Ahuja Investments Ltd v Victorygame Ltd
| Jurisdiction | England & Wales |
| Judge | Hodge |
| Judgment Date | 16 September 2021 |
| Neutral Citation | [2021] EWHC 2730 (Ch) |
| Docket Number | Case No: BL-2019-001003 |
| Year | 2021 |
| Court | Chancery Division |
[2021] EWHC 2730 (Ch)
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
BUSINESS LIST (ChD)
The Rolls Building
7 Rolls Buildings
Fetter Lane
London EC4A 1NL
HIS HONOUR JUDGE Hodge QC
(Sitting as a Judge of the High Court)
Case No: BL-2019-001003
Mr David Holland QC and Mr Edward Rowntree (instructed by Cardium Law) appeared on behalf of the Claimant
Mr Ian Clarke QC, Mr Nicholas Trompeter QC with him (instructed by SBP Law) appeared on behalf of the Defendants
APPROVED JUDGMENT ON COSTS
JUDGE Hodge QC:
This extemporary judgment is a sequel to, and should be read in conjunction with, first, the reserved judgment I handed down upon the substantive trial of this claim and counterclaim on Thursday 26 August 2021 and, secondly, the extemporary judgment I delivered earlier today on the subject of interest.
As a result of those two judgments, I will be dismissing the claim and awarding judgment to the first defendant on the counterclaim in the sums of:
(1) £824,000, being the principal sum of £800,000 and the interest due under the loan agreement on 21 December 2018, together with
(2) contractual interest thereon under the loan agreement to the date of this hearing in a sum of £1,351,257.13, amounting in total to a judgment sum of some £2,175,257.
The issue I now have to resolve is the costs of the claim and counterclaim.
I have received written submissions from Mr Holland and Mr Rowntree for the claimant and from Mr Clarke and Mr Trompeter for the defendant. On the issue of costs, I was addressed orally by Mr Clarke, who appears today without the benefit of Mr Trompeter's presence, for a little over an hour before the short adjournment. I was then addressed by Mr Holland again for a little over an hour either side of the luncheon adjournment; and then I heard briefly from Mr Clarke in reply.
Essentially, there are three aspects that fall for consideration:
(1) The application of the normal principles governing an award of costs in civil litigation in accordance with CPR 44.2.
(2) The effect of an acknowledged Part 36 offer to settle, which brings into play the costs consequences set out in CPR 36.17(4).
(3) The extent to which, if at all, those principles should be affected by the contractual provisions of clause 6.1 of the loan agreement in so far as the costs position of the first defendant, but not the second defendant (who was not a party to the loan agreement), is concerned.
The position up until the effective date for the purposes of the Part 36 offer, which is 17 February 2021, falls to be determined in accordance with CPR 44.2. The court has an overriding discretion as to costs but the general rule is that the unsuccessful party will be ordered to pay the costs of the successful party, although the court may make a different order. In the present case, it is clear that the successful parties are the defendants. Then:
“(4) In deciding what order (if any) to make about costs, the court will have regard to all the circumstances of the case, including:
(a) the conduct of all the parties;
(b) whether a party has succeeded on part of its case, even if that party has not been wholly successful …”
Although, since there is a Part 36 offer here this exception does not apply, the court will also have regard to (c), any admissible offers to settle.
By CPR 44.2(5):
“The conduct of the parties includes—
(a) conduct before, as well as during, the proceedings …
(b) whether it was reasonable for a party to raise, pursue or contest a particular allegation or issue;
(c) the manner in which a party has pursued or defended its case or a particular allegation or issue; and
(d) whether a claimant who has succeeded in the claim, in whole or in part, exaggerated its claim.”
For the purposes of the present case, that consideration about exaggeration applies to the first defendant which claimed in the order of £31 million by way of interest as part of its counterclaim and has succeeded in recovering some £1.3 million by way of interest and thus has failed in its counterclaim to the extent of some £28.8 million.
