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
		14/06/2013

Mr. Justice Silber:-

I. Introduction

1. As a result of the judgment in the main action handed down on 5 June 2013 with the Neutral Citation Number [2013] EWCA 1500 [QB] ("the main judgment"), it is agreed that the consequences of it are that:-

i) The claim against the First Defendant should be dismissed;

ii) Judgment by the Claimant against the Second Defendants for £1,192,546.02;

iii) The Claimant should pay the Second Defendants costs of the Spanish tax claim to be assessed on a standard basis by way of a set off against any costs payable by the Second Defendant to the Claimant, such costs to be assessed if not agreed.

2. The outstanding issues to be resolved are:-

(i) What order should be made in relation to the costs of the First Defendant?

(ii) On what basis should costs be awarded against the Second Defendant, namely standard or indemnity?

(iii) Should the Claimant be awarded all his costs or should there be any deduction, and if so, how much?

(iv) Is the Claimant entitled to an indemnity in respect of the costs of Grant Thornton in complying with disclosure orders?

(v) What rate of interest is payable by the Second Defendants?

(vi) What interim costs order payment should be made?

(vii) Should there be a stay of the judgment or the interim costs order payment pending the determination of the application for permission to appeal and the subsequent appeal? and

(viii) Within what period must the Defendants apply for permission to appeal?

II. The First Defendant's costs

3. The case for the First Defendant is first that the Claimant should be ordered to pay its costs in respect of all matters, because first the Claimant's case has failed against them, and second that the only loss which the Claimant has suffered was a result of the Second Defendants' breach of duty in Autumn 2004, which was long after the Second Defendants had taken over the assets of the First Defendant in March 2003.
4. It is said by Mr Roger Stewart QC, counsel for the Defendants, that there is no good reason for the Court to depart from the general principle that the successful party, which in this case is the First Defendant, should be entitled to an order for its costs, such costs to be assessed in default of agreement and paid by the Claimant.
5. Mr Mark Simpson QC, counsel for the Claimant, contends first that the First Defendant had not incurred any costs over and above that which the Second Defendants otherwise would have had to incur, and second that therefore there is no purpose in making a costs order in favour of the First Defendant as their inclusion in these proceedings has not led to an increase in the legal and other costs payable by the Defendants. The riposte of the Defendants is to contend first that much evidence was given about the circumstances in which Mr Purnell provided tax advice while acting for the First Defendant when not expressly requested to do so, which would not have been necessary if the First Defendant had not been sued, and second that additional experts' costs were incurred by the First Defendant being a party.

(i) The giving of tax advice by Mr. Purnell when not expressly requested to do so

6. Mr. Simpson contends first that the Claimant's case was based on two ways of showing that the Second Defendants had an obligation to advise the Claimant on tax matters even if not expressly requested to do so and both ways would have been pursued even if the Second Defendants were the sole defendants. The first aspect of it was that Mr. Purnell, who was the Claimant's long term accountant, had an obligation established over many years while acting for the First Defendant and continuing while he was acting for the Second Defendant to advise the Claimant on tax issues even when not requested to do so.
7. The second aspect of the Claimant's case was that even if the first aspect was wrong and Mr. Purnell did not have that pre-existing duty, then Mr. Purnell still had such an obligation to give the Claimant tax advice when not requested to do so at the meeting on 2 October 2004. Therefore the case for the Claimant is irrespective of whether the First Defendant was a party to the proceedings, the first part of the claim required an investigation of the previous history of the relationship between the Claimant and the entities for whom Mr. Purnell worked, which were at the relevant times the First and Second Defendant.
8. The First Defendants had the same insurers and solicitors as the Second Defendants and so Mr Simpson submits that on that issue no additional costs have been incurred on the Defendants' side by having the First Defendant as a party to this action; the evidence would have been the same even if the First Defendants had not been joined in the proceedings. I agree.
9. Mr Stewart's next submission is that the reports of the expert accountants considered the pleaded contention of the Claimant that the First Defendant had an obligation to advise the Claimant in the period prior to March 2003 that (a) he had or very probably had non-dom status; (b) his non-dom status carried with it very significant tax advantages; and (c) he should therefore take tax advice from a firm of accountants or tax advisers who specialised in advising individuals with non-dom status. The references in the report of the accountancy experts of the parties, according to Mr. Stewart and not disputed by Mr. Simpson, show that some costs must have been incurred by having the First Defendant as a party to the action. The Claimant's expert, Mr. Kilshaw, for example, dealt with the duty of the First Defendants to give advice on the Claimant's domicile and in his first report and that had to be considered by, the Defendants' expert, Mr. Warburton.
10. In those circumstances, I have concluded that the inclusion of the First Defendant in the present proceedings has led to some additional costs being incurred, although these are not large sums, they cannot be ignored. Thus the First Defendant is entitled to an order for costs against the Claimant; they will have to decide if it is worthwhile having this assessment and the Claimant might wish to consider whether to make an offer.

III. The Costs of the Second Defendants

(i) Should the Claimant's costs against the Second Defendants be assessed on a standard basis or on an indemnity basis?

