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England and Wales High Court (Technology and Construction Court) Decisions


You are here: BAILII >> Databases >> England and Wales High Court (Technology and Construction Court) Decisions >> Vector Investments v Williams [2009] EWHC 3601 (TCC) (05 November 2009)
URL: http://www.bailii.org/ew/cases/EWHC/TCC/2009/3601.html
Cite as: [2009] EWHC 3601 (TCC), [2010] BLR 195

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Neutral Citation Number: [2009] EWHC 3601 (TCC)
Case No: 9BM90165

IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
TECHNOLOGY AND CONSTRUCTION COURT

St. Dunstan's House
133-137 Fleet Street
London EC4A 1HD
5 November 2009

B e f o r e :

MR. JUSTICE RAMSEY
____________________

Between:
VECTOR INVESTMENTS
Claimant

- and -


J.D. WILLIAMS

____________________

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____________________

HTML VERSION OF JUDGMENT
____________________

Crown Copyright ©


     

    MR. JUSTICE RAMSEY :

    Introduction
  1. By a Tomlin Order dated 18 December 2008 the claimant ("Vector") and the defendant ("Williams") compromised the substantive proceedings in this action. In doing so, they provided in the order that liability for the costs of these proceedings should be determined by the court if it could not be agreed by the parties. The compromise was on the basis that Williams agreed to pay Vector £750,000 plus VAT in full and final satisfaction of all the claims and counterclaims in the action.
  2. Background
  3. Vector is a developer and they had previously carried out the redevelopment of Victoria Station in Manchester to provide the MEN Arena and associated facilities, including a cinema. In 2000 they decided to redevelop the cinema to create a call centre. Williams is a catalogue and internet retailer. Williams entered into an agreement for lease of the call centre with Vector by an Agreement dated 15 May 2001 ("Agreement for Lease") under which Vector would bear the costs of the landlord's works and Williams would pay for the permitted tenant variations and the tenant fit-out works. Professional fees and similar costs would be shared.
  4. A further agreement ("the Building Contract") was entered into between Vector and Wates Construction Limited ("Wates") under which Wates were to carry out all the necessary works including tenant fit-out works. Williams were however to be responsible for the design of the tenant fit-out works. Under the Building Contract the architect was David Lyons & Associates ("DLA") and the quantity surveyors were Davis, Langdon & Everest ("DLE").
  5. There were delays to the works and disputes arose between Vector and Williams as to liability for those delays and for sums due as additional payments to Wates. There were discussions in March 2002 in an attempt to resolve delay matters but those discussions were unsuccessful. The works reached practical completion on 31 May 2002. In July 2002 the relevant financial position in relation to pay due to Wates and sums claimed from Williams was that DLA, the Architect under the Building Contract, had certified a gross valuation in favour of Wates of £11.8 million and DLE had issued a summary of tenants' provisional sums in a total sum of £1,902.682.44.
  6. By December 2002 DLE were writing to say that Williams' overall liability for the cost of the work would be in the region of £2.9 million to £3.4 million, which included all work under the original Agreement, tenant-generated additional works and a proportion of Wates' loss and expense claim. This was followed by a demand by Vector for a further payment from Williams of £1 million plus VAT.
  7. Williams then instructed solicitors, Halliwells LLP. EC Harris LLP ("ECH"), who had become involved in May 2002, started to become more involved and Vector instructed Hammonds LLP as their solicitors. On 13 July 2004 DLA wrote to Williams and certified that the current value of the tenant's works was £3,836,964 plus VAT. They enclosed six Lever Arch files of documentation relating to the build up of that valuation. This led to exchanges between the parties and on 25 July 2005 Halliwells wrote to Vector to seek "a number of documents which are fundamental to your claim which we have not yet seen". They listed the documents.
  8. On 16 September 2005 Hammonds informed Halliwells that they had been instructed and they enclosed a file of documents responding to Halliwells' request of 25 July. In the meantime, Vector had written four letters to Williams on 7 September 2005 in respect of claims for sums due in relation to finance charges, late payment charges, professional fees and a reduced rent-free period. Hammonds then sought a substantive response from Halliwells to those claims but it seems that, whilst Halliwells produced a draft letter dated 11 November 2005, the letter was never sent to Hammonds. That letter referred to Williams' consultant advising them that the correct sum for tenant fit-out works was £1,811,052.45 and that Williams' assessed professional fees were £252,617.74.
  9. Further claims for payment were made and by January 2006 DLA issued an Interim Certificate 17 certifying that the value of the works carried out by Wates was £12.15 million with tenant works being valued at £4,407,996.67. A statement of financial claims was sent to Halliwells on 8 February 2006 and an open meeting was held on 23 February 2006 between Vector, Williams, solicitors for the parties, ECH and Mr. Philip Hannis who had been acting as Williams' representative throughout. On 6 March 2006 Hammonds wrote to Halliwells to say that they required a response to the claims by 17 March 2006 and reserved the right to issue proceedings. There was further correspondence from Halliwells on 22 March 2006 and from Hammonds on 31 March 2006.
  10. On 25 May 2006 Vector issued the present proceedings in Salford District Registry claiming the sum of £6,191,049.
  11. These proceedings
  12. Vector served the claim form and particulars of claim on 25 May 2006. Williams acknowledged service on 8 June 2006. On 9 June 2006 Vector issued and served an application for summary judgment. That application was heard by His Honour Judge Gilliland QC on 30 June 2006 and he gave judgment dismissing the application and awarded Williams their costs. Vector indicated that it wished to amend the particulars of claim in the light of that judgment. On 19 October 2006 directions were given for the service of a draft amended particulars of claim and other procedural steps leading to a hearing of the substantive matters in June 2007.
  13. On 4 June 2007 the proceedings were stayed whilst there was an application for transfer to London. Subsequently, directions were given by Akenhead J for a trial commencing on 20 October 2008 but this hearing was later adjourned to 24 November 2008. The proceedings were, as I indicated, compromised on about 19 November 2008 leading to the Tomlin Order dated 18 December 2008 which sought the court's determination on liability for costs.
  14. The costs proceedings
  15. Originally it was intended that submissions on costs would be made within the period of the vacated substantive hearing in November and December 2008. In the end, that did not prove possible for the parties but they provided outline statements of their position on costs.
  16. In relation to the issue of costs Williams then served the following evidence: (1) a witness statement dated 19 December 2008 from Sarah Maylor and a witness statement from Helen Mills dated 18 December 2008. They are both solicitors with Halliwells; (2) a report by David Palentine of Trett Consulting dated 17 December 2008 and a paper from Mr. Eagles of Trett Consulting Ltd.
  17. Vector then served a witness statement dated 16 January 2009 from Mr. Albert Howard, the Managing Director and Company Secretary of Vector. Mr. Harland, the Head of Legal Services for Williams then served a witness statement dated 10February 2009. Vector also served further evidence: a witness statement dated 28 July 2009 from David Moss, a solicitor at Hammonds; a witness statement from Neil Fitch of ECH dated 23 July 2009 and a witness statement from Peter Stickland of ECH dated 17 July 2009. Finally, they also served a further witness statement dated 19 October 2009 from Mr. Howard.
  18. In addition to the overall costs of the proceedings, Williams also seeks a special order in respect of difficulties which is says occurred in inspecting Vector's documents.
