Costar UK Ltd v Low & Ors

THE DEPUTY JUDGE: This is an appeal against an order made by Deputy Master Cousins on 22 October last. He joined a Mr Darren Frostick to some existing proceedings as the Fourth Defendant and, after giving some procedural directions, ordered that the costs of the application to join Mr Frostick should be costs in the cause, except that the Claimant’s costs of and occasioned by Mr Frostick’s objection to the application should be paid by the Third and Fourth defendants, the Fourth Defendant being a reference to Mr Frostick, and summarily assessed those costs in the sum of just under £4,200.

Mr Frostick now appeals against that order. The amount involved is small, but it does raise a point of principle. Both the Claimant and Mr Frostick have appeared by counsel, Mr Simon Redmayne for Mr Frostick, and Miss Sonia Nolten for the Claimant. There was some brief debate at the beginning of the hearing as to whether permission to appeal had or had not been given in the order made by Nugee J. on 4 November, the order being in ambiguous terms, but it was common ground that the submissions on both sides would be identical whether the court was entertaining an application for permission or was hearing the appeal itself and it was agreed that the question made no practical difference.

In order to explain the challenge to the Deputy Master’s order I need to set the order into context. The claim made in the proceedings is one for what is called the theft of confidential information of the Claimant. The claims in the proceedings were originally made against three defendants, the third one being Red Leads – pronounced Leds or possibly Leeds – Limited, a company of which Mr Frostick is the sole director and shareholder. Mr Frostick himself of course was not originally a defendant, but even before he was joined, the claim was put forward by the Claimant on the footing that he had conspired with the three original defendants.

The chronology in outline is this. On 29 April 2013, Warren J. made a search order and after a variation a day or two later, Arnold J. on 10 May continued the search order with some further variation until trial. The claim form was issued on the same day as the original search order and thereafter there was a series of orders extending time for service of the Particulars of Claim, in whole or in part because there was to be a mediation in July. There seem to have been some negotiations after that. By early September it seems that it was apparent that no settlement was possible and, on 13 September, the Claimant’s solicitors wrote to Bawtrees LLP, who were solicitors for the Third Defendant, seeking their consent to join Mr Frostick. That request was repeated on 16 September when the Claimant wrote to the First Defendant with a similar request. On the same day, Bawtrees refused, on behalf of the Third Defendant, to give such a consent, but on 19 September the First and Second Defendants did consent to the proposed joinder. On 20 September, the Claimant’s solicitors expressed surprised at the Third Defendant’s refusal and asked whether Bawtrees were also acting for Mr Frostick. A week later, on 27 September, Bawtrees wrote to say that they were now instructed by Mr Frostick, though I note that the Claimant’s solicitors were saying that they had in fact been acting for Mr Frostick for several months, and in that letter Bawtrees offered an undertaking from Mr Frostick, though they refused consent to his being joined as a defendant. The letter ran to three pages and analysed the relief sought in the Particulars of Claim; offered to provide a confirmation by way of affidavit and an undertaking which they asserted was all of the relief which was sought or would be sought against him in the proceedings; and asserted that the proposal to join him was an entirely unnecessary step, ending with a request, if an application to join Mr Frostick was made, to bring the court’s attention to that letter.

Mr Frostick swore an affidavit on 3 October in which he acknowledged that the Claimant was seeking to join him. The following day, the Claimant’s solicitors wrote to say that they would be applying to join Mr Frostick and they issued an application to that effect on 8 October. The application had attached to it a draft order which included a provision for not only the Third Defendant, but also Mr Frostick himself, as proposed Fourth Defendant, to pay the costs of the application. On 11 October, the Claimant’s solicitors sent the application to join Mr Frostick to Bawtrees. On 14 October, Bawtrees wrote resisting joinder, maintaining their refusal to consent, but asked again for their letter of 27 September to be put before the court. On 15 October there was a communication from the liquidator of the Third Defendant, which had gone into winding-up, no doubt on Mr Frostick’s initiative, on 10 October. The liquidator said that he was not in a position to sign a proposed consent order to join Mr Frostick, but also said that the action would not be defended by the Third Defendant any further. That was the state of affairs when the matter came before the Deputy Master on 22 October and when he made the order which I have summarised. The order as to costs was not that Mr Frostick should pay the costs of the application: those costs were ordered to be costs in the case, but there was an exception in respect of his objections to the application, which he was ordered to pay in the sum of £4,178.

The attack on the order for costs is put on three grounds by Mr Redmayne. One is that the court had no jurisdiction to make it; the second was that it embodied an error in principle or alternatively that it was an exercise of discretion which was wholly wrong; and thirdly that the order was contrary to the Fourth Defendant’s right to a fair trial under Article 6 of the Human Rights Convention.

