Hone & Ors v Abbey Forwarding & Anor

We have had before us written submissions of the parties consequential upon our judgments of 23 May 2014. We were invited to hear further oral submissions on these points. However, the written materials before us have been sufficiently comprehensive to enable us to decide outstanding matters on the papers without a hearing. The following is the judgment of the court to which all members have contributed.

The outstanding issues can be summarised under the following heads: 1) the final judgment sum; 2) interest; 3) costs in the High Court and the costs of the Appeal; 4) interim payment on account of costs.

We will set out immediately the conclusions that we have reached on each of these points before stating our short reasons;

1) The correct figure for the final judgment should be a total of £57,763.31 in favour of the Appellants, made up of a total of £45,000 (£15,000 each) to the Appellants for general damages; £3,463.31 to Mr Patrick Owen (as ordered below), and £9,300 to the Appellants collectively in respect of damages for lost future marble transactions . 2) Interest is to be calculated on the relevant sums in the manner proposed by the Appellants, but at 3%. We invite the parties to agree the appropriate figure and to include it in the revised draft order to be submitted. 3) The Respondents are to pay 25% of the Appellants’ costs in the High Court, to be assessed on the standard basis. There will be no order for costs in this court. 4) The Respondents are to pay to the Appellants £100,000, on account of costs, within 21 days of the date of this judgment.

Our reasons are as follows.

Paragraph 6 of the Appellants’ submissions and paragraph 5(b) of their draft order both seem to include the £8000 ordered by the judge to be paid to Mr P Owen for general damages. We intend to order £15,000 to be paid to each of the Appellants under this head and no more. We agree, on this point, with what is said in footnote 2 to the draft order submitted by the Respondents with Miss Harman’s e-mail to my clerk of 5 June 2014. In view of the terms in which the third sentence of paragraph 145 of my judgment was written, I understand why the Appellants may have misunderstood the position in this respect.

In our judgment, interest should be paid at a suitable rate for an appropriate period. We consider that the manner of the calculation is suitably framed in paragraphs 7 to 11 of the Appellants’ written submissions, but we consider the rate of interest there proposed to be extravagant. A rate of 3% is, in our view, the correct rate.

In the case of costs, both here and in the High Court, we have carefully considered the very lengthy submissions advanced by the parties. Necessarily, in a case such as this, the court has to adopt a relatively “broad brush” approach. In reaching our decision we have borne in mind the conduct of the litigation by each party. Neither side, in our judgment, has conducted the litigation in an exemplary fashion.

The salient features of our decision are twofold: 1) the Appellants made extravagant claims to damages, but underlying some of them was the bona fide point of law as to the legal test for the recoverability of damages under the cross-undertaking (which, of course, in the end the Appellants lost); 2) the Respondents to the bitter end, even before us, were contending that no compensation should be awarded to the Appellants at all (see paragraph 4 of my judgment) and failed to make an offer to compromise the proceedings matching or exceeding the sums ultimately recovered. In considering both points, we have had in mind the present trend to favour “issues based” costs orders in appropriate circumstances, together with all the matters stated in CPR 44.2.

Seeking to apply these principles to the costs here and below, we make the following observations. From what we have said above, it can be seen what sum we consider should have been ordered in the Appellants’ favour. The Respondents contended below that nothing at all was recoverable and had made no offer matching or exceeding the sum that ought, in our view, to have been ordered. The Appellants, however, had advanced a highly inflated claim. Two competing factors weigh with us. First, in claims of this sort, a party who makes no offer at all, and then makes one which the other side beats at the end of the day, is at substantial risk as to costs. Secondly, a party who loses on a number of issues will frequently find his recoverable costs significantly reduced.

In proposing that the appeal from the judge’s costs order should be allowed, I said, in paragraph 141, of my judgment that I considered that justice would have been served if the judge had adhered to the “starting point” of giving the Appellants their costs down to 31 August 2012 and HMRC their costs thereafter. My Lord, Vos LJ agreed.

That was, of course, a “starting point” and I said, in paragraph 146, that further argument on costs would be required. We have now had the benefit of such argument and it seems to us all, in the light of those submissions, that an order for payment by the Respondents of 25% of the Appellants’ costs of the inquiry in the High Court, assessed on the standard basis, would meet all the relevant considerations.

Turning to the costs of the appeal, the Appellants succeeded in obtaining an increased sum for damages overall; they succeeded, in principle, on the costs appeal and won on the cross-appeal. However, they lost on the significant point of law which took the majority of the time in argument, both on paper and orally. Bearing in mind the same considerations as before, we consider that “no order for costs” of the appeal and of the cross-appeal is the correct order to make in these circumstances.

We see no reason to distinguish between the Respondents. The order for payment of costs in favour of the Appellants will be made against both Respondents.

In the light of the revised costs order which we propose, the interim costs order must be in a far lesser sum than that proposed by the Appellants. Doing the best that we can with the help of the figures presented, we have decided that an interim figure of no more than £100,000 can be justified.

We ask counsel to submit a revised order. In doing so, we direct that the draft should avoid the phraseology of “declarations”, which was adopted in the drafts from both sides. The form should state that the appeal is allowed, with the consequence that certain orders for payment are made, and that the cross appeal is dismissed. We see no need for further elaboration.