11. The case for the Claimant is that it is entitled to have its costs assessed on an indemnity basis from 12 October 2012, while the costs incurred prior to that time will have to be assessed on a standard basis. The basis of that submission is that the Claimant' solicitors had made a Part 36 offer of £1,024,000 on 21 September 2012 which expired on 12 October 2012. It has not been accepted. The Claimant has beaten that offer because the current total award is £1,090,736 excluding interest.

(ii) The CPR provisions

12. The relevant provisions in the CPR are Part 36.14, which provide, in so far as material, that: -

"36.14-(1) This rule applies where upon judgment being entered-

(a) a Claimant fails to obtain a judgment more advantageous than a Defendant's Part 36 offer; or

(b) judgment against the Defendant is at least as advantageous to the Claimant as the proposals contained in a Claimant's Part 36 offer.

(1A) For the purpose of paragraph (1), in relation to any money claim or money element of a claim, "more advantageous" means better in money terms by any amount, however small, and "at least as advantageous" shall be construed accordingly.

(2) Subject to paragraph (6), where rule 36.14(1)(a) applies, the court will, unless it considers it unjust to do so, order that the Defendant is entitled to-

(a) his costs from the date on which the relevant period expired; and

(b) interest on those costs.

(3) Subject to paragraph (6), where rule 36.14(1)(b) applies, the court will, unless it considers it unjust to do so, order that the Claimant is entitled to-

(a) interest on the whole or part of any sum of money (excluding interest) awarded at a rate not exceeding 10% above base rate for some or all of the period starting with the date on which the relevant period expired;

(b) his costs on the indemnity basis from the date on which the relevant period expired; and

(c) interest on those costs at a rate not exceeding 10% above base rate.

(4) In considering whether it would be unjust to make the orders referred to in paragraphs (2) and (3) above, the court will take into account all the circumstances of the case including –

(a) the terms of any Part 36 offer;

(b) the stage in the proceedings when 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; and

(d) 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."

13. The Claimant contends that he is entitled to the relief set out in CPR 36.14(3) (which I will call "the Part 36 order") and he will give credit for any lower sum of interest ordered or agreed on any of those sums since that date. The Second Defendant put forward four reasons why the Claimant is not entitled to the Part 36 order.

(iii) Has the Claimant beaten the offer?

14. Mr Stewart contends that the Claimant has failed to beat the offer after taking account of the costs payable by the Claimant to the First Defendant and also the costs payable to the Second Defendant by reason of the Spanish property claim, which the Claimant abandoned.
15. The Part 36 offer was headed with the names of both Harben Barker (a firm) and Harben Barker Limited as the Defendants and it stated that

"our client is willing to settle the whole of the action referred to above [which is the present claim] on the following terms.. Your client to pay our client, within 14 days of accepting this offer, the sum of £1,024,000..."

16. On the assumption that the term "our client" includes the First Defendant Mr Stewart submits, therefore, that in determining if the Part 36 offer has been beaten, it is necessary to take account of sums payable by the Claimant to the First Defendant as explained in paragraph 10 above and to the Second Defendants for the Spanish properties' claim.
17. Mr. Simpson submits that Part 36.14(1A) (which I have set out in paragraph 12 above) shows that the judgment is "better in money terms" than the offer made. I agree that this shows why I cannot accept Mr. Stewart's submission.
18. There are other reasons for reaching that conclusion and they are that the costs of the First Defendant would be very small for the reasons which I have explained, and because:-

i) The Claimant's solicitors had written to the Defendants' solicitors on 8 August 2012 which was more than a month before the Part 36 offer was made explaining that they were not pursuing the Spanish property claim. So it follows that the offer was not to settle that claim and so the Defendants would not have had to pay it. Indeed the Defendants, if in doubt could, and should, have sought clarification; and

ii) In any event, the Defendants' costs of the Spanish claim were £51,117.50 plus VAT before assessment on a standard basis according to Appendix 6 to the Defendants' written skeleton argument. So together with the small amount of the First Defendants' costs, it would have been far less than the difference between the Claimant's offer and the amount awarded.

19. Taking all those figures into account I consider that the Claimant has beaten the offer and thus this ground of challenge fails.

(iv) Withdrawal of the offer?

20. The second reason why Mr Stewart contends that the Claimant cannot rely on the Part 36 offer is that the Claimant withdrew it on 7 May 2013. He points out that the provisions in CPR 36.14 giving the Claimant the right to indemnity costs and other benefits do not apply when an offer has been withdrawn, as is stated in CPR 36.14(6).
21. The trial ended in March 2013 and the draft judgment in this case was sent to the parties on 3 May 2013, but for reasons which are not relevant to this application, judgment could not be handed down until 5 June 2013. CPR 36.9(5) provides that "unless the parties agree, a Part 36 offer may not be accepted after the end of the trial but before judgment is handed down".
22. In other words, the position was that there was no need for the Claimant to withdraw the offer because it was no longer capable of acceptance without the Claimant's consent which would not have been forthcoming. Thus if the Defendants had purported to accept the offer on, say 7 May 2013, just before the Part 36 offer was withdrawn, the Claimant would just have relied on CPR 36.9(5) explaining that he had not consented so that it could not be accepted.
23. So I agree with Mr Simpson that a withdrawal was entirely unnecessary and in the circumstances of this case, it cannot deprive the Claimant of beneficial consequences of having made the offer in the first place. I should add that if I had accepted Mr. Stewart's submission on this point, I would have had to consider CPR 44.4 and would have had to give serious consideration in the light of the policy behind Part 36 to making an order for indemnity costs against the Second Defendants from the date when the Part 36 offer expired, as the Claimant had made a valid offer which had not been beaten which the Defendants could have accepted right up till the end of the hearing but that it had failed to do so.

