England and Wales High Court (Queen's Bench Division) Decisions

IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION

		Royal Courts of Justice Strand, London, WC2A 2LL
		04/04/2012

Mr Justice Tugendhat :

1. In the judgment I handed down on 29 March Neutral Citation Number: [2012] EWHC 773 (QB) I refused Mr Hare's application to strike out the claim as an abuse of the process of the court. This judgment sets out my decision on costs.
2. There is no dispute that Mr Hare should pay the Claimant its costs of the application to strike out. Mr Downes asked for those costs on an indemnity basis as from the letter dated 5 October 2011 referred to in para [18] of my first judgment.
3. I accept that the pursuit of the application to strike out stood less prospect of success following that letter. But I did not accept that it had become so unreasonable as to justify an order for indemnity costs.
4. After the handing down of my judgment, the parties submitted to the court a draft Order which included detailed directions to take the case to trial.
5. However, in response to a question from the bench, Mr Tomlinson made clear that the offer of a permanent undertaking to the court referred to in my judgment at para [21] of my judgment remained open.
6. There is nothing more than a permanent undertaking or injunction that the Claimant could achieve if successful at a trial. So on that basis, it seemed to me that, in the exercise of my case management powers in CPR Part 3.1(2)(f), I ought to accept the undertaking and stay the action.
7. In the course of submissions I asked Mr Downes if he had instructions whether he would oppose my imposing a stay, and making no order as to the costs of the action. I also indicated that by reason of the matters set out in paras [35] to [41] of my judgment, I would in any event have thought it right that the Claimant should not recover all of its costs of the action, in accordance with CPR Part 44.3(4) and (5)(a) (conduct of the parties).
8. I adjourned for some time to enable Mr Downes to seek instructions, but he was unable to obtain them. He made clear that he opposed my disposing of the matter in this way. He had had no notice, and was unprepared to argue the question. At a point at which, by a misunderstanding, I thought he had said all that he wished to say in the circumstances, I indicated that that was the order that I proposed to make. Mr Downes objected that he had not completed the submissions that he did wish to make. While accepting that the position was unsatisfactory in the light of that misunderstanding, I invited Mr Downes to complete the submissions that he said he wished to make. But they did not lead me to take a different view.
9. By letter dated 4 July Wragge & Co for the Claimant had served on Mr Hare a copy of the Order of Vos J dated 3 July, the Application Notice for the continuation of the injunction on the return date, the Claim Form, the Particulars of Claim and the Response Pack. Other steps taken by the Claimant in the action, or incidental to it, are set out in paras [1], [4] to [5] and [14]-[15] of my judgment. These included the preparation of a bundle for the hearing on 7 July (served by letter dated 6 July) and the collection of evidence as described in Wragge & Co's letter of 7 July. By the same letter they gave notice that they had entered into a conditional fee agreement with the Claimant, and they enclosed a notice of funding.
10. Amended Particulars of Claim were served by letter dated 19 July. Time for service of the Defence was agreed to expire on 3 August, and Mr Hare's Application to strike out the claim was served by him on that date. It is common ground that the Claimant must bear the costs of the amendment, and draft re-amendment to the Particulars of Claim.
11. In opening the Claimant's case to me on 20 March Mr Downes had stated that, in addition to the costs of Mr Hare's application to strike out the claim, the Claimant's base costs already amounted to £75,000. This sum seems very high to me for the steps described in para 9 above, but I have no breakdown, and am not engaged in an assessment. I shall assume that they are the reasonable costs for the work done, subject to the point on the Claimant's conduct under CPR Part 44.3 that I had raised.
12. On 29 March Mr Downes reminded me how large was the sum the Claimant had incurred in respect of costs the action, other than the costs of Mr Hare's Application Notice. He said that including the After the Event Insurance premium they were over £100,000. He submitted that if the action were to be brought to an end that day the court was required to reach a view as to which party was the successful party within the meaning of CPR Part 44.3(3)(2)(a):

"If the court decides to make an order about costs – (a) the general rule is that the unsuccessful party will be order to pay the costs of the successful party; but (b) the court may make a different order".

