Neutral Citation Number: [2010] EWHC 1918 (Ch)
Case No: HC09C00566 & HC09C00751
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION

Royal Courts of Justice
Strand, London, WC2A 2LL

Date: 27/07/2010

Before :

MR JUSTICE WARREN
- - - - - - - - - - - - - - - - - - - - -
Between :

	DAVID ALFRED YOULTON	Claimant	
	- and -		
	CHARLES RUSSELL (a firm)	Defendants	

- - - - - - - - - - - - - - - - - - - - -
- - - - - - - - - - - - - - - - - - - - -

Hugh Evans (instructed by Trethowans LLP) for the Claimant
Ben Hubble QC and Emilie Jones (instructed by Barlow Lyde & Gilbert LLP) for the Defendants

Hearing date: 13th May 2010
- - - - - - - - - - - - - - - - - - - - -
Judgment

Mr Justice Warren : 

Introduction
1.	Following the handing-down of my judgment, a further hearing has been held to deal with a number of consequential matters.  I dealt with some of those at the hearing; I now deal with the matters which remain outstanding.
Tax on damages
2.	Mr Evans tells me that it was only a few days before the last hearing that it became clear that Professor Youlton will have to pay tax on the damages which he receives. In saying that it is clear, he relies on the Opinion which has been obtained from Tax Counsel, Patrick Way, who describes the damages as being “in lieu of missing pension funds”.
3.	Professor Youlton was, it will be remembered, asserting two claims.  First, his own loss following a breach of the duty of care owed to him; secondly, the Trustees’ loss following a breach of the duty of care owed to them as trustees.  The cause of action based on this latter breach (“the Trustees’ Claim”) was assigned to Professor Youlton who is, pursuant to the assignment agreement, obliged to account to the other trustees (individually, not collectively with Professor Youlton himself as a trustee) pursuant to the terms of the relevant assignment.
4.	Mr Way has advised on the basis that the whole of the sums recovered are an asset of Professor Youlton.  He has not addressed (and was I assume not asked to address) the effect for tax purposes of the assignment by the trustees of the Trustees’ Claim if indeed he knew about it.
5.	Prior to the assignment, the Trustees’ Claim was a trust asset.  That asset was, by the assignment, distributed from the Scheme.  It was distributed for a consideration, namely the obligation under the assignment agreement to account to the other trustees for a proportion of the recovery.  I do not know the tax consequences of that transaction, but I would not be entirely surprised to find that there was a tax charge on the whole value of the cause of action, as an unauthorised payment to each of the Trustees under what was then section 600 Income and Corporation Taxes Act 1988.  I do not need to say anything  more about the actual immediate tax consequence of that transaction since, quite clearly in my view, the Trustees could not increase the liability of CR to the Trustees (as trustees of the Scheme) by assigning the Trustees’ Claim to Professor Youlton.  
6.	Similarly, if as a result of the assignment the damages actually recovered by Professor Youlton personally following his successful pursuit of the Trustees’ Claim (which had been assigned to him) are subject to tax in his hands when, if those same damages had been recovered by the Trustees and formed part of the funds of the Scheme, they would not have been subject to tax.  I do not consider that CR can be held liable for more than the Trustees themselves could have recovered.  As to that, I would have thought that the Zim principle discussed by Mr Way would have resulted in no capital gains tax or any other tax being paid by the Trustees as trustees of the Scheme if they had enforced the Trustees’ Claim themselves.
7.	In any case, it would be entirely wrong, in principle, for the damages received by Professor Youlton simply to be grossed up to reflect the tax which needs to be paid.  As a result of the assignment, he and his co-trustees as individuals will receive their respective shares of the damages as their own property free from the constraints that would apply if those damages remained within the envelope of the Scheme.  
8.	In my judgment, it is far too late at this stage of the proceedings to raise a wholly new and difficult issue relating to the recoverable damages which could and should have been dealt with at trial.  Given that I do not understand, in any case, how a tax liability which flows from the assignment transaction can be laid at the door of CR, it would be wrong to allow this speculative and uncertain aspect now to be raised.
9.	So far as Professor Youlton’s personal claim is concerned, that is subsumed in the Trustees’ Claim.  Thus, had the Trustees themselves (as Trustees of the Scheme) asserted the Trustees’ Claim for the benefit of the Scheme, the fund would have been properly reconstituted and Professor Youlton personally would have suffered no loss.  I do not consider that Professor Youlton and the Trustees between them can generate a personal loss recoverable by Professor Youlton when their own loss (ie the damages recoverable pursuant to the Trustees’ Claim and assigned by them to Professor Youlton) will be met in full.  To put it another way, Professor Youlton’s loss insofar as attributable to his lost pension rights, is no more than a reflection of the diminution in value of the trust fund; so that if CR makes due recompense equal to the loss to the trust fund, Professor Youlton has suffered no loss, a result which cannot be altered to the detriment of CR by the Trustees having assigned the Trustees’ Claim to Professor Youlton.
