England and Wales High Court (Chancery Division) Decisions

IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION

		Royal Courts of Justice Strand, London, WC2A 2LL
		19/04/2011

Mr Justice Warren :

1. This short judgment is written to deal with the costs of the application which I heard on 28 May 2010.
2. The application raised three distinct matters:

a. The section 42 Partnership Act 1890 point.

b. The Minor Partners' costs ancillary question.

c. A claim by Vatsal and Anju for an interim payment in respect of the amounts which would be owing following the account to be taken by Master Bragge alternatively a stay of the payment on account of costs payable by them to Udi and Bhavini.

3. On the first two of those matters, Vatsal and Anju were unsuccessful. Any costs order must reflect that. It is to be acknowledged, however, that those issues took a comparatively short time at the hearing and preparation for argument on them cannot have taken a great deal of time.
4. The third matter divided into two – (i) interim payment alternatively (ii) stay. Vatsal and Anju were unsuccessful on (i) but successful on (ii). Udi and Bhavini opposed both (i) and (ii). Thus, Vatsal and Anju can argue that, even if (i) had not been raised, they would still have had to come to court to obtain (ii); against which, Udi and Bhavini can argue that had (i) not been raised, agreement would have been reached on (ii). I am sceptical about the latter especially as there was not even a without prejudice save as to costs offer by Udi and Bhavini to agree to a stay provided that the interim payment application was abandoned although, equally, Vatsal and Anju did not make the corresponding offer either (ie to abandon the interim payment application if a stay were agreed).
5. Mr O'Mahony contends that Vatsal and Anju were the successful parties having succeeded in obtaining their alternative relief. He says that a stay should have been consented to in the light of Master Bragge's order dated 28 April 2010 (as to which see paragraph 5 of my judgment handed down on 25 March 2011, [2011] EWHC 641 (Ch) ) and in particular the part of that order, by consent, to the effect that an account should be taken. He relies on the failure by Udi previously identified by me to demonstrate any enthusiasm for a speedy sale of the Cashco properties when a sale would have put Vatsal in funds to meet the order for payment on account of costs.
6. Mr Talbot has referred me to a transcript to show the course of the hearing and how the argument for a stay was largely developed, and in due course limited, orally by Mr O'Mahony in answering question from me. Indeed, the alternative of a stay had only the briefest of mentions in the skeleton argument prepared by Mr Sisley and Mr O'Mahony for the hearing. It is true that the alternative was only briefly mentioned, but the submission went like this:

"The alternative to an interim payment is a stay, as allowed by CPR r.3.1(2)(f). That might anyway be the better approach when the parties' affairs are so entangled and when money is to be released in stages as sales proceed. This is also why a stay is desirable."

7. That resonates with what I said in paragraph 19 of my 25 March 2011, [2011] EWHC 641 (Ch) judgment. It indicates that what has been described as the alternative remedy was not seen as some undesirable fall-back position.
8. Mr Talbot also points out that Vatsal and Anju could and should have made their application for a partial stay when he, Mr Talbot, applied for a payment on account of costs. [The use of the words "partial stay" reflects I think my use of the words "limited stay" by which I meant a stay pending the outcome of the account before Master Bragge or a change of position following a sale of Cashco properties and the release of funds to Vatsal.] Had the issue been raised at that time, the result might have been that no order for payment on account would have been made: see paragraph 18 of my 25 March 2011, [2011] EWHC 641 (Ch) judgment. Of course, some time would have been taken up and the hearing would have been that bit longer. But I doubt very much that the sort of costs which have no doubt been run up in relation to the actual application would have been incurred. I agree with Mr Talbot that the issue could and should have been raised at the earlier hearing. I consider that the failure to do so, and the need for a separate application and hearing, should be reflected in the costs order.
9. In my judgment, the fair result is to make no order at all, as between Vatsal and Anju, on the one hand, and Udi and Bhavini, on the other hand, about the costs of all aspects of the hearing on 28 May 2010 including both the section 42 point and the point about the costs of the partners in the Minor Partnerships. Vatsal and Anju are, I consider, properly to be seen as the successful parties on the interim payment/stay aspect of the application. But, although successful, they lost one significant part of the argument in that they did not achieve an interim payment and, what is more, the application should in any case have been made at the earlier hearing. They also lost the other two points (section 42, costs of partners). To refuse them recovery of any their costs seems to me to be the fair result, as it is to refuse Udi and Bhavini recovery of any of their costs.
10. I would ask counsel to finalise the Minute of Order on that basis and to lodge a signed copy with the court.