Brit Inns Ltd ((in Liquidation)) and Others (Claimant) BDW Trading Ltd (Defendant) J Reddington Ltd (Third Party/Part 20 Defendant)

JurisdictionEngland & Wales
JudgeMr Justice Coulson
Judgment Date07 September 2012
Neutral Citation[2012] EWHC 2489 (TCC)
Docket NumberCase No: HT-11-503
CourtQueen's Bench Division (Technology and Construction Court)
Date07 September 2012
Between:
(1) Brit Inns Limited (in liquidation)
(2) Vincent Barber
(3) Linda Lawless
Claimant
and
BDW Trading Limited
Defendant
and
J Reddington Limited
Third Party/Part 20 Defendant

-and-

(1) Vincent Barber
(2) Linda Lawless
(3) Stephen Katz (Acting as Liquidator of Brit Inns Ltd)
Claimants
and
BDW Trading Limited
and
J Reddington Limited
Defendants

[2012] EWHC 2489 (TCC)

Before:

Mr Justice Coulson

Case No: HT-11-503

IN THE HIGH COURT OF JUSTICE

QUEEN'S BENCH DIVISION

TECHNOLOGY AND CONSTRUCTION COURT

Royal Courts of Justice

Strand, London, WC2A 2LL

Mr Thomas Plewman (instructed by Norton Rose) for Brit Inns Ltd

Mr William Evans (instructed by Davenport Lyons) for the Vincent Barber, Linda Lawless and Stephen Katz

Mr Andrew Miller (instructed by Kennedys) for BDW Trading Ltd and J Reddington Ltd

Hearing date: 31 ST August 2012

[Judgment No 2: COSTS]

Mr Justice Coulson
1

INTRODUCTION

1

On those rare occasions when civil litigation goes wrong, costs become the critical issue. Even before the trial, the parties realise that, in reality, the sums likely to be recovered in the action will be dwarfed by their potential exposure to costs, and they take every point that might conceivably improve their position. This case is a good example of that unhappy process.

2

This litigation has gone wrong for everybody. In the main action (a subrogated claim for insured losses where liability was never in issue), against a pleaded claim for £660,000 odd, the claimants recovered £157,467.89 by way of damages, plus such sum as I award for interest. Their recovery is thus about 25% of what they claimed. It has apparently cost them £528,547.02 to achieve that result. In the separate uninsured claim, against a pleaded claim of £522,000 odd, the claimants recovered just £16,403.24, a percentage recovery of about 3%. That result cost them £157,311.16. Although I do not have a figure for the costs of the defendant/third party, it seems likely that they too will have spent hundreds of thousands of pounds in circumstances, noted below, where they failed to better their only offer made under CPR Part 36.

3

In those circumstances, it is perhaps unsurprising that the costs arguments took half a day, with the defendant's skeleton argument alone running to 41 closely-typed pages and 151 paragraphs, together with appendices. Every possible point that can arise on costs is in issue: the relevance of offers under Part 36 and Part 44; the proper interpretation of 'success' in Part 44.3; the parties' conduct before and during the litigation; and the problems created by the exaggeration of the claim and the failure on the part of the claimants to provide proper information timeously. Similarly, the widest possible range of outcomes is urged upon the court. The claimants in the main action seek their costs in full; the claimants in the uninsured action seek 50% of their costs; whilst the defendant/third party claim that their costs should be paid by the claimants on an indemnity basis. In addition, all parties recognise that the court has a wide discretion to make any number of other costs orders lying between these opposite ends of the spectrum.

4

The principal issue concerns the proper approach to costs in a case where, throughout, the defendant took a much more realistic view of the value of the claim than did the claimants, and where the court assessed quantum by reference to the defendant's evidence rather than any evidence adduced by the claimants, but where the defendant/third party failed to protect their position on costs by making a Part 36 offer which they subsequently bettered. I approach this issue, and the other matters which arise, in this way. Having dealt with interest in Section 2 below, in Section 3 I summarise the outcome of the two actions. In Section 4, I summarise the correspondence between the parties, dealing with their respective offers and the defendant's complaints about the lack of particulars and supporting material. In Section 5 I summarise the applicable law. Then, in Section 6, I address the costs in the main action and, in Section 7, the costs in the uninsured action. There is a short summary of my conclusions in Section 8.

2

INTEREST

5

In the main action, in the exercise of my discretion, I award interest on the sum of £157,467.89 at 1% over base rate. That seems to me to be the appropriate percentage in the particular circumstance of this case.

6

I accept that 31 October 2007, the date put forward by the claimants, is the correct date for the purposes of the calculation. Such damages as I have awarded had been suffered or incurred by the claimants by that date. For this purpose, as is conventional in a subrogated claim, I ignore the fact that the insurers had not themselves incurred any costs by then. In addition, although I consider that there was a general failure to supply information to the defendant timeously or at all, I find that that does not justify taking a later date for the start of the interest period. On the claimants' unchallenged figures, this produces an amount of interest in the sum of £17,749.31. That is to be added to the sums awarded in the main judgment, to give a total figure of £175,217.20.

