Cobden Investments Ltd (Petitioner) v The Rwm Purchaser Ltd and Others
| Jurisdiction | England & Wales |
| Judge | Mr Justice Warren |
| Judgment Date | 01 June 2011 |
| Neutral Citation | [2011] EWHC 1370 (Ch) |
| Court | Chancery Division |
| Docket Number | Case No: 10220 of 2008 |
| Date | 01 June 2011 |
[2011] EWHC 1370 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
COMPANIES COURT
Royal Courts of Justice
Strand, London, WC2A 2LL
Mr Justice Warren
Case No: 10220 of 2008
In the Matter of Southern Counties Fresh Foods Limited
And in the Matter of the Companies Act 1985
Mr Bernard Weatherill QC & Mr Peter Griffiths (instructed by Messrs Rosenblatt) for the Petitioner
Mr Victor Joffe QC & Mr Timothy Collingwood (instructed by New Media Law LLP) for the Respondents
Hearing dates: 4 th & 5 th April 2011
Introduction
As we reach what I am sure everyone hopes is the end of this marathon litigation, I now have to deal with the costs of the Petition and the reserved costs of RWM's application for summary judgment or strike-out in relation to certain paragraphs of the Petition. The parties could hardly be further apart. Mr Weatherill submits that CIL should recover the whole of the costs of the litigation, including indemnity costs in relation to certain aspects, together with interest. Mr Joffe submits that RWM should recover 32% of its costs up until the date of handing-down of my main judgment in November 2008 and all of its costs after that date.
The Law
Having said that, there is a considerable amount of common ground about the principles which I have to apply: it is the correct application of those principles which is disputed. I need therefore to identify the correct principles in order to apply them to the facts.
A preliminary point to make is that there are no special principles applicable to unfair prejudice petitions. It is, of course, the case that every case is heavily fact-dependant when it comes to deciding where costs should fall. There are, no doubt, factual features commonly present in unfair prejudice petitions which are not present in other types of litigation and those features will fall to be taken account of when applying established principles.
It does, however, need to be remembered that, in order to be in a position to exercise its discretion concerning the appropriate remedy if unfair prejudice is established, the Court needs to have a full understanding of the background to and the context of the dispute giving rise to allegations of unfair prejudice. Accordingly, a petitioner or a respondent may adduce evidence of facts which are relevant for the Court to know. A petitioner may rely on those facts as amounting to an example of unfair prejudice. The petitioner may establish those facts but fail to demonstrate that they amount to unfair prejudice. It does not follow that, because the petitioner has failed to demonstrate unfair prejudice by reference to those facts, that the incidence of costs is to be decided as if the petitioner had lost the issue to which those facts were relevant. The facts in this type of case would be relevant to the petition as a whole. Of course, the Court must take into account, as one factor in determining what costs order to make, the fact that the petitioner has failed to make out the case of unfair prejudice based on those facts and also the extent to which those facts were in reality only relevant to that claim.
The starting point is section 51 Senior Courts Act 1981 which provides that costs are in the discretion of the court subject to rules of court. This is a wide, although not unlimited, jurisdiction: see Aiden Shipping Ltd v Interbulk Ltd [1986] AC 965. The relevant rules for present purposes are found in CPR 44.3. CPR 44.3(1) affirms the discretion of the court about who is to pay, the amount of the payment and time of payment. If the court decides to make an order for payment – it may decide to make no order at all – the general rule under CPR 44.3(2)(a) is that the unsuccessful party will be ordered to pay the costs of the successful party, but under CPR 44.3(2)(b) the court may make a different order. CPR 44.3 does not lay down, nor does any other rule lay down, how it is to be decided, in cases where it is not obvious, who has been successful or unsuccessful.
CPR 44.3 (4) provides that when deciding what (if any) order to make the court must have regard to "all the circumstances" which include
a. the conduct of all parties;
b. whether a party has succeeded on part of his case even if he has not been wholly successful and;
c. any payment into court or admissible offer to settle and which is not a Part 36 Offer.
