England and Wales High Court (Chancery Division) Decisions

IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION

		Royal Courts of Justice Strand, London, WC2A 2LL
		20/04/2010

Mr Justice Warren :

Overview

1. The costs of this litigation and the consequences in that context of my judgments (the main judgment and the supplementary judgment concerning Harshika's quantum meruit claim) now have to be dealt with.
2. Although there are two sets of proceedings – the company proceedings and the partnership proceedings – the main proponents, Vatsal and Udi, would prefer to see a single costs order dealing with all of the matters in dispute between them. Provided that the other parties to the two actions are not prejudiced, I am sympathetic to that approach. They both wish issue based orders to be avoided if possible and again prefer to see a single order made. That approach is the one which, if practicable, I ought to take in any case under CPR 44.3(7).
3. Mr Talbot has divided his submissions into four blocks:

a. The company proceedings

b. The Minor Partnerships

c. Lloyd Avenue

d. The partnership proceedings.

4. He separates the Minor Partnerships and Lloyd Avenue because he submits that orders should be made on an indemnity basis in respect of those two issues. He then invites me to determine that 75% of the costs of d. (excluding b. and c.) should be paid by Vatsal. In order to avoid a difficult, expensive, time-consuming and contentious apportionment of costs between the two sets of proceedings, he invites me to make an overall order under which Vatsal and Anju pay 85% of Udi's and Bhavini's total costs. I am not clear whether this final figure is intended to include the Minor Partnerships and Lloyd Avenue. For reasons appearing later in this judgment, I do not consider that I should make any indemnity costs orders. There is no reason for hiving off the Minor Partnerships and Lloyd Avenue for the purposes of my costs order. I will, accordingly, treat those claims in the same way as other claims in the partnership action. As will also be seen later, I propose to follow Mr Talbot in making an overall order which takes account of both actions.
5. There is one preliminary point which I should make. The parties talk of the costs of the two actions. In so doing, I think they intend to refer to the costs other than those which have already been dealt with by previous costs orders. Whether or not that is their intention, it is the basis on which I am proceeding so that when I talk of a party's costs (or a percentage of those costs) I am referring only to those parts of the overall costs of the whole litigation which have not already been subject to orders (other than orders reserving costs). Further, I do not intend to disturb the orders made by Mr Furness about how Mr Callaghan's fees were to be borne. Mr Furness's costs direction left open the possibility that the trial judge might make a different order concerning the ultimate incidence of Mr Callaghan's fees but I intend to leave matters where he left them.
6. It must be remembered that the partnership action involved a number of separate partnerships comprising different partners. Different issues arose in each partnership. There were discrete claims by the Mother concerning her interest in Kingswood Manor and Cashco and by Harshika in relation to her quantum meruit. There were separate issues in relation to other matters, for instance the Locus Group. Any costs order must take account of these points.
7. There are two general matters which I must also take into account whoever is seen as winning or losing. The first is that, in practical terms, Vatsal would not, I consider, have obtained what he has actually obtained unless he had threatened proceedings and ultimately commenced the partnership action. It is said on behalf of Udi that it is nonsensical to say that Vatsal and Anju would not have been bought out if they had not pressed the litigation: they would either have been bought out or realised their interests on a sale of the partnerships' assets following the dissolution of the partnerships. I am more than highly sceptical about that. Having seen a great deal of documentation and having heard a great deal of oral evidence, I think it is very unlikely that that sensible course (buy-out or sale) would have taken place without Vatsal having had to assert his rights through litigation. If one needs an example of that, Alfriston provides it. Sensible proposals from the Minor Partners in that partnership and, indeed, from Vatsal got nowhere.
8. As to the company proceedings, I doubt very much that Anju would ever have recovered what was owing to her in respect of her director's account with VU Chem unless some proceedings had been taken. That is not to say that the appropriate way forward was an unfair prejudice petition. But it is apparent that a simple claim for payment of the debt would not have been straightforward; it was not until after I had given judgment that Udi and Bhavini recognised Anju's rights and made payment.
9. The second general matter is that the partners, other than Udi and Bhavini, in the various partnerships (other than Alfriston) took no significant active part in the proceedings (in spite of which they now seek recovery of a significant amount of costs from Vatsal). They have, it is true, been drawn into this bitter dispute between Vatsal and Udi. No doubt all they have ever wanted is a quiet life, able to get on with the running of their businesses without this unnecessary distraction. None of them has been active, it must be said, in promoting any sort of dialogue to enable the disputes to be resolved without the time, effort and expense of litigation; nor has any of them sought to engage in negotiations with Vatsal to acquire his share in any particular partnership or property, but that may be because no-one had the money or finance to contemplate such a course.
10. In deciding what is the correct costs order overall, it is necessary for me to consider to some extent the appropriate orders which I would make if I were dealing with the two actions separately and, in the case of the partnership action, if I were proceeding issue by issue. It is that exercise I now carry out.

