North Oxford Golf Club v A2 Dominion Homes Ltd (Formerly Known As Chernwell Family Housing Trust) [2013] EWHC 852 (QB)

[2013] EWHC 852 (QB)Case No.IN THE HIGH COURT OF JUSTICEQUEEN'S BENCH DIVISIONDate 24 April 2013
Before
Mr Justice RoyceJudge HurstMiss Beth King
Between
North Oxford Golf ClubClaimantsA2 Dominion Homes LtdRespondents
Roger Mallalieu (instructed by Kennedys) appeared for claimant.Simon J Brown (instructed by Owen White) appeared for defendant.
JUDGMENT (Approved)

Introduction

[1]The claimants seek permission to appeal in part the judgment on costs made by Master Simons the Costs Judge on a detailed assessment on 24 and 25 May 2012.[2]Master Simons granted an extension of time for appealing which expired on 6 July 2012. The Notice of Appeal was not lodged until 5 December 2012 so there is an application also for a retrospective extension of time of six months.

Background

[3]The action concerned a claim by a Golf Club for subsidence damage to its club house and associated buildings caused by roots of poplar trees in the gardens of adjacent properties for which the defendant Housing Trust was responsible.[4]A claim form was issued on 11 July 2008 and proceedings were served in December 2008. The claim was for:a. damages for the cost of remedial work including underpinningb. damages for past and future loss of profitc. damages for inconvenience and loss of amenityd. an injunction requiring removal of the trees.[5]The parties agreed to a mediation in 2010 but it was not successful. There was a written mediation agreement.[6]The parties were given leave to call four experts each at trial. The claim settled after the second day of trial with the defendant agreeing:a. to pay £850,000 damagesb. to take steps to remove the treesc. to pay the claimant's reasonable costs.

The Costs

[7]The claimant's bill of costs totalled £1,232,882.63 including success fee. We are told the detailed assessment took place over the course of eight or nine days. Master Simons found that the costs were disproportionate. He found that the hourly rates claimed were too high. He disallowed some costs of the mediation. Those findings are the subject of this application for permission to appeal.

Proportionality

[8]In a careful and detailed ex tempore judgment of 11 May 2011 Master Simons set out the basis on which he concluded that the costs claimed were disproportionate. He took as the base costs exclusive of VAT and additional liabilities a figure of £846,287. He set out in paras 2 to 5 a summary of the contentions advanced by the defendant and in paras 6 to 9 a summary of the contentions advanced by the claimant. He set out his reasoning for the conclusions he reached in the subsequent paragraphs.[9]Mr Mallalieu makes four principal criticisms: 1. He cited the well known judgment of the Court of Appeal in Lownds v Home Office [2002] 1 WLR 2450 where Lord Woolf CJ at 2458 said "Whether the costs are proportionate should be decided having regard to what it was reasonable for the party in question to believe might be recovered". He says Master Simons was too influenced by the settlement figure of £850,000 rather than concentrating on the substantially higher figure which it was reasonable for the claimant to believe it might recover at the time it made its claim. We do not accept that criticism. It is clear that Master Simons had well in mind the correct legal approach. In particular Master Simons referred correctly to the factors he had to take into account set out in CPR 44.5(3). 2. He says that the Master appeared to accept in para 3 of his judgment that the only real issue was the extent of the damage whereas in fact the defendant relied on a variety of defences which were maintained up to settlement. The consequence was that the claim involved considerable difficulty and complexity which the Master underestimated. We do not accept that criticism. In para 3 the Master was merely setting out the argument of the defendant. In para 10 it is clear (on a correct reading of the transcript which has been mistranscribed) that he accepted the case was one of complexity or difficulty but that was more in the region of the expert evidence on causation and the history of the damage. 3. Mr Mallalieu says that in considering the factor in 44.5(3)(c) namely the importance of the matter to the parties the Master made reference to the fact that the claimant was instructed by insurers and it was not the individual claimant who was paying the costs as the claim proceeded by way of subrogation. Mr Mallalieu says the insurers only contributed £188,324. The Master made the point that in some respects every case is of importance to the parties. So it was here. We do not consider this aspect of the matter resulted in any significantly incorrect approach in the Master's analysis. 4. Mr Mallalieu contends the Master paid insufficient heed to the conduct of the defendant. In essence he says the defendant fought the case tooth and nail; resisted early attempts at mediation; and should have come up with more realistic settlement proposals at an earlier stage. We consider that the Master had in mind conduct but we do not consider the conduct complained of here in contesting the case was such as should have prevented the Master from making a finding of disproportionality.[10]It is apparent from his judgment that he took into account the matters he was required to take into account. He was influenced by, for example, the almost complete lack of planning in respect of the work to be done and the costs (see paras 10 and 11). There were items in the bill which should not have been included (see para 16).[11]We bear in mind that an experienced costs judge is in a very good position to determine proportionality. As Eady J pointed out in Cox v Carter [2006] EWHC 1235:
"Given the nature of this exercise, inevitably to some extent 'rough and ready', it will be unusual for such a preliminary finding to be overturned on appeal: see e.g. Giambrone v JMC Holidays [2003] 1 All ER 982; Ortwein v Rugby Mansions [2004] 1 Costs LR 26 ..."
[12]We do not consider that Master Simons was plainly wrong in finding disproportionality. Indeed we consider he was plainly right. In any event he was fully entitled to reach the conclusion he did and the grounds of appeal in respect of proportionality have no prospect of success.