(v) Lack of proper information on costs

24. The third reason why Mr Stewart says that the Claimant is not entitled to the normal consequences of CPR 36.10 is that it would be unjust for the Court to make an order of indemnity costs in the present case because the Claimant had not given details of its costs, which the Defendants' solicitors had sought. It is noteworthy that the terms required for a valid Part 36 offer are set out in some detail in CPR Part 36.2. Nothing in that provision requires details of the costs of the party making the offer having to be included in the offer or to be supplied.
25. It is true that it is said that in deciding whether to make a Part 36 order, the Court will "take account of all the circumstances of the case" and the relevant factors include those set out in CPR 36.14(4), which I have set out. It is important to appreciate that deficiencies in the information available to the parties will not automatically mean that a Part 36 order must not be made. Indeed a Part 36 order will only not be made if the deficiencies in it are such that the Court considers it "unjust" to make a Part 36 order.
26. This requirement envisages a more detailed exercise by the Court looking at other factors, such as the consequences of the alleged deficiencies for the party receiving the Part 36 offer and whether that party would have acted differently in relation to the offer if the information had not been deficient.
27. Mr Stewart stresses that the Second Defendant was unable to assess the merits of accepting the Part 36 offer because of the Claimant's unwillingness to provide properly particularised details of its costs. It was also stated that throughout the proceedings the Claimant had provided very limited costs information which was often inconsistent and "highly questionable so far as its accuracy was concerned". It was pointed out that the Defendants' solicitors wrote to the Claimant's solicitors on 19 September 2012 expressing its serious concerns in relation to the Claimant's approach to costs and that prompted the decision of the Claimant to make the Part 36 offer.
28. The Defendant is seeking to rely on CPR 36.14(4), which states that it would be unjust to make the usual order in respect of an offer which had not been bettered after taking out all the circumstances of the case including:-

"(c) the information available to the parties at the time when the Part 36 offer was made"; and "(d) the conduct of parties with regard to the giving or refusing to give information for the purposes of enabling the offer to be made or evaluated".

29. I think that the information "available to the parties" referred to in CPR 36.14(4)(c) is the information relating to the merits of the claim and it is not information as to what costs the maker of the offer had incurred at the date of the offer. Indeed the decision whether to accept a Part 36 offer means that the recipient of the offer needs to consider the merits of the claim and that information is clearly relevant to carrying out that exercise.
30. It is important to appreciate that a party accepting an Part 36 offer is protected against any liability for excessive costs incurred previously, as the party making the offer (who in this case was the Claimant) is only to be entitled to the costs of the proceedings on the standard basis up to the date of service of notice of acceptance (CPR 36.10(2) and (3)). Such costs would be subject to the appropriate scrutiny on the assessment process.
31. In consequence, any Defendant who accepts a Claimant's Part 36 offer would then be protected by the assessment process against an unreasonable or an excessive claim for costs. So the absence of some information relating to the offerors's costs would not mean that it would be "unjust" to make a Part 36 order.
32. It is of crucial importance that the Defendants do not say they would have accepted the offer if they had known the actual position as to costs, even though they have had many opportunities to do so. In my view, it cannot be "unjust" to make a Part 36 order in circumstances in which the alleged deficiencies in the offer have not been the reason why the recipient of the offer did not accept it.
33. It therefore follows that any lack of information as to the Claimant's costs had no causative effect on the way that the Defendant acted in relation to the offer. In those circumstances, it certainly would not be unjust to make the usual order because the Defendants would have not accepted the offer if given the proper information on costs.
34. In reaching that conclusion I have taken into account the reliance placed in the Defendants' written skeleton argument on the decision of Ford v GKR Construction [2001] WLR 1397, but I do not find anything in that judgment which requires the party to have exact details of what the costs will be.
35. I should also add that CPR 36.8 states that a party may request the offeror to clarify the offer. So before a party is able to say that it would be unjust for a Part 36 order to be made against it because it had failed to comply with an obligation to make information available, the party should have invoked Part 36.8. That is, after all, the procedure designed to deal with cases where there is a need for clarification. So that is another reason why I must reject the Defendants' contentions.

(vi) Change of Landscape? - A ground for not making a Part 36 Order?

