The Rolls Building
7 Rolls Buildings
New Fetter Lane
London EC4A 1NL
Before:
His Honour Judge Behrens
sitting as a Judge of the High Court
Between:
(1) HFI FARNBOROUGH LLP (2) HFI KNIGHTS HILL LLP (3) HFI ROMSEY LLP (4) HFI WIMBOURNE LLP | Claimants |
- and - | |
PARK GARAGE GROUP PLC | Defendant |
John McGhee QC (instructed by Herbert Smith Freehills LLP) for the Claimants
Joanne Wicks QC (instructed by Clifford Chance LLP) for the Defendant
This judgment is based on written submissions received from Mr McGhee and Ms Wicks.
Judgment on Costs and Permission to Appeal
Judge Behrens:
1 Introduction
This judgment deals with questions of costs and permission to appeal arising out of the judgment in the action which was formally handed down on 13 December 2012. Ms Wicks and Mr McGhee have provided helpful written submissions in accordance with an agreed timetable and both parties have agreed that the matter should be dealt with on the basis of such submissions.
2 Costs
The submissions
Ms Wicks’ primary submission is that HFI pay Park’s costs on the standard basis. She referred me to CPR 44.3(2). She submits that Park is the successful party and that accordingly HFI should pay Park’s costs. There is, she submits no good reason to depart from the general rule.
She points out that HFI’s claims for declarations, damages, possession and interest have all failed and Park succeeded on all the construction issues (save for the question of sale costs) and all the rectification claims even though most were unnecessary in the light of my view on the construction issues.
Ms Wicks referred me to paragraph 12 of a judgment of Tomlinson LJ in Pindell v Airasia [2010] EWHC 3238 where he said:
12.With one exception, I do not think it appropriate to consider an issue-based costs order. Within the battle fought over recovery of damages for the lost sale, AirAsia lost several of the individual skirmishes. Thus they lost on liability, although that was simply a question of construction, albeit to be considered against the background of the factual matrix, and moreover it was a difficult issue of construction to resolve which AirAsia can scarcely be criticised for raising. They lost on estoppel, which certainly occupied some time at trial. They lost on the question of commercially reasonable efforts to redeliver on time. AirAsia also had significantly the worse of the argument on the market value of the aircraft and the question whether the sale price to NAC was outside the range of what was normally to be expected. However, as Simon Brown LJ, as he then was, observed in Budgen v Andrew Gardner Partnership [2002] EWCA Civ 1125 at paragraph 35:
“…in almost every case even the winner is likely to fail on some issues.”
In that regard these matters do not take the case out of the norm or in my judgment render it appropriate to condemn the parties to a yet further exercise in apportioning the costs incurred to the issues to which they related. In many instances that would here be a fraught if not impossible exercise for the simple reason that much of the evidence, oral and documentary, could properly be said to be relevant to both issues on which the Defendants have won as well as to issues on which they have lost.
13 The exception is issue (4) to which I referred in paragraph 43 of my judgment, viz, “could and would NAC in any event have terminated the Sale Agreement on account of the condition of the engines following their shop visits to ST Engines?” This was a discrete issue which on any view generated significant costs in terms of disclosure of engine maintenance documents by BBAM and the instruction of expert witnesses.…
Ms Wicks submits that in so far as there were issues upon which Park did not succeed they did not take the case out of the norm.
Mr McGhee recognises that Park was the successful party and that accordingly the starting point is that HFI should pay Park’s costs. However he submits that the appropriate order for costs would be:
There be no order for costs in respect of any costs incurred in relation to the issue as to the basis for assessment of or quantum of the value of the Premises or in relation to the issue as to the basis of assessment of or quantum of mesne profits.
Save as aforesaid the Claimants do pay the Defendant's costs on the standard basis to be assessed on a detailed assessment if not agreed.”
In paragraph 4 of his submissions he points out that there was a hard fought debate between the parties as to whether the valuation threshold had been reached and as to the amount of mesne profits. He points out that I did not accept Park’s case on valuation. I found that the threshold had been exceeded in two of the four properties on a vacant possession basis and on all four properties on an investment basis. My figure for mesne profits was between the figures proposed by Ms Barber and Mr Hunter.
He accordingly submits that it would be wrong for Park to recover the costs of these issues and the circumstances justify an issue based order under CPR 44(3)(6)(f). He points out that Park’s solicitors have not provided a proper breakdown of their costs so as to enable the Court to provide a proper estimate of the appropriate percentage. It would, in his view, not be difficult for a costs judge to separate out the costs of the issues.
Ms Wicks deals with these submissions in paragraphs 8 to 14 of her original submissions and in paragraphs 2 to 7 of her submissions in reply. In summary she submits that Mr McGhee’s submission fails to reflect Park’s level of success; that the costs of Park in relation to the valuation issues were reasonably incurred in meeting HFI’s unsuccessful claim and is contrary to the steer away from an issue based costs order reflected in CPR 44.3(7). She referred me to the principles formulated by Jackson J in Multiplex Constructions v Cleveland Bridge [2008] EWHC 2280 with particular reference to the 8th principle in relation to costs on issues common to several issues.