Rent claim
10.	Two issues remain outstanding.  The first is the question of directions for the assessment of the quantum of the rent claim.  Subject to one minor exception about a date for disclosure, directions are agreed.  I am content to make those directions subject to that exception.  The parties are discussing the exception; it is something they really ought to be able to agree.  I make no decision at this stage.
11.	The second issue is whether Professor Youlton is entitled to interest on the rent claim and if so how this is to be assessed.  This, the parties both suggest, in turn falls into two categories:
i)	Interest (if any) up to a notional date at which the issue of rent reviews would have been settled.  This involves consideration of whether any interest would have been incorporated within the notional settlement and of what the appropriate notional date of settlement is.
ii)	Interest (if any) on damages running (i) from the notional date of settlement, in respect of that notional settlement and (ii) from the dates on which any sums which would have been paid as rent after such settlement would have been paid, in respect of such sums.  Such interest on damages can only be awarded up to 13 May 2010 (in accordance with the order of Norris J).
12.	I can, of course, see the logic of the way in which the parties now see the issues as arising.  There is, however, a difficulty.  In paragraph 496 of the main judgment, I attempted to cut through in what I saw as a proportionate way the various levels of complexity which, on a strict logical basis, arise.  I decided to assess a percentage chance of achieving a rent review including the West Wing with the increased rent being payable from the review date and to reflect in that percentage an allowance for the chance of the increased rent running from some later date (whether a notional settlement date or the date when full beneficial occupation of the West Wing was available).  The result of my approach was that the Trustees would be able to recover 40% of that which they would have recovered had they obtained a settlement of the rent review backdated to 2004.   
13.	At this point, I deal with the parties’ submissions concerning the date at which the Trustees and S&W are to be taken, for the purpose of assessing damages, to have reached a negotiated settlement (“the Settlement Date”).
14.	The identification of the Settlement Date is now of some significance in the light of the claims which are made by Professor Youlton for interest.  Mr Evans submits that the Settlement Date should be taken as 1 June 2006 given that the issue of rent on the West Wing was raised in the Trustees’ proposals in January and May 2006.  And, as I said in the main judgment, I see no reason to think that the Trustees would not have raised the point moving forward from August 2005 even if the validity of the 2002 Side Letter had never been challenged.  
15.	However, I consider that it is unrealistic to think the Trustees would have been able to achieve a settlement on the rent review issue as early as June 2006.  Although Mr Evans submits that the disputes (apart from the Want of Authority Defence and the Unenforceability Defence) were straightforward – indeed, I have said as much myself in relation to the dispute over the Apportionment Agreement - whether the Trustees would in fact have gone to court to obtain declaratory relief in relation to the rent review in June 2006 is far from clear.  Although the Unenforceability Defence had been around in embryonic form since September 2005, Mr Clark had given advice that the 2002 Side Letter was more likely to be held valid than invalid.  Negotiations for settling the disputes (not just the enforcement of the 2002 Side Letter) continued through 2006 at least up until June.  I do not think that the Uncertainty Defence was the impediment in the absence of which a settlement would certainly been reached of all these disputes; nor do I think that it is likely that the Trustees would have proceeded at that stage to enforce the rent review had it not been for their concerns about that challenge to the validity of the 2002 Side Letter.  
16.	On the other hand, I do not think that the Trustees would have delayed past October 2006 in seeking to enforce the rent review.  They had, after all, decided, even in the face of the Unenforceability Defence and the Company Law Points, to launch proceedings.  That, it seems to me, might well have resulted in a settlement (assuming one was going to be reached at all and as to which I have already assessed the chances at 40%) by the end of the year or early 2007.  I propose to take the December 2006 rent day as the Settlement Date.
17.	I now turn to consider what damages the Trustees would be entitled to obtain if, counterfactually, it had been 100% certain that they would, on the Settlement Date, have achieved a settlement under which the rent review would be backdated to 2004 with interest payable on arrears under the terms of the Lease.   In referring to arrears of rent in this judgment, I mean, in respect of any period, the difference between the reviewed rent £R1 when it has been determined and the rent actually paid for that period.  This is, of course, a notional exercise: the reviewed rent will never be payable in fact but is to be ascertained for purposes of assessing damages.
