Phillip Garritt-Critchley and Others v Andrew Ronnan and Solarpower PV Ltd
| Jurisdiction | England & Wales |
| Judge | His Honour Judge Waksman QC |
| Judgment Date | 03 February 2014 |
| Neutral Citation | [2014] EWHC 1774 (Ch) |
| Court | Chancery Division |
| Docket Number | Case No: 2MA30319 |
| Date | 03 February 2014 |
[2014] EWHC 1774 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
MANCHESTER DISTRICT REGISTRY
HHJ Waksman QC sitting as a Judge of the High Court
The High Court
Manchester District Registry
DX 724783 Manchester 44
His Honour Judge Waksman, QC
Case No: 2MA30319
Mr A Barden (instructed by Pannone LLP) appeared on behalf of the Claimants
Mr G Maynard-Connor (instructed by Hill Dickinson LLP) appeared on behalf of the Defendants
Approved Judgment
The second matter with which I have to deal with today concerns the claimant's application for their costs to be paid by the defendant on an indemnity rather than a standard basis for the whole costs of the action. That application requires me to say a little more about the nature of the claim, the amounts claimed and how it has proceeded.
The letter before claim which was written on 24 February 2012, it being recalled that the terminal incident between the parties, if I can put it that way, was a meeting on 3 January of that year. The letter set out the case for saying that there had been an agreement that shares would be issued and paragraph 5.8 of that letter put the value of the claim at that stage at £208,000. It required proposals for payment but nonetheless the last paragraph read thus:
"Notwithstanding the above, our clients are willing to enter into an appropriate form of ADR, such as mediation at the appropriate time. We therefore hope that the issue of proceedings will not be necessary."
The response from those acting for the defendants was to not engage with that offer of mediation at that stage. The matter resurfaced when allocation questionnaires were filed. In the allocation questionnaire the defendants made plain that they were not prepared to engage in any settlement activity and they did not want the court to arrange a mediation in the event of a stay. The allocation questionnaire gave as the reason that "the parties are too far apart at this stage".
When asked in correspondence why they were not willing to mediate after their allocation questionnaire had been noted by the claimants they said that:
"Both we and our clients are well aware of the penalties the court might seek to impose if we are unreasonably found to refuse mediation, but we are confident that in a matter in which our clients are extremely confident of their position and do not consider there is any realistic prospect that your client will succeed, the rejection is entirely reasonable."
They then went on to reject the notion of the court directing expert evidence on the basis that since there never was any actionable claim for the shares, there was no point in an expert being called. That perhaps takes optimism to a new level, because obviously the court has to proceed upon the basis that liability may be established and quantum will be relevant. As indeed both parties did agree ultimately.
The correspondence went back and forth but a fair summary is to say that the claimants kept referring to the sense of having a mediation and the defendants kept saying that they were not prepared to do so because of confidence in the success of the defence and the witness statement of Mr Barnard exhibits numerous pieces of correspondence to that effect.
The matter came before District Judge Khan on 28 May, where he gave directions to trial. And at paragraph 8 he recorded that:
"… the court considers the overriding objective would be served by the parties seeking to resolve the claim by mediation, the parties will no less than 21 days before trial file in a sealed envelope a witness statement which explains why a party refused to attend mediation."
That was a theme which was taken up again by the claimants' solicitors on 30 August and they repeated the offer, which was rejected shortly thereafter. The matter proceeded until 4 November and at that point the claimants having said that they will be willing to settle for something like £170,000 plus their costs and the evidence coming in suggested it might be considerably more than that, they produced a new Part 36 offer which said that they would take £10,000 in total plus their costs to-date. The period for accepting that offer expired without it being accepted. On 14 December a counter-offer in Part 36 form was produced by the defendants which was that the claimant should discontinue and the defendants would take three-quarters of their costs.
In a final attempt at negotiation, and despite the fact that the claimants thought that if the Defendants' best offer was simply that the claimants should discontinue and pay three-quarters of the defendants' costs, there was not much point in settling, they said this in a letter of 12 December:
"However, if your clients are prepared to negotiate constructively, rather than inviting our clients simply to discontinue, then we may be able to progress matters."
And they said in paragraph 1.6 that they are willing to conduct further negotiations in correspondence.
This trial started on 14 January 2014 and there was therefore the opportunity for a final attempt to have some negotiations which could be by way of mediation or not, still being canvassed by the claimants and still being refused by the defendants. The trial took place over four days but before I gave my judgment which would have been today, the defendants decided to accept, out of time, the offer to pay the claimant £10,000 and pay all of their costs, at least on a standard basis.
I am asked to grant an indemnity costs order principally on the basis of an unreasonable failure to engage in mediation. I uphold that contention for the following reasons, and in giving those reasons I accept that since it is the claimants' application for indemnity costs it must justify it and if it wishes to persuade the court that a party has acted unreasonably in whatever way then it must satisfy the court that that has happened, so I accept the burden of proof is on the claimant.
This was an action of a fairly typical kind where the allegation was whether a binding agreement had been made or not. As is evident from the lack of cases or authorities put before me prior to my giving judgment, this was essentially a question of fact applying well-known contractual principles, in relation to a contract which did not itself require to be in writing. It therefore, was a very fact intensive and evidence intensive exercise where the court would have to judge the credibility of their witnesses and look at the importance or otherwise of contemporaneous documents and the commercial sense or otherwise of each side's case. That is classically a case where both parties needed to engage in a risk analysis as to whether their side of the coin would be accepted or not.
The second aspect of this claim was that there was an obvious sliding scale of a compensatory award if the claimants succeeded. This was not an all or nothing case on quantum where the parties would have to agree that if liability was established the obvious amount of damages would be X. This was a case where the services of an expert, therefore a matter of opinion, was required, in order to see what the range of awards would be and as was apparent to me in the course of the trial and the points being taken, the range was really very considerable indeed.
That again is a classic matter where mediation should be considered because there is ample room for manoeuvre within the wide range of possible quantum scenarios. Unfortunately, as it seems to me, the defendants did not approach this matter in the correct way at all. I take as my starting point the leading Court of Appeal authority of Halsey and I will refer to this as I look...
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