Sycamore Bidco Ltd v Sean Breslin and Another
| Jurisdiction | England & Wales |
| Judge | Mr Justice Mann |
| Judgment Date | 18 March 2013 |
| Neutral Citation | [2013] EWHC 583 (Ch) |
| Docket Number | Case No: HC10CO3460 |
| Court | Chancery Division |
| Date | 18 March 2013 |
[2013] EWHC 583 (Ch)
Mr Justice Mann
Case No: HC10CO3460
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Royal Courts of Justice
Strand, London, WC2A 2LL
Catherine Newman QC and Adam Smith (instructed by Addleshaw Goddard LLP) for the Claimant
Andrew Neish QC (instructed by PriceWaterhouseCoopers Legal LLP) for the Defendants
Hearing dates: 14 th & 15 th February 2013
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.
Introduction
This is the third post-judgment hearing in this matter, and it deals with costs, interim payments, permission to appeal, and issues as to outstanding inquiries and the costs of the LTIPs claim. Previous hearings dealt with the finalisation of the damages claim and interest. It is necessary to deal with costs separately because there have been two Part 36 offers in this case (made by the claimant) and they rendered it impossible to deal with costs before the other matters had been determined, because those other matters affected the question of whether or not the offers were beaten.
Dealing with these outstanding issues, and particularly costs, has become a difficult, costly and time-consuming matter. That is because the parties (and particularly the defendants) have raised a very significant number of points arising out of the conduct of the proceedings which go to both the incidence of costs as a whole and the proper effect of the Part 36 offers. The motivation behind all those points is the level of costs in these proceedings. Sycamore is seeking all its costs of the proceedings. A conditional fee agreement ("CFA") was in force so as to govern the costs since 11 May 2011, though the agreement was apparently entered into only in November (when notice of it was given) and its effect backdated. Sycamore's base costs are in the order of £3.9m. Sycamore has declined to disclose the amount of the uplift, or any other relevant details of the CFA, but its solicitors have said that they consider it unlikely that the uplift would be more than £1m. They have not bound their client to that figure. The defendants fear that it may turn out to be more than that, and that they are at risk of having to pay £5m or £6m in costs. The damages claim that I ordered was a figure of £5.25m, and interest on that adds another £1m or so, so it can be seen that the costs are, at the very least, a very large proportion of the amount claimed, and may exceed it. That means that the costs assume an even larger significance in this litigation than they normally do, and explains the vigour and detail of the assault on Sycamore's claim for costs. I asked the parties what their approximate figures were for their costs of arguing the points taken at the hearing before me, and the aggregate costs were said to be in the region of £100,000. That seems like a very large figure to spend on what are essentially ancillary matters, but I suppose that the amount of the costs at stake has raised costs questions above the level of the ancillary.
The Part 36 offers
The claimant made two Part 36 offers:
(a) on 16 th February 2012 the claimant offered to accept £5.5m, inclusive of interest up to 8 th March 2012, in settlement of the claim.
(b) On 19 th of April 2012 the claimant offered to accept £4m inclusive of interest. This offer was made less than 21 days before the start of the trial.
Neither offer was accepted. The defendants made no offer to settle this case other than an early offer of £75,000. It will be apparent from those figures that a combination of my award of damages and my award of interest gives the claimant a greater sum than either of those Part 36 offers. The claimant has therefore beaten those offers.
The main issues arising
Against that background the following principal issues arise:
(a) It being accepted that Sycamore has been successful overall, and that therefore as winner it should be entitled to costs, whether some of its costs should be disallowed because of the issues in the action on which it failed and because of its conduct in running the case.
(b) Do all the normal consequences of beating a Part 36 offer follow, in the claimant's favour, or are there circumstances which justify or require the imposition of lesser burdens on the defendants.
(c) What orders should be made in relation to costs of the two applications that were made in the course of the proceedings.
(d) What interest should be awarded on costs?
(e) Should the start date for interest running on costs under the Judgments Act be postponed?
