the sterling equivalent of $1,200,000) plus VAT for “consultation fee for negotiating the deal with Weatherford – USA”. The sums paid were described in Clearwell’s accounts to 31^st July 2007 as “in respect of services supplied negotiating licence and supplier agreements” with a note stating “every transaction took place at arms length basis and at prevailing market rate”. Dr Stefanini signed those accounts on behalf of the board.

In February 2009 the next instalment of the licence fee of $250,000 was paid. On 9^th February 2009 MSL invoiced Clearwell for Messrs Clark and Lauretti’s 26% share for “consultancy provided during 2008 in association with your Licence Agreement with Weatherford”. On 28^th February 2009 Hydropath invoiced Clearwell for the sterling equivalent of $185,000 representing 74% as “consultancy as per agreement with Weatherford-USA for 2008”.

In March 2010 the next instalment of $625,000 was paid by Weatherford. Sums were paid by Clearwell to MSL and Hydropath in the same way and in the same proportions.

Thereafter Dr Stefanini and Messrs Clark and Lauretti fell out in August/September 2010. Messrs Clark and Lauretti were removed as directors of Clearwell on 17^th January 2011.

On 28^th December 2010, notwithstanding an assertion by Weatherford that Hydropath were in breach of warranty by reason of an alleged sparking problem with the technology, it paid the final instalment of $625,000 to Clearwell. On 7^th January 2011 MSL invoiced Clearwell for $162,500 i.e. 26% of $625,000. No payment was made and that non payment led to the present litigation.

As I have said, after a 5 day hearing the Judge reviewing the evidence delivered a judgment in favour of the Claimants. The amount of the judgment is the sterling equivalent of the figure of $162,500.

The Judge concluded there was an agreement made on 12^th December 2006 which distributed by way of consultancy fees the sums payable by way of licence fees in favour of Clearwell.

It is quite clear that the Judge considered the evidence of the 3 main witnesses Dr Stefanini, Mr Clark and Mr Lauretti very carefully. He found the evidence of Mr Clark and Mr Lauretti as to the meeting and lunch afterwards as reliable and accepted Mr Clark’s evidence that they met to discuss what should happen to the licence fees. He said he looked at it as a single fee payable by instalments. Clearwell denied there was any such agreement and asserted that as regards future instalments agreements were made as to the division of those each time they were received. The Judge rejected that contention and said there were no such discussions because all those involved already knew who was entitled to what namely, it was done on the basis of the agreement reached in December 2006.

Clearwell’s case was clearly damaged by the unsatisfactory nature of the evidence of Dr Stefanini. He said he had a bad memory and had no recollection of any meeting in December to discuss the licence fees. He then in the witness box recollected discussing with his wife that he would be making loans of $250,000 to Mr Clark and Mr Lauretti because they had said they were short of money so he said the $250,000 each received from the $2,500,000 was by way of a loan. The Judge rejected this as being a fabrication after the event invented because they had fallen out. The Judge concluded “I regret that Dr Stefanini’s lack of recollection of the meeting on 12^th December 2006 was convenient. I have to conclude that in fact he remembers this important meeting and what had been agreed at it but did not want to admit that” (paragraph 27 (c)). The accountant Mr Steinberg was present for part of the meeting and the Judge concluded that he advised the directors as to the effect of the licence fees and how they could be paid out.

As is demonstrated by the payment schedule above, all the payments save the last one were paid out in accordance with his apparent suggestion. It is worth noting that the largest recipient of the payments under this agreement was actually Dr Stefanini. Given Clearwell’s stance that these payments were illegal I asked Mr Booth QC whether Dr Stefanini was going to return his payments to Clearwell. In a long response which was at times difficult to follow the conclusion was that for various reasons despite the plea of illegality Dr Stefanini was not going to repay the fruits that he had received of the supposed illegality. This is of course an extremely unattractive stance to take.

The issue therefore was a short one in the sense that the Judge had to decide whether anything had been agreed in December 2006 and if so what and the consequences of that decision and finally whether that agreement could be enforced lawfully against Clearwell. He concluded there was an agreement as alleged by the Claimants and that there was no lawful impediment to the agreement operating as they contended.

Clearwell raised the following 5 issues on this appeal.

