England and Wales Court of Appeal (Civil Division) Decisions

IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Edward Murray (sitting as a Deputy Judge of the Chancery Division)
HC13E04392

		Royal Courts of Justice Strand, London, WC2A 2LL
		06/04/2017

Approved Judgment on Form of Order

Lord Justice Kitchin:

1. This is the judgment of the court concerning the form of order to be made following our judgment upon this appeal. Unfortunately there is very little common ground between the parties. The matters in dispute fall into five broad categories:

i) general orders;

ii) costs of the appeal, the application before the deputy judge and the action as a whole;

iii) directions for the further conduct of the action;

iv) statements of case; and

v) a case management conference.

2. We shall address each of these matters in turn and shall do so by reference to the draft orders which the parties have supplied to us.

General orders

3. The appeal has succeeded in relation to the Cliveden Claim but has failed in relation to the Pont Street and Oriel Claims. In addition, the application by the claimants for permission to adduce further evidence upon the appeal ("the further evidence application") has failed. Accordingly, the order made by the deputy judge must be varied, the claim form and the claimants' statements of case relating to the Pont Street Claim and the Oriel Claim must be struck out and the further evidence application must be refused. We believe it is appropriate to do so in the terms proposed by the defendant save that the order should record expressly that the appeal in relation to the Cliveden Claim has been allowed and that the further evidence application has been refused.

Costs

4. The deputy judge ordered that the claimants should pay to the defendant his costs of the entire proceedings on the standard basis and that they should pay to the defendant £413,000 on account of those costs.
5. The claimants now seek an order that the order of the deputy judge be set aside and that all of the costs of the proceedings to date be reserved, presumably until after the trial of the Cliveden Claim or further order in the meantime. They contend that this would be a fair order. They say they have succeeded upon their appeal and more generally in relation to the application to strike out the whole claim ("the strike out application") because the Cliveden Claim has been reinstated, and that it is relation to this claim that most costs have been incurred. Moreover, so they continue, any possible attempt at compromise has been defeated by the defendant's intransigent determination to defend the order of the deputy judge. However, they also say, it is simply not possible at this stage to say which party will be the overall winner at the end of the day and so the determination of where the costs burden should fall should be deferred.
6. The defendant, on the other hand, asks for his costs of the appeal (including the costs relating to the dispute over the form of order), the further evidence application and the strike out application. He also seeks an order for the payment of his costs of a summary judgment application issued by the claimants in relation to the Cliveden Claim and, indeed, the whole action to date (including the costs of any interim applications where the decision on costs was reserved to the judge). He argues that he should be awarded £550,000 on account of those costs.
7. The defendant has made a series of submissions in support of his position which may be summarised as follows. He was the real winner because he successfully resisted the attempt by the claimants to appeal against the deputy judge's order striking out the Pont Street Claim and the Oriel Claim, and that these together constituted at least 94% of the whole claim by value and were, as a result, the most problematic claims for the estate of the late Elliot Nichol ("the estate"). Further, these claims have prevented the distribution of any part of the estate, led to the appointment of a judicial factor and prevented the executors from implementing Mr Nichol's business plans. What is more, the claimants' inexcusable failure to follow the Aldi Stores guidelines and to observe the overriding objective lay behind both the strike-out application and the appeal and that this should be reflected in the costs order of this court. Yet further, the claimants conducted themselves before the action began in a wholly unreasonable way in that they intimated vastly inflated claims in the pre-action correspondence; have pursued the Pont Street and Oriel Claims in a wholly unreasonable manner; have unreasonably sought a 'trial run' of the Cliveden Claim; and have behaved in an entirely unreasonable way throughout the proceedings in numerous other respects. Drawing the threads together, the defendant submits that the claimants' conduct as a whole justifies an award of the whole of his costs of the proceedings to date; that the claimants should bear his costs of their summary judgment application in relation to the Cliveden claim; and that the vast majority of the costs to date have been incurred in relation to the Pont Street and Oriel Claims, the costs of the strike out application before the deputy judge, the appeal and the claimants' summary judgment application.

