Richardson Roofing Company Ltd v Ballast Plc & Ors

This is a costs application by the Fourth Party The Colman Partnership (TCP) against the Claimant, Richardson Roofing Company Ltd (Richardson). TCP has submitted a draft Bill of Costs including all TCP’s costs incurred in the action totalling £690,411.11. This Bill of Costs is challenged by Richardson both in relation to the matters before me and in relation to the specific sums claimed in the Bill of Costs.

I set out the Notice of Application dated 30 November 2007 in full:

“[Solicitors on behalf of the] Fourth Party intend to apply for an order … that the Costs Judge dealing with the detailed assessment of costs due to the Fourth Party, pursuant to paragraph 1 of the Order of the Court dated 4 November 2003 (ie, that the Claimant pay to the Fourth Party the costs incurred and thrown away by the adjournment of the trial of Preliminary Issues which took place before HHJ Seymour QC in June and July 2003) be directed that such costs include the Fourth Party’s costs of preparation and attendance at the trial in June and July 2003 because there is now no prospect of the Claimant’s claim being revived, and no prospect that any of the relevant costs incurred by the Fourth Party will be used for the purpose of any alternative hearing.”

By an amendment made in the course of the hearing on 28 February 2008, TCP proposed, as an alternative, that I should order that:

“the Claimant do pay the Fourth Party its costs of preparation for and attendance at the trial of Preliminary Issues in June and July 2003”

This amendment was not proceeded with.

This is a most unusual Application. The Order which I have to construe, dated 4 November 2003, is an Order by Consent signed by Jonathan Marks QC on behalf of Richardson and Richard Wilmot-Smith QC on behalf of TCP. These same Counsel have argued this application before me. Each claims that the Order which they themselves agreed and signed has a substantially different meaning to that contended for by the other. Despite this there is no allegation by either party that the other is acting in bad faith or under a mistake.

It is important at the outset to set out the Consent Order in full:

“1.

Richardson Roofing pay to TCP the costs incurred and thrown away by the adjournment of the trial.

2.

There be an interim payment by Richardson Roofing to TCP of £125,000 on account of the costs ordered at paragraph 1 above. The aforesaid interim payment to be paid by way of two instalments (without set-off) direct to Fishburns client account, the first being made by 4 pm on Wednesday 3 December 2003 in the sum of £65,000 and the second being made by 4 pm on Tuesday 3 February 2004 in the sum of £60,000.

3.

The interim payment ordered at paragraph 2 in the total amount of £125,000 to be personally guaranteed by George Martin Richardson of Reston Lodge, 184 Petersham Road, Richmond, Surrey, TW10 7AD. In signing this Order Leading Counsel for Richardson Roofing is also agent for George Richardson, who consent to the terms of this Order.

4.

Detailed assessment of the costs due to TCP pursuant to the Order at paragraph 1 above to follow in due course.

5.

TCP shall not be obliged to take any further steps in the proceedings pending further directions.

6.

TCP’s application for the costs of and occasioned by the striking out of the Particulars of Claim to be adjourned.

7.

The costs of and occasioned by this application to be paid to TCP by Richardson Roofing in any event.

8.

There be liberty to apply.”

The Application referred to in Paragraph 7 of the Order is dated 10 October 2003 and forms part of a complicated history which refers back to hearings before Judge Seymour QC in June and July 2003. I will deal with the Notice and draft Order as part of the history.

Put shortly, TCP is asking for a direction to the Costs Judge that the assessed costs in paragraph 1 of the draft Order should include all TCP’s costs of preparation for and attendance at the trial of the Preliminary Issues. Richardson, on the other hand, contends that in the event that any direction is given to the Costs Judge it should be limited to what are said to be the comparatively modest costs thrown away by the fact that the trial of the Preliminary Issues was adjourned.

The parties have taken opposing views as to the admissibility and relevance of many of the documents which Richardson has put before me.