The company proceedings

11. There can be no doubt that Vatsal and Anju are the substantial losers in the company proceedings. Although Anju has recovered money in respect of her loan account, an unfair prejudice petition would have been inappropriate and disproportionate if that had been the only company issue. Apart from that, I held that there was no unfair prejudice to her and none to Vatsal.
12. Mr Talbot submits that Udi and Bhavini should be awarded all of their costs in the company proceedings since Vatsal's petition was entirely unwarranted, Anju's petition effectively failed and neither petition should have been brought. He goes further, and seeks costs on the indemnity basis. He points out that Vatsal and Anju issued the company proceedings without first sending a letter before action. He relies on Phoenix Finance Limited v Federation International de l'Automobile [2003] CP Rep 1, per Sir Andrew Morritt, V-C to support the submission that this sort of conduct leads to adverse indemnity costs orders.
13. The court has a wide discretion when it comes to awarding costs on the indemnity basis However, there must be something in the conduct of the proceedings or the circumstances of the case which takes the case out of the norm in a way which justifies such an order. Thus where it is the conduct of the paying party which is relied on, there must be some element in his conduct of the case which deserves some mark of disapproval; unreasonableness to a high degree may be sufficient: see Excelsior Commercial & Industrial Holdings Ltd v Salisbury Hammer Aspden & Johnson [2002] CP Rep 67 and Simms v Law Society [2005] EWCA Civ 849 cited by David Richards J in Ghafoor v Cliff [2006] 1 WLR 3020 at para 72. Mr Talbot relies in particular on the written offer made by Udi and Bhavini in relation to VU Chem explained at paragraphs 533ff of my main judgment.
14. Vatsal and Anju failed to reply to that offer of 5 February 2007 within the 21 days in which it was stated to be open for acceptance, a period which, in agreement with Mr Talbot, I consider was a reasonable period for acceptance.
15. Had Vatsal and Anju accepted Udi's and Bhavini's offer of 5 February 2007 all of the costs of the company proceedings which were incurred after that date would have been avoided; furthermore, Vatsal and Anju would have been in a far better position than they are now, having unsuccessfully pursued the company proceedings to judgment.
16. It should not, however, be overlooked that Vatsal and Anju had made offers themselves: see paragraphs 531 and 532 of my main judgment. Those offers were not ones which Udi and Bhavini felt able to accept. But they were not unreasonable offers (even though it was reasonable to refuse them) and do support the view that Vatsal and Anju were conducting the company proceedings in a proper manner.
17. Mr Sisley submits that Udi's and Bhavini's own conduct has, in some respects, been such that they should be deprived of any costs order in their favour. He relies on the evidence, which I have criticised, of Bhavini concerning the methadone register and preparation for the new NHS contract. To deprive Udi and Bhavini of the entirety of the costs because of this would be wholly disproportionate. It is, however, a serious matter because this evidence was given as part of the justification for removing Vatsal and Anju as directors in an attempt to defuse that part of their allegations of unfair prejudice. I will take account of it accordingly.
18. In my judgment, subject to two points in addition to that made in the preceding paragraph, Udi and Bhavini are entitled to their costs of the company proceedings from Vatsal and Anju. These should be met on the standard basis; I do not consider that the company proceedings are a matter for indemnity costs. The two caveats are these:

a. It may be appropriate to make a single rolled-up order for the entire litigation. I shall deal with that later.

b. Anju did have a measure of success in recovering the amounts owing on her director's account. The added costs of that issue must have been de minimis. I decline to make any adjustment to reflect this small success, especially having refused to make an order for costs on the indemnity basis notwithstanding the rejection of the offer of 5 February 2007.

