England and Wales High Court (Chancery Division) Decisions

IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION

		Royal Courts of Justice Strand, London, WC2A 2LL
		17 June 2009

Richard Sheldon QC (sitting as a Deputy Judge of the High Court):

1. I handed down judgment in this matter on 8 April 2009. The judgment had earlier been provided in draft form to the parties. In the last paragraph of the judgment I stated that as Henry Pulbrook lived in Thailand, in order to inconvenience him as little as possible, I would formally hand down the judgment at a hearing at which none of the parties needed to attend. I stated that if the form of order could not be agreed in advance of my formally handing down the judgment, or if any application were sought to be made arising from the judgment such as an application for permission to appeal, I would consider the matter further (i) on the basis of written submissions, or (ii) if any of the parties so requested, at a further hearing to be arranged.
2. In a postscript to the judgment I noted that the form of order had not been agreed and I made the following directions:

(i) the parties do serve on each other and file with the court written submissions by 6 May 2009;

(ii) the parties do serve on each other and file with the court written submissions in reply by 27 May 2009.

I also stated that the written submissions should specify with clarity (i) the orders which I was being asked to make giving effect to the judgment; (ii) the orders as to costs which I was being asked to make; (iii) any other orders which were sought consequential upon the judgment, such as for permission to appeal and/or for a stay. I stated that the written submissions should set out the arguments in support of the position adopted by the party in question and identify any relevant materials which that party relied upon and that insofar as the position of a party has already been set out in correspondence, I encouraged the other party to respond to that position in the written submissions to be served and filed on 6 May 2009.

3. None of the parties has requested a further hearing. I shall therefore decide the outstanding issues on the basis of the written submissions of the parties. The Claimants' written submissions were supplied to me by 6 May 2009. On 4 May 2009, Henry Pulbrook wrote to the Claimants' solicitors stating that he would be unable to complete his submissions in time because of a shut down of electricity and proposed that submissions be exchanged by fax at 4pm UK time on Friday 8 May 2009. Although, Henry Pulbrook's written submissions are dated 8 May 2009 they were not received by the Claimants until 18 May 2009 (and copies supplied to me on the same date). Henry Pulbrook has confirmed that he received the Claimants' written submissions by post on 13 May 2009. On 27 May 2009, the Claimants, in accordance with the timetable I prescribed, lodged written submissions in reply. In a letter to me of that date, the Claimants' solicitors informed me that they had earlier that day spoken to Henry Pulbrook in Thailand and that he had stated that he had not prepared his submissions in reply and would not be ready to file them on that day. He gave no indication as to when he expected to have completed them. There has been no request by him for an extension of time to lodge submissions in reply. I have nevertheless delayed producing this judgment until after 3 June 2009 so as to give Henry Pulbrook the benefit of the full three week period since he received the Claimants' written submissions to produce submissions in reply, as envisaged in the directions I made earlier. I have received no further submissions from Henry Pulbrook. I would, however, note that the Claimants' position, as reflected in their opening written submissions, had already substantially been set out by them in correspondence prior to my handing down judgment on 8 April 2009 so that Henry Pulbrook has had the opportunity to deal with that position in his opening written submissions, and he has in fact done so. In these circumstances, I see no reason to delay any further my decision on the outstanding matters.
4. In this Judgment I adopt the definitions which appear in my earlier Judgment.
5. A draft of the Order which the Claimants invited me to make to reflect my earlier judgment was sent to Henry Pulbrook on 1 April 2009. The Claimants have since produced an amended version, attached to their written submissions sent on 6 May 2009, which is only slightly different from the earlier draft, the differences being confined to certain details in the orders for costs which the Claimants seek. There are issues on costs which I have to decide. So far as the other parts of the draft Order are concerned Henry Pulbrook agrees to the declaration in paragraph 1 (to the effect that the March 2006 Deed is liable to be set aside by reason of having been procured by the undue influence of Henry Pulbrook.), the order in paragraph 2 (that the March 2006 Deed be set aside) and paragraphs 9 and 10 (orders for permission to serve the Order on Henry Pulbrook and Dr Pulbrook out of the jurisdiction).
6. A copy of the earlier version of the form of the draft Order proposed by the Claimants has been sent to Dr Pulbrook (the amendments in the later version do not affect him). By letter dated 2 May 2009, he confirms that, provided that the order appearing at paragraph 8 of the draft (that there be no order for costs against him) is made, he has no further comments.
7. The issues that I have to decide relate to (i) the sums that should be paid by Henry Pulbrook to the Claimants, and interest thereon; (ii) costs; and (iii) permission to appeal.
8. I should mention at this stage (relevant to points (i) and (ii)) that on 22 April 2008, Mr Towns made a Part 36 offer to accept £66,000 inclusive of interest in satisfaction of the entire claim and counterclaim, which was available for acceptance within 28 days from the date of the letter. The offer was made more than 21 days before the trial of the claim (and more than 21 days before the claim was originally listed to be tried). The relevant period (as defined in CPR 36.3(1)(c)) expired on 20 May 2008. The Part 36 offer was not accepted by Henry Pulbrook, nor was it withdrawn or changed prior to judgment.
9. The Claimants have recovered judgment against Henry Pulbrook which is at least as advantageous as the proposals contained in the Part 36 offer. Accordingly the condition in CPR 36.14(1)(b) is satisfied and the following provisions of CPR 36.14 apply:

