Hurry Narain Purrunsing v A'court & Company (A Firm)and Another
| Jurisdiction | England & Wales |
| Judge | HH Judge Pelling |
| Judgment Date | 01 July 2016 |
| Neutral Citation | [2016] EWHC 1528 (Ch) |
| Date | 01 July 2016 |
| Court | Chancery Division |
| Docket Number | Case No: HC 2013 000250 |
[2016] EWHC 1528 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Civil Justice Centre
Manchester
M60 9DJ
His Honour Judge Pelling QC
SITTING AS A JUDGE OF THE HIGH COURT
Case No: HC 2013 000250
Mr Paul Marshall (instructed by Anthony Gold) for the Claimant
Mr William Flenley QC (instructed by Caytons Law) for the First Defendant
Mr Simon Hale (instructed by Plexus Law) for the Second Defendant
Hearing date: 27th May 2016
HH Judge Pelling QC:
Introduction
This is the post judgment hearing of the remaining costs issues following the hand down of my substantive judgment ( [2016] EWHC 789 (Ch)) in this case on 14 April 2016. Judgment was reserved only because the hearing finished after 4 p.m. on a Friday and I was listed to sit in London only for that day.
Issues
So far as costs are concerned, the issues that I have to determine are:
i) Whether as between the claimant and the first defendant ("ACC"), the claimant is entitled to recover all of his costs;
ii) Whether some of all of the costs recoverable by the claimant should be assessed on the Indemnity rather than the standard basis;
iii) What costs provision is appropriate as between the defendants.
The Outcome of the Substantive proceedings
The claimant succeeded against both defendants and, as between the defendants, each was directed to bear an equal part of the loss. The Order made on the hand down of the substantive judgment recorded that ACC was to pay the claimant's costs of the claim against ACC (paragraph 6) and HOC was to pay the claimant's costs of the claim against HOC (paragraph 7) but with all other issues concerning costs (apart from an interim payment) being adjourned to the hearing on 27 May 2016.
The Claimant's Entitlement to 100% of his Costs as against the First Defendant
It was submitted on behalf of ACC that there should be a reduction in the costs the claimant was otherwise entitled to recover because the claim as against ACC was pleaded by reference to alleged breach of warranty of authority that was abandoned during the week before trial and a claim based on an alleged breach of an undertaking that was abandoned in part at the start of the trial and at best played a secondary role and was not in the end resolved by the judgment because it did not need to be resolved in light of the decision that I reached in relation to the claim based on breach of trust. ACC submitted that in effect I should adopt an issued based approach to the assessment of costs and resolve this issue by directing that the claimant should recover only 80% of its costs of and occasioned by the claim against the first defendant.
The abandonment of the claim for damages for breach of warranty of authority was the subject of correspondence. The claimant's solicitors proposed that this element of the claim be abandoned essentially for pragmatic reasons – or as it was put in the letter of 7 March 2016, " … in order to save court time and in the interests of proportionality…". The proposal made by the claimant's solicitors was that the claimant would not seek a finding on this issue unless ACC's solicitors insisted and that the costs issues should be left to the trial judge. This proposal was agreed by ACC's solicitors by email on 8 March 2016. In oral submissions, Mr Flenley QC submitted in essence that if you plead an allegation and then do not proceed with it, then you should expect to have to pay the costs of and occasioned by that issue.
I am not able to accept ACC's submissions on this issue. First, I do not see how an order in the terms sought can be sought or made given the terms of paragraph 6 of the order made on 14 April 2016. However leaving that point to one side, in my judgment the matters abandoned did not add materially to the costs of these proceedings at either the pleading, evidential or hearing stages. The cost of preparing pleadings and witness statements and of complying with disclosure obligations would have been much the same whether the allegations relied on by ACC to support the submission I am now considering were made or not. My assessment (admittedly on very much a broad brush basis) is that to reduce the costs recoverable by the claimant by 20% (or by any percentage that could be material) would significantly over compensate ACC for the costs incurred in relation to the issues that Mr Flenley points to.