The Minor Partnerships – the issue by issue analysis

Lloyd Avenue

19. I deal with Lloyd Avenue first. Vatsal lost on the issue concerning the shares of the partners. The result was that Vatsal had a 12.5% share instead of the equal 20% for which he had contended. He now accepts Mr Callaghan's valuation following the arithmetic of which the difference between 20% and 12.5% is only £11,676. If this aspect stood alone, I would agree with Mr Talbot that this was a case for an award of indemnity costs. However, it did not stand alone but formed one element of a much larger dispute. Vatsal should not be ordered to pay costs on the indemnity basis, but he must pay them on the standard basis. I would only add this. Although this is really a matter for the tax judge if the matter has to go to detailed assessment, I would find very unattractive an argument that the costs incurred by the Minor Partners and Udi were not proportionate because the claim was so small. Just as Vatsal should not suffer an indemnity costs order because the issue over the Lloyd Avenue partnership was simply part of a larger dispute, so too the Minor Partners should not be deprived of the costs which they would otherwise be entitled to receive on the standard basis simply because they may not be seen as proportionate in isolation.

The other Minor Partnerships

20. The other Minor Partnerships are Alfriston, Friends, Gatton, Global Investments, Cavendish and Patco. Mr Talbot submits that the Court should exercise its discretion to order Vatsal (and, in relation to Global Investments, Vatsal and Anju) to pay the costs of all the other minor partners (including Udi and Bhavini) in relation to the Minor Partnerships on the indemnity basis.
21. On Day 1 of the hearing, I expressed surprise that Vatsal and Udi were coming to court saying that Mr Callaghan's valuations were not right without adducing any evidence about what was right or even seeking to cross-examine Mr Callaghan. That might have been sufficient on a directions hearing to persuade the court to make directions for further valuations. But this was a trial where actual decisions were meant to be made. If the Claimants wished to challenge Mr Callaghan, it was incumbent on them to produce at least some evidence which would either establish a different value or at least persuade me that Mr Callaghan's valuation was likely to be significantly wrong.
22. But they did not do so. Instead, on Day 6 of the trial, Mr Sisley made submissions on the evidence which was before the court. I then adjourned to allow Mr Talbot and Mr Braithwaite to prepare submissions in response to these new arguments. Mr Talbot tells me that written submissions in response were prepared, but were not lodged, since the parties agreed (in principle) that Udi should purchase Vatsal's and Anju's interests in the Minor Partnerships by reference to Mr Callaghan's valuations. The issue of the Minor Partnership valuations was eventually subsumed within a broader negotiation which occupied much of the seventh day of the trial.
23. Mr Talbot therefore submits that Vatsal and Anju acted wholly unreasonably in (i) raising their challenge to Mr Callaghan's valuations of the Minor Partnerships, and (ii) pursuing that challenge without seeking to adduce expert evidence and/or cross-examine Mr Callaghan. The Claimants' case in relation to the Minor Partnerships was always weak, and their refusal to withdraw it resulted in substantial costs being incurred.
24. Mr Braithwaite makes similar submission on behalf of the partners in the Minor Partnerships other than the main protagonists. I accept the submissions of Mr Talbot and Mr Braithwaite to the extent that they relate to costs incurred once Udi had accepted Mr Callaghan's valuations on 16 April 2009 and a reasonable time had passed thereafter. I view the position at trial to have been sufficiently serious to warrant my considering seriously the making of an indemnity costs order in relation to the wasted time at trial which, between Mr Sisley's submissions and the preparation of submissions in reply to Mr Sisley's submissions, amounted to the best part of a day. In my judgment, the Claimants acted unreasonably in pursuing the challenge to Mr Callaghan's valuations without seeking to adduce expert evidence or even seeking to cross-examine Mr Callaghan.
25. But that is not an end of the story. During the unfortunately long period between the end of the trial and the delivery of my main judgment, Udi appears to have attempting to arrange finance for his acquisition of Vatsal's shares in the Minor Partnerships. By January 2010, he had not raised enough and at the end of the month wrote to say that he could not get funding to buy Friends or Patco.
26. It is not to be overlooked that in the Minor Partnerships other than Alfriston, there was resistance to any realisation of Vatsal's share or of the assets by Udi and Bhavini who resisted any order as late as the hearing before Mr Furness on 1 March 2007. Vatsal and Anju made offers to sell their shares and indicated that they would consider sensible offers but nothing came of them.
27. On the other side, however, it is surely correct that, unless Vatsal and Anju had commenced litigation to ensure the winding-up of these Minor Partnerships, nothing would have happened. It is unrealistic for Mr Talbot and Mr Braithwaite to complain that the proceedings were premature and that there should have attempts, following Vatsal's notices of dissolving the partnerships, to agree a separation. These disputes between Vatsal and Anju were always going to end up in court. It is unfortunate that the other partners have, more or less willingly, been brought into the proceedings but that is a consequence of the relationship of partnership as it has turned out in these particular partnerships. But these partners (in contrast with Alfriston) were not active in their approach and it was almost unavoidable that some sort of litigation in which they would need to be joined would have to be commenced. In my judgment and applying an issue by issue approach, the costs from a reasonable time after 16 April 2009, say 1 May 2009, of the disputes concerning the Minor Partnerships other than Lloyd Avenue and Alfriston Road (which I come to next) should be paid by Vatsal (and in the case of Global Investments by Anju too). But this should be on the standard basis and not on the indemnity basis. The costs of the Minor Partners prior to that date, to the extent that they have not already been dealt with by agreement or by any previous order of the court, should be met out of the partnership assets as an expense of the winding-up. Vatsal's and Udi's costs should not be thrown on the other partners through the dissolution accounts. As between them there should be no order in respect of pre-April 2009 costs.

