Brian Warwicker Partnership Plc v Hok International Ltd

RECORDER BLUNT: There are two outstanding issues in this action. One is the issue as to the rate of interest that should be applied to the contribution which I have held BWP are entitled to recover. As I understand it, there is no issue as to the period during which interest should run.

The second issue is in relation to costs.

Dealing first with the issue in relation to interest, the interest claimed is at a rate of 8 per cent. Mr Patten is not able to provide any material to indicate that that, for example, is a rate at which his clients have had to borrow money, or indeed any other information as to that rate. He has drawn to my attention the fact that the rate of 8 per cent was used for the purposes of calculations and settlement in the main action, and no issue was raised in relation to that aspect when the reasonableness of BWP's settlement with Burford was considered.

Mr Mort has suggested that 6 per cent would be certainly closer to a base rate. It does seem to me that in the absence of any further commercial information, prima facie, one should not be giving or awarding a rate of interest which is substantially higher than the base rate, and it seems to me, therefore, that Mr Mort's 6 per cent is the appropriate rate, about which a necessary calculation can be done and a figure can be agreed.

Turning now to the issues of costs, Mr Mort has submitted that HOK should not be ordered to pay the whole of the costs of the Part 20 proceedings. He does this really in two ways: first of all, he takes a quantitative point, and secondly he makes an issue point.

He has drawn my attention to CPR Part 44, rule 3, identifying the court's discretion, the general rule in 44.3(2), and then the criteria in 44.3(4).

Dealing with Mr Mort's first point, the quantitative point, he says that BWP's pleaded claim was for a contribution of 75 per cent or more, and in the event, they have been awarded only 40 per cent. Mr Patten's submission is that, instead of looking at the apparent position of the parties, one should look at the real position of the parties as evidenced by correspondence, and he produced a bundle of correspondence which I am satisfied is without prejudice save as to costs, even though some of the correspondence is not so marked.

That indicates that there were offers and counter offers, and that BWP's best offer was to settle for £550,000 inclusive of costs, or £450,000 plus costs. He indicated that it is possible that the first of those two offers would in fact be more favourable than that which has in fact resulted for HOK, and submits that the second one, although not as favourable to his clients, nevertheless was not all that far off the judgment sum.

The position, as evidenced by this correspondence, of HOK, was firstly that it was simply prepared to forego its costs in order settle the Part 20 claim, and then that was followed up with the payment into court of £125,000.

It does seem to me that, looking at these matters on the so-called quantitative basis, it is preferable to examine not only the pleaded situation but the real situation of the parties, and on that basis it seems to me that the quantitative argument does not really assist HOK.

In principle, of course, and applying the traditional rules, if a claimant obtains judgment for any sum larger than that which is admitted, the costs follow the event. I recognise that a more subtle approach is required under the new rules, but nevertheless, on the basis of what we have called the quantitative argument, it does not seem to me that the ordinary rule should be displaced.

Turning now to the "issue approach" Mr Mort really identified two findings which, putting it colloquially, went against BWP in relation to two issues, both of which, he said, involved substantial time and cost, which would have been avoided, had BWP not continued to contest these issues.

The first issue was in relation to the allegation raised by HOK that BWP had not acted reasonably in failing to admit, or in continuing to deny, its breach of duty to Burford, and that was an issue on which I found against BWP. Mr Mort said that that involved substantial costs in addressing that issue. He referred particularly to the evidence of Mr Leathley and his cross-examination.

It seems to me, however, that most of Mr Leathley's evidence and his lengthy cross-examination was directed principally to issues of apportionment and only a little of his evidence was devoted to the reasons why it took BWP so long to "see the light".

Accordingly, it does not seem to me that the favourable finding to HOK on that issue is such as to require some special order as to costs.

Turning now to the second issue, Mr Mort referred to the fact that, at the commencement of the trial, BWP accepted its own fault to be limited in scope, and it asserted that its liability to Burford, which formed the basis for its claim for contribution, was narrow and limited.

Mr Mort then relied on the fact that, in the event BWP had been found to have been at fault in a number of other respects. Mr Mort submitted that, had BWP accepted its broader responsibility, a good amount of time and costs would have been saved.

Mr Patten, in his response submitted, that it was really impossible to disentangle the evidence in relation to these technical issues. I suggested that perhaps, if BWP had admitted a breach of duty at an earlier stage, it would have been possible to dispense with the M&E expert's evidence. Mr Patten rejected that observation, pointing out that in fact there were issues relating to matters of M&E expertise which had taken up a substantial amount of the court's time in relation to which BWP had succeeded.

I instance in particular the argument about whether the only appropriate methodology for BWP to have followed was the CIBSE table A4.4 method. There were also other M&E issues which were resolved in fact in favour of BWP, and these were issues which HOK was pursuing as part of its submission that BWP's culpability was as extensive as was alleged in Burford's pleadings, and as adopted by HOK and supported by HOK, or the expert witnesses called by HOK.

It seems to me that Mr Patten is right about that. Again, it does not seem to me that this is an appropriate case in which any special order for costs should be made.

Accordingly, the appropriate order is that the HOK should pay BWP's costs of the Part 20 proceedings on the standard basis to be assessed, if not agreed.