Grosvenor v High-Point Rendel Group Plc (Costs) [2004] EWHC 3057 (TCC)

Case No HT–03–438[2004] EWHC 3057 (TCC)
IN THE HIGH COURT OF JUSTICE
QUEEN’S BENCH DIVISION
TECHNOLOGY AND CONSTRUCTION COURT
Venue Royal Courts of Justice, Strand, London WC2A 2LLDate 30 September 2004
Before
HIS HONOUR JUDGE PETER COULSON QC
Between
THE HONOURABLE RICHARD GROSVENORClaimant– and –
Between
HIGH-POINT RENDEL GROUP PLCDefendant
Mr James Aldreidge (instructed by Fenwick Elliott) for claimantMr Akash Nawbatt (instructed by Mace and Jones) for defendantHearing Hearing date: 29 July 2004
COSTSJudgmentINTRODUCTION:
[1]On 29 July 2004, I handed down judgment in this case. Pursuant to that judgment, the claimant recovered a total of £1,644.38p including VAT and interest, which was about 2 per cent of the gross sum that he had claimed. The parties are now in dispute about costs. This dispute was rehearsed briefly in court on 29 July 2004, and since then I have been provided with full written submissions by both sides. The claimant seeks the whole of his costs from the defendant because he claims to be the successful party; he relies principally on the absence of a CPR Part 36 offer and/or a Part 36 payment. The defendant, on the other hand, contends that the claimant should pay the vast bulk of their costs because of their substantial success on the issues, and because of the claimant’s rejection of their written offer dated 14 January 2004. THE RELEVANT PRINCIPLES[2]It seems to me that, to exercise my discretion pursuant to CPR Part 44.3, there are three matters which I must consider when reaching my decision on costs. They are the identity of the successful party in this litigation (including a consideration of success on the individual issues); the effect of the various offers made by the parties; and the conduct of the parties. I therefore deal with each of those matters in turn. WHO IS THE SUCCESSFUL PARTY?[3]There can be no doubt in my judgment that it was the defendant who was the successful party in this litigation. The defendant defeated all the claimant’s claims based on an entitlement to commission before 1 August 2000, as well as all the claimant’s claims based on an entitlement to commission after August 2001. The defendant also defeated the claim for post-termination commission and the claim for a declaration. As regards the five individual claims for commission itself, the defendant was successful in defeating the two principal claims for commission, in respect of Pfizer and BTP, as well as the smaller claim relating to the NAO.[4]Of the two small claims on which the claimant was successful, I note that the claim in respect of Burges Salmon was admitted by the defendant during the trial, whilst the disputed claim in respect of SJ Berwin was worth just £165.95p. In all the circumstances, therefore, it is contrary to common sense for the claimant, who recovered no more than 2 per cent of the total sum claimed, to try to describe himself as the successful party.[5]For these reasons, therefore, it seems to me that, on an application of the issue-by-issue approach discussed in Summit Property Ltd v Pitmans [2001] EWCA Civ 2020, and cited in the Civil Procedure commentary at CPR 44.3.1, the defendant would be entitled to the costs of Issues 1, 2, 3, 5 and 6, as set out in my judgment of 29 July 2004, and the bulk of the costs of Issue 4.[6]The claimant contends that an issue-based costs order should only be made in exceptional cases and reliance is placed on the decision in Summit. I consider that argument to be a misreading of paragraph 17 of the judgment of Longmore LJ in that case. The exceptional situation discussed in that paragraph is a situation where a court chooses to deprive a successful party of his costs of a particular issue and also makes him pay the otherwise unsuccessful party’s costs on that issue. That is not the case here. Furthermore, Summit is authority for the proposition that issue-based costs orders can be appropriate, depending on the facts of the case in question. Indeed, following the introduction of the new Civil Procedure Rules, there have been a number of decisions in which the courts have stressed the importance of issue-based costs orders. In particular, in Phonographic Performance Ltd v AIE Reduffusion Music Ltd [1999] 1 WLR 1507, the then Master of the Rolls, Lord Woolf said, at page 1522H:
“The most significant change of emphasis of the new rules is to require courts to be more ready to make separate orders which reflect the outcome of different issues. In doing this the new rules are reflecting a change of practice, which has already started. It is now clear that a too-robust application of the ‘follow the event principle’ encourages litigants to increase the costs of litigation, since it discourages litigants from being selective as to the points they take. If you recover all your costs as long as you win, you are encouraged to leave no stone unturned in your effort to do so.”
