Court to cost-manage £13m claim

A £13m claim is to be subject to costs management after the claimant failed to mention the value in the claim form, which would have taken it outside the compulsory regime.

As it was, Chief Master Marsh in the Chancery Division found that there were “positive reasons why cost management is desirable” anyway. With estimated costs of more than £4m, it was “plain that issues of proportionality are engaged”.

He was ruling in Signia Wealth Ltd v Marlborough Trust Company Ltd & Anor [2016] EWHC 2141 (Ch), which he described as a complex and hotly contested case about the departure of the second defendant from her role as CEO of the claimant. The first defendant was the trustee of a trust which held shares in the claimant beneficially for the second defendant and for other family members.

As a preliminary matter, the master was asked whether the case should be subject to costs management. At the time of the hearing, the claimant had incurred costs of £967,000 and forecast expenditure up to the end of the trial of £1,374,000. The defendants had incurred costs of £776,000, with forecast costs being slightly in excess of £1m.

Master Marsh said, although there was initial uncertainty, it was now not in doubt that the claim was within the costs management regime, even though it exceeded the £10m threshold for compulsory costs management. “That is so because neither the claim form nor the additional claim mentioned the value of £13m, which is said to be the value of the shares which were held by the first defendant.

“Had the figure been mentioned in the additional claim form, then the costs management regime would not have applied.”

He then went on to look at whether the case should be taken outside the regime, applying the test in CPR 13.15(2).

Master Marsh highlighted five relevant factors. First, the ill-feeling between the parties, serious allegations levelled against the second defendant and the manner in which the litigation was being conducted – “where all proper points are being taken” – made it “eminently suitable for some degree of control by the court”.

Secondly, “on any view, a claim which may be conducted through to a trial lasting ten days with a total cost of £4.14m is an expensive piece of litigation.” Thirdly, with approximately £2.4m in costs yet to be expended, it “cannot be said that the court’s ability to control costs would be entirely wasted or largely wasted with such figures involved”. Fourthly, there was some concern about inequality of arms between the parties. Finally, he had regard to the difference in the budgets.

Master Mash concluded: “It is not possible for me to be satisfied here that this litigation can be conducted justly and at proportionate cost without costs management. Although a cost management order will be made at a later stage of the claim than is generally desirable, there are significant future costs to be incurred.

“Indeed, it seems to me that there are positive reasons why cost management is desirable here. The court has power in appropriate cases, and this may well be such a case, to make observations about costs which have been incurred. Without having formed a concluded view on that subject, such observations may be useful here given the size of the incurred costs…

“Overall, it seems to me that there is likely to be a real benefit for the parties if there is a cost management order.” 

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Costs News
Published date
15 Sep 2016

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