(3) Subject to paragraph (6), where rule 36.14(1)(b) applies, the court will, unless it considers it unjust to do so, order that the claimant is entitled to -

(a) interest on the whole or part of any sum of money (excluding interest) awarded at a rate not exceeding 10% above base rate for some or all of the period starting with the date on which the relevant period expired;

(b) his costs on the indemnity basis from the date on which the relevant period expired;

(c) interest on those costs at a rate not exceeding 10% above base rate.

(4) In considering whether it would be unjust to make the orders referred to in paragraph.. (3) above, the court will take into account all the circumstances of the case including -

(a) the terms of any Part 36 offer;

(b) the stage in the proceedings when any part 36 offer was made, including in particular how long before the trial started the offer was made;

(c) the information available to the parties at the time the Part 36 offer was made; and

(d) the conduct of the parties with regard to the giving or refusing to give information for the purposes of enabling the offer to be made or evaluated.

10. CPR 36.14(6) has no application on the facts of the present case.

Sums awarded at trial and interest

11. In paragraph 3 of the draft Order proposed by the Claimants, they seek an order that:

The First Defendant do pay the Claimants the sum of £124,195.01 together with interest thereon of £29,410.87 to the date of Judgment of 8 April 2009 and thereafter at the rate of 8% per annum until the date of payment.

12. There can be no doubt that it follows from my earlier Judgment that there should be an order that Henry Pulbrook do pay the Claimants the sum of £124,195.01, which is the total of the five payments which I have held were wrongfully paid away from the Joint Account by him. In his written submissions, Henry Pulbrook asserts that: "Not one single penny of the claim moneys adjudged for the Claimants was received by me personally. At no time did I receive the £124,195.01 personally, and at no time did I retain any of it for my personal use. The entirety of the £124,195.01 is money paid to Farrer & Co directly, or received by me and my brother jointly and subsequently paid away in legal fees… I submit that an alternative should be pursued based upon retrieval of the money". Henry Pulbrook here ignores the fact that the monies were used to pay his personal liability to Farrer & Co. In any event, it is clear that there should be an order that Henry Pulbrook do pay the Claimants the sum of £124,195.01.
13. The figure of £29,410.87 for interest is calculated on the following basis:

(a) from the date each payment was made until 20 May 2008 (the expiry of the relevant period) at 8%;

(b) from 21 May 2008 until the date of judgment (8 April 2009) at a rate of 10% above base rate in accordance with CPR 36.14(3)(a).