  19. At the hearing I heard evidence from the two quantity surveying experts, Neil Fitch of ECH and David Palentine of Trett Consulting. Mr. Fitch had been involved in the project since May 2002 when ECH were asked to express a view on matters because Vector had concerns that the project was running late and over budget. He explained the view that Vector should deal first with the final account of Wates then find out the value of the tenant fit-out works and then consider a claim against the consultants. He explained that he was involved in the final account negotiation with Wates which led to the agreement of £12.15 million in April 2004. This sum had been based on papers he had received from DLE. Although he only had a supervising role, his staff produced Certificates 14 to 17 in consultation with the Design Team.
  20. After the summary judgment application had been dismissed, ECH then produced the documentation for the amended particulars of claim. He said that much of the underlying material was the same as that produced for Certificate 14 and that there was reference in the amended particulars of claim to figures which had been taken from Certificate 16 and 17 so that Williams could see where the figures in that document came from. He said that, after the amended particulars of claim had been produced, he became involved in the role of expert witness and the view was taken, in conjunction with David Palentine, that the works should be re-measured from scratch. This led to a reduction in the value of the tenant fit-out works and the permitted tenant variations. The element of the claim relating to loss of expense had also to be assessed. This, he said, had been validated by DLE but there was not much back-up information. He thought that he might be able to validate a claim of some £50,000 to £100,000.
  21. He was referred to paragraph 2.5 of David Palentine's statement. He accepted that the amended particulars of claim did not provide a narrative but did not see the need for one. He also accepted that there were not marked up drawings. He said, though, that there were take-offs which cross-referred to Certificate 16 and 17 and extracts from the final account. He said the reason why the figures had reduced was that for him to give expert evidence the analysis of the figures had to be done with a higher degree of precision and where support could not be found, the item was not included.
  22. David Palentine also gave evidence. He had been instructed as expert for Williams on 30 March 2007. Initially he was concerned with the value of tenant fit-out works but then his brief was extended to consider loss and expense and in August 2008 he first considered the fee element. He was asked questions about the way in which matters progressed from his first involvement in March 2007 until the production of the experts' third joint statement. He said that he was sent the pleadings and then had his first meeting with Neil Fitch on 12 April 2007. He referred to a request to Halliwells for documents, some of which he received. He said that at this stage he was to produce his expert evidence for the trial fixed for June and July 2007. He said that he worked on the re-measure of the work but that with an offer being made by Williams in August 2007 and the transfer of proceedings to London, the level of work dropped off from June to November 2007.
  23. At the end of November 2007, at his instigation, a further request for documents was made by Halliwells and at a meeting with Neil Fitch in January 2008, he also asked him for the documents. He said he received some documents at the meeting and the remainder in February 2008. He said he had asked for Mr. Hannis's re-measurement but did not receive it. He was under the impression that it could not be found. It was therefore necessary to carry out a re-measurement for this reason but also because he considered that the amended particulars of claim lacked the necessary information.
  24. The issues in relation to costs
  25. In summary, Vector seeks an order that it should have the costs of the proceedings on the following basis: (1) That Vector obtained payment of £750,000 plus VAT from Williams and is therefore the successful party and should be awarded its costs on the general principle that the successful party should be awarded costs; (2) That Williams' without prejudice save as to costs offer to settle of 29August 2007 for £400,000 was beaten and does not affect the award of costs; (3) That there are no other relevant circumstances which should affect the general principle; (4) That no order for costs should be made in favour of Williams in relation to Vector's disclosure exercise.
  26. Williams, on the other hand, submit that: (1) It was the successful party because it reduced Vector's claim from some £6 million to £750,000 and should be awarded its costs; (2) Alternatively, neither party was successful and the starting point should be no order for costs; (3) Alternatively, if Vector were to be considered the successful party, then taking into account the conduct of the parties, the lack of success on the claim and the offer of 29 August 2007, Vector should not be awarded any of its costs; (4) That any costs order ought to award Williams the wasted costs of dealing with Vector's disclosure and deprive Vector of its costs of that exercise.
  27. The applicable principles
  28. I now turn to consider the principles which are applicable to a case such as this. There are two relevant areas which have to be considered. First, the approach of the court where the only live issue is that of costs and where the parties have compromised the substantive dispute. Secondly, the general approach of the courts to the awards of costs as that approach is relevant to the contentions in this case.
  29. I first deal with costs where the underlying claim has been compromised. In certain cases, of which this is an example, the parties reach a stage in litigation where they realise they can resolve the underlying claims but by then the costs of the litigation have become so significant that they cannot resolve the question of liability for those costs. In such circumstances the parties sometimes reach agreement on the substantive claims and counterclaims and agree that the court will determine liability for costs. The court is generally willing to assist the parties by making such a determination. In Boxall v. London Borough of Waltham Forest (unreported, 21 December 2000) Scott Baker J set out the following principles relevant to the present case:
  30. "(i) the court has power to make a costs order when the substantive proceedings have been resolved without a trial but the parties have not agreed about costs.
    …
    (iii) the overriding objective is to do justice between the parties without incurring unnecessary court time and consequently additional cost;
    (iv) at the end of the spectrum there will be cases where it is obvious which side would have won had the substantive issues been fought to a conclusion. In between, the position will, in differing degrees, be less clear. How far the court will be prepared to look into the previously unresolved substantive issues will depend on the circumstances of the particular case, not least the amount of costs at stake and the conduct of the parties.
    (v) in the absence of a good reason to make any other order the fall back is to make no order as to costs.
    (vi) the court should take care to ensure that it does not discourage parties from settling … proceedings … ."
  31. In the earlier case of R v. Holderness Borough Council Ex parte James Robert Developments [1993] 1 PLR 108 an application for judicial review of a planning issue became academic and the parties sought the court's determination on costs. In order to decide the question of costs the judge at first instance proceeded on the basis that, as both parties accepted, he should resolve the substantive issue in order to determine the costs. On appeal, the majority held that the court had to deal with the substantive issues: see Butler-Sloss LJ at 119H and Dillon LJ at 122B to C. Simon Browne LJ, dissenting, said this as to the approach of the court at 115:
  32. "I recognise, of course, that costs applications have to be entertained and resolved. But not, I would suggest, by litigating the case for all the world as if the substantive issues need to be resolved for their own sake. In my judgment, an altogether broader approach should be adopted. One which enables the court in a comparatively short time to decide, and decide, moreover, without giving a fully-reasoned judgment, into which general category of discontinuance the case falls."
  33. He concluded at 119 by saying this:
  34. "Can it really be an appropriate use of court time (not to mention the parties' ever escalating costs) to resolve in a series of decisions (including perhaps the House of Lords hereafter?) what, in all other respects, is a purely academic question, even if an important one, just so as to deal fairly and properly with the costs incurred by the parties before that question became academic? I would hold not. I would suggest instead that the costs can and properly should be dealt with once only, and even then generally on a broad-brush approach. That would not seem to me unfair. And it would certainly be a great deal more economical and expeditious."
  35. In the subsequent case of Brawley v. Marczynski [2002] EWCA Civ 756 the Court of Appeal considered the case where the parties had compromised a patent action on the basis that the patent had been assigned to the claimants and the defendants as co-owners with the claimants obtaining one half of the profits which were subsequently agreed at £300,000. The question of costs was then left to the determination of the court. Longmore LJ referred to what Scott Baker J had said in Boxall and said that the case came within the fourth principle:
  36. "…namely that it was a case where it was obvious which side would have won had the substantive issues been fought to a conclusion. [The judge] decided that the claimant, having been kept out of the money to which he was entitled for many years, until the settlement of 1999 and indeed until the further settlement of the amount due in 2001, was clearly the overall victor. I, for my part, not only am not minded to say that the learned judge in any way erred in his discretion; I go further and say that the decision reached by the judge is a decision to which I myself would have come."
  37. It is evident that in a case such as the present if the court were to embark on the determination of the substantive issues in order to come to a conclusion on the issue of costs, the parties would be discouraged from settling and costs and court time would be wasted. Such an approach would evidently be contrary to the overriding objective in the CPR of saving expense, dealing with the case in ways which are proportionate and allotting to a case an appropriate share of the court's resources. In this case, sensibly, neither party has suggested that a trial of the substantive issues is necessary: rather, both sides have referred to the provisions of CPR 44.3 which set out the circumstances to be taken into account when exercising the court's discretion as to costs.
  38. The application of the principles to this case.
  39. In applying the provisions of CPR 44.3 in this case, because the court will not be in a position to make a determination of the substantive issues, the question arises of how success is to be dealt with; in particular, under CPR 44.3(2)(a), how the court should approach the general rule "that the unsuccessful party will be ordered to pay the costs of the successful party". If, as here, the court is not determining success based on a decision on the substantive issues, how should it approach the matters? Both parties use the settlement figure as the basis for their primary submissions on success. Mr. David Streatfeild-James QC, on behalf of Vector, submits that the sum of £750,000 plus VAT recovered by Vector means that they are the successful party. Mr. Paul Darling QC and Mr. Tom Lazur, on behalf of Williams, submit that they are the successful party because they have reduced the claim of some £6 million to some £750,000 which arithmetically is a small percentage of the sum claimed.
  40. In my judgment a settlement sum is to be taken as the starting point for assessing which party has been successful in cases where the parties seek a determination of costs in the court's discretion under CPR 44.3 but do not seek the court's determination on the substantive issue. In cases such as this, it is overwhelmingly likely that the parties will not seek a determination of the substantive issues and in any event the court would take some persuading that a trial of substantive issues would be justified under the overriding objective. While the settlement sum is the starting point, the court also has to bear in mind that the settlement sum is not a determination of which side would have won had the substantive issues been fought to a conclusion. Indeed, the process of settlement in negotiation or in mediation takes into account many different factors, only one of which may be the merits of the claim.
  41. However, in the absence of any other compelling factor, I consider that the settlement sum will in fact be both the starting and the finishing point of the court's consideration of success. Evidently the subjective reasons why a party has settled cannot form the basis for the determination and there will often be nothing other than the settlement sum by way of an objective factor.
  42. The law on costs
  43. The general principles were set out by Jackson J in Multiplex Construction (UK) Limited v. Cleveland Bridge (No 7) [2008] EWHC 2280 (TCC) at paragraph 72 as follows:
  44. "(i) In commercial litigation where each party has claims and asserts that a balance is owing in its own favour, the party which ends up receiving payment should generally be characterised as the overall winner of the entire action."
  45. That was evidently based on the following two passages from decisions cited by Jackson J First, by Longmore LJ in AL Barnes Limited v. Time Talk (UK) Limited [2003] EWCA Civ 402 at paragraph 29:
  46. "In deciding who is the successful party the most important thing is to identify the party who is to pay money to the other. That is the surest indication of success and failure."
  47. Secondly, by Ward LJ in Burchell v. Bullard [2005] EWCA Civ 358 at paragraph 33:
  48. "Costs following the event is the general rule and in this kind of litigation the event is determined by establishing who writes the cheque at the end of the case. Here the defendants do. They were the unsuccessful parties and my starting point is that the claimant is entitled to the costs of the proceedings …"
  49. I consider the party who receives a balance of £750,000 plus VAT on its claim would be regarded by most people as being successful. I do not consider that the defendant who reduces the claim can be regarded as the successful party particularly in a case where the substantive issues are not being determined. In other cases defences may cause the court to make a proportional order to reflect success on the defence but, in my judgment, it does not make the defendant the successful party. I add that the decision in Hooper v. Biddle [2006] EWHC 2995 (Ch) relied on by Williams does not provide support for any other conclusion. That was the case of a nuisance payment on the basis that liability was not accepted.
  50. Mr. Darling submits that the court should, in the alternative, say that there was no successful party as Vector recovered only £750,000 and Williams succeeded in reducing the claim from some £6 million. The court should therefore, he submits, make no order as to costs. It is evident that no order as to costs is the fall back position set out by Scott Baker J at paragraph 21(v) in Boxall. There will evidently be claims, particularly in the area of judicial review proceedings or other cases where there is no monetary claim, where the settlement will leave the court in a position where it cannot determine which party was successful and where, in the absence of a determination on contested substantive issues, no order for costs will be appropriate. However, in cases where there is a monetary claim and a party has recovered a substantial sum, it will be rare for the court to find that the fall back position of no order as to costs is appropriate. Certainly this is not a case where that order would be appropriate.