In this regard I have well in mind the principle of construction of documents set out in the well known speech of Lord Hoffmann in ICS Ltd v West Bromwich BS [1998] AC 896 at 912 and following:

“The principles may be summarised as follows:

(1)

Interpretation is the ascertainment of the meaning which the document would convey to a reasonable person having all the background knowledge which would reasonably have been available to the parties in the situation that they were in at the time of the contract.

(2)

The background was famously referred to by Lord Wilberforce as the “matrix of fact” but this phrase is if anything an understated description of what the background may include. Subject to the requirement that it should have been reasonably available to the parties and to the exception to be mentioned next, it includes absolutely anything which would have affected the way in which the language of the document would have been understood by a reasonable man.

(3)

The law excludes from the admissible background the previous negotiations of the parties and their declarations of subjective intent. They are admissible only in an action for rectification. The law makes this distinction for reasons of practical policy and, in this respect only, legal interpretation differs from the way we would interpret utterances in ordinary life. The boundaries of this exception are in some respect unclear. But this is not the occasion on which to explore them.

(4)

The meaning which a document (or any other utterance) would convey to a reasonable man is not the same thing as the meaning of its words. The meaning of words is a matter of dictionaries and grammas: the meaning of the document is what the parties using those words against the relevant background would reasonably have been understood to mean. The background may not merely enable the reasonable man to choose between the possible meanings of words which are ambiguous but even (as occasionally happens in ordinary life) to conclude that the parties must, for whatever reason, have used the wrong words or syntax: see Mannai Investments Co Ltd v Eagle Star Life Assurance Co Ltd [1997] AC 749.

(5)

The “Rule” that words should be given their “natural and ordinary meaning” reflects the common sense proposition that we do not easily accept that people have made linguistic mistakes particularly in formal documents. On the other hand, if one would nevertheless conclude from the background that something must have gone wrong with the language, the law does not require Judges to attribute to the parties an intention which they plainly could not have had. Lord Diplock made this point more vigorously when he said in Antaios Compania Naviera SA v Salen Rederierna AB [1985] AC 191, 201:

“If detailed semantic and syntactical analysis of words in a commercial contract is going to lead to a conclusion that flouts business common sense it must be must be made to yield to business common sense.””

I turn now to the matrix of fact. The dispute involved the development of a property at The Terraces, Madiera Drive, Brighton, East Sussex. Richardson was the roofing sub-contractor on the project. Ballast Plc (Ballast) was the contractor employed for the purpose of the construction of the works. Compco Holdings Plc (Compco) were the property developers and owners of the property. The Colman Partnership (TCP) were the architects appointed for the design and supervision of the works and particularly the roof.

In Particulars of Claim served on 30 October 2001, Richardson sued Ballast for loss and damage caused by delay to completion of its sub-contract works in the sum of £996,469.44. Ballast brought in Compco. By an agreement dated 6 December 2001 annexed to Mr Marsh of Fishburns (TCP’s solicitors) second witness statement, Compco agreed that Ballast should be permitted to bring proceedings against TCP in Compco’s name.

The matter came on before His Honour Judge Seymour QC on 24 June 2003 for a trial of Preliminary Issues. Judge Seymour QC gave judgment on 25 June 2003 in circumstances which gave rise to what would appear to have been justifiable annoyance on his part. It appears that in December 2002, His Honour Judge Havery QC had directed that there be Preliminary Issues on various matters relating to the roof. Any such Preliminary Issues would inevitably involve Richardson, Ballast and TCP. The parties were directed by Judge Havery QC to agree the precise wording of the Preliminary Issues or to apply to the Court for further directions. They did neither.

On 25 June 2003 Judge Seymour QC described the state of the action and especially the Particulars of Claim as “shambolic”. At paragraph 23 of his judgment he said:

“23.

In all of the circumstances it seems to me that I have no alternative but to adjourn this trial. In order to try and get the main action, at any rate, into a fit state to be tried at some point in the future, it seems to me that the constructive way forward is to strike out the Particulars of Claim in their entirety and this is what I do.”