Alfriston Road

28. Alfriston Road gives rise to slightly different considerations. The relevant partners in that partnership were Hasmukbhai Patel and Induben Patel, the ninth and tenth defendants. They had separate solicitors, Manis, and, as Mr Sisley puts it, "took an independent course". Following the dissolution of the partnership on 28 February 2005, the ninth and tenth defendants appear to have continued the business. On 18 November 2005, Manis wrote to Magwells pointing out that there was no dispute between their respective clients. They wrote:

"….The exercise needed is a simple one. The partnership's assets be valued and divided in accordance with the undisputed partnership shares…..All that remains is for the business, including the freehold premises, to be valued and either one or more of the partners will buy out the other partner's shares failing which, the business sold in the open market and the sake proceeds divided in accordance with their respective shares…

As you know, our clients, the 50% owners of the partnership business, have operated the business from day one and continue to do so. It is their intention to acquire the remaining partners' shares.

……We do not see the need for our clients to be embroiled in this litigation…."

29. On 3 January 2006, Magwells replied to that letter stating that Vatsal would certainly allow Manis' clients the opportunity of buying out his share. They wrote:

"Whatever happens, our client will sell his share to your clients, but obviously your clients must go to Mr UB Amin to see if he is similarly content…."

30. Manis replied to that on 23 January 2006 to say that they were waiting to hear from Stephenson Harwood and would revert after obtaining instructions once they had heard. It is reasonable to infer that Manis never did hear from Stephenson Harwood because, on 25 April 2006, they wrote a letter to Stephenson Harwood and Magwells jointly. They said that they were at a loss as to why their clients were parties to the action; the partnership had been terminated on 28 February 2005 expressing the view that outstanding matters could easily have been resolved without the expense of litigation. Then, in a complete change from the intention expressed in the letter of November 2005, they wrote "Our clients do not wish to continue with the business of the Partnership". They expressed the view that the litigation had been unnecessary and that Vatsal should pay the costs. There seems to have been no response to that suggestion. Matters drifted on until on 5 December 2006, Magwells wrote with a new offer one limb of which was that the property and the business be placed with an agent for sale on the open market. This letter crossed with one from Manis which included this:

"Our clients have, from the outset, even before any proceedings were unnecessarily issued by your clients as far as the Alfriston Post Office is concerned, confirmed that there is no dispute and that the Partnership assets should be evaluated and realised…. It is and always has been our clients' position that they have been, unnecessarily, dragged into a dispute between the two brothers and are being forced to participate in this very costly litigation….."

31. That provoked a response from Magwells stating that that was exactly what had been offered. It was asked why would Manis' clients not, therefore, accept one proposal or the other. Manis' repeated their clients' position remarking that "the brothers appear to be in a stalemate and not willing to isolate this Partnership and deal with it independently of the many other partnerships in which they are in dispute". Magwells wrote on 11 January 2006 to say that Vatsal was more than willing to deal with this partnership in isolation – his recent offer had been precisely that. Accordingly, a draft order (for use at a forthcoming hearing) was sent. The draft was agreed.
32. Mr Sisley submits that Manis' clients should pay the costs of the action in relation to Alfriston because they never properly addressed the offers made by Vatsal until forced. Udi should be equally liable because he appears to have obstructed resolution. I cannot accept that Manis' clients should be penalised in this way. It was Manis who, in November 2005, protested that there was no dispute and that an evaluation and sale was appropriate (albeit that, at that stage, their clients were proposing to continue the business). Manis' point even then was that proceedings should never have been commenced in relation to Alfriston. Now, I accept that Vatsal was, for reasons already given, acting reasonably in commencing proceedings against Udi. But he wrote no letter before action to the ninth and tenth defendants. Had he done so, there would have been a real prospect, in my judgment, of Alfriston being dealt with without any need ever to join Manis' clients to the action. However, I also accept that Manis and their clients may have could have responded more helpfully to Magwells letters and perhaps have avoided some of the costs which they must have incurred. But that is not enough to disentitle them from any costs to which they would otherwise be entitled. And it does not begin to address the difficulty which Vatsal faces in relation to Mr Callaghan's valuation as much in relation to Alfriston as the other Minor Partnerships.
33. In my judgment, it would be wrong for the ninth and tenth defendants to have to bear any of the costs of the litigation having attempted, through Manis, to engage in a constructive way with both Vatsal and Udi through their respective solicitors. In my view, they should receive their costs, on the standard basis, from Vatsal and Udi equally up to 1 May 2009 and from Vatsal after that date again on the standard basis. As between Vatsal and Udi for the period from 1 May 2009, the dispute centred on Mr Callaghan's valuations. Vatsal should be responsible for Udi's costs but on the standard basis.