  51. In this case on the basis that Vector has recovered £750,000 plus VAT I consider that it should be regarded as the successful party and, subject to the court making a different order under CPR 44.3(2)(b), the general rule would be that Williams should pay Vector's costs under CPR 44.3(2)(a).
  52. I now turn to consider the grounds on which Williams contends that I should make a different order. It is to be noted that under CPR 44.3(6) the different order can take a number of forms including at CPR 44.3(6)(a) an order to pay "a proportion of another party's costs". The grounds relied upon by Williams can be summarised as follows: (1) conduct in relation to the claim; (2) conduct relating to the offer made on 29 August 2007 and the failure to negotiate; (3) the exaggeration of the claim. I shall consider each of those heads of conduct.
  53. Conduct in relation to the Claim
  54. I need to set out some more detail of the background to and the conduct of the claim.
  55. As DLE observed in a letter written to Vector on 28 February 2001, the way in which the works were procured had the potential for problems. Vector were procuring the landlord's work and also the tenant fit-out work. Whilst the landlord's work had 80% costs certainty the tenant's work was proceeding on 100% provisional sums with design information being provided by consultants appointed by Williams as the building contract proceeded. In these circumstances there was clearly a potential for Wates to be delayed and disrupted both by the landlord's works and by the tenant fit-out works and for the division of responsibility for any delay and disruption as between Vector and Williams to be a complex matter to resolve. A pragmatic attempt to enter into an agreement which shared responsibility did not succeed. During the course of the works it seems that the value of the tenant fit-out works was the subject of valuation by DLE for Vector and that Williams engaged Mr. Hannis who evidently carried out checks on the re-measurement of the works (see the e-mail exchange between Mr Hannis and DLE of 22 July 2002 and Mr. Hannis' letter of 31 July 2002 to DLE).
  56. On 11 October 2002 DLE wrote to say that a number of items had been identified which would constitute tenant's variations or tenant fit-out works. These included a contribution towards the loss and expense claim. By 18 December 2002, as I have noted above, DLE were advising Mr. Hannis and Williams that Williams' liability was in the region of £2.9 million to £3.4 million. It seems that the first time when a proper valuation was put on the figure was on 13 July 2004 when DLA sent Williams Certificate 14 under the Building Contract with a current value of tenants' work of £3,836,964. Accompanying that letter were the six Lever Arch files of documents which related to the build up of the valuation. Williams responded to that claim on 28 July 2004 and further information was provided by Vector and ECH in December 2004. It was then on 15 May 2005 that Vector sent Williams a response and further information. More information was requested by Halliwells on 25 July 2005 and this was provided by Hammonds on 16 September 2005.
  57. By 11 November 2005, when Halliwells prepared the draft letter which was not sent, they had been able, most likely with the assistance of Mr. Hannis, to come to a view that some £1.8 million was due, £1.4 million having been paid. Williams paid the balance after a meeting on 13 February 2006 and a further breakdown of Williams' view of the claim was attached to Halliwells' letter of 22 March 2006. Proceedings were then issued and served in May 2006. By that stage I consider that there was no conduct which can affect any order for costs. There was certainly a substantial delay in Vector providing Williams with details of the sums which they claimed from them but from 2005 onwards Williams were in a position to evaluate the claim and did so as can be seen from Halliwells' draft letter of 11 November 2005 and the letters of 23 February 2006 and 22 March 2006 from Halliwells to Hammonds. Equally, Williams were able to and did make known their position in these latter documents.
  58. The period after May 2006 was taken up, first, with an unsuccessful summary judgment application by Vector and, secondly, by the need for Vector to make amendments to its particulars of claim, to plead a case on the merits of the claim rather than relying on the submission in the summary judgment application that the Architect's certificates were conclusive. Both of these stages, the summary judgment and the amendments, led to costs orders being made against Vector.
  59. By order dated 19 October 2006 a trial had been listed during June and July 2007. However, by late May 2007 the parties were agreed that the trial in June/July was unrealistic and the parties also agreed to a consent order staying the proceedings and transferring them to London. Meanwhile, in March 2007 Williams had appointed programming expert, Mr. Eagles, and their quantity surveying expert, Mr. Palentine. As Mr. Palentine explained, he had made a request for documents through Halliwells. This led to Halliwells writing to Hammonds on 30 March and 4 April 2007 and Hammonds responding with documents on 26 April 2007. Halliwells then wrote on 22 and 28 June 2007 requesting further documents. Hammonds responded on 2 July 2007 with the suggestion that there should be early disclosure rather than serial requests for disclosure. By 31 July 2007 there had been no reply from Halliwells and only a holding reply was sent on 3 August 2007.
  60. It was then on 29 August 2007 that Halliwells sent Hammonds the "without prejudice save as to costs" offer. On 31 August 2007 Hammonds sought a substantive reply on the issue of early disclosure but in reply on 5 September 2007 (dated incorrectly 5 August 2007) Halliwells stated:
  61. "we consider that it is entirely reasonable that the parties should take this opportunity to consider the merits of their respective positions with a view to seeing whether the matter is capable of settlement before incurring further potentially unnecessary costs."
  62. There were then exchanges concerned with the offer which I shall consider below. Otherwise it seems that matters relating to proceedings did not progress until 13 November 2007 when Halliwells wrote to propose dates for disclosure. At the same time Halliwells raised a complaint about a failure to provide information. Hammonds responded on 23 November 2007 asserting, in my view with some justification, that there had not been a failure to provide information. They proposed a meeting or a telephone call to discuss the mechanics of disclosure in addition to agreeing directions. Halliwells replied on 13 December 2007 and passed on a request made by Mr. Palentine for further documentation. Hammonds responded on 21 December 2007 and repeated the suggestion for a meeting to agree directions and the scope of disclosure. No meeting took place but the parties were able to agree directions which included an order for standard disclosure by 22 February 2008 and the court made those orders on 25 January 2008.
  63. I do not consider that there is anything up to that stage which could be described as being general conduct which should deprive Vector of any costs. Of course I leave out the consideration of the offer of 29 August 2007 which I shall deal with below. The complaint of lack of information is not justified on the basis that Vector provided information to Williams and had proposed early disclosure in response to serial requests. In the end the parties agreed disclosure by list by 22 February 2008.
  64. So far as experts are concerned, Mr. Palentine and Mr. Fitch met in January 2008 and some further documentation was provided then and soon after. Disclosure was then given and Williams makes a specific application for wasted costs in relation to inspection of Vector's documents which I shall consider below.
  65. Matters then proceeded by way of expert meetings, in particular between Mr. Fitch and Mr. Palentine whose main task was to narrow differences on the value of tenant fit-out works and permitted tenant variations. The approach taken, as I have said, was to start from scratch and re-measure the works. This seems to have been partly because it was easier to do it that way but also because Mr. Palentine did not have copies of the re-measurement carried out by Mr. Hannis and also felt that he did not have sufficient information from the amended particulars of claim. The experts then produced joint statements on 22 September, 16 October and 14 November 2008. By the end of that process, as set out in their third joint statement, the experts had narrowed the position so that Mr. Fitch's value was £2.246 million plus £515,000 for disputed items and Mr. Palentine's value was £1.844 million plus £285,000 for disputed items.