(f) Should the defendants have permission to appeal?
(g) Should there be a stay of enforcement pending any appeal?
(h) Various other more minor questions about outstanding enquiries and costs in the LTIPs claim.
It will be convenient to take the issues in that order. In particular, it is right that issue (a) should be taken before issue (b). Miss Newman accepted that it was in accordance with principle that I could deal with a disallowance of costs on the sort of grounds relied on by the defendants before then turning to the effect of the Part 36 offers, so that the consequences of those offers bite only on such costs as the claimant was entitled to, though she said that actual point was left open in a Court of Appeal decision. It seems to me that she must be right in her stance. She did not claim that her Part 36 offer was capable of trumping any decision which disallowed costs, and that seems to me to be right in principle.
At one level, since both of the claimant's Part 36 offers came in under the award of damages and interest, I can by and large look at the effect of the early offer and ignore the later.
The general disallowance of costs
Miss Newman's starting point was a straightforward one. Her clients had succeeded, they had obtained a large sum of damages and there was no reason why the costs which would normally follow pursuant to the prima facie rule in CPR rule 44.3(2)(a) should not do so. The burden was on Mr Neish to demonstrate why any costs should be disallowed, and he had not satisfied that burden.
Mr Neish, for the defendants, submitted that the claimant should not have all its costs. There should be a significant disallowance of costs, to the tune of 60% (allowing it 40%), to reflect the very significant issues on which Sycamore had fought and lost. It had run a misrepresentation case which failed, because there was no representation; it had run a breach of warranty case in relation to the AXA payment which failed, because the failure to allocate that payment properly in the accounts was not material; it ran a warranty case based on the improper taking of commissions which failed as a breach of warranty, and was never going to sound in damages anyway; it ran the Bank of New York point on which it failed; it ran the Rotch Properties claim which failed badly. These points were not merely odd points which happened to fail on the way to an overall victory. They were all points which took up significant, or even very significant, time at the trial, significant space in witness statements and involved a large amount of disclosure. If they had not been run the action would have been shorter and simpler, with far less material deployed. His instructing solicitor, Mr Isaacs, put in an analysis of the time said to have been taken at trial on the points on which Sycamore respectively won and lost. In addition, though it did not figure in Mr Isaacs' calculation, Mr Neish pointed out that even in relation to the Liberata payment, an overall issue on which Sycamore won, it lost a lot of the sub-points on the way — for example, the appropriation point and the suggestion that the payment was somehow "hidden". Those failed sub-points also took up significant time at the trial.
Furthermore, Mr Neish said that I should make a reduction to reflect the Court's disapproval of the fact that Sycamore ran cases based on dishonesty against Mr Brooks, the defendants themselves (or at least Mr Breslin) and PwC (their corporate advisers). Sycamore itself had advanced a case which I was said to have found to have been less than frank.
Miss Newman's response to this was, in essence, that Mr Neish's case that the trial and proceedings as a whole had been lengthened and made more expensive by the inclusion of claims on which she failed was vastly over-stated. A lot of the allegedly excessive documentation was required by the defendants, not by Sycamore. The court made no findings on a lot of the points that would have arisen if the misrepresentation claim had succeeded, because it deliberately did not embark on them having found that there was no representation, so the claimant cannot be taken to have lost on those issues. She went on to point to various issues which she says were raised unreasonably by the defendants, including the allegation that Dunedin had knowledge of the Liberata compensation and its source, and she said that the defendants required a lot of disclosure which turned out to be pointless.
The principles on which I should determine this dispute were not themselves disputed. Many are set out in the judgment of Jackson J in Multiplex v Cleveland Bridge [2009] Costs LR 55:
"(i) In commercial litigation where each party has claims and asserts that a balance is owing in its own favour, the party which ends up receiving payment should generally be characterised as the overall winner of the entire action.
(ii) In considering how to exercise its discretion the court should take as its starting point the general rule that the successful party is entitled to an order for costs.
(iii) The judge must...
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