Shortly before the trial (1^st December 2010) the Particulars of Claim were amended. The primary amendment was to add Messrs Clark and Lauretti as Claimants on the basis that the agreement in December 2006 was made by them and the payments of money to MSL were by their direction only and not on the basis that MSL had any contractual relationship. The key amendment is in paragraph 6 and the insertion of paragraphs 6A–C. The amended pleading is as follows:-

“6

It was orally agreed at a meeting in London at the registered office of the Defendant at 1 Southampton Street, London on 12 December 2006 4 December 2007 between Mr Stefanini, Mr Clark and Mr Lauretti that the licence fee payable by Weatherford pursuant to the Licence and Technical Services Agreements would be divided between Mr Stefanini, Mr Clark and Mr Laurettithe Claimantand Hydropath in the same proportion as their respective shareholdings in the Defendant, namely 13%, 13%26% and 74% and that this would in addition serve as their remuneration for services provided to Weatherford under the Technical Services Agreement. The said agreement (“the Fee Agreement”) was made between Clearwell on one hand (acting through its directors Mr Clark, Mr Lauretti and Mr Stefanini), and MSL or Mr Clark, Mr Lauretti and Mr Stefanini on the other. It was understood by the parties that Mr Clark would receive the monies and provide support services to Weatherford through MSL.TheClaimant and Hydropath would invoice the Defendant annually for theirMr Stefanini’s share of the licence fee. On 9 February 2009 Mr Clark emailed Dalia Stefanini, Mr Nathan Steinberg, asking that Mr Lauretti’s share of the licence fee could be invoiced by MSL to make it “...easier for Clearwell’s accounts”.”

6A. The parties knew that the licence fee from Weatherford would be payable in instalments. However the division of those instalments was determined by the Fee Agreement.

6B. Accordingly the parties to the Fee Agreement were:

(i)

Clearwell, who would receive the licence fee from Weatherford; and

(ii)

MSL, alternatively Mr Clark, who would receive Mr Clark’s share of the fee from Clearwell;

(iii)

MSL, alternatively Mr Lauretti, who would receive Mr Lauretti’s share of the fee from Clearwell;

6C. The terms of the Fee Agreement were that in consideration for the work undertaken in procuring the business with Weatherford and/or in consideration of the work done and to be done in operating the business arrangements with Weatherford, Clearwell agreed that:

(i)

Mr Clark alternatively MSL would receive 13% of the licence fee.

(ii)

Mr Lauretti alternatively MSL would receive 13% of the licence fee.

(iii)

Mr Stefanini alternatively Hydropath would receive 74% of the licence fee”.

Clearwell did not oppose the amendments and re-pleaded its Defence to them.

The complaint is that the agreement as found by the learned Judge is not in accordance with the pleaded case. This was an argument advanced at trial and rejected by the Judge (paragraphs [29-30]). It is a contention that the essence of the Claimants’ case was that they were entitled to payment regardless of whether they have provided services in the period after 12^th December 2006. Clearwell’s contention advanced before the Judge and rejected in those paragraphs and repeated in this Court was that the pleadings involved a claim that the Claimants did not have to provide any services. Thus it is contended the arrangements are purely voluntary and Clearwell receives no benefit thereby and therefore cannot be required to make any payments. The Judge rejected the submission that that is what the pleading said. He concluded (paragraph [30]) that the pleading (by particular reference to paragraph 6C) demonstrated that the agreement was that Messrs Clark, Lauretti and Dr Stefanini would provide services as and when required. That does not mean that they had no obligation to provide services but it does mean that they only had to provide services when asked to do so by Clearwell.

This is a common situation in respect of a consultancy agreement. It was further strengthened in this case because Clearwell would only be able to carry out its obligations by using the directors. It had no other staff with which to do them. It is quite clear in my view that the pleading meant as the Judge said and not as contended by Mr Booth QC who appeared for Clearwell.

In any event let us suppose that the agreement as found by the Judge departed from that pleading. As was pointed out in argument it made no difference and Mr Booth QC was unable to say that he did not know the case that was being advanced. It would not have altered the course of the trial as the only issue was what was agreed if at all on 12^th December 2006.

There is in my view therefore nothing in the pleading point and I would refuse permission to appeal in respect of that ground.

This was a challenge to the Judge’s finding that a legally binding agreement was entered into on 12th December 2006. Clearwell contends that the learned Judge “wrongly concluded the fact that a binding agreement between Mr Clark and Mr Lauretti (and by inference Dr Stefanini) on the one part and the Appellant on the other part was entered into on or about December 2006” (ground 4).

