England and Wales High Court (Chancery Division) Decisions

IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION

		Court No: 4 Rolls Building Fetter Lane London EC4A 1NL
		15th July 2013

MR CHARLES HOLLANDER QC:

1. I gave judgment in this matter after a trial this morning. I now have to deal with a number of matters in relation to interest and costs.
2. I first deal with a number of issues as to interest.
3. The first matter is on the claim for interest in respect of the main judgment sum of

£650,000. The claimant says that I should order it at 2% above base from 1st April 2007, which is the date on which, had it not been for the events which occurred, it is likely that the claimant would have obtained probate and then become entitled to the monies she was hoping to receive. The defendant says that the appropriate rate is 1% above base and that the relevant date is 20th August 2009, as interest was earned or capable of being earned by the estate in the intervening period.

4. So far as the rate of interest is concerned, the Commercial Court Guide suggests 1% above base. There is a reference in the White Book to 2% above base. It seems to me 2% is excessive but 1% is more appropriate to commercial cases and therefore I will order 1.5%.

Next, as to the date from which interest is to run, it seems to me that the defendant is right in respect of this. Whether or not the estate actually did earn interest, these were assets which were in the estate and therefore were potentially earning money. The complaint made by the claimant is in fact they did not, but in particular bearing in mind my finding at paragraph 132 of my judgment, where I refer to the suggestion made by the defendant solicitors acting for the co-executors that consideration should be given to disposal of its assets, not to be done without the consent of the claimant. The assets were there in the estate and potentially capable of being disposed and thus (whether sold or not) capable of increasing in value orearning interest, so it would be wrong to award interest separately during this period. I award 1.5% above base from the 20th August 2009.

5. The next question on interest is on the £62,000 costs of the claimant which she incurred in the course of the 2006 probate action. Here the issue is very limited. It simply goes to the rates above base. Given my previous finding, I award on this head 1.5% above base from the time in each case when these costs were paid.
6. The next matter for me to decide is interest under CPR 36.14(3)(a). This arises because on the 10th May 2013, the claimant's solicitors made a Part 36 offer as follows:

'We have considered the matter carefully with our client and the evidence you have disclosed does not alter our client's view as to the merits of her case, however in an attempt to resolve matters now and to avoid the costs in respect of a four-day hearing, our client would be prepared to accept the sum of £700,000 in settlement of her claim. This letter is intended to have the consequences of Section 1 of the Part 36 rules. If your client accepts this offer within 21 days from, and not including today, they will be liable for our client's costs in accordance with Rule 36.10. This offer relates to the whole of the claim. There is no counterclaim applicable to the matter.'

7. The trial started on 4 June 2013, whereas the 21 day period expired immediately before that. It is accepted that the claimant has beaten that and therefore unless it is unjust under 36.14(3)(a), I am obliged to order interest starting with the date on which the relevant period expired, interest on the whole or part of any sum of money awarded at a rate not exceeding 10% above base rate. The question in issue

is simply as to what rate I should order from the 3rd June 2013. Given current

interest rates, which were rather different when this rule was first devised, and the notes in the White Book indicating that the judge has the discretion as to exactly what percentage should order, in my judgment it would be quite wrong to order a sum anywhere near 10% as that would be effectively penal. Allowing however for

8. a generous uplift in usual rates to reflect the purpose of the rule, I order 3.5% above base for the period from 3rd June 2013.That concludes the issues in relation to interest. Next I have to consider, the provision of CPR r36.14(3)(d) which has been brought in by the Jackson Reforms and is brand new. This provides that in circumstances where the claimant has made a Part 36 offer and has beaten it, as here, that unless it is unjust to do so, she is entitled to an additional amount not exceeding £75,000, calculated in accordance with the table therein set out. I refer to the sum in this judgment as being £75,000 for convenience, although I think in fact the calculation will produce a figure slightly less than that.
9. Thus I am obliged to order this sum to be paid unless I consider it unjust to do so, and CPR r36.14(4) sets out some of the circumstances for consideration as to whether it would be unjust to make the orders. I will not read into this judgment the words of the rule, but in setting out factors to be considered it includes (a) the terms of any Part 36 offer; (b) the stage in the proceedings where 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 when the Part 36 offer was made. It also refers at (d) to 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. .

Mr Fenwick, on behalf of the defendant, says in respect of this, that it would be unjust so to order. He says that the offer was made at the last minute, the 21 day period expired only a day or two before the trial started. He says it only just beat the offer and he relied particularly on two matters. First of all he said that there had been no pleaded case in respect of the allegation that Dr Staunton should have been chased up by Mr Ward. This was a key allegation in the case. This arose in the course of opening when I asked counsel for the claimant as to whether she was running such an allegation and she said she was. Mr Fenwick pointed out at thatstage that that matter was not pleaded, but said he would not take a pleading point on it.

