Dadu Ltd v Barrowfen Properties Ltd, Court of Appeal - Supreme Court Cost Office, August 05, 2008, [2008] EWHC 90110 (Costs)

Issuing Organization:Supreme Court Cost Office
Actores:Dadu Ltd v Barrowfen Properties Ltd
Resolution Date:August 05, 2008
 
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Claim No. 5WT12933

SCCO Refs: 0801784

08 A 1810

BAILII Citation Number: [2008] EWHC 90110 (Costs)

IN THE WANDSWORTH COUNTY COURT

Date: 5 August 2008

Before:

MASTER ROGERS SITTING AS A DEPUTY DISTRICT JUDGE

OF WANDSWORTH COUNTY COURT

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Between :

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Miss Judith Ayling (instructed by Messrs Hugh Cartwright & Amin) for the Claimant

Mr Roger Mallalieu (instructed by Messrs Stevens & Bolton) for the Defendant

Hearing date: Tuesday 1 July 2008

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Judgment

Master Rogers:

THE ISSUE

1. The issue argued before me in advance of a detailed assessment of a bill of costs to be conducted later by a different Costs Judge is whether the Claimant's solicitors are entitled to exclude from consideration by that Costs Judge a document in relation to negotiations for settlement when the underlying litigation was compromised on the basis that the document in question is marked without prejudice.

THE BACKGROUND

2. The Claimant sought a new lease of business premises which it occupies under a previous lease from the defendant landlord, 190-198 Upper Tooting Road, London SW17 7EG.

3. The defendant landlord opposed the renewal of the lease on the ground that the Claimant had failed to keep the plot in good repair, had committed substantial breaches of covenant and, most importantly, the landlord intended to demolish or reconstruct the premises, or carry out substantial works of construction which could not be done without first obtaining vacant possession.

4. By the time of the proposed hearing before the Circuit Judge on 17 May 2007, the landlord had not been able to obtain the necessary consent to make good their objection to the grant of a new lease on the basis of their intention to reconstruct or carry out substantial works of construction.

5. Accordingly, the negotiations centred on the length of the new lease to be granted, the break clause for the landlord, the rent payable under this lease and the Claimant's costs.

6. Exhibited to the first witness statement on behalf of the Defendant of Janet Nancy Waine, is a detailed attendance note of discussions that took place between the Defendant's representatives and advisers leading up to the agreed settlement which was reached and which was incorporated in a consent order in the Tomlin form.

7. The relevance and extent to which I can take into account this document will be considered later in this judgment.

8. The order made by Judge Hallon reads as follows:

``BY CONSENT IT IS ORDERED THAT

1. The proceedings be stayed but for the purpose of enhancing the terms of the schedule herein for which parties have liberty to apply.

2. The Defendants do pay the Claimant's costs up to and including 01.05.07 to be subject to a detailed assessment if not agreed.

3. The Defendants do make an interim payment towards the Claimant's costs of £20,000 (inclusive of VAT) to be paid to the Claimant's solicitors within seven days of receipt of the rent payable by the Claimant on 24.06.07.

4. Except as set out above there be no order as to costs.

SCHEDULE

1. The Defendant will grant to the Claimant and the Claimant will take a new lease of the ground floor premises 192-198 Upper Tooting Road, London SW17 7AG to commence on 14.08.07.

2. The new lease will be in the form of the draft appended hereto, save that:

(a) The term will be 15 years.

(b) The rent will be £86,000 per annum (subject to review as provided in the draft lease).

(c) The lease will contain the landlord's rolling break clause in the terms set out in the rider to paragraph 3 of schedule 1 of the draft.

(d) The existence of the said rolling break clause is a matter to which regard must be had on any rent review.

3. There is no interim rent payable by the Claimant.''

THE CLAIMANT'S BILL AND THE POINTS OF DISPUTE

9. The Claimant's solicitors' bill is for a total of £70,393.65. The Defendant's points of dispute reads as follows:

``Preliminary Issue 1: Costs Estimate

The Claimant's claim for a new lease was disposed of during negotiations at the hearing on 14 May 2007 wherein it was ordered (by consent) that the Defendant would grant a new lease of the property subject of the proceedings for a term of 15 years, the lease containing a landlord's redevelopment break clause. The Defendant also agreed to pay the Claimant's costs up to 1 May 2007.