13. Mr Downes submitted that the Claimant is the successful party. Further, he submitted that I should not have regard to the conduct of the application made to Vos J without notice to Mr Hare. Matters relating to that should be argued, if at all, at the hearing of the Claimant's application to continue the injunction on the return date, and that hearing had never taken place.
14. Mr Downes submitted that, in any event, no extra costs were incurred by the without notice application.
15. Mr Tomlinson did not object to my imposing a stay of my own motion. He submitted that there is no requirement that I decide which party is the successful one. In any event, I could not do that, because the offer of a permanent undertaking had been put forward without prejudice to Mr Hare's contention that the Claimant was not entitled to an injunction.
16. There had been a proposal from the Claimant of a one day trial to determine whether Mr Hare spoke the words complained of. Mr Tomlinson had submitted that that would not be determinative of whether or not the Claimant was entitled to an injunction, and I had accepted that submission, as set out in para [30] of my judgment.
17. Of course I understand the difficulty that Mr Downes faces, being without instructions and not having expected me to impose a stay on the proceedings of my own motion. But the CPR requires the court to exercise its case management powers to give effect to the overriding objective: CPR Part 1.2. This matter has been the subject of a number of hearings already, and the argument after I handed down my judgment itself lasted well over an hour. If I were to adjourn the matter for another hearing, further substantial costs would result.
18. In my judgment it is a matter of speculation whether the application to Vos J without notice to Mr Hare gave rise to costs which would not have been incurred if notice had been given. I do not know what would have happened if the Claimant had given short notice to Mr Hare, to enable Mr Hare to participate in the telephone hearing before Vos J. However, I assume in the Claimant's favour that it would in any event have commenced proceedings claiming a permanent injunction. But I cannot, and do not, assume that the proceedings would have taken the same course that they in fact took. CPR Part 44.3(4) and (5)(a) do not require the court to make a finding that a failure to comply with the CPR has caused costs to be incurred which would not otherwise have been incurred. The court is entitled to make orders for costs reflecting the conduct of the parties, and it may do so with a view to encouraging parties to act in accordance with the CPR.
19. The Claimant has never given the reasons for not giving notice to Mr Hare, as it was required to do by CPR Part 25.3 and Practice Direction 25A para 3.4. This is not surprising, because there are very few acceptable reasons that can be given for denying a defendant the elementary right to be heard before an order of the court is made against him. None of them apply in the present case. The Claimant knew how to contact Mr Hare. And the Claimant could not have invoked either of the reasons referred to by Lord Hoffmann (National Commercial Bank of Jamaica Ltd v Olint Corpn Ltd [2009] UKPC 16; [2009] 1 WLR 1405 para [13] and set out in the notes to the White Book (2012) para 25.3.5):

"unless either giving notice would enable the defendant to take steps to defeat the purpose of the injunction (as in the case of a Mareva or Anton Piller order) or there has been literally no time to give notice before the injunction is required to prevent the threatened wrongful act."

20. As Clintons pointed out on 8 July, Wragge & Co had already on 1 July given notice to them of its intention to commence proceedings. And the notice required by CPR Part 25.3 need only be informal, and can be given very shortly before the application is actually made.
21. I do not accept that the court is precluded from making a decision pursuant to CPR Part 44.3(4) and (5)(a) if there is no hearing of the Claimant's Application to continue the injunction. In deciding whether or not to exercise my case management powers of my own motion, and if so, whether to adjourn before I do so, I have to reach a view as to what remains at stake in the action, including what remains at stake on matters of costs.
22. Apart from the costs of Mr Hare's application to strike out, which I have dealt with separately, there is nothing now at stake in this action except costs. And if I am right that the Claimant should not recover the costs of the without notice application, the costs now remaining at stake are no more than the costs of the Claim Form, the Particulars of Claim, preparation for the return date, some correspondence, and some investigation of the evidence. In my judgment, the overriding objective cannot be achieved if there is to be a trial to ascertain which party is to bear those costs. It would be wholly disproportionate.
23. There is no doubt that the Claimant has been successful in the sense that it has already achieved all that it could achieve if it took the matter to trial. But it does not follow that Mr Hare is the unsuccessful party. I have made no findings adverse to Mr Hare. The only decision I have made is that the claim is not an abuse of the process of the court. If the Claimant did take the matter to trial, there is no knowing whether it would win or lose. It might come away with nothing, and, if it did, it would be the unsuccessful party for the purposes of CPR Part 44.3. I accept Mr Tomlinson's submission that I cannot decide that Mr Hare is the unsuccessful party to the action.
24. This case follows closely upon another case in which a party achieved the purpose it set out to achieve, and yet did not recover costs: Citation Plc v Ellis Whittam Ltd [2012] EWHC 764 (QB) (28 March 2012). There may be other cases in which that can happen, but it is particularly prone to happen in cases where the only relief sought is an injunction or an order for specific performance.
25. It is not uncommon in cases where a claimant seeks to prevent the disclosure of information, or the publication of defamatory words, for the claimant, or intended claimant, to achieve his purpose by means of solicitors' letters, or the mere issue of a claim form. The solicitors may charge a high price for that service, but it does not follow that the intended defendant, or the actual defendant, will be ordered to pay those costs. The converse applies in relation to defendants. They can incur substantial bills from solicitors in successfully dissuading a party from pursuing a threatened claim, and yet not recover their costs.

CONCLUSION

26. It is for these reasons that I accept the permanent undertaking of Mr Hare in the terms of the interim undertaking embodied in the Order of 7 July 2011, I stay the action, and I make no order as to costs of the action, save that Mr Hare pay to the Claimant its costs of Mr Hare's application notice dated 3 August 2011.