7

In the uninsured action, I also award interest at 1% over base on the sole head of claim which was successful, which concerned wasted staff costs. Whilst the precise basis of the successful claim was not formulated until Mr Evans' closing submissions, I accept that this head of claim was included from the outset and was the subject of Mr Barber's witness statement. It was, on analysis, a relatively straightforward item, and the relevant losses had been incurred by 1 April 2007. That is therefore the date for the interest calculation in the uninsured claim. The parties will have to agree the calculation of this sum, which in total is unlikely to be more than £2,000.

3

SUMMARY OF OUTCOME

8

In the main action, the claimants advanced two principal claims. There was a claim for material damage in the sum of £355,070, and a claim for loss of profits in the sum of £240,905. There were other claims amounting to about £65,000, the largest of which was a claim for the costs of re-marketing the restaurant. In my Judgment at [2012] EWHC 2143 (TCC), I awarded the claimants £136,688.89 in relation to the material damage and £20,779 by way of loss of profits, a total of £157,467.89. I rejected all the other claims.

9

In the action concerned with the uninsured claims, the claimants fared even worse. The largest claims, being the claim for loss of rent (£368,000) and the claim for loss of profits (£194,000), were abandoned part way through the trial. 6 out of the remaining 7 heads of claim failed in their entirety. The only head of claim that was successful, and then only in part, was the claim for the wasted costs of employing staff, which was pleaded at £39,000 odd and in respect of which I awarded just £16,403.24.

10

The problems for the claimants created by my principal Judgment do not end with a simple comparison between what they claimed and what they recovered. In the main action, there were inherent problems with the factual evidence which underpinned the claim for material damage (which I addressed at paragraphs 59–77 of my Judgment); other problems with the expert evidence adduced in support of that claim (paragraphs 78–90); and similarly fundamental difficulties with the evidence as to the claim for loss of profit (paragraphs 190–263). In addition, all the other heads of claim, including one which attempted to resurrect items which had previously been abandoned by the claimants' QS expert, all failed.

11

As I observed in my Judgment, these problems were really created at the outset, when the loss adjusters failed to undertake a proper analysis of the claims being made and failed to see that large parts of the claim were unsubstantiated. As a result, the sum paid out by the insurers was unjustifiably high. Thereafter, the insurers pursued the claim without properly scrutinising the detail of the claim or the evidence that supported it. The inter-solicitor correspondence makes clear that the claimants in the subrogated claim believed that, since the loss adjusters had approved the sum paid out by the insurers, there was little point in the defendants subsequently seeking to challenge the detail of the claim. That was a high-handed and ultimately erroneous basis for pursuing this particular claim.

12

The unjustified approach adopted by the claimants was not assisted by their experts, who failed to note the underlying problems or advise thereon. The expert evidence of both Mr Woodall and Mrs Rawlin, the claimants' experts, was unsatisfactory for a number of reasons, and I rejected it in its entirety at the trial. One of the many ironies in this case is that, to the extent that the claimants recovered anything at all, they did so on the basis of the evidence adduced by the defendant's experts, Mr Thomas and Mr Isaac.

13

The issues raised by the separate, uninsured claim reflect even more poorly on the claimants. Indeed, I am in no doubt that there should never have been a separate action at all. Ramsey J was plainly concerned about that at the very first CMC, and expressly reserved the costs of the second action to the trial judge. There was no proper explanation as to why this matter was not dealt with in the usual way, with the uninsured losses being advanced as part of the subrogated claim: indeed, the written agreement between the claimants and their insurers expressly envisaged all claims being pursued in a 'single action'. Moreover there was considerable overlap between the two; many heads of claim involved a common factual basis, with quantum being simply split between insured and uninsured elements. That was how I approached the claims in my Judgment.

14

It was alleged that Mr Barber...

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2 firm's commentaries
  • Costs: Behaviour Of Parties
    • United Kingdom
    • Mondaq United Kingdom
    • 20 Septiembre 2012
    ...disallow the costs of wholly inadequate expert evidence. Further reading: Brit Inns Ltd (In Liquidation) v BDW Trading Ltd (Costs) [2012] EWHC 2489 (TCC) This article was written for Law-Now, CMS Cameron McKenna's free online information service. To register for Law-Now, please go to Law-No......
  • Exaggerated Claims, Part 36 Offers And The Court's Discretion As To Costs
    • United Kingdom
    • Mondaq United Kingdom
    • 8 Octubre 2012
    ...the case of Brit Inns Ltd & Anr v BDW Trading Ltd (No.2), [2012] EWHC 2489 (TCC), Mr Justice Coulson had to consider an exaggerated claim in relation to which the defendant failed to adequately protect its position on costs with an effective Part 36 offer. The Facts Following extensive ......

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