36. Mr Stewart's final ground for contending that a Part 36 order should not be made is that he submits that the landscape of the action changed considerably after the Claimant's Part 36 offer had been made and during the lead-up to the trial.
37. He relies on many factors such as that the Claimant's case originally relied on allegations of duty, breaches of that duty and causation arising over a period of many years and these allegations continued throughout the conduct of the proceedings right up to the time when the Claimant's written opening was served on 14 November 2012. It was only then that the Claimant focussed solely on the period between September 2004 and March 2005. So the Claimant's great reliance on events prior to September was essentially abandoned, but this reduced the ambit of the claim and should not have changed the Defendants' view of it prospects of success.
38. Mr. Stewart also points to other changes in the nature of the case such as the fact first that the Claimant served a further detailed witness statement on 9 November 2012 containing new information and other additional evidence during and after the trial, and second that the Claimant's expert witness, Mr Kilshaw, served much additional material immediately prior to and during the trial. In addition, it is said that the Second Defendant faced considerable difficulties in articulating a precisely defined case in relation to the role of other advisors in advising the Claimant in relation to the sale because of the fact that it had very limited involvement in the sale and the focus of the Claimant's case had moved to the period covered by the merger.
39. The Defendants' case is that the precise role of other advisors could only be considered once the Defendants had had the opportunity to review first the files of the Claimants solicitors in relation to the sale and the merger which were disclosed in advance of the trial on 12 and 23 October 2012 and comprised 26 lever arch files, and second Wragge's billing records which were disclosed only on 23 November 2012.
40. In all cases, there are continuously new developments, especially in the run-up to the start of the trial, and in deciding where to accept a Part 36 offer, a party has to assess what those developments will be, could be, or might be. New developments of the kind relied on by the Defendants cannot mean that it would be unjust to make a Part 36 order. Indeed if the Defendants were correct, I suspect that there would be very few cases in which a Part 36 order would be made.
41. A further reason why I reject this ground is that the Defendants do not say that if they had known this information which emerged after the offer, they would then have accepted the offer which remained open with the court's approval prior to the end of the trial (CPR 36.9(3)(d)) I should stress that every aspect of this case has been fought with ferocity by the Defendants and they have not made a counter offer.
42. A Part 36 order will therefore be made in the Claimant's favour, and it is not disputed that this entitles the Claimant to the relief set out in CRP 36.14(3), save that Mr Stewart contends that 10% uplift is not the normal rate, but that in this case the uplift should be a maximum of 5%. He attaches importance to the low base rate at present, but this ignores the fact that the uplift is penal and not compensatory. Mr. Stewart does not put forward any other mitigating factor or any other reason why I should not apply the 10% uplift. I consider that to be the appropriate rate.

(vii) Should the Claimant be entitled to all its costs or should there be deductions or set-offs?

43. The Claimant properly accepts that he must pay the Second Defendants' costs of first the Spanish property claims, and second those occasioned by the amendment to the pleadings with such costs to be assessed on a standard basis if not agreed and by way of a set off against the awarded costs in the Claimant's favour.
44. The Second Defendants are contending that the Claimant should pay his costs on a number of issues or not obtain its costs for those issues. The most recent comprehensive judicial summary of the law on issues-based orders was given by Gloster J in HLB Kidsons v Lloyds Underwriters [2008] 3 Costs LR 427, in which the following principles were agreed between the parties as being applicable and which are not challenged in this case. They are:-

"The court's discretion as to costs is a wide one. The aim always is to "make an order that reflects the overall justice of the case" ( Travellers' Casualty v Sun Life [2006] EWHC 2885 (Comm) at para 11 per Clarke J. As Mr Kealey submitted, the general rule remains that costs should follow the event, i.e. that "the unsuccessful party will be ordered to pay the costs of the successful party": CPR 44.3(2) . In Kastor Navigation v Axa Global Risks [2004] 2 Lloyd's Rep 119, the Court of Appeal affirmed the general rule and noted that the question of who is the "successful party" for the purposes of the general rule must be determined by reference to the litigation as a whole; see para 143, per Rix LJ. The court may, of course, depart from the general rule, but it remains appropriate to give "real weight" to the overall success of the winning party: Scholes Windows v Magnet (No. 2) [2000] ECDR 266 at 268. As Longmore LJ said in Barnes v Time Talk [2003] BLR 331 at para 28, it is important to identify at the outset who is the "successful party". Only then is the court likely to approach costs from the right perspective. The question of who is the successful party "is a matter for the exercise of common sense": BCCI v Ali (No. 4) 149 NLJ 1222 , per Lightman J. Success, for the purposes of the CPR , is "not a technical term but a result in real life" ( BCCI v Ali (No. 4) ... supra )). The matter must be looked at "in a realistic … and … commercially sensible way": Fulham Leisure Holdings v Nicholson Graham & Jones [2006] EWHC 2428 (Ch) at para 3 per Mann J.

