Case No:  6LV70007
Neutral citation number: [2011] EWHC 582 (Ch)

IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
LIVERPOOL DISTRICT REGISTRY	
Liverpool Civil & Family Courts,
35 Vernon Street,
Liverpool L2 2BX

Date: Wednesday, 2nd February 2011

Before:

HIS HONOUR JUDGE HODGE Q.C.
sitting as a Judge of the High Court
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B E T W E E N:

	JENNIFER JEAN LEE	Claimant	
	and		
	FUTURIST DEVELOPMENTS LIMITED	Defendant/Part 20 Claimant	
	and		
	(1) JENNIFER JEAN LEE 
(2) DEREK LEE	
Part 20 Defendants	

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Miss LESLEY ANDERSON Q.C. appeared on behalf of the Part 20 Defendant, Mr Derek Lee.

Mr. JOHN BENSON Q.C. appeared on behalf of the Defendant and Part 20 Claimant, Futurist Developments Ltd.
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JUDGMENT

JUDGE HODGE QC:
1.	This is my extemporary judgment in the case of Jennifer Jean Lee as Claimant and Futurist Developments Limited as Defendant (by original action), and between Futurist Developments Limited as Part 20 Claimant and Jennifer Jean Lee and her husband Derek Lee as Part 20 Defendants (by way of counterclaim), claim number 6LV70007.
2.	This hearing is the sequel to a trial that took place before me over some 11 days in October 2010.  On 8th November 2010 I handed down a reserved written judgment, the neutral citation number of which is [2010] EWHC 2764 (Ch).  	
3.	In summary, I gave judgment for Mrs. Lee on her claim, which was for the sale of potential development land in Aintree held as to 25% for Mrs. Lee and as to the remaining 75% for Futurist Developments Limited (Futurist); and I gave directions for the sale of that land with vacant possession and the distribution of the net sale proceeds.  
4.	On the Part 20 counterclaim, I gave judgment for Futurist against Mr. Lee for £405,000, representing a net introduction fee received by him, together with compound interest up to 8th November 2010 of £203,091.60, being a total sum of £608,091.60.  I dismissed the remainder of the counterclaim against Mr. and Mrs. Lee.  Subject to certain special costs orders, I directed that Futurist was to pay to Mrs. Lee her costs of the claim and counterclaim, such costs to be the subject of a detailed assessment unless otherwise agreed.  Subject to that, I made an issues-based costs order as between Futurist and Mr. Lee.  I directed that Mr. Lee was to pay Futurist’s costs of and incidental to the Unite commission claim, but that Mr. Lee was to be paid the costs of and incidental to all the other claims from time to time, and at any time, made in the counterclaim.  Such issues-based costs orders were to be the subject of detailed assessment, unless otherwise agreed; and paragraph 9 of my order directed that there was to be a mutual set-off in relation to the sums ordered by way of costs as between Mr. Lee and Futurist.  I directed that the monies, some £180,000, presently standing in court as security for Mr. and Mrs. Lee’s costs of the counterclaim, together with the accrued interest, were to remain in court pending the preparation and submission of detailed bills of costs by Mr. and Mrs. Lee, or the expiry of the time period prescribed by the Civil Procedure Rules for the preparation and submission of such detailed bills of costs.  Thereafter, Futurist was to be at liberty to apply to me, if available, or otherwise to a judge sitting as a judge of the Chancery Division, for permission to remove from court, and have repaid to Futurist, all or part of those sums.
5.	I stayed execution on the judgment debt entered against Mr. Lee in the total sum, inclusive of interest, of just over £608,000 until 4 o’clock on Monday 6th December 2010, being 28 days after the formal hand-down of judgment.  I directed that any application for a further stay should be made to a District Judge or, in the event that no District Judge was available to hear the application in a timeous manner, to a Chancery judge on a Chancery applications day.  I further stated, in paragraph 11 of my order, that any such application for a further stay was to be supported by evidence of Mr. Lee’s assets and liabilities.
6.	Mr. Lee took no steps to satisfy any part of the judgment debt on which, pursuant to statute, interest continues to accrue at the rate of 8% per annum; nor did Mr. Lee make any application for a further stay of execution.  
7.	In December a number of applications were made to the court.  On 13th December, Futurist’s solicitors, MSB Solicitors, issued an application notice seeking an unless order to bar Mr. Lee from enforcing any part of my judgment due to Mr. Lee’s failure to pay the sums awarded to Futurist by 6th December.  The application notice asked for the application to be dealt with without a hearing and before a District Judge.  The application relied on the evidence set out in the box below, and that was verified by a statement of truth from Mr. Mark Adrian Foreman, the Futurist solicitor.  The evidence referred to my judgment, a copy of which was said to be attached; it referred to the requirement upon Mr. Lee to pay £608,000 odd to Futurist; and to the stay of that judgment until 4 p.m. on 6th December 2010.  It was said that Mr. Lee had failed to pay the sum, despite enforcement agents attending his premises to enforce judgment.  Mr. Lee being in breach of the judgment was said not to be entitled to enforce any costs orders against Futurist, in particular those at paragraphs 3.2 and 8 of the judgment, unless Mr. Lee were to pay the £608,000 odd within 7 days of the date of the order made pursuant to the application.  
8.	That application was placed before Deputy District Judge Berkson, apparently on 15th December.  On that day he made the order which was said to be attached to a general form of judgment or order dated 15th December and issued on 17th December.  That attached order was in the form supplied by MSB Solicitors.  It set out the title of the claim and Part 20 claim and was expressed to be before me, sitting as a judge of the High Court on Monday 8th November 2010.  The order then went on to say:  
		“Upon hearing the application of Futurist it was ordered that (1) unless Mr. Lee paid the judgment sum of £608,000 odd by the”, 
	and then there was a space for the District Judge to insert the date, 
		“then, (a) Mr. Derek Lee shall not be permitted to enforce any costs orders against Futurist; (b) Mr. Lee shall not be permitted to raise any detailed assessment against Futurist in respect of the costs; and (c) Mr. Lee shall not be permitted to raise any points of dispute against any detailed assessment raised by Futurist Developments against Mr. Lee.  (2) Costs of the application awarded to Futurist.” 
