Renewable Power & Light Ltd v McCarthy Tetrault and Others
| Jurisdiction | England & Wales |
| Judge | Mr Justice Morgan |
| Judgment Date | 18 November 2014 |
| Neutral Citation | [2014] EWHC 3848 (Ch) |
| Court | Chancery Division |
| Docket Number | Case No: HC12A02388 |
| Date | 18 November 2014 |
[2014] EWHC 3848 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Royal Courts of Justice, Rolls Building
Fetter Lane, London, EC4A 1NL
Mr Justice Morgan
Case No: HC12A02388
The Claimant did not appear at the hearing on 18 November 2014
Christopher Butcher QC, Jamie GoldsmithandAndrew Lodder (instructed by Taylor Wessing LLP) for the Third Defendant (Grant Thornton (UK) LLP)
Hearing date: 18 th November 2014
Mr Justice Morgan Tuesday, 18 November 2014
(11.13 am)
Ruling by Mr Justice Morgan
The trial of this action began on 6th November 2014. On 17th November 2014, the claimant served notice of discontinuance in relation to its claim. The notice of discontinuance disposed of the whole of the claim. However, there is a counterclaim which needs to be determined or otherwise dealt with. There are also consequential matters which need to be addressed. I will start with the counterclaim.
The counterclaim is effectively in two parts. The first part of the counterclaim is pleaded at paragraphs 114 to 119. The second part of the counterclaim is contained in paragraph 120. Paragraph 121 is a claim to interest pursuant to section 35A of the Senior Courts Act 1981.
So far as the first part of the counterclaim is concerned, the defendant does not wish to advance that counterclaim at this hearing, principally because that part of the counterclaim is on the basis that the allegations made by the claimant against the defendant are found to be true. That has never, of course, been the defendant's positive case and the counterclaim was meant to address the eventuality of the defendant being found liable to the claimant, which eventuality the defendant would say should never arise. However, the defendant submits today that this part of its counterclaim should not be dismissed. Alternatively, it is said that I should not make "no order" in relation to that part of the counterclaim.
The defendant is not clear as to what may happen next, in view of the fact that the claimant's claim was discontinued mid-trial. The defendant would wish to have available to it any possible protection that these parts of the counterclaim might afford it, just in case the claimant does something by way of reactivation of its claim.
It seems that the prospects of the claim being reactivated are very remote, and of course the defendant would not wish to say anything or have me say anything which would encourage the claimant to think that there was any chance of any kind whatever of reactivating its claim. But for the avoidance of doubt and to be on the very safe side, I am prepared to accede to the defendant's request in relation to paragraphs 114 to 119 of the counterclaim. I will stay that part of the counterclaim on terms which have been discussed in the course of argument and which will be reflected in an order of the court.
That brings me to paragraph 120 of the counterclaim. That, as pleaded, reads as follows:
"Further or alternatively, if Grant Thornton is found not liable to RPL in negligence it is entitled to and seeks damages in the amount of its costs, fees and expenses in defending the present proceedings assessed on the indemnity basis pursuant to clause 6.1 of the Grant Thornton Contract and clauses 8.3 and 8.7 of the Placing Agreement" and earlier paragraphs of the defence are repeated for that purpose.
As pleaded, the counterclaim arises if Grant Thornton is found not liable to RPL in negligence. Technically that hasn't happened. There has not been a finding either way, because the claim against Grant Thornton has resulted in a judgment on the claim. It seems to me it is not appropriate for me to continue the trial and make a finding as to whether Grant Thornton is or is not liable in negligence just for the purpose of addressing the counterclaim.
It seems to me that I can read paragraph 120 so that the condition of Grant Thornton being found not liable extends to what has happened here, which is that the claimant has discontinued its claim against Grant Thornton. I do not see any unfairness to the claimant by proceeding in that way.
Therefore, I address this counterclaim on the basis that there is before me an effective counterclaim requiring determination and the counterclaim is a claim to an indemnity pursuant to the contractual provisions.
The contractual provisions are found in what is described in the pleading as "the Grant Thornton Contract" and in "the Placing Agreement". I will go first to the Grant Thornton Contract and then separately consider the Placing Agreement.
The relevant clause in the Grant Thornton Contract is clause 6.1. That is a lengthy provision. The parties know the full extent of the wording of that provision. In this judgment I will refer only to the parts of the clause which are most relevant.
Approaching it that way, by clause 6.1 of the Grant Thornton Contract, RPL agreed to indemnify Grant Thornton — and I now quote but leaving out words:
"From and against any and all actions, claims, demands, proceedings and judgements (collectively "Claims") and any and all losses, liabilities, damages, costs, charge and expenses (collectively "Losses") of whatever nature … or which are suffered or incurred by Grant Thornton … and which relate to or arise from directly or indirectly Grant Thornton's engagement hereunder … and/or the transaction(s) or matters to which it relates and [RPL] shall reimburse Grant Thornton … for all costs, charges and expenses (including legal fees) as they are incurred by Grant Thornton … in connection with investigating, dealing with or defending any claims (whether actual, pending, threatened or potential) which so relate or arise."
Clause 6.1 is subject to a proviso which I will read in full. It is in these terms:
"Provided that the company will not be responsible for any Claims or Losses to the extent that they are found in final judgement by a court of competent jurisdiction to have resulted from a criminal or fraudulent act or the wilful default or negligence of Grant Thornton, or in circumstances where Grant Thornton is prohibited from receiving an indemnity pursuant to the Financial Services Authority Rules or Financial Services and Markets Act 2000, or the rules of any appropriate regulatory authority, but only to the extent of such prohibition."
Clause 6.1 is expressed in wide terms. Within those terms is the phrase:
"… all costs, charges and expenses including legal fees …"
In the remainder of this judgment I will concentrate on that phrase and how it applies, because the thrust of the defendant's claim today is that it wishes to have an order for its legal costs, the costs of the proceedings, both in defending the claim and in presenting the counterclaim. But although I will concentrate on that phrase, I do not mean to indicate that Grant Thornton has no right to be indemnified in other respects.
If I reach the conclusion that Grant Thornton is entitled to rely on clause 6.1, I will make a declaration to that effect, and the declaration should follow the width of the wording of clause 6.1. If Grant Thornton later wishes to say that it is entitled to be indemnified in other respects — one possibility is in relation to management time — then I will give Grant Thornton permission to apply to the court for an appropriate order to enable it to advance such a claim.
There may be legal argument as to whether such a claim can be put, and of course there is likely to be some argument as to the quantification process, but I will leave that door open, I do not intend to close it in what I am now about to say, focusing on the legal costs.
The first point to address in relation to legal costs is that clause 6.1 refers to "all costs" et cetera. However, it is accepted by Mr Butcher QC on behalf of the defendant, having in mind the decision of the Court of Appeal in Gomba Holdings UK Ltd v Minories Finance Limited (No. 2) [1993] Ch 171 that "all costs" is to be interpreted as reasonable costs...
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