There is no automatic rule requiring reduction of a successful party's costs if he loses on one or more issues. In any litigation, especially complex litigation such as the present case, any winning party is likely to fail on one or more issues in the case. As Simon Brown LJ said in Budgen v Andrew Gardner Partnership [2002] EWCA Civ 1125 at para 35: "the court can properly have regard to the fact that in almost every case even the winner is likely to fail on some issues". Likewise in Travellers' Casualty ... supra ), Clarke J said at para 12:

"If the successful Claimant has lost out on a number of issues it may be inappropriate to make separate orders for costs in respect of issues upon which he has failed, unless the points were unreasonably taken. It is a fortunate litigant who wins on every point."

45. In the Budgen case the quotation from the judgment of Simon Brown LJ cited above ended with the statement that :-

"...and [the court] should be less ready to reflect [the failure of the winner on some issues] in the eventual costs order than the altogether more fundamental failure to make an offer sufficient to meet the winner's true entitlement."

46. I turn to the issues in respect of which the Second Defendants contend that the Claimant should pay their costs, bearing in mind that in line with the authorities cited in paragraphs 44 and 45 above, the Claimant was the winner in the litigation and care should therefore be taken before reducing his entitlement to costs.

(viii) Claimant's claim relating to a continuing breach of duty by the Defendants which extended over a period of years before being reduced

47. The complaint of the Defendants is (as explained in paragraphs 5 to 9 above) that the Claimant originally pleaded his case on the basis that there was a continuing breach of duty by the Defendants which extended over a period of years, but that the Claimant only narrowed his case in his written opening and in the oral opening when he abandoned reliance on breaches of duty prior to September 2004.
48. What is important is that the Claimant's case was that the Defendants had an obligation to give tax planning advice to the Claimant even when not requested to do so. As I have explained, his case was based first on a continuing duty as evidenced by Mr Purnell's conduct from the time when he was a partner in the First Defendants, while the second and alternative aspect of the case was that even if such a duty had not previously existed, it arose during the course of the meeting on 2 October 2004. On both of these matters the Claimant has succeeded. In my view no deduction from the Claimant's costs should be made on this count.

(ix) Failure by Claimant's solicitors to disclose "properly" the Claimant's diary extract relating to the meeting on 3 December 2002

49. During the course of the cross-examination of Mr Purnell, Mr Simpson sought to place reliance on an extract from the Claimant's diary. It was a relevant issue to the question of whether the Defendants had a tax-planning retainer which Mr Purnell ultimately agreed to. There was a dispute as to whether this diary had been properly disclosed. The existence of the diary had been drawn to the attention of the Defendants' counsel on 11 November 2012, when, before the trial, a draft chronology was sent by the Claimant's counsel.
50. A witness statement was put in by Ms Emma Carr explaining the background and I am satisfied that the Claimant's advisers were not culpable to an extent which should lead to a reduction in their costs.

(x) Claim for penalties

51. The Claimant sought to recover the penalties which he had to pay to HMRC as well as ancillary costs and out of pocket expenses. This claim was denied by the Defendants who did not rely on any statutory provision.
52. I was concerned when I was drafting the judgment that there was no statutory or other material put before me to explain the circumstances in which penalties could be and would be imposed. I therefore asked Counsel to explain the basis on which penalties could be imposed by HMRC. After the draft judgment had been circulated, Mr Goodfellow QC (who was then counsel for the Defendants) explained that under the statutory provisions then in force, penalties could only be levied if the tax payer himself was negligent. Once that had been explained, the Claimant abandoned this claim and the Second Defendants claim that the Claimant should pay their costs relating to his issue.
53. It is unfortunate that the statutory position in relation to penalties had not been properly pleaded by the Defendants as it should have been. A few sentences setting out the statutory basis would have sufficed. The note from counsel for the Defendants would then have been quite unnecessary and no deduction should be made in respect of the Claimant's costs for it, especially in the light of the comments of Simon Brown LJ in Bugden set out in paragraphs 44 and 45 above.

(xi) Adjournment in relation to paragraph 43.2(g) of the Defendant's statement of case and the Claimant's threatened application to strike it out