  66. In about August 2008 there was then a suggestion by Mr. Howard of Vector to Mr. Harland of Williams that the issues between the parties might be dealt with by way of mediation. This led to a suggestion in Hammonds' letter of 27 August 2008 that Williams had rejected this proposal. Halliwells, in their letter of 4 September 2008, disputed that assertion. Neither party sought to go to mediation. On 11 November 2008 Halliwells sent a "without prejudice save as to costs" letter to Hammonds in which Williams offered to accept liability for three weeks' delay and to agree weekly figures for the prolongation of costs for Wates and their sub-contractor, ABB. This was followed on 14 November 2008 by a "without prejudice save as to costs" offer of £750,000 plus VAT from Hammonds which was accepted by Halliwells' letter of 19 November 2008. This led to the Tomlin Order.
  67. In relation to conduct in this period, I do not consider that Williams has made out a failure by Vector to produce necessary information. Prior to the issue of proceedings information was provided, albeit at a late stage but well before the claim was issued, and Williams were able to, and did, assess their position on that basis.
  68. Following the summary judgment application and the subsequent amendment, Vector did provide information to Williams but in response to further serial requests for disclosure sensibly proposed to have early disclosure. This was not responded to and in mid-2007 it was then evident that Williams' focus was on making the offer of 29 August 2007. When preparation for the litigation commenced again information was requested by Williams in November 2007 and this was provided in January and February 2008 in joint meetings and subsequently on disclosure.
  69. There are two other items of conduct relied upon by Williams. First, it is said that the amended particulars of claim did not have a narrative section, did not include marked up drawings, take-off sheets or evidence for the rates or relevant documents. I have seen Appendix 5 to the amended particulars of claim and in my judgment it provides sufficient material for Williams and its experts to understand the claim. I do not consider that it is necessary to have a detailed narrative or to have drawings and take off details included. Secondly, complaint is made that Mr. Howard sent out at regular intervals a standard letter which sought the payment of ever-increasing and ever-ingenious sums by way of interest. I do not accept that this is conduct which, in itself, gives rise to any costs consequences though it may be relevant on the questions I have to consider in relation to the offer.
  70. In summary, therefore, I see no basis in terms of general conduct for depriving Vector of any of its costs in the period up to the settlement nor, I should say, is there anything in Williams' conduct which raises any factors relevant to costs.
  71. The offer of 29 August 2007
  72. On 29th August 2007 Halliwells sent an offer to Hammonds. It was expressed to be "without prejudice save as to costs" and expressly was not made as a Part 36 offer. It offered £400,000 in full and final settlement of Vector's claims. It was only in respect of certain claims, those at sections 1.00 to 15.00 and 17.00 of Appendix 5 to the amended particulars of claim. Essentially those claims were for tenant fit-out works and permitted tenant variations together with professional fees and other fees relating to the fit-out works. It did not include any offer for the claim in respect of the rent-free period or for loss and expense or for other fees or any other part of the claim. It offered to pay 25% of Vector's costs of dealing with the claims for which the offer was made but less Williams' costs for dealing with the claims which were not included in the offer. The offer also stated:
  73. "This offer is made in a genuine attempt to resolve this matter with the minimum of further cost to both parties. Notwithstanding the same our client recognises that significant costs have been incurred by both parties to date and with that in mind, to the extent that the only issue preventing the matter being settled is agreement on those costs, we suggest that the offer of £400,000 be accepted and the issue of costs alone be remitted to the court for determination."
  74. In response to that offer, Hammonds wrote on 31 August 2007 to say this:
  75. "Your letter provides no indication of, or information about, how the offer sum is calculated. At summary level the sum claimed in respect of items 1.00 to 15.00 and 17.00 of Appendix 5 of the Amended Particulars of Claim together with associated fees, interest and finance, exceeds £2 million. We require an indication of how the sum of £400,000 is built up before we can even begin to properly advise Vector on whether [Williams'] offer is capable of acceptance. Without such information Vector cannot sensibly respond to the offer."
  76. In reply on 5 September 2007 (dated 5 August 2007) Halliwells said that the offer was clear and no further clarification was necessary. Correspondence followed from Hammonds on the 19 September 2007, from Halliwells on 11 October 2007 in which they said, "The offer includes an element of commercial settlement" and from Hammonds on 12 October 2007 but those took the matter no further. On 7 November 2007 Halliwells said that the offer had been open for acceptance for over two months and would be withdrawn upon the expiry of 21 days. Hammonds wrote on 23 November 2007 and Halliwells replied on 13 December 2007 to say:
  77. "However, we understand from your response that your client has refused to consider the offer and has evidently rejected the same."
  78. Finally, on 14 December 2007 Hammonds said,
  79. "Given that there is no apparent basis for the offer based in the claim or [Williams'] response to the claim, the offer is not capable of acceptance by Vector."
  80. From those facts it can be seen that there was no Part 36 offer. There was an offer of a lower sum, £400,000, than Vector the sum of £750,000 which Vector ultimately recovered and there was no counter-offer made by Vector.
  81. What effect, if any, should this have upon the court's discretion to award costs? First, Williams faced the well-known difficulty of not wanting to make a Part 36 offer. If they had made a Part 36 offer then this would have led, on acceptance, to Williams having to pay Vector the costs of the proceedings under CPR 36.10(1). Clearly though, Williams wanted to contend that Vector should not have all of its costs rather than be limited merely to arguments of proportionality and reasonableness on a detailed assessment. Whilst the offer was not a Part 36 offer it can evidently be taken into account as an admissible offer to settle under CPR 44.4(c). On the face of the offer, ignoring the primary offer on costs, it could have been accepted on the basis of payment of £400,000 and the court determining costs. In fact Vector has obtained £750,000 with a similar costs provision. This is not a case where the offer of £400,000 was exceeded by only a small margin. Vector obtained a further substantial sum of £350,000.
  82. Williams make the point, though, that according to costs information provided the following can be seen: (1) That according to a cost estimate provided for the hearing in January 2008, as amended by Hammonds' letter dated 25 January 2008, Vector had incurred £625,000 for the costs of counsel and solicitors and £575,000 for expert fees. They predicted that a further £325,000 for solicitors and £635,000 to £820,000 for experts would be incurred; (2) As set out in Mr. Moss's witness statement, by the time of the settlement, Vector had incurred £4,677,511 being £1,701,152 for solicitors, £474,951 for counsel, £1,893,752 for experts and £607,654 for witnesses and other costs.
  83. From those figures it can be seen that costs increased from £1.2 million, past the prediction of £2.1 million to £2.3 million excluding counsels' fees, to £4.6 million. On that basis, as Mr. Darling submits, Vector has incurred a further £3.5 million in costs to achieve an improvement in their position of £350,000. In addition, apart from the request for a breakdown of the figure of £400,000 and the request to know more about Williams' case, there was no attempt by Vector to put forward a different figure or to negotiate.
  84. How should these matters be taken into account in relation to costs? As Jackson J said in Multiplex at paragraph 72(vii):
  85. "(vii) If (a) one party makes an offer under part 36 or an admissible offer within rule 44.3(4)(c) which is nearly but not quite sufficient, and (b) the other party rejects that offer outright without any attempt to negotiate, then it might be appropriate to penalise the second party in costs."
  86. That proposition was derived from the following passages cited in that judgment which cast light upon that factor First, in Painting v. University of Oxford [2005] EWCA Civ 161 Maurice Kay LJ, said at paragraph 22 that there were two points which called for "considerable weight". The second one was:
  87. "that at no stage did Mrs Painting manifest any willingness to negotiate or to put forward a counter-proposal to the Part 36 payment. No one can compel a claimant to take such steps. However, to contest and lose an issue of exaggeration without having made ever a counter-proposal is a matter of some significance in this kind of litigation. It must not be assumed that beating a Part 36 payment is conclusive. It is a factor, and will often be conclusive, but one has to have regard to all the circumstances of the case."
  88. Also in Painting at paragraph 27 Longmore LJ said this:
  89. "I agree with my Lord that it is relevant that Mrs Painting herself made no attempt to negotiate, made no offer of her own and made no response to the offers of the University. That would not have mattered in pre-CPR days but, to my mind, that now matters very much. Negotiation is supposed to be a two-way street, and a claimant who makes no attempt to negotiate can expect, and should expect, the courts to take that into account when making the appropriate order as to costs."
  90. Secondly, Jackson J cited what Chadwick LJ had said in Johnsey Estates (1990) Limited v. Secretary of State for the Environment where there was a payment into court which was lower than the sum awarded and then there was a later payment-in which was greater. The court held that the other party was entitled to its costs up to the second offer. In doing so the court dealt with an argument that the landlord should not be deprived of its costs between the two offers. The submission was that:
  91. "…the landlord was, throughout, seeking damages and amounts which were far in excess of the amount to which it was ultimately held entitled; and that it was the landlord's inflated and unrealistic valuation of the claims which had made it impossible to dispose of the action by agreement in 1996. He accepted, of course, that the amount of the first payment in turned out to be less than the amount to which the landlord was entitled; but he submitted that that was irrelevant; when the Secretary of State increased the amount notionally in court to £450,000, the landlord would not accept it. The action went on because the landlord was not interested in any reasonable offer; and, in those circumstances, the landlord must bear its own costs."
  92. Chadwick LJ in response to that submission said this:
  93. "I would reject it. It seems to me that a court should resist invitations to speculate whether offers to settle litigation which were not in fact made might or might not have been accepted if they had been made. There are, I think, at least two reasons why a court should not allow itself to be led down that road. First, the rules of court provide the means by which a party who thinks that his opponent is not open to reason can protect himself from costs. He can make a payment in; he can make a Calderbank offer; now, under the Civil Procedure Rules 1998, he can make a payment or an offer under CPR Pt 36. … Second, speculation is likely to be a most unsatisfactory tool by which to determine questions of costs at the end of a trial. It is not, I think, suggested that each party would be required to disclose, at that stage, what advice it had received, from time to time, as to the strengths and weaknesses of its claim or defence. But without knowing that – and without a detailed knowledge of the financial and other pressures to which each party was subject from time to time - speculation would be hopelessly ill-informed."
  94. As I said in Biffa Waste Services Limited v. Maschinenfabrik Ernst Hese GmbH [2008] EWHC 2657 on the basis of the decision on Johnsey it seemed to me that the following propositions would follow: (1) Where a party has not made an offer, the court should not speculate on what the position might have been had that party made an offer; (2) Where a party makes no offers and does not respond to offers, the court may take that conduct into account in deciding on the appropriate order for costs. The passages cited from Painting show that a failure to negotiate is a relevant matter in determining what costs order to make. Equally, Johnsey illustrates the difficulty which arises if the court is led to speculate on what might have happened if an offer which was not made had been made.
  95. Mr. Darling submits that I should proceed on the basis either that the case would have settled, in which case Williams should have their costs after that date, or that there was a loss of an opportunity to settle which should be reflected in a percentage reduction of costs or no order for costs after August 2007.
  96. I am not persuaded that I should speculate on what might have happened in those negotiations or conclude that there would have been a settlement or what level of settlement there might have been. Rather, I accept that what was lost was the opportunity to settle at that stage and avoid the costs which were incurred after that date.
  97. How should the court approach cases where a claimant has made offers which do not comply with Part 36 and which have been beaten by the claimant as a result of settlement? The orthodox starting point for considering offers is to see whether the sum recovered is more than the sum offered. It is clear that where Part 36 applies the question is more broad and as Ward LJ said in Carver v. British Airports Authority [2008] EWCA Civ 412 at paragraph 30, cited in Multiplex at paragraph 68:
  98. "Are the concepts of bettering a Part 36 payment and obtaining a judgment more advantageous than the Part 36 offer synonymous? Posed in that way, perhaps they are. But in the context of the new Part 36, where money claims and non-money claims are to be treated in the same way, 'more advantageous' is, as Rix L.J. observed in the course of argument, 'an open-textured' phrase. It permits a more wide-ranging review of all the facts and circumstances of the case in deciding whether the judgment, which is the fruit of the litigation, was worth the fight."
  99. However, in this case there was no Part 36 offer and the particular benefits of a Part 36 offer should, in my judgment, be reserved for parties who make Part 36 offers and by doing so accept the risk that, under that rule, costs have to be paid automatically by the offering party if the offer is accepted.
  100. On the facts of this case a matter of considerable weight in determining the appropriate order for costs was the failure by Vector to negotiate in August 2007 which meant that there was a loss of opportunity to settle the matter without Vector incurring the large costs which they did incur before they settled the matter in November 2008. In essence, this is a case which settled later than it might otherwise have done. However, I equally bear in mind that this cannot improve Williams' position which is that they made an offer which was beaten, in the event, by the level of final settlement.
  101. Exaggeration
  102. The claim, as pleaded in this case, consisted of the following heads of claim: (1) Repayment of the rent-free period: £750,000; (2) Tenant fit-out works including loss and expense of £924,739.02: £2,485,063.83; (3) Professional fees for tenant fit-out works: £485,371.81; (4) Permitted tenant variations including fees: £94,748.95; (5) Other fees: £22,654.85. That totals £3,837,838.44 which is made up of the total claim of £5,839,778.54 less sums paid of £2,001,940.10. In addition, there were claims for interest and VAT. The settlement sum was £750,000 and, therefore, compared to the £3.8 million the recovery has only been some 20% of the claim. There was therefore exaggeration in the claim in the sense that the sums claimed were so much larger than the sum recovered.
