Neutral Citation Number: [2016]
EWHC 776 (Ch)
Case No: HC-2014-002092
HC-2014-001010
HC-2014-001387
HC-2014-001388
HC-2014-001389
HC-2015-000103
HC-2015-000105
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Royal Courts of Justice, Rolls Building
Fetter Lane, London EC4A 1NL
Date: 12/04/2016
Before:
MR JUSTICE NUGEE
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Between:
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Sharp & Others
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Claimants
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Blank & Others
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Defendants
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Alan Steinfeld QC & Stuart Adair (instructed by Harcus Sinclair UK Limited)
for the Claimants
Helen Davies QC & Tony Singla (instructed by Herbert Smith Freehills)
for the Defendants
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Judgment
Mr Justice
Nugee:
Introduction
1.
I now have to deal with the costs of various matters. The parties have
submitted very detailed and helpful written submissions, and I have been
invited to deal with the costs on paper without a hearing, which I am content
to do. Because of the many points raised by the submissions this judgment is
more elaborate than a judgment on costs would normally be; but there are
significant sums in issue and I accept that the parties are entitled to a fully
reasoned judgment.
2.
The relevant matters are as follows:
(1)
the Defendants’ application, by application notice dated 15 July
2015, for summary judgment in relation to certain allegations in the
Particulars of Claim, and/or for parts of the claim to be struck out (“the
summary judgment application”);
(2)
the Claimants’ application, by application notice dated 29
September 2015, for specific disclosure (“the specific disclosure
application”);
(3)
the Claimants’ application, made in the course of the second case
management conference (“CMC”), for permission to amend the Particulars
of Claim (“the amendment application”);
(4)
the second CMC itself, which dealt with a miscellany of matters.
3.
It is agreed that the costs of the CMC should be costs in the case. I
agree and will therefore make an order to that effect. The other matters are
however more contentious.
The summary
judgment application
4.
This sought summary judgment or a strike out in relation to a number of
discrete allegations in the Particulars of Claim. I heard it initially over 3
days from 21 to 23 October 2015; that left one remaining part of the
application which was adjourned and heard on 24 and 25 February 2016. There
were 6 parts to the application which were argued, and on which I gave
judgment, separately.
5.
These 6 concerned the following allegations in the Particulars of Claim
(in the order in which I heard them):
(1)
An allegation that Lloyds would not have had to raise additional
capital if it had not proceeded with the acquisition of HBOS (“the
recapitalisation issue”). I gave an oral judgment on 23 October 2015
declining to grant summary judgment on this part of the application.
(2)
An allegation that the Director Defendants were aware that HBOS
(through its subsidiary Bank of Scotland) was manipulating its LIBOR
submissions (“the LIBOR issue”). I handed down a reserved judgment on
12 November 2015 declining to grant summary judgment on this part of the
application.
(3)
An allegation which relied on statements in the Prospectus as
giving rise to a duty of care in tort (“the prospectus issue”). I gave
an oral judgment on 22 October 2015 upholding this part of the application.
(4)
Allegations that (i) the Director Defendants owed a broad range of
fiduciary duties; (ii) that the Director Defendants owed a duty in tort to take
all reasonable steps to prevent the Claimants from suffering loss and damage;
and (iii) that the Director Defendants had acted in breach of duty in putting
the proposed acquisition of HBOS to an EGM (“the duties issue”). I gave
a reserved judgment on 12 November 2015 largely, but not entirely, upholding
these aspects of the Defendants’ application.
(5)
An allegation that the Defendants had included numerous misleading
and tricky statements in their documents (“the tricky issue”). The
Defendants’ application was for these to be particularised. I gave an oral
judgment on 23 October 2015 requiring particulars to be given.
(6)
Allegations that HBOS was valueless at the time it was acquired,
and that the exchange of Lloyds shares for HBOS shares constituted a gross
overvaluation of HBOS (“the valueless issue”). This was argued at the
adjourned hearing in February and I gave an oral judgment on 25 February 2016
refusing summary judgment on this part of the application.
6.
I have divided the application into 6 parts; it is always possible to
subdivide an issue further and the Claimants have identified 7 issues by
treating the duties issue as comprising a fiduciary duties issue and an EGM
issue (although accepting these were closely connected), whereas the Defendants
have identified 8 issues by also splitting out the prevention of loss duties
(both fiduciary and tortious) from the duties issue. I do not think this level
of subdivision is necessary: I think it is more appropriate to regard the general
fiduciary duties, the prevention of loss duties and the calling of the EGM as
all tied up together, as is reflected by the fact that they were argued
together, and as comprising different aspects of what was really one overall
issue.