54. In their opening served on 14 November 2012, the Defendants took a new point, which was that there was a fatal conceptual flaw in the Claimant's case because putting the bearer warrants in trust (as was required by BWP) would have devalued them by an amount exceeding the proposed saving of CGT. The Claimant's solicitors wrote to the Defendants' solicitor saying that if they wished to pursue this new point, it would have to be pleaded.
55. The Defendants then served a draft Re-Re Amended Defence which included the new paragraph 43.2.g. On the first day of the trial, which was 20 November 2012, the Claimant consented to most of the amendments which were proposed, but not to adding paragraph 43.2.g. On the second day of the hearing on 21 November 2012, the Claimant sought a ruling that the new case set out in paragraph 43.2(g) was not open to the Defendants on the existing pleadings and it was pointed out that if an amendment was required, the Defendants had not served any evidence in support. The Defendants' counsel then asked for an adjournment saying that he would adduce the evidence by 26 November 2012 and this request was granted.
56. So at the point of the adjournment, the Defendants did not have any evidence to support their amendment or they would have served it. I allowed the Defendants until Friday 23 November 2012 to serve evidence which they did with an actuarial report of Mr Tucker, but surprisingly there was no evidence from Mr Warburton, who was the accountancy expert for the Defendants and who dealt with the issue of what a non-dom specialist would have warned the Claimant about concerning the risks of entering BWP.
57. Eventually the Claimants consented to the amendment. The issue now arises as to whether the Claimant's conduct was unreasonable and had needlessly delayed the trial. I have no doubt in coming to the conclusion that it was the Defendants' conduct which was culpable because Paragraph 43.2 (g) should have been pleaded well in advance of the trial, and when pleaded at the start of the trial, it should not have been put before the Court without the Defendants having an expert report to support it. This led to the adjournment on 21 November 2012 to which I have referred because the Defendants did not have the evidence until Friday 23 November 2012.
58. Mr Warburton (the Defendant's accountancy expert) did not support the Defendants' case and the Defendants therefore did not pursue their case that a reasonably competent specialist advisor would have warned the Claimant about this point. In consequence the Paragraph 43.2.g point was pursued only on quantum but it was rejected.
59. The next complaint of the Defendants is that they have incurred costs because the Claimant notified me on 3 December 2012 that they intended to apply to strike out paragraph 43.2.g, but they did not do so mainly because I wanted the trial to keep moving and I said that it should be dealt with in final speeches. In paragraphs 474 to 480 of the main judgment, I explained why the claim in paragraph 43.2.g had no merit and was totally unrealistic. There is no justification for any deduction on this point.

(xii) Application to recall

60. Many points in the Defendant's pleadings that should have been put to the Claimant in cross–examination had not been put to him, and the Defendants did not think it was necessary for them to have done so. In order to avoid an argument the Defendants applied for permission to recall the Claimant. This application was opposed by the Claimant.
61. After a contested hearing lasting half a day and an exchange of skeleton arguments I ordered the Claimant's recall. I am unable to accept Mr Simpson's contention that the order should be costs in the cause. The approach of the Claimant on the application to recall cannot be justified and he should have to pay the costs of resisting this application.

(xiii) The claim for breach of fiduciary duty

62. The Claimant sought to recover £20,000 paid by MTM to the Defendant who wrongfully did not disclose it to the Claimant, who only discovered it during disclosure in this action. They then offered to repay it without any admission of liability.
63. The Defendant eventually admitted liability but they indicated that they intended to contest the Claimant's version of events as they served witness statements from Mr. Harben and Mr. Barker dealing with these matters. So the Claimant intended originally to cross-examine these men and Mr. Purnell as their accounts were inconsistent, but he decided not to do so as a result of a discussion between counsel.
64. There was some argument about whether the Claimant should have abandoned his claim earlier but it does not seem that there had been unreasonable conduct on the Claimant's part which would justify a reduction in his costs.

(xiv) Sundry Issues

65. There are further issues in which it has been suggested by the Second Defendants that there should be a reduction in the amount of costs payable by the Second Defendants to the Claimant.
66. The first was the questioning of Mr Stanford in relation to the signing of the Statement of Truth on the Re-Re-Re-Amended Defence. It is true that Mr Simpson persisted with a line of questioning based on his contention that Mr Stanford signed the Statement of Truth without believing the contents to be true. Eventually Mr Simpson accepted that he could not rely on this point. It should never have been pursued.
67. The second point of which complaint is made was that the cross-examination of Mr Warburton was prolonged and aggressive during which Mr Simpson made numerous allegations of dishonesty and lack of expertise. At the end of the day, the Claimant did not pursue any allegations of dishonesty. Mr Warburton was not an easy person to cross-examine as his answers were lengthy and often not to the point. There is no need for any deduction.
68. The third matter relates to threats to raise accusations of misconduct against the Defendants legal team. None of the allegations were pursued and they have not added to the length of the hearing or unfairly increased costs in this extremely vigorously contested case.
69. A fourth factor relied on was the Claimant's decision to start proceedings in the Queen's Bench Division. These proceedings were served on 15 November 2010, but the Defendants did not make any application to transfer the case for two years. Indeed the original Particulars of Claim did not raise any matters of complex tax law but they only arose later as a result of changes made by the Defendants to their case. In any event, I do not think that this lengthened the trial but it made my task more difficult especially as many of these matters were not properly pleaded.
70. The final issue raised was the late disclosure of material produced by Mr Kilshaw as he produced much material and further reports. It is said that their late disclosure hampered preparations for trial and that they should have been served earlier. Again it is said that they extended the length of the trial and that much of it was irrelevant. Two of the reports produced by Mr Kilshaw were actually served in response to the late amendments made by the Defendants to their case. Indeed much of the evidence complained of was of assistance to me and it did not lead to a misuse of the court's time.
71. I am quite satisfied that there should be a reduction in the costs which the Claimant is entitled to claim as a result of the matters to which I have referred, namely the failure of the Claimant to resist the Defendants' application for the Claimant to be recalled for cross-examination and to very minor degree the unnecessary cross-examination of Mr Stanford. In respect of these matters, the Second Defendants are entitled to their costs but in order to avoid an issue- based assessment, I have come to the conclusion that the Claimant should receive 95% of his costs on the basis that this takes into account the costs payable to the Second Defendants which have to be set off against the costs due to the Claimant. I appreciate that in some cases that sort of reduction might have been regarded being too petty to be made but in this case, the costs which are being sought are over £5 million.
72. In those circumstances the order that I believe should be made is that the Second Defendant pays 95% of the Claimant's costs of the action on a standard basis up to 12 October 2012, and on an indemnity basis thereafter with interest at 10% above base rate, such costs to be assessed if not agreed.

