[2025] EWHC 2738 (Ch)

In my judgment, C lost the Application. D3 sought from its supplemental skeleton onwards a conditional strike-out order, which D1 and D2 supported and C resisted. I held that such an order should be granted. Therefore, I found in favour of D3, supported by D1 and D2.

Further, for the reasons explained in the Judgment, C should have sought to amend its claim earlier and provide a draft amended pleading in good time before the hearing. Had C done so, in my judgment it would have been possible to avoid the hearing of D3’s strike-out application. There may, depending on the defendants’ stances, have needed to be a hearing to consider the draft amended pleading, but that would have been a hearing with a slightly different purpose to the one that took place before me.

I turn against that backdrop to D1 and D2’s costs. Starting with the period up to receipt of C’s skeleton, D1 and D2’s position was that they wished to ensure that the issue concerning the Owner’s Agent Fees point was not dealt with by the Court at D3’s request in a way that decided against D1 and D2’s construction. Given that, in my judgment it is understandable that D1 and D2 wished to attend the hearing.

However, that stance was a stance in opposition to D3 to that degree. Therefore, in my judgment, it would not be appropriate for me to order that C should pay these costs. Rather D1 and D2’s costs up to receipt of C’s skeleton should be reserved. The outcome of a final hearing, in particular, the view taken on D1 and D2’s construction of cl.3.1(e) of the Promotion Agreement, will be relevant to how these costs should be borne. C contends that D1 and D2 should bear their own costs, arguing that that neither C or D3 ever suggested the Court should reach any determination on the construction of the Promotion Agreement vis-à-vis D1 and D2. I reject this: D3 did seek determination of this point in a way that would bind D1 and D2. See for example [45] of D3’s skeleton.

I turn next to D1 and D2’s costs for the period following receipt of C’s skeleton. D1 and D2’s stance became that they supported the open offer (with the glosses mentioned above) and C repleading its case. At the hearing through Ms Newton, they supported D3’s position that a conditional strike-out order should be granted, so they supported the winning position, and she also made brief other submissions in opening and submissions at the end of the hearing about a particular point arising from C’s reply.

C points out in its written costs submissions that, as the White Book explains at [44.2.13], generally an unsuccessful party should not have to pay two sets of costs. C relies on the House of Lords decision in Bolton MDC v Secretary of State for the Environment [1995] 1 WLR 1176 for the proposition that in general interested parties should only get their costs if there is some specific issue which requires separate representation.

In Bolton MDC, which arose in the planning context, the House of Lords held that

However, I do consider that D1 and D2 had an interest here which was separate to D3 and which required separate representation.

D1 and D2 were separate defendants to the claim with different interests from D3, reflecting the different roles and capacities they had in the events complained of by C.

It was readily understandable that they would wish to attend the hearing through Counsel to protect their separate interests as defendants. It was not clear how debate would proceed at the hearing, particularly given the development of C’s position in its skeleton and the claims that it heralded in them. Indeed:

I also agree with D1 and D2’s submission that it was readily conceivable that the Court would wish to understand D1 and D2’s position on D3’s application and C’s submissions as they developed through oral submission.

Therefore, C’s claim was in a state of some development from the original Particulars, and in a manner which engaged D1 and D2’s interests. In such circumstances, in my judgment it is clear that there was good reason, and that it was appropriate, for D1 and D2 to attend the hearing given their different interest to D3.

At the hearing, D1 and D2 set out in its position orally through Ms Newton, which- while brief- added value to the hearing. She also answered my question as to whether D1 and D2 supported an unless order in respect of the totality of C’s claim against D3, including in relation to Owner’s Agent Fees (which she did). She made submissions about any revised draft pleading that C put forward, including that D1 and D2 should be able to plead to it, and made one point at the end of the hearing in response to C’s reply. Ms Newton was careful in her submissions not to duplicate those of Ms Yates for D3.

Further, as explained above, the strike-out hearing and the costs of it could have been avoided had C put forward a revised pleading in good time before the hearing.

Taking the above together, in my judgment this means that the appropriate order is that C should pay D1 and D2’s costs from receipt of C’s skeleton onwards to be subject to detailed assessment unless agreed. As explained above, the appropriate way to divide costs is into D1 and D2’s costs incurred (a) before and (b) after receipt of C’s skeleton, the former costs being reserved. Any points on proportionality or reasonableness of the latter costs can be dealt with on detailed assessment. It would not be appropriate to assess summarily D1 and D2’s costs incurred after receipt of C’s skeleton, because I do not know the proportion of the costs incurred during this period.