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Costs Don’t Always Follow the Event

Cattles Ltd and another company v Price Waterhouse Coopers LLP QBD, 1 November 2011 [2011] All ER (D) 37 (Nov)

Mr Justice Eder, presiding in this case, provided an interesting slant on the general rule that costs will be awarded in favour of a party who achieve their desired outcome following an application, particularly where that application has been preceded by correspondence attempting to resolve the issue at hand without the need for an application.

Background

This case concerned an application by the claimant group of companies (“the claimant”) for pre-action disclosure of, amongst other things, the defendant’s working papers for the years 2005-2008, in contemplation of litigation whereby the claimant intended to sue the defendant for damages. The claimant, through their solicitors, had written to the defendant in July 2011 requesting that they voluntarily disclose the documents. Having been dissatisfied with the defendant’s response, the claimant companies issued an application for Pre-Action Disclosure in August 2011, with the matter to be heard on 14 October 2011.

Throughout September 2011, various items of correspondence passed between the two parties, including offers from the defendant to disclose some but not all of the documents requested, a request by the defendant for disclosure of documents from the claimant companies and a counter-application by the defendant for pre-action disclosure of these documents.

At the hearing of the applications, the defendant was ordered to disclose the majority of the documents requested. The claimant sought the costs of its application on the basis that it had been largely successful in its application and on the basis the defendant’s refusal to disclose the documents when requested, which necessitated the application, had been unreasonable, pursuant to CPR part 48.1(3).

Held

Lord Justice Eder held that the defendant’s conduct was only unreasonable after a certain date, being 30 September 2011. LJ Eder held that the claimant’s request for certain documents had only been properly set out in a letter sent by their solicitors in a letter dated 21 September 2011, well after the defendant’s initial refusal to give disclosure and well after the application was issued. It was held that the defendant was entitled to a reasonable time (7 days) to consider and respond to this letter. Therefore, it was held that the defendant’s refusal could not be unreasonable until the expiry of that time period.

After the expiry of this period and from 30 September 2011 onwards, given that the defendant was in no doubt of what was being requested by the claimant, their refusal to provide disclosure was held to be unreasonable in relation to the documents which they were eventually ordered to disclose. LJ Eder therefore awarded the defendant its costs of the claimant’s application up to and including 30 September 2011 but awarded the claimant it’s costs from 30 September 2011 onwards, including the cost of the hearing, since it was during this period that the defendant had acted unreasonably.

Comment

This decision raises a number of issues for solicitors and clients involved in litigation regarding pre-action disclosure and also in litigation on a wider scale. Firstly, the need to provide clear, detailed letters of claim to ensure that opposing parties are aware of exactly what a claimant is seeking so that they are left in no doubt what is required of them in order to comply.

Secondly, the decision asserts the importance of giving the opposing party a reasonable time to consider and respond to certain requests and to certain, more weighty items of correspondence. In this case, the appropriate period was deemed to be seven days. This may not be applicable to all scenarios but it shows that where possible, litigators should have an eye on what is reasonable, rather than just what is advantageous, when seeking to dictate deadlines for responses to correspondence.

Finally, the decision asserts a well-established principle that one should always seek to have one’s own house in as good an order at all times when conducting litigation. Where the unreasonable refusal, delay or general conduct of one party is being relied upon when seeking a costs order, the conduct of the party seeking the award should be beyond reproach, to give that party the best possible chance of obtaining the award which it seeks.

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