18.	Under such a settlement, the Trustees would have become entitled, on the Settlement Date (or shortly thereafter) to a capital sum equal to the cumulated amount of the arrears; on each rent payment day, the difference between the reviewed rent and the rent actually paid on that day would increase the arrears.  Under the Lease, unpaid rent (and any increase on a review) carries interest from the date on which it should have been paid.  Since, in the present case, the actual payments are known (or can be established) and since the reviewed rent will be ascertained in due course if not agreed, it is a straightforward arithmetical exercise to work out the amount of interest due under the Lease up to the Settlement Date.
19.	It must be assumed that S&W would honour its obligations under such a settlement.  There is nothing in the evidence which would suggest any other conclusion.  Accordingly, the amount of arrears plus interest up to the Settlement Date would have been paid at that time.   Similarly, after the Settlement Date, it is to be assumed that S&W would meet its obligations to pay rent at the reviewed rate: no question of further interest payable on arrears under the terms of the Lease would then arise.
20.	Accordingly, if the Trustees’ damages claim is to be assessed as of the Settlement Date, they would be entitled to the arrears plus interest up to that date, together with interest on damages if the court sees fit to award it.  In relation to the period after the Settlement Date, they would, in theory, be entitled to the discounted value of the future arrears up to the 2009 review date.  In ascertaining the amount of the arrears, an assumption would have to be made about the amounts of future payments of rent, the obvious assumption being that rent would continue to be paid at the rate in force at the time of the Settlement Date.  That amount, too, would carry interest at the discretion of the court as interest on damages.  Payments of rent actually made in the future would have to be taken into account in some way when they differed from the amount based on the assumption just mentioned.  In particular, a significant reduction in the arrears would flow from the 2007 rent review.
21.	However, this treatment of the post-Settlement Date damages departs from the real world in a way that neither principle nor practice really require.  On the facts of the case, damages are now being addressed by me at a time after the date of the 2009 rent review and thus at a time when all of the arrears would, under the notional settlement, have been paid.  It is a far simpler exercise, and one which would happily produce a more accurate assessment of the Trustees’ loss, to work out the arrears in respect of each payment date producing a figure for damages by applying the 40% “loss of chance” percentage and then to award interest (as interest on damages, not as interest under the Lease) from each such date until actual payment.  As in relation to rent prior to the Settlement Date, the actual payments made (including those under the 2007 review) are known or can be ascertained.  The reviewed rent will, in due course, be ascertained so that again a simple arithmetical exercise will be possible to ascertain the amount of the arrears arising on each payment date.
22.	The total amount of the arrears in respect of the period before the Settlement Date and the period after the Settlement Date applying the approach in the last paragraph is the total sum £(R1-TR) which I identified in paragraph 506 of the main judgment.   On the hypothesis now under consideration (a settlement under which the rent review was backdated to 2004 with interest payable under the Lease), the Trustees’ loss would be (i) that sum together with (ii) interest under the Lease on pre-Settlement Date arrears up to the Settlement Date plus (iii) arrears in respect of the period after the Settlement Date to the 2009 review date.  In paragraph 506 of the main judgment, I identified the loss as (i) plus (iii) but expressly stated that this loss ignored interest.  The court would have a discretion to award interest on the total of (i) and (ii) from the Settlement Date and on (iii) from the relevant date for payment of each instalment of arrears, in each case until payment of the damages (but subject to paragraph 7 of Norris J’s order which disentitles Professor Youlton from claiming interest over the period from the handing down of the main judgment and the later date identified in the order).
23.	It could not, however be said that the Trustees would be certain to achieve a settlement on the basis I have been considering.  There were several possible outcomes.  Thus, I mentioned in the main judgment the following possible settlements: (i) one with the reviewed rent backdated to 2004, (ii) one with the reviewed rent running from the date of the settlement, and (iii) one with the reviewed rent running from the date when full beneficial occupation of the West Wing was made available.  I did not divide scenario (i) into its two obvious subdivisions namely (a) interest payable under the Lease and (b) no interest payable: it was not necessary to do so since I was then leaving the question of interest open.
24.	The figure of 40% which I arrived at reflected settlement type (i) (including both components (a) and (b)).  It also reflected settlement types (ii) and (iii).  I might have, but did not, assess the percentage chance of each of these types of settlement separately (say as A% for type (i), B% for type (ii) and C% for type (iii)).  I did not do so for the reasons stated in paragraph 496 of the main judgment.  However, the 40% is not simply the arithmetic total of A, B and C.  Part of the 40% can be viewed as equal to A, but both B and C are reflected in the 40% by small percentages the reduction being, as I put it, “an allowance for the chance of the increased rent running from some later date”.  