In support of the submissions Ms Wicks and/or Clifford Chance LLP have provided a very brief Schedule of Costs which can be summarised
Clifford Chance Fees to 12/12/2012 | 285,173.14 | |
Future costs | 1,152.50 | |
Total | 286,325.64 | |
Counsel's Fees | 60,894.75 | |
Future Costs | 1,750.00 | |
Total | 62,644.75 | |
Expert - David Hunter | 27,576.48 | |
Other disbursements | 27,695.88 | |
404,242.75 |
No comparable figures have been provided by Mr McGhee or Herbert Smith Freehills LLP. In her submissions in Reply Ms Wicks submits that Park’s request for details of this bill amounted to a request for a detailed bill. Such a request was disproportionate. Helpfully, however, in paragraph 7 she disclosed that Clifford Chance LLP’s costs include £12,882.60 specifically billed in respect of Mr Hunter’s evidence. She recognises that this is likely to be an underestimate.
Discussion and Conclusion
Whilst I see the force of Ms Wicks’ submissions I find myself largely in agreement with Mr McGhee’s submissions. The valuation and mesne profits issues were discrete issues. They were unnecessary to the defence on the main construction and rectification issues. They involved very significant additional expense. Apart from the direct costs mentioned above it is not without significance that there were 2 bundles of expert evidence extending to 523 pages. The cross-examination of the experts extended for approximately a day. (I do not have the exact timings). The cross-examination of Mr Barlow (which occupies some 30 pages of the transcript) was almost exclusively devoted to discrediting the evidence to be given by Ms Barber. Both Counsel devoted part of their closing submissions to the valuation issues.
In no sense of the word can Park be said to have succeeded in relation to these issues. At best the result might be described as a “score draw” – probably in HFI’s favour.
It may be that it was not unreasonable for Park to raise the issues but to my mind that does not deal with the question of whether it is fair to order HFI to pay Park’s costs of these issues. To my mind the critical question is that the issues were discrete. In those circumstances I agree with Mr McGhee that it would not be right to order HFI to pay Park’s costs of these issues.
However in the light of the steer given in CPR 44(3)(7) and despite the fear of Mr McGhee that any estimate I make will not be accurate I propose to make an order under CPR 44(3)(6)(a) in the following terms:
There will be no order in respect of the costs of Park’s expert – Mr David Hunter – in the sum of £27,576.48. HFI will pay the costs of the remaining disbursements of Park.
HFI will pay 80% of the remaining costs of Park. (i.e. its Solicitors and Counsels fees)
All such costs to be assessed if not agreed on the standard basis.
It will be apparent that my albeit rough and ready estimate is that approximately 20% of the trial time and of the preparation time will have been devoted to the issues of valuation and mesne profits.
3 Interim Payment
Ms Wicks seeks an interim payment in respect of costs. Mr McGhee does not oppose this in principle. The rival submissions go to quantum.
The costs schedule provided assesses the costs of the action at £404,242.75. After deducting the costs of David Hunter and reducing Clifford Chance LLP’s and Counsel’s fees by 20% I arrive at a figure of £306,872.19
HFI has not chosen to disclose its costs so that I am not really in a position to compare figures. HFI has proposed an interim payment of £162,000; Park has suggested a figure of £225,000. Both these figures were based on the figure in the Costs Schedule. I propose to award the sum of £185,000 being approximately 60% of the figure of £306,872.19.
4 Permission to Appeal
Ms Wicks is, of course, correct that in order to reverse the result HFI will have to succeed on both the construction and the rectification issue. However if it succeeds on one of the points it might be relevant on the question of costs.
In my view this is a case where the Court of Appeal might well take a different view from me on either the construction or the rectification issues or even both. I would accordingly grant HFI permission to appeal.
The permission to appeal will cover the construction issues (including the issue not decided in the judgment) and the rectification issues but not the valuation or mesne profits issue. As I understand it, no permission is sought by either party on these issues.
I would also grant permission to Park to appeal (or cross appeal if it wishes to see if there is in fact an appeal by HFI) on the question of costs (though not on the amount of the interim payment).
5 Other matters.
I should like to hand a judgment down by Friday 11 January 2013. I should therefore be pleased to receive comments/corrections and a draft order by Wednesday 9 January 2013. I assume that there will be no attendance when judgment is handed down.
I have treated the costs of dealing with these ancillary matters as part of the costs of the action. That is to say HFI will pay 80% of these costs. Unless there has been a specific part 36 offer (or equivalent) in relation to these costs I think that is the right order. If there has been an offer there may need to be a separate order in relation to them.