IV. Grant Thornton's Fees

73. The Claimant made successful applications for disclosure against Grant Thornton during the trial and the Claimant seeks an order that the Second Defendants should indemnify the Claimant against any costs payable by it to Grant Thornton arising out of the disclosure application.
74. The Claimant's case is that as a result of the disclosure a substantial number of highly relevant documents were disclosed which were material to assessing various aspects of the expert evidence. Grant Thornton was the firm where the Defendants' accountancy expert, Mr. Warburton, worked, although he had never implemented BWP, but he gave evidence about the warnings which he would have given.
75. The documents sought and obtained from Grant Thornton related to how that firm advised clients about BWP in late 2004 because an important issue in this case related to how a competent non-dom specialist would have advised the Claimant if he had been referred to them by the Defendants. So it is said that they were part of the Claimant's costs of fighting this claim and that it would be unjust if, after having won the action, the Claimant then had to pay them.
76. In response it is said by the Defendants that the Claimant had tried and failed prior to the trial in an application before Master Kay QC to obtain disclosure of the Grant Thornton material but that the Claimant had made no attempt to appeal that order. Instead the second application was made during the course of the trial on 21 December 2012. Mr Stewart contends that if the material was of importance, then the Claimant could and should have obtained it by making a request pursuant to CPR Part 35.6.
77. My starting point is that the material that was disclosed was highly relevant as it was inconsistent with the stance of Mr Warburton on various important matters. I do not think that the fact that this application was made during the trial should preclude the Claimant from obtaining an order that it should be disclosed. I have concluded that the Claimant is entitled to this indemnity.

V. Interest

78. There are two aspects to this of which the first relates to the costs after the expiry of the offer and the second relates to the prior period.

(i) The rate of interest for the period after the date specified for acceptance of the offer

79. In respect of the period after the expiry of the offer, the Claimant seeks to rely on the provisions of CPR Part 36.14(3)(a), which I have set out above and which shows that the Claimant is entitled to:-

"interest on the whole or part of any sum of money (excluding interest) awarded at a rate not exceeding 10% above base rate for some or all of the period starting with the date on which the relevant period expired"

80. As I have explained in paragraph 42 above, I will award the Claimant 10% over the base rate for sums excluding interest from the date when the offer expired.

(ii) The rate of interest for the period before the date specified for acceptance of the offer

81. In respect of the earlier period, the Claimant seeks an order that he should receive base rate plus 3% and that is because he is an individual and not a large commercial concern. The Defendants consider that the Claimant should receive base rate and no uplift.
82. There is a dispute between the parties as to the amount of interest that ought to be payable. Mr Simpson contends that it should be at the rate of 3% over base while Mr. Stewart submits that it should be at the rate of 1% over base rate.
83. Different rates have been awarded by judges although there is much evidence that interest at base rate plus 1% has been awarded but, it is noteworthy that interest was awarded at 2% over base rate in Brown v KMR Services [1995] 2 Lloyds Reports 513 and cases such as Eron Park Limited v Secretary of State for Environment [2001] 3 ELR 133. This also seems to be the midway between the old rate of 1% and 3% over base arrived at by the Court of Appeal in Jura v Ahmed [2002] EWCA Civ 210. I believe 2% above base to be the rate at which a person with the general attributes of the actual Claimant in this case would borrow money.