He went on at paragraph 24:

“In doing that I do not intend to deprive the Claimants of an opportunity to seek to reformulate in some intelligible fashion and to advance that claim against whatever Defendants they consider to be appropriate. But bearing in mind that the process of pleading has essentially run amok in this action up to now, what I intend to order is that there should be a stay of further proceedings in the main action until such time as the Claimants have obtained permission of the Court for service of substituted Particulars of Claim.”

He concluded his judgment by indicating that he was prepared to hear argument on costs. There was some argument on costs on 25 June 2003 and the costs hearing was resumed on 7 July 2003. By 7 July 2003 Mr Marks QC had been brought into the case to represent Richardson. Mr Wilmot-Smith QC and Mr Pilling had been present throughout representing TCP.

It is clear that the argument before Judge Seymour QC on costs concerned somewhat similar issues to those which now, five years later, are before me. At page 11 of the 7 July 2003 transcript Mr Catchpole QC (who was representing Ballast and Compco) said:

“Richardsons do not dispute as a matter of principle that they should pay for the costs consequences of those orders [of HH Judge Seymour QC]. They do not dispute, as I understand it, the proposition advanced by both Ballast, Compco and TCP that separate costs orders ought to be made, so that Richardsons will pay TCP direct and will pay Ballast/Compco direct. What they seek to do is to persuade your Lordship to restrict the order to what they term “wasted costs” and then to persuade your Lordship that whatever is covered by that phrase is actually very limited indeed.”

Mr Catchpole QC sought to persuade the learned Judge that he ought to order Richardson to pay all the costs of the action to date.

The hearing continued on 8 July 2003. In the course of his submissions (page 5 of the transcript) Mr Marks said:

“No-one here is expecting, subject to questions of appeal, to be allowed unlimited time in which to rejoin this litigation and we would expect your Lordship to set some time within which a reformulated case had to be presented …

My Lord, if then a reformulated case were not presented it would follow that the action brought by Richardson would be struck out and costs would follow the event …”

At page 28 of the same transcript, Judge Seymour QC said this:

“My own view of what I have done is that I have stayed the Claimant’s claim and struck out the Particulars of Claim so that the Claimant can consider whether it wishes to pursue a claim and if so on what legal basis and a Judge can consider whether that basis, whatever it may be, is capable of succeeding subject to proof of relevant facts and to successful resolution of any disputed points of law …”

In his further submission at page 58 of the transcript Mr Marks QC addressed the learned Judge as follows on the issue of costs:

“The proper way, in my submission, is for your Lordship in your Lordship’s judgment to give indications to the Costs Judge on a detailed assessment of what matters you believe go to costs thrown away, what costs have been thrown away, and as to what costs he will wish to consider might have been thrown away in the light of the further conduct of the action. In other words, some you will be able to say are plainly thrown away at this stage; others you will be able to say may have been wasted and may not …

But it would be utterly wrong and utterly unjust we say, that costs that will turn out to be useful to any or all of the parties will be paid by Richardson now … if there is a reasonable prospect that those costs will be salvaged and will be put to good use it will be wrong to pre-judge the issue and usurp the function of the trial Judge …”

The argument continued on 9 July 2003. After further argument, Judge Seymour QC gave his ruling (page 52 of the transcript). He said that the question before the Court was what orders as to costs should be made following upon the adjournment of the trial on 25 June 2003. He noted that the submissions by Mr Wilmot-Smith QC and Mr Catchpole QC were that Richardson should be ordered to pay on an indemnity basis the entirety of the costs of the application to date.

He also noted that Mr Marks QC was arguing (page 53) that the costs incurred by way of preparation for the abortive trial of Preliminary Issues had not necessarily been wasted “because they will still produce value when Richardson Roofing, the Claimant, has reformulated its claim and that claim has come to trial.” The learned Judge went on to say that:

“In the absence of a viable basis of claim, it seems to me that the entirety of the costs of the action to date … and again this is a provisional conclusion because the argument has not been completed … have indeed been wasted.”

At page 54 of the transcript the learned Judge ruled that there may be a viable basis for Richardson pursuing its claim against Ballast. He went on to indicate that in these circumstances:

“Quantum of costs which the other parties can legitimately expect to recover at this stage is comparatively and “comparatively” is an important word because we are talking about large sums of money … modest; whereas if the argument is not a good argument then my feeling is that they are well placed to recover the entirety of the costs to date.”