Kingston Road business

34. Udi succeeded on this and should, on an issue by issue approach, have his costs on the standard basis.

Changes and 107a Rosendale Road

35. Udi was successful in relation to the ownership of the business, Changes; Vatsal was successful in relation to the ownership of the property from which the business was operated. There was also a question of rent in relation to the property which Vatsal claimed. This was settled for £21,000 in the end. It might be said that Vatsal should receive a modest proportion, say 10%, of his costs in relation to these related issues. I shall take that into account in my overall assessment.

Kingston Road

36. Udi was successful in resisting Vatsal's claim to a share in the business carried on at 104 Kingston Road. As to the occupation rent claimed, Vatsal was partly successful and partly unsuccessful in that I held he was entitled to rent for some, but not all, of the period claimed. Vatsal has since accepted £8,000 in full and final settlement of this claim. I call that a no-win draw. Accordingly, on an issue by issue approach, Vatsal should pay Udi his costs attributable to Vatsal's claim to a share in the business.

Kingswood Manor

37. Vatsal's claim was to a 50% share in Kingswood Manor. The Mother originally claimed a 75% share in her defence but that was later reduced to, I think, one third, a claim which I rejected. However, if she did not have a share, she claimed a right of occupation in one way or another. In the end, it was not necessary for me to decide whether she had an interest because Vatsal's ultimate position was that he was content for the Mother to reside at Kingswood Manor (with no payment by her) for as long as she wished. Udi's case was that Kingswood Manor was owned by Cashco subject to whatever rights the Mother had. It would have been better for all concerned, especially the Mother, if it had been made clear that she would not, under any circumstances, be forced to move. Vatsal refused to commit himself to that position since he felt that Udi should agree to pay for his own occupation of Kingswood Manor notwithstanding that he and Bhavini would be looking after the Mother. The Mother, however, pushed her claim for a share in the property.
38. Although I might well have held that the Mother had some interest in the property (probably a life interest but not a share, although this would have given rise to difficulties in relation to the Settled Land Act 1925), Vatsal had to resist first of all a claim that the Mother owned 75% and then 1/3^rd. It does not seem right to me that Vatsal should have to pay any of the Mother's costs on this issue. Vatsal succeeded in establishing for the benefit of both himself and Udi that the Mother did not have a share. Udi, as co-owner, ought to bear half of the costs. Ordinarily, it might be appropriate to provide for the costs of a person in Vatsal's position by way of a charge over or by way of recovery from the proceeds of sale of the property. In the present case, however, I see no reason why the incidence of those costs should not be dealt with as part of the overall costs order without introducing that added complication.
39. So far as concerns Udi, Vatsal succeeded in establishing that the property was not a Cashco property. But Udi won in respect of the payment of an occupation rent. I consider that Vatsal has had the greater measure of success in relation to those two disputes and would, on an issue by issue approach, deal with the share and the occupation rent in one order and award Vatsal 20% of his costs on those two points against Udi.

Kingswood Manor furniture

40. It is apparent from my main judgment that Vatsal was the substantial loser on this issue. He ought, on an issue by issue approach, to bear the costs of this part of the proceedings. I am sympathetic to the argument that he should do so on the indemnity basis but, in the end, I do not think that would be right in the context of this litigation as a whole.