During the course of the negotiations at Court on 14 May 2007, discussions were entered into in relation to the level of the Claimant's costs. The Claimant's representative provided a written estimate of the Claimant's costs up to 1 May 2007 as follows:

Solicitors £28,000.00

Expert £5,000.00

Counsel £3,500.00

Disbursements £1,750.00

Total £38,250.00''

``On the basis of the sums advised by the Claimant, the Defendant agreed to pay the Claimant's costs up to and including 1 May 2007, to be subject to a Detailed Assessment if not agreed, as part of the settlement agreement, enshrined within the Consent Order dated 14 May 2007.

The Claimant's Bill of Costs served by way of Notice of Commencement dated 28th December 2007 totals £70,393.65, a discrepancy of in excess of 84% more than the estimate provided on 14 May 2007.

Despite the discrepancy in respect of the costs claimed, the Claimant has failed to provide an explanation, as required by CPR 43 PD 6.5A(1).

In accordance with CPR 43 PD 6.6(2), where there is a difference of 20% or more between the costs claimed by a party and the costs shown in an estimate filed by that party; and the receiving party has not provided a satisfactory explanation for that difference; or the paying party reasonably relied on the estimate of costs; the Court may regard the difference between the costs claimed and the costs shown in the estimate as evidence that the costs claimed are unreasonable or disproportionate.

It is the Defendant's submission that it is clear that the estimate provided by the Claimant was relied upon. The estimate was requested during the course of negotiations and was considered together with the negotiated level of the rent payable under the new lease. To dispose of all matters between the parties and on the basis of the estimate provided the Defendant agreed to pay the Claimant's costs up to and including 1 May 2007, to be subject to a Detailed Assessment if not agreed. If necessary, reference will be made to the Defendant's notes of the negotiations that took place at Court of 14 May 2007 upon attendance at the Detailed Assessment hearing.

Reference is also made to the decision of Master Gordon-Saker in Tribe -v- Southdown Gliding Club & Ors LTL 14/8/2007, which deals with the application of CPR 43 PD 6. It is submitted that on the facts, a reasonable reliance upon the estimate provided by the Claimant is clear.

In the absence of any explanation in respect of the discrepancy, and in any event given that it is apparent in the circumstances that the Defendant reasonably relied upon the estimate provided, the Claimant should be restricted to the amount estimated.''

10. In their replies, the Claimant's solicitors say this:

``The Claimant's Solicitor refutes entirely the idea that the figures given for profit costs, Counsel and Experts were anything other than some very rough figure provided at the Defendant's insistence. The figures (sic) given was not an Estimate provided under Section 6 of the Costs Practice Direction. It was not an Estimate in the required form of precedent H and the Defendant's advisors knew that the figure could not be relied upon as the Claimant's Solicitor had advised them that he did not have an accurate figure of the costs to date nor could he be expected to do so as he was simply asked to provide some rough figures whilst at Court and it would have been impossible to have accurately costed the file. The Defendant's advisors were well aware of this.

``Had the parties intended that the figures reluctantly provided by the Claimant's Solicitor should be binding and form part of the settlement then the figures would have been incorporated in the Consent Order. It is noteworthy that the Consent Order provides for the costs to be assessed if not agreed. At the doors of the Court if the Defendants had genuinely sought to place reliance upon the figures provided by the Claimant's Solicitor which they knew to be figures provided in the absence of the file being costed, then they would have asked for those costs figures to be incorporated into the Consent Order. They did not, they consented to an Order for Costs to be assessed if not agreed. Reference to Section 6 of the Costs Practice Direction by the Defendants is meaningless given the circumstances in which the costs figures were given to them during negotiations at the door of the Court. The directions given in Section 6 and the Judgment of Master Gordon-Saker in Tribe -v- Southdown Gilding Club &Others relate to proper Estimates of Costs given at allocation, listing or at any other stage as ordered by the Court and have no relevance to some handwritten figures for costs given at the doors of the Court when both parties to the negotiations knew that the figures provided were at best guesswork.

Even where an Estimate is provided in precedent form H in accordance with the Practice Direction it cannot in any event act as a cap as the Defendants are suggesting. The Claimant refers to Leigh -v- Michelin Tyres [2003] EWCA Civ 1766 and also to the Tribe -v- Southdown Gliding Club case which the Defendants quote.

Further and in the alternative if the Court is minded to accept the Defendant's position that the costs figure given by the Claimant's Solicitor amounted to an Estimate under Section 6 of the Practice Direction the Defendant is put to proof as to precisely how it relied upon the Estimate and how the litigation would have been conducted differently had the Claimant's Solicitor been in a position to be able to provide accurate costs details.

The figure given for costs as the door of...

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