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	England and Wales High Court (Queen's Bench Division) Decisions
You are here: BAILII >> Databases >> England and Wales High Court (Queen's Bench Division) Decisions >> Vaught v Tel Sell UK Ltd. [2005] EWHC 2857 (QB) (04 November 2005) URL: http://www.bailii.org/ew/cases/EWHC/QB/2005/2857.html Cite as: [2005] EWHC 2857 (QB)

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IN THE HIGH COURT OF JUSTICE
QUEENS BENCH DIVISION

		Royal Courts of Justice
		4th November 2005

JUDGE SEYMOUR:

1. Judgment has been handed down this morning in this action. The result, in broad general terms, of the litigation is that the claimant has been wholly unsuccessful and the defendant has been successful in relation to its Part 20 claims.
2. The claimant has had the benefit of funding from the Community Legal Service Fund, and in those circumstances the question has arisen what is the appropriate order for costs that I should make? It is, I think, common ground that I should at least make an order in these terms: "The claimant, a party who was in receipt of services funded by the Legal Services Commission shall pay to the defendant an amount to be determined by a costs judge."
3. Mr. Tom Weisselberg, who appears on behalf of the successful defendant, submits that I should also order something to the following effect: "When determining such costs, the costs judge should take into account the fact that the judge would have determined that the claimant should pay the defendant's costs of the proceedings on an indemnity basis." The submission that I should make an order which includes wording to that effect gives rise to two questions:

(i) whether it is right in principle, in the case of a party in receipt of services funded by the Legal Services Commission, that any such order should be made; and

(ii) if it is appropriate to consider giving an indication to the costs judge of the basis upon which costs should be determined whether, in the circumstances of this case, it would be appropriate to indicate that costs would have been determined on an indemnity basis but for the basis of funding of the claimant.

4. Part 44 of the Civil Procedure Rules contains general rules about costs. In particular, Part 44.4 is concerned with the basis of assessment and provides that the court has power to direct that costs can be assessed either on the standard basis or on the indemnity basis. However, Mr. Richard O'Dair, who appears on behalf of the unsuccessful claimant, has drawn to my attention the provisions of Part 44.17 which, so far as presently material, says this:

"This Part … does not apply to the assessment of costs in proceedings to the extent that –

(a) section 1 of the Access to Justice Act 1999, and provisions made under that Act ….

make different provision."

5. Mr. O'Dair has drawn to my attention the provisions of s.11 of the Access to Justice Act 1999 which, by subsection (1) provides:

"Except in prescribed circumstances, costs ordered against an individual in relation to any proceedings or part of proceedings funded for him [which is this case] shall not exceed the amount (if any) which is a reasonable one for him to pay having regard to all the circumstances including:-

(a) the financial resources of all the parties to the proceedings; and

(b) their conduct in connection with the dispute to which the proceedings relate.

and for this purpose proceedings, or a part of proceedings, are funded for an individual if services relating to the proceedings or part are funded for him by the Commission as part of the Community Legal Service."

6. Regulations have been made under the Access to Justice Act 1999 which are relevant to the matter with which this judgment is concerned. Those regulations are the Community Legal Service (Costs) Regulations 2000. The regulations include regulation 9, which sets out procedures for ordering costs against a litigant or the Commission. It is not necessary, I think, for the purposes of this judgment to set out extensively the provisions of Regulation 9, but it is appropriate to notice para.6:

"Where the court makes a section 11(1) costs order that does not specify the amount which the client is to pay under it, it may also make findings of fact, as to the parties' conduct in the proceedings or otherwise, relevant to the determination of that amount, and those findings shall be taken into consideration in that determination."

That provision, Mr. Weisselberg submitted, gave me power to make the direction which he invited me to make if I was otherwise satisfied that, but for the basis of the claimant's funding, I would have ordered costs on an indemnity basis against him. Mr. O'Dair submits that that is not an

appropriate interpretation of the relevant provision and that the course which I should adopt is simply to leave the matter of costs to the costs judge having made an order in the terms which I have already indicated were not in contention between the parties.

