Mr Robert Colicci v Ms Nora Mikhailovna Grinberg as executrix of the estate of Ernesto Colicci deceased
| Jurisdiction | England & Wales |
| Judge | Mark Anderson |
| Judgment Date | 11 August 2023 |
| Neutral Citation | [2023] EWHC 2075 (Ch) |
| Court | Chancery Division |
| Docket Number | CASE NUMBER PT-2021-000834 |
[2023] EWHC 2075 (Ch)
Recorder Mark Anderson KC acting as a judge of the High Court pursuant to section 9(1) Senior Courts Act 1981
CASE NUMBER PT-2021-000834
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
PROPERTY TRUSTS AND PROBATE LIST (ChD)
Royal Courts of Justice, Strand, London, WC2A 2LL
Penelope Reed KC (instructed by Charles Russell Speechlys LLP) for the claimants
Angeline Welsh KC (instructed by iLaw Solicitors Limited) for the first defendant
Hearing dates: 13, 14, 15 and 16 March, 18 May 2023
JUDGMENT ON COSTS
Mark Anderson KC:
I handed down judgment on 18 May 2023, following a trial in March which lasted 4 days. This is my reserved judgment on costs after further submissions at a consequentials hearing on 19 July. I will use the terminology set out in paragraphs 3 to 6 the main judgment.
The claimants made an offer of settlement on 1 March 2022, the relevant period for acceptance expiring on 23 March 2022. I will first consider the costs up to that date.
Costs to 23 March 2022
The claimants' principal claim, based on interpretation of the 2017 Agreement, succeeded. The claimants were therefore the successful parties.
The general rule is that the unsuccessful defendant (Ms Grinberg) will be ordered to pay the costs of the successful claimants on the standard basis, but the court may make a different order having regard to all the circumstances, including those set out in CPR 44.2(4).
A relevant consideration here is that the claimants brought a claim for rectification in case their claim based on interpretation failed. I found that the alternative rectification claim would have failed. It obviously increased the overall costs for the claimants and for the defendant.
I have considered the factors identified in CPR44.2(4) and (5), as well as reminding myself of the various orders open to me as listed in (6).
CPR44.2(4)(b) applies where there has been partial success by an otherwise unsuccessful party. Here, the defendant has not enjoyed partial success. Her case was that she beneficially owned the B Shares, and that case completely failed. However the fact that the claimants advanced an alternative rectification claim which was rejected is a feature that I should take into consideration.
It is impossible to assess confidently what proportion of the overall costs are attributable to the rectification claim, but I am confident that it was a significant proportion. I agree with Ms Welsh that if there had been no rectification claim, there would have been limited (if any) cross examination and there would have been no need for Extended Disclosure. Ms Welsh submits that the best approach is to make an issue-based order, whereby the claimants are awarded the costs of the interpretation issue and the defendant the costs of the rectification issue. I do not think that such an order would be workable, because there is significant overlap between the two issues. Some of the evidence was relevant only to rectification, as I was at pains to point out in my judgment. But the entire background evidence was relevant to both, and both claims required careful analysis of the legal effects of the three contracts at the heart of the dispute.
I nevertheless accept that the rectification issue contributed heavily to the overall costs and that I should make an order which relieves the defendant of having to pay the claimants' costs to the extent that they were increased by that issue. Doing the best that I can without any detailed analysis by the parties, according to my own perception as the trial judge, I have decided that the claimants should have 40 per cent up of their costs to and including 23 March 2022. Those costs will be assessed on the standard basis.
The period after 23 March 2022
Was it a Part 36 offer?
The claimants contend that their offer of 1 March 2022 was a Part 36 offer and that the main judgment is more advantageous to the claimants than the proposal contained in the offer. They therefore say that CPR 36.17(1)(b) applies and they are entitled to the additional amounts provided for in CPR36.17(4) with effect from 24 March 2022. These contentions are disputed by the defendant, Ms Grinberg.
The first issue I have to decide is whether the offer of settlement was effective as a Part 36 offer. The offer read as follows:
The offer
Our clients will pay to your client the sum of £150,000 by telegraphic transfer to your firm's client account in full and final settlement of this claim to include your client's claim to any interest (whether directly or as residuary beneficiary of the estate of Ernesto Colicci deceased (the Estate)) in the 40 shares in ECSI Limited contained within the Estate (the Shares), and your client will simultaneously transfer the Shares in equal parts to Robert Colicci and Rosanna Colicci. There is no counterclaim to be taken into account. For the avoidance of doubt, this is a claimant's Part 36 offer.
The costs position
If this offer is accepted within 21 days (the relevant period), our clients will be entitled to be paid their costs of the proceedings (including recoverable pre-action costs) up to the date on which you serve written notice of acceptance of this offer in accordance with CPR 36.13(1), such costs to be assessed on the standard basis if not agreed.
Ms Welsh KC argues that that was not an effective Part 36 offer. She says that the defendant had no claim to a payment of money from the claimants unless and until an order for costs was made in her favour. Therefore an offer to pay her money must be interpreted as an offer to pay costs. She submits that an offer which includes terms as to costs, including an offer to pay a global sum inclusive of costs, is inconsistent with the scheme of Part 36 and so ineffective. She cites Knight & Another v Knight & Others [2019] Costs LR 1459.
Ms Welsh accepts that a Part 36 offer must be interpreted according to ordinary objective principles, i.e. as it would be interpreted by a reasonable person in the position of the offeree with knowledge of the relevant background. Ms Welsh also accepts that an offer of settlement which is expressed to be made under Part 36 would normally be interpreted by a reasonable person consistently with Part 36.
The relevant background is that the adult children claimed to be the beneficial owners of the B Shares, seeking a declaration and an order for their transfer. That claim was resisted by the defendant, but the parties were agreed that if the defendant succeeded, the claimants nevertheless had a right to acquire the shares for full value. The point of the litigation was to decide whether the claimants had to pay for the shares or not.
In my judgment the offer to pay £150,000 for the shares was an offer to compromise that issue. No reasonable person would have seen it as an offer to pay £150,000 by way of a contribution to the defendant's costs. The offer made clear that the usual Part 36 consequences as to costs would apply: the defendant would pay the claimant's costs. There was no mention of the defendant's own costs being paid by the claimant. No reasonable person would have found themselves even pondering whether this was an offer to pay the defendant's costs. The fact that it referred to itself as a Part 36 offer would have put paid to any ambiguity, though I find there was none anyway.
Moreover the offer clearly related to the claim, as is required by CPR36.5(d). The claim was that the defendant be ordered to transfer the shares to the adult children without payment in return. The offer to make a payment for the transfer of the shares clearly related to, and sought to compromise, that claim. The fact that the claimants could not have been ordered to make a monetary payment to the defendant except by way of costs does not alter this reasoning. An offer can take effect under Part 36 even if it proposes an outcome which the court could not order after a trial: Jockey Club Racecourse Limited v Willmott Dixon Construction Limited [2016] EWHC 167 (TCC) at [29–37].
I therefore conclude that the offer of 1 March 2022 was a Part 36 offer.
Was the outcome at least as advantageous to the claimants as the proposals contained in the offer?
The outcome of the litigation is that the defendant must transfer the B Shares to the adult children without being paid for them, and must pay 40% of the claimants' costs up to 23 March 2022. Those costs are said by the claimant to be just over £125,000, so the defendant will have to pay just over £50,000, subject to detailed assessment. That is more advantageous to the claimants than the proposals contained in the Part 36 offer, under which the claimants would have received a figure approaching £125,000 in costs, subject to detailed assessment, but would have paid £150,000 for the B Shares.
Under CPR 36.17(4), unless I consider it unjust to do so, I must make an order that the defendant pays the claimants' costs on the indemnity basis from 24 March 2022, together with interest on those costs at a rate not exceeding 10% above base rate, and an additional amount calculated in accordance with CPR 36.17(4)(d)(ii). In considering whether it would be unjust to make such an order, I am obliged to consider all the...
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