Hourly Rates

[13]Mr Mallalieu contends that the Master should not have reduced the hourly rates to the extent he did. However he accepts that if we are against him on proportionality his argument faces great difficulty. The Master was entitled here to take as his starting point the rates for solicitors in Oxford. In fact he allowed somewhat higher rates. There is no real prospect of a successful appeal on hourly rates.

Mediation Costs

[14]The mediation agreement provided at para 15:
"The Parties agree to pay the Mediator in accordance with the terms set out in Schedule 3 attached"
Schedule 3.3 provided "The Mediator's fees shall be borne equally by the Parties and shall be paid within 30 days of the date of the fee account".

Schedule 3.3 provided

[15]There was in addition to the mediation agreement a letter of 15 January 2010 from the claimant's solicitors to the defendant's solicitors saying "We suggest that the parties agree to share equally the costs of the main room and any costs attributed to the mediator (refreshments, lunch, printing etc)".[16]The claimant claimed the costs of the mediation as part of the inter partes costs. The defendant argued that the mediation was entirely separate from the action and should not form part of the inter partes costs.[17]The Master concluded that there was a distinction between the participation costs (i.e. the mediator's costs and hire of the room etc) on the one hand and the costs of preparation and presentation on the other hand. He allowed the latter but not the former.[18]In National Westminster Bank plc v Thomas Feeney and Linda Feeney [2006] EWCA 90066 (Costs) the defendants had sought to recover from the claimant in their bill of costs served under the terms of a Tomlin Order the costs of a mediation. Costs Judge Campbell pointed out that in principle mediation costs were recoverable as costs of the action but he disallowed the costs. He concluded that the Tomlin order did not supersede what had previously been agreed under the terms of the mediation agreement. That agreement incorporated the standard model agreement of CEDR which provided:
"21 CEDR Solve's fees (which include the mediator's fees) and the other expenses of the mediation will be borne equally by the parties. Payment of these fees and expenses will be made to CEDR Solve in accordance with its fee schedule and terms and conditions of business. Each party will bear its own costs and expenses of its participation in the mediation ..."
[19]Mr Brown also relies on Lobster Group Ltd v Heidelberg Graphic Equipment Ltd [2008] EWHC 13 (TCC); [2008] 5 Costs LR 724 and Roundstone Nurseries Ltd v Stephenson Holdings Ltd [2009] EWHC 1431 (TCC); [2009] 5 Costs LR 787. In Lobster Group Coulson J decided that in considering an application for security for costs the costs of a pre action mediation had to be excluded. At para 16 he said "First, unlike the costs incurred in a pre action protocol, I do not believe that the costs of a separate pre action mediation can ordinarily be described as "costs of and incidental to the proceedings. On the contrary, it seems clear to me they are not". Mr Brown relies on para 46 of Roundstone where Coulson J said:
"The costs of a separate, stand alone ADR process, particularly if it takes place before the proceedings are commenced, will not usually form part of 'the costs of or incidental to the litigation'. Often it is agreed by the parties that each party will bear their own costs of such a mediation, with the result that the costs cannot be sought by one or other party in the proceedings. In such circumstances, the costs of a pre action mediation will not normally be recoverable."
[20]This is an area where there is room for argument. We do not consider the authorities provide a clear answer. However we consider that the Master was probably entitled to reach the conclusion he did.[21]There is though a further point. On the claimant's figures the amount disallowed comes to only £3,315.90. On the defendant's calculation it comes to only £2,062.50 plus VAT.[22]The time estimated and allowed for these applications was two hours. Mr Mallalieu for the claimant took one and three quarter hours. This is not meant as a criticism but it is a fact. Mr Brown then had to respond. The result was is that by twenty minutes to five the second application in respect of a retrospective extension of time had not even been reached. Although we had not listened to oral argument on the extension of time application we had read the written submissions and it was apparent that Mr Mallalieu was going to have an uphill task in justifying the very substantial delay. It was thus highly unlikely that an extension would be granted. Adjourning to another day would increase the costs very substantially as well as taking up valuable court time. The sum being argued about in respect of mediation costs was in comparison very small.[23]Could this be consistent with the overriding objective? The answer was an emphatic No. We therefore concluded that we should refuse permission on this ground also. The consequence is that permission is refused on all grounds with costs of £21,625.88 to be paid by the claimant to the defendants. We informed the parties of our conclusion and indicated that we would hand down our reasons later.