9.	In the letter dated 13th December, and filed at the court in Liverpool on 4th January 2011, MSB Solicitors wrote to the court enclosing the unless order approved by the Deputy District Judge in the stated terms on 17th December.  The letter went on to say that it appeared that Deputy District Judge Berkson had failed to complete the date section on the proposed order, thus leaving 	it defective, but instead had issued an order approving the attached order.  The writer invited the court to put the order back before Judge Berkson, or another District Judge, as a matter of extreme urgency to insert a date in an attempt to make the order effective, and suggested that that date should be inserted as 31st December 2010, being 14 days from 17th December.
10.	That letter was, apparently, placed before a District Judge.  On 10th January 2011 a further draft of the order, in the form settled by the solicitors for Futurist, was sealed.  On that occasion, in addition to referring to my name, the order was expressed also to be before Deputy District Judge Berkson on 10th January 2011, and the date inserted as the date by which Mr. Lee was to pay the judgment sum of £608,000 odd was inserted as 24th January 2011.  
11.	In the meantime, an attempt to levy execution by way of writ of fi fa had taken place by a High Court enforcement officer pursuant to a writ sealed on 13th December 2010.  That writ commanded the enforcement officer to seize in execution the goods, chattels and other property of the defendant, Mr. Derek Lee, and immediately after execution to pay the Claimant Futurist those sums and interest scheduled, amounting to some £608,000 odd.  The address for enforcement was stated to be Bank Chambers, 123 Prescot Street, Liverpool.  That was the address provided by Mr. Lee in evidence at the trial, although, in fact, it is the address of a company in which Mr. Lee is said to have a minority shareholding, Parkmore Group Limited.  When execution was attempted to be levied, Parkmore Group Limited objected that an attempt was being made to levy execution on its goods rather than the goods of Mr. Lee.  In due course, on 17th December the High Court enforcement officer served a return to the writ of fi fa, certifying that he had been unable to locate goods and chattels of Mr. Lee, that no payments had been made against the writ, and a formal return had now been lodged with the balance of the writ at that date being £613,211.05. 
12.	As a result of the attempt to levy execution at Bank Chambers, an application was made by Mr. Lee’s solicitors, Brabners Chaffe Street, on 17th December 2010, although the application notice itself is dated 18th December, the following day.  The application notice sought relief under five heads as follows:  (1) that there be a stay of execution on the judgment against Mr. Lee; (2) further or in the alternative, that the warrant of execution issued in respect of the judgment be suspended to prevent an abuse of process; (3) further or in the alternative, that the warrant of execution issued in respect of the judgment be amended to remove reference to the property of Parkmore Group Limited; (4) in any event, that there be a stay of execution of the warrant, at least pending the hearing of the application; and (5) that costs be provided for. 
13.	The Applicant indicated that it wished to have the application dealt with at a hearing, estimated to last 45 minutes, before a District Judge.  Reliance was placed on evidence set out in the box in the application notice, which was verified by a statement of truth signed by Mr. Philip Richard Steel, a solicitor of Brabners Chaffe Street, Mr. Lee’s solicitor, and dated 17th December 2010.  The evidence read as follows:
		The judgment of the court following trial, which would be made available to the court at the hearing of the application, was said to be highly critical of Futurist and its conduct of its Part 20 claim.  The court was said to have found in favour of Mr. Lee on all but one of the multiple applications made against him, and awarded him his costs against Futurist on all but that one issue, to be assessed at detailed assessment.  Mr. Lee was said to be in the process of progressing the assessment of his costs award and to confidently expect the costs payable to him by Futurist, when assessed, to exceed the judgment debt.  Pending assessment of the costs due to Mr. Lee from Futurist, Futurist had issued a warrant of execution naming the address of an unconnected third party, Parkmore Group Limited (PGL), on the warrant as what was said to be a means of mischief-making so as to seek to seize goods plainly belonging to PGL, and which had clearly been evidenced as such.  That was said to have necessitated the making of the instant application so as to prevent an abuse of the procedure.  Upon Futurist’s instructions, High Court enforcement officers were said to have attended PGL’s premises and sought to levy execution against PGL’s office equipment on 16th December 2010.  Those goods were said plainly not to be assets of Mr. Lee, and the solicitors for Futurist and the High Court enforcement officer were said to have been placed on notice of that;
and a relevant letter was attached. 	
14.	I am informed that it was at the time of issuing that application on behalf of Mr. Lee that his solicitors first found out about the application that had been made, in the event, to Deputy District Judge Berkson.  That application by Mr Lee was placed before District Judge Fitzgerald on the date it was issued, 17th December 2010, and he ordered that execution should be stayed pending the hearing of Mr. Lee’s on notice application of 17th December, which was listed for hearing on 22nd February 2011.  
15.	The reference to staying execution is ambiguous: it is not clear whether it should be reference to a stay of execution on the judgment of 8th November, or merely a stay of execution of the writ of fi fa, inaccurately described as “the said warrant”. I am satisfied, looking at the document with which the application notice was placed before the District Judge, and construing the order of District Judge Fitzgerald in its context and against the background of the application notice, and, in particular, paragraph 4 thereof, that what the District Judge was doing on 17th December was simply staying execution of the writ of fi fa and not granting a stay of execution of the judgment itself.  I think that Miss Anderson Q.C., for Mr. Lee, accepts that such was indeed the case.
16.	On 22nd December, Mr. Lee’s solicitors prepared a further application notice on his behalf which was sealed on 23rd December 2010.  That sought orders as follows:  (1) that the order made by Deputy District Judge Berkson on 15th December 2010 be set aside pursuant to CPR 23.10; (2) that any sums due from the company in relation to Mr. Lee’s costs following assessment, but including any interim award or awards, be set off against Mr. Lee’s liabilities and damages to the company, Futurist; (3) that there be a stay of execution on the judgment against Mr. Lee until further order; and (4) that costs be provided for.   