Judge Seymour QC did not say what he understood by “modest”. He does not appear to have made his remarks by reference to any particular items of costs.

Judge Seymour QC went on to say that he intended to direct the trial of a Preliminary Issue but he did not specify what that issue would be.

On 16 July 2003 a further hearing was convened at short notice before Judge Seymour QC. Mr Marks QC, speaking for all the parties, said that all parties had taken a fresh look at the commercial realities of the litigation. He went on:

“My Lord in those circumstances we have agreed that it would be sensible if your Lordship were asked to and were to agree to stay this action until 30 September to allow settlement negotiations to take place.”

His Honour Judge Seymour QC made the appropriate Order by Consent.

There were then settlement negotiations which were unsuccessful and on 10 October 2003 TCP served an Application Notice asking for the relief set out in the draft Order.

The relief which it sought was as follows:

“1(1) The costs incurred and thrown away by the adjournment of the trial; and

(2)

the costs of and occasioned by the striking out of the Particulars of Claim: such costs to include for the avoidance of doubt those costs incurred by TCP in amending their pleadings (and other steps) consequent on Richardson Roofing’s Particulars of Claim being struck out.”

Paragraph 2 sought a payment on account by Richardson.

“3.

Unless Richardson Roofing by 3 December 2003 seek to re-plead their case by serving a draft amended pleading together with an issued application to amend upon TCP’s solicitors, Richardson Roofing’s claim be struck out and Richardson Roofing pay TCP’s costs of the action, excluding costs in connection with the Schedule 5 claim by Compco against TCP.

4.

If Richardson Roofing do serve such application and draft amended pleading by 3 December 2003 then TCP shall have until 14 January 2004 to notify the Court and the other parties of any objection to the draft amendment.”

Paragraph 5 of the draft Order dealt with the situation if there is such an objection.

Paragraph 6 provided that if leave was not given, Richardson’s claim stood dismissed and:

“Richardson Roofing pay TCP’s costs of the action to date excluding costs in connection with the Schedule 5 claim by Compco against TCP.”

Paragraph 7 dealt with the costs relating to the amendment of pleadings if permission was given to Richardson to amend its pleadings.

Paragraph 8 provided that:

“TCP shall not be obliged to begin any work relating to pleading to the amended case (or take any further steps in the proceedings) until:

(a)

the interim payment ordered at (2) above is discharged;

(b)

the payment on account ordered at (7) above has been discharged; and

(c)

any security for costs (if applied for and ordered) shall have been provided, in each case by the date ordered.”

Paragraph 9 of the draft Order provided that if any of the payments were not made by the due date, Richardson’s claim would be struck out and Richardson would be ordered to pay the costs of the action unless Richardson had been granted an extension of time by the Court.

Thus far I have no difficulty in setting out the factual matrix. TCP says that it objects even to my taking account of the Application Notice and the accompanying draft Order. It seems to me that this is clearly part of the factual matrix. The Consent Order which was in fact agreed differed significantly from the draft Order annexed to the Application Notice.

Richardson goes much further and says that the factual matrix includes a number of communications passing between solicitors in October and November 2003. Richardson’s solicitors even include in the bundle which they produced for this hearing, a number of documents which clearly relate to without prejudice discussions and which unfortunately have not been redacted. I have managed as far as possible not to read this material and where I have read it I have disregarded it.

There is also a sense of unreality in hearing submissions from the Counsel who signed the Order by Consent and who were trying to ensure that they made their submissions consciously excluding matters which would have been relevant to my decision. After all, the issue which is before me is precisely the issue which must have been considered in detail by the parties (including Leading Counsel) in the course of their negotiations.

It is also clear, eg, from the letter dated 22 October 2003 from Richardson to their then solicitors Stevens & Bolton that Jonathan Marks QC was intimately concerned in negotiations not only with TCP but also with insurers.

