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Importance of justifying your involvement in a case to recover your costs

 

Not all litigation involves a procedurally simple claim and there are times when the same parties are engaged in overlapping disputes.

Claims and client matters are often more convoluted than that and frequently then the costs are drawn into that complexity in particular when questions arise as to the effect of offers.

The recent case of Mr Oladimeji Kehinde Akinola v (1) Mr Akinfenwa Oyadare (2) Ms Jumoke Abosde Adepoju  [2020 EWHC 2038 (Ch) is an example of such a case arising in practice.

Background of the Case

This case is not strictly a costs case and of itself is not particularly novel and nor does it create any particular precedent but demonstrates how a claim can involve consideration of different entitlements, heads and categories of costs which should be considered when offers are being made to compromise proceedings.  It also offers some comment in relation to the weighing up of factors when a court is considering whether to make an order that costs should be paid on the Indemnity Basis.

The parties were engaged in litigation arising from the Administration of an Estate whose assets included a number of properties in London and Essex. The First Defendant was the Administrator appointed by the court over the estate of the Second Defendant’s mother. The Claimant claimed a beneficial interest in the Estate on the basis of his relationship and history with the Deceased which amounted to a claim that he had a beneficial interest in the properties and further contended that the First Defendant had accepted that interest giving rise to a proprietary estoppel. The Claimant contended that in reliance of that acceptance he had taken responsibility for management of the properties.

The claim involved 2 linked but initially separate sets of proceedings. The first was a Part 8 claim in which the Claimant sought the removal of the First Defendant as Administrator. There was then a second set of proceedings under the usual Part 7 procedure in which he advanced his claims to the properties. Within the Part 7 claim the Court dealt with a number of preliminary issues to determine whether in fact the First Defendant did have any interest for the property.

Unhappily for the Claimant the court in short found that he did not have any beneficial interest on any of the grounds contended for. The inevitable consequence of such a conclusion was that the Part 8 claim should be dismissed, not being a beneficiary he could not seek removal of the Administrator.

The Claimant was then inevitably faced with claims for costs. There was little dispute that he was to be liable for the costs of both sets of proceedings. Questions though arose as to the basis of those costs orders.

Summary

The First and Second Defendants were represented jointly in relation to the Part 8 claims before the Second Defendant instructed separate proceedings for the trial of the preliminary hearing.

The First Defendant contended that there should be an order for indemnity costs throughout effectively on the grounds of conduct. The Second Defendant argued that the Court should make an Order for costs on the Indemnity Basis for the period after the Defendants’ “Part 36” Offer expired.

The Claimant had in support of part of his claim adduced evidence in the form of a handwritten statement of account on a completion statement which he said showed his financial contribution to one of the properties he claimed an interest in but which he had failed to mention before the current proceedings, despite the fact that this would have been relevant in the earlier litigation in relation to the Estate.  The court had found, on the balance of probabilities, this was written by the Claimant although in evidence he had said it was not his writing. The First Defendant said that this evidence had been concocted for the purpose of this litigation, to strengthen what was a weak claim which was otherwise so weak as to be hopeless, although the court emphasised that this allegation had not been put to the Claimant in cross examination. Nonetheless, the court accepted that this was conduct worthy of moral condemnation.

However, the court was less impressed with arguments that it was unreasonable to pursue the case by rejecting the offer which had been made to settle the claim.

The court examined the terms of what purported to be a Part 36 Offer to compromise the claim. The offer was on the basis that the parties would drop hands and that the Claimant would withdraw the claims. The Court had two issues with that offer.

Firstly, the court commented that the usual meaning of  “drop hands” was that each party would bear their own costs, making the offer incompatible with the requirements of CPR 36.13, by which the offer has to include agreement that the Defendants would pay the Claimant’s costs.

Secondly, the court had difficulty with the use of the expression that the Claimant should withdraw his claim, which was by the time the offer was made a case where formal proceedings were in process. The court noted that there was no mechanism compatible with Part 36 that allowed for the Claimant to withdraw his claim, meaning the offer was not one which was capable of acceptance.

Thus, the court found that the offer was not a relevant factor in determining whether to make an Order for costs on the Indemnity Basis.

So back to the conduct points.

The court was critical of the involvement of the separate representation of the Defendants for the trial of the preliminary issues and indeed raised the question of how far the First Defendant should have been involved in the Part 7 case when determining the appropriate Payment on Account and did so on the basis that it was possible that the costs of the First Defendant would be subject to a significant reduction on Detailed Assessment.

That being so, the Court felt the question of proportionality had to be a live issue to be considered when the costs were subject to Detailed Assessment. The importance of that was thought to outweigh the issues in relation to the evidence adduced and as such the order was made on the Standard basis only despite the adverse findings made against the probity of the Claimant’s evidence!

However, all was not lost since so far as the First Defendant was concerned the court specifically pointed out that it was dealing only with the question of inter partes costs and not the entitlement of the Administrator to be reimbursed from the Estate/Properties. Less good news maybe though for the Second Defendant who was the main beneficiary of that Estate!

So another lesson of the importance of carefully complying with the requirements of Part 36 if you wish to obtain the benefits of those provisions but also the importance if you wish to recover your costs of ensuring that you can justify your involvement in the case.

How can PIC help?

PIC are always happy to review and discuss the terms of offers to be made, and in those claims where there are questions as to the entitlement to costs, the best ways to support and protect your claim for costs.

 

26.11.2020