17.	Mr. Lee’s solicitors asked for that application to be dealt with at a hearing before a District Judge, with an estimated length of hearing of three hours.  That application was supported by a witness statement from Mr. Steel, the solicitor at Brabners Chaffe Street, dated 22nd December 2010.  That witness statement extends to some 23 pages and has exhibited to it no less than 19 exhibits, PRS1 through to PRS19.  
18.	A return date for that application was given of 29th March 2011 before a District Judge.  By this time, therefore, there were in existence orders of Deputy District Judge Berkson and District Judge Fitzgerald, and applications returnable in respect of Mr. Lee’s two applications on 22nd February and 29th March 2011.
19.	On 21st January 2011, Futurist’s solicitors prepared an application notice.  That sought (1) that the interim stay of execution granted by District Judge Fitzgerald be dismissed and the return hearing date of 22nd February 2011 be vacated; (2) that Mr. Lee’s application listed for a hearing on 29th March be dismissed; and (3) costs.  The application notice sought that the application should be dealt with at a hearing before a High Court judge, with an estimated length of three hours. 
20.	In support of that application there were two witness statements from Mr. Gerald Michael John Murphy, referred to, because he has a father with a similar name, as Mr. Murphy Jnr., dated 10th January 2011, with exhibit JM/MF1, and a second witness statement dated 17th January 2011, with exhibit JM/MF2. He is one of the two current directors of Futurist.  That application notice was issued on 24th January 2011, and, pursuant to directions informally given by me, was listed for hearing before me in Liverpool today.  It is that application which is before me today.    	
21.	On that application, Mr. John Benson Q.C. appears for Futurist. He has not previously had any involvement in this litigation.  That cannot be said of leading counsel appearing for Mr. Lee, Miss Lesley Anderson Q.C., who has been involved in this litigation since its inception in 2006, and who conducted the trial before me on behalf of Mr. and Mrs. Lee in October and November last year.  Both counsel have prepared helpful written 	skeleton arguments, in each case dated 30th January 2011.
22.	This morning there was handed to me a short witness statement from Mr. Lee.  I am told, although my copy is unsigned, that it has been signed with a statement of truth from Mr. Lee.  He gives his address as “care of” his solicitors.  When I pointed out that he should have given his residential address, as required by paragraph 18.1(2) of the Practice Direction pursuant to CPR Part 32, Miss Anderson handed to me a copy of a letter from Merseyside Police to Mr. and Mrs. Lee dated 8th November 2010 according to which Merseyside Police are said to be in receipt of information that there was a risk of a threat to the lives of both Mr. and Mrs. Lee.  I am told that they have been living at an address which is not that of Mr. and Mrs. Lee’s own home at Frankby on the Wirral.  I accept, in the light of that letter, that there was a good reason for Mr. Lee’s residential address not to be given, although the court would have wished to have had an update on events since 8th November 2010 in so far as they relate to the risk of a threat to the lives of Mr. and Mrs. Lee. 
23.	In the statement that was handed up, Mr. Lee explained that he was making the statement in connection with my order, and with reference to his assets and liabilities so far as relevant to the hearing presently listed for today.  He then proceeds to set out his assets and liabilities.  His assets of any note are said to be income of approximately £400 per month and disability living allowance, less approximately £45 per week by way of contribution to his disability vehicle.  He is also said to own 16,667 shares in Parkmore Group Limited.  He says he does not know what they are worth, but it is a minority holding in a company which made a loss of £187,000 approximately in the previous year.  He says that over the years he has held a number of shareholdings in different companies, but he does not believe that he presently owns any further shareholdings, although he could not be absolutely certain on the point.  He makes no reference to any real property, and I was told that he does not own any; that prior to 8th November he was living in a property on the Wirral owned by his wife, Mrs. Lee. 
24.	Mr. Lee’s liabilities are said to be £7,000 odd owed to Royal Bank of Scotland on a personal overdraft, some £11,000 owed to MBNA on a credit card, about £6,000 owed on a Barclays Visa credit card, and what is said to be a debt of approximately £110,000 to former business partners, friends and family, which has not been called in to date.  Those are said to be the extent of Mr. Lee’s assets and liabilities.  
25.	Also handed in to the court today was a Lever Arch file, comprising a draft bill of costs for Mr. and Mrs. Lee in respect of this litigation.  It is a lengthy document, extending to some 95 pages, plus various schedules, describing work undertaken.  The bottom line is that disbursements are said to amount to just over £219,000, profit costs to just over £340,000, VAT is said to amount to £106,820 odd, making a grand total of £666,448.65.
26.	In response to an observation from the Bench that Mr. Lee, on the basis of his witness statement, had apparently discharged all monies due and owing to his solicitors, Miss Anderson told me that that was not correct; that in fact Mr. Lee, together with his wife, had unpaid solicitors’ costs of some £180,000.  Miss Anderson undertook to lodge an amended statement of assets and liabilities.  She accepted that the existing statement was deficient in failing to identify the liability to Mr. Lee’s own solicitors in respect of their litigation costs.
27.	As I have indicated, formally the only application before me is that made by Futurist seeking a dismissal of the interim stay of execution granted by District Judge Fitzgerald, the vacation of the return date of that application on 22nd February, and the dismissal of Mr. Lee’s own application listed for hearing on 29th March.  However, at the outset of this hearing the court pointed out that, pursuant to the overriding objective of dealing with cases justly, as set out and explained in CPR 1.1, the court should endeavour to address and deal with all aspects of this case at this hearing.  The court was satisfied that, in doing so, the parties would be on an equal footing: they are both represented by experienced leading counsel.  That course would save expense, deal with the case in ways which were proportionate, ensure that it was dealt with expeditiously and fairly, and would result in the allotment to it of an appropriate share of the court’s resources, while taking into account the need to allot resources to other cases.  In particular, the court had in mind its case management duty under CPR 1.4 and, in particular, the fact that it is enjoined by CPR 1.4(2)(i) to deal with as many aspects of the case as it can on the same occasion.  I, therefore, received comprehensive oral submissions as supplementing the detailed written skeleton arguments. 