25.	In paragraph 502 of the main judgment I concluded that the measure of the Trustees’ loss was 40% of £(5R1-TR) (again, implicitly, ignoring interest).  That was to adopt a very broad-brush approach which did not distinguish between rent arrears before and after the Settlement Date.  £TR, it should be noted, is the total amount paid as rent over the entire 5 year period, the arrears being the difference between that figure and £5R1.  There is nothing in what I said in paragraphs 496 to 503 of the main judgment (or anywhere else) about when any element of that total loss accrued.   Accordingly, once the Settlement Date is known, the arrears on that date will be known or can be ascertained.  The Trustees’ damages will then include 40% of those arrears.
26.	As to interest on those arrears, it would not be right simply to ascertain interest under the Lease and to allow 40% as damages.  This is because the 40% itself reflects (i) a possible settlement under which the review is backdated to 2004 but without interest being payable under the Lease and (ii) in accordance with paragraph 496 of the main judgment, a possible settlement under which the review takes effect only from the Settlement Date (and under which no question of interest under the Lease prior to the Settlement Date would arise).  Accordingly, I consider that the 40% must be reduced otherwise Professor Youlton will be over-compensated.  
27.	Of that 40%, I do not consider that more than 10% can properly be seen as representing the chance that the Trustees would have negotiated a settlement under which not only was the reviewed rent backdated to the 2004 review date but also under which interest would be payable under the Lease (or otherwise).  Accordingly, in my judgment, the Trustees’ loss as at the Settlement Date should include an element for interest equal to 10% (and not 40%) of the interest for which the Lease provides.
28.	As to the rate of interest, the parties should be able to work out the amount of interest which would be due if the provisions of the Lease are applied to a notional review backdated to 2004 and running to the Settlement Date.  10% of the damages thus ascertained should then be included as part of the Trustees’ damages as at the Settlement Date.
29.	So far as concerns interest on the damages accrued in respect of the period before the Settlement Date (ie 40% of the arrears of rent together with 10% of interest under the Lease on such arrears), Professor Youlton is, in my judgment, entitled to an award of interest on those damages from the Settlement Date, subject to the order of Norris J which I have mentioned.  I will return to the rate of interest in a moment.
30.	So far as concerns damages in respect of the period after the Settlement Date, I have already explained my approach in paragraph 21 above.  The 40% is to be applied in ascertaining the quantum of damages, and interest is to be paid on the resulting figure subject again to the order of Norris J.
31.	As to the appropriate interest rate, this is a case where a commercial rate of interest should be paid and I award 1% over NatWest base rate from time to time.  This will apply from the Settlement Date in respect of that element of the damages which reflects arrears of rent and interest under the Lease and from the date for payment of each instalment of arrears in respect of that element of the damages which reflects the non-payment of these arrears.

Interest on the main claim for loss of opportunity under the Apportionment Agreement
32.	The next question is whether Professor Youlton is entitled to interest on damages awarded in relation to the loss of opportunity in relation to the Apportionment Agreement.  This claim falls into two categories:
i)	Interest (if any) up to a notional date of settlement.
ii)	Interest (if any) on damages running from that notional date.  
This involves consideration of (i) an appropriate notional date of settlement, and (ii) how the settlement would have been paid (as compared with how it was in fact paid), including whether by instalments (and if so the number and structure of those instalments, and whether they would have included interest), or whether on a putative sale of the S&W (and if so what would have been paid, including whether this would have included interest).
33.	As to the notional settlement date, both parties submitted that the date should be the same as their respective submissions concerning the Settlement Date for the purposes of the lost rent claim.  I consider that very much the same factors apply to the establishment of the notional settlement date in each case.  There is in both cases a range of dates which can be seen as reasonable to select as the notional settlement date.  I see no reason to reach different answers in relation to those dates.  Accordingly, I propose to adopt the December 2006 rent date, (that is to say the Settlement Date as defined above) as the date of the notional settlement of the claim concerning the Apportionment Agreement.
34.	Mr Evans submits that I should award interest on the amount of Professor Youlton’s claim for the period up to the Settlement Date.  He puts this on the basis of loss of a chance and thus claims only a proportion of what would otherwise be the full amount of interest.
35.	I reject that submission.  It is, I think, inconsistent with what I said expressly in my main judgment; thus, in paragraph 520, I referred to a settlement being agreed without interest provided that payment was made promptly.  I expressed considerable doubt about the entitlement of the Trustees to interest under the Apportionment Agreement.  And the assessment of the prospects of recovery over a period of time of 70% of the full value of the claim serves only to emphasise the scepticism with which I viewed any claim to interest under the Apportionment Agreement.  This claim is far too speculative for it to be reasonable to attach any weight to it for the purposes of including this element of alleged damages by reference to the loss of a chance.