7.
It can be seen that the Defendants’ application had mixed success. The
Claimants’ overall submission is that I should make an estimated apportionment
of the costs attributable to the parts of the application on which they were
successful and order the Defendants to pay those costs. The Defendants’
overall submission is that having regard to the issues on which they were
successful and those on which they were not, the appropriate order is costs in
the case.
8.
On either view it is necessary for me to identify who is the successful
party on the relevant issues and to form some view of the proportion of costs
spent on the different issues.
9.
Certain aspects are relatively straightforward. It is not disputed that
the Defendants were the successful party on the prospectus and tricky issues.
So far as the prospectus issue is concerned, the Claimants point out that I
said in my judgment that it is doubtful whether striking it out would make any
practical difference to the trial, but this is a point which cuts both ways:
however unimportant the point may have been, the fact remains that the
Claimants opposed this part of the application, and argued against it, and
lost. They also point out that so far as the tricky issue is concerned, I did
not accede to the Defendants’ suggestion of an unless order; but I regard this
as not materially detracting from the fact that in substance the Defendants
obtained what they sought, namely an order requiring the Claimants to
particularise the allegation.
10.
I also take the view that the Defendants were the successful party in
relation to the duties issue. They succeeded in obtaining a strike out both of
the broad fiduciary duties pleaded (other than those consistent with the
sufficient information duty admitted in Paragraph 37(f) of the Defence),
including in particular the duty pleaded to prevent shareholders from suffering
loss, and of the tortious duty to take all reasonable steps to prevent
shareholders from suffering loss. These latter two duties, the prevention of
loss duties, were ones that they had specifically taken issue with in their
Defence (at Paragraph 37(h)). The Claimants suggest that their success did not
have any practical effect on the claim or narrow the issues. I do not accept
this submission which I think understates the potential significance of the
point: it seems self-evident that a prevention of loss duty, whether framed as
a fiduciary duty or as a duty of care in tort, is much more wide-ranging than
the sufficient information duty, or the various tortious duties pleaded, and I
can well understand why the Defendants wished to dispose of the prevention of
loss duties, and indeed the broad range of fiduciary duties pleaded, at an
early stage.
11.
The Claimants also suggest that overall the parties were drawn on the
duties issue, once allowance is made for the fact that the Defendants did not
entirely succeed in striking out the allegations in Paragraphs 121, 122(2) and
127 relating to the calling of the EGM. Again I disagree. The Defendants’
overall concern, as Ms Davies made clear in argument, was that the combination
of the duties pleaded and the plea that it was a breach of duty to call the EGM
might be intended to lay the groundwork for a causation argument that would
avoid the need for the Claimants to prove what would have happened had fuller
or different information been given. Although I took the view that this
causation argument was not open to the Claimants, it was I think a legitimate
concern on the way the pleadings were framed; and I did agree with the application
to strike out Paragraphs 121 and 127 in which it was pleaded that the holding
of the EGM was a breach of duty. Taken as a whole my judgment achieved what
the Defendants sought to achieve. In these circumstances, the fact that I left
in Paragraph 122(2), and the fact that I was subsequently persuaded to allow
the Claimants to reintroduce Paragraph 121 (once it had been redrafted), do not
seem to me to amount to reasons for regarding the Defendants as unsuccessful on
the EGM point, or for treating the duties issue as having resulted in a draw
overall.
12.
There is no dispute that the Claimants were the successful party on the
valueless issue.
13.
In relation to these four issues the position on costs seems to me to be
relatively straightforward. Although contained in one application notice, the
Defendants in effect brought 6 separate applications, each with their own
evidence and each argued separately, and each (as it happens) the subject of a
separate judgment. In these circumstances I think the costs of each issue
should in principle be looked at separately. The starting point is therefore
the general rule in CPR r 44.2(2)(a) that the unsuccessful party should
pay the costs of the successful party, that is that the Claimants should pay
the Defendants’ costs of the application so far as they related to the
prospectus, duties and tricky issues, and the Defendants should pay the
Claimants’ costs of the application so far as they related to the valueless
issue.
14.
