Stimpson v Southern Landlords Association
| Jurisdiction | England & Wales |
| Judge | JUDGE PELLING |
| Judgment Date | 21 May 2009 |
| Neutral Citation | [2009] EWHC 2072 (Ch),[2009] EWHC 1556 (Ch) |
| Court | Chancery Division |
| Docket Number | Case No: 7571 of 2008,Claim No: 7571 of 2008 |
| Date | 21 May 2009 |
[2009] EWHC 1556 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Royal Courts of Justice
Strand
London WC2A 2LL
Before: His Honour Judge Pelling Q.C.
Claim No: 7571 of 2008
MR D BROMILOW appeared on behalf of the Applicant
MR I GREENWOOD appeared on behalf of Second to Fifth Respondents
MR A THOMPSON appeared on behalf of Sixth Respondent
Approved Judgments
FIRST JUDGMENT
1. I have before me an application by the successful defendants for the costs of and occasioned by the application before me. There is no dispute that they are entitled to costs, but the dispute, as increasingly happens now, is as to whether or not the assessment should be on the indemnity as opposed to the standard basis.
2. In relation to the principles that apply there is no dispute. Before the court orders costs to be assessed on an indemnity as opposed to a standard basis there has to be conduct on the part of the paying party, which takes the case out of the norm in a way which is worthy of criticism. Against that background it was submitted on behalf of the Second to Fifth Defendants that this was such a case.
3. Firstly, it is submitted that the claim was exaggerated in quantum by being formulated in the sum of about £5.3m when, for the reasons set out in my substantive judgment, that was not seriously arguable. It is said, on behalf of the Sixth Defendant, that this was first pointed out when the evidence was exchanged in November of last year, yet no attempt has been made to withdraw that point. It is true that the claim, as formulated in the sum of £5.3m, was plainly unsustainable for the reasons I identified. However, I am not satisfied that that of itself or in combination with anything else justifies an award for indemnity costs. Whilst it is true to say that submissions were made to the effect that the formulation was unsustainable, those submissions did not take up a large portion of the debate in front of me, nor indeed did it take up a large part of the judgment. Costs have not been increased as a result of that point and this point was not one which undermined the application as a whole.
4. The next point that is taken, is that all the causes of action relied upon are ones that I concluded were unarguable, save for one. However, the fact that I conclude that a claim is unarguable in this sort of application does not of itself justify awards of costs on an indemnity basis.
5. The third point which is taken is that the Claimant concentrated on process rather than substance and brought about the problem he complained of by conduct which I concluded was at least arguably a breach of fiduciary duty on his part. That is so, but it seems to me, again with respect, that is not something which leads to the conclusion that costs should be awarded on an indemnity basis. The fact that he behaved in a way which was contrary to his fiduciary duty was something which the Defendant could have resolved by calling an extraordinary general meeting. That step was not taken. Further, there are provisions within the Articles of Association, which I drew attention to in the judgment, which permits that problem to be dealt with.
7. Next, it is said that there are a number of small claims not relied on. I accept the point made on behalf of the Claimant that they were not relied on before me, because in essence the Claimant was not going to win the small points if he could not win on the big ones and without conceding that he had no case in relation to them. It was necessary to include the small points in the Particulars of Claim so that in the event that permission was given, they could be proceeded with. By their very nature and because they were not relied on before me they have not taken up time or added unnecessarily to the costs.
8. So far as the lack of good faith point is concerned, lack of good faith in the context of the provisions that I have been concerned with, does not necessarily carry with it the implication of dishonesty. I make clear that nothing in my judgment is to be construed in any way as suggesting that the First Claimant has been guilty of dishonesty, even on an arguable basis. Rather, my conclusion based on good faith is that he was motivated by a desire to maintain control of the First Defendant in a way which adversely affected his judgment in relation to the matters that had to be borne in mind. That is a rather different point and does not, in my judgment; lead to the conclusion that costs should be awarded on an indemnity basis.
9. The final point which is left is a point concerning the EGM. It will be recalled that in the final part of my judgment I drew attention to the fact that there was an alternative remedy available to the First Claimant that enabled him to call an EGM and thus, by changing the directors, gain control of the company so as to enable the company itself to bring the claim. That remains a good point notwithstanding the new law in this area and, as I said in my judgment, might be a determinative one. This point could have been but was not taken as a preliminary issue. It was not taken before Sir Edward Evans-Lombe. It is submitted that it could not have been in the circumstances. Without being there I cannot myself know what the nature of the proceedings were before that judge. But if the point was regarded as important as it became in the hearing before me, there was nothing to prevent the issue by the Defendants of an application which would call for either the staying or dismissal of this application over until after the alternative remedy had been deployed. That step was not taken, thus there can be no real complaint on the part of the Defendants that the matter was argued fully on the merits which they engaged with in their witness statement evidence.
10. In the result this is a case where, because they have won, the Defendants are entitled to their costs. It is not a case where costs should be awarded on the indemnity basis.
SECOND JUDGMENT
1. There is before me an application for the costs of and occasioned by some sequestration proceedings, which were commenced by the Claimant against the Sixth Defendant for alleged breach of an order made by Briggs J, which records undertakings given by the Claimant, which order is dated 15 September 2008.
2. At paragraph 4 of the undertakings it is rehearsed that the Sixth Defendant would not, until after the hearing of the application I heard earlier today, without the permission of the Claimants via their solicitors or the court
“ … attempt to persuade any member of the SPLA who is not a member of the NLA to become a member of the NLA save that the NLA is permitted to offer such a person the opportunity to become a member of the NLA and explain the terms on which that person might do so and the effects of doing so:
(a) if such person contacts the NLA via the NLA's phone line or via the SPLA's or otherwise or;
(b) if such person accesses the NLA's website… or
(c) if such person approaches it to ask about membership of the NLA at any meeting…” or
(d) if the membership of such person has expired or is about to expire within 21 days, in which event the NLA may write to him without canvassing for membership of the NLA in order to inform him: (1) about that expiry; (2) that on that expiry he ceased or will cease to be entitled to any service or benefits”.
3. A series of four allegations were raised which formed the basis of the application to sequestrate. One related to a letter which was apparently written by one of the individual Respondents, which it was alleged was posted by the Sixth Defendant, as to which it is said, and there is no challenge to it, that there was no evidence which established that the Sixth Defendant had posted the letter at all. As to the second and third allegations, they each concerned the writing of a letter as to which, it is submitted on behalf of the Sixth Defendants, that they could not even arguably found a contempt application of any sort on account of the fact that the addressees of the letters were not members of the SPLA as at 15 September, being the date of the undertaking, since on the face of the material before the court each had ceased to be a member in August. The final allegation concerned a conversation, which is alleged to have taken place between an employee of the NLA and an individual, as to which it was submitted that the evidence was seriously tainted. The evidence was claimed to be the transcript of a conversation that was recorded, but on analysis the recording showed that a potentially significant amount of the conversation had not been recorded or had been deleted or recorded over.
4. What then happened is evidence was filed in answer, skeletons lodged and the matter was to come on for hearing after I had delivered judgment in the application I gave judgment in this morning. In the event an indication was given by the Claimants to the Defendants some time yesterday afternoon or yesterday evening that the application would not be moved.
5. It is submitted on behalf of the Claimant that either I should order his costs to be paid by the Sixth Defendant or alternatively make no order as to costs on the basis that the breaches occurred and he was justified in issuing the application. The withdrawal was justified because on a consideration of the material filed in answer, it contained an apology, which the claimant was content to accept. The position of the Sixth Defendant is that on no basis can it be right that the Sixth Defendant be...
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