England and Wales Court of Appeal (Civil Division) Decisions

IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE WILLESDEN COUNTY COURT
HH JUDGE COPLEY
Case No 8WD02675

		Royal Courts of Justice Strand, London, WC2A 2LL
		11/04/2011

Lord Justice Thomas:

1. This is the judgment of the court.
2. On 24 February 2011 we handed down our judgment in this appeal. At that stage the submissions from the parties on costs were not available. Submissions have now been made and in the light of those submissions and the history of this matter, we considered it desirable to give a short further judgment.
3. After the judge had reached his final decision on 12 April 2010, embodying his decision, Mr and Mrs Seeff instructed solicitors, DMH Stallard LLP. On 14 May 2010 they made what they described as an offer to settle under CPR Part 36. That offer was sent in the context of an application by Mr and Mrs Seeff for permission to appeal. In their offer, they offered to take £200, each side should bear their own costs of the proceedings and £15,000 paid on account of costs should be repaid within 14 days.
4. On 7 July 2010 a counter-offer under Part 36 was made on behalf of Mr and Mrs Ho by their solicitor. In essence the offer was that Mr and Mrs Seeff agree to an application for an injunction be dismissed, that they should pay a further £10,000 towards Mr and Mrs Ho's costs and that the application for permission to appeal be dismissed.
5. On 2 August 2010, Stanley Burnton LJ granted permission to appeal, both on the substantive issues and on costs, but in his grant of permission said that the parties attempt mediation.
6. On 22 August 2010 Mr and Mrs Seeff's solicitors wrote to Mr and Mrs Ho's solicitors suggesting mediation and putting forward the name of a mediator.
7. On 21 September 2010 the offer of mediation was rejected on the grounds that as Mr and Mrs Ho had had legal representation throughout the proceedings they only had limited funds and were unable to afford mediation which was considered to be very expensive. They repeated the Part 36 counter-offer made on 14 July. They offered negotiation. Nothing material thereafter happened.
8. After we had made available our draft judgment, Mr and Mrs Seeff put forward a draft order reflecting the terms of the judgment, including the repayment of the £15,000 paid on account of costs by Mr and Mrs Seeff to Mr and Mrs Ho as a result of the judge's order, together with interest thereon. The draft order then proposed:

"[Mr and Mrs Ho] do pay to [Mr and Mrs Seeff] the costs of this appeal, such costs to be the subject of detailed assessment on the standard basis until 8 June 2010 and on the indemnity basis thereafter."

9. The draft order also provided that Mr and Mrs Ho pay interest on the costs at a rate of 10% and asked for an interim payment on account of the costs of £14,000 by no later than 24 March 2010.
10. Mr and Mrs Ho's solicitors responded to that proposal by letter of 22 February 2011 stating that as the judgment of the Court of Appeal was more advantageous than those of the Part 36 offer, they accepted the costs consequences of Part 36.14 applied. The letter went on to say that Mr and Mrs Ho's only asset was their home and they had insufficient savings from which they could pay Mr and Mrs Seeff's costs of the appeal, having already invested most of their savings in fighting the case over the last three years. The letter pointed out that they had not yet paid any of their own solicitor's costs for representing them in the appeal. The letter went on to say that they would need to borrow money on the security of their house. They therefore asked for a moratorium of four months for the repayment of the £15,000 as that money had been immediately applied toward the payment of fees and disbursements incurred by Mr and Mrs Ho. They then made proposals for the payment on costs on a staged basis.
11. In submissions sent two days later, counsel for Mr and Mrs Ho put forward a different argument. It was contended that the offer made on 14 May 2010 was not a Part 36 offer as it required Mr and Mrs Ho to repay the amount that had been paid on account of costs within a 14 day time limit.
12. In our view the offer was compliant with Part 36; in any event the letter of 14 May 2010 made it clear that if the offer was in any way defective or non-compliant with Part 36, Mr and Mrs Ho's solicitors were asked to let them know as soon as possible. It seems to us clear that, not only did the solicitors treat the offer as a Part 36 offer in the light of the hearing of the appeal, but they also accepted it as a Part 36 offer in their letter of 21 September 2010.
13. Although this is a dispute involving very small sums of money where the amount of costs exceeded what was in issue, it is important that parties to litigation appreciate the need to try and settle disputes of this kind. To emphasise the desirability of settlement, Part 36 contains sanctions for those who do not do so. There is, in our judgement, no reason for those sanctions not to apply in a case such as this, harsh though its consequences may be for Mr and Mrs Ho. We see, therefore, no reason why the costs to which Mr and Mrs Seeff are entitled should not be subject to payment on an indemnity basis together with interest.
14. Mr and Mrs Seeff seek the costs of the hearing of 12 April 2010 before the judge. In the judgment given on 24 February 2011, it was stated that the correct order for costs below was that each party should bear their own costs. This included the costs of the hearing on 12 April 2010.
15. However, although Mr and Mrs Seeff were the successful party in the Court of Appeal, a number of points were taken on which they did not succeed. In the circumstances, therefore, we consider that they should only be entitled to recover 75% of their costs, such costs to be paid on an indemnity basis and subject to interest. As to the rate of interest, we consider that the appropriate rate of interest is 6%.
16. As this was an appeal that was heard within an afternoon, this is a case where costs should be summarily assessed. The claimants' certificate sets out a sum of £32,740. In our view an adjustment downwards has to be made for the length of the hearing. If the 100% figure of recovery was appropriate, the costs would have been summarily assessed at £32,000. As Mr and Mrs Ho are liable for 75% of them, then Mr and Mrs Ho must therefore pay the sum of £24,000 as well as repaying the sum of £15,000 paid on account of costs ordered by the judge.
17. After we had sent the draft judgment to the parties submissions were made on behalf of Mr and Mrs Seeff that the amount awarded on summary assessment should be increased as the statement of costs had not included the costs incurred in dealing with costs. They claimed a further £3,507. This amount is disproportionate to what was involved in this case; no more than £750 should have been incurred. We consider, however, that this further amount should be added to the sum to be paid by Mr and Mrs Ho thus increasing the amount due from £24,000 to £24,750.
18. In the circumstances Mr and Mrs Ho should be given until 23 May 2011 to pay the sum of £24,750; it will bear interest at the rate of 6%. The sum of £15,000 (with interest from 25 April 2010 at the rate of 2.5%) is to be paid by 28 April 2011.