There is one subtlety to add to this: where the Defendants have
succeeded in having an allegation struck out, they should in principle be
entitled, as Ms Davies points out, to recover all costs incurred on that issue
not just the costs incurred on the application. But in practice at this stage
of the proceedings it must be doubtful what separate costs have been incurred
on these matters that are not costs of the application, and I have not been
given any indication of what such costs might amount to.
15.
Both parties have made various miscellaneous points. The Claimants say
that the issues on which the Defendants have succeeded were minor and have had
no impact in terms of narrowing the issues or shortening the cost and length of
trial, that the application has delayed the proceedings by some 6 months, and
that the Defendants’ success was “technical” and their victory “pyrrhic”. I do
not accept these characterisations of the Defendants’ success; in particular
the duties issue as I have already said was in my view one of some potential
significance. I am not persuaded that any of these matters constitutes a good
reason to depart from the general rule that the Defendants should in principle
have their costs of the issues on which they won.
16.
The Defendants for their part say that the Claimants should not have
their costs of the evidence which they filed on the valueless issue, because
the work would have been necessary in any event and the material in question
will almost certainly be deployed at trial. I am not persuaded that this is a
good reason to depart from the general rule either. It is quite difficult at
this stage to form any very clear view as to how much of the work done will
turn out to be useful at trial: certainly I would expect some of Mr MacGregor’s
work (in particular on explaining the own credit adjustment) to be deployed at
trial; but other parts are likely to be overtaken by developments. In any
event the natural consequence of a defendant issuing and pursuing a summary
judgment application is to require a claimant to bring forward at least part of
his evidence early, and I do not see anything objectionable in principle to the
defendant in effect bearing the risk of having to meet the cost of doing so if
his application fails.
17.
So far as the recapitalisation and LIBOR allegations are concerned, it
is again not disputed that the Claimants were the successful party. Ms Davies
makes the point however that the Defendants were justified in issuing a summary
judgment application in relation to these allegations in the light of the very
thin particulars that were provided by the Claimants in response to requests
for further information. There is I think considerable force in this. In my
judgment on the recapitalisation allegation, I accepted that the pleading as it
stood amounted to an allegation that Lloyds would not have had to raise any
additional capital (at [29]), and that the Claimants obviously faced some
difficulties in making out this extreme version of the facts (at [30]). In my
judgment on the LIBOR allegation, I said that the FCA’s findings did not
establish or even really begin to suggest that the Defendant directors were
aware that Lloyds was manipulating its own LIBOR submissions, and so formed no
basis for the assertion that they would have been aware of the possibility that
HBOS might be doing the same thing (at [14]); and that the material put before
me by Ms Davies cast real doubt on whether there was any sound basis for
drawing the inference the Claimants had pleaded (at [23]).
18.
I do not think I should say any more about the apparent merits of the
pleaded case as these allegations will remain for trial and I am currently due
to be the trial judge, but without going beyond the views I have already
expressed, it can be seen that in effect I allowed these allegations to proceed
not because of material that the Claimants had produced in support of them, but
despite the lack of it. In the case of the recapitalisation allegation this
was because it was not clear that it would serve any useful purpose to strike
out the allegation where the relevant facts were going to be in issue at trial
anyway. In the case of the LIBOR allegation, it was because I could not be
confident that disclosure would not shed a different light on the allegation.
19.
These circumstances do to my mind raise a real question as to whether a
simple order that the Defendants pay the Claimants their costs of these parts
of the application does most justice between the parties. I fully accept that
the general rule is that costs should follow the event; and that it is a
salutary principle that those who make interlocutory applications and lose them
should normally pay the costs of the applications, and should do so when they
lose them, not at the end of the day. But costs are always in the discretion
of the Court: under CPR r 44.2(2)(b) the Court has power to make a
different order from the general rule, and under CPR r 44.4 the Court is
to have regard to all the circumstances.
20.
In the present case both these parts of the application were in my
judgment reasonably brought having regard to the nature of the case pleaded; if
it turns out at trial that there is indeed nothing in either allegation, it is
not obvious to me that it would be just to require the Defendants to pay the
Claimants the costs of the evidence deployed, and the argument presented, in
support of the submission that they should be free to take forward claims for
which they have little support at the moment, and may never have sufficient to
make good their case. In such a case I think it would be more just to leave
the Claimants to bear their own costs of these allegations. That suggests to
me that so far as the Claimants’ costs are concerned, it is fairer to order
that the Defendants should pay them only if the allegations are made good at
trial, rather than being paid by the Defendants now regardless of what happens
to these particular allegations.