The starting point in deciding the issue I am now considering is that identified in CPR r.44.2(2)(a) namely who has been successful. There can be no doubt about that on the facts of this case. The claimant has succeeded against ACC in obtaining an order that ACC restore the trust fund lost. The court is permitted to depart from that approach – see CPR r.44.2(2)(b)– and in deciding whether to do so the court is required to have regard to whether a party has succeeded in part of its case but " … has not been wholly successful" – see CPR r.44.2(4)(b). Here the claimant has been wholly successful in the sense that he has recovered as against ACC the whole of the sum that he had lost as a result of ACC's breach of trust. There is no automatic rule to the effect that an issue based order will be made in the form of a reduction of the costs a successful party should recover if he loses one or more issues – see HLB Kidsons v. Lloyds Underwriters [2007] EWHC 699 [2008] 3 Costs L.R. 427. The reality is that a successful party in complex litigation (and the issues that arose in this case were legally complex) is unlikely to succeed on all issues.
In this case, I consider it would be inappropriate and unreasonable to make the Order sought by ACC because one of the issues relied on was one that was not abandoned but was simply one that it was not necessary for me to resolve and in relation to that issue and the others because the likely costs generated by the inclusion of the issues within the claim is unlikely to have had a material effect. In addition, success or failure on the issues concerned had no material effect on the outcome in terms of what was recovered so that the inclusion of these claims can realistically have had no serious impact on the assessment of the claim so far as offers were concerned.
Enhanced Costs– Part 36 Offers
The Relevant Part 36 Offer
By a letter dated 20 May 2015, the claimant made a Part 36 offer by which he offered to settle the claim at £516,000 inclusive of interest. The claimant valued his claim at that stage at £573,698.15 inclusive of interest. The discount was therefore £57,698.15. Following the trial, the claimant recovered £470,000 together with interest at the rate of 2.5% above base rate, which down to the date of the order (14 April 2016) was £48,983.01. This totalled £518,983.01. It was submitted on behalf of the claimant that since he had recovered a sum in excess of what had been offered, he was entitled to recover an enhanced costs order for the period from the date 21 days after the Part 36 offer was made – 10 June 2015.
On 21 July 2015, the claimant made a further Part 36 offer of settlement on the basis of a payment to him of £444,500, being 90% of his claim, inclusive of interest at the rate of 1.5% from 24 October 2012. That offer was withdrawn on the third day of the trial with the result that the only Part 36 offer that is relevant for present purposes is that made on 20 May 2015. All references hereafter to the "Part 36 offer" are to the Part 36 offer made on 20 May 2015.
Parties' Submissions
Mr Flenley submits that in deciding whether this should be the outcome it is necessary to deduct the interest that has been awarded between the date 21 days after the Part 36 offer was made and the date of judgment and determine whether the offer has been bettered by the claimant by reference to the resulting figure. It is submitted that if this exercise is carried out correctly then it becomes apparent that the claimant has recovered less than his effective Part 36 offer and the enhanced costs provisions are of no application. Mr Hale adopts this submission so far as HOC is concerned. Mr Marshall on behalf of the claimant submits that this is an impermissible approach and that all that is required is to compare the sum offered on 20 May 2015 with the sum inclusive of interest that the claimant was left with at the date when judgment was given and if the latter figure is higher than the former then the claimant is entitled to an enhanced costs order.
The Legal Framework
By CPR r.36.5(4):
"(4) A Part 36 offer which offers to pay or offers to accept a sum of money will be treated as inclusive of all interest until—
(a) the date on which the period specified under rule 36.5(1)(c) expires; or
(b) if rule 36.5(2) applies, a date 21 days after the date the offer was made."
The costs consequences for a defendant of not accepting a claimant's Part 36 offer which the claimant has then bettered following a trial is set out in CPR r.36.17, which in so far as is material is to the following effect:
" Costs consequences following judgment
36.17
(1) Subject to rule 36.21, this rule applies where upon judgment being entered—
…
(b) judgment against the defendant is at least as advantageous to the claimant as the proposals contained in a claimant's Part 36 offer.
(2) For the purposes of paragraph (1), in relation to any money claim or money element of a claim, "more advantageous" means better in money terms by any amount, however small, and "at least as advantageous" shall be construed accordingly.
(3) Subject to paragraphs (7) and (8), where paragraph (1)(a) applies, the court must, unless it considers it unjust to do so, order that the defendant is entitled to—
(a) costs (including any recoverable pre-action costs) from the date on which the relevant...
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