Mr Clarke reminded me of the observations of Jackson LJ (with whom Moore-Bick and Ward LJJ agreed) in Fox v Foundation Piling Ltd [2011] EWCA Civ 790; [2011] 6 Costs LR 961 at paragraph 62, emphasising:
“… a growing and unwelcome tendency by first instance courts … to depart from the starting point set out in CPR 44.3(2)(a) …”
Mr Clarke also referred me to observations of Pitchford LJ (speaking with the agreement of Patten LJ) in Hutchinson v Neale [2012] EWCA Civ 345; [2012] 5 Costs LO 588 at paragraphs 27 and 28. There, it was emphasised that:
“There is no general rule that a finding of dishonesty conduct by the successful party will replace the usual starting point. What is required is an evaluation of the nature and degree of the misconduct, its relevance to and effect upon the issues arising in the trial, and its tendency to create an unwarranted increase in the costs of the action to either or both of the parties.”
The Court of Appeal endorsed the approach of Briggs J in the earlier case of Bank of Tokyo-Mitsubishi UFJ Ltd v Baskan Gida Sanayi Ve Pazarlama AS [2009] EWHC 1696 (Ch); [2010] 5 Costs LR 657. I was taken by Mr Clarke to paragraph 19. Mr Holland cited more extensively from paragraphs 6 to 9, paragraph 19, paragraph 33 and paragraphs 40 and 60. The court has a range of sanctions available in relation to an otherwise successful party who has put forward a dishonest case. At paragraph 19 (ii), Briggs J stressed that:
“The court's powers in relation to the putting forward of a dishonest case include (a) disallowance of that party's costs in advancing that case, (b) an order that he pay the other party's costs attributable to proving that dishonesty, and (c) the imposition of an additional penalty which, while it must be proportionate to the gravity of the misconduct, may in an appropriate case extend to a disallowance of the whole of the successful party's costs, or an order that he pay all or part of the unsuccessful party's costs.”
Mr Holland also cited more extensively to me from the case of Hutchinson v Neale. He took me to passages at paragraphs 20, 25, 28 and 31. There, again, it was stressed at paragraph 28 that:
“There is no general rule that a finding of dishonest conduct by the successful party will replace the usual starting point [that costs should follow the event]. What is required is an evaluation of the nature and degree of the misconduct, its relevance to and effect upon the issues arising in the trial, and its tendency to create an unwarranted increase in the costs of the action to either or both of the parties. [T]he full range of [costs] measures is available to ensure that the dishonest but successful party does not gain, and the honest but unsuccessful party does not lose, in consequence of the wrongdoing established.”
At paragraph 31, Pitchford LJ emphasised that the starting point should be that an order for costs in the successful party's favour should be subject to adjustments to ensure that the successful party does not “recover any costs which may have been incurred in advancing a dishonest case”.
The defendants submit that they are the successful parties in the litigation so the starting point is that the claimant should pay their costs, and that the claimant had the means of protecting its costs position by making an appropriate Part 36 or Calderbank offer but it chose not to do so. That is said to count against it. The defendants recognise and acknowledge that the court made various findings of dishonesty against them in the judgment. They accept that this may be a factor relevant to be taken into account as conduct of the parties within the meaning of CPR 44.2(4)(a); but that provision mandates a consideration of the conduct of all of the parties, and not just of the defendants.
Crucially, the court rejected significant aspects of Mr Singh's own evidence on behalf of the claimant which were essential to its claim. The court found that Mr Singh had lied on key allegations that, at the meeting on 9 February 2016, he had been handed a copy of the rental schedule, or a document similar to it, and that he was informed at the 9 February meeting that the leases were all for terms of 15 years. The court found that the first time that the lease term representation was ever communicated to Mr Singh was when he had received the rental schedule on 29 February 2016, when he was in India. Yet, although he might have looked at the rental schedule at that stage, the court was entirely satisfied that the lease term representation contributed in no way to Mr Singh's decision to proceed with the property. Further, Mr Singh had been totally unconcerned about the lease terms when the rental schedule had been emailed to him shortly before exchange of contracts.
It is said by Mr Clarke that the significance of this is twofold. First, Mr Singh (and, by extension, the claimant) brought a dishonest claim. The court rejected key aspects of Mr Singh's false narrative as to what he had received and what...
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