Mr Peter Burgess v Mrs Basia Lejonvarn
| Jurisdiction | England & Wales |
| Judge | Mr Martin Bowdery,Martin Bowdery |
| Judgment Date | 26 February 2019 |
| Neutral Citation | [2019] EWHC 369 (TCC) |
| Court | Queen's Bench Division (Technology and Construction Court) |
| Docket Number | Case No: HT-2015-000090 |
| Date | 26 February 2019 |
[2019] EWHC 369 (TCC)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
TECHNOLOGY AND CONSTRUCTION COURT
Royal Courts of Justice
Strand, London, WC2A 2LL
Mr Martin Bowdery QC
Case No: HT-2015-000090
Mr Seb Oram (instructed by Mayo Wynne Baxter LLP) for the Claimants
Mr Louis Flannery Q (instructed by Stephenson Harwood LLP) for the Defendant
Hearing date: 13 th December 2018
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.
Mr Martin Bowdery QC
Insert Judge title and name here:
Martin Bowdery QC:
I have read and heard thoughtful and thorough submissions on costs from Seb Oram, Counsel for the Claimants, and Louis Flannery QC, Senior Counsel for the Defendant. This is a post-judgment hearing to consider consequential matters arising out of the judgment which I handed down on the 26 th November 2018. I have also been provided with a very helpful Chronology prepared by the Claimants (which I incorporate by reference into this judgment at Appendix A). I note that these proceeding have had the benefit of case management orders from some nine full-time and part-time TCC High Court Judges, if one includes the case management orders I made during the trial and the Order made by Mr Justice Waksman last week.
The following issues require to be dealt with today:
(1) whether the Defendant is entitled to her costs on the indemnity basis;
(2) whether the Defendant is entitled to all of her pre-action costs;
(3) what (if any) interest should be ordered in respect of costs already paid by the Defendant;
(4) the amount of any payment on account.
The Defendant's approved cost budget following the CCMC before O'Farrell J was of the sum of approximately £415,000 excluding VAT. The Defendant's revised budget totals £724,265.63 excluding VAT and the costs of preparing the budget.
Costs that remain to be awarded
By way of introduction, I should identify that two previous Orders have been made reserving costs: one on 29 th January 2016, when Alexander Nissen QC reserved the costs of the preliminary issues trial; and secondly on 7 th April 2017, when the Court of Appeal ordered that the Defendant appellant should pay one half of the costs of the appeal, the remaining half to be reserved to the Trial Judge. There have also been various Part 36 and “without prejudice save as to costs” offers.
The best offers were as follows. On 26 th March 2015, the Defendant made an offer under Part 36 of some £25,000. By comparison, the Claimants offered on 11 th January 2018 to accept £45,000 on a Part 36 basis, and amended that offer on 22 nd March 2018 to accept the same amount, but 60% of their costs on a Calderbank basis. The Claimants' previous offers were higher, reflecting the outcome of the preliminary issues trial. The Claimants accept that they failed to obtain a judgment more advantageous than the Defendant's Part 36 offer and, as a consequence, she is entitled to her costs after 16 th April 2015 on the standard basis, and interest on those costs pursuant to CPR 36.17(3).
There are three elements of the costs that remain to be awarded which are not covered by the matters described above. These are as follows:
1) 50% of the balance of the Court of Appeal costs;
2) the costs reserved by Alexander Nissen QC in respect of the costs of the preliminary issues; and
3) the costs of the proceedings prior to the expiry of the relevant period of Defendant's offer. As to the Court of Appeal costs, the Claimants accept that they should follow the event. Similarly, the Claimants accept that the costs reserved in respect of the preliminary issues trial should also follow the event.
As to the Defendant's costs prior to 16 th April 2015, these are principally the costs of the pre-action phase because the Defendant's Defence was only served on the 19 th May 2015. Whilst the Claimants accept that they must pay the Defendant's costs prior to the 16 th April 2015 in principle, a significant reduction it is said should be deducted to reflect the alleged failure of the Defendant to engage or comply with the pre-action protocol.
The relevant principles to be applied are as follows. CPR 36.17 only regulates the order for costs after 16 th April 2015, the expiry of the relevant period. Those incurred prior to that date are governed by the general principles of CPR 44.2.
“(1) The court has discretion as to –
(a) whether costs are payable by one party to another;
(b) the amount of those costs; and
(c) when they are to be paid.
(2) If the court decides to make an order about costs –
(a) the general rule is that the unsuccessful party will be ordered to pay the costs of the successful party; but
(b) the court may make a different order.
(3) The general rule does not apply to the following proceedings –
(a) proceedings in the Court of Appeal on an application or appeal made in connection with proceedings in the Family Division; or
(b) proceedings in the Court of Appeal from a judgment, direction, decision or order given or made in probate proceedings or family proceedings.
