England and Wales High Court (Technology and Construction Court) Decisions

IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
TECHNOLOGY AND CONSTRUCTION COURT

		Royal Courts of Justice Rolls Building
		17th October 2013

MR. JUSTICE AKENHEAD:

1. I am not going to go into detail about the history, but following the Court of Appeal's decision in May 2013, the case having been transferred to the TCC in London, the Claimant applied again to re-amend its particulars of claim to maintain a claim for replacement costs relating to the warehouse floors. On any count, the Claimant would have had to pay for the costs of and occasioned by that application and indeed of and occasioned by producing the draft, producing the application, and producing, if it did, any evidence to support it. It is not unreasonable for the defending parties to have looked at that application and the amendment critically. The parties came before the court and by that stage it was accepted, as indeed, on analysis, it had to be, that the Claimant, as a condition of permission to re-amend, would, in any event, have to provide much more by way of detailed particulars. My judgment of 27 June 2013 says what it says, but any approval of the re-amendment was firmly and clearly tempered by the need to provide adequate particulars. It is difficult to hypothesise as to what precisely the Court would have done if the Claimant had said at that time: "Well, the best particulars I can come up with" are the ones that they actually produced before 2 August"; but it is clear from the judgment of 2 August that, if that had been the best that it could do permission would not have been granted in June on that ground alone.
2. Therefore, it does seem to me that, in effect, on the application to re-amend overall, which was dismissed on 2 August, the defending parties have succeeded. Although I do accept that the Claimant had the better of the overall arguments that were put forward for the June hearing, they were all predicated, however good or bad they were, on the provision of adequate particularisation. So what has happened, in effect, over the following few weeks after 27 June is that the claimant was unable, apparently, to come up with the requisite particulars, although it did produce a substantial amount of further documentation and further amended draft pleadings and related documents; it was unable to comply with the conditions for leave to amend, and the result has been that the costs which were expended primarily in June had, in effect, been wasted. They had been wasted as a result of the claimant's inability or at least its omission at that stage, to provide adequate particulars and to comply with the conditions imposed. Therefore, it does seem to me that it is legitimate overall to take that into account.
3. So in principle it does seem to me, therefore, that the claimant should pay the defending parties' costs. That is subject to one small caveat. It would come as no surprise, particularly to the third party, Stuarts, who I think took the lead in the June hearing, that they came back to the court with new arguments once the parties had the draft judgment. Birse and Stuarts would have been put to some cost in this regard. The claimant would have been put to some cost; the court's additional time addressing the new arguments is immaterial so far as costs are concerned. But it does seem to me that in respect of these new arguments that were put forward in writing following the provision of the draft judgment (and dealt with in paras.17-20 in my first judgment), obviously if raised at the oral hearing, which they could and should have been, additional costs were expended which need not have been. Therefore, the defending parties should not recover the costs of and occasioned by the exchange of submissions on the issues raised in para.17-20 in the judgment. That may not amount to very much, but it does seem to me that that would be not unfair in all the circumstances because the parties were put to, the Claimant in particular was put to, unnecessary costs, and the defending parties, and I think it is primarily the third party, should pay the Claimant's costs of that exercise on a standard basis.
4. I have already ruled that, bar the relatively small aspect of the June hearing, events which led to the June judgment, the defending parties should have their costs of and occasioned by the re-amendment applications. The Claimant should bear its own costs. The Claimant should pay the costs of and occasioned by the hearings and consequential costs upon the amendments to the extent that they have been allowed.
5. The real question is whether it is appropriate to make a summary assessment at this stage. One of the problems of this case is that I produced my draft judgment, as far as I recall, on Tuesday afternoon and called for corrections by this morning, and at the end of my judgment I said this at para.48:

"So far as costs are concerned, I anticipate that the defending parties will seek their costs but they may feel that it would be difficult for the court to do a summary assessment and that an interim payment on account of costs may be more appropriate."

Then I said:

"At the handing down of the judgement, I will deal with any issues on further directions and costs."

6. It is clear from my judgment that I did attach some importance to the witness statement of Mr. Georgiou of Clyde & Co, senior associate, who has the day-to-day conduct of Birse's case in this litigation. He said at para.32 of his statement:

"In addition, all of the defending parties would have incurred substantial costs in connection with the claimant's attempts to secure permission to amend and costs have been wasted on serial draft re-amendments in the Part 20 claims. Birse alone has incurred in excess of £753,523 in fees and disbursements since directions were provided for the Co-op's application to amend in June 2012. Since little else has happened procedurally since June 2012, the majority of these costs relate to the amendment question."

I took that into account at face value to infer that a substantial, indeed very substantial, part of that amount of costs had been incurred since the first application to re-amend was issued in mid-2012, initially dealt with by His Honour Judge Davis and which then made its way to the Court of Appeal for judgment in May 2013.

