HT-2022-000254 - [2025] EWHC 1581 (TCC)

The order as to costs is a discretionary matter taking into account the matters set out in Part 44. In this case, I have no doubt that the applicants, as the successful party, should have some part of their costs. I do not consider it appropriate to make an issue based costs order although that would have been an available option to reflect the measure of success on issues. Rather, taking account of what I have called the conundrum, the parties’ respective conduct, and the measure of success on issues, it seems to me that the fair order is one that the respondents should pay 50% of the applicants’ costs.

The applicants have submitted that they were forced to make this application by the conduct of the respondents which was out of the norm and that costs should, therefore be assessed on the indemnity basis. I do not accept that submission. There were a number of unusual aspects to this application and the circumstances in which it was made and nothing so unreasonable in the respondents’ conduct that it was taken out of the norm of assessment on the standard basis.

In response to the applicants’ submission, the respondents relied on a number of authorities relating to the order of assessment on the indemnity basis. I do not recite them all but most relevant is Arcadia Group Brands Ltd. v Visa Inc [2015] EWCA Civ 883. Weakness of a legal argument is not, without more, a justification for an indemnity costs order. The position might be different if the proceedings or steps taken within them were plainly hopeless or had some ulterior motive. Contrary to the applicants’ submission, in my judgment, there is nothing like that in this case.

There are before me two versions of the applicants’ statement of costs for summary assessment: one provided in advance of the hearing in July 2024 (“the July version”) and one following judgment in January 2025 (“the January version”). The current application is made for the sums claimed in the version filed in January 2025 which, I am told, takes account of costs mistakenly omitted from the previous version, costs to date and costs of the costs application. The total sum claimed is £42,338 plus VAT of £8,467.00. The respondents object to reliance on the January version and ask the court to cap the costs at the total in the July version.

A statement of costs for the purposes of summary assessment is required to be filed prior to the hearing signed by the party’s legal representative. In this case, the time estimate given by the applicants was half a day but the hearing lasted the entire day. Had the hearing lasted half a day and been of the scope that might have been expected for a half day hearing, the parties could have anticipated an ex tempore judgment followed by an order as to costs and a summary assessment. It is wholly unsatisfactory to say after the event, as the applicants do, that costs were left out and that they would have been the subject of oral submissions (of which no notice had been given) and for the applicants now to take advantage of the fact that the longer and more extensive hearing necessitated a reserved judgment. It is right, however, that I now have a further statement of costs signed by legal representatives and which undoubtedly includes costs incurred after the hearing. Rather than capping the costs in the lesser amount, I intend to reflect the unsatisfactory position by discounting the amounts that appear to have been left out.

There are a number of striking differences between the July and January versions:

Between the conclusion of the hearing and the costs submissions, there had been some exchanges between the parties in relation to further documents which the respondents sought to put before the court (as set out in paragraphs 13 and 14 of the judgment). TWM’s position was that it objected to the admission of these documents in evidence. The correspondence was brief but I recognise that TWM would have had to review the documents. I do not consider that that could account for a further £3,500 in attendances on opponents and it is not reflected in the Schedule of work done on documents. It does not naturally fall within the line “Preparing research post hearing” which has been added since July and that research is otherwise unexplained.

Whilst I do not wish to do Mr Moraes and his able submissions any disservice, I do not see how over £5,000 of fees could have been mistakenly omitted from the July statement of costs. It is submitted that these omitted fees were for settling the letter before the application, the application and the evidence in support. The Schedule of work done on documents also includes work to prepare the application (charged at Grade A rates), to prepare the witness statements of Mr Hitchcock and to prepare the exhibits. The sums are relatively modest and indicative of counsel’s involvement but not to the extent of the difference between the two versions of the statement of costs. There would also have been additional time spent providing typographical corrections to the judgment and agreeing the form of Order but that could not account for any significant part of this difference.

Further, although counsel was required to make submissions on costs and reply submissions, the costs incurred for the costs submissions seem to me high. It is submitted, in particular, that given the lapse of time between hearing and judgment, preparation required re-reading of documents. I recognise that there will have been some need for re-familiarisation but that has to be seen against the following background. Firstly, submissions on costs had already been made as part of the skeleton argument for the hearing. The applicants made their case for indemnity costs and, in particular, set out their case as to why the “ring fencing” offer could not be relied upon. The subsequent submissions adopted and expanded upon those submissions. Secondly, the expanded submissions and further submissions largely relied on the terms of the judgment. That had been provided in draft in December and reviewed for the purposes of providing corrections before any submissions on costs were made in writing.

The respondents also point out that the applicants’ solicitors are based on Guildford and that the national rates should apply, being at the time £278 per hour for a Grade A fee earner and £175 per hour for Grade D. The rates claimed are, therefore, about 25% higher than the national rates.

Taking account of the reductions to the elements of the statement of costs that I have indicated above (but not the hourly rates), I would have summarily assessed the costs in the sum of £34,100. 50% of that sum payable as costs by the applicants would, therefore, be £17,050.

Since this is a summary assessment, rather than carrying out a detailed assessment of the solicitors’ costs and recalculating all the solicitors’ fees on national rates, and also taking account of the fact that part of the costs are counsel’s fees, I make a further reduction of 15% rounded up give a total payable (excluding VAT) of £14,500.

The statement of costs includes a claim for VAT. I am surprised to see a claim for VAT as I would expect either of the applicant companies to be VAT registered. If they are not, VAT is recoverable. If they are, it is not. I would hope that the parties could agree whether or not VAT was payable but, if not, further submissions can be made in writing.

Subject to the addition of VAT, therefore, my decision is that the respondents should pay the applicants’ costs in the sum of £14,500 and, bearing in mind that the respondents are all effectively individuals, I will give 56 days from the date of the handdown of this judgment to pay.

When Mr Moraes made his written submissions on 27 January 2025, he did so, in accordance with my directions, by email to my clerk. In that email he also said that he would send under separate cover the applicants’ costs submissions in respect of without prejudice save as to costs dealings in respect of the costs of the written submissions. In that further email, Mr Moraes said that the applicants had made a without prejudice save as to costs offer which was relevant to the liability for the written submissions on costs.

Before I first considered the costs submissions in February, I confirmed to Mr Moraes that I had not opened that second email and I asked him to clarify whether I would reach a decision on costs and then consider the second email so that there would be a single ruling or whether, following my decision on costs, I should expect further submissions (if relevant) on the offer. My concern was not to consider the without prejudice save as to costs correspondence before I should properly do so. It was confirmed that the former approach would be preferable. Accordingly, at this point, I have now reviewed that correspondence.

The correspondence amounts to a single email from TWM to the respondents’ solicitors. The date is not apparent on the face of the attachment but is said to be 17 January 2025. The email reiterates that it is the applicants’ case that the respondents should pay their costs on the indemnity basis but is an offer to compromise on the basis that the respondents pay the applicants’ costs on the standard basis. It is submitted that the offer is self-explanatory and that if the applicants achieve this result as a minimum, the costs of the costs submissions (which had not been made at the date of the offer) should be paid on the indemnity basis.

In light of the decision I have reached on costs, the applicants have not achieved that minimum as they are not to recover the whole of their costs on the standard basis. It follows that no further adjustment needs to be made to the amount awarded as costs.

The respondents propose that there is an alternative means by which the court should deal with costs namely by the making of an order under Part 46.2(1) that a third party bears the costs. It is argued that such an order could and should be made against any one of Click Group Holdings Ltd, Click St Andrews and Aaron Emmett on the grounds that they were responsible for the provision of information in accordance with the freezing order and were in breach of those provisions. In relation to Mr Emmett it is further proposed that the court should order Mr Emmett to provide costs submissions and explain why the various orders have not been complied with.

Part 46.2(1) requires that a person against whom a third party costs order is sought should be joined as a party to the proceedings and given the opportunity to be heard. There is no application under this rule before the court (other than a paragraph of the respondents’ submissions) but the making of such an order is a matter for the court’s discretion and I accept that the court could join a party of its own motion. I do not, however, consider it appropriate to do so.

The short point is that the applicants’ success did not turn on whether or not Click St Andrews had any interest in the Properties but on the priority of the Charge. It was not necessary for the court to determine whether there was such an interest and I expressly did not do so despite the invitation from the applicants, in the absence of any further evidence, to make a finding that there was no such interest. As I said in the main judgment and in this judgment on costs, the respondents are not, in my view, to be criticised for maintaining that there may be such an interest in the face of the disclosure failures but that was not the determinative point on the merits of the application and is not a basis for a costs order against a third party and it certainly does not follow that any third party ought to bear the costs of the application.