Further in Clearwell’s skeleton (paragraph 19) it asked this Court to overturn the Judge’s finding of the fact on the basis that “this case is at the end of the scale where an Appellate tribunal can more readily interfere”.

It is well known that the appeal procedure is not a re-hearing. The exercise of the Court of Appeal’s powers is limited to a review. It is further well established that the Court of Appeal is reluctant to overturn factual conclusions of a trial Judge. As actually set out in Clearwell’s skeleton argument see Assicurazioni Generali SpA v Arab Insurance Group [2003] 1 WLR 577 CA at paragraph [6]– [23] per Clark LJ as approved by the House of Lords in Datec Electronic Holdings Ltd v UPS Ltd [2007] 1 WLR 1325 HL at paragraph [46] per Lord Mance.

This was further emphasised by the House of Lords in the case of Thorner (Appellant) v Major & Ors (Respondents) [2009] UKHL 18. See Lord Neuberger of Abbotsbury (for example) as follows:-

“80 Perhaps more importantly, the meaning to be ascribed to words passing between parties will depend, often very much, on their factual context. This is particularly true in a case such as this, where a very taciturn farmer, given to indirect statements, made remarks obliquely referring to his intention with regard to his farm after his death. At trial, there was much evidence about the relationship between Peter and David, and about Peter's character. Consequently, the Deputy Judge was far better able than any appellate tribunal (even with the benefit of transcripts of the evidence) to assess not only how the statements would have been intended by Peter and understood by David, but also whether any such understanding and any subsequent reliance by David were reasonable. His very full and careful judgment demonstrates that the Deputy Judge took full advantage of this ability, as the observations of Lloyd LJ at http://www.bailii.org/ew/cases/EWCA/Civ/2008/732.html[2008] EWCA Civ 732, para 66 effectively acknowledge.

81 That does not of course, mean that the Court of Appeal had no power to reverse the first instance decision on the ground that David's understanding of, or reliance on, Peter's statements was unreasonable. However, particularly in a case such as this, where the facts are unusual and the first instance judge has made full and careful findings, an appellate court should be very slow indeed to intervene. It may well be that the Court of Appeal took the view, advanced before your Lordships, that the question of how Peter's statements should reasonably have been understood was a matter of law, and was therefore an issue on which an appellate court was freer to intervene than on questions of primary fact (such as what was said by Peter or how it was understood by David) or of inferences from primary fact (such as what Peter, who could not of course give evidence, intended when making the statements).”

These principles are clear and litigants should be aware of them. Attempts to rerun trials in the Court of Appeal with selective reading of transcripts are not likely to be successful see for example EPI Environmental Technologies Inc v Symphony Plastic Technology Inc [2006] EWCA Civ 3 at paragraph 62 per Lord Justice Buxton.

The issue in the present case involved an assessment of the credibility of the 3 main players. The Judge set out his assessment of those witnesses in the light of the evidence before him, the cross examination of those witnesses and presumably the subsequent actions that took place after December 2006. There is in my view absolutely nothing to justify a suggestion that there are any grounds to come to the conclusion that the Judge in his careful analysis and conclusion as to the facts crossed the barrier such that his findings were ones that no reasonable Judge could come to.

The Judge carefully considered the evidence and came to the conclusions he did as set out in paragraphs [32-34] of his judgment. He was alive to the fact that an agreement made orally between lay people would not be quite as full as a written one drafted by lawyers. However the agreement, he concluded, was a simple contract. That simplicity of course can give rise to difficulties which a properly drawn agreement would not do because the lawyers are engaged to anticipate problems and address them. He concluded nevertheless that the agreement was not void for uncertainty and that the absence of a formal contract did not in this case lead to the conclusion that there was no formal legal contract entered into.

I can see no basis for concluding that the Judge’s analysis and conclusions are capable of challenge. I would therefore refuse permission to appeal on grounds (4) and (5).

This was a fall back claim by Clearwell in the event that the Judge concluded that an agreement was entered into on 12^th December 2006 as contended by the Claimants.

Clearwell’s submission per Mr Booth QC was that such an agreement was a disguised distribution of profits because the invoices had to be paid regardless of the value of the services to which they purportedly related and because the payments were due whether or not services had in fact been provided. Mr Booth QC submitted to the learned Judge that if the other directors had made a bona fide assessment of the value of their services in 2006 that would mean that the payments then made from the first $2,500,000 were lawful though subject to a challenge by the Revenue. His submission was that future payments could only be lawful if they were assessed year by year against services provided. As the Judge concluded in paragraph 35 it is an unmeritorious contention by Clearwell when Dr Stefanini was the largest beneficiary of the arrangement and, as I have said above, has no intention of repaying the sums he has received.