28.	So far as the order made by Deputy District Judge Berkson is concerned, in its initial form, although it was a court order, it was effectively meaningless because it debarred, or purported to debar, Mr. Lee from recovering his costs pursuant to my earlier order, and from proceeding with a detailed assessment thereof, and debarred him from challenging the detailed assessment of Futurist’s costs, if he did not pay the judgment debt of £608,000 odd by an indeterminate date.  In that sense, the order, as originally drawn, was meaningless.  As drawn on 10th January it gave him 14 days to do so, which has now passed. 
29.	I have to say that Deputy District Judge Berkson’s order is, in my judgment, one that should never have been made.  Indeed, in my judgment, it is one that should never have been applied for. I had already made an order awarding Mr. Lee certain costs, and awarding certain costs against him to Futurist which were to be the subject of a detailed assessment.  It does not seem to me that it is open to a court, in those circumstances, to make an order the effect of which is to deprive Mr. Lee of substantive rights unless he satisfies a judgment debt by a certain time, originally envisaged to be 7 days after the date of the court’s order. 
30.	When I enquired of Mr. Benson as to the nature of the jurisdiction which the Deputy District Judge was being invited to invoke, his response was that the power to make the order sought arose from the broad case management powers in the particular circumstances of the instant case.  He indicated that he could point to no specific provision of the Civil Procedure Rules that allowed an order to be made in the terms sought.  Mr. Benson was clearly doing the best he could, but the reality of the matter is there is no jurisdiction to make an order of the kind sought.  It was particularly inappropriate to invite a District Judge to make such an order without there being any hearing.  Under the terms of CPR 23.4 (1), the general rule is that a copy of any application notice must be served on each respondent; although an application may be made without serving a copy of the application notice if this is permitted by a rule or a practice direction, or a court order. 
31.	CPR 23.8 provides, so far as material, that the court may deal with an application without a hearing if “(c) the court does not consider that a hearing would be appropriate”.  Deputy District Judge Berkson appears to have considered that the court could deal with the application without the need for a hearing.  I must confess that is not a view at which I would have arrived.  But, in any event, where an application is made without notice, by CPR 23.9 (3) the order must contain a statement of the right to make an application to set aside or vary the order under CPR 23.10.  Again, the order was deficient in not containing that statement; and the order was in a form drafted by the Applicant, Futurist’s, solicitors. 
32.	I am entirely satisfied that Deputy District Judge Berkson’s order should be set aside.  I consider that it was made without jurisdiction, and that it was an inappropriate order to make; and, in any event, it should never have been made on a without notice hearing.  I will set aside that order.
33.	The next matter to consider is the setting aside of District Judge Fitzgerald’s order.  I am satisfied that all the District Judge was doing was to direct a stay of execution of the execution process by way of writ of fi fa that had been initiated by Futurist on 13th December.  That execution process has already been completed, and there is a nil return to the writ.  I am told that in any event Futurist’s solicitors have indicated that they are not going to seek to enforce in respect of goods belonging to anyone other than Mr. Lee, and, in particular, Parkmore Group Limited; and Mr. Benson has taken me to the form of the writ of fi fa, which makes it clear that the writ was directed simply to Mr. Lee, albeit the premises mentioned in it were those of Parkmore Group Limited.
34.	I am satisfied, in those circumstances, that no further stay of execution of the execution process is needed.  The substantive issue is whether there should be a stay of execution of the judgment I entered against Mr. Lee on 8th November 2010.  Mr. Lee had had an opportunity to apply for a stay of execution.  Before 6th December he did not avail himself of that opportunity.  When he came to apply for a stay of execution by the application notice of the 18th and 22nd December, he did not, as envisaged by my order, seek to support his application with a statement of assets and liabilities.  He has now sought to remedy that, although his statement is acknowledged by Miss Anderson to be incomplete in the respect I have indicated.  It is quite clear to me, on the evidence, that this is not a case where Mr. Lee needs time to pay, in the sense that he is looking to realise his assets.  Miss Anderson was quite frank in submitting that he simply cannot pay the amount of the judgment debt otherwise than from the award of costs that I made in his favour.
35.	I should indicate that I have a measure of healthy scepticism about Mr. Lee’s financial position, as disclosed by his recent witness statement. There are two reasons for that:  first, it is clear from the evidence I heard during the course of the trial that at certain times in the not too distant past Mr. Lee, or corporate entities associated with, and controlled by, him have undoubtedly received substantial sums of money, and no explanation was forthcoming as to their destination.  Secondly, as appears from the partial transcript of the discussions that took place after the formal hand-down of my judgment, which is exhibit GM/MF2 to Mr. Murphy’s second witness statement, when addressing the issue of a possible stay of execution of the money judgment against Mr. Lee, Miss Anderson is recorded as having said:  “The position Mr. Lee is in is that he believes that he can make a payment of £100,000 quite shortly, he is in some difficulty paying the rest.  I would invite the court to say that Mr. Lee should pay £100,000 within 14 days but then the balance within 26 days.  I accept I did not put before the court any formal application at this stage”; and the remainder of that was inaudible.  I have some difficulty in seeing how Mr. Lee could have given Miss Anderson instructions to say that he believes that he could make payment of £100,000 quite shortly if his financial position is as stated in his witness statement handed in today.    
36.	Be that as it may, it seems to me quite clear that there is no prospect of any monies being available to Mr. Lee imminently; and, in my judgment, the only proper basis for granting a stay of execution is the way in which the matter was put by Miss Anderson: that although Mr. Lee is under a liability in damages in a sum of just over £600,000, and on which interest is accruing at quite a high rate, nevertheless he anticipates being able to receive a substantial sum of money back from Futurist on the detailed assessment of the costs which he has been awarded from that entity.