7. I could understand that very substantial costs were incurred in connection with that application because it would be necessary to review the nature of the new complaint, such as it was, and so on. The first draft went through one further iteration before His Honour Judge Davis. The second version of the re-amendment, which was one of the versions put before the Court of Appeal, for instance, would have brought about costs. I took that into account in my judgment, although I was surprised that the costs were at that level. But, in my own mind and as I indicate in para.45(c), I could see that the total of Birse's costs would be not insignificantly less than that (£753,523) but that coupled with the other defending parties' costs, costs of and occasioned by the numerous amendment applications and the appeal would exceed £1m. I took that into account in terms of assessing the recoverable costs on any ultimate assessment of costs.
8. I am not saying that Mr. Georgiou is wrong. The figure that he quotes is a very precise figure and, if he has had the day-to-day conduct, he will be fully aware as to what else has happened to contribute to that cost since June 2012. He says little else has happened procedurally and it is not certainly obvious to me that much else has happened whilst and since the re-amendment applications were being considered and then ultimately ruled upon in the Court of Appeal.
9. I can see that re-amendments of this sort, particularly involving appeals, and particularly involving repeat re-amendments, can have a very substantial knock-on and related effect to the costs. It is undoubtedly the case that the court is encouraged to make summary assessments where the hearings last for less than a day. The three hearings in question, as far as I recall, probably in total amount to much more than a day's worth of time, but individually they did not. So it would be open to me to assess summarily, and, of course, in the ordinary course of events, that is what I would very much prefer to do.
10. But I am very concerned that, if Mr. Georgiou is right in his statement, there is a very real risk of confusion on any ultimate assessment of costs by the costs judge. If I were to make a summary assessment now, there is a risk, which it seems to me is unquantifiable at this stage, that there will be an order for costs, obviously in favour of the defending parties, but that it would not necessarily or fairly compensate them for all the costs which they have incurred to date of and occasioned by what are now four applications to re-amend and five drafts having been produced, including a trip to the Court of Appeal. As I understand it, the costs at least of the Court of Appeal are to fall ultimately to be assessed, in any event, although an interim payment on account for that has been made. I am not clear what has happened vis-à-vis the costs of the hearing before His Honour Judge Davis. In effect, the defending parties have successfully appealed the decision of his, but I assume that that falls into the same category. So, in any event, a substantial element of the costs of and occasioned by the first application to re-amend in the appeal will need to be assessed in any event.
11. It is therefore not inconsistent that I deal with the costs today on a similar basis. Ms. Sinclair QC on behalf of Birse and Mr. Cannon QC on behalf of the third party have made it clear orally that they wish to apply for an interim payment on account of costs. I think, as I understand it, they accept that there are potential difficulties and there will, in any event, have to be covered by the costs order future costs which are consequential upon the re-amendments that have been allowed and that there may be other costs, for instance, consulting experts in relation to the various reiterations of re-amendment that are not referred to on the bills which they have produced.
12. Mr. Hughes QC argues, I suspect without immense conviction, that at least the third party, Stuarts, has, by lodging a statement of costs (summary assessment form), made an application for summary assessment. I do not accept that. There is no formal application in any event. Birse has simply listed its costs albeit not on a similar form, so they have not made an application for summary costs assessment. Whether they have or they have not seems to me to be largely immaterial; it seems to me that I should decide what is the most appropriate thing to do. It would be unfortunate if one were to have simply a summary costs assessment related specifically to the costs of and occasioned by the hearings without all the related costs. One could pick through the briefing of counsel to appear, the attendance of solicitors, travelling time and so on, but that does not take into account all the particular solicitors and indeed counsel's pre-hearing preparation for the three hearings in question and what went on between.
13. It does seem to me that this is an appropriate case for an interim payment on account. Ms. Sinclair QC, against a total bill inclusive of VAT, seeks £50,000. That includes VAT. It is not completely clear at this stage, given that her clients are in voluntary liquidation and because of the involvement of the sum insurers in her client's interest, whether the VAT will be recoverable. She seeks £50,000 on behalf of her clients, a payment on account, off the order for costs. It seems to me that that is reasonable in all the circumstances. I am certainly not satisfied that the costs bills that have been put before me actually represent all the overall costs of and occasioned by the amendments, the three re-amendment applications and all the costs of and occasioned by the re-amendment applications to date. If I am wrong about that, that will be sorted out on an assessment, but I certainly do not have that confidence.
14. Mr. Cannon, whose clients' costs run to £91,000, including VAT, is of the view, on instructions, that VAT will probably be payable in respect of those costs. That may well be the case. In view of the ruling I have given earlier about the small element of the costs to be payable by the defendant and third party, that would knock a small amount off the overall figure. He seeks £50,000. That seems to me to be eminently reasonable at this stage. So I will order an interim payment on account in that sum.
15. So far as Jubb is concerned, on instructions, Mr. Pilling makes it clear that his clients seek a summary costs assessment. He has put in bills which I notice do not obviously include VAT. Those are not challenged as a matter of summary assessment. Again, I have not done the arithmetic, but they should be relatively modest amounts.

MR. PILLING: My Lord, would you like a figure?

MR. JUSTICE AKENHEAD: I have probably got a figure, actually, £25,630.50, not challenged by the claimant. So there will be an order on the summary costs assessment in that figure. Those should all be payable within 14 days.

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