21.
On these aspects therefore, I accept the Defendants’ submission that the
costs should await the outcome of the trial, but with two significant
differences. First, I do not think the costs should simply be expressed as
costs in the case, as this would mean that the Claimants, if successful
overall, would recover them even if they lost on these particular allegations.
Rather the costs should I think stand or fall with the fate of these particular
allegations, as what might be termed “costs in the issue”.
22.
Second, although I consider this is appropriate for the Claimants’
costs, I do not think the same applies to the Defendants’ costs. It is one
thing to say that the Defendants should not have to pay the Claimants their
costs if the allegations turn out to be groundless; it is another thing to
require the Claimants to pay the Defendants their costs of applications which
the Defendants have persisted in to judgment and which they have in the event
lost. I do not think it would be fair to do this even if these claims
ultimately turn out to be unfounded.
23.
In principle therefore it seems to me that the fairest course is not, as
submitted by Mr Steinfeld, for the Defendants simply to pay the Claimants’
costs of these aspects of the application, nor, as submitted by Ms Davies, for
the costs to be wrapped up in a general order for costs in the case, but for
the Claimants’ costs to be costs in the issues. By that I mean that the
Defendants should pay the Claimants their costs of the application in relation
to the recapitalisation issue if but only if they succeed in that issue at
trial; and the same with the LIBOR allegation. I will not formally make an
order in those terms however as it may give rise to difficulties if the
allegations in fact established at trial are not identical to those originally
pleaded – it is already foreseeable that this might arise in the case of the
recapitalisation allegation which has since been amended. The better course is
therefore to reserve the costs to trial, but with the intention that they
should be costs in the issues as explained. Reserving the costs of
interlocutory applications to trial is in general now discouraged, not least
because the trial judge will very often not have heard the application; in the
present case however I am due to be the trial judge and this particular
consideration does not apply.
24.
In summary therefore I consider the appropriate order in principle to be
as follows;
(1)
The Claimants to pay the Defendants their costs of the application
so far as regards the prospectus, duties and tricky issues.
(2)
The Defendants to pay the Claimants their costs of the application
so far as regards the valueless issue.
(3)
The Claimants’ costs of the recapitalisation and LIBOR allegations
to be reserved to the trial judge with the intention that they be costs in the
issues as explained above.
25.
Under CPR r 44.2(7) however the Court is enjoined not to make an
order in relation to a distinct part of the proceedings under r 44.2(6)(f)
(which would include the costs of particular issues) if it is practicable to
make an order in relation to a proportion of another party’s costs under
r 44.2(6)(a) instead. That exercise requires one to apportion the costs
incurred on the various aspects of the application.
26.
The Claimants have sought to do this. The Defendants have not sought to
do it themselves, but equally they have not taken issue with the particular
apportionment put forward by the Claimants (save in relation to Mr MacGregor’s
expert’s report, which I will consider separately). The Claimants’
calculations are elaborate and detailed, and calculations of this type tend to
give a spurious air of mathematical precision to what is necessarily an
imprecise exercise, but I propose to follow the Claimants’ methodology to see
where it leads.
27.
I will take the Claimants’ figures for the percentages of time spent at
the hearing, and the written argument and evidence, as a starting point. I
will not however adopt the Claimants’ overall percentages. These give
different weight to the hearing time and written material per issue, so that
for example on the duties issue they propose allocating 15% of the costs to it,
which is less than the average of hearing time (26%) and written
material (7%), whereas on the valueless issue they propose allocating 28% which
is rather more than the average of hearing time (32%) and written
material (21%). Instead, I propose to proceed on the basis that, leaving
aside Mr McGregor’s fees, 50% of the Claimants’ costs were incurred on the
hearing and 50% on the written material. That produces a consistent basis for
each issue under which the overall percentage is in each case the average of
the two other percentages. That gives the following figures:
Issue hearing time % written%
overall %
LIBOR 10
8 9
Recapitalisation 18 30
24
Duties 26
7 16.5
Prospectus
8 3 5.5
Valueless 32 21
26.5
Tricky
2
Para
2(3) PD 24
2
Total
85.5%
28.
That leaves 14.5% unallocated which is attributable to common matters.