The Locus Group and MPIC

41. Vatsal lost the issues on the Locus Group (including Axiom) and MPIC comprehensively. He should bear the costs of this part of the proceedings. They took up a significant amount of time at trial. A considerable amount of work was obviously done in dealing with these issues both in the pleadings and in preparation for trial. Vatsal must bear the costs of this part of the proceedings. The case is pretty close to being one which was so speculative (and as Mr Talbot would say vexatious) as to warrant an indemnity costs order. But I do not think it quite crosses the boundary.

Cashco – the Mother's claim

42. One of the issues concerning Cashco was the Mother's contribution. I held that she was entitled to recover something but nothing like what she was claiming. As between the partners in Cashco (in particular Vatsal) and the Mother, I do not consider that there should be a claim in either direction. As between the partners, Vatsal had defended the partnership against the Mother's inflated claims. He should I consider be entitled to his costs of doing so out of the assets of the partnership

Cashco – Harshika's claim

43. Another issue was Harshika's claim. That claim was originally pleaded as claim to a share in Cashco with a claim to a quantum meruit very much as a fall-back position. It was not until trial that Mr Braithwaite abandoned ship on the share and went for money. Harshika's case changed as I recorded in my main judgment. She succeeded in her quantum meruit claim in the end and it is right that she should not be liable to meet any of Vatsal's costs on this issue. However, I do not consider that she should herself be entitled to costs either from Vatsal or the partners collectively. This is not simply because her story changed and because she abandoned what had been her primary case. It is also because she has waited so long to assert her claim. Nothing was recorded in writing, the Father made no statement and the evidence was sparse. She has, if I may say so, only herself to blame for the fact that she needed to litigate her case at all. That case was reasonably defended by Vatsal. He did so for the benefit of the partnership as a whole and thus for the benefit of Udi and Harshika's own husband. He did so in the face of Udi's position which was not to oppose the claim or even support Vatsal in taking the limitation point. The consequence of his position would have been to allow his sister to recover as much as she reasonably could and to reduce the value of Cashco to the detriment of Vatsal. In these circumstances, it is right that Vatsal should be able to recover his costs of this aspect of the case from the assets of Cashco as a partnership expense. They are thus to be allowed on the indemnity basis. Udi should not recover his own costs on this issue either from Vatsal or out of the partnership assets.

Cashco's ownership of properties

44. There was dispute about a number of properties where Udi said they belonged to Cashco but Vatsal said they were owned equally between the two of them. I dealt with these in paragraphs 189 to 238 of my main judgment. Vatsal was successful in relation to all of them. On an issue by issue approach, he should have his costs in respect of those disputes against Udi.

Foreign accounts

45. Udi succeeded in relation to the Indian account. Vatsal has not, as yet, succeeded in relation to the American accounts although I observe that, in relation to those accounts, Udi and the Mother could, if they had wished, very probably have obtained additional information which Vatsal ought to be able to see. On an issue by issue approach, I would award Udi his costs in relation to the Indian account and make no order in relation to the American accounts.

The Policies

46. Udi was successful in relation to the Standard Life policy. He should on an issue by issue approach have his costs of that dispute. The position in relation to the Scottish Amicable policy was not finally resolved, this being a valuation question in the dissolution of Cashco. So far as the costs incurred in relation to it, they should not be reflected in any costs order whether on an issue by issue approach or otherwise.

Summary

47. The following would in principle apply on an issue by issue basis:

a. Vatsal and Anju are liable to Udi and Bhavini for the costs of the VU Chem action but subject to a reduction to reflect Bhavini's conduct in relation to the methadone register.

b. Harshika is not entitled to the costs of her claim to a share or quantum meruit. Vatsal's costs of that claim should be met as an expense of Cashco. Udi should not be entitled to any costs in respect of that claim.

c. The Mother is not entitled to the costs of her claims to a share in Kingswood Manor nor the costs of her claim to a share in Cashco alternatively for money from Cashco.

d. Vatsal's costs of defending the Mother's claim to a share in Kingswood Manor should ultimately be paid out of the proceeds of sale of Kingswood Manor and thus in effect be borne by Vatsal and Udi equally. Udi should not be entitled to any costs in respect of that claim.

e. Vatsal's costs of the Mother's claim to an interest in Cashco and the alternative claim for money should be met as an expense of Cashco. Udi should not be entitled to any costs in respect of those claims.

f. The costs of Vatsal and Udi in relation to whether Kingswood Manor was a Cashco property and in relation to occupation rent should be dealt with by an order for the payment by Udi to Vatsal of 20% of Vatsal's costs on those two issues.

g. Vatsal should pay Udi his costs in relation to the Kingswood Manor furniture issue.