For this purpose, conduct includes conduct before as well as during the proceedings, whether it was reasonable for a party to raise, pursue or contest a particular allegation or issue, the manner in which a party has pursued or defended his case or a particular allegation or issue and whether a claimant who has succeeded in his claim in whole or in part exaggerated his claim.
The court has a range of orders which it can make which include those set out in CPR 44.3(6). One of those (see paragraph (f)) is an order relating only to a distinct part of the proceedings (otherwise known as an issue based order). Thus, where a successful claimant wins his case overall but loses on a distinct part of his case, the court can preclude recovery by him of his costs referable to that claim and can even order that he pays the costs of the other party referable to that claim. Issue based orders are discouraged. Thus CPR 44.3(7) directs that where the court would otherwise make an issue based order it must instead, if practicable, make an order under CPR 44.3(6)(a) or (c) (that is to say an order for payment of a proportion of another party's costs or an order for payment of costs from or until a certain date only). The policy is to prevent orders being made which will of themselves produce more cost and added difficulty for costs judges who will often need to apportion costs between one issue and another.
In the present case, neither party seeks an issue based order; indeed, they agree that I should not make such an order. Instead, I am invited to make costs orders in respect of different periods which I will identify later. I should say at once that I agree with the parties that I should not make an issue based order. That is not to say that I should not consider whether it would be appropriate to make an issue based costs order: indeed, given the way in which the issues in the present case were argued, it is something which I shall have to consider. But even if an issue based order is otherwise appropriate, I must observe the provisions of CPR 44.3(7).
In respect of part of the period of this litigation, CIL's lawyers, or some of them, have been working under a conditional fee agreement although as I understand it there has been no after the event insurance. The provisions of CPR 44.3A and 44.3B will have to be applied in respect of the costs (if any) payable to CIL. I will need to determine the basis of assessment – standard or indemnity costs – under CPR 44.4.
Under the old Rules of the Supreme Court, the general rules relating to the costs of unfair prejudice petitions were laid down in Re Elgindata Ltd (No. 2) [1993] BCLC 119 (per Nourse LJ at 124i-125c) as follows:
a. first, as is generally the case, costs are in the discretion of the court;
b. secondly, costs should generally follow the event, except where it appears to the court in all the circumstances that some other order ought to be made;
c. thirdly, the general rule does not cease to apply simply because the successful party has raised some issues or made allegations which have failed;
d. but where the raising of such allegations has caused a significant increase in the length or cost of the proceedings the petitioner may be deprived of the whole or a proportion of those costs; and
e. where a successful petitioner has raised issues or made allegations improperly or unreasonably, the court may not only deprive him of his costs but may order him to pay the whole or a proportion of the unsuccessful respondent's costs.
The position is now governed by the CPR. As well as acting in accordance with CPR 44.3, the Court must, of course, always bear in mind the overriding objective under CPR 1.1 of dealing with cases justly. Mr Weatherill correctly starts with the general position under CPR 44.3(2)(a). He submission then is that Court should only make a different order if would be unjust to adopt the general rule in all the circumstances of the case. This places an onus on an unsuccessful party to justify a departure from the general rule. I do not consider that that is a correct approach. The Court has a discretion, one which is conferred by section 51 and exercised in accordance with the CPR. There may be a range of reasonable and just decisions which the Court can make. If it acts within that range, it is acting properly; and this is so even if the general rule that costs follow the event would be one possible reasonable and just order. The starting point is no doubt the general rule and the Court will then consider what departures from that general rule are appropriate having regard to all the circumstances of the case: see Multiplex Constructions (UK) Ltd v Cleveland Bridge UK Ltd and Cleveland Bridge Dorman Long Engineering Ltd [2008] EWHC 2280 (TCC) at paragraph 72. But that does not cast some particular onus on the unsuccessful party to demonstrate that adopting the general rule would be unjust.
What is the continuing status of Elgindata? Mr Weatherill has referred me to DEG-Deustche v Koshy (2000) 97(11) LSG 38, where Rimer J held (applying Phonographic Performance Ltd v AEI Redifusion Music Ltd [1999] 2 AER 229) that the principles set out in Elgindata remained a good working guide, but should not be applied mechanistically. He confirmed that...
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