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
		17/04/2018

MRS JUSTICE LAMBERT:

1. This is my ruling on the costs issues which have arisen between the parties following my judgment on liability of 15^th March 2018 in which I found in favour of the Defendant.
2. There is no dispute but that there should be an order for costs in favour of the Defendant and that the final quantum of those costs should be the subject of detailed assessment to be undertaken on a standard basis. The parties have not however been able to agree whether there should be payment by the Claimant of a reasonable sum on account of costs and, if so, the level of the payment on account. There is also a disagreement on a linked issue of whether any payment on account should be stayed pending appeal.
3. I have received submissions from Mr Strelitz, Counsel for the Claimant, (by email of 19.36 28^th March 2018). As to the level of the interim payment, Mr Strelitz informed me that the Claimant had offered 90% of the Defendant's budgeted incurred and future costs (as approved by Master Kay QC), that is, £159,108.34. In issue between the parties was the further sum of £19,500 which the Defendant claimed by way of payment on account, representing 65% of the costs incurred in excess of the Defendant's budget. Mr Strelitz also informed me that there was an objection in principle to an order for payment on account of costs unless the execution of the order were to be stayed pending appeal. He informed me that, although he had not sought permission to appeal from me, there were instructions in place to lodge an Appellant's Notice by the due date. The central argument in support of his application for a stay was that the effect of the interim costs payment would be to stifle an appeal. His submissions refer to the devastating financial effect of the circumstances giving rise to the action and assert that it would be wholly unjust if the Defendant were to be able to frustrate the prosecution of an appeal by the enforcement of its costs.
4. I have also received submissions in writing from Mr Samuel on behalf of the Defendant (4^th April 2018) in which he justifies the higher level of interim payment and raises an objection to the stay on execution of the enforcement of any order for payment on account of costs given the absence any evidence served on behalf of the Claimant in support of his assertion that the effect of the payment on account would be to prevent an appeal being prosecuted.