14. As to (a), the rate of 8% represents an average rate which is slightly below 3% above base rate over the relevant period (see the note at CPR 7.0.17(h)) and is said to be slightly less than the cost of borrowing. I consider that this is an appropriate rate of interest to award.
15. As to (b), the Claimants rely on CPR 13.14(3)(a), cited above. I have to consider whether it would be unjust to make such an order and consider whether the rate of 10% above base rate is the appropriate rate, since the power in that rule is to order interest at a rate "not exceeding" 10% above base rate. These matters are also relevant to the issues on costs and I deal with them in that context since Henry Pulbrook in his written submissions raises issues on costs which have a bearing on these matters.
16. Paragraph 3 of the draft order also seeks an order for payment of interest on the sums awarded at a rate of 8% from the date of judgment to the date of payment. This represents the current "judgment debt" rate. Since it is possible this rate will change in the future I do not think it right to make an order in these terms. I am not sure that it is strictly necessary to include any reference in the order to interest post judgment, but if the Claimants wish such a reference to be made the last phrase in paragraph 3 of the draft Order should be amended to read: "and thereafter pursuant to s 17 of the Judgments Act 1838".
17. Paragraph 4 of the draft order provides for Henry Pulbrook's counterclaim to be dismissed. This follows from the matters I decided in my earlier judgment and I so order.