The appeal and further evidence application

8. In assessing these submissions we think that a convenient place to start is the appeal and the further evidence application. We see no reason to reserve the costs of the appeal. As we have explained, the substantive issues before us have been decided and so we consider that we should address the appropriate costs order to make in relation to them. In our view neither side can be termed the overall winner for each has won a significant part of the appeal. The claimants have succeeded in restoring the Cliveden Claim but the defendant has successfully resisted the appeal in relation to the Pont Street and Oriel Claims, and he has also defeated the further evidence application. We have also taken full account of the various matters upon which the defendant relies and which we have summarised at [7] above and have had particular regard to the relative values of the different claims and the claimants' overall conduct. It must be remembered, however, that permission to appeal was granted in relation to all of the deputy judge's findings by Sir Timothy Lloyd upon the papers and in our view there was nothing inappropriate in the way the claimants dealt with the appeal either before or at the hearing. It was a perfectly proper appeal to bring and so too, in our judgment, was the further evidence application. In all of these circumstances we think that each side should have its costs of those parts of the appeal upon which it prevailed, that is to say that the claimants are entitled to their costs of the appeal so far as it related to the Cliveden Claim and the defendant is entitled to his costs of the appeal so far as it related to the Pont Street and Oriel Claims and the further evidence application. We have also considered whether it is possible to make one single order that one side should pay to the other a proportion of its costs. However, the difficulty we face is that we have no estimate from the claimants of the recoverable costs they have incurred overall and no real guidance from either side as to the proportion of its costs which is properly attributable to each of the various claims. Accordingly we have decided that the appropriate order to make is that the claimants should have their costs of the appeal so far as it relates to the Cliveden Claim and that the defendant should have his costs of the appeal so far as it relates to the Pont Street and Oriel Claims, and that the defendant should also have his costs of the further evidence application. We realise that this will mean that the costs of both sides will have to be assessed and that the recoverable and assessed costs of each side will have to be set off, one against the other, but we see no real alternative in light of the limited information before us.

The hearing before the deputy judge

9. Turning now to the hearing before the deputy judge, the order for costs that he made was the inevitable consequence of the conclusions to which he had come upon the strike out application. However, in light of our findings upon the appeal, we must consider whether, and if so in what way, it should be varied. In our judgment we should deal with these costs now rather than reserving them and we believe the starting point is the same as that for the appeal. Neither side can be termed the overall winner for each has now prevailed upon a significant part of the application. The defendant's attempt to strike out the Cliveden Claim has failed but he has succeeded in striking out the Pont Street and Oriel Claims which were plainly of very great concern. We have also given careful regard once again to all of the defendant's submissions concerning the claimants' conduct. But here it is, in our view, important to have in mind that many aspects of the claimants' conduct have already been taken into account in assessing whether the pursuit of each of the claims constituted an abuse of process. As we explained in our main judgment, we have in that context assessed the impact of the overlap between these proceedings and those involving Ms Al Amoudi, the breach of the Aldi Stores guidelines and the way the claimants have chosen to conduct these proceedings. However, after careful consideration, we decided that the pursuit of the Cliveden Claim did not constitute an abuse of process. In all these circumstances and despite the powerful submissions the defendant advances, we are not persuaded that the conduct of the claimants has been such that they should be denied appropriate recognition of their success in relation to the Cliveden Claim. We think justice demands that each side should have its costs of those parts of the application upon which it prevailed. Again, we do not have sufficient information to allow us to make one single order that one side should pay to the other a proportion of its costs and so we shall make an order that the claimants shall have their costs of the application so far as it related to the Cliveden Claim and that the defendant shall have his costs of the application so far as it related to the Pont Street and Oriel Claims.

The summary judgment application

10. The defendant invites us to stay the claimants' summary judgment application made by notice dated 19 February 2014 in relation to part of the Cliveden Claim and to award to him his costs of and occasioned by it on the basis that the claimants have intimated that they do not intend to proceed with it. The claimants, on the other hand, invite us to adjourn the application with liberty to restore it but make no specific submission about the costs the parties have incurred. It is far from clear to us what the claimants intend to do with this application and this is plainly a wholly unsatisfactory state of affairs. However, since we heard no argument about this application at the hearing of the substantive appeal and we are equipped with so little information in relation to it we have come to the conclusion that it is not appropriate to make any order save that the parties are to apply for directions in relation to it at the case management conference (the "CMC") to which we refer below and, if and in so far as necessary, we will direct that it be remitted to the High Court for that purpose.