The learned Judge was referred to a number of authorities on this point.

The contention is that the payments made under the agreement were illegal distributions and contrary to what was then section 263 (1) Companies Act 1985 which provided:-

“A company shall not make a distribution except out of profits available for the purpose”.

Those profits are the accumulated realised profits less accumulated realised losses and the profits have to be justified by reference to the relevant accounts.

Section 281 CA 1985 provides that:-

“The provisions of this part are without prejudice to any enactment or rule of law or any provision of a company’s memorandum or articles restricting the sums out of which or the case in which a distribution may be made.”

That retains the common law provisions which were in place as developed by case law before these provisions came into force. They first came into force with the Companies Act 1980 (sections 39-45) which were re-enacted in the CA 1985.

The Judge’s conclusion after reviewing the authorities was set out in paragraphs 41-45 as follows:-

“41.

It is important to be clear how this part of the defence case has been put. It had to be put, of course, in the alternative to the primary case that there was no agreement. The defence case looked at the instalments of licence fee year by year, accepting that the payments which were made up to 2010 were made in respect of services provided by the directors in the relevant years and seeking to treat the final instalment in isolation. That is not consistent with the agreement as I have found it to be, namely a global agreement covering payment of all the directors’ services to Clearwell whenever provided. As I have said, the defence at first put in issue whether Mr Clark and Mr Lauretti had provided any services in 2010. But their evidence that they had was not challenged in cross-examination. Neither side adduced any evidence as to the value of the services which had been provided by the directors prior to December 2006, nor as to the value of the services which might be expected after December 2006, nor as to the value of the services which were in fact provided after December 2006. ”

42.

In the present case looking at the circumstances as a whole it is clear that the overall object of the exercise was to get the directors’ shares of the licence fees receivable by Clearwell to the directors in a tax efficient manner. That was to be done in the context that the directors had provided substantial services to Clearwell and were going to provide further substantial services, for which they expected to be remunerated. (I note here that the services could have been expected to continue until 2014 when the relevant patent expired. Mr Clark and Mr Lauretti will not be providing services until then because of the actions of Dr Stefanini as the controlling shareholder of Clearwell: no evidence was called on behalf of Clearwell that Mr Clark and Mr Lauretti were guilty of any wrongdoing.) It was those services of the directors which brought the licence fees to Clearwell, and so the licence fees were a reflection of the value of the services. It is also important that it was properly expected by the directors in 2006 that Clearwell would have substantial other income which would easily cover its future expenditure. It cannot be said that the amounts allocated to the directors by the agreement were clearly disproportionate to the services.

43.

Mr Booth laid great emphasis on it being the claimants’ case that the monies were payable regardless of whether the directors provided any services and the acceptance in evidence that the directors were not obliged to provide any services. I have considered these aspects in paragraphs 29 to 32 above. If I am right that the directors were obliged to provide their services, then this point falls away. If I am wrong about that, it was nonetheless an agreement made on the basis that the services had been provided and would continue to be provided. So Clearwell would be getting what it was paying for.

44.

The case of Re Halt Garage was concerned with director’s remuneration, but was a clear case because no services had been provided in the period in question because the director was ill. Most other cases have been concerned with the transfer of assets. Although MacPherson’s case concerned pay, it turned on the insolvency of the company. No authority was cited which concerned issues similar to those arising here.

45.

My conclusion is that it has not been established that the agreement of December 2006 involved an unlawful distribution of assets on the ground that the sums involved exceeded the value of the services being paid for. It was not the equivalent of a sale to the company by the directors of assets at an over-value. I conclude that the agreement was a proper one for the directors to make and that they were not in breach of their duties in making it. It was an agreement which was ‘for the benefit of and to promote the prosperity of the company’ – Re Lee Behrens, because it provided for the proper remuneration of its directors. So these last defences fail.”

In my view the facts as found by the Judge and summarised in paragraph 42, which are not capable of challenge before this court for the reasons I have already set out, are fatal to Clearwell’s argument on this point. The context is that the payments out were on the basis that the directors had provided substantial services to Clearwell and were going to provide further substantial services if required for which they expected to be remunerated. That obligation as the Judge found was until 2014 when the patent expired. Thus the licence fees as the Judge said “were a reflection of the value of the services” (paragraph 43). Further it was also important that it was properly expected by the directors in 2006 that Clearwell would have substantial other income which could easily cover its future expenditure. The Judge therefore concluded that “it cannot be said that the amount allocated to the directors by the agreement were clearly disproportionate to the services” (paragraph 42).