h. The Minor Partners in Lloyd Avenue should be entitled to their costs from Vatsal.

i. The Minor Partners should be entitled to their costs from Vatsal from 1 May 2009 in respect of all the Minor Partnerships. The Minor Partners in Alfriston should also be entitled to their costs before that date from Vatsal and Udi who, as between them, should bear those costs in equal shares.

j. Vatsal should pay Udi all of his costs in relation to Lloyd Avenue and his costs in relation to the other Minor Partnerships since 1 May 2009.

k. Vatsal should pay to Udi his costs relating to Locus (including MPIC).

l. Vatsal should pay to Udi his costs relating to the Kingston road business.

m. Vatsal should pay to Udi his costs relating to the Indian account.

n. Vatsal should pay to Udi his costs relating to the Standard Life policy.

o. Udi should pay to Vatsal say 10% of his costs relating to Rosendale Road, Changes and occupation rent for that property.

p. Udi should pay to Vatsal his costs relating to establishing the beneficial ownership of the various properties said by Udi to be Cashco properties but which I held to be owned by Vatsal and Udi equally.

Overall costs orders

48. I now consider how these issue-based preliminary conclusions can be reflected in overall costs orders. It follows from the above analysis that no costs orders should be made in favour of either of the Mother and Harshika (except in relation to Lloyd Avenue).
49. So far as concerns the partners in the Minor Partnerships other than Alfriston and Lloyd Avenue (and ignoring Vatsal, Anju, Udi and Bhavini themselves), Vatsal should pay their costs as from 1 May 2009. Vatsal and Udi should pay (and bear equally the burden of) the costs of the Minor Partners in Alfriston up to 1 May 2009 and Vatsal should bear them thereafter. As to the costs of the Minor Partners before that date, see paragraph 27 above.
50. So far as concerns Vatsal, Anju, Udi and Bhavini I have not seen any bills and do not know the overall costs of any of the parties. It is not, therefore, at all safe for me in this case, where the costs on each side are very large, to carry out an exercise setting off, by reference to percentages, one side's costs against the others in order to arrive at an overall, single, percentage of one side's costs payable to the other. Let me illustrate the difficulty by reference to a simplified example. Suppose that Vatsal has spent in total £X but that Udi has spent only a smaller amount of £Y. Suppose that there had been only 4 issues and that I considered Vatsal succeeded on issue 1, Udi succeeded on issue 2 but on issues 3 and 4 there should be no order. Suppose I were to make a rough and ready assessment that each issue was generated an equal, 25%, share of the costs. It might then be thought that the costs orders in each direction of 25% on issues 1 and 2 would result in no order at all. But that would not be fair if the costs on each side (on the standard basis) were markedly different.
51. Instead, I think the appropriate way in which to proceed is to ascertain a percentage of each side's costs which is payable to the other, leaving the parties to turn those percentages into money amounts and to effect set-off at that level. In carrying out this exercise, I shall assume that each side has spent the same or a similar proportion of its total expenditure on each issue where that is appropriate. I will need to take into account the fact that Vatsal has had to deal with issues, such as Harshika's claims, in respect of which Udi has incurred much less (if any) expenditure.
52. I have already indicated (see paragraph 38 above) that Vatsal's costs in defending the Mother's claim to a share of Kingston Manor can and should be dealt with as part of an overall costs order reflected in the percentage of the costs which are to be payable by one party to the other. Thus in determining the overall percentage of Vatsal's costs which Udi should pay to Vatsal I will take into account that Udi should ultimately bear half of the costs which Vatsal has expended on the Mother's claim.
53. It is more difficult to apply that approach in relation to the costs which I have indicated should be paid out of Cashco's assets (the costs incurred by Vatsal in relation to Harshika's claim and in relation to the Mother's claim to a share in Cashco alternatively for money). The difficulty is that Mr Desai is also a partner and thus a person who would be affected if the costs were met in that way. Strict logic would therefore suggest that this aspect of costs cannot be dealt with by adopting a broad-brush approach as between Vatsal and Udi (and their wives) and that, instead, these elements of Vatsal's costs must be stripped out of his overall costs to be dealt with separately. In that case, they would then fall to be treated as an expense of the Cashco partnership and be provided for as part of the dissolution exercise.
54. Nonetheless, I would prefer to deal with the matter in a different way which will, broadly speaking, achieve a similar result although not with the same precision. I propose to adopt the following method. In the first instance, I will make an overall costs order which treats 100% of these costs as attributable to Vatsal and Udi between them, and this will be reflected in the overall percentage of his own costs which Udi should bear. Vatsal will then need to work out that part of his costs which are in fact attributable to these two claims. Mr Desai should be debited with his 10% share of those costs (viewed as an expense of Cashco) in the dissolution accounts of Cashco. If the figure cannot be agreed between the three partners, it will be necessary for the costs judge to conduct a detailed assessment of Vatsal's costs attributable to these claims.