VI. Interim Payment

84. The Claimant has sought an interim payment on account of costs and the Defendants have contended originally that such an order would not be appropriate in this case. Mr. Stewart in his oral submissions accepted that there should be an interim payment and he suggested a figure of £750,000, while Mr. Simpson contends that the appropriate figure should be £2 million and he sets out some assumptions for this calculation.
85. There are three extraordinary features about the costs of the Claimant. First there is a great discrepancy between the Claimant's total costs including disbursements of £4,995,201.03 inclusive of VAT and the Defendants' total costs up to 8 May 2013 of approximately £1.06 million inclusive of VAT. which is a little more than 20% of the Claimant's costs. Although the Claimant's costs in a case such as this would be expected to be higher than those of the Defendants, it is very surprising that that there is such great disparity.
86. A second feature is that the costs of the Claimant are so large in relation to the claim which was for about £1.2 million. Mr. Mark Bowers, a solicitor employed by the Defendants' professional indemnity insurer explains that in dealing with litigation and legal costs for more than 20 years he has never seen a claim for costs exceed the value of the claim by 76% or £3.8 million. Obviously this calls for clear evidence justifying the costs from the Claimant's advisers and I would have expected them to be keen to assist.
87. Third, Ms Gaddum, the partner dealing with this case at the Defendants' solicitors, takes issue with a large number of items in the Claimant's solicitors' bill including the number of hours which the partner in the firm of solicitors acting for the Claimant contends had worked as well as the Claimant's CFA arrangements. She also complains of the lack of transparency in the Claimant's figures and sensible information has been sought by her from the Claimant's solicitors but much to my surprise it has not been given. I am not aware of any cogent reason for their failure to give this information which I would have expected that it would have been relatively easy for them to provide.
88. All these points make it more difficult for me to assess the appropriate figure for an interim payment when I bear in mind what was said by Warren J in Gollop v Pryke [29 November 2011] in which according to the Lawtel report, he explained that there was no rule that a payment of account should be the irreducible minimum of what would be awarded by way of costs, but a better test was to make a reasonable assessment of what was likely to be awarded.
89. The difficulty about applying that principle in this case is the absence of information that could, and should, have been given by the Claimant's solicitors but which has not been provided. The Defendants' solicitors have asked for a schedule of £3.6 million of costs and disbursements incurred by the Claimant in relation to the trial and particularisation of experts' fees but this has not been forthcoming. Another issue raised relates to the claim by Mr. Hick a partner in the Claimant's solicitors firm who claims for 1103.7 hours on documents and "works not covered by other headings" from 22 December 2010 to 8 May 2013 I find this calling for some justification bearing in mind the extensive input from counsel and Mr. Kilshaw which should have reduced the level of solicitors costs overall and above all the need for partner level involvement. There are therefore many justified and unanswered queries relating to the bill of the Claimant but I should add that Counsel's fees are not disputed by the Defendants.
90. I would have expected the Claimant's solicitors to be only too keen to disabuse me of worries about these matters by providing this sort of information but this has not been the case. This undermines my confidence in the other parts of the Claimant's costs schedules especially in the light of the evidence of Ms Gaddum and Mr. Bowers. This omission of the Claimant's solicitors does not help their client to obtain the sort of interim payment which he seeks.
91. Having considered all the arguments (especially the matters set out in Ms Gaddum's latest witness statement and in the correspondence) and after taking account of all the submissions made by counsel as well as my findings on the appropriate basis for awarding costs in this, the appropriate deductions and the calculations put forward by Mr. Simpson, I have come to the conclusion that the appropriate figure for an interim payment is £1.7 million. If the Claimant is disappointed with this sum, he will have to understand that I have not received all the information necessary to support an application to make a larger award.

VII. The Stay

92. The next question to be considered is whether there should be a stay of the orders for damages and interim costs pending the determination of the application for permission to appeal and any subsequent appeal. This entails carrying out the balancing exercise explained by Clarke LJ in Hammond Suddard Solicitors v Agrichem International Holdings Limited [2001] EWCA Civ 2065 [22] when he said that:-

"Whether the court should exercise its discretion to grant a stay will depend upon all the circumstances of the case, but the essential question is whether there is a risk of injustice to one or other or both parties if it grants or refuses a stay.. If a stay is refused and the appeal succeeds, and the judgment is enforced in the meantime, what are the risks of the appellant being able to recover any monies paid from the respondent?"

93. I raised the matter of the terms of the stay at the hearing in the light of the limited amount of information available about the Claimant's assets. He had made a witness statement in which he referred to various properties which he owned but no proper valuations were given of the value of his interest in each of them. So more information was and is required to ascertain the effect and the nature of the charges.
94. The Claimant needs payment of the judgment debt and the interim costs in order to pay the CGT of £1,004,043.00 due on the sale of his shares in August and also to pay his counsel and his expert. Mr Stewart on instructions made an open offer to pay £850,000 by way of interim payment to be secured on the Claimant's residence at Brookdale, 21 Mearse Lane, Barnt Green. That offer only relates to payment of part of the judgment and it does not relate to the interim award which I have now made.
95. Obviously the Claimant will wish to consider what other security he is ready and able to give while the Defendants will also wish to consider their position. At the end of the hearing it was said by Mr. Simpson that the order to be made should be for the judgment and the interim costs to be payable in 14 days but subject to the Defendants having liberty to apply for that order to be varied if they were not satisfied with the security that has been given. I would be prepared to make that order with time to run from the time of handing down this judgment specially as the Second Defendants would have known by then of the amount of the interim costs order and the judgment debt although not the exact amount of the interest payable.
96. I should make it clear that I do not regard the Claimant as obliged to give full security for the judgment debt and the interim costs but I am concerned that he should take reasonable steps to ensure that the Defendants are protected as well as can reasonably be achieved and not necessarily up to the full value of the judgment debt or the interim costs award if they succeed in obtaining permission to appeal and in being successful on the subsequent appeal. I certainly was not envisaging that the Claimant should be required to sell now any property if he does not wish to do so.

VIII. Time for lodging application for permission to appeal

97. The Second Defendant wanted the time for lodging this application extended until 31 July 2013 because of the need to file many documents. The Claimant disagrees and I believe that the time for appealing this order should be 21 days after this judgment is handed down.
98. Hopefully all outstanding matters can be resolved in writing without the need for Counsel to attend. I am grateful to Counsel for their assistance.