[7]Since the issues in this case were clear and well defined, and because they involved little or no overlap, I consider that this is a case where an issue-based costs approach is appropriate. It follows that such an approach would lead to orders very much in the defendant’s favour. Success on the Issues, however, is only one of the factors to be considered under CPR Part 44.3 and it is now necessary to consider the other two. THE OFFERS[8]The claimant made two without prejudice offers to the defendant. On 20 November 2003, the claimant said that he would accept the sum of £47,500, inclusive of VAT and costs, in order to settle his claim. Seven months later, on 10 June 2004, (three weeks before trial), the claimant said that he would accept £50,525, plus payment of his costs, in order to settle his claim. In the event, of course, the claimant failed to recover anything like the sums identified in his offer letters. It seems to me that, when exercising my discretion on the question of costs, I should have regard to the fact that, at both the beginning and end of this litigation, the claimant’s expectations were unreasonably excessive. To put the point another way, it seems to me that the gulf between the amount which the claimant was prepared to accept in settlement and the amount which the claimant actually recovered after the trial is another fair measure of the claimant’s comprehensive lack of success in these proceedings.[9]As previously noted, the claimant’s first offer of 20 November 2003 was inclusive of VAT and costs. On 23 December 2003, pursuant to a request by the defendant’s solicitor, the claimant’s solicitors informed them that the claimant’s reasonable costs so far were £15,000. On 14 January 2004, the date of the service of the defence, the defendant responded to the offer made by the claimant. The defendant offered to pay the claimant £25,000, a sum expressly said to include the claimant’s costs and VAT. The claimant originally maintained that no copy of this letter was ever received but pursuant to some further submissions dated 6 August 2004, that point has now been expressly withdrawn. Accordingly, it appears that the defendant made an offer of £25,000 inclusive of costs to which the claimant never responded in any way at all.[10]Both parties are agreed that, pursuant to CPR Part 44.3(4)(c), I must take into account, when deciding the question of costs, any “admissible offer to settle”. It does not appear from the claimant’s submissions that it is suggested that the offer of 14 January 2004 is in any way ‘inadmissible’; for the avoidance of doubt, I consider that the offer made on 14 January 2004 was admissible in accordance with the principles set out in Archital Luxfer Ltd v Henry Boot Construction Ltd [1981] 1 Lloyd’s Rep 642, Padmanor Investments Ltd v Soundcraft Electronics Ltd [1995] 4 All ER 683 and Lindner v How [2001] BLR 90.[11]The criticism of the offer of 14 January 2004 in the claimant’s written submissions appears to be that it offered a lump sum rather than £x plus costs. However, not only do I consider that this point is irrelevant on the question of admissibility, but I also consider that it is an unjust criticism. First, the offer of 14 January 2004 was in response to the claimant’s own offer of 20 November 2003 which itself was expressed in terms that were inclusive of costs. Secondly, the defendant had been told that the claimant was likely to recover £15,000 by way of costs and it was entirely reasonable, in those circumstances, for the defendant to make an offer, which expressly included that amount.[12]The defendant accepts that the letter of 14 January 2004 was not a Part 36 payment or offer. Moreover, the defendant accepts, as they are bound to do, that Amber v Stacey [2001] 1 WLR 1225 is authority for the proposition that it is an error of principle to give an offer not made in accordance with Part 36 the same effect as a Part 36 payment. Neither point, however, detracts from the defendant’s reliance on that admissible offer in accordance with CPR 44.3; indeed the defendant goes on to make the point that, even in Amber v Stacey, the claimant’s unreasonable conduct, including its failure to accept the non-Part 36 offer, meant that the claimant was deprived of all of its costs from the date of the offer and also had to pay 50 per cent of the defendant’s costs incurred from the date of the offer.[13]It goes without saying that, in the present case, if the claimant had accepted the offer of 14 January 2004, the claimant would be considerably better off than he is now. Even if the maximum amount of the offer in respect of the claimant’s claims was £10,000, with the remaining £15,000 being referable to his costs, the claimant would still have recovered significantly more by accepting the offer than he actually recovered at the trial, Accordingly it seems to me that, by taking into account this admissible offer and the claimant’s wholesale rejection of it, there is a further significant point in the defendant’s favour on costs. CONDUCT[14]Pursuant to CPR 44.3(5), I must also take into account the parties’ conduct. As regards the defendant, the claimant only raised one matter by way of conduct, content of the letter of 6 June 2003. It seems to me that that letter is irrelevant on the question of costs, since it was written some time before the commencement of the litigation. More importantly, I dealt with that letter at paragraph 42 of my judgment, in which I accepted Mr Trendell’s explanation of the letter and how it was firmly based on the claimant’s own reports of his agreement with Mr Darling. For the avoidance of doubt, I do not believe that there is anything in the defendant’s conduct, either before or during the litigation, which is relevant on the question of costs.