It seems to me that it is part of the factual matrix that on 15 October 2003 Ballast went into administration. This was no doubt taken into account by the parties when they agreed the Consent Order on 4 November 2003.

I note also a draft Order on 28 October 2003 from TCP which amends the previous draft. In paragraph 2 of this draft, the interim payment on account is quantified in the sum of £154,987.73. Paragraph 3 and succeeding paragraphs are amended to include the payment of the sum in paragraph 2 by 3 December 2003 in an unless order. Paragraph 4 of the draft requires the case to be re-listed for further directions and paragraph 5 provides that TCP shall take no further steps pending further directions.

Among other documents, I am directed by Richardson to a witness statement by Michael Charles Frisby, a partner in Stevens & Bolton, sworn on behalf of Richardson on 30 October 2003, a few days before the Order by Consent. It is a highly argumentative document which amongst other things goes into the question of Counsel’s brief fees. This is precisely the sort of document which should not be before me. It sets out one party’s position in the event of a contested Court hearing at a time when it is clear that without prejudice negotiations were taking place which may well have been on a wholly different basis. It is not for me to speculate whether this witness statement does or does not reflect the state of the without prejudice discussions.

I am also asked to take into account a number of documents which came into existence subsequent to the Order by Consent, including documents relating to the position of Ballast, and documents passing between Stevens & Bolton and their client, Richardson. These do not help me. I would however have been entitled to consider any document by either party which constituted an admission that the other party’s construction of the document was correct but no such document is before me.

I record for completeness that on 9 January 2006 the joint liquidators of Ballast assigned the right to take proceedings against TCP to Berwin Leighton Paisner LLP (an unsecured creditor for £328,912.53) and that by a Consent Order entered in this Court on 24 November 2006 between Berwin Leighton Paisner and Fishburns on behalf of TCP these parties entered into the following Order:

“1.

All proceedings in the Part 20 Second Claim between Compco Holdings Plc and the Colman Partnership Ltd (the Part 20 Second Claim) shall be stayed upon the terms set out in the attached Schedule, save for putting the said terms into Effect as to which the parties are at liberty to apply. For the avoidance of doubt this Order will not prevent the Colman Partnership Ltd from seeking to enforce the Order for costs obtained against the Claimant Richardson Roofing Ltd. …”

This provision is repeated in paragraph 4 of the Schedule. It seems to me that this was doing no more than seeking to preserve the position relating to these costs. It is, therefore, neutral in relation to the issues in this application. I am told that Ballast was dissolved, on 13 April 2006. If Richardson had revived the proceedings in, say, early 2004 a trial in this court would have been concluded long before April 2006.

Mr Richardson, the Chairman of the Claimant company, served a witness statement dated 3 April 2008. Much of it is a mixture of fact and argument, no doubt drafted by his lawyers. Originally it included documentary evidence of negotiations. After I complained that they were inadmissible and that I had not read them, most were taken out of the trial bundle. Some remained – (unfortunately unredacted) because they were said to be relevant to the contention that Richardson intended to pursue its claim against Ballast. I have been careful, insofar as it is not relevant to the factual matrix of the issues that I have to decide, to disregard such evidence.

Mr Richardson says in his witness statement that some efforts were made to progress the action. Since Compco’s claim against TCP continued to settlement he claims that all the costs incurred by TCP in preparing and attending trial in 2003 were not thrown away. He agrees in paragraph 17 of his witness statement that “there is no prospect that any of the relevant costs incurred by TCP will be used for the purpose of any alternative hearing.” He argues that this is unrelated to the adjournment but rather to the Part 20 proceedings between Compco and TCP.

Mr Richardson’s statement goes into considerable detail as to discussions leading up to the Order by Consent and the period after the Order was made. Both parties made detailed submissions in relation to paragraph 38 of his witness statement. TCP said that it showed bad faith and that Richardson never seriously intended to proceed with its claim against Ballast or to progress the case to a favourable judgment. There is however no allegation that Richardson entered into the Consent Order in bad faith or that its terms should be rectified.