(4) In deciding what order (if any) to make about costs, the court will have regard to all the circumstances, including –
(a) the conduct of all the parties;
(b) whether a party has succeeded on part of its case, even if that party has not been wholly successful; and
(c) any admissible offer to settle made by a party which is drawn to the court's attention, and which is not an offer to which costs consequences under Part 36 apply.
(5) The conduct of the parties includes –
(a) conduct before, as well as during, the proceedings and in particular the extent to which the parties followed the Practice Direction – Pre-Action Conduct or any relevant pre-action protocol;
(b) whether it was reasonable for a party to raise, pursue or contest a particular allegation or issue;
(c) the manner in which a party has pursued or defended its case or a particular allegation or issue; and
(d) whether a claimant who has succeeded in the claim, in whole or in part, exaggerated its claim.
(6) The orders which the court may make under this rule include an order that a party must pay –
(a) a proportion of another party's costs;
(b) a stated amount in respect of another party's costs;
(c) costs from or until a certain date only;
(d) costs incurred before proceedings have begun;
(e) costs relating to particular steps taken in the proceedings;
(f) costs relating only to a distinct part of the proceedings; and
(g) interest on costs from or until a certain date, including a date before judgment.
(7) Before the court considers making an order under paragraph (6)(f), it will consider whether it is practicable to make an order under paragraph (6)(a) or (c) instead.
(8) Where the court orders a party to pay costs subject to detailed assessment, it will order that party to pay a reasonable sum on account of costs, unless there is good reason not to do so.”
INDEMNITY COSTS
I turn to the first matter which must be resolved today. The relevant principles relating to indemnity costs are dealt with in a number of cases. I will begin by referring to the observations of His Honour Judge Keyser QC in Kellie v. Wheatley & Lloyd Architects Limited [2014] EWHC 2886 (TCC). At paragraphs 18 and 19 of his Judgment, he helpfully summarises the applicable principles:
“18. In general terms, an award of costs on the indemnity basis is justified only if the paying party's conduct is morally reprehensible or unreasonable to a high degree, so that the case falls outside the norm. The applicable principles were set out at length by Tomlinson J in Three Rivers District Council v The Governor and Company of the Bank of England [2006] EWHC 816 (Comm), at [25], in a passage on which Mr Lixenberg relied (omitting the eighth point, which was formulated with particular regard to the Three Rivers litigation):
‘(1) The court should have regard to all the circumstances of the case and the discretion to award indemnity costs is extremely wide.
(2) The critical requirement before an indemnity order can be made in the successful defendant's favour is that there must be some conduct or some circumstance which takes the case out of the norm.
(3) Insofar as the conduct of the unsuccessful claimant is relied on as a ground for ordering indemnity costs, the test is not conduct attracting moral condemnation, which is an a fortiori ground, but rather unreasonableness.
(4) The court can and should have regard to the conduct of an unsuccessful claimant during the proceedings, both before and during the trial, as well as whether it was reasonable for the claimant to raise and pursue particular allegations and the manner in which the claimant pursued its case and its allegations.
(5) Where a claim is speculative, weak, opportunistic or thin, a claimant who chooses to pursue it is taking a high risk and can expect to pay indemnity costs if it fails.
(6) A fortiori, where the claim includes allegations of dishonesty, let alone allegations of conduct meriting an award to the claimant of exemplary damages, and those allegations are pursued aggressively inter alia by hostile cross examination.
(7) Where the unsuccessful allegations are the subject of extensive publicity, especially where it has been courted by the unsuccessful claimant, that is a further ground.’
19. More recently, in Courtwell Properties Ltd v Greencore PF (UK) Ltd [2014] EWHC 184 (TCC), Akenhead J said this:
‘22. So far as indemnity costs are concerned, there are numerous authorities which address the circumstances in which these may be ordered. A helpful if not absolutely exhaustive summary was given by Mr Justice Coulson in Elvanite Full...
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Table of cases
...NSWSC 231 II.13.100 Burge v Swarbrick [2007] hCa 17 III.16.04 Burgess v Lejonvarn [2018] EWhC 3166 (TCC) I.5.57 Burgess v Lejonvarn [2019] EWhC 369 (TCC) III.26.272, III.26.291 Burgh v Legge (1839) 5 M&W 418; 151 Er 177 II.6.435 Burgundy Global Exploration Corp v Transocean Ofshore Internat......
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Litigation
...Imperial Chemical Industries Ltd v Merit Merrell Technology Ltd [2017] EWHC 2299 (TCC) at [8]–[11], per Fraser J; Burgess v Lejonvarn [2019] EWHC 369 (TCC) at [8]–[10], per DHCJ Bowdery QC. See also Kier Construction Ltd v Royal Insurance (UK) Ltd (No 2) (1992) 30 Con LR 95; Connaught Resta......