Groveholt Ltd v Hughes & Anor, Court of Appeal - Chancery Division, June 20, 2008, [2008] EWHC 1358 (Ch)

Resolution Date:June 20, 2008
Issuing Organization:Chancery Division
Actores:Groveholt Ltd v Hughes & Anor
 
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Neutral Citation Number: [2008] EWHC 1358 (Ch)

Case No: HC04C00899

IN THE HIGH COURT OF JUSTICE

CHANCERY DIVISION

Royal Courts of Justice

Strand, London, WC2A 2LL

Date: 20/06/2008

Before :

MR JUSTICE PETER SMITH

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Between :

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Mr N Strauss QC & Mr N Kitchener QC (instructed by Lawrence Graham LLP) for the Claimant

Mr A Hill-Smith (instructed by Lester Aldridge) for the Defendants

Hearing dates: 1st, 2nd, 6th and 7th May 2008

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Approved Judgment

I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.

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MR JUSTICE PETER SMITH

Peter Smith J:

INTRODUCTION1. This judgment is in respect of the Claimant's application for Summary Judgment pursuant to CPR 24 issued on 30th November 2007.

  1. On 24th April 2008 the Claimant issued an application to amend its Summary Judgment application to seek an order that the First Defendant (``Mr Hughes'') is obliged to deduct from any payment to which he would otherwise be entitled under the Agreement dated 9th April 1998 the amount of the Infrastructure and Site Assembly costs incurred by Sainsburys or the Claimant (``Groveholt'').

  2. The Defendants indicated that they would not oppose that amended application but would seek costs that they said had been wasted in dealing with the original form of the relief sought which Groveholt was not currently minded to pursue. In so seeking to amend the Part 24 application Mr Nicholas Strauss QC who with Mr Neil Kitchener QC appears for Groveholt made it clear that this was in the light of evidence served by Mr Hughes and they reserved the right to contemplate seeking further summary relief in the event that it was considered appropriate so to do. I think this kind of piecemeal approach to actions is dangerous and has to be reviewed very carefully.

  3. The nature of the relief sought is difficult to understand without further elucidation.

    BACKGROUND

  4. The action is for redemption of a charge and an account of any sums due under it. It arises from a number of agreements in respect of the development of Mr Hughes' former property at Cawdor Quarry, Matlock, Derbyshire (``The Property''). The redevelopment involved the construction of a Superstore for occupation by Sainsburys and further potential opportunities for residential development (the latter has not proceeded as I understand it).

  5. The dispute arises out of the consideration of a number of documents as follows:-

  6. As it will appear from an examination of those various documents there is perhaps surprisingly no direct relationship between Groveholt and Mr Hughes. Their only relationship arises out of the fact that Groveholt acquired the property from Chelverton. That company had charged the Property to Mr Hughes as security for overage payments due to him under the terms of the Hughes/Chelverton Agreement. The major dispute concerns the ability of Groveholt to deduct costs from the overage payments which are undoubtedly due to Mr Hughes in respect of Infrastructure and Site Assembly costs. The ascertainment of the amount that Groveholt contends can be deducted involves consideration of the works required to be done under the terms of the Hughes/Sainsbury Agreement, the Loan Agreement and the Hughes/Chelverton Agreement. Groveholt is not a party to any of those arrangements nor did it subsequently become a party by novation or otherwise. That is a key difficulty of this case in my view at this summary judgment stage.

    DANGERS OF SUMMARY JUDGMENT APPLICATIONS

  7. This case demonstrates in my view the dangers involved in summary judgment applications when the application even if successful will not end all disputes between the parties. It is graphically demonstrated by the fact that Mr Hughes issued his own application for summary judgment for the balance of the overage money claiming that no deductions were possible under the terms of the agreement and he lost. It is ironic indeed that one of the arguments raised by Groveholt in opposition to that application was that it was not appropriate to grant declaratory relief by way of summary judgment.

  8. In the event when Mr Hughes' summary judgment application was heard before Nicholas Underhill QC (as he then was), he dismissed Mr Hughes' application. An appeal by Mr Hughes was also dismissed by the Court of Appeal (both the first instance and the Court of Appeal judgments are to be found at [2005] 2 BCLC 421).