Mr Richardson completed the history to date. He said that the claim against Ballast should be progressed. But on 7 May 2004 administrators published accounts which showed that for unsecured creditors there would be an estimated dividend of 0.3%. Mr Richardson said that there would be no funds from which costs or damages could be paid. I note that 7 May 2004 was 11 months after the June hearings of the Preliminary Issue and 6 months after the Consent Order had been agreed. It might have been expected that if the action was to be revived, some progress at least would have been made in the early months of 2004. After all, the Overriding Objective of the Civil Procedure Rules requires that cases should be dealt with expeditiously.

Ballast went into voluntary liquidation on 29 October 2004.

On 15 September 2006 TCP’s solicitors wrote to say that they would be seeking a detailed assessment of costs pursuant to paragraph 1 of the Consent Order of 4 November 2003.

Mr Marsh of Fishburns swore two witness statements on behalf of TCP but I do not need to refer to them further here.

In answer to Mr Marsh’s first witness statement, Mr Hough of C J Hough, Richardson’s current solicitors, swore a witness statement in opposition to this application. I do not need to refer to this witness statement either.

Pursuant to my Order the draft bill of costs of TCP was served on 18 March 2008. It includes all costs incurred from 8 March 2002 to 10 July 2003. Again, pursuant to my Order, Richardson has provided a detailed response. Perhaps surprisingly, no detailed oral submissions were made to me on the draft bill of costs.

Although it will be necessary to construe paragraph 1 of the Consent Order dated 4 November 2003 in the context of the whole document, it is appropriate to have particularly in mind paragraph 1 when considering the opposing submissions.

The words are:

“1.

Richardson Roofing to pay to TCP the costs incurred and thrown away by the adjournment of the trial.”

TCP has asked the Court to give a direction to the Costs Judge that the assessed costs should include TCP’s costs of preparation and attendance at the trial of the Preliminary Issues.

The grounds are summarised in the following steps. A trial of Preliminary Issues was directed by HH Judge Havery QC to take place in June or July 2003. The agenda for the hearing was the claim that the problems with the roof were the result not of defective workmanship by Richardson but of defective design by TCP. TCP incurred substantial costs in preparation for the trial of Preliminary Issues. In the event the Particulars of Claim were struck out and the trial of Preliminary Issues was adjourned. Richardson accepted that it would have to pay TCP’s costs incurred and thrown away as a result of the adjournment. Richardson argued at the hearings in June/July 2003 that some costs might not be wasted because Richardson had a claim which it intended to advance in a pleadable form and some of the preparation might be put to good use. It was clear now that the costs thrown away as a result of the adjournment include the costs of preparing for and attending the trial of Preliminary Issues and an indication to this effect should be given to the Costs Judge.

TCP argues further that the claims in the Part 20 proceedings between Ballast/ Compco and TCP mirror the claims between Richardson and Compco and that Mr Marks QC for Richardson acknowledged this when he made his submissions in the course of the costs argument.

At paragraph 28 of his initial skeleton Mr Wilmot-Smith QC refers to three categories of costs formulated by Richardson which are as follows:

TCP contends, contrary to the submission by Richardson, that the preparation and service of witness statements, preparation and consideration of trial bundles, joint meetings, reports of architectural and quantum experts and Ballast’s main variation claims are not salvageable. TCP contends that it is clear that none of the costs of the Preliminary Issues trial will be saved.

Richardson submits first that the application should be dismissed and I should give no directions. Secondly it claims that on a proper construction, the Consent Order referred to the comparatively limited costs associated with the adjournment. The balance of the costs, it submits, should lie where they fall unless the Court makes a further Order as to those costs.

Richardson also contends that the Consent Order must be construed objectively. The subjective intentions of Counsel (and His Honour Judge Seymour QC when he made the Order) are irrelevant: see ICS v West Bromwich Building Society (already cited) and Aird v Prime Meridian [2006] 111 CLR 209 at paragraph 24.