I take those points in turn. Mr Redmayne said that the court’s discretion as to costs was set out in rule 44.3(1) of the Civil Procedure Rules, which provides that the court has a discretion as to whether costs are payable by one party to another, the amount of those costs and when they are to be paid. It is said that that provision did not apply because Mr Frostick was not a party to the proceedings when the Deputy Master made the order. He said, by contrast, that rule 48.2 dealt with a costs order against a non-party but that the procedure laid down in that provision had not been followed. In short, it requires that the person against whom the third party costs order is sought should be added as a party to the proceedings for the purposes of costs only and should be given a reasonable opportunity to attend a hearing at which the court would consider the matter further. Hence, he says the Deputy Master had no discretion to make an order for costs against Mr Frostick at all.

Miss Nolten’s answer, in part, to that submission, as made in her skeleton, was that by the end of the hearing in front of the Deputy Master, Mr Frostick had become a party to the proceedings because the Deputy Master had, earlier in the hearing, made an order to that effect. Mr Redmayne submitted that that was incorrect, and I think Miss Nolten agreed that that was so, having regard to the terms of paragraph 3.3 of Practice Direction 19A which provides that a new defendant does not become a party to the proceedings until the amended claim form has been served on him. To that may be added rules 40.2(2) and 40.7, which require an order or judgment to be dated and sealed, but provide that the order or judgment takes effect when made, carrying the implication that until the order has been dated and sealed it does not take effect, something which plainly did not happen by the end of the hearing on 22 October. So Mr Frostick, when the order was made, was not a party to the claim against the three existing defendants.

But Miss Nolten also submitted, and about this I consider that she was right, that there is no jurisdictional point at all. The court has power under section 51 of the Senior Courts Act 1981 to make an order for costs against anyone, as that provision was construed in the Aiden Shipping case. In my view, therefore, rule 44(3), which refers to costs payable by one party to another, is not dealing with jurisdiction. It is simply laying down the scope of the court’s discretion when an order is sought for payment of costs by one party to another. I had thought at first that the solution to the difficulty which these facts reveal was to be found by construing the word “party” in rule 44.3 as meaning a party to a particular application and not necessarily a party to the proceedings as a whole, and for reasons which I shall elaborate on I take the view that Mr Frostick was a party to the application to join him, though not a party to the proceedings themselves. But I doubt whether that solution is available if rule 44(3) is not a jurisdictional provision at all. The point is, I think, rather the scope of rule 48.2, which refers to the procedural requirements which apply when an order for costs is sought against a person who is not a party to proceedings. I have already summarised the procedural requirements under that rule, which include the requirement that the person sought to be made liable for costs should be added for the purposes of costs only. As Miss Nolten submitted, that is a provision wholly inappropriate when a person is being added as a substantive party to the claim. It is simply not possible to add such a person for the purposes of costs only. I think, therefore, it may be that “proceedings” in rule 48.2(1) covers an application to join a person as a party as distinct from the underlying claim, and in that sense Mr Frostick was a party to the application before the Deputy Master on 22 October. He had been sent the application and the draft order. It was clear that the application was against him and an order was specifically sought against him in the draft attached to the application. At any rate, I consider that the procedural requirements of rule 48.2 cannot apply to a case such as this and I consider that the court did have jurisdiction to make the order that it made and the first ground of challenge therefore fails.

I turn, therefore, to the second ground, the error in principle or the wholly wrong exercise of discretion. The basis of this ground was that, in Mr Redmayne’s submission, Mr Frostick had no standing to oppose the application to join him or influence the decision of the court on that application, so it was necessarily wrong to make him pay any part of the costs of that application. The provision for joinder of new parties is to be found in Rule 19.2. Mr Redmayne submitted that it focused exclusively on the effect of joinder on the existing parties. The effect of the proposed joinder on the proposed new party was irrelevant and therefore he had no standing to appear or to object. The point was expressed more than once by saying that Mr Frostick had no entitlement to consent - a formulation which I found somewhat mysterious. In my judgment, nothing in rule 19.2 says that the effect of the proposed joinder on the proposed new party is irrelevant. Indeed, it seems to me that sub-rule (2)(b) is flatly inconsistent with it, since it permits the joinder of the new party if:

“There is an issue involving a new party and an existing party [in the case, the Claimant] which is connected to the matters in dispute in the proceedings, and it is desirable to add the new party so that the court can resolve that issue.”

The desirability of adding a new party to an existing claim must, in my view, plainly extend to considering matters from the point of view of the proposed new party.

There is no warrant for construing the rule as precluding the proposed new party from appearing on the application and it is inconceivable that the court would refuse to hear submissions on behalf of that party. If Mr Redmayne were right on this point it would follow that whenever a person objected to being joined there would necessarily have to be two hearings: one from which he would be rigorously excluded, to decide, apparently in the interests of the existing parties alone, whether a joinder should be ordered, and then a subsequent one in which the newly-joined defendant would be applying to cease to be a party under sub-rule (3). I think that result would be both expensive and nonsensical and the terms of Rule 19.2 do not support it. The foundation for the second point therefore falls away.

