John Michael Sharp and the other Claimants listed in the GLO Register v Sir Maurice Victor Blank
| Jurisdiction | England & Wales |
| Judge | Sir Alastair Norris |
| Judgment Date | 14 July 2020 |
| Neutral Citation | [2020] EWHC 1870 (Ch) |
| Court | Chancery Division |
| Docket Number | Case No: HC-2014-002092 HC-2014-001387 HC-2014-001388 HC-2014-001389 HC-2015-000103 HC-2015-000105 |
| Date | 14 July 2020 |
and
[2020] EWHC 1870 (Ch)
Sir Alastair Norris
Case No: HC-2014-002092
HC-2014-001010
HC-2014-001387
HC-2014-001388
HC-2014-001389
HC-2015-000103
HC-2015-000105
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
COMPANIES COURT
Royal Courts of Justice
The Rolls Building
Fetter Lane
EC4A 1NL
Richard Hill QC Alexander Hutton QC and Sebastian Isaac (instructed by Harcus Sinclair UK Limited) for the Claimants
Helen Davies QC Tony Singla and Kyle Lawson (instructed by Herbert Smith Freehills LLP) for the Defendants
Robert Marven QC instructed for the Additional Party
Hearing dates: 29 January 2020
Approved Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
Introduction
The issues to be dealt with at the hearing of consequential matters were:-
(a) What order for costs should be made as between the Claimants and the Defendants?
(b) What order for an interim payment of costs should be made?
(c) What orders should be made in respect of interest on costs?
(d) Should any of those orders be made against Therium Finance No.1 IC (“Therium”) which has been joined as an Additional Party for the purposes of costs?
(e) Should permission to appeal be granted?
In considering these matters it will be necessary to have in mind that the action was conducted by reference to a Group Litigation Order dated 6 August 2014 (“the GLO”). There were approximately 5800 Claimants covered by the GLO. Paragraph 10(1) of the GLO provided that the liability of each Claimant to the Defendants for costs should be several and not joint. Paragraph 10(2) of the GLO contained a definition of “individual costs” (in essence, costs and disbursements incurred solely in relation to an individual claim). All other costs were to be treated as “common costs”. Paragraph 10(4) of the GLO employs this distinction in relation to costs and disbursements of the Defendants for which the Claimants are liable. Paragraph 10(4) of the GLO provides that an individual Claimant's liability for the common costs of the Defendants incurred in any quarter shall be a several liability for a share of those common costs proportionate to the alleged value of that Claimant's claim as against the alleged value of the overall claims. But paragraph 10(5) then provides:-
“In the event that a Claimant's claim is the subject of an adverse costs order or… is dismissed… on terms which provide for that Claimant to pay the Defendants' costs that Claimant shall be liable for his or her individual costs and any liability for common costs shall be determined following the trial of the common issues…”
A reconciliation of paragraph 10(4) and paragraph 10(5) is achieved by treating the latter as addressing the situation where an individual Claimant's claim is dismissed on a “one off” basis before the trial of the common issues. The costs with which I am concerned are all common costs.
Costs between the Claimants and the Defendants
There are two facets to this issue: the overall order, and the manner of its implementation.
As to the overall order, the jurisdiction to make an order about costs is set out in CPR 44. The terms of the discretion which it confers are very familiar and do not need to be recited: I have the provisions of that Part well in mind.
By my judgment (the reference to which is [2019] EWHC 3096 (Ch)) I dismissed the claims of the Claimants listed in the GLO Register (“the Claimants”). The Defendants submit that this is a case for the straightforward application of the “general rule” in CPR 44.2(2)(a) and seek an order that Claimants pay their costs of and incidental to the action, to be assessed (in default of agreement) on the standard basis. The Claimants submit that this is a case for making “a different order” under CPR 44.2(2)(b) and argue for an order that they pay only 65% of the Defendants' costs.
The foundation of that argument is that although the Claimants failed overall they did succeed on two issues in the case; and that CPR 44.2(4)(b) directs the Court to take into account in deciding what order to make about costs whether (amongst other things) a party has succeeded in part of his or her case even though not wholly successful.