55. This approach is not one which has been debated in front of me. I must therefore give the parties the opportunity to object. My conclusion is to that extent only provisional. However, the approach seems to me to provide a sensible way of avoiding more complicated detailed assessment and further difficulties for me in determining the overall percentage of Vatsal's costs which Udi should meet.
56. I do not propose to assign a percentage of the overall costs of each side to each separate issue although, in reaching final percentages, I have taken account of my perceptions of the weight of each issue in terms of time and expense. It is an unscientific exercise; but then it is appreciated that the only way of achieving a more precise and accurate result is to carry out precisely the huge and expensive assessment exercise which everyone wants to avoid. I should however indicate my thinking in relation to the apportionment of the overall costs between the company action and the partnership action. There has obviously been considerable overlap in the work done for each action: the history is the same and witness statements contained large amounts of common material. Indeed, in the end, all the evidence stood as evidence in both actions.
57. Although it is not necessarily the case that each side has incurred the same proportion of its cost in relation to the two actions, I do not see such differences between their positions that I would be justified in adopting different percentages. I am confident that at least 30%, but not more than 50% of each side's overall costs should be apportioned to the company action, but I think that almost any percentage within that range could be justified. In my view, taking into account everything which I have read for the trial, the conduct of the trial itself and events after the trial, I proceed on the basis that 35% of each side's total costs are to be attributed to the VU Chem action, leaving 65% apportioned to the partnership action and all the issues raised in that action. I reduce that 35% to 33% to reflect Bhavini's conduct in relation to the methadone register.
58. Of that 65%, in my judgment, (arithmetically rather than as a percentage of a percentage), Vatsal should pay Udi a further 25% making a total of 58% (33% + 25%) of his total costs. In the other direction, Udi should pay Vatsal 25% of his total costs. It is quite by coincidence that the costs of each side attributable to the partnership action (ie 65% of their total costs) are the same – 25% of their total costs. It does, however, reflect my broad impression that, in relation to the partnership action, neither Vatsal nor Udi could claim victory. For the reasons already given, I do not think I should simply set off the two 25% figures against each other because in terms of £s, they may be different amounts. However, if the parties, having considered this judgment, consider that they can, by agreement, but through all of this and agree a costs order under which Vatsal pays Udi 33% of Udi's total costs, I will be willing to make such an order.
59. I have so far really ignored the special positions of Anju and Bhavini. Anju should, together with Vatsal, be liable for the 33% of the total costs which are effectively attributable to the company action. Although she is in theory responsible with Vatsal in relation to Global Investments, it would be disproportionate to require an assessment of those costs and I have no information on which I could rationally assign a percentage of the costs to that limited issue. Accordingly, I will make an order that Vatsal and Anju should pay 33% of Udi and Bhavini's total costs of both sets of proceedings. In additional, unless the parties can agree to call it a day in relation to reciprocal costs orders, I will make what I might call "25% orders" in each direction as between Vatsal and Udi.

Payment on account

60. It is clear that Vatsal and Anju will be liable for substantial costs. It is appropriate that I make an interim order. Mr Talbot tells me that the total costs of Udi and Bhavini exceed £1.3 million. That figure does not come as a surprise but I can see that there may be many areas where challenges might be made applying the rules applicable to a standard basis assessment. I am prepared to order payment on account of 50% of the 33% of the total costs taking the figure of £1.3 million as the starting point. That gives a figure of £214,500. However, before I make such an order formally, I require to see written confirmation from Stephenson Harwood that the costs which their clients are liable to pay to them exceed the figure of £1.3 million.
61. Mr Talbot also seeks pre-judgment interest under CPR 44.3(6)(g), referring me to the decision of Laddie J in IPC Media v Highbury Leisure Publishing Ltd [2005] EWHC 283. I am not willing to make such an order, at least at the present time. I have no evidence before me about what costs have actually been paid. Interest cannot be claimed from a paying party on costs which the receiving client is liable to pay to his solicitors but which have not yet been paid (but I add that I say nothing about whether the paying party might later be liable for interest if the receiving party is obliged to pay, and does pay, interest on his own solicitors' bills).