Analysis
The court was concerned with costs following the trial of a claim relating to the estate of Ernesto Colicci (deceased). Recorder Mark Anderson KC had handed down judgment on 18 May 2023 following the trial in March 2023. He reserved judgment on costs after further submissions at a consequential hearing on 19 July.
The claimants’ principal claim, based on interpretation of an agreement, succeeded. The claimants were therefore the successful parties. The Recorder acknowledged that the general rule is that the unsuccessful party will be ordered to pay the costs of the successful party on the standard basis, but the court may make a different order having regard to all the circumstances, including those set out in CPR 44.2(4). A relevant consideration in determining costs in this case was that the claimants had brought a claim for rectification in case their claim based on interpretation failed. Recorder Mark Anderson KC found that the alternative rectification claim had failed and it had increased the overall costs for the claimants and for the defendant. He considered the factors identified in CPR 44.2(4) and (5), and reminded himself of the various orders open to him as listed in (6). The Recorder noted that CPR 44.2(4)(b) applied where there had been partial success by an otherwise unsuccessful party, but found the defendant had not enjoyed partial success. He did not think that an issue-based order, whereby the claimants would be awarded the costs of the interpretation issue and the defendant the costs of the rectification issue, would be workable, because there was significant overlap between the two issues. He accepted that the rectification issue contributed heavily to the overall costs and that he should make an order which relieved the defendant of having to pay the claimants’ costs to the extent that they were increased by that issue.
Held (awarding costs):
Recorder Mark Anderson KC decided that the claimants should have 40% of their costs up to and including 23 March 2022 to be assessed on the standard basis.
He went on to consider costs for the period after 23 March 2022. The claimants had made an offer on 1 March 2022 and the main judgment was more advantageous to the claimants than the proposal contained in the offer. They therefore said that CPR 36.17(1)(b) applied and they were entitled to the additional amounts provided for in CPR 36.17(4) with effect from 24 March 2022. The defendant contended the offer was not a Part 36 offer.
The Recorder stated the first issue he had to decide was whether the offer of settlement was effective as a Part 36 offer. In his judgement the offer was an offer to compromise. No reasonable person would have seen it as an offer to pay a contribution to the defendant’s costs. The offer made clear that the usual Part 36 consequences as to costs would apply: the defendant would pay the claimants’ costs. There was no mention of the defendant’s own costs being paid by the claimants. No reasonable person would have found themselves even pondering whether this was an offer to pay the defendant’s costs. Moreover the offer clearly related to the claim, as was required by CPR 36.5(d). He therefore concluded that the offer of 1 March 2022 was a Part 36 offer.
The second issue the Recorder had to decide was whether the outcome was at least as advantageous to the claimants as the proposals contained in the Part 36 offer, such that CPR 36.17(1)(b) applied. The Recorder found that the outcome was more advantageous than the Part 36 offer and so CPR 36.17(1)(b) did apply.
The third issue was whether it was unjust to award the CPR 36.17(4) sums. In considering whether it would be unjust to make such an order, the Recorder was obliged to consider all the circumstances of the case, including the matters specified in CPR 36.17(5)(a) to (e). The Recorder also considered the authorities of Jockey Club Racecourse Ltd v Willmott Dixon Construction Ltd [2016], JMX v Norfolk & Norwich Hospitals NHS Foundation Trust [2018], and Yieldpoint Stable Value Fund v Kimura Commodity Trade Finance Fund [2023]. The Recorder agreed with Mr Houseman KC in Yieldpoint (at para 19) that decided cases provided only illustrative guidance. The Recorder accepted that, in general terms, the stronger a claimant’s case, the less likely it is that an offer to settle at a small discount will be stigmatised as non-genuine. He did not discern a marked disconnect between the claimants’ prospects and the offer they made, applying the reasoning of Foskett J in JMX at para 12 (where the claimant’s offer was to accept a discount of 10%) that it was not usually possible or desirable to attempt ‘to determine how the case should have looked to the offeror before the offer was made’. The Recorder held it was usually unrealistic for the court to embark on an assessment of how a party should have regarded its prospects of success when pitching the level of an offer to settle and that offers usually reflect a range of considerations, of which an assessment of prospects is only one. He found that the financial landscape had shifted since the claim was first asserted. Although it was not a generous offer, that did not equate to its not being a genuine attempt at settlement.
The Recorder considered that the terms of the offer were clear. If the defendant did not understand those terms, it was open to her to seek clarification. She did not. There was no deficiency in the information available to the defendant and she did not ask for any information from the claimants. The offer was made well before trial, when there were still large savings to be made in terms of costs. The Recorder observed that the White Book explains at 36.17.5 that the Part 36 regime is designed rigorously and robustly to promote settlement, and he must not first ask what he would have decided as a matter of discretion and then check that against the Part 36 outcome. It was not his function to assess the fairness of the Part 36 regime, but to ask whether there was anything particular to the present case which would take it out of the norm. The fact that the claimants failed on a secondary issue did not do so. It was a frequently encountered feature. In these circumstances the Recorder did not consider it unjust to make the order referred to in CPR 36.17(4) and held that he must therefore make such an order. The Recorder exercised his discretion as to the rate of interest under CPR 36.17(4)(c) and held that 4% over base was reasonable.
The Recorder went on to decide whether to make an order for an interim payment on account of costs. It seemed to him oppressive to order the defendant to make a payment to the claimants which she could not afford, while the claimants retained the benefit of an asset which belonged partly to her, the sale of which would enable her to afford the payment. He therefore thought it just to order a stay.
The Recorder determined that the costs incurred after March 2022 would be assessed on the indemnity basis, and would bear interest as well as an additional payment under CPR 36.17(4)(d). In light of all these considerations he ordered that the defendant make an interim payment on account of costs in the sum of £165,000, which would be stayed for the reasons already explained.
JUDGMENT: RECORDER MARK ANDERSON KC : [1] I handed down judgment on 18 May 2023, following a trial in March which lasted 4 days. This is my reserved judgment on costs after further submissions at a consequentials hearing on 19 July. I will use the terminology set out in paras 3 to 6 [of] the …Continue reading "Colicci & ors v Grinberg & anr [2023] WTLR 1249"