I do not accept the argument of the Claimants;-
(a) It is a commonplace that a successful party will not succeed on every aspect of its case. But notwithstanding that very frequent occurrence in litigation, the general rule still applies. Costs are determined by reference to overall success.
(b) Although no authority is needed to support that observation, the point was pithily summarised by Gloster J. in HPL Kidson's v Lloyds Underwriters [2008] 3 Costs LR 427 at [11].
(c) A degree of caution is needed against a too-ready departure from the general rule for the reasons explained by Jackson LJ in Fox v Foundation Piling [2011] EWCA 790 at [62].
(d) There is no reason in principle why a party who succeeds in establishing one element of his cause of action but fails to establish the others should be regarded as partially successful. The Claimants established that the Defendant directors were in breach of a duty of care in respect of statements and in breach of an equitable duty of disclosure (because the directors did not cause to be noted in the Circular the existence of a specific Bank of England support facility for HBOS or the existence of the facility covered by the Lloyds Repo). But the Claimants failed to establish that such a state of disclosure was causative of any loss, nor did they establish the amount of any loss in fact suffered.
(e) The Claimants submitted that although they only established breach of duty in relation to two items of disclosure, those allegations lay at the heart of their case. That may happen to be so from their perspective, but it certainly was not so from my perspective. At trial the Claimants attacked the Transaction across an extremely broad front (even after they had abandoned significant parts of their pleaded case pre-trial). They did not abandon their “recommendation” case, so that had to be fought out and adjudicated (and required the bulk of the evidential review and fact-finding): and that outcome had an effect upon the “disclosure” case. They made a multi-faceted case about disclosure; including cases of deliberate concealment, of duties of care in relation to market announcements and briefings, of misstatements about the value of HBOS and about the amount of capital a stand-alone Lloyds would have to raise, and of the obligation of directors to disclose every piece of information they themselves had considered. None of this succeeded. Given the breadth of the attack the degree of success was small.
(f) The Claimants submitted that the Defendants should have conceded the case on the disclosure duty (by which I think they mean “the part of the disclosure case that ultimately succeeded”) and that by so doing costs would have been saved. But even the measure of success achieved by the Claimants was so achieved on a fine balance: as paragraph [855] of my judgment and its surrounding paragraphs seek to make clear.
(g) It is, of course, not the law that a successful party can only be deprived of the costs of an issue if he has unreasonably resisted that issue: any more than it is the law that he should be deprived of the costs of the issue simply because he lost it. In singling out an issue for separate treatment by way of costs I think the court must look for some objective ground (other than failure itself) which alongside failure distinguishes it from other issues and causes the general rule to be disapplied. In F & C Alternative Investments Holdings v Barthelemy Davis LJ described it as “a reason based on justice” ( [2013] 1 WLR 548 at [47]). Without seeking in any way to be prescriptive, I think the distinctive ground may relate (amongst other things) to the comparative weakness of an argument (even if not unreasonably maintained) or to the necessity for particular evidence relevant only to that issue or to extensive and intensive legal argument directed to that issue which gives it an especial significance in the costs context. But such a factor is missing here. The law both on “misstatement” and “sufficient information” was all but agreed. The Claimants failed to establish the deliberate concealment they alleged. They failed to establish the disclosure duties for which they contended. They succeeded in establishing a breach of the conceded duty by demonstrating that the Defendants had not correctly assessed the materiality of two matters. The key issue of “materiality” was determined by reference to evidence (about the nature of ELA and the Lloyds Repo and what resort to ELA and to the Lloyds Repo told one about HBOS as part of the Enlarged Group) adduced in relation to the “recommendation case”.
This is a case in which the general rule should apply, and costs should follow the event. But that then raises the question of what this means for individual Claimants. It may well be that many of the 5800 Claimants never foresaw this as a real question because they thought that they were litigating risk-free. But most unfortunately that is not the case.
The Claimants...
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