Rushbrooke UK Ltd v 4 Designs Concept Ltd
| Jurisdiction | England & Wales |
| Judge | Paul Matthews |
| Judgment Date | 15 June 2022 |
| Neutral Citation | [2022] EWHC 1416 (Ch) |
| Docket Number | Case No: CR-2022-BRS-000042 |
| Court | Chancery Division |
[2022] EWHC 1416 (Ch)
HHJ Paul Matthews
(sitting as a Judge of the High Court)
Case No: CR-2022-BRS-000042
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS IN BRISTOL
INSOLVENCY AND COMPANIES LIST (ChD)
Bristol Civil Justice Centre
2 Redcliff Street, Bristol, BS1 6GR
Charlie Newington-Bridges (instructed by Neath Raisbeck Golding Law) for the Applicant
John Churchill (instructed by Temple Bright LLP) for the Respondent
Applications dealt with on paper
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.
This judgment will be handed down by the Judge remotely by circulation to the parties' representatives by email and release to The National Archives. The date and time for hand-down is deemed to be 10:30 am on Wednesday 15 June 2022.
Introduction
On 9 May 2022 I heard the claimant company's application (by notice dated 20 April 2022) for an injunction to restrain presentation of a winding-up petition. On 13 May 2022, I handed down judgment in this matter, giving my reasons for striking out the application. This was on the basis that one of the only two directors of the company, Mr Mark Steventon-Smith, had no authority on his own to make or give instructions to make the application on the company's behalf: see [2022] EWHC 1110 (Ch). I invited written submissions on consequential matters, and received those from both sides on 13 May 2022 (primary submissions) and 16 May 2022 (responsive submissions).
A primary submission from the respondent was that the applicant's solicitors, Neath Raisbeck Golding Law (“NRG”), should show cause why they should not be ordered to be jointly liable with the company (and Mr Steventon-Smith) for the wasted costs of the application of 20 April 2022. The responsive submission of the applicant suggested that the solicitors should file their evidence by the 30 May 2022, and that the respondent should file any evidence in answer by 7 June 2022. I therefore gave directions (albeit with slightly different dates), and duly received such written evidence. Having considered it, I decided that the most appropriate way to deal with the wasted costs issue was to invite written submissions from the parties and from NRG on that issue. So that matter will be dealt with in a separate judgment. The present ruling deals with all the other costs-related issues. The delay in producing it was due to other more urgent work which in the circumstances had to take priority. Nevertheless, I am sorry for the delay.
The rival positions
The successful respondent seeks two costs orders. The first is an order that the applicant company and Mr Steventon-Smith jointly and severally pay the respondent's costs. The basis for this form of order is said to be either (i) the applicant is liable to pay the respondent's costs under the general rule in CPR rule 44.2(2)(a), and Mr Steventon-Smith is liable to indemnify the applicant, so he should pay the respondent directly, or (ii) Mr Steventon-Smith should be made liable for the costs as a non-party, because he is the real party to the litigation. The second order sought is one that the applicant's solicitors NRG should be jointly liable to pay the wasted costs of the application.
So far as concerns the quantum of costs, the respondent has submitted both an original and an updated costs schedule. The second schedule covers the additional work undertaken between the filing of the original schedule and the hearing itself, as well as additional work undertaken following the hearing, including the primary written submissions. The original schedule gives a total of £3425 plus VAT of £685, making £4110, and the updated a figure of £4065, plus VAT of £813, making £4878. The total of the two schedules therefore is £8988, including VAT.
The applicant accepts that the application has been struck out by the court, and that costs should follow the event. However, the applicant challenges the updated costs schedule on the grounds that it was filed and served after the hearing, instead of 24 hours before. It also challenges the quantum of the costs sought. I will come back to these challenges. In addition, by its responsive submissions, the applicant argues that it is not an appropriate case for Mr Steventon-Smith to be made liable as a non-party, both on procedural and on merits grounds. The applicant says that Mr Steventon-Smith has not been added as a party to the proceedings pursuant to CPR rule 46.2, and that the applicant company, rather than he, was the real party to the litigation. Mr Steventon-Smith himself has not filed or served any written submissions.