He made those factual findings having reviewed the authorities in this area, in particular Progress Property Company Ltd v Moorgarth Group Ltd [2010] UKSC 55, Re: Halt Garage Ltd [1982] 3 All ER 1016 (which has no significance in my view in relation to the facts of the present case) and the judgment of Chadwick LJ in MacPherson v European Strategic Bureau Ltd [2002] BCC 39.

Lord Mance in Progress referred to a New Zealand Court of Appeal decision in Jenkins v Harbour View Courts Ltd [1966] 1 NZLR 1 at 23 where Turner J said:-

“A transaction will not be held to be a return of capital, he said, simply because it was a transaction with a shareholder; nor simply because a loss of capital has in fact resulted. Nor will the inadequacy of the consideration necessarily decide the matter. I agree that the cases cited by Mr Dugdale do support his proposition that none of the criteria mentioned by him will, taken by itself, determine the matter; but I accept Mr Ennor’s counter-submission that the question which the Court must ask itself is – is this transaction in essence one in which the company divests itself of part of its undertaking in favour of a shareholder otherwise than in the course of a bona fide transaction entered into as a matter of contract, and not as a company-shareholder transaction? If this is the essence of the transaction, then it is in my opinion a return of capital.”

The Judge’s factual findings are unimpeachable. He applied the correct test and concluded that this was a bona fide transaction for consideration which was in the interests of the company and was not a disguised return of capital.

The Judge on hearing the evidence examined the facts as found and came to the conclusion that the transaction did not contravene either the common law or statutory principle.

Despite Mr Booth QC’s valiant attempts this argument fails when the attempt to challenge the Judge’s factual findings fails.

I would therefore dismiss the appeal.

I agree.

I also agree.

This judgment is in respect of costs following the dismissal of the Appeal.

The Respondents/Claimants have been successful and are clearly entitled to their costs both in respect of the decision to refuse permission to appeal on grounds 1, 3, 4 and 5 and in respect of the dismissal of the appeal (for which permission had been given by the Judge below) on ground 2.

The only issue is as to whether or not the costs should be summarily assessed or subject to a detailed assessment if not agreed.

The Respondents/Claimants have provided a number of Schedules of Costs. The first dated 11^th October was for £ 26,035.50. The largest amount was Counsel’s brief fee of £17,500. The next was dated 12^th October 2012 in the sum of £28,535.50. The change was entirely due to an increase of Counsel’s fee to £20,000 by adding a conference fee of £3,500 and reducing the brief fee to £16,500 giving a total of £ 28,535.0. The final amended schedule reduced the bill to £27,948 by reducing the solicitor’s fees from £ 8460.50. The Appellant/Defendant has not provided any schedule of costs.

The general position is that there should be a summary assessment if possible of the costs of the hearings in the Court of Appeal to which PD 52.14 applies see CPR 44 PD.7 paragraph 13.2 (3). It is the duty of all parties to provide assistance to the Judge in making a summary assessment. I would have been assisted by the provision of the Appellant/Defendant’s costs.

The Respondents notified the Appellant on 9^th November 2012 that if the costs could not be agreed the Court will be asked to assess them summarily based on the schedule.

The Appellant/Defendant’s stance is that the costs should be subject to a detailed assessment. In my view that is not appropriate. The costs in order of things are relatively modest and to submit them to a detailed assessment is likely to be disproportionately expensive and likely to delay matters. Had I been inclined to do that I would in any event have ordered a substantial payment on account of around 75% of the figure claimed.

I therefore come to the assessment of the costs

The Appellant/Defendant challenges the change of Counsel’s fees. I agree. In my view the original brief fee of £17,000 is sufficiently large to encompass any pre appeal conference. I will therefore reduce Counsel’s fees by £3,000 to £17,000

The other costs in my view are perfectly reasonable. I will therefore summarily assess the Respondents/Claimants costs at £24,948.00. The draft order should be correspondingly adjusted in paragraph 3 to say :-

“The Appellant do pay the Respondents costs of the Appeal (including the costs of application for permission to appeal) summarily assessed in the sum of £24,948.00.”