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You are here: BAILII >> Databases >> England and Wales High Court (Technology and Construction Court) Decisions >> Denny v Babaee & Ors [2023] EWHC 1490 (TCC) (19 June 2023) URL: https://www.bailii.org/ew/cases/EWHC/TCC/2023/1490.html Cite as: [2023] EWHC 1490 (TCC) |
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BUSINESS AND PROPERTY COURTS IN MANCHESTER
TECHNOLOGY AND CONSTRUCTION COURT (KBD)
1 Bridge Street West Manchester M60 9DJ |
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B e f o r e :
____________________
LEIGHTON DENNY |
Claimant |
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- and – |
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(1) KAMBIZ BABAEE (2) CONNOR CONSTRUCTION (WATFORD) LIMITED (3) K10 DEVELOPMENTS LIMITED |
Defendants |
____________________
Crown Copyright ©
This judgment was handed down remotely at 9.30 am on Monday 19 June 2023 by circulation to the parties or their representatives by email and by release to the National Archives
His Honour Judge Pearce:
INTRODUCTION
5.1. Judgment was entered for the Claimant against the First and Third Defendant in the sum of £549,773.90 inclusive of VAT;
5.2. The Claimant was ordered to be paid his costs of the proceedings by the First and Third Defendant and to be paid the sum of £180,000 on account of his costs of the proceedings;
5.3. No Order for Costs was made as regards the costs reserved by paragraph 10 of the Court's Order of 14th October 2022;
5.4. The sums ordered under paragraphs 1 and 2 above were required to be paid by the First and the Third Defendant and received by the Claimant's solicitor by 5pm on 3rd May 2023;
5.5. The issues of whether the Claimant is entitled to indemnity costs and whether the Claimant's costs should be reduced to have regard to the fact that the valuation of his claim changed during the course of the proceedings to be heard by me at 10.00am on 15th June 2023;
5.6. Permission was given to both parties to lodge and exchange evidence in respect of the issues identified in the previous paragraph by 5pm on 17th May 2023.
5.7. Permission to Appeal was refused.
THE RELEVANT LAW
"44.2— Court's discretion as to costs
(1) The court has discretion as to—
(a) whether costs are payable by one party to another;
(b) the amount of those costs; and
(c) when they are to be paid.
(2) If the court decides to make an order about costs—
(a) the general rule is that the unsuccessful party will be ordered to pay the costs of the successful party; but
(b) the court may make a different order.
…
(4) In deciding what order (if any) to make about costs, the court will have regard to all the circumstances, including—
(a) the conduct of all the parties;
(b) whether a party has succeeded on part of its case, even if that party has not been wholly successful; and
(c) any admissible offer to settle made by a party which is drawn to the court's attention, and which is not an offer to which costs consequences under Part 36 apply.
(5) The conduct of the parties includes—
(a) conduct before, as well as during, the proceedings and in particular the extent to which the parties followed the Practice Direction—Pre-Action Conduct or any relevant pre-action protocol;
(b) whether it was reasonable for a party to raise, pursue or contest a particular allegation or issue;
(c) the manner in which a party has pursued or defended its case or a particular allegation or issue; and
(d) whether a claimant who has succeeded in the claim, in whole or in part, exaggerated its claim.
(6) The orders which the court may make under this rule include an order that a party must pay—
(a) a proportion of another party's costs;
(b) a stated amount in respect of another party's costs;
(c) costs from or until a certain date only;
(d) costs incurred before proceedings have begun;
(e) costs relating to particular steps taken in the proceedings;
(f) costs relating only to a distinct part of the proceedings; and
(g) interest on costs from or until a certain date, including a date before judgment.
(7) Before the court considers making an order under paragraph (6)(f), it will consider whether it is practicable to make an order under paragraph (6)(a) or (c) instead."
"The Court explained that
(1) the manner in which the court is to "have regard" to conduct of the variety referred to in paras (b) and (d) of r.44.2(5) is principally to enquire into its causative effect, in particular, to the extent to which the conduct caused the incurring or wasting of costs;
(2) in determining such effect there may be no need for the court to determine which party was the "winner" on a particular point falling for decision by the trial judge;
(3) where the causative effect of an exaggerated claim by a successful party is to put the other party to the incurring or wasting of costs, some compensation to that other party should be granted; and
(4) in addition, where the court finds that the misconduct was so egregious that a penalty should be imposed, it may deprive the offending party of costs by way of punitive sanction. In the instant case there was, as the judge found, gross exaggeration by the successful claimant, and that was conduct to be taken into account in disapplying the general rule as to entitlement to costs."
"The weakness of a legal argument is not, without more, justification for an order for costs to be assessed on the indemnity basis. The position might be different if proceedings or steps taken within them are not only based on a plainly hopeless case but are motivated by some ulterior commercial or personal purpose or otherwise for purely tactical reasons unconnected with any real belief in their merit (Arcadia Group Brands Ltd v Visa Inc [2015] EWCA Civ 883; [2015] Bus LR 1362, CA, per Sir Terence Etherton C, at [83]). Such an order should not be made simply because the paying party has been found to be wrong or his evidence has been rejected in preference to that of the receiving party."
THE DEFENDANTS' ARGUMENT FOR A REDUCTION OF COSTS BASED ON THE CHANGE IN VALUE OF THE CLAIM
19.1. An argument that the Claimant should be penalised for relying earlier in the case on the higher figures of Mr Freeman when in the event they were not relied on at trial;
19.2. An argument that additional costs were incurred because the Claimant initially put its case on exaggerated figures.
20.1. As to the court taking the line of penalising the Claimant's conduct, it would be necessary to consider how egregious the conduct was, for example whether the overstatement of the valuation was deliberate or reckless conduct and whether the overstatement flowed from any misconduct of the Claimant himself. I simply do not have the material to judge that. In the absence of such material, the Defendants do not demonstrate a ground for punishing the Claimant. After all, it has to be recognised that, in relatively complex litigation, it is likely to be the case that parties win on some issues and not others, or that they win in whole on some and only in part on others..
20.2. Whilst the Defendant might have been able to argue that he has incurred avoidable costs because of the exaggerated value put on this aspect of the claim (for example through the costs of their Quantity Surveyor, Mr Bird, considering this aspect of the case), the Defendant has not come before the court with material that shows this is in fact the case. It is not self-evidently true that any significant increased costs have been incurred because of the Claimant's reliance on Mr Freeman's evidence on quantum and there is simply no material from which the court could judge the amount of any increased cost.
20.3. IN any event (and on either point), without a coherent argument advanced on behalf of the Defendant, it is not possible for the Claimant to know the case he has to meet and to respond to it.
THE CLAIMANT'S ARGUMENT FOR INDEMNITY COSTS
22.1. That the Defendant has been uncooperative in the litigation, failing to engage and/or to deal with the case in a realistic manner, thereby incurring additional costs;
22.2. That the Defendants engaged inmediation
and came to an agreement in principle but then failed to see that settlement agreement to completion.
23.1. The failure to respond to pre-action correspondence;
23.2. The failure to engage with the proceedings early on such that summary judgement was entered;
23.3. The failure to identify the weaknesses of their own case and the corresponding strength of the Claimant's expert evidence, leading to the failure to realise the true value of the case;
23.4. The failure to meet costs order that have been made on an interlocutory basis until enforcement was threatened.
CONCLUSION
32.1. The Defendants should pay the Claimant's costs on the standard basis up to and including 31 December 2022.
32.2. The Defendants should pay the Claimant's costs on the indemnity basis from 1 January 2023.