37.	I accept, despite Mr. Murphy’s attempts to counter the assertion, and Mr. Benson’s submissions in that regard, that there must be real questions as to the present solvency, or otherwise, of Futurist.  Law of Property Act receivers have been appointed in respect of many of its properties; it is in long-term default in filing accounts; and I am satisfied, despite the assertions made on its behalf, that there is indeed no satisfactory explanation for its failure to file accounts and bring matters up to date. 
38.	But the real question is whether the issues-based costs orders that I made on 8th November justify the grant of a stay of execution of the judgment debt against Mr. Lee.  In that regard, I was taken by Miss Anderson to the decision of Mr. George Leggatt Q.C., sitting as a Deputy Judge of the Chancery Division, in the case of Fearns v. Anglo-Dutch Paint and Chemical Company Limited [2010] EWHC 2366 Ch.  In particular, she took me to passages at paragraphs 12 and 19 to 20, and 21 to 23.  Miss Anderson lays particular emphasis upon the test formulated by Lord Denning in Federal Commerce & Navigation Co Ltd v Molena Alpha Inc [1978] QB 927,975, namely, that equitable set off was available where a cross-claim was so closely connected with the claim, in this case Futurist’s claim, that it would be manifestly unjust to allow the Claimant, in this case Futurist, to enforce payment without taking into account the cross-claim.
39.	The issue of set-off of costs against damages was addressed by the Deputy Judge at paragraphs 68 through to 77 of his judgment. Having referred to certain earlier authorities, the Deputy Judge said that the present case involved a set-off between costs and damages, and the Deputy Judge said he could not see how that could be said to fall within the discretion conferred by section 51 of what is now the Senior Courts Act 1981, at any rate where the application was to set-off an order for costs against damages, rather than vice versa.
40.	The Deputy Judge, at paragraph 74, referred to the view expressed by Scott L.J. in Lockley v. National Blood Transfusion Service that, as it did not fall within the discretion as to costs conferred by section 51, the set-off of damages against damages, or of costs against damages, was not properly described as a discretionary matter at all, and depended upon whether the test for an equitable set-off was satisfied.  He also referred to Scott L.J’s expression of the opinion that while the set-off of costs against other costs incurred in the same action seemed so natural and equitable as not to need any special justification, it was less obvious that a set-off of costs against damages would always be justified.  The Deputy Judge went on to say that not only, however, were those statements obiter but, as pointed out in a later decision, the Court of Appeal in Lockley did not appear to have been referred to certain earlier authorities which made it clear that the court had a discretionary jurisdiction to order a set-off between different liabilities in respect of damages or costs for which judgment had been given in the same case, or in different cases, in accordance with its view of what was just in the particular circumstances.  The judge therefore concluded, at the end of paragraph 75, that whilst it seemed to him that it must be right to order a set-off if the principle of equitable set-off applied in accordance with the authorities, he considered that there was also a broader discretion to order a set-off if the court thought it just to do so.  In the instant case it did not, in fact, make any practical difference, in the judge’s view, which approach was adopted:  applying the test for equitable set off, or exercising the court’s discretion, the connection between the two sums was such that justice plainly required that they be set off.
41.	If one looked simply at the position of the party seeking to enforce judgment, and leaving aside the effect of the order on his creditors, the Deputy Judge could not see how it could be right for him to receive a payment of damages without giving credit against the payment for the liability in costs which he had incurred in pursuing the claim to recover those damages.  The justice of the matter seemed to the Deputy Judge to be equally clear if one considered the effect on his creditors, for whose benefit for litigation had, in large part, been maintained.  The Deputy Judge concluded, at the end of paragraph 76, that it would, in his view, be manifestly unjust that they should receive a share of the damages free of the liability to make a payment on account of the defendants’ costs which was part of the costs of obtaining the damages award.  For those reasons, he ordered that the sum due from Mr. Fearns by way of interim payment on account of the defendants’ costs should be set off against the defendants’ liability in damages to him.  
42.	Miss Anderson submitted that any right of equitable set-off that existed could not have merged on the making of my judgment because the right of equitable set-off only arose on the making of my order.  She submitted that Futurist, by bringing both a legitimate claim, and also illegitimate claims, should not be entitled to separate out the liability for the costs of doing so, otherwise it would be an encouragement to litigants to over-egg the pudding by bringing exaggerated claims in the knowledge that, if they did so, any award of costs made against them could not be set-off against an award of damages made on the legitimate part of the claim.  She emphasised that in insolvency there would be a clear set-off of Mr. Lee’s liability for damages against his entitlement to costs against the judgment creditors.  She invited the court to say that Futurist’s creditors should not have the benefit of the damages awarded to Futurist without giving credit for the costs order made against Futurist in favour of Mr. Lee.  She also made the point that Mr. Lee could certainly assert his right of set-off, or, indeed, a cross-claim, in respect of his costs as a defence to any statutory demand or bankruptcy petition that might be served upon him.
43.	I accept Miss Anderson’s submission that if one is simply looking at the narrow principle of equitable set-off and seeing whether it applies, then that would operate quite independently of the form of order made by the court on 8th November.  In so far as it was held by the Deputy Judge in the Fearns case that there is also a broader discretion to order a set-off if the court thinks it just to do so, it does seem to me, however, that Miss Anderson is effectively inviting the court to revisit the order that it made on 8th November.  
44.	The position is that my reserved judgment was circulated in draft form a week or so before it was formally handed down on 8th November.  At the end of paragraph 72, in section 9 (headed “Conclusion”), I invited counsel to seek to agree the terms of an appropriate Minute of Order, and indicated that any differences could be addressed after the judgment was formally handed down.  In the course of the hearing, which I think occupied a morning, various arguments were advanced to me.  My order provided, in terms, for a mutual set-off of the costs orders as between Mr. Lee and Futurist; but no application was made to set-off his liability for damages against the issues-based costs order made in his favour.  In so far as the court is, therefore, being invited to exercise its broader discretion to order a set-off if the court thinks it just to do so, it does seem to me that I am, effectively, being invited to exercise the jurisdiction conferred by CPR 3.1(7): that a power of the court to make an order includes a power to vary or revoke it.  That is a power to be exercised with circumspection, as the authorities considered at paragraph 3.1.9, at pages 58 onwards of the current (2010) edition of Civil Procedure make clear. 	