10. The other matter which he relied upon was he said that the nursing notes from the Allenbrook Nursing Home had been sought in November 2012 but were not disclosed until the Sunday or the Monday just before the trial, and he said that in particular those two matters are material under (4)(c) of 36.14.
11. I have taken into account also the very much last minute when this offer was made. Given that the jurisdiction to make an order only arises when the 21 day period for the offer has expired before the trial and when the Claimant beats the offer, it must follow that (4)(b) envisages that the court may take into account whether the offer was made a long or a short period before the commencement of the trial. Where enhanced interest is in issue under CPR 36.14(4)(c ), the length of time since the offer is reflected in the amount of interest awarded (ie because the period of time is very short here). But where the lump sum is in issue, the rule has in mind an "all or nothing" order and contemplates that expiry of the 21 day period only a very short period of time before the trial, as here, may be a factor in rendering making the payment order unjust. The fact that the claimant only just beat what was recovered makes no difference in my judgment.
12. The two most important factual points are those raised by Mr Fenwick, namely the case relating to Dr Staunton and the nursing notes. So far as the first is concerned, this was an important matter and was the principal ground on which I decided the liability, although not the only one in the event. That was a matter of fundamental importance and at the start of the trial the defendants were entitled to say that the matter was not formally in issue, it only became an issue when raised in opening.

So far as the second matter is concerned, in my view the nursing notes were disclosable and should have been disclosed, because there was reference in thepleadings to the 2006 probate action and the mental condition of the testator was an issue there. I take into account that (i) the claimants in not disclosing them made it clear they wanted the consent of the home, they did not suggest they did not have the documents and (ii) if pressed the defendants could have made an application to court for copies. But these were important documents which were only disclosed on the eve of the commencement of the trial.

13. However, in the light of the matters set out at [13] to [15] above, in particular the matter of Dr Staunton, I consider that it would be unjust to make an order for

£75,000 and I decline to do so.

14. I now turn next to the question of costs. Now here, plainly, the claimant has succeeded, but Mr Fenwick says the claimant should be deprived of some part of their costs, for the following four reasons: (i) the non pleading of the Dr Staunton case. (ii) the failure to provide the nursing home records (iii) the failure of the share claim which involved some discussion of ad colligenda bona, and (iv) the failure of the executor's costs here.
15. Had I not decided that it was unjust under r36.14(4) to refuse an order for £75,000, I would have made a deduction from the claimant's costs to take into account these matters. However having reached a view in respect of the £75,000, for the reasons set out above, and taken into account in that regard (i) and (ii) it would in my judgment be unfair to the claimant to penalise her a second time in respect of the first two matters., Matters (iii) and (iv) would not on their own have been sufficient to deprive the claimant of costs. Thus having in mind very much my previous decision in respect of the £75,000, I do not make any reduction for the plaintiff's costs and I order the claimant should recover all her costs. For the avoidance of doubt, if I had not declined to order payment of the £75000 lump sum, I would have ordered that the Claimant should receive less than the full amount of her costs.The next item is the claim for indemnity costs from 3rd June 2013 until today. This is not significantly in dispute and I award that.
16. Interest on costs from the date paid. The only issue here is whether it is 1% or 2% above base, and in view of my previous ruling I order 1.5% above base.
17. Enhanced interest on costs after 3rd June 2013, asked at 10% above base. The

defendants say it should be 3% or 4% above base. In line with my previous ruling I order 3.5% above base.

JUDGE HOLLANDER: Now, I hope I have not made errors in that, I hope you followed it all. It is somewhat complicated.

MR FENWICK: Yes, well that's very clear. We will have to do some recalculations. JUDGE HOLLANDER: You will have to do lots of recalculations.

MR FENWICK: Particularly when we know the dates of claimant, but hopefully that can be agreed between solicitors and-

JUDGE HOLLANDER: You want to ask for interim payment and he wants to ask for leave to appeal.

MRS PEACOCKE: Well indeed My Lord, I certainly want to ask for an interim payment, but also it may be that Your Lordship should simply confirm that the costs shall up to the 3rd June be on the standard basis and after that be on the indemnity basis. I'm not quite sure that was included in Your Lordship's judgment.

JUDGE HOLLANDER: Of course and-

MRS PEACOCKE: And I think there's no dispute on it. MR FENWICK: Sorry I-

JUDGE HOLLANDER: Right. I am sorry, it probably is your go next but did you want to say anything before Mrs Peacocke deals with any question on interim payment?

MR FENWICK: No, if there is such an application, of which I've had no notice, then I shall deal with that first.MRS PEACOCKE: My Lord we do ask for an interim payment as to our costs. We have not provided a schedule of all the costs of the litigation so as to ask for an interim payment in a certain amount, but it is open to Your Lordship simply to make an interim payment in a percentage of the-

JUDGE HOLLANDER: But it might be said to be in Mr Fenwick's interest that he pays you more rather than less given that he is having to pay interest-

MRS PEACOCKE: Interest on it, indeed. JUDGE HOLLANDER: -at 3.5%-

MRS PEACOCKE: Indeed.