The Claimants’ approach is to allocate such unallocated costs (and the 2%
attributable to the para 2(3) point) proportionately to the other issues. The
Defendants make three points in relation to this.
29.
First they say that the 2% attributable to the para 2(3) point should
not be dealt with in this way as they were the successful party in that I
proceeded to hear the application. I agree: the para 2(3) point was an attempt
to stop the application in its tracks which failed.
30.
Second, they say that the unallocated costs should not be apportioned as
a matter of principle as they are matters on which neither party was
successful. I do not agree: these are not matters on which neither party was
successful, but matters which cannot be attributed to any particular part of
the application (for example a chronology). In principle the Claimants’
approach of allocating these common costs proportionately to the other issues
seems to me appropriate.
31.
Third, the Defendants say that the Claimants’ calculations are wrong as
a matter of arithmetic. They take as an example the share of the 16% (on the
Claimants’ figures) attributable to the 3 issues on which the Claimants won
(62% on the Claimants’ figures) and say the apportionment should be 62% x 16% =
9.92%. I do not agree; I think it is the Defendants whose maths is unfortunately
faulty as their approach would leave some of the 16% unallocated. The correct
apportionment (on these figures) is not 62% of 16%, but 62/84 (or 73.8%) of
16%, namely 11.8%, which is how the Claimants have calculated it. On the
figures I have adopted above, the apportionment is of course different, but in
principle the Claimants’ approach seems to me mathematically sound.
32.
Using the figures above, there is not 16% but 14.5% to apportion to the
other issues. To find the appropriate apportionment it is necessary to take
the percentage given above for the issue, say P; the formula for the additional
allocation is then given by P/85.5 x 14.5. In the case of LIBOR for example,
the percentage given above is 9% and the appropriate additional allocation is
9/85.5 x 14.5 = 1.53%, making a total of 10.53%. It can be seen that an
alternative (and simpler) way of expressing the formula for the additional
allocation is P x 14.5/85.5 or P x 16.95%.
33.
Applying that approach consistently gives the following figures:
LIBOR 9.0 +
1.53 10.53
Recapitalisation
24.0 + 4.07 28.07
Duties 16.5
+ 2.80 19.30
Prospectus
5.5 + 0.93
6.43
Valueless
26.5 + 4.49 30.99
Tricky 2.0
+ 0.34 2.34
Para 2(3) 2.0
+ 0.34 2.34
Total 85.5
+ 14.50 100.00
34.
On the assumption, in the absence of any other indication, that the
Defendants’ costs were incurred in the same proportions, this would mean that:
(1)
The Claimants should pay the Defendants 30.41% of their costs.
(2)
The Defendants should pay the Claimants 30.99% of their costs.
(3)
38.6% of the Claimants’ costs should be costs in the issues.
These figures of course look precise but
are not; it would be equally accurate, and more helpful, to say that what this
calculation demonstrates is that a fair reflection of the relative success of
the parties is that the Defendants and Claimants should each have 30% of their
costs, and 40% of the Claimants’ costs should be reserved to be costs in the
issues. If I stand back from the mathematical calculations and ask whether
such an order fairly reflects the respective success of the parties, it seems
to me that it does. The Defendants and the Claimants each achieved a
significant success (on the duties issue and the valueless issue respectively);
and although the Defendants lost on two other potentially important issues (the
recapitalisation and LIBOR issues), they did so in circumstances where for the
reasons I have given I consider the most appropriate order is to reserve the
costs.
35.
That leaves the fees payable to Mr MacGregor which have been separately
apportioned by the Claimants. Their apportionment is 70% to the valueless
issue, and 30% to the recapitalisation issue. The Defendants’ proposed
apportionment is the other way round – 30% to the valueless issue, and 70% to
the recapitalisation issue. I have looked back at Mr MacGregor’s report. I
accept that it is too simplistic to look just at the specific parts of the
report where he deals with the valueless allegation (sections 7 to 9) as some
of the introductory sections are relevant to both issues; and although only one
section (section 10) deals directly with the recapitalisation issue, some of the
introductory sections do seem to be more directly relevant to that issue.
Taking this into account, I start from the position that Mr MacGregor was asked
to deal with, and dealt with, two substantive issues, neither of which was
obviously more time-consuming to consider than the other, and that the default
position is that the costs should be apportioned equally between the two
issues. I then ask myself whether any sufficient reason has been shown by
either party to depart from equality. I have not been persuaded that there
has, so I will adopt an overall apportionment of 50% to each issue.