45.	Essentially, it is a power to be exercised generally where either the original order was made on the basis of erroneous information, whether accidentally or deliberately given, or where subsequent events, unforeseen at the time the order was made, have destroyed the basis on which it was made.  The power is one which requires an applicant to show either some material change of circumstances or that the judge who made the earlier order was misled in some way, whether innocently or otherwise, as to the correct factual position before him.    
46.	In so far, however, as there would, in accordance with general equitable principles be a right of set-off, then it does seem to me that I am not circumscribed by the way in which the matter was addressed on 8th November.  Essentially, what I have to ask myself is whether it would be manifestly unjust that Futurist should receive the £600,000 odd which I held it was entitled to for breach of Mr. Lee’s fiduciary duties in failing to account for the Unite commission free of the liability to make an issues-based payment of costs to Mr. Lee.  In that regard, Miss Anderson relies on the fact that the bulk of Mr. Lee’s legal expenditure in these proceedings, which is reflected in the issues-based costs order made in his favour, related to the wider corporate opportunity claim which was said to flow from Mr. Lee’s failure to disclose the existence of the Unite commission. On that issue Mr. Lee was successful. 
47.	I bear that fully in mind; but it, nevertheless, does not seem to me that there is a sufficiently close connection between the damages award and the issues-based costs order made in favour of Mr. Lee that I should allow an equitable set-off of one against the other.  It does not, in my judgment, seem to me to be unjust, still less manifestly unjust, that Futurist should be entitled to receive its award of £600,000 odd free of its liability to make a payment in respect of Mr. Lee’s costs of the issues on which he was successful.  
48.	The fact is that I dealt with the matter by making an issues-based costs order.  Mr. Lee was awarded his costs of the issues on which he succeeded, but he was required to pay the costs of the issue on which he lost, which was the issue of the Unite commission.  It does not seem to me that there would be any injustice at all in requiring Mr. Lee to pay any damages without being entitled to set-off against that his entitlement to costs awarded in respect of other issues in the litigation in respect of which he had been successful.  But, lest I should be wrong on that, it seems to me that there is another and complete answer, on the facts of the present case, to Mr. Lee’s claim for set-off.
49.	The draft bill of costs, belatedly produced this morning, shows a grand total of £666,000 odd.  As Mr. Benson pointed out this afternoon, that relates to the costs of both Mr. and Mrs. Lee; and it does not in any way seek to separate out the issues by reference to which my actual costs order was based.  Mr. Benson also makes the point that, as appears from paragraph 15 of Mr. Murphy’s first witness statement, at the time of the security for costs application in April 2009 the estimate of costs provided by Mr. and Mrs. Lee’s solicitors amounted to just under £300,000, of which almost £150,000 was the estimate for the future costs of a 10 day trial.  In the event, the trial lasted 12 days.  Miss Anderson is entitled to make the point that the issues did change considerably in the interval between April 2009 and trial, although in some respects certain of those issues were, in fact, narrowed during the course of that period.
50.	Bearing all those factors in mind, however, it does seem to me that there was a considerable increase in the costs allegedly incurred by Mr. and Mrs. Lee between April 2009 and the trial in 2010, and that indicates to me that there is likely to be some reduction in the costs allowed on detailed assessment, even before the separate position of Mrs. Lee is considered, and the costs are broken down between the differing issues on which Futurist and Mr. and Mrs. Lee, respectively, succeeded.  It therefore seems to me that there is some justification in approaching the draft bill of costs on the footing that nowhere near the £666,000 odd is likely to be recovered in fact by Mr. Lee on detailed assessment.  Against that, of course, will fall to be set-off the costs awarded in favour of Futurist on the Unite commission issue.  Those costs, although they may not amount to as much as the costs awarded to Mr. and Mrs. Lee, will, nevertheless, be not insubstantial.  When the balance is struck, it must be borne in mind that there is also £180,000 already in court in respect of the costs to be recovered by Mr. and Mrs. Lee.  Given that it does look, from the work that has been done so far, that Mr. and Mrs. Lee are intending to proceed with a detailed assessment of the costs awarded to them, it is unlikely that the court, in view of the figures, is going to allow that £180,000 to be withdrawn before the detailed assessment is concluded.   
51.	In those circumstances, I cannot see that the amount that Mr. Lee has a realistic prospect of recovering by way of costs will come anywhere near the amount of the judgment debt of £608,000 odd, on which interest is continuing to accrue at the rate of 8% per annum.  In those circumstances, even if I were to take the view that either there were a true equitable set-off, or the court should at this stage exercise the discretion recognised by Mr. Leggatt in the Fearns case of setting-off costs against damages, I simply cannot see that the amount of the set-off would come anywhere near equalling, still less over-topping, the amount of the judgment debt awarded against Mr. Lee.  In those circumstances, it does not seem to me to be appropriate to accede to Mr. Lee’s application for a stay of execution of the judgment debt awarded against him in my judgment.  I would, therefore, propose to dismiss the application for a stay of execution.  It seems to me that there is no point in retaining the hearings on either the 22nd February or 29th March, and I will therefore order that those hearings should be vacated.  That, I think, addresses all the issues arising on the substantive applications.
Mr.	BENSON:  Thank you, my Lord, I think it does.
Miss	ANDERSON:  I think it does, yes.  My Lord, I am instructed to make an application to appeal.  I do not know whether you want to deal with questions of costs before we deal with that.
JUDGE HODGE:  Yes, should we deal with that then?
