Global Energy Horizons Corporation v Robert Gresham Gray
| Jurisdiction | England & Wales |
| Judge | Lord Justice David Richards,Lord Justice Henderson,Lady Justice Rose |
| Judgment Date | 05 February 2021 |
| Neutral Citation | [2021] EWCA Civ 123 |
| Date | 05 February 2021 |
| Court | Court of Appeal (Civil Division) |
| Docket Number | Case No: A3/2019/2681 |
[2021] EWCA Civ 123
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
LORD JUSTICE ARNOLD
[2019] EWHC 2603 (Ch)
Royal Courts of Justice
Strand, London, WC2A 2LL
Lord Justice David Richards
Lord Justice Henderson
and
Lady Justice Rose
Case No: A3/2019/2681
Andrew de Mestre QC and James Knott (instructed by Eversheds Sutherland) for the Appellant
Edward Levey QC and Philip Ahlquist (instructed by Enyo Law) for the Respondent
Hearing date: 28 January 2021
Approved Judgment
Lord Justice David Richards, Lord Justice Henderson and
We handed down judgment in this appeal on 9 December 2020: [2020] EWCA Civ 1668 (‘the Main Judgment’). We adopt the same abbreviations in this judgment as we used there. At [487] of the Main Judgment we referred to the further grounds of GEHC's appeal relating to costs that it had not been possible to consider in the course of the appeal hearing. In the event, a further short hearing was required to deal with only one of those issues, namely the paragraph in the order of Arnold J dated 4 October 2019 directing that there should be no order as to the costs of the Enquiry Hearing before Asplin J.
The order made on 4 October followed the 3 October 2019 Ruling described at [102] of the Main Judgment (‘the Costs Ruling’). In the Costs Ruling, Arnold J set out the reasons why Asplin J had reserved the costs at the end of the Enquiry Phase, as expressed in her ruling on 28 July 2015. She had been unable to arrive at a valuation of the Business Assets and she recognised that the question of their value was “at the very heart” of the dispute. If she had been able to conclude that their value was very small, that was a matter that she would have taken into consideration as relevant to costs. She went on: “Of course that has to be balanced against the very way in which the inquiry was run and dealt with on behalf of Mr Gray and the evidence that was before the court”. She concluded that she was not prejudging the outcome of that exercise of discretion or what the conclusion would have been.
Arnold J said in the Costs Ruling that the starting point for the costs of the Enquiry Trial was that, in accordance with CPR r. 44.2(2)(a), the unsuccessful party will be ordered to pay the costs of the successful party. He rejected the ‘headline submissions’ that he had received from the parties whereby, on the one hand, GEHC argued that since Mr Gray had been held liable to account to them for over £3.6 million, it was the successful party and, on the other hand, Mr Gray had pointed out that GEHC's claim against him at its highest had been for an amount just under £227.8 million of which it had recovered only 1.6%. He considered that he needed to adopt ‘a more granular approach’. He described the five separate claims that GEHC had relied on against Mr Gray, as set out in the 9 th witness statement of Mr Elliss, solicitor for Mr Gray. Of those, two had been abandoned before or during the trial; one (the claim to the management fees) had resulted in GEHC recovering about 7% of the total it had claimed; one (the claim to the Business Assets) had been held to have nil value; and the fifth (the claim to the Klamath Falls settlement monies) had resulted in an award of $3 million out of the $5.1 million claimed. He said that neither party could be said to have been successful and “the overall result was that both parties lost heavily”. Standing back, he concluded that the result was ‘a score draw’ and that the correct starting point was that each party should bear its own costs.
Arnold J then turned to the other factors referred to in CPR 44.2(4). Mr Gray relied on three offers he had made to settle the case but the judge concluded that none of those undermined his provisional conclusion. As to Mr Gray's conduct, he noted that after giving the Liability Judgment, Vos J had warned Mr Gray of the potential consequences if he did not give a true account. Mr Gray had not heeded that warning as was apparent from the Enquiry Judgment. That did not, however, lead Arnold J to conclude that there should be any different order. He recorded GEHC's contention that it had been necessary for it to pursue its claims, having regard to the fact that Mr Gray was a defaulting fiduciary who had made no satisfactory monetary offer. GEHC had been forced to come to court to achieve the order it did achieve. Arnold J dismissed this point saying “That is of course true so far as it goes, but it does not outweigh the other factors to which I have already referred”: [25]. He also rejected Mr Gray's complaints about alleged misconduct on the part of GEHC and its expert witness. He confirmed therefore that the right order was that each side should bear its own costs.
Mr de Mestre appearing for GEHC before us accepted that this court is reluctant to interfere with the exercise of the first instance judge's discretion as to costs. He cited the judgment of Ward LJ in Day v Day [2006] EWCA Civ 415 where no order for costs had been made by the trial judge on the basis that neither side in a bitter family dispute had won what they had claimed. Ward LJ (with whom Sir Martin Nourse agreed) restated the general rule that an appellate court should not interfere with the judge's exercise of discretion merely because they take the view that they would have exercised that discretion differently. He cited a passage from the judgment of Chadwick LJ in Johnsey Estates v Secretary of State for the Environment [2001] EWCA Civ 53, stating that an appellate court must recognise the advantage that the trial judge enjoys as a result of his or her ‘feel’ for the case. The court should only interfere if the judge below erred in principle, took matters into account which should have been left out of account, left matters out of account that should have been taken into account, or reached a conclusion which was so plainly wrong that it could be described as perverse. The court in Day held that the trial judge had been wrong to describe the result as a draw simply because neither side had got everything they wanted. There was no doubt that the defendant was “the person who has to put his hand in his pocket and pay up the money that is in dispute”. It had been a victory for the claimant and she had been entitled to her costs. Mr de Mestre also referred to the judgment of Master Clark in Sheffield v Sheffield & ors [2018] EWHC 2360 (Ch) where she said at [31] that when accounts and inquiries are rendered necessary by a breach of trust, then the defaulting trustee will be ordered to pay the costs of the claim. She cited a passage to that effect in Lewin on Trusts. Mr Levey appearing for Mr Gray countered that the authorities in the footnotes to the relevant passage in Lewin did not in fact support that proposition as a general rule.
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