  9. A major argument raised by Groveholt before me is that in the light of the judgment of Mr Underhill QC and the Court of Appeal it is no longer open to Mr Hughes to challenge the deductibility of the items referred to in Groveholt's amended Part 24 application as the issue (Groveholt contends) is res judicata having been determined against Mr Hughes in those two decisions.

  10. There are a number of competing principles that come into play on a summary judgment application. The civil procedure rules it is submitted by Mr Strauss QC introduced by Part 24 a speedy procedure to resolve issues that ought not to have to go to trial because there is no real prospect of defending them. As a matter of general observation that is right but it can be overstated. In reality that was a procedure that was generally open under the former RSC order 14 but it can I suppose be said that it is made more clear that the Courts are empowered by the CPR to achieve an early determination of issues as expeditiously as possible. It can also be said that as Part 24 gave a right to a Defendant to make the application (hence Mr Hughes' original application) that reinforced that view. The theory behind this is of course is the desire to save people unnecessary costs of taking cases to trial if issues can be finally determined earlier.

  11. Against that the CPR (especially in relation to its summary costs procedures under CPR 44) was designed to prevent ``litigation fatigue''. By that I mean that it was well established that some parties' ability to take cases to trial was diminished or even extinguished by an unscrupulous party on the other side making constant interlocutory applications. This tended to drain the other party's resources because often in interlocutory applications even if unsuccessful no adverse costs order was made or the costs were rolled up to be determined at the end of the trial. To discourage this, the CPR introduced by rule 44 a procedure for summary assessment of costs. However that only applies to a one day case. The circumstances of the present application are instructive. Initially it was listed with a 2 day estimate. As arguments developed further supplemental arguments in writing were provided during the course of the hearing and the case ultimately took 4 days. There is therefore no procedure to make a summary assessment of the costs in favour of a successful party (although that can be partially mollified by a detailed assessment coupled with a significant interim payment).

  12. Thus on the one hand the CPR encouraged Part 24 applications but equally it marked a disapproval of failed Part 24 applications.

  13. Where a successful application will not lead to a final resolution of all disputes between the parties the Court has to be particularly careful. The reasoning behind this need for caution is well exemplified by the present case.

    A SAVING IN COSTS ?

  14. Mr Strauss QC stressed on a number of occasions that the CPR through the Part 24 procedure encouraged early resolution of issues in preference to a deferral to trial. I agree that was one of the significant developments under the CPR but it cannot be pressed too far. This case was listed for 2 days. That of course is quite a long time for a summary judgment application (disregarding the oft stated plea by the Defendants in such cases that a case cannot be suitable for summary judgment if it takes 2 days). The hearing actually lasted 4 days.

  15. Further as I have said the Claimant seeks to amend its summary judgment application and during the course of argument Mr Strauss QC was constrained to concede further variations to the relief sought. As I have said above the case demonstrates the difficulties of piecemeal summary judgment applications.

  16. Even if the Claimant is successful on its Part 24 application there will in my view not be any significant saving in costs. The amount of deductions which the Claimant contends it can make from the purchase price due to the First Defendant under the agreements below will involve a detailed consideration of the actual expenditure on a line by line basis. There are also disputes as to the ability of Mr Hughes to challenge the deductions. The best that Mr Strauss QC could say is that if the Claimant won on this aspect i.e. an argument that the works carried out by Sainsbury PLC was deductible as a matter of principle is that the Defendants might be more willing to avoid a costly trial on the issues as to quantum. To my mind that is unrealistic. These arguments have spread over 4 days but I doubt very much whether 4 days would have been taken with these arguments if they had been part of a trial on the merits.

  17. This case in my view is a classic instance of where the parties are best served by progressing the case speedily and expeditiously towards trial. The proceedings were initially commenced on 12th March 2004. There was then the interlude where the parties went to the Court of Appeal concerning the insolvency of Chelverton. That clearly delayed matters. The present Part 24 application itself was issued as long ago as 30th November 2007. That too has delayed the progress and matters towards trial. For the reasons that I have set out above I do not accept that the resolution of this dispute will...

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