The respondent by its responsive submissions says that, since both costs schedules have been filed with sufficient time for the applicant to respond to them, there is no prejudice to it, and therefore both schedules should be taken into account. It also asks for its costs to be assessed on the indemnity rather than standard basis. In any event, however, the court should not feel bound to apply the costs guideline hourly rates. It also says that Mr Steventon-Smith was forewarned of an application under rule 46.2 in the respondent's skeleton argument for 9 May 2022, and indeed filed a witness statement after that skeleton was filed. Accordingly it says that no further period should be given to enable Mr Steventon-Smith to file written submissions.
The basis of assessment of costs
I deal first with the basis of assessment of costs. The respondent seeks an award of costs on the indemnity basis, by reason of what are called “the principles outlined in Smith v Butler [2012] EWCA Civ 314 [40]–[47]”. I discussed this case in my substantive judgment on this application. There I said this about it:
“40. … This case concerned the affairs of the company, Contact Holdings Ltd. This was in substance a dispute between the two shareholders, Mr Smith, with 68.8% of the shares, and Mr Butler, with 31.2% of the shares. They were both directors, along with a third person, Mr Harris, the finance director. In addition, Mr Smith was the chairman of the board, and Mr Butler was the managing director of the company. Mr Butler was concerned about allegations that Mr Smith had utilised his company credit card for the payment of personal expenses amounting to £78,000.
41. Having consulted Mr Harris, who agreed with him, Mr Butler took it upon himself on 1 July 2011, without the benefit of a resolution of the Board of Directors, to suspend Mr Smith from office and to exclude him from the company's premises. Mr Smith served on the company requisition for the convening and holding of an extraordinary general meeting to consider resolutions for the removal of Mr Butler and Mr Harris as directors. But Mr Butler made clear that he would not attend such a meeting, so that the meeting would then be inquorate, and ineffective. Subsequently Mr Smith applied to the court for a declaration as against both Mr Butler and the company that Mr Butler's actions were outside his powers, and for an order convening a general meeting with a quorum of one. At first instance Mr Smith succeeded, and Mr Butler appealed.
42. In the Court of Appeal, Arden LJ gave the leading judgment. She decided that the judge had been right to conclude that Mr Butler had no authority is managing director to suspend Mr Smith from his role as chairman or to procure the company to defend his proceedings, and would dismiss the appeal. Rimer LJ agreed with her on these points, and would also dismiss the appeal. But he added that he preferred not to express any general view as to a managing director's implied authority to commence or defend legal proceedings on behalf of the company. The third member of the court, Ryder J, also agreed with Arden LJ's reasons and conclusions and would likewise dismiss the appeal. Unlike Rimer LJ, however, he did not express any reservation in relation to implied authority to commence or defend legal proceedings.
[…]
44. It is clear from their judgments in Smith v Butler that the majority of the court (Arden LJ and Ryder J) qualified the decision in Mitchell & Hobbs (UK) Ltd v Mill, so that, in some cases at least, paragraph 72 of Table A may confer authority on a managing director to commence or defend proceedings on behalf of the company. However, in a case like Mitchell & Hobbs, where there were only two directors, who had fallen out, and therefore would not agree to all ratify the commencement of proceedings, the court considered that the decision in that case, that there was no authority to commence the proceedings, was correct.”
In Smith v Butler, Arden LJ said:
“43. Section 1157 [of the Companies Act 2006] empowers the court to grant relief where a director is found to have acted in breach of duty and it appears to the court that he:
‘acted honestly and reasonably, and that having regard to all the circumstances of the case (including those connected with his appointment) he ought fairly to be excused, the court may relieve him, either wholly or in part, from his liability on such terms as it thinks fit.’
[…]
45. I have no doubt that the judge had power to order Mr Butler to pay the Company's costs (see section 51 of the Senior Courts Act 1981). The judge had a wide discretion with respect to such an order. Moreover, Mr Dougherty has not satisfied me that there was any matter which the judge could take into account under section 1157 of the 2006 Act in this case but not under his discretion to make an order as to costs.
46. More fundamentally, however, if I am right in my conclusion on the primary issue that Mr Butler had no authority to cause the Company actively to defend Mr Smith's applications, then...
To continue reading
Request your trial
-
Rushbrooke UK Ltd v 4 Designs Concept Ltd
...pay the respondent's costs of and incidental to the application, and summarily assessed these in the sum of £7920 (including VAT): [2022] EWHC 1416 (Ch). At the same time I declined to order that Mr Steventon-Smith should be jointly liable with the company to the respondent for those 2 Howe......