Miss	ANDERSON:  Although on the face of it it looks as if it was a discretionary matter, (indecipherable) put the application on the basis of the existence of the equitable set off, which your Lordship has not found there may be a basis for an equitable set off.  Clearly this is something of some importance.  I put it less on the basis of the discretion Mr. Leggatt Q.C. recognised in Fearns, albeit I did rely on it, I am not suggesting I did not.  It is not right that this is just the straightforward exercise of a discretion, there is underlying it a point of principle as to when one should set up the question of costs against damages in cases such as this where I submit we are of the same facts, a similar situation as Fearns namely, that costs are in the same proceedings as have been taken by Futurist to recover the judgment debt.  It is on that basis that I ask for permission.
JUDGE HODGE:  The difficulty with that is that I have taken the view that even if I did have the appropriate jurisdictional basis that there was an equitable set-off, on the actual figures it comes nowhere near to reaching, still less over-topping, the judgment debt. Therefore there should not be a stay of execution, effectively on the facts of the case.
Miss	ANDERSON:  I take on board the point about the scepticism about the bill of costs by Mr. Lee, what I say your Lordship is then (indecipherable) is taking as read the position of Futurist’s costs, so in fact we know that not only have they not (indecipherable), they have put no evidence before you whatsoever about the question of costs when they ought to be able to do that given that if they are to apply (indecipherable) next week.
JUDGE HODGE:  But there is £180,000 already in court.
Miss	ANDERSON:  There is, but I do not read your Lordship’s judgment as suggesting that that is going to be sufficient.  In other words, one falls somewhere between two and your Lordship has, in effect, accepted the submission based upon absolutely nothing, not even by way of instructions, as to what Futurist’s position is in relation to its costs of the Unite.
JUDGE HODGE:  Based upon my own involvement in the case, I can form a view as to what the total costs are likely to be.  Essentially, the figures simply just do not stack up from Mr. Lee’s part: £666,000, some of which is Mrs. Lee.  You have £180,000 in court; and Mr. Lee is only entitled to part of his costs, and he has to pay part of Futurist’s costs.  On any view of the figures, it seems to me that he is going to get nowhere near approaching the amount of the judgment debt.  For those reasons, it seems to me that there is no real prospect of success on appeal.
Miss	ANDERSON:  My Lord, I am obliged.  I wonder if I may after the hearing ask your Lordship to fill out the relevant.
JUDGE HODGE:  I will deliver judgment- assuming I have been provided now with all the information I should have had - I will deliver judgment on the 2.15 application, and then I will go and complete the form N460, so I am afraid you will have to wait for that.  Presumably there are costs to deal with?
Miss	ANDERSON:  My Lord, there are. I anticipate we are both going to be asking for some of the costs. I do not know if he wants to go first.  Mine is relatively simple, I suppose.  I submit that some portion of the costs relate to the setting aside of Deputy District Judge Berkson’s order, a challenge that was made to District Judge Fitzgerald’s order.  I think I erroneously called him District Judge Fitzpatrick, I apologise for that.
JUDGE HODGE:  Roughly what percentage do you say Mr. Lee should bear?
Miss	ANDERSON:  One gets into issue based.  I am not inviting the court to make an issue based (indecipherable) in relation to this, no.  
JUDGE HODGE:  It is a percentage based order, it seems to me.
Miss	ANDERSON:  Your Honour, in my submission it is more than half because, if we can go through the chronology, District Judge Berkson’s order ought not to have been made and it was that that prompted the application on 22nd December, so those two are linked together.  I accept that the part on which I failed on 22nd December is the part which also sought set off, but the costs up until that point really had all been related to the question of District Judge Berkson’s order, it is only really today that the question of set off has become important because it is a legal argument, so one can separate that out and say:  “I have lost on that but that has really only had led to costs arising from today.”  The costs of, for example, the applications and the evidence all went to setting aside, or principally setting aside District Judge Berkson’s order.  They have also tried to challenge District Judge Fitzgerald’s order in circumstances where they have failed to do so.  The undertakings only give (indecipherable) to the challenge.  The challenge, in my submission, that we made, or we were quite right to apply, and we have not heard anything, for example, to justify why there was the attempt to take Parkmore’s is we were right to protect Parkmore’s property, and the only one could do that was by going through the order.
		(Indecipherable) invite your Lordship to take a broad brush approach, but in my submission it is probably something like 60/40 in our favour on that because the argument, whilst we have lost today, or the costs attached to the argument today are really the costs of our skeleton argument, and the costs today. No disrespect to my learned friend, my learned friend’s skeleton does not even grapple with the set off issues, it was me who grappled with the set off issue, not him.  
Mr.	BENSON:  Just dealing with the appeal matter, I do not know whether my learned friend was suggesting not only that there is a reasonable prospect of success but there is some other compelling reason why there should be an appeal.
JUDGE HODGE:  I did not understand her to be.  I have refused permission to appeal anyway.
Mr.	BENSON:  The reality is that the application that your Lordship has found was not appropriately made to District Judge Berkson has, in our respectful submission, little consequence in the overall scheme of these applications, and I say that for this reason.  First of all, the first application that was made by Mr. Lee after the application had been made by Futurist to District Judge Berkson was because it was perceived that Futurist’s solicitors had sought to issue a writ of execution against an undertaking not a party to the proceedings.  They say in terms, the first application, the real cause of their concern was wrongly, as it happens, that the writ was improperly made.
		District Judge Berkson’s, it was made ex parte, it was not discovered until the 17th.  When it was discovered, the response of Mr. Lee’s solicitors was not to make a freestanding application to set aside District Judge Berkson’s order but to include it in what has been suggested in the skeleton argument is the real issue in this matter, namely, that Mr. Lee’s costs following the assessment should be set off against his liability in damages to the company, and that there be a stay of execution on the judgment.  