Costs

18. The Claimants ask that Henry Pulbrook should be ordered to pay all their costs. They rely on the fact that they have succeeded on all but a very small part of their claim and have recovered substantially more than the Part 36 offer. They seek an order that Henry Pulbrook pay their costs on a standard basis until 20 May 2008 (the expiry of the relevant period) and thereafter, pursuant to CPR 36.14(3)(b) on an indemnity basis. They also seek an order that he pays interest at 4% above base rate on those indemnity costs from the date the work was done or liability for disbursements incurred until the date of judgment pursuant to CPR 36.14(3)(c).
19. In paragraph 6 of the draft order proposed by the Claimants, they also seek an order for payment of interest on costs for the period after judgment at the rate of 8% until the date of payment. I consider this is inappropriate for the reasons given in paragraph [16] above and my comments on the appropriate form of order equally apply to this part of the proposed order.
20. Henry Pulbrook strongly disputes the orders sought by the Claimants as regards costs. He points out that the £124,195.01 adjudged in the Claimants' favour comprises only 4 1/2 of the total of 22 claims listed in the Schedule to the Amended Points of Claim. He says it follows that he has won on 17 1/2 claims (80%) and the Claimants only won 4 1/2 (20%). In money terms he accepts that these percentages are effectively reversed, but nevertheless asks me to consider the extent to which costs have been incurred in relation to each of the 22 claims and the extent to which the arguments and evidence of either side have prevailed in each area.
21. In my judgment, these points made by Henry Pulbrook have no merit. On 21 August 2007, Payne Hicks Beach wrote to Henry Pulbrook seeking an account of his dealings with the Joint Account and of his dealings with the property in Mrs Towns' estate. No such account was provided. These proceedings were commenced on 5 October 2007. The relief sought included an account of his dealings in respect of these matters. It was only after the proceedings were issued that Henry Pulbrook provided information and documentation, on a piecemeal basis, which when taken together provided a form of account. I refer in particular to his letter of 27 November 2007, Statement of Defence dated 2 January 2008, his letter dated 10 February 2008, witness statement dated 10 April 2008, documents including bank statements disclosed on 30 April 2008. The parties were ordered to provide standard disclosure by 28 March 2008. Henry Pulbrook failed to comply and the court made a final order on 7 May 2008 giving him until 12 May 2008 to comply. Even after this date, Henry Pulbrook continued to supply documents on a piecemeal basis which cast further light on the matters in issue - including some disclosed as late as the week before trial.
22. It is clear to me that the Claimants were entitled to seek in these proceedings an account of Henry Pulbrook's dealings with the Joint Account and the property in Mrs Towns' estate. As a result of the information provided by Henry Pulbrook they amended the Schedule to the Points of Claim, having accepted certain of his explanations, to drop their claims in respect of the majority (in number) of claims to repayment. I am quite satisfied that, with one possible exception, their conduct of these proceedings was entirely justified and, leaving to one side for present purposes the Part 36 offer, forms no basis to deter me from making an award of costs in their favour. Henry Pulbrook has only himself to blame for the costs incurred in respect of the claims which have been dropped by the Claimants - had he provided the information and explanations sought by the Claimants before these proceedings were commenced, the claims which were later dropped would not have been brought in the first place.
23. The one possible exception relates to the claims in respect of the Fee Payments. The Claimants decided to pursue these claims at trial and lost. Although the amounts involved were small, and their consideration involved only a relatively small amount of time at trial, these claims did involve investigation of discrete areas of fact. I have carefully considered whether I should take an issue based approach to the question of costs. I have concluded that it would not be appropriate to make a deduction in the award of costs in favour of the Claimants to reflect this feature. In reaching this conclusion, I take into account the terms of the Part 36 offer, the fact that a number of documents on which Henry Pulbrook relied in support of his defence to these claims were disclosed late (some only a week before the trial - well after the Part 36 offer had been made) and the relatively small amount of time taken at trial.
24. In disputing that the Claimants should be awarded costs, Henry Pulbrook also asserts that "not one of the many allegations against me of direct personal gain has been sustained." This is incorrect. As clearly appears from my earlier judgment, the payments wrongfully made from the Joint Account were applied to discharge his personal liability to Farrer & Co.
25. Henry Pulbrook also asserts that certain of the work undertaken by the Claimants is not properly chargeable and he gives a number of examples. I do not think it necessary in this judgment to go into details of these. It seems to me that all these matters are properly matters which he can raise on any detailed assessment and none of them affect the general orders for costs which I should make.
26. I therefore order that Henry Pulbrook should pay the Claimants' costs on a standard basis until 20 May 2008.
27. I now turn to the Part 36 offer. Henry Pulbrook makes the point that the offer in the 22 April 2008 letter only related to elements of the claim which existed at that date, amounting to £88,503.49. He says that this is relevant to the question of whether the Claimants have bettered, via trial, the terms of their offer or not. I do not see how this is so. The Claimants at trial have achieved a result more advantageous than the Part 36 offer. Acceptance of the Part 36 offer would have settled the matter once and for all (including the specific claims which were subsequently raised by amendment). It would have involved a settlement of the claims against Henry Pulbrook for an account of his dealings with the Joint Account and Mrs Towns' estate and consequential relief. Henry Pulbrook says that the court should take into account that if he had accepted the Part 36 offer he would have been liable for the Claimants' costs down to acceptance, of which he was given an estimate of £60,000. In other words the real cost to him of acceptance was some £126,000. I take him as saying that the question of whether or not the Part 36 offer was bettered by the Claimants at trial will depend on the order for costs I make. This seems to me the wrong approach, but even if it were correct it does not help him on the facts of this case. The Claimants have succeeded in recovering considerably more than £126,000, irrespective of the award of costs which I make, and even more when taking into account the order for costs in the Claimants' favour down to 20 May 2008.
28. Henry Pulbrook submits that, having regard to CPR Part 36, it would be unjust for the court to award costs against him. Although not expressly so stated, this would also appear to refer to the question of whether it would be unjust to make orders in accordance with CPR 36.14(3). He relies on all the points made in his written submissions and summarises them as:

(1) The quantity of claims successfully defended

(2) The composition of the claims successfully defended

(3) The scandalous profligacy of costs racked up by the Claimants

(4) The inapplicability of certain costs in these proceedings

(5) The costly involvement of Dr Pulbrook

(6) The fact that not one penny of the Claim Moneys was received or retained by him personally

(7) The fact that he has no ability to pay.