  103. As I set out in Biffa, the court must distinguish between the case where a party has recovered less than its claim so that there is unintentional exaggeration and a case where there has been intentional exaggeration, that is where a party has intentionally increased the claim or exaggerated symptoms so as to be deliberately misleading or fraudulent. As Longmore LJ said in Painting at paragraph 26:
  104. "However, exaggeration can take many forms and the rule makes no distinction between intentional exaggeration or unintentional exaggeration. Here, Mr Farmer was constrained to accept that Mrs Painting had been deliberately misleading in the course of the claim, and the fact that the exaggeration is intended and fraudulent is, to my mind, a very important element which needs to be addressed in any assessment of costs."
  105. Mr. Darling submits that there was intentional exaggeration in this case. He refers in particular to Mr. Howard's fifth witness statement where he says at paragraphs 41 and 42:
  106. "41. Williams had indicated for the first time since the discussions in March 2002 that it was prepared to make some contribution to the costs of the delays. Although the amount of this claim was £900,000, and this was supported by Mr. Stickland (as to time) and by Mr. Fitch (as to quantum) it had always been understood by me that the supporting documentation from Wates (and in particular its subcontractors) was poorly organised. As I have explained, I had always been keen to reach agreement on the apportionment of this claim, and it was Williams who had refused to discuss it after March 2002.
    42. The claim for the rent-free period (of £750,000) faced difficulties: in particular, Williams had a case that the relevant clause was either a penalty or incapable of application. From a layman's viewpoint I did not see it as likely that Vector would ever recover both this sum and the loss and expense claim."
  107. As I read that passage Mr. Howard was recognising that there were difficulties in proving the loss and expense claim and legal difficulties in recovering the loss of the rent-free period. I do not consider that that means that Vector's claim has been intentionally exaggerated. Vector pleaded a case based on a detailed valuation of the tenant fit-out works and the permitted tenant variations. They also sought loss and expense which had been paid to Wates and a claim in respect of the rent-free period. Those claims may have been difficult, as Mr. Howard says, but in respect of loss and expense Williams made an offer in their letter of 11 November 2008. I do not consider that arguable claims give rise to intentional exaggeration which, as I define it, requires something more, such as being deliberately misleading or fraudulent.
  108. In my judgment, this is a case of unintentional exaggeration. The figures which were pleaded were based on professional advice. When, as Mr. Fitch said, he came to consider what he could establish in his role as an expert on the basis of the re-measurement carried out with Mr. Palentine, the value of the claims for the tenant fit-out works, permitted tenant variations excluding loss and expense were reduced from some £1.65 million to £950,000. Taking this figure and figures from Mr. Fitch's report and the £750,000 loss of rent-free period, the claim reduced from £3.8 million to £2.95 million on the basis of full liability for works. The settlement sum, therefore, represented about 25% of this reduced figure which excludes interest and VAT.
  109. This unintentional exaggeration of the claim, however, is a factor which I must take into account. In doing so I accept Mr. Darling's submission that the parties would approach a claim valued at £750,000 in a different way to a claim valued at £3 million to £4 million. However, equally, I have to take into account the fact that as Mr. Streatfeild-James says, Williams could have protected themselves by making an increased offer.
  110. Summary
  111. In summary, my conclusions on the matters put before me are these. First, that Vector was the successful party and is entitled, as a starting point, to an order of costs in its favour. Secondly, that there is nothing in Vector's general conduct prior to or during the litigation which nullifies that entitlement. From 2005 onwards Vector provided information to Williams when reasonably requested and there is no reason to criticise the amended particulars of claim. Thirdly that Vector failed to negotiate in response to Williams' offer of 29 August 2007. There was therefore a loss of an opportunity to settle the case before further costs of some £3.5 million were spent to recover £350,000 more than the sum in the offer. Fourthly, Vector's recovery was some 25% of the sum claimed leaving aside interest and VAT. Fifthly, Williams could have protected itself by making an increased offer.
  112. Those factors are all matters which I have to take into account. They are not sufficient in my judgment to deprive Vector of an order for costs in its favour. This is therefore certainly not a case where there should be an order in favour of Williams or no order as to costs. Until the offer was received on 29 August 2007 I see no reason why Vector should not have its costs on the usual basis. Any exaggeration up to that stage could have been dealt with by an offer and in any event the case had only reached pleading stage by that date and substantial costs orders had already been made against it in respect of the failed summary judgment application and the amendments to the particulars of claim.
  113. I consider that a period of, say, 21 days after the 29 August 2007 would have been a reasonable period for negotiations to have taken place and therefore that Vector should have its costs up to 19 September 2007 in accordance with the general rule. After that date the factors set out above lead me to the conclusion that whilst Vector should not be deprived of all of its costs, it should be deprived of a substantial proportion of those costs. The conduct in failing to respond effectively or to negotiate and in then proceeding to recover a further £350,000 by expending costs of £3.5 million against an exaggerated claim is a significant factor, although I accept that it must be balanced against the fact that Williams could have increased, but did not increase, the sum offered. However, given the reaction to their previous offer, the fact that Williams did not do so is perhaps understandable.
  114. Reflecting the factors as I consider appropriate and accepting that there is no exact mathematical correlation between the factors and any reduction, I have come to the conclusion that in the period after 19 September 2007 Vector should recover 50% of its costs.
  115. The costs of inspection of Vector's documents
  116. Williams seeks a particular order in relation to the wasted costs which it incurred in relation to inspection of Vector's documents and which it says were due to there being irrelevant and duplicated documents and to the documents not being in a logical order. In a case such as this, where the value of works and delay and disruption are in issue and where the documents extend to hundreds of files, there is a tendency to assume that standard disclosure under the CPR is not much different to disclosure under the old rules and the Peruvian Guano test. That, as Jacob LJ said in Nichia v. Argos [2007] EWCA Civ 741 at paragraphs 46 and 47, is not something which should happen. He said this:
  117. "46. It is wrong just to disclose a mass of background documents which do not really take the case one way or another. And there is a real vice in doing so: it compels the mass reading by the lawyers on the other side, and is followed usually by the importation of the documents into the whole case thereafter – hence trial bundles most of which are never looked at.
