England and Wales High Court (Chancery Division) Decisions

IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION

		Royal Courts of Justice The Rolls Building Fetter Lane EC4A 1NL
		05/02/2014

Mr Justice Norris :

1. I order that the costs of the application dated 15 October 2013 ("the Application") shall, insofar as not already provided for, be Claimant's costs in the case.
2. Until the adjourned hearing of the Application the Defendants had given undertakings. At the adjourned hearing they withdrew the undertakings and argued that the Claimants were not entitled to any interim relief: but they indicated that if I was minded to appoint a receiver then in an endeavour to "buy off" such an order they would renew their undertakings. In the event I appointed a receiver (but not on the general terms which the Claimants had sought and only as part of a package designed to bring home to the parties wisdom of resolving their differences both in this action and in the context of their wider business relationship).
3. The Claimants submit that they were successful on the application and that, in accordance with the general rule, they were entitled to their costs unless in all the circumstances the court saw fit to make a different order. They submitted that no different order should be made having regard to the conduct of the Defendants.
4. The Defendants submit that costs should be reserved, and that this is the settled practice: see paragraph 44.7.4 of the White Book and the reference to the cases of Desquenne [2001] FSR 1 (CA) and Picnic at Ascot [2001] FSR 2. The Claimants submit that this is no longer the settled practice: see the observation of Rimer LJ in Taylor v Burnton [2014] EWCA Civ 21 that:-

"Whereas in times gone by "costs in cause" orders or "claimants costs in cause" orders where commonly made on interim applications, nowadays they are more rarely made, and the winner of an interim application will commonly be awarded his costs there and then, regardless of what happens at the trial".

5. The principal considerations that have weighed with me in making my order are these:-

a) The Claimants succeeded on their application:

b) The basis on which they succeeded was not by establishing their legal rights but by an application of the principles set out in American Cynamid (so that I may have appointed a receiver to protect rights which in the end they do not establish):

c) The Claimants sought, (but at the hearing abandoned) a request for a different form of order (a package of injunctive relief including an order that the business be relocated):

d) The Application was necessitated by the fact that the Defendants seized control of and excluded the Claimants from a business in which even the Defendants acknowledged the Claimants have some form of economic interest:

e) The Defendants appear to have abandoned the legal position which they adopted in open correspondence and in counsel's skeleton argument for the first hearing of the Application, denied that the Claimants or their company were members of the partnership, and advanced a new case at the hearing that the Claimants had some form of beneficial interest in some of the assets of the LLP:

f) The Defendants asserted that the Claimants had acted fraudulently in registering themselves as partners when the Defendants had actually provided the relevant access codes to facilitate that change:

g) The Claimants did not issue any originating process even though (whatever may have initially been agreed or understood) it became clear that the application would be hotly contested and (having issued process) had failed to serve it even at the date of the hearing of the application:

h) I am in a much better position to weigh these various factors and will be the trial judge, so that it is not sensible to reserve costs:

i) I strongly feel that in no circumstances should the Defendants be eligible to claim £75,000 (their claimed costs) or any lesser sum from the Claimants having regard to the way in which they have conducted themselves on this application:

j) The Claimants are guaranteed payment of £6500 in respect of their costs under the order of Asplin J:

k) The possibility that the Claimants may not establish that they are entitled to an interest of a sort that would support or of a value that would warrant the appointment of a receiver should not be overlooked.

6. I have referred to these as "the principal considerations": as ever in cases of the sort one has regard to "all the circumstances" some of which it is not easy to articulate but have undoubtedly influenced the clear view that I have formed.
7. I should specifically record that I have left out of account one matter urged upon me. The Defendants urged that because I was encouraging the parties to mediate their dispute I should reserve the costs rather than making any form of adverse costs order. This has not weighed with me. I do not think that the willingness of a party to mediate should deprive it of a costs order to which it would otherwise be entitled.