36.
It follows from the principles I have adopted above that the Claimants
should be entitled to recover 50% of the costs of the report. That leaves the
question of the other 50%: should these be included in the costs of the
recapitalisation issue which are reserved to trial? In my judgment the answer
is No. As Ms Davies points out, the transcript of the first CMC at which I
gave permission to adduce expert evidence makes it entirely clear that the
permission was to do so on the valueless issue alone – see transcript for 22
July 2015 at p 11 where I said:
“Yes,
valueless. That is the issue. That is what I have understood the issue to
be. I see Mr Steinfeld nodding. That will appear on the transcript. It is
certainly not permission to adduce accountancy evidence in relation to any
other issue.”
I
then said I would give permission, and referred to:
“a report
from an expert accountant on the issue which has been identified and will be
available on the transcript, which you have suggested….As far as admissibility
is concerned I will give you permission to put it in.”
There is nothing ambiguous in this; the
only issue on which permission to adduce expert evidence was given was the
valueless allegation.
37.
It is true that the Order drawn up to give effect to the directions I
made at the CMC simply refers to:
“permission,
if so advised, to adduce expert evidence in the area of accountancy”
but the purpose of an order is to give
effect to a judge’s judgment, not to widen it; and in the light of what I said,
it cannot be supposed that this Order gave permission to adduce expert
accountancy evidence on any other issue than the valueless issue. In these
circumstances I do not see why the Claimants should be able to claim the costs
of adducing expert evidence on the recapitalisation issue. I will therefore
direct that no part of Mr MacGregor’s fees attributable to that issue (which I
have assessed at 50%) should be included in the costs of the recapitalisation
issue.
38.
The Defendants also incurred costs on instructing their expert, Mr
Deetz, whose report was confined to the valueless issue. It follows that they
should not recover any part of those costs.
39.
I can now summarise what I consider to be the appropriate order for
costs of the summary judgment application. I see no reason to award costs
other than in accordance with the principles I have identified above. I will
therefore order:
(1)
The Claimants to pay the Defendants 30% of their costs of the
application other than Mr Deetz’s fees.
(2)
The Defendants to pay the Claimants 30% of their costs of the
application other than Mr MacGregor’s fees.
(3)
The Defendants to pay the Claimants 50% of their costs so far as they
consist of Mr MacGregor’s fees.
(4)
40% of the Claimants’ costs of the application (other than Mr
MacGregor’s fees) be reserved to the trial judge.
It is tempting to consider whether this
can be simplified by treating the 30% of the costs (other than the expert fees)
payable each way under (1) and (2) as cancelling each other out, but although
the overall costs schedules are not very far apart, it is apparent that the
Claimants have spent rather less on legal fees (and more on expert fees) than
the Defendants and I do not think I should deprive the parties of the right to
a detailed assessment if they want it. I will therefore direct that the costs
in (1), (2) and (3) be the subject of detailed assessment on the standard basis
if not agreed.
40.
I have not overlooked Ms Davies’ point that in principle the Defendants
should have their costs of the issues on which they succeeded not just their
costs of the appropriate part of the application, but in the absence of any
reason to think that any significant costs have been incurred, it seems to me
unnecessary to make any special provision for such costs. If the Defendants
are successful at trial they can expect to recover them anyway.
41.
The Claimants ask for an interim payment. Since I have directed
detailed assessment, CPR 44.2(8) requires me to make an order for payment of a
reasonable sum on account of costs unless there is good reason not to. This
requires me to assess the likely overall effect of the costs orders in (1), (2)
and (3). Taking the figures in the parties’ costs schedules produces the
following:
(1)
Defendants’ costs
Grand total
797,796.90
Less
Expert’s fees 88,980.00
5,340.00
VAT
17,920.80
112,240.80 112,240.80
685,556.10
x 30%
205,666.83
(2)
Claimants’ costs
Grand total
758,155.18
Less
Expert’s fees 265,810.00
VAT
53,162.00
318,972.00 318,972.00
439,183.18
x 30%
131,755.14
(3)
Claimants’ expert fees
(as above) 318,972.00
x 50% 159,486.00
159,486.00
(4) Net payable (assuming 100%
recovery)
Payable by
Defendants 131,755.14
159,486.00
291,241.14 291,241.14
Payable by
Claimants 205,666.83
Net payable by Defendants
85,574.31
42.