JUDGE HOLLANDER: Subject to security it might be thought he would want to overpay you-

MRS PEACOCKE: Well-

JUDGE HOLLANDER: -but perhaps- MRS PEACOCKE: Be that as it may.

JUDGE HOLLANDER: -he can form his own view on that.

MRS PEACOCKE: Be that as it may My Lord. All we do is we do ask that there should be an award of an interim payment as to our costs and we simply ask that Your Lordship should make that on a rough-and-ready basis of 50% of the claimant's billed costs.

JUDGE HOLLANDER: Well what am I being asked to do? Because you better give me a figure and tell me how it is made out.

MRS PEACOCKE: Indeed.

[Inaudible discussion].

MRS PEACOCKE: £75,000, representing 50% of the claimant's billed costs to date. JUDGE HOLLANDER: So you are telling me on instructions-

MRS PEACOCKE: I am.JUDGE HOLLANDER: -that your costs to date are about £150,000? MRS PEACOCKE: My Lord, yes.

MR FENWICK: My Lord, I've heard what my learned friend says and I've heard what Your Lordship has said. I also can do arithmetic, and I'm sure those behind me can also work out commerciality. There has been no application. I have conducted a very large number of cases in which interim payments have been sought. I have never come across one where I haven't been told until a moment before it's sought what the amount is.

JUDGE HOLLANDER: Well I have.

MR FENWICK: Well Your Lordship is lucky – lucky or unlucky.

JUDGE HOLLANDER: But the fact is that I mean that would go to the percentage really, would it not?

MR FENWICK: Well-

JUDGE HOLLANDER: The more details you have- MR FENWICK: Yeah.

JUDGE HOLLANDER: -the higher the percentage the claimant is, all things being equal, entitled to. So you say – it is obvious they have incurred some costs-

MR FENWICK: Yes.

JUDGE HOLLANDER: -and you can tell – and you do not have to tell me what your costs are but I can surmise it might not be less than £150,000 or-

MR FENWICK: I don't know but I imagine they might not be.

JUDGE HOLLANDER: I imagine they might not be. In which case- I mean, you know, that does not seem to me a particularly high figure, £75,000.

MR FENWICK: No.

JUDGE HOLLANDER: If you want to address me on that please do. MR FENWICK: No My Lord.JUDGE HOLLANDER: Interim payment £75,000.

MRS PEACOCKE: My Lord I'm grateful. My Lord the only other point that the claimant will do is insofar as it may be necessary and because it's a very very new point, I would ask Your Lordship to consider whether or not the claimant should have permission to appeal on the question of the payment of the additional amount under the new rules 36.14.

JUDGE HOLLANDER: I am refusing leave to appeal and I think I made it clear in my judgment that had I not done that I would have disallowed some of your costs. So what is it, that the figure in issue is not the full £75,000 if I can put it that way?

MRS PEACOCKE: Indeed My Lord, I'm grateful.

MR FENWICK: My Lord it's never easy to make attractive a submission to the court that he has got it wrong.

JUDGE HOLLANDER: No, that is alright, do not worry.

MR FENWICK: No well, I know Your Lordship will take it in that spirit.

JUDGE HOLLANDER: Well it always arises on leave to appeal in my experience.

MR FENWICK: Yes. Your Lordship will see that, regretfully, we ask for permission to appeal on breach, causation, on the 100% loss of chance, on the breaking chain of causation a bleak scope, and on the worthy point where, with respect, we don't think Your Lordship has followed Lord Justice Chadwick, beguiled by my learned friend's submissions to do so.

Now I've set out in summary form the areas. Your Lordship is well aware of your own judgment. I'm not proposing to try and persuade you that Your Lordship was wrong, simply that there are important matters here on which the court could consider giving leave, but unless there is any particular aspect you would like clarification on, I'm simply going to make that application, invite Your Lordship to give us permission and if not then we must seek our luck elsewhere.JUDGE HOLLANDER: No. Thank you very much for setting it out in such detail. I refuse leave to appeal.

MR FENWICK: I'm grateful.

JUDGE HOLLANDER: Right. Somebody is going to provide me an order and work out which will follow those. I will fill in the form.

MRS PEACOCKE: There's a form as to permission but otherwise I'm very happy to see if we could agree a minative order signed between counsel.

JUDGE HOLLANDER: Yes, the only thing I am just pausing here is this form it says it is the claimant's application for permission to appeal.

MRS PEACOCKE: It does.

JUDGE HOLLANDER: Presumably we need two forms. MR FENWICK: I'm afraid Your Lordship does, yes.

JUDGE HOLLANDER: Yes.

MR FENWICK: It is very dull. JUDGE HOLLANDER: Good, right. MRS PEACOCKE: My Lord-

JUDGE HOLLANDER: Thank you very much to both of you for all your assistance.

End of judgment.

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