Stay of Execution

5. The Claimant's objection in principle to an interim costs order is contingent upon my ruling upon his application to stay such an order. Although recognising the potential for overlap between an objection in principle to an order and a stay, given Mr Strelitz' position, the logical starting point for me is whether any order which I may be minded to make for payment on account of costs should be stayed.
6. CPR 44.2(8) states that "where the court orders a party to pay costs subject to detailed assessment, it will order that party to pay a reasonable sum on account of costs, unless there is a good reason not to do so". CPR 52.16 which considers the circumstances in which the Court should order a stay of any order or decision, states that an appeal shall not operate as a stay of any order or decision of the lower court.
7. The parties' submissions refer me to three authorities: Excalibur Ventures LLC v Texas Keystone Inc [2015] EWHC 566, Hammond Suddards Solicitors v Agrichem International Holdings Limited [2001] EWCA Civ 2065 and Goldtrail Travel Ltd (in liquidation) v Onur Air Tasimacilik [2017] UKSC 57. There is no obvious tension between those authorities or the other cases referred to in the notes to CPR 52.16.3 in the White Book which consider the general principles to be applied in respect of applications for stays of any order or decision (not just those involving payments on account of costs). The principles are clear: in considering an application for a stay the court has a broad discretion to make an order which best accords with the interests of justice taking into account all of the circumstances.
8. In Hammond Suddards, Christopher Clarke LJ considered an application for a stay of execution of an order for payment on account of costs. He observed 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 it grants or refuses a stay. In particular, if a stay is refused what are the risks of the appeal being stifled? If a stay is granted and the appeal fails, what are the risks that the respondent will be unable to enforce the judgment? On the other hand, 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? " (see judgment of Christopher Clarke LJ at paragraph 22). In Goldtrail, it was agreed between the parties that if it were to be contended that the effect of an order would be to stifle an appeal then this contention "needs to be established by the appellant and.. to be established on the balance of probabilities." Lord Wilson JSC had no doubt that this concession was correctly made (see paragraph 15).
9. It is with this uncontroversial guidance in mind that I address the issue which is before me.
10. It is submitted on behalf of the Claimant that, absent a stay of execution, an appeal from my judgment would likely be stifled. At paragraph 4(a) of Mr Strelitz' submission to me (of 28^th March) he states that I had before me at the trial of the action, "information relating to the devastating financial effects of the material circumstances upon him (the Claimant) and his family". No further relevant submission or comment was made. No evidence, whether in the form of a witness statement from the Claimant concerning the Claimant's current financial situation and circumstances or otherwise, was provided in support of his application. My understanding is therefore that Mr Strelitz simply asks me to take into account what I learned of the Claimant's financial predicament during the course of the trial.
11. The subject matter of the trial was an unfavourable reference relating to the Claimant which had been written in early January 2015 and which had been preceded by the termination of the Claimant's authorisation to work as an Independent Financial Advisor. The trial was of liability only. Although pleaded in both tort and contract, the central focus was upon the tort claim (negligent misstatement). Limited evidence emerged during the trial concerning any losses which the Claimant had sustained. It was accepted that it was not necessary for my determination on liability to consider the extent of any loss or whether the Claimant had discharged his duty to mitigate any loss, although I understood that both issues were likely to be very contentious. For my purposes it was sufficient for me to answer the question of whether any loss at all, however modest, had been sustained in order to conclude one way or the other whether the tort was "complete". In the event, I determined that the Claimant had suffered a loss in the form of his "loss of a chance" of securing employment as an Independent Financial Advisor. No more than this.
12. For the purposes of this ruling I have reminded myself of the contents of certain of the trial documents. In the absence of any guidance from Mr Strelitz as to what to look at in particular, I have reviewed the pleadings and the Claimant's witness statement to see what may be gleaned from them concerning the Claimant's financial status. The Particulars of Claim included (at annex C) a computation of loss. The loss was put at £158,064 representing the difference between the Claimant's earnings as an IFA and his "actual earnings" to trial. From this document it seems that the Claimant may have found some alternative source of earnings, albeit of relatively modest level. The Claimant's witness statement for trial (dated October 2017) records at paragraph 226 the various alternative jobs which the Claimant considered applying for but which he rejected, for one reason or another. Likewise, during the course of the trial, I note that there was some factual evidence from the Defendant that the Claimant had been offered alternative employment by CIFS after the termination of his CF30 status, which the Claimant had declined to accept. Although the Claimant, at trial, asserted that he had lost a substantial income as a result of the loss of his CF30 status and the unfavourable reference, and that he and his family had suffered financially and emotionally, his financial losses were not explored in cross examination at all given the limited issue before the court. There was certainly no interrogation by either party as to the extent of the loss or what earnings in fact had been achieved since early 2015.
13. I reject the Claimant's application for a stay of execution on any order for payment on account of costs.
14. No evidence has been served from him or on his behalf to support the assertion that the effect of such an order would be to stifle his appeal. I have no evidence before me concerning his level of earnings since 2015; or concerning any assets which he may or may not hold; or of how he has funded the litigation. I bear in mind that a mere assertion that such an order would stifle an appeal is insufficient. The Claimant must (per Goldtrail) establish his position on the balance of probabilities. Mr Strelitz is inviting me to infer from the wider circumstances of the case and the exiguous evidence at trial, that the Claimant is impoverished to the extent that he would be unable to pursue his appeal if required to fund an interim payment. I do not find that such an inference can properly be drawn in the evidential vacuum in which this application is made. I also note Mr Samuel's observation that Mr Strelitz' submissions do not positively assert that the effect of a payment on account of costs will frustrate an appeal; only that the "Claimant's modest means" "would likely mean that an appeal cannot be pursued". Nor is there evidence that, in the event of an appeal failing, the Claimant would be in a position to discharge his liability in costs to the successful Defendant (Christopher Clarke LJ's second question); nor evidence from the Claimant that in the event of an appeal succeeding there is a concern that the Defendant would not be able to repay costs paid on account (Christopher Clarke LJ's third question).
15. For all of these reasons, I do not grant the Claimant's application. It is not in the interests of justice to do so. I take no account of the prospects or otherwise of the Claimant being successful on appeal. It not necessary for me to do so in order to determine the application. Also given that no application for permission has been made to me, my understanding of the basis of a challenge is limited to that included in Mr Strelitz submissions at 4(d) where he re-asserts the argument which he advanced at trial.

Whether an Order for Payment on Account of Costs Should Be Made

16. No argument is advanced by Mr Strelitz supporting his application that no interim costs order should be made. He records in his email submissions only that he does not agree to the making of such an order. I can deal with this shortly. CPR 44.2(8) creates a presumption that such an order will be made absent a good reason. In the present case, no reason, good or bad, has been advanced. I therefore order that a payment on account of costs should be made.

Quantum of the Payment on Account

17. There is £19,500 between the parties. In support of the additional sum, the Defendant argues that at detailed assessment the costs judge will have good reason to exceed the budgeted figure on the grounds of the trial overrunning and the additional work which Mr Samuel undertook in order to provide me with comprehensive written submissions.
18. I remind myself that I am making no final determination on the appropriate level of costs. This is a matter for the costs judge in due course. However, I note Mr Strelitz argument that the costs claimed in respect of the closing submissions is a high figure. This is a point of substance which will no doubt be considered carefully at detailed assessment. I am not however prepared at this stage to accept the Defendant's submission that the costs judge will have good reason to exceed the budget under CPR 3.18.
19. I therefore order that the Claimant do pay the Defendant 90% of the Defendant's budgeted costs figure on account. I am informed that this sum is £159.108.
20. I invite the parties to now draw up the Order giving effect to this ruling.