England and Wales High Court (Chancery Division) Decisions

IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Royal Courts of Justice Strand.
London. WC2A 2LL
Date: Monday. 25th February 2008

		25th February 2008

MR. JUSTICE MORGAN:

1. This is a matter in which I gave judgment last week. At the end of the hearing last week various points were raised by Mr. Brandreth, of counsel, on behalf of the defendants. It became necessary, therefore, to have a further hearing at which those points could be investigated with proper time being available.
2. One of the points has now been investigated. Mr. Brandreth has researched the matter in detail. He has explained the fruits of his researches in a skeleton argument which was both informative and helpful. In particular, the situation has emerged that one of the matters he wanted to raise last week need not be attended to today; it simply does not require any intervention from the court at this stage.
3. That leaves various issues principally relating to the costs of the action, which I have now struck out in its entirety. I have no hesitation whatever in giving the defendants their costs on the standard basis to be the subject of a detailed assessment by a Costs Judge. But Mr. Brandreth submits that I should go further and I should award costs on the indemnity basis and that I should do a summary assessment of them myself.
4. The question of whether costs should be on the standard basis or the indemnity basis is a question which frequently arises. There are, as it happens, many authorities on the question although one of the points made in some of those authorities is that it is a fact-sensitive matter where the judge should react to the particular circumstances of the case and not go through an increasing number of authorities where other judges in other cases have expressed their conclusions for the reasons they have given.
5. As against that, one should not react on an impressionistic basis to an application of this kind; one should act in accordance with principle. For that purpose I have found the decision of Sir Anthony Colman in National Westminster Bank plc v Rabobank Nederland (Number 2) [2008] 1 All ER (Comm) 243 to be of great assistance to me. Sir Anthony Colman collected a large number of earlier cases and, in particular, he collected what Tomlinson J had himself collected in a judgment given in Three Rivers District Council v. Bank of England [2006] EWHC 816 (Comm).
6. There are factors for and against the different orders for costs I might make in this case. Mr. Brandreth has stressed - and is entitled to stress - that Mr. Wilson's case was without merit. I have already held that it was totally without merit, as that phrase is used in Rule 3.4. It is also right that the defendants did what they could to avoid the matter having to come to court and they made offers to settle which have significantly exceeded what Mr. Wilson is now taking away from this litigation, which is defeat and an adverse order for costs against him.
7. On the other hand, there are many features of cases where indemnity costs have been ordered which are not present in this case. The case is a much more modest case than the type of cases which have caused difficulty in the past. This is not a case that has taken weeks to try. It is not a case involving allegations of bad faith, dishonesty or deceit which were put forward without proper justification and where the court, rightly, takes the most severe view of a litigant acting in that way. This is a technical case. It is a case about a trade mark. The application has been made to strike out the claim. The application has succeeded. The material before the court is not voluminous. The hearing itself took two hours.
8. My reaction to those facts in particular is that I should not depart from the normal order of standard basis costs to ordering that this be costs on an indemnity basis. One of the significant differences between the two bases of assessment is the question of proportionality. With standard basis costs the court will only allow costs which are proportionate to the matters in issue. Mr. Brandreth has described the significance to the defendants of these claims being made against them. Even without merit, as they were, he says they were still immensely troublesome to deal with. However on the standard basis, whoever assesses the costs, will be well able to take into account those points when considering the proportionate response.
9. But in short, I am not persuaded that I should remove from Mr. Wilson the protection of proportionality which the rules would give to him when costs are assessed on the standard basis. Mr. Brandreth also refers to an interlocutory hearing and Mr. Wilson's stance in relation to that. I will assume against Mr. Wilson that he behaved inappropriately and perhaps unreasonably at that time but the degree of fault is, in the overall context, not so grave as to justify an award of indemnity costs.
10. So I will, for those reasons, say that the costs should be on the standard basis.
11. So far as a detailed assessment versus a summary assessment is concerned, the defendants' schedule of costs produces a total figure of some £92,000. I am not going to say that is unjustified, but I feel immensely uncomfortable in saying that it, or a large part of it, is justified and in saying that, on a summary assessment, where Mr. Wilson is in person and can make some points but will not perhaps be able to make all the points that would immediately occur to an experienced Costs Judge.
12. My reaction to the bill is that Mr. Wilson should have the benefit of this being considered by a Costs Judge assessing it on the standard basis and applying the important safeguard of proportionality which I am preserving in favour of Mr. Wilson.
13. That means, however, that I should - in accordance with the ordinary practice - give to the defendants something on account of their costs. Mr. Brandreth says it should be 50% of the figure in the schedule, something of the order of £45,000/£46,000. Fifty percent is often appropriate. I also recognise that costs often strike the court as being on the high side but yet 50% is not departed from.
14. My own reaction to what I know about this case, what has happened here, the amount of legal work involved and the amount of the bill, is that the appropriate figure on account of costs is £15,000. I have not given Mr. Brandreth an opportunity to address me on the time for payment, but I will give Mr. Wilson 28 days to pay that £15,000 unless Mr. Brandreth wants to deflect me from that course.
15. The other matter that has been raised, just to record it, is that under Rule 36.14, in view of the Part 36 offers that have been made by the defendants, the court is able -indeed the court ordinarily should - direct the defendants should have interest on their costs. I am going to say there is no reason why that should not apply here. Interest should be at the rate of base rate plus 1% and it should be from the time when the defendants paid sums by way of costs to their solicitors, Bird & Bird or, conceivably, if such facts should arise, from an earlier date being a date when the clients became liable to pay interest on costs to Bird & Bird.
16. The only other matter I would comment on is the draft minute of order: paragraph 1 of it at the moment says:

"The claimant's claim be struck out as being totally without merit."

I would wish to see that divided into two statements. The first is that:

"The claimant's claim be struck out as disclosing no reasonable cause of action" and, secondly,

"It is recorded, for the purposes of CPR 3.4, that the claimant's claim was totally without merit."

17. Paragraph 2 of the draft order stands. Paragraph 3 deals with costs which I have dealt with. Paragraph 4 deals with the interim payment. Paragraph 5 deals with costs which, again, I have dealt with. I have not mentioned the date, 8^th October 2007, which is the correct date to take.
18. I think it also should be noted in the minute of order that Mr. Wilson was invited to indicate his position on permission to appeal and he stated he did not seek permission to appeal. I think that since that has happened (in case a point develops in the future) it ought to be recorded.

Mr. Brandreth, are there any other matters which arise?

MR. BRANDRETH: I believe your Lordship invited me to talk about ----

MR. JUSTICE MORGAN: The 28 days?

MR. BRANDRETH: Was it only about the 28 days or was it about the sum, the interim amount, also? I would certainly wish to.

MR. JUSTICE MORGAN: You can address me on both. I am not going to shut you out but, of course, there is an inevitable improbability that I am not going to change the figure.

MR. BRANRETH: Then, my Lord, I will be very brief. We take no issue on the 28 days. As to the £15,000, the authorities indicate it should be the minimum that the defendants can be expected to recover on assessment.

MR. JUSTICE MORGAN: Yes.

MR. BRANDRETH: £15,000 represents one-sixth of the total costs bill. My Lord, in my submission, it stretches the bounds of credulity to suggest that a Costs Judge will view five-sixths of the costs expended on this case as either unreasonable or disproportionate. At the very least, my Lord, we would submit that £30,000 or one-third is a bare minimum that could be expected to be recovered on assessment. Even then, in my submission, it seems very unlikely that a Costs Judge will view two-thirds of the costs as being either unreasonable or disproportionately incurred.

MR. JUSTICE MORGAN: Yes.

MR. BRANDRETH: For that reason, my Lord, I would urge you to consider making an order in the terms of £30,000.

MR. JUSTICE MORGAN: I will adhere to the £15,000. There is no difficulty at all about the reasons you have given; they may well turn out to be right. But my own assessment is that the bill is a very long way north of the kind of figure that I would have expected. I do not want to place what will be quite a burden on Mr. Wilson of meeting a sum of money which just conceivably - however remote it might be - he is not obliged to pay.

I have been given a transcript of the judgment last week. I have not had an opportunity to review it. I will do that without delay. It will go back to the Shorthandwriters and they will no doubt make it available.

Otherwise, do I need the pleadings etc.?

MR. BRANDRETH: I believe your Lordship has cited from the defence very briefly.

MR. JUSTICE MORGAN: Then I think I will keep the papers for the time being if that is satisfactory.

Thank you very much.