36.	As to interest on damages after the Settlement Date, Mr Evans appears to accept that S&W may not have been able to pay all of £1.047 million immediately but submits that, if S&W had wanted a concession to pay money over time, interest would have been agreed.  Indeed, Professor Youlton had suggested this, also suggesting payment of interest at the same rate (10% pa) as was payable on Advent’s preference shares.  He points out that in the actual Settlement Agreement, simple interest was payable at 2% pa above NatWest base rate on the outstanding instalment of £250,000.  Alternatively, he submits that, as under the Settlement Agreement, the whole amount would have become due on the sale of S&W which took place on 26 February 2009
37.	Mr Evans accepts, of course, that credit must be given for the £500,000 plus interest recovered from S&W under the Settlement Agreement.  He suggests that this should be set off against the £200,000 architect’s fees and £300,000 costs.  I do not understand why this should be so.  For reasons given in the main judgment, the architect’s fees did not properly form part of any claim under the Apportionment Agreement.  The Settlement Agreement expressly provided for the parties to bear their own costs.  The £500,000 is clearly intended to represent a compromise of the claim under the Apportionment Agreement and cannot, therefore, relate to the architect’s fees or costs.
38.	Mr Hubble has addressed part of his written submissions to the question of interest on £547,000 – that is the difference between the figure of £1.049 million (being the value I placed on the likely recovery under the claim) and £500,000 (being the amount paid under the Settlement Agreement).  He submits that an award of interest on this sum would be inappropriate.  He refers to paragraphs 524 to 527 of the main judgment and ascribes to me a finding that the likely outcome for the Trustees would have been a commitment on the part of S&W to settle for £1,250,000 over a period of 5 years rather than 2.
39.	I do not think I said that at all.  The figure of £1,250,000 was one which I had mentioned earlier (at paragraph 520) as the figure at which the Trustees would have been prepared to settle (without interest) provided that payment was effected promptly.  I then went on to discuss the effect of the financial problems of S&W, the starting point (see paragraph 523) being the figure of £1.496 million, not £1,250,000.  In paragraph 524, I did mention the possibility of payment of instalments of £250,000 for 5 years (a total of £1,250,000) but this was by way of an example of the sort of figures which S&W could be seen as being able to afford, not as some sort of implied statement of the limit of their liability.  Then in paragraph 525, I went on to address the risk of non-payment referring to a possible payment of £250,000 for “another 5 years” after the initial 2 years during which the £250,000 had actually been paid.  That is a total of £1,750,000, well in excess of even the £1,496 million figure and plenty to cover the £1,047 million plus interest.
40.	Finally – and this is the important point – I said in paragraph 527 that I would assess “the chance of the Trustees having obtained a settlement and making actual recovery over a period of time at 70% of the full value of their claim of £1.496 million, that is to say £1.047 million”.  In other words, I anticipated that the Trustees would recover over a period of time 70% of the full value of their claim; the full value was £1,496 million and 70% of the full value was £1.047 million.  Payment of £1.047 million in instalments without interest would not effect recovery of the full value.  Interest would have to be paid on the instalments or an extra instalment would need to be paid equivalent to the value of interest not paid.  In whatever way the settlement was structured, what the Trustees would receive would have a value, as of the settlement date, of £1.047 million.  It is that which the Trustees lost and which, subject to giving credit for the £500,000, is the appropriate measure of damages.  
41.	Damages should therefore be assessed at £1.047 million as of the Settlement Date.  Professor Youlton is, in principle, entitled to interest on the £1.047 million but must give credit for the payment of £500,000 and interest.   As to the first instalment of £250,000, the damages claim should be reduced by that amount and, as from the date of its receipt, interest should run only on the reduced amount (with interest being paid on the full amount until then).  As to the second instalment, again the damages should be reduced by that amount and, from the date of payment, interest should again run only on the reduced amount.  However, under the Settlement Agreement, interest was payable on the outstanding instalments from the date of the Settlement Agreement until payment.  Interest should stop running against CR, therefore, not on the date of payment of the instalment but on the date of the Settlement Agreement.  If the Trustees have failed to collect interest due to them under the Settlement, CR cannot be made to pay for their failure to do so.
42.	As to the rate of interest, as with the rent claim I award 1% over NatWest base rate from time to time.
43.	Even if that approach were wrong, and interest or other compensatory payment would not have been agreed under the notional settlement, there was a very strong chance, in my view, that S&W would have agreed to pay the full amount of outstanding instalments upon the occurrence of a sale such as that which triggered payment of the instalment outstanding under the Settlement Agreement.  In the light of my decision in the preceding paragraph, I do not propose to consider the precise consequences of this alternative possibility any further.
Costs as damages
44.	There are three issues:
i)	What (if any) reduction should be applied to the fees of CR and Counsel claimed by Professor Youlton to allow for the fees which Professor Youlton would have incurred in any event?
ii)	What if any of the Jekyll Partnership’s costs are recoverable on the basis that the work done was of an expert nature?
iii)	What interest is due on any costs recoverable as damages?  It is anticipated that this is a matter which will be capable of agreement between the parties after I have determined which of the fees are recoverable, probably between handing down of the draft and formal delivery of the judgment.  I will say no more about it at this stage.