Mr Marks further argues forcefully that:

“Any costs that would have been incurred anyway in preparation for a deferred trial is neither incurred nor thrown away by the adjournment.” (his emphasis)

Mr Marks QC also argues that the term “costs thrown away by the adjournment” was a term of legal art and in an agreement drawn up by lawyers it should be construed as such. Most of the costs claimed by TCP were not caused by the adjournment, eg, expert evidence and inter partes attendances.

In relation to the admissible background material, Richardson argues:

Richardson concedes that costs incurred and thrown away by the adjournment of the trial include the costs of the hearing from 7 to 10 July 2003. In his earlier skeleton argument Mr Williams noted:

“All concerned acknowledge that the trial was adjourned in some disarray, Judge Seymour QC expressing extreme dissatisfaction with the way in which Richardson’s former advisors had presented matters. Substantial costs were thereby thrown away; as the exhibits to TCP’s application show there were several days of argument, and heavy consequential applications in respect of costs and future directions which would have been unnecessary if the case had been better ordered.

To these submissions TCP responds that there is no evidence that the insolvency of Ballast prevented Richardson from advancing its case. Richardson could, for example, have taken an assignment from Ballast to pursue Compco/TCP. Further no steps were taken to inform TCP of Richardson’s intention.

TCP contends that the question before the Court is whether any of the costs of preparation were salvaged. If they were not salvaged they were wasted or thrown away. TCP referred with approval to Mr Marks QC’s submissions before Judge Seymour QC set out at paragraph 18 above.

I deal first with the threshold question of jurisdiction. Pursuant to Section 51(1) of the Supreme Court Act 1981:

“Subject to the provisions of this or any other enactment and to Rules of Court the costs of and incidental to all proceedings in … b) the High Court shall be in the discretion of the court.”

Section 51(3) provides that the Court shall have full power to determine by whom and to what extent the costs are to be paid.

I conclude (and it was not seriously argued to the contrary) that I have power to give directions to the Costs Judge. I have thought carefully as to whether, not having been the trial Judge of the Preliminary Issues or the Judge who made the Order by Consent, I should decline to give such directions. I have concluded that since the parties have argued some matters exhaustively before me I ought to give some directions.

I regard much of the argument before me as irrelevant. I therefore set out the relevant factual matrix before construing the Order.

The original claim was between Richardson and Ballast. This is sometimes described as “the main action”. The Particulars of Claim made subsidiary allegations against TCP. I deduce from Judge Havery QC’s Order for Preliminary Issues that it was urged upon him that if the allegations relating to the design and construction of the roof could be resolved then there was a good prospect of other issues being resolved and it was for this reason that he ordered Preliminary Issues involving TCP.

The parties no doubt prepared extensively for the hearing of Preliminary Issues to be heard on 24 and 25 June 2003. In the event, on the second day, His Honour Judge Seymour QC found the state of preparedness for the hearings as “shambolic”. It was impossible to continue with a trial of the Preliminary Issues. The learned Judge reviewed the pleadings and concluded that the Particulars of Claim should be struck out in their entirety.

There were further hearings from 7 to 9 July 2003. On 9 July 2003 Judge Seymour QC indicated that there may be a viable basis for Richardson to pursue its claim against Ballast. In those circumstances “the quantum of costs which the other party can expect to recover at this stage is comparatively … modest.” He said this in the context of the large sums of costs which had been incurred by the parties in the litigation. I have no basis for assessing whether or not such costs would or would not have been “comparatively modest”.

On 16 July 2003 the parties agreed to a stay to 30 September 2003 to allow settlement negotiations to take place. These were unsuccessful.

On 10 October 2003 TCP served a further Application Notice which started the sequence of events which led to the Order by Consent which is the subject of this application.

The draft Order annexed to the Application Notice asked for the costs incurred and thrown away by the adjournment of the trial. In fact it was the adjournment of the trial on Preliminary Issues. The draft Order also asked for the costs of the striking out of the Particulars of Claim and costs incurred by TCP in amending their pleadings. It also asked for a payment on account of costs.

A later draft Order quantified the interim payment in the sum of £154,987.73.

I note that on 15 October 2003 Ballast went into administration.