7. There are matters which have been brought to my attention in support of the submission that Mr. Weisselberg makes which had not, quite properly, been brought to my attention before. Those matters are matters of which the costs judge will be unaware unless I mention them and make findings of fact in relation to them. They concern offers to settle. Immediately after the claimant, Mr. Vaught, was dismissed an offer was made to pay him a sum of £16,000. He rejected that offer. Subsequently, but not very long afterwards, an offer was made to pay him the sum of £9,500 and Mr. Vaught rejected that offer also.
8. After the litigation had commenced, and not very long before the trial, a Part 36 offer was made on behalf of Mr. Vaught by his solicitors. It was dated 5th September and it was an offer to accept an amount of £108,000 in settlement of his claim inclusive of interest, exclusive of costs, and taking into account the defendant's counterclaims. That Part 36 offer was made following a number of informal offers made between the parties. On 25th August 2005 Mr. Vaught had offered to accept a sum of £95,000 in settlement of his claim. On the same day an offer was made on behalf of the defendant to pay £65,000 and to waive the effect of an order for costs on an indemnity basis of which it had the benefit, which was assessed as being worth £22,000.
9. The parties did not negotiate around those offers, which were certainly presented as being quite close the one to the other. Instead what happened was that the Part 36 offer which I have just mentioned was made on behalf of Mr. Vaught. The reaction to the Part 36 offer was another informal offer – by "informal" I mean an offer not complying with the provisions of Part 36. The offer on behalf of the defendant made on 16th September 2005 was to pay a sum of £78,000 by instalments, the last of which would be payable on 31st January next year and a repetition of the waiver of the benefit of the costs order on an indemnity basis which had been made against Mr. Vaught. These findings in relation to offers made between the parties are intended as findings of fact to inform the costs judge of matters of which he would be unaware if he had only the terms of my judgment to consider.
10. I now intend to make a number of comments. These are not intended as findings of fact. I make these comments on the basis that it will be for the costs judge, having had the benefit no doubt of submission on behalf of both the claimant and the defendant, to determine whether he derives any assistance from them and, if so, what. The claims of the claimant, Mr. Vaught, were essentially three. The first was a claim for damages for wrongful dismissal. I have explained the circumstances of the claim, and my findings in relation to it in my judgment. The comment, which I add, is that the claim seems to me always to have been hopeless. In particular, the refusal persistently of Mr. Vaught to undertake the preparation of the media reports, and the preparation of the business plan and budget, which I have mentioned, should have made it entirely clear from the outset that his dismissal was amply justified.
11. The second comment that I desire to make concerns the claim of Mr. Vaught for a bonus. This claim was said to be independent of the claim for damages for wrongful dismissal and, had it succeeded, to a degree that would have been correct. However, it seems to me that the claim was always based upon an interpretation of the contract of employment which was contrived and artificial and a reliance upon the provisions of the Apportionment Act 1870, which was both unpleaded and speculative.
12. The third element of claim was the claim for damages for breach of a contractual warranty and, until a late stage in the proceedings, put on the alternative basis as a misrepresentation. What the warranty was said to be, or the representation said to have been was, as I have explained in my judgment, at all times obscure; and the claim, as it seems to me, was always bound to fail. So the situation one has is that before the litigation was commenced offers were made on behalf of the defendant to settle which, with the benefit of hindsight, were generous – the claims were always hopeless – and subsequently before the trial quite generous offers were made on behalf of the defendant to settle which were rejected.
13. Moreover, the litigation was conducted in my judgment in a way which was intended to apply illegitimate pressure to the defendant, in particular I have in mind the wholly unjustified application for a freezing order which was initially successful but was immediately discharged upon the return day by order of Mr. Justice Newman. Mr. Justice Newman has dealt with the application as such and I need say no more about it. Its relevance, as it seems to me (but it is a matter for the costs judge whether he thinks it is of any materiality) is that it shows an approach to the conduct of the litigation which is quite inappropriate. Moreover, there was, and I think as to this I probably have to make a finding of fact because otherwise the costs judge will not know about it, an application for summary judgment on behalf of the claimant which, in the event, was not pursued. It was made at a relatively late stage in the litigation, a matter of just a few months before trial. What the justification for it was imagined to be I have no idea – certainly my comment is that I cannot see any possible justification for making an application for summary judgment.
14. In the light of the factors which I have mentioned, but for the basis upon which the litigation has been funded, so far as the claimant is concerned, I comment that I would have been persuaded that this was an appropriate case in which to make an order for costs against him on an indemnity basis. But for the avoidance of any possible doubt I emphasise yet again that my comments are intended to be considered by the costs judge only if he/she considers them of some assistance, and he/she may derive from them whatever assistance he/she thinks is appropriate. The findings of fact, which I have identified as such, are intended to be taken into account by the costs judge pursuant to regulation 9.6 of the Community Legal Service (Costs) Regulations 2000.