45.	I dealt with the question of “cost as damages” generally in paragraphs 528ff of the main judgment.  
i) Fee reduction
46.	Dilapidations: I concluded in paragraph 532(i) that the costs incurred in relation to dilapidations ought not to feature in the damages claim.  Costs were claimed only after 25 October 2005 and I doubted that any significant part of CR’s fees in relation to this issue was incurred after that date.  None of CR’s invoices in respect of work done after that date and which form part of Professor Youlton’s claim expressly relates to dilapidations; and yet there were invoices (in respect of which no claim is made) which do refer to dilapidations (in a total sum of something under £5,000 plus VAT).    That suggests that where work was done on dilapidations, it was charged for expressly.  I take the view that of the invoices claimed no adjustment needs to be made in respect of dilapidations.
47.	The other matters which I identified in paragraph 531 are the “put and keep” covenant, whether rent reviews should take account of the West Wing and the effect of the Interim Award in relation to recoveries under the Apportionment Agreement.   In relation to those I said that there was little doubt that time and expense would have been spent on each of these issues and would have featured in any settlement, negotiation, mediation or litigation.  As to the last (the effect of the interim award), I thought S&W’s case was weak and that not much cost would have been incurred.  Accordingly, credit should be given against the total costs (after stripping out the costs referable to dilapidations) for the expense which would have been incurred.
48.	If I were to deal with each invoice in detail, I would need the input of a costs draftsman.   There are two good reasons not to require that.  First of all, even if I knew the precise allocation under each invoice in relation to work done on each aspect of the Trustees’ dispute with S&W (after stripping out costs referable to dilapidations), it would not follow that Professor Youlton should recover every penny found to be attributable to the dispute concerning the two Agreements.  The costs incurred in resolving all of the other issues, if taken in isolation, might actually have been more than the costs attributable to those issues ascertained by a detailed analysis of the invoices in the events which actually happened.  Further, to carry out that sort of detailed exercise would be expensive.  Since it will not necessarily give an accurate assessment of what is owing, I think it is a disproportionate exercise to require to be carried out, especially given the rough and ready approach which I have adopted to the ascertainment of damages.
49.	Nonetheless, I do need to say a little more about these other claims.  The dispute about the “put and keep” clause has still not been resolved.  Mr Evans says that no costs have been incurred on this issue.  He says that it is for CR to show that costs have been incurred on this issue which they have not done: none of the invoices claimed relates to this issue.  Further, he says that costs will need to be incurred to effect a resolution so that there should be no deduction since the position is the same in the actual and hypothetical worlds.  I do not think that that is quite right.  If work has been carried out in relation to the “put and keep” clause, that work is not totally wasted.  Going into further resolution of that dispute, the Trustees will have the advantage of having received advice which is relevant and will not have to be done again.  It is reasonably clear that the “put and keep” issue was considered from time to time even though there is no billing for it.  There must be some, albeit small, discount from the total fees incurred to reflect this factor although it is, I accept, a difficult and somewhat speculative task to perform.
50.	As to the rent review issue, Mr Evans submitted that the issue was, in the event, resolved in the Trustees’ favour at the settlement meeting at little cost (the subsequent cost in agreeing the actual figure not being part of the claim).  The only defence to the Trustees’ claim would, he says, have been rectification as to which S&W’s claim was very weak.  The costs would not be that great – a few hours of a lawyers time.  This I perceive as one of Mr Evans’ more optimistic submissions.  The Trustees might well have been successful in the end, but there would inevitably have been a level of irrecoverable costs attributable to resolution of the dispute.  In any case, he points to invoices specifically referable to the rent review which show a charge of just over £1,200 plus VAT which, he suggests, fairly represent the work on this issue.  
51.	As to costs incurred in relation to the Apportionment Agreement, I have decided that the costs incurred before 19 October 2006 should not be recoverable.  According to Mr Evans (and this seems correct) the total costs after 25 October 2005 (the date from which the costs element of the damages claim runs) and before 19 October 2006 (excluding Counsel’s fees) is under £25,000 plus VAT (taking about half of the last invoice ending on 31 October 2006).  Mr Evans says that it is for CR to point to work done on the Apportionment Agreement before 19 October 2006 and that it is difficult to see that anything of substance was carried out although a small invoice of £1,620 plus VAT may be an exception, but even that is not clear.
