YOU’RE AS BAD AS EACH OTHER: NO-ONE IS GETTING ANY COSTS: POWERFUL WORDS IN THE HIGH COURT

In GBM Minerals Engineering Consultants Limited -v- GM Minerals Holdings Limited [2015] EWHC 3091 (TCC) Mr Justice Fraser had some some strong words to say about conduct and costs, resulting in a decision that no order for costs should be made.

“This could be said to be the very antithesis of cost-effective and efficient litigation. If the parties insist on litigation of attrition, they may find (without in any way pre-judging any particular costs applications in advance) the court approaching the matter by not awarding costs to either party.”

THE CASE

The judge granted both parties permission to amend their pleadings shortly before trial. There was no agreement as to who should pay the costs.

KEY POINTS

  • Both parties had acted unreasonably in opposing amendments.
  • The appropriate order was no order for costs of the application.

THE ARGUMENTS AS TO COSTS

The judge’s observations on the process as to costs make interesting reading in themselves.
  1. For reasons explained in that judgment, in what I consider to be exceptional circumstances, I allowed both applications to amend. This meant that the trial date had to be vacated. I directed that the parties should attempt to agree the relevant costs consequences, but if they were unable to do so each should lodge short written submissions and the court would consider the matter of costs as a paper application, and would deal with costs in writing. Section 4.4 of the Technology and Construction Court Guide encourages this approach, which saves the parties the costs of further attendance, and neither party in this instance sought to dissuade me from dealing with costs in this way. I directed that the submissions on costs be limited to two pages. Each party complied with that regarding the length of submissions, but I have also been provided with no fewer than 13 e mails between the solicitors as well, dealing with this subject. These e mails do not make edifying reading. They rather reinforce the point to which I referred in paragraph [32] of my earlier judgment at GBM Minerals Engineering Consultants Ltd v GB Minerals Holdings Ltd [2015] EWHC 2954 (TCC). These parties appear determined to fight bitterly over every possible inch of ground.
  2. Sadly, but unsurprisingly in those circumstances, the parties have been unable to agree who should bear the costs of preparation and attendance at the hearing on 9 October 2015. Schedules were lodged prior to the hearing so that summary assessment could be performed by the court for both applications. These show that the claimant’s costs of its own application were £8,224, and the defendant’s costs of opposing that application were £6,386 (all figures stated exclude Value Added Tax). So far as the defendant’s application is concerned, the defendant’s costs were £50,693.50, and the claimant’s costs in opposing that application were £32,153.

THE JUDGE’S FINDINGS

The judge had given permission to both parties to amend their pleadings. Both parties had acted unreasonably. Therefore no order for costs was made.

  1.  However, CPR Part 44.2(4)(a) expressly requires me to consider the conduct of the parties, and paragraph [24] of my earlier judgment makes it clear that impermissible matters were affecting the defendant’s decision concerning whether, and when, to amend its defence and counterclaim to include the allegedly secret payments made by the claimant to Mr Laing.
Conclusion
  1. In my view, the fact that each party opposed the other’s application to amend their pleadings is explained as an attempt by each to seek opportunistic advantage. Although the defendant must have realised that the claimant could no longer rely upon the 17 Variation Orders (which the defendant itself had uncovered as being potentially created falsely after the event), by opposing the amendments it was seeking to trap the claimant in a corner – failure by the claimant to obtain permission would effectively have meant that the claimant had no pleaded case left to advance at trial at all, even though the case was that the increases in contract amount for the work were agreed by the defendant. This would have amounted to the defendant achieving summary judgment on its defence to the claim, but by the back door. There was no good reason to oppose the claimant’s amendments, and I consider the lack of particularisation was being used by the defendant as an excuse.
  2. Turning to the defendant’s amendments, the claimant sought to keep these issues out of the case, even though they are very serious allegations, are supported (arguably at this stage) by contemporaneous documents, and are relevant to the subject matter that will already be before the court when the trial judge comes to consider the committal proceedings, as ordered by Coulson J in his judgment. The material that justified the amendments was not available to the defendant until the disclosure process, and represents prima facie evidence of secret payments. The claimant however attacked the amendments on a number of fronts, including lack of particularisation (of what was by its nature a potentially secret arrangement between a director of the claimant, Mr Short, and one of the claimant’s own witnesses, Mr Laing) and a failure to bring the application earlier. The claimant was seeking an opportunistic advantage.
  3. In my judgment, both of paragraphs [16] and [17] above represent examples of parties seeking “litigation advantage”, a phrase used (in different circumstances, concerning relief from sanction) by the Court of Appeal in paragraph [41][4] of Denton v TH White Ltd [2014] EWCA Civ 906. The Court of Appeal in that case made it clear that “the court will be more ready in the future to penalise opportunism”[5]. Although that statement was made in the context of avoiding satellite litigation, and contested applications for relief from sanction, it makes it clear that seeking opportunistic advantage will not achieve the aim of efficient conduct of litigation.
  4. This was in any event a Pre-Trial Review which would have required attendance by trial counsel in any event. I consider that in all the unique circumstances of this case, on these two applications, the correct order for costs on each of the applications is no order for costs. Each party will therefore have to bear its own costs of the hearing of each application.
  5. I wish to end on a cautionary note to the parties. The total sum of both parties’ costs, taken from both the schedules on the two amendment applications, is approximately £97,456. That is a sizeable amount for developments in the case that effectively amount to no more than the claimant no longer relying upon falsely created Variation Orders, and for the defendant to allege that the claimant had made secret payments to Mr Laing, based on the contents of an e mail and a one-page schedule. That sum is also a sizeable percentage of each of the costs budgets that were approved by Akenhead J on 24 October 2014. Without repeating paragraph [32] of my first judgment, there are now two separate applications listed for 6 November 2015, namely an application for security for costs and also another for specific disclosure, that latter application including a Schedule dated 20 October 2015 seeking no fewer than 20 different categories of documents (with one of those categories having three sub-categories). This could be said to be the very antithesis of cost-effective and efficient litigation. If the parties insist on litigation of attrition, they may find (without in any way pre-judging any particular costs applications in advance) the court approaching the matter by not awarding costs to either party.”

 RELATED POSTS

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: