HT-2020-000448 - [2024] EWHC 2025 (TCC)

Fecha: 01-Ago-2024

The Legal Principles

The Legal Principles

96.

The following is a summary of the relevant legal principles relevant to this case:

(1)

the Court has discretion as to whether costs are payable by one party to another, the amount of those costs and when they are to be paid (CPR 44.2(1));

(2)

the general rule, or starting point, is that the unsuccessful party will be ordered to pay the costs of the successful party, although the Court may make a different order (CPR 44.2(2));

(3)

having regard to the general rule, the first task must be to decide who is the successful party. The Court should then apply the general rule unless there are circumstances which lead to a different result (Straker v Tudor Rose [2007] 368 (CA)per Waller LJ at [12]).

(4)

where the claim is for money, particularly in a commercial context, in deciding who is the successful party, the most important thing is to identify the party who is to pay money to the other. This has been made clear numerous times: see e.g. Barnes v Time Talk (UK) Ltd [2003] EWCA Civ 402 per Longmore LJ at [28], with whom Waller LJ agreed in Straker at [13]; Multiplex Constructions (UK) Limited v Cleveland Bridge UK Limited (No.7) [2008] EWHC 2280 (TCC) per Jackson J, as he was then, at [72]; Fiona Trust & Holding Corporation v Privalov [2011] EWHC 664 (Comm) at [36] per Andrew Smith J;

(5)

in deciding whether to depart from the general rule, the Court will have regard to all the circumstances, including (as set out at (CPR 44.2(4)):

(a)

the conduct of the parties (including consideration those factors listed at CPR 44.2(5));

(b)

whether a party has succeeded on part of its case, even if that party has not been wholly successful; and

(c)

any admissible offer to settle made by a party which is drawn to the court's attention, and which is not an offer to which costs consequences under Part 36 apply;

(6)

as to CPR 44.2(4)(b):

(a)

in departing from the general rule, the Court may order a party to pay a proportion of another party’s costs, or from or until a certain date (CPR 44.2(6)(a) and (c)), or an issues-based costs order (CPR 44.2(6)(f)). Before doing the latter, it will consider whether it is practicable to make an order limiting the costs payable to a proportion of the overall costs or by reference to a specific date (CPR 44.2 (7));

(b)

however, a Court will be cautious before departing from the general rule. This is because, particularly in complex commercial litigation such as this, it is regularly the case that arguments or factual disputes may be relevant to a number of underlying issues which have to be addressed in the proceedings; and a party may rely on a number of grounds to support a claim, and succeed on some and not others. Parties should be afforded a reasonable degree of latitude in formulating claims, including pleading alternative bases for the same basic claim, and Courts should avoid an unduly finely detailed division of issues and sub-issues when deciding what costs orders to make (F&C Investments (Holdings) Ltd v Barthelemy [2011] EWHC 2807 per Sales J at [16]-[21]). Moreover, over-zealous departure from the general rule also generates unwelcome uncertainty for litigants (Fox v Foundation Piling Ltd [2011] 6 Costs LR 961 per Jackson LJ at [62])

(7)

as to CPR 44.2(4)(c), the absence of an offer may be as relevant as the existence of one. Where a defendant is faced with an exorbitant claim which they wish to defend vigorously but where they are vulnerable to a finding that they are liable for a much smaller amount, there is a clear process provided by the CPR Part 36 which they can follow to protect their position (Global Energy Horizons Corporation v Gray [2021] Costs LR 133). I would add, in the context of the arguments made by the parties, that this is a relevant factor, not in all cases a determinative one.

97.

In light of TCS’s specific reliance upon Global Energy in the face of DBS’s argument that there should be no order as to costs, it is necessary to consider this case in a little more detail. The Claimant, GEHC, had brought a claim for breach of fiduciary duty against the Defendant, Mr Gray, totalling just under £227.8m. It succeeded in the sum of £3.6m. The Court of Appeal decided that the judge below had been wrong to regard the outcome as a ‘score draw’ in which both parties had lost heavily. This is essentially the argument urged upon me by Mr Croall. The first reason given for considering that the judge’s conclusion was wrong in principle was that relating to the absence of a Part 36 offer which could have protected the defendant, the reasoning for which forms the substance of sub-paragraph 90(7) above. The second reason, however, set out at [11] to [14] of the judgment, was also a clearly material consideration. The Court of Appeal considered that the judge at first instance (who, unusually, determined costs not having had the benefit of being the trial judge – which is likely to have made the Court of Appeal more inclined to interfere with the exercise of discretion: see [6]) had been wrong to dismiss GEHC’s point that it had been necessary for it to pursue its claims against Mr Gray as a defaulting fiduciary, given that he had put forward a thoroughly dishonest account of the benefits he had received. The Court of Appeal concluded that GEHC should be regarded as the winner not just because it was awarded a substantial sum of money but also because it succeeded in showing, at great costs in time and money, that Mr Gray’s account had been false in many serious respects. The fact that only a small fraction of the amount claimed was awarded did not outweigh this fact. Ultimately, the thrust of the Court’s decision was that the enormous amount of time and money spent in the litigation should be laid at the door of the (dishonest) Mr Gray, irrespective of the limited recovery made by GEHC, against which an offer could have been made.

98.

It is by reason of the existence of this clear and weighty second reason, linking the extraordinary waste of time and cost on numerous issues and the need for GEHC to prove Mr Gray’s dishonesty, that I accept Mr Croall’s submission that Global Energy is far from on all fours with the present case. Nevertheless, the absence of a Part 36 offer by which DBS could have protected itself remains an important factor, even though it is not, in this case, a determinative one.