As far as the discussions between the parties leading up to the Order by Consent are concerned, I am unable to take any notice of them. I do know that in the Order by Consent of 3 November 2003 a personal guarantee of the interim payment by Mr Richardson was introduced. This no doubt reflects the fact that the negotiations did take place and resulted in the introduction of the personal guarantee, something that was not included (and could not have been included) in the original draft Order.

I must construe the Order by Consent against this background with the established principles of construction of documents well in mind. I start with paragraph 1 of the Order by Consent which I must construe in the context of the other paragraphs of the Order. I remind myself again of its terms “1. Richardson Roofing to pay to TCP the costs incurred and thrown away by the adjournment of the trial”.

In paragraph 1(ii) of the original application (and as amended) TCP claimed the costs of and occasioned by the striking out of the Particulars of Claim, such costs to include, for the avoidance of doubt, those costs incurred by TCP in amending their pleadings (and other steps) consequent on Richardson Roofing’s Particulars of Claim being struck out. I note that under paragraph 6 of the Order by Consent this claim was by consent adjourned.

I construe paragraph 1 of the Order within this context. I conclude that paragraph 1 of the Order by Consent cannot include the costs referred to in paragraph 1(ii) of the draft Order, ie the costs of and occasioned by the striking out of the Particulars of Claim. Paragraph 1 of the Order clearly refers to the costs incurred and thrown away by the adjournment of the trial of the Preliminary Issue in June 2003.

The words “costs incurred and thrown away by the adjournment of the trial” must be construed in the light of what was reasonably contemplated as at the date of 4 November 2003 and not at the date of the provisional Order of His Honour Judge Seymour QC in June/July 2003. I am satisfied that the common intention of the parties was that the Order was framed in the context that it left open that the action might yet be revived by Richardson. I note that 4 November 2003 was only a few weeks after the end of the agreed period of the stay. It could not be said at that date that there was no prospect of the main action being repleaded and reviewed. Had this been the position no doubt the Order by Consent would have reflected the fact that the action was, in effect, struck out. On the other hand there is no evidence that the main action would have been revived immediately in November 2003.

The Practice Direction to Part 44 [44 PD No.2 (8.5)] does not give much guidance as to the meaning of costs thrown away since it relates to wholly different circumstances.

“Where for example a judgment or order is set aside the party in whose favour the costs order is made is entitled to the costs which have been incurred as a consequence. This includes the costs of:

(a)

preparing for and attending any hearing at which the judgment or order which has been set aside was made;

(b)

preparing for and attending any hearing to set aside the judgment or order in question …”

The Consent Order itself makes a distinction between all the costs of the action and the costs “thrown away” as a result of the adjournment. Even as at November 2003 it is arguable that all the costs involved in preparing for and attending the hearings which started on 24 June 2003 will have been thrown away but this will be a matter for the Costs Judge to decide on better evidence than is available to me. It will be for the Costs Judge in making his detailed assessment to consider also whether in fact any of the documents prepared for the hearing in June 2003 would in fact have any value in any renewed or revived proceedings which might have taken place after November 2003.

The submissions of the parties seemed to me to be getting closer together as the hearing proceeded. By the end of the oral hearings I had the impression that the parties were in fact in agreement that the relevant costs were the costs thrown away by the abortive hearing and not TCP’s costs of the action or even TCP’s costs consequential on the striking-out of Richardson’s pleadings. Richardson seemed to view the costs of the adjournment on a restrictive basis as relatively modest on the basis that much of the material (which I have not seen) will be used on a later occasion. As I have said, the extent to which such material (or solicitors’ or counsels’ preparation) in June 2003 would be valuable in proceedings taking place after November 2003 is a matter for the Costs Judge.

[After further submissions] I conclude that the correct approach is that the Costs Judge should carry out the assessment taking into account the matters raised in this Judgment. The Costs of this application are to be costs in the assessment. For the avoidance of doubt the Costs Judge should make this assessment on the basis of CPR 47.18(2) disregarding the presumption in CPR 47.18(1). The assessment should be undertaken by the Senior Costs Judge or his nominee.