52.	There are, in fact, two other invoices which Mr Hubble has identified and which I think are in the same category and fall to be deducted: 20 April 2006 in respect of the Lease dispute “The Lease Apportionment of Costs” comprising £5,800 fees and a small amount of costs; and 30 June 2006 in relation to the dispute with S&W “Apportionment of Costs” comprising £5,764 fees.  There are further invoices dated 27 September 2006 (£3,150 fees) and 6 November 2006 (£3,275 fees) in respect of “Dispute with Snell & Wilcox”; by this time, it is reasonable to think that part of those invoices are attributable to work in connection with the Apportionment Agreement.
53.	I do not think that it is quite right to say that it is up to CR to point to work done on the Apportionment Agreement before 19 October 2006.  It is for Professor Youlton to prove his case.   He has produced evidence in the form of invoices which may include fees which, in principle, he should not recover.  I say “may” deliberately, because where an invoice covers work, some of which is and some of which is not, work in respect of which the fees are recoverable, resolution of what work was actually done and when, would require just the sort of involvement of a costs draftsman at a detailed level which I am anxious to avoid.  To view the matter as one of the burden of proof is not helpful: the legal burden rests with Professor Youlton and it is then for the court, on the basis of the evidence which it does have, to determine what is and is not recoverable.  The concept of evidential burden, although helpful in some circumstances, is not one I find particularly helpful in the present case.
54.	In relation to CR’s own fees, Mr Evans arrives at a total of £104,833.94 plus VAT, claiming only invoices from 25 October 2005.  The figure is derived from the invoices in the court bundle (Bundle O items 1-13), after deducting Counsel’s fees.  He says that only a tiny deduction in relation to the matters I have discussed above should be made, a very few thousands of pounds at most.
55.	I do not think that such a small deduction reflects the reality of the work which CR actually carried out in relation to the other matters I have mentioned or the work done on the Apportionment Agreement before 19 October 2006.  Still less does it make any adequate allowance for the costs which would have been incurred in resolving the issue of rent on the West Wing or the effect of the Interim Award.  Reflecting as best I can the evidence which I now have and my knowledge of this case through the conduct of a lengthy trial, I consider that the claim in respect of CR’s fees should be reduced by 20%.
56.	The next element of costs I need to consider is Counsel’s fees.  I dealt with these in paragraph 535 of the main judgment.   His invoice of £2,000 to Shoosmiths is to be disallowed – Mr Evans admits that “most” of it should be disallowed, but I see no reason why it should not all be disallowed.  He also accepts that some part of the fees leading up to the unsuccessful mediation on 4 May 2006 should be disallowed since they were incurred in part in relation to dilapidations or other matters which should be disallowed.  I propose to deduct £3,000 plus VAT.
ii)	Jekyll Partnership
57.	Mr Evans submits that assisting the surveyors is an expert matter so that Professor Youlton is entitled to recover invoices O/19 and O/25 in the bundle in the sums of £3,615 plus VAT and £4,980 plus VAT.  
58.	I do not agree with Mr Evans’ submission.  He has not identified the nature of the work which Ms Manson carried out which is said to be of an expert nature rather than simply assistance which she was able to give by virtue of her knowledge of the facts and her long involvement with the Property.  I am not persuaded that she brought any relevant expertise to the table.  Suppose, for instance, that she had been unavailable for one reason or another such as illness.  I do not understand why it would then have been necessary (or even reasonable if expense was involved) for the surveyors to approach a person with Ms Manson’s expertise to assist them.
Costs of the action:
59.	These are two issues:
i)	What costs order should be made, and in particular is a proportionate order for costs appropriate?
ii)	What (if any) interim payment for costs should be awarded to the Claimant? 
60.	Mr Evans seeks an order for the payment of Professor Youlton’s costs on the standard basis.  He says that not only has Professor Youlton succeeded, he has done so on virtually all the issues in contention.   The only exception was the limitation issue which I deal with in a moment. Mr Hubble has drawn my attention to part 36 offers made by each side.  CR made an offer of £400,000 by letter dated 13 November 2009.  This was increased during the trial, on 15 December 2009, to £500,000 plus costs.  Professor Youlton made an offer of £1.75 million by letter dated 30 November 2009.  Neither side, therefore, has beaten a part 36 offer made by the other.