    47. Now it might be suggested that it is cheaper to make this sort of mass disclosure than to consider the documents with some care to decide whether they should be disclosed. And at that stage it might be cheaper – just run it all through the photocopier or CD maker – especially since doing so is an allowable cost. But that is not the point. For it is the downstream costs caused by overdisclosure which so often are so substantial and so pointless."
  118. The evidence from the two solicitors at Halliwells sets out the position. Miss Sarah Maylor says this at paragraph 91 of her witness statement in relation to what was found on the first inspection visit:
  119. "a. There were a significant number of the documents that had no relevance to the issues in dispute. There were a number of documents found which had no relevance to the project or the parties at all.
    b. The documents were not in a consistent chronological order. Although sections of individual files do appear in chronological order, there are, at times, large jumps between time periods.
    c. As bundles of documents had been provided to the claimant by various parties and had literally been disclosed in the same format, there is massive duplication between the files. …
    d. Where documents did appear to be sorted into rough categories, these categories were found to be entirely unhelpful in the inspection process."
  120. Miss Helen Mills says this at paragraph 9 of her witness statement:
  121. "The three main deficiencies to the claimant's disclosure can be summarised as: (1) irrelevant documents; (2) duplication and (3) the order of documents. Specific instances of these deficiencies are set out in a letter from Halliwells to Hammonds on 1 May 2008. For example: the files contain a large amount of out of office e-mails; numerous e-mails setting up meetings or requesting an individual's availability; in one file there were 17 copies of the MEN Events List; all of the documents that appear in Vector File 77 also appear in Vector File 14 (amounting to over 100 documents); files contain both faxed and hard copies of letters; the documents have been disclosed in the order in which they were originally filed by their author, therefore there is no consistency throughout the files as to how the documents are categorised."
  122. In response, Mr. Moss of Hammonds sets out the position at paragraph 190 of his witness statement:
  123. "In summary, Vector disclosed documents that it considered were within its possession and control and relevant to the proceedings. Vector's Building Contractor, M&E Engineer, Architect, Project Manager, Quantity Surveyor, ECH, Addleshaw Goddard and Vector itself provided such documents. As stated above, the documents from these parties were provided on a piecemeal basis with full access to all documents being logistically complicated. I do not consider that the volume of documents (over 800 files) disclosed was unusual given the size, complexity and number of parties involved in the project."
  124. He says this at paragraph 193:
  125. "I note that [Williams'] complaints about Vector's disclosure include the presence of duplicated documents … the order of the documents … the size of the files … the nature of the files … and the contents of the files ... I consider these complaints are both misguided and wrong."
  126. In summary it seems to me that Mr. Moss accepts that he disclosed complete files on the basis of the test of relevance and it appears that these files contained irrelevant and duplicated documents. So far as the costs are concerned Williams' schedule of costs indicates that the costs associated with inspection of the claimant's disclosure amount to £137,000. There is also a schedule of costs which sets out claimed costs of £132,000.
  127. At the outset I observe, first, that Hammonds raised in correspondence a number of times the need for a meeting to discuss disclosure and inspection. Whilst there were telephone calls there was no meeting. In cases such as this, where there are large volumes of documents, I consider it is essential for the parties to discuss the scope and extent of disclosure in advance. It is regrettable that this did not happen in this case.
  128. Secondly, there are references in the correspondence to possible applications to the court in relation to the issue of the way in which the documents were disclosed. Again, I consider that if major problems arise on inspection the parties should apply to the court so that issues are raised and dealt with at the time. Whilst I quite understand the parties are reluctant to be diverted from such activities as inspection by having to make a court application, issues can often be brought to a head and resolved by the court instead of dealing with them in lengthy correspondence between the parties.
  129. On the basis of the evidence of Miss Maylor and Miss Mills there were unsatisfactory aspects of the disclosure in terms of irrelevant and duplicated documents and the way in which they were organised. I note in relation to duplicated documents that under CPR Rule 31.9 there is a provision as to what copy documents need be disclosed. In this case it does not seem that consideration was given to that particular rule.
  130. I am persuaded by the evidence in this case that the approach taken by Vector was to disclose whole files which contained duplicate and unnecessary documents and that this led to unnecessary costs being incurred by Williams in carrying out the inspection. I also accept the fact the trial bundle contained 70 bundles compared to over 800 produced by Vector for inspection, indicates to some extent that irrelevant documents or documents not necessary for standard disclosure were included.
  131. This is a case, therefore, where Vector's costs of disclosure will have been lower because they did not carry out work of excluding excessive documents. For that reason I do not consider that any reduction should be made to Vector's costs for this. In relation to Williams' costs there was, on any view, a need for a substantial inspection exercise in this case. Doing the best I can on the documents before me, I consider that Vector should pay Williams £20,000 in respect of these costs. This, in my view, should be a stated amount in respect of those costs under CPR 44.3(6)(b). In coming to that figure I have assessed a lower figure to take account of the fact that some of the difficulties would, in my view, have been avoided if meetings had been held or an application made to the court.
  132. Conclusion
  133. In summary, I therefore decide that the following orders should be made as to costs. First that Williams are to pay Vector its costs up to 19 September 2007 and 50% of its costs from 19 September 2007, such costs to be assessed on a standard basis if not agreed. Secondly that Vector should give credit by way of reduction of the costs payable under that order for £20,000 in relation to the wasted costs incurred by Williams in inspecting Vector's documents. Of course, any existing order for costs is not altered by this order and unless anything is said to the contrary my order would also include any reserved costs.
  134. I now have to deal with the costs of these cost proceedings. On this, Mr. Streatfeild-James says that he has succeeded and therefore he is entitled to his costs. He says that Mr. Darling was seeking an order in his favour or no order for costs and has therefore lost. As a result, he says he is the successful party and that all of the costs need not have expended to succeed.
  135. Mr. Darling submits that it should be no order for costs. He says, first of all, that, on the basis that the parties resolved the underlying claim and have come to court only for costs, this would be a fair outcome. Alternatively he says that there should be no order because Williams has won on the inspection question, it has won on the question of the offer, it has won on exaggeration and it has reduced Vector's costs substantially.
  136. It seems to me that Vector has been successful in having a costs order in its favour and therefore, as a general principle, that is the starting point. Vector has lost, though, on a number of issues. First of all, they have lost on the question of the costs of the inspection exercise. Secondly, they have also lost on the basis of there being an exaggerated claim and, finally, they have lost because of the failure to negotiate on the basis of the offer.
  137. In all the circumstances it seems to me that the appropriate order is that Vector should have 70% of its costs.


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