The other costs of the action

11. That brings us to the other costs of the action. The Pont Street and Oriel Claims have been struck out and so the defendant is entitled to all of his costs in relation to them. We reject the claimants' suggestion that those costs should be reserved. We are not, however, persuaded by the defendant's submissions that the claimants should also bear all of his costs of the Cliveden Claim to date, further to those we have already addressed. We recognise that there was a breach of the Aldi Stores guidelines in relation to this claim, that the Al Amoudi proceedings provided a 'trial run' and that the costs with which we are here concerned are probably a small fraction of the whole. However, as we pointed out in our main judgment, the existence of the Cliveden joint venture agreement was never in issue in the Al Amoudi proceedings and it was never asserted that Ms Al Amoudi had any liability arising from it. Its relevance was really by way of contrast to the alleged oral agreements which were in issue. Further, we are not much impressed by the argument that the defendant should have these costs because they are relatively small. In our judgment it is not appropriate to make any order in relation to these residual costs at this stage. They remain costs in the action until further order.

Assessment and payment on account

12. We are concerned that the parties should not at this stage be diverted by a costly and complicated assessment of costs. We recognise, however, that circumstances may change and therefore direct that no assessment is to take place without an order from a judge or Master of the High Court. In so ruling we do not intend to preclude the making of an order for the payment by one side or the other of an appropriate sum on account of costs, however. For the reasons we have given, we are not in a position at this stage to make such an order. Nevertheless, we recognise that, once equipped with the necessary evidence, a court might consider that it would be just for such an order to be made. We therefore give the parties liberty to apply to a judge or Master of the High Court for that purpose.

Directions for the further conduct of the action

13. The parties appear to be agreed and we shall in any event direct that the Cliveden Claim be allocated to the multi-track. We shall also direct that the parties are not required to prepare, file or serve costs budgets. As for the summary judgment application, the parties must apply for any further directions they seek (including any order as to costs) at the CMC to which we refer below.

Statements of case

14. The defendant invites us to make a series of orders about the parties' respective statements of case. In summary, he invites us to order (a) that the claimants should serve amended particulars of claim deleting matters which relate only to the Pont Street and Oriel Claims, and leaving only matters relating to the Cliveden Claim; (b) that the defendant should thereafter serve an amended defence; and (c) that the claimants should thereafter serve an amended reply. He urges us to make clear that this order does not permit any wider amendments and he also seeks his costs of the amendments.
15. The claimants, on the other hand, invite us to direct that all matters relating to the parties' respective statements of case should be addressed at the CMC and not before. They also say that "significant disclosure" is required before any amendment to the statements of case can be made, that they may wish to plead a wider case of fraud and that they may seek directions in relation to related proceedings issued under claim number HC14D03316.
16. We are entirely satisfied that it is appropriate to make the orders that the defendant seeks, adjusted only to reflect the date of hand down of this further judgment. These orders will ensure that the statements of case reflect the outcome of this appeal. In so far as the claimants wish to make wider amendments to their statements of case or to seek disclosure relating to any such wider case, they must make appropriate applications at the CMC. We are also satisfied that the claimants must pay the costs of and occasioned by the amendments we are directing. They are necessary because the Pont Street and Oriel Claims were an abuse of process.

Case management conference (CMC)

17. The matter is to be restored before a Master for a CMC with a provisional time estimate of ½ day on the first available date convenient to the parties and their legal representatives (if applicable). The parties may seek any further directions they seek as to the further conduct of these proceedings at that hearing. Subject to the foregoing, we shall make the orders sought by the defendant at 15 and 16 of his draft order, again adjusted only to reflect the date of hand down of this further judgment.

General

18. The parties are asked as soon as possible to prepare and agree a draft order reflecting this judgment and to provide it to the court for its approval.