29. I have already commented on certain of these matters in this Judgment. I take into account the other matters raised by Henry Pulbrook and the Claimants' responses to them in their submissions in reply. I do not consider it necessary to set these out in detail. Suffice it to say, as regards these other matters, that I am far from satisfied that Henry Pulbrook's criticisms are well founded.
30. In considering whether it would be unjust to make orders pursuant to CPR 36.13(3), CPR 36.14(4) directs me to have regard to all the circumstances of the case, including the specific matters there identified. I have also been referred to, and read, McPhilemy v Times Newpapers Ltd [2002] 1 WLR 934 paras 9-10, 20-23; Rowlands v Bryn Alyn Community (Holdings) [2003] EWCA Civ 383 at paras 20 - 24; Chantrey Vellacott v The Convergence Group plc [2007] EWHC 1774 (Ch) at paras 9 - 12.
31. There is nothing in the consideration of the specific matters identified in CPR 36.14(4) in the context of the Part 36 offer that was made in this case which could lead me to conclude that it would be unjust to make orders of the type referred to in CPR 36.14(3). By the Part 36 offer, Mr Towns offered to accept something of the order of half of the sum which I have found to be payable by Henry Pulbrook. When proceedings were issued, Mr Towns was still in the dark as regards much of the accounting information he was seeking from Henry Pulbrook. The offer was made after certain material information was disclosed by Henry Pulbrook (although more information was later to be disclosed). Henry Pulbrook had an obligation as a fiduciary to account to his principal and failed to do so in a timely fashion. The offer was made sufficiently in advance of the trial to make it reasonable for him to consider it, and he had the information available to evaluate it.
32. Having regard to all the circumstances of this case, I do not consider that it would be unjust to make the orders contemplated by CPR 36.14(3). Henry Pulbrook was a fiduciary. I have found that he wrongfully applied Mr Towns' money for his own benefit, leaving Mr Towns, to whom his fiduciary duties were owed, with little or no capital. Henry Pulbrook failed to provide accounting information and documentation in a timely manner. When proceedings were commenced, Mr Towns was in a frail condition. Had the proceedings been speedily determined or settled, Mr Towns would personally have been able to enjoy the proceeds. As a result of his death in June 2008 and the delay in resolution of these proceedings, he has been deprived of this benefit.
33. I have no hesitation in making the orders sought by the Claimants for indemnity costs as from 20 May 2008 and ordering payment of interest on those costs from that date to 8 April 2009 at the rate of 4% per annum above base rate to be calculated from the date upon which the work was done or liability for disbursements incurred. This seems to me clearly justified in the light of the cases, and well within the parameters set out in the passages to which I have been referred, and having regard also to all the circumstances of this case.
34. I also have no hesitation in exercising my power under CPR 36.14(3)(a) to award enhanced interest from 20 May 2008 to 8 April 2009 on the sums I have ordered Henry Pulbrook to pay at a rate in excess of the 8% rate which I have awarded up to the beginning of that period. I nevertheless have a general discretion as to the appropriate rate of interest to be applied. It has been said that such a power to award interest is conferred in order to enable the court in a case to which the rule applies to redress the element of perceived unfairness, otherwise inherent in the legal process, which arises from the fact that damages, costs (even on an indemnity basis) and statutory interest will not compensate the successful claimant for the inconvenience, anxiety and distress of having to resort to and pursue proceedings which he had sought to avoid by an offer to settle on terms which (as events turned out) were less advantageous to him than the judgment which he achieved (McPhilemy at para 21). In Chantrey Vellacott Rimer J awarded the maximum rate of 10% above base rate on the judgment debt in a case which he described as "a disgrace and should never have been brought". There is little other guidance in the cases as to what the appropriate rate of interest should be.
35. It seems to me that the rate of 10% above base rate sought by the Claimants is too high. Whilst there is some force in the criticisms made by the Claimants of Henry Pulbrook's conduct of these proceedings, it would be unfair to him, having regard to the judgment I earlier delivered, to brand his defence to these claims as a "disgrace". In all the circumstances of this case, I consider that the appropriate rate at which I should award interest from 20 May 2008 to 8 April 2009 on the sums I have ordered Henry Pulbrook to pay is 6% above base rate. The figure for interest in paragraph 3 of the draft order proposed by the Claimants will need to be recalculated accordingly.