That calculation is of course based on 100% of actual costs incurred.
The Claimants ask for an interim payment on the basis of 40% of actual costs
incurred. Assuming the same level of recovery for both parties this produces
the following net figure payable by the Defendants:
85,574.31 x 40% = 34,301.72 (or
say) Ł35,000.
This is admittedly a small sum in the
context of this litigation but nevertheless I see no good reason not to order
an interim payment on account of costs of that amount, payable within 14 days
of the date this judgment is formally handed down.
The
specific disclosure application
43.
The Claimants’ specific disclosure application sought disclosure of 16
classes of documents under 3 heads (LIBOR, the 2009 Accounts and
Recapitalisation). Before the resumed hearing the parties agreed to dispose of
this application by the Defendants giving specific disclosure of 4 classes of
documents, 2 relating to LIBOR and 2 relating to the 2009 Accounts and Recapitalisation.
The agreement did not include any agreement as to costs.
44.
The Claimants seek an order that the costs be in the case. They say
that the disclosure that has now been agreed is substantial and would not have
been forthcoming without the application. They accept that they did not obtain
all the classes of documents that they sought but say that they came to a
sensible compromise agreement.
45.
The Defendants seek their costs of the application. They say that the
Claimants significantly narrowed the scope of their application, which
indicates that as issued it was misconceived; that the Claimants issued the
application without any attempt to engage with the Defendants beforehand; and
that had the Claimants sought to do that, it would not have been necessary to
issue the application.
46.
These submissions raise in effect two issues. One is the question of
how significant or substantial is the disclosure that the Defendants have now
agreed to give when compared with the disclosure originally sought; the other
is what would have happened had the Claimants, as they no doubt should have
done, sought disclosure in correspondence first. On both issues I have the
difficulty that I have not heard the application. I find it impossible to form
any reliable view of either issue. The Defendants may be right that what they
have now agreed to disclose is only a small part of what was originally sought;
and that if only it had been asked for, it would have been given: they can
point to the much reduced scope of what has been agreed compared to what was
originally sought. Equally however the Claimants may be justified in their
assessment that they have achieved the agreement of the Defendants to disclose
significant material which they would not have done without making the
application: they can point to the fact that the Defendants appear to have
opposed the application in its entirety. Neither position is obviously
implausible, and in the absence of any exploration of these issues in the
hearing before me, I do not see how I can sensibly form a view of them – to do
so would I think be little better than poorly informed speculation.
47.
In these circumstances I agree with the Claimants that the appropriate
order is for costs to be in the case.
The
amendment application
48.
I can take this quite shortly. In the course of the second CMC, the
Claimants sought permission to amend in a number of respects. Some amendments
were consented to: in principle the costs of and occasioned by these amendments
should be borne by the Claimants in any event.
49.
The dispute is over the costs of the amendments which were opposed by
the Defendants. In principle it seems to me that the costs of an opposed
application to amend fall to be treated in the same way as the costs of any
other opposed application, namely that they should follow the event. This
requires one first to identify the successful party. But in the present case
both parties had a considerable degree of success. The Claimants were granted
permission to amend in certain respects, but the process of arguing the
amendments identified certain problems with them, and in some respects the
Claimants agreed to think again. I find it difficult to characterise either
party as in substance the successful party. The application to amend was
brought as part of the second CMC and it seems to me fair to both parties to
treat the costs as costs in the case.
Summary
50.
I will order the costs of the specific disclosure application, the CMC
and the amendment application to be costs in the case.
51.
In relation to the summary judgment application, I will order:
(1)
The Claimants to pay 30% of the Defendants’ costs of the
application other than the expert’s fees (Mr Deetz and Navigant and VAT
thereon).
(2)
The Defendants to pay 30% of the Claimants’ costs of the
application other than Mr MacGregor’s fees (and VAT thereon).
(3)
The Defendants to pay 50% of the Claimants’ costs so far as they
consist of Mr MacGregor’s fees (and VAT thereon).
(4)
40% of the Claimants’ costs of the application other than Mr
MacGregor’s fees (and VAT thereon) be reserved to the trial judge.
(5)
The costs in (1), (2) and (3) to be the subject of detailed
assessment on the standard basis if not agreed.
(6)
The Defendants to pay the Claimants Ł35,000 as an interim payment on
account of costs within 14 days of the date this judgment
is formally handed down.