61.	Subject to any subsisting orders (such as the order of Norris J on 27 November 2009 which makes it clear that CR are not to be liable for any of the costs of that hearing), Mr Hubble accepts that CR will be liable to pay a substantial proportion of Professor Youlton’s costs, but submits that there should be a reduction.  He says that Professor Youlton has been unsuccessful in a number of respects:
i)	Recovery is substantially less than that claimed: £3.4 million (reduced from £4.2 million).
ii)	CR achieved substantial success in respect of the Trustees’ entitlement under the Apportionment Agreement.  The pleaded claim was £2.67 million as against the figures discussed in the main judgment plus, I should add, the interest elements considered earlier in this judgment.
iii)	Professor Youlton failed on his claim in respect of the alleged lost sale: see paragraph 510 of the main judgment.  This claim appeared to be for £1.2 million until limited, shortly before trial, to £386,000.
iv)	Professor Youlton has failed in respect of various items of costs claimed as damages (eg Shoosmiths’ fees, Mr Rogers’ fees, the Jekyll Partnership fees and half the Mediator’s fees).  
v)	The limitation issue already mentioned. The claim would have been for a lesser amount to reflect the fact that only Professor Youlton could make a claim against CR based on breach of duty in respect of the Unenforceability Defence.  Further, Mr Hubble submits that CR should not be liable for Professor Youlton’s additional costs of preparing and issuing the Particulars of Claim in the second action and various procedural matters in relation to the second action.
62.	I reject Mr Hubble’s submission that these factors, other than the last, would justify an issue based order or, whether or not in place of an issue based order under CPR 44.1(7), an order for payment of a proportion of those costs.  The overwhelming time and effort at trial, and of the evidence prepared for trial, went to liability which was hotly contested at all times by CR.  Of course, quantum was, and is, a serious matter, but if one looks at how the issues which Mr Hubble identifies impacted on the length and complexity of the trial or the costs of preparation, the answer must be “Very little”.   If Professor Youlton had moderated his claims under i) and ii), I doubt that it would have made any difference at all to how CR saw the action overall.  Claim iii) took little time: there was no additional evidence directed at this issue which would not have been before the court in any case.  Claim iii) was really an argument to recover an additional head of loss which in the event failed but the making of the claim is not something to be penalised by a reduction in the recoverable costs.  There is perhaps more in Mr Hubble's submission in relation to the items within claim iv) but again insufficient, in my judgment, to justify an issue based order (reflected in a percentage reduction).
63.	The limitation issue has caused me more difficulty because it might be thought wrong in principle that Professor Youlton should recover all of his costs when he has only succeeded in full as the result of an amendment made during the course of the trial.  But on analysis, I do not think there is much in the point.  
64.	The first point to remember is that Professor Youlton’s personal claim was not time-barred.  I have held that CR owed him a duty of care in relation to the 2002 Side Letter and the Apportionment Agreement and that that duty was not replaced by their parallel duty to the Trustees.  If follows that the first action would have succeeded if the Trustees’ claim was time-barred.
65.	I also held that the only claim of the Trustees which was time barred was the claim against CR in relation to their breach of duty in respect of the availability to S&W of the Unenforceability Defence.   Accordingly, had I not allowed the amendment to the first action, CR would have remained liable to Professor Youlton personally.  The difference would have been that the damages which he could have recovered would have reflected the fact that he had only a personal claim in relation to that particular duty.  Those damages, so far as attributable to that issue, would not have been the full loss suffered by the Trustees, but the loss to Professor Youlton from the trust fund of the Scheme being reduced by that full amount.  
66.	In order to establish liability to Professor Youlton and the extent of his own loss, precisely the same evidence would have been presented to the court.  Further, the availability of the limitation defence in relation to the Unenforceability Defence would actually have lengthened the legal argument since it would have required me to deal with the enormously difficult task of apportioning the loss suffered by the Trustees between the breaches of duty in relation to Want of Authority Defence and the Unenforceability Defence.   
67.	As to Mr Hubble’s point that two actions were unnecessary, that, to my mind, rings slightly hollow.  It is, I think, very unlikely that CR would have agreed to an amendment to assert the Trustees’ claim in the first action out of time even if the approach to limitation which found favour with me had been presented by Professor Youlton to them.  He could have made an application to make the amendment, but would have been wise to issue a protective claim in any case lest any other limitation period were to expire.   However, if such a claim had been made it would (assuming that I was correct in holding that I had power to make the amendment and assuming that the judge hearing the application exercised the discretion to allow amendment in the way that I did) have made the second action effectively redundant.  It could have been consolidated with the first action and some duplication of effort could have been avoided.
68.	I accordingly disallow Professor Youlton’s costs of the pleadings in the second action subsequent to the Claim Form.   I also reduce the costs which he is able to recover from CR by the costs which they have incurred in the preparation of their pleadings in the second action. If there are any other items which CR can show were incurred exclusively by reason of there being two actions rather than one, it would seem to me that they should be dealt with in the same way.  That is to say, Professor Youlton cannot recover his costs of such an item; and CR should have a corresponding reduction in their own liability to Professor Youlton.
69.	The result is that Professor Youlton is entitled to recover his costs of the two actions on the standard basis subject to the disallowance described in the preceding paragraph, and any subsisting costs orders.