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
		28th November 2014

1. MR JUSTICE EDER: This case has a long history. Some months ago there was a hearing before me relating to the appointment of an arbitrator between the claimants, Ned Nwoko Solicitors and the named defendants, that is the Oyo State Government of Nigeria and the executive Governor of Oyo state. I delivered a judgment following that hearing. The details do not matter and I do not propose to repeat what is there set out, save to say that as a result of that hearing, I made an order dated 27 June 2014 whereby I ordered, in effect, and in very broad summary, that one of a number of possible arbitrators be appointed as arbitrator, and that the defendant shall fully cooperate with the claimants in respect of such appointment.
2. For reasons which do not matter, it would appear that the defendant did not cooperate with the claimants in respect of such an appointment and was in breach of my order. In order to rectify that position, the claimants then issued an application notice seeking to bring the matter back before the court with a view to ensuring that an arbitrator was appointed as soon as possible.
3. That application came before Mr Justice Popplewell on 3 September 2014. However, before that date, there were problems with regard to the service of the application notice. The position was that until very recently, I think earlier this week, the defendant has been represented by solicitors, CNA Solicitors Limited, who I shall refer to as CNA. CNA were throughout this period the solicitors on the record for the defendant. As I said, the claimant issued an application notice to seek to bring the matter back before the court because of the breach of the defendant in failing to cooperate to appoint the arbitrator. In the usual way, the claimant's solicitor served that application notice on CNA. However, the stance taken by CNA was summarised in an e-mail sent by them on 11 August 2014. Time does not allow me to quote that e-mail in full, but it is important because it asserted:

"... we [i.e. CNA] are not able to accept service of your application and return papers accordingly."

4. It appears also that various correspondence sent by the claimant's solicitors to CNA was apparently returned unopened and e-mails sent were ignored. Mr Oyo, who has appeared on behalf of CNA today, has confirmed that he accepts, and indeed his clients accept, that that position was not a proper position to take. When solicitors are solicitors on the record, they are obliged to accept service of any application or other proceedings relating to the proceedings in which they are solicitors on the record, and therefore the position that they took was unacceptable.
5. When the matter came before Mr Justice Popplewell, as I have mentioned, at the hearing on 3 September, he duly appointed an arbitrator, I think Mr Hodge Malek QC in the arbitration and on the claimant's application CNA were ordered to show cause as to why a wasted costs order should not be made against them. Mr Justice Popplewell dealt with that in a short judgment, dated 3 September 2014. I do not propose to read relevant parts of it out in full, other than to refer briefly to paragraph 7 where he said that he had no doubt that there was, to put at its lowest, a strong prima facie case that in the e-mail of 11 August 2014 CAN acted improperly, unreasonably or negligently in arguing that there had not been good service by service on CNA Solicitors. He went on to say that the stance taken in that e-mail was not only wrong, but one which was obstructive and failed to take any account of what are elementary and well known provisions of the civil procedure rules governing the position of solicitors on the record. That, of course, was not a concluded view. As I say, he made an order to the effect that CNA were required to show cause as to why a wasted costs order should not be made against them as a result of the stance which they had taken.
6. Thereafter, a witness statement was served on behalf of CNA by Mr Abduramen Ali, dated 9 September 2014, purporting to show cause why a wasted costs order should not be made. I am not going to read that witness statement in full, but in my view it does not show good cause as to why a wasted costs order should not be made. Mr Oyo who appeared on behalf of CNA now did not, I think, suggest otherwise.
7. On 1 October 2014, given the position taken in Mr Ali's witness statement on behalf of CNA, the claimants restored the application in effect for a wasted costs order against CNA. That is the application that I have now to deal with. On the face of it, as I say, it seems to me that the provisional view taken by Mr Justice Popplewell during the hearing on 3 September was not only right as a provisional view, but it is a conclusion which seems to me inevitable to flow from the events that I have described very summarily and there is nothing in Mr Ali's statement to persuade me that I should reach a different conclusion. That is all relatively straightforward. What is much, much more difficult is to assess what amount of wasted costs.
8. At the beginning of the hearing, Mr Newman, who appeared on behalf of the claimants, submitted that there should be a wasted costs order in effect to cover two parts. The first part was to deal with the wasted costs up to the hearing before Mr Justice Popplewell and secondly to deal with the costs since that date. As far as the costs incurred up to 3 September 2014, there was a schedule which had been put before the court. I am not going to go through that in detail, but it is a schedule which totals almost £28,000. The difficulty with that schedule is that it does not, and does not even begin, to identify what costs are supposedly said to have been wasted by the relevant conduct on behalf of CNA. Mr Newman originally suggested that I should somehow summarily assess those costs by taking a broad brush. At one stage it was suggested that the relevant figure was 20 per cent, another time it was suggested it should be 80 per cent of that figure. That approach is quite unacceptable. In order for the court to deal with it, even on a broad brush basis, it is incumbent upon a party to come before the court with proper evidence to identify what costs have been caused by what deficient conduct. I accept that in many cases it may be that some estimates have to be made, but it is unacceptable for any party simply to throw at the court a large schedule, a schedule containing a large bunch of figures which the court is then expected to plough through in order to arrive at some principled decision. It is simply impossible for the court to do that.
9. Mr Newman in effect then asked for an adjournment. He accepted in broad terms I think the criticisms that I had enunciated. Over the short adjournment, his solicitor has now prepared a short witness statement, in effect, signed with a statement of truth, summarising what are now said to be the costs that have been incurred in respect of the relevant conduct. In respect of the period up to 3 September, it is now said that the relevant figure for wasted costs, if I have it correct, is £3,725. That is a much, much more modest figure than the previous figure suggested.
10. However, this witness statement maintains that a substantial amount of costs has been incurred, totalling I think a sum of £12,600 or including VAT £16,325. That is still a very large figure on any view.
11. Mr Oyo, who appears on behalf of CNA, has put before the court a letter dated 19 November 2014, which is about a week or so ago -- maybe a little longer, it may be 10 days ago, something of that kind -- which contains an offer said to be without prejudice save as to costs, where an offer is made on behalf of CNA that they will make a payment of £5,623.60 to the claimants in full and final settlement of its claim for wasted costs order:

"This payment is consideration for your client's consent to vacant the hearing listed for 28 November 2014."

That offer was rejected by the claimant's solicitors earlier this week.

12. There is one other matter I should mention, if I have not mentioned it already, and that is that although CNA has been solicitors on the record, they came off the record by an order which I think I made on Wednesday of this week, permitting them to come off the record. So they have been on the record throughout this on behalf of the defendants until, I think, a few days ago.
13. It is against that rather unhappy background that I have to consider what the proper order to make is. As I have said, I have no doubt at all that the provisional view expressed by Mr Justice Popplewell was right and that there can be no doubt that the proper order is that I should make a wasted costs order against CNA for the costs incurred, or the costs wasted, by the claimant arising out of the conduct of CNA in refusing to accept service of the application notice. I have no doubt about that.
14. As far as quantum is concerned, it seems to me that the actual costs resulting from that failure are in truth relatively modest. Going back to the recent revised schedule, the original figure at least up to 3 September is said to be, I think including VAT if I have it correctly, £3,725. It is odd in the sense that there is nothing in that schedule that calculates actually what costs were incurred as a result of that CNA's conduct. So, for example, the claimant did not seek to re-serve the defendant as a result of that conduct. There is nothing in this schedule relating to those costs. Rather the costs relate to, in effect, to the filing of the application notice for counsel's fees in relation to that, attendance on CNA and court attendance, and a conference. What you see is that the £3,725 is calculated on the basis of a proportion, that is 50 per cent, of that hearing before Mr Justice Popplewell and in relation to those matters. I can well understand as to why Mr Nwoko has assessed that or sought to calculate them on a 50 per cent basis, but I am afraid I don't accept that 50 per cent is correct. In my view, at least before that hearing, if I asked myself the question what are the direct costs resulting from the conduct of CNA, I would have assessed them at perhaps £1,000, maybe £1,500, nothing more than that.
15. It seems to me that an all inclusive figure of £2,000, relating to the costs incurred up to 3 September, said to be consequent on those matters, is in my view appropriate.
16. Thereafter I think Mr Newman is right that a certain amount of costs were incurred and the matter perhaps spiralled out of control, that CNA could, if they had wished, stopped the matter there. They could have said "Right, we are not going to fight this issue", but they didn't. They took the view, right or wrong, in any event wrong, to fight the issue and in that context they put in a statement from Mr Ali, a substantial statement. That had to be considered and I am satisfied that further costs will have been incurred as a direct result of that, which form part of the wasted costs order.
17. The figure that is now given in Mr Newman's schedule for that is, as I have said, a figure of £12,600. That is broken down into two main parts. The first part, in effect, is £7,500, I think, plus VAT which is for a proportionate charge, it is said, of Mr Nwoko's time in relation to the preparation of this application, and £3,000 plus VAT for Mr Newman's fees in relation to it. The difficulty with that, as I see it, is that the £7,500 plus VAT has not been broken down at all. The £3,000 plus VAT is not really broken down. I would have imagined it was a brief fee. Mr Newman says, and I accept this of course, that in fact he had to do at least some of the work, maybe more than that earlier. But Mr Oyo submits, it seems to me with very considerable force indeed, that this application was issued on 1 October and Mr Newman's skeleton is only dated 25 November. Even if Mr Newman did do a lot of work before, it seems to me the work involves his time here today and obviously preparing -- at least to put in final form, I don't know exactly -- that skeleton argument.
18. The difficulty, of course, is that on the basis that I have considered that the costs prior to 3 September are £2,000, given the offer that was made on 19 November, I have to consider in a way whether or not the costs that were incurred from 3 September to 19 September are the appropriate amount of costs and should be more or less than that figure. The difficulty is that I don't really have enough information to reach a conclusion on that, partly because, as I say, the figure that Ms Nwoko gave in her recent statement of £7,500 is not broken down at all, as it should have been in, in terms of timing, as it should have been done originally. That is the difficulty that the court is faced with. On any view, it seems to me in any event that a total claim in effect for £12,600, I think it was, for that figure since then is on any view excessive. It seems to me that this is all a mountain grown out of a molehill. Having regard to the overriding objective, it seems to me that the court ought to take a realistic view of the actual underlying dispute.
19. I should emphasise, however, that the difficulty arises because of CNA's conduct. If CNA had not conducted themselves in the way they did, all of this could and would have been avoided. Doing the best I can in these rather unsatisfactory circumstances, it is my conclusion that the proper order is to order that the costs incurred since 3 September should be assessed in the sum of £5,000, and that therefore the total amount that should be paid by CNA is a figure of £7,000, and I should say that is including VAT. That is the conclusion that I reach.