Paying party has made litigation choices and must now face the consequences, says judge
A judge has refused a paying party’s request to delay payment of a summarily assessed costs order, without which it said it would struggle to continue the claim.
However, Judge Barber, sitting in the Insolvency and Companies Court, accepted a suggestion from the receiving party that the paying party be given a short period of time to make a formal application for this.
In Brierley v Howe & Anor (Re Costs – 36 Bourne Street Ltd) [2024] EWHC 2983 (Ch), the first respondent succeeded in a strike-out application and the judge found no good reason not to award him his costs. She decided to assess them summarily given that the total hearing time amounted to approximately one day.
On quantum, she accepted that London 1 rates were justified and that the first respondent was entitled to instruct a highly specialised barrister, even though he charged more than the petitioner’s KC and junior combined. “In my judgment, this highly technical strike out application does warrant London grade 1 treatment, even if other aspects of the case, as the matter progresses on to trial, may warrant only London grade 2.”
Judge Barber assessed the costs at £30,000 before turning to the issue which took up most of the hearing: whether the court should defer the question of when the petitioner should pay the costs to a later hearing.
The petitioner said having to pay immediately would render it impossible to continue with her residual claim against the first respondent. The judge noted there was no evidence provided to support this contention, even though the petitioner should have contemplated the possibility of losing and had had “plenty of time” – three months since the strike-out hearing – to prepare it.
“To delay final disposal of any aspect of this application in the manner proposed by the petitioner would, in my judgment, be contrary to the overriding objective.”
Preparing evidence about her own affairs “would not have been a particularly onerous task,” Judge Barber continued. “It does seem to me that it is not good enough for the petitioner to wait until the judgment is circulated, in the hope that it may be a judgment in her favour, before taking any other steps of the nature now proposed.”
She said the caselaw and guidance to which she had been referred did not lead “inexorably to the conclusion that no deadline can be set for payment of the costs ordered today”.
The judge welcomed the first respondent’s suggestion to add a ‘rider’ to the order that, if the petitioner issued a fully evidenced application seeking a stay of the costs order (and/or an extension of the deadline for payment) within a given, “quite short” timeframe, the deadline for payment should be extended until the application was disposed of or further order.
“In my judgment this ‘rider’ provides more than adequate protection to the petitioner in context,” she said.
She rejected the petitioner’s alternative suggestion to put it off to a case and costs management conference (CCMC) next year. “That is far too late. Further costs will inevitably have been run up preparing for the CCMC in the meantime.
“Moreover… any deferral of costs liability ordered by the court on grounds of impecuniosity may well inform the approach that the court takes at the CCMC itself, on costs management, on directions through to trial and on the issues to be determined at trial. The outcome of any deferral application needs to be known in advance of the CCMC.”
Judge Barber saw the “force” in the first respondent’s concern about the suggestion that the petitioner should be kept immune from any costs orders ahead of trial.
The petitioner’s stance on costs “appears to be premised on the expectation of a likely win and significant recoveries at trial” but the remainder of the issues were legally and factually complex. “There is certainly no guarantee that the petitioner will win and indeed an appreciable risk that she will not.”
The judge also put the decision in the context of the petitioner retaining “a large legal team”, whose costs for the strike-out application were some £34,000, including counsel’s fees for the hearing of over £17,000. This compared to the first respondent’s costs schedule of £45,000, including a £22,000 brief fee.
“This is not a case where the petitioner has been bounced into litigation and has had no option but to respond to it. It was the petitioner’s choice to issue these section 994 proceedings and it was her choice to include a wide range of allegations and issues, including, as I have found, certain allegations which were liable to be struck out.”
Further, the petitioner had largely ignored warnings from the first respondent’s solicitors to keep within legitimate bounds of the section 994 jurisdiction.
“As is clear from my main judgment, the petitioner (through her legal team) adopted a somewhat blinkered, defiant and unrealistic approach to the strike out application. The petitioner’s legal team also prolonged the time that final disposal of the application took, by seeking to bolster the petitioner’s position with passages from authorities which were partially quoted or quoted out of context.
“This lengthened and complicated the process of final disposal unnecessarily, as each such quote then had to be the subject of submissions and considered in its full form and proper context, before being rejected for the most part as any realistic plank in support of the argument in favour of which it was put forward.
“The defiant, unrealistic stance adopted by the petitioner on the strike out application is also not a ‘one-off’. It is part of an emerging pattern of ‘taking things to the wire’ already demonstrated in the section 306 proceedings which preceded this application.”
As a result, Judge Barber rejected the suggestion that making a costs order now, with a deadline imposed for payment, would not be just. “The petitioner, advised and represented by a large legal team including senior leading counsel, has made litigation choices and must now face the consequences.”
There was no good reason why the first respondent should be kept out of pocket in respect of costs “which he has very reasonably incurred” in a process designed to keep the section 994 petition within legitimate bounds. “He is to be praised for his efforts to do so, rather than castigated, as the petitioner’s legal team would have it.”
The judge ordered payment of the costs within 21 days, subject to the provisions of the ‘rider’.
Andrew Sutcliffe KC and George Eyre (instructed by Hewlett Swanson) for the petitioner. Nigel Dougherty (instructed by Cooley) for the respondents.