Payment on account of costs

36. The Claimants invite me to make an order under CPR 44.3(8) to order an amount to be paid on account before costs are assessed. They have produced a costs schedule showing costs incurred of £137,357.90 of which £3,462.73 are payable to the Claimants pursuant to an interim costs order dated 29 April 2008. They seek an order (paragraph 7 of the draft order) that Henry Pulbrook pay the sum of £70,000 on account of their assessed costs and that such sum so paid be accounted for by them on the detailed assessment.
37. Henry Pulbrook says that his financial circumstances are such that he would be unable to comply with any costs order having immediate effect on him. He asks for a stay of execution to apply to any such order.
38. The notes at CPR 44.3.15 state:

Where the resources of a party ordered to pay costs are limited, the court should not force the receiving party to engage in detailed assessment proceedings before receiving any money at all since this would merely require the expenditure of further money on a process which would produce no return. The judge awarded an interim payment in an amount which he regarded as the absolute bare minimum that the defendants could hope to recover on a detailed assessment: Allason v Random House UK Ltd [2002] EWHC 1030 (Ch), Laddie J……

In general an interim order for payment of costs prior to assessment should be made, but the court has to take into account all the circumstances in the particular case including the unsuccessful party's wish to appeal; the relative financial position of each party; the court's overriding objective to deal with cases justly….

39. There is no reason for me to depart from the court's usual practice to order a payment on account of costs. In doing so, bearing in mind Henry Pulbrook's limited resources, I will award what I regard as the minimum amount which I consider the Claimants could hope to recover on a detailed assessment. Having regard to the orders for costs which I have made, and taking into account the matters raised by Henry Pulbrook's written submissions to the effect that costs have been unnecessarily and unreasonably incurred, I am satisfied that the amount of £70,000 sought by the Claimants is the minimum amount which they could hope to recover on a detailed assessment. I therefore make the order as sought in paragraph 7 of the draft order.
40. I also make the order sought in paragraph 8 of the draft order that there be no order for costs against Dr. Pulbrook.

Permission to appeal

41. Henry Pulbrook does not seek permission to appeal against my findings of undue influence as regards the March 2006 Deed which are reflected in paragraphs 1 and 2 of the draft order, and in monetary terms, £66,000 which I have ordered to be paid by him (part of the total in paragraph 3 of the draft order).
42. Henry Pulbrook does however seek permission to appeal against the orders which I have made which reflect my findings in relation to Mrs Towns' Indemnity Payments (which represent the balance of the total sums (i.e. other than the £66,000) which I have ordered to be paid by him). In particular, he takes issue with my findings as to the ownership of the monies used to fund such payments following Mrs Towns' death and as to the validity of the November 2005 Indemnity Letter.
43. I refuse permission to appeal on these matters. I consider they have no realistic prospects of success. My findings in relation to these matters are based on findings of fact having regard to the evidence which I heard and which I set out in my earlier judgment. In that judgment, and in making my findings of fact, I took into account the matters referred to by Henry Pulbrook in his written submissions in support of his application for permission to appeal (which are confined to the issue of the ownership of monies in the Joint Account). In order to succeed on an appeal, Henry Pulbrook would need to succeed on both points. In his written submissions, he provides no explanation for why he says my findings in relation to the validity of the November 2005 Indemnity Letter are wrong.
44. I would ask Counsel for the Claimants to produce a minute of order which reflects the orders I have made. The minute should be sent to me for approval. This judgment will formally be handed down on 17 June 2009. There is no need for any of the parties to attend.