[15]Regrettably, the same cannot be said of the claimant’s conduct. There can be no doubt that the claimant’s claim was grossly exaggerated, and was pursued (as I pointed out in my judgment) with a firm eye on what was expedient in 2004, rather than what actually happened in 1999, 2000 and 2001. By way of example only, I note that the two principal claims, in respect of Pfizer and BTP, were based on the alleged existence of an oral agreement, which had not even been asserted by the claimant until the production of the statement of claim. I am therefore driven to conclude that the claimant unreasonably pursued the bulk of his claims up to and during the trial.[16]There is one further matter which I also consider evidences unreasonable conduct on the part of the claimant. At the hearing on 29 July 2004, the defendant sought to rely on their offer of 14 January 2004. The claimant was not in a position to deal with that offer at that hearing because it was said that there was no copy of the letter on file. In the claimant’s written submissions dated 3 August 2004, it was said that the letter of 14 January 2004 “was not received by the claimant’s solicitors. Please see the witness statements of Dr Julian Crichlow and of Mr Stefan Cucos. The lack of response by the claimant’s solicitors to the letter is explained by the fact that the letter was never received”. The witness statements to which reference is made in these submissions have not been provided, either to the defendant or to the court. On 6 August 2004 the allegation that the letter was not received by the claimant’s solicitors was withdrawn because, so it was said, an attendance note had been found which showed that the offer “was transmitted to the claimant”. A witness statement of Stefan Cucos was provided which set out the claimant’s original position that no offer had been received and then, at paragraph 4, stated baldly:
“Since writing that letter, a handwritten attendance note has been shown to me indicating that an offer was made at about the time alleged by the defendant’s solicitors.”
No copy of this attendance note has been provided; more importantly, since, on the claimant’s own case, the lack of response to the offer could not now be explained by the fact that the letter had not been received, no alternative explanation has been provided by Mr Cucos or the claimant as to why the letter was ignored. I am therefore bound to say that I regard the claimant’s conduct in respect of the offer, and in particular the wholly erroneous statement that the offer had never been received, as wholly unreasonable. In addition, when properly analysed, such conduct reveals the absence of any explanation whatsoever for the decision to ignore the defendant’s admissible and reasonable offer. CONCLUSIONS[17]Taking into account all of the facts and matters set out above, I have concluded that the following is the appropriate order on costs: Prior to 14 January 2004(a) the claimant to recover 25 per cent of his costs from the defendant to reflect those costs incurred in relation to the ultimately successful claims in respect of Burges Salmon and SJ Berwin and the bringing of the claim generally;(b) the defendant to recover 75 per cent of its costs from the claimant to reflect their ultimate success on the vast bulk of the issues; After 14 January 2004 (a) the claimant to bear his own costs to reflect the fact that he was the unsuccessful party and would have been much better off if he had accepted the admissible offer of 14 January 2004; (b) the defendant to recover 75 per cent of its costs from the claimant, to reflect the reasonableness of the sum offered on 14 January 2004 and its success on issues, 1, 2, 3, 5 and 6 and the bulk of issue 4. The discount of 25 per centreflects the absence of a Part 36 payment or offer and the defendant’s failure to admit timeously the small sums due in respect of the work done for Burges Salmon and SJ Berwin.[18]I should emphasise that the order for costs in respect of the period after 14 January 2004 is intended to cover all of the costs of the trial, including the paper application in respect of further evidence and the hearing on 30 July 2004. It is not appropriate to order that any part of these costs orders should be assessed on an indemnity basis; all costs will be assessed on the standard basis. I will consider any application for interim payment of costs when this Judgment on Costs is handed down.