I might have taken a different view, not as to the construction of the rules but as to the fairness of the order, if the Claimant had been asserting in correspondence with Mr Frostick’s solicitors that he had no standing to appear on the application and that his views on it were irrelevant or if it had been asserting that he had no entitlement to object. Although Mr Redmayne made a submission to the contrary, I do not read the correspondence from the Claimant’s solicitors as containing any such assertion. In any event, Mr Frostick’s solicitors were wholly uninhibited even if they had thought that such a point was being made, and by asking for their letter of 27 September to be shown to the court, they did their best to influence the proceedings. It is true that Miss Nolten, who appeared before the Deputy Master, made references to Mr Frostick’s lack of locus, but those references made no difference to Mr Frostick or his solicitors since they were not there to hear them. She did in fact put their letter before the court. so that the objection was in fact considered.

As to the third point, that on human rights, Mr Redmayne accepted that it was really parasitic on the other two. As I have held that the court did have jurisdiction, that Mr Frostick had notice of the hearing and that he was entitled to be heard, and indeed that his objections were before the court, I consider that there is nothing in the point sought to be raised under Article 6.

In the course of submissions a new point emerged, taken by Mr Redmayne, which was this: on the facts, Mr Frostick was not in fact responsible for any part of the costs of the hearing before the Deputy Master, because there would have had to be one anyway. The facts are, as I have recounted, that the First and Second Defendants consented to Mr Frostick’s joinder when asked before the application was made. The Third Defendant, which as I have mentioned had gone into winding-up on 10 October, said by its liquidator on 15 October that he was not agreeing any consent order as to joinder, but he offered no actual opposition to it and said that he would not be defending the claim. Mr Redmayne said it was therefore the liquidator’s attitude which made the hearing necessary but I do not accept that that is so. It is clear, in my view, that if those had been the only considerations, the order would almost certainly have been made on paper had Mr Frostick consented to joinder, something he could have done without prejudice to his right to raise the points that his solicitors had sought to raise on 27 September. It is clear, in my view, that his refusal of consent coupled with the demand to put his objections before the court compelled the holding of an oral hearing and, in my view, therefore, the Deputy Master’s order was fully justified. For those reasons, I dismiss the appeal.

The summary assessment is not an altogether satisfactory procedure here, not least because the work which is actually done in the various summary headings which appear on the statement of costs is not described, except in very general terms. In this particular case, Miss Nolten has pointed out that there was an effort, on the part of Mr Frostick, to have this appeal rolled up with a striking-out application, which I understand was heard last week, and I would not therefore be surprised if, in consequence, work which one party may have attributed to the striking-out application is attributed by the other to this appeal. It does seem to me that although the points raised on the appeal were awkward and unusual they required almost no knowledge of the claims made in the proceedings. Although it is true that I asked Miss Nolten about her submissions to the Deputy Master, that, of itself, would not justify, on this appeal, the attendance of counsel who would otherwise have been unsuitable for reasons of seniority or expense.

It does seem to me that an appeal which raised a series of short points, and I say short because I think Mr Redmayne’s skeleton ran to only some four pages, should be capable of being dealt with succinctly, as indeed it was. His submissions took not very much more than two hours this morning and I have no doubt that the re-stated requirement of proportionality which under Rule 44.3(2), as it now is, permits and indeed encourages the court to disallow or reduce costs disproportionate in amount, even if they were reasonably or necessarily incurred, points in this case to a substantial reduction in the bill in the statement of costs put forward by the Appellant. The total is just under £12,000, of which more than half is counsel’s fees. It seems to me that an argument about some £4,200 in costs ought to be capable of being dealt with at very considerably less expense. It is quite true that the Respondent did not initiate the appeal and it finds itself having to defend a modest sum and they may be , to some extent, out of pocket. But I am impressed by the submissions made by Mr Redmayne. His statement of costs is, before VAT, less than half that of the Respondent’s and one would assume that the Appellant, being the initiator of the proceedings would, if anything, be liable to pay a little more.

I am not going to try and go through the individual items claimed in the Respondent’s bill for the two fee-earners, but I am just going to take a global figure, and I have to say that I have paid considerable attention to the discrepancy in counsel’s brief fees. The aggregate for the appellant is some £2,700 and for the respondent more than twice that. It seems to me that it ought to be possible, in an appeal raising a small number of short points, to have an argument about the costs order which the Deputy Master made without the summary question becoming swamped by the costs of the appeal.

All told, I am going to assess the costs in the same amount as the costs which the Deputy Master ordered to be paid, so I assess the costs which Mr Frostick will have to pay to the Respondent in the sum of £4,200 plus VAT.

I appreciate that Mr Frostick’s means are not the subject of formal evidence but I do not find it at all difficult to accept that his means may be somewhat straitened. I am going to accede to Mr Redmayne’s request, so I shall order that £4,200 be tied into the timetable laid down last Thursday, so it will actually be 15 days, I think. So I will order £4,178 to be paid on 3 April and on the 24 £4,200. That actually would be the £4,178 plus any interest accrued.