		Futurist have had to deal, in our respectful submission, firstly with an application to District Judge Fitzgerald, which was itself inappropriately made because it was not supported by a statement of assets and liabilities.  It had to deal with a second order seeking a stay of judgment, again when there was no statement of assets and liabilities.  It had to deal with an application in which paragraph 2 has not succeeded, which has formed a very large component of the proceedings before your Lordship.  It was a matter, the application to set off against damages, which could and should have been dealt with at the appropriate time, namely, on 8th November when you handed down your judgment.  That aspect has been a wholly unnecessary feature of the parties’ attention and labours since 8th November.
		I venture to suggest, because there has been no additional material put before the court that was not available to be put before your Lordship on 8th November, that the court’s decision on 8th November would have been exactly the same as it has today.  Futurist have had to deal with that, they have had to deal with two inappropriately issued applications and, quite sensibly, in our respectful submission, decided that the appropriate way to deal with it was to bring this application before your Lordship and to tie it up with the other applications.  Mr. Murphy said in terms in one of his statements that the procedure adopted was this is paragraph 10 at A7:  “I have instructed the company’s solicitors to make the application in terms set out above to at the very least clarify the position”, that we were put in a most difficult situation as a creditor with these inappropriately made applications.  The only valid aspect of the matter was the application to set aside District Judge Berkson’s order, in respect of which the quantum of costs must be very small having regard to Mr. Lee’s response to it.
		It has in the scheme of things not been a matter of great issue in this hearing today.  Your Lordship identified at the outset that the position seemed to be indefensible, I made one or two comments and there we are.  In my respectful submission, to suggest that there is a percentage apportionment in the favour of Mr. Lee on these applications would, with respect, be perverse.  This is a case where, on the merits, Futurist’s applications have substantially succeeded with the exception of the lower court application before District Judge Berkson.  In the light of that we would suggest that the percentage of apportionment should be very, very heavily weighted in favour of Futurist.  
		I hasten to observe at the conclusion of these submissions, the court may feel that it is appropriate that Futurist are here to argue these matters today without having the benefit or the opportunity to prepare in the light of the statement and bill of costs which were provided to us at the twelfth hour.  To deal with the matter in that context is unsatisfactory, this application and our challenge successfully in the Lee applications, with the exception of the Berkson order, are matters that Mr. Lee, with respect, has brought upon himself and I ask for an order for costs which substantially reflects the fact that Futurist have succeeded and Mr. Lee has not.
Miss	ANDERSON:  Just two points, it is wholly inappropriate to airbrush the Deputy District Judge Berkson order as the last thing in my learned friend’s skeleton conceded the point and it was quite wrong to continue to challenge it right up until today.  We cannot airbrush out of the picture an order that should not have been made, was made on so many flawed bases, including the fact that your Lordship has said in the judgment that it ought not even to have been made at all, never mind the jurisdiction, it certainly should not have been made without a hearing.  We were perfectly justified in issuing the application on the 22nd, and that ought to be reflected.
		The second point is, again, my learned friend cannot dismiss the District Judge Fitzgerald order.  He, with respect, completely misunderstands the point.  It was not an application to challenge the name on the writ, it was to challenge the fact that the enforcement officer who turned up was taking Parkmore’s computer and equipment, that was the reason for going in front of District Judge Fitzgerald, it is nothing to do with the name on the writ.  The only reason the name on the writ became relevant was because of the question that your Lordship raised as to what the writ actually said.
JUDGE HODGE:  It was because the application of 18th December sought that the warrant of execution issue be amended to remove reference to property of Parkmore Group Limited and it does not contain any such reference.
Miss	ANDERSON:  It does not contain, no.  The real substance of this, forget the writ, the fact that the enforcement officer was there trying to take all Parkmore’s goods.  If my learned friend suggests that that was not a necessary application in the circumstances is wholly erroneous.  In my submission, I accept it is an unusual order, but that is because the thrust of the submission from my learned friend amounts to, the worse application that we make, or the behaviour that we make, because we conceded quickly and do not argue much about it today that somehow should not reflect in the costs order.  The fact is they did not have a leg to stand on in relation to the Berkson order, and that should be reflected in costs.  That is what I sought to do.
		Where the percentage lies between 60 and 40, I notice my learned friend has not suggested any alternative, maybe 60/40 is not right, but what is not right is that they should not pay the consequences of the orders that they make, and both the applications which they made and which ought not to have been made, and which your Lordship has upheld in our favour today, or should pay the consequences of them, which is the application on 22nd December.
R U L I N G
JUDGE HODGE QC:  I now have to deal with the costs of this matter.  I have dealt, in formal terms, with the application issued by Futurist, and dated 21st January 2011, but I have dealt with all matters arising from the orders of Deputy District Judge Berkson and District Judge Fitzgerald.
2.	The court’s discretion as to costs, and the circumstances to be taken into account when exercising that discretion, are set out in CPR 44.3.  The general rule, if the court decides to make an order about costs, is that the unsuccessful party will be ordered to pay the costs of the successful party, although the court may make a different order.  In deciding what order, if any, to make about costs the court must have regard to all the circumstances, including the conduct of the parties, and whether a party has succeeded on part of his case, even if he has not been wholly successful.
3.	I reject Miss Anderson’s submission that Mr. Lee has been more successful than Futurist.  As Mr. Benson points out, at paragraph 9 of Miss Anderson’s written skeleton she indicated that the real issue of substance was whether Futurist should be permitted to enforce the judgment when the amount of its liability to pay Mr. Lee’s costs has not yet been determined by detailed assessment.  On that issue, Mr. Lee has been unsuccessful.  
4.	It does seem to me that in substance the successful party here has been Futurist, but I do have to have regard to the fact that Futurist has not been entirely successful; in particular, it has failed to uphold the order of Deputy District Judge Berkson, which was made on its own initiative, and which would have had, if upheld, the substantial effect of depriving Mr. Lee of the benefit of the costs order that had been made in his favour, and of preventing him from effectively challenging the costs bill being put forward on the Unite Commission issue by Futurist. 
5.	The fact that the application was made to Deputy District Judge Berkson is a matter of conduct to which I can have regard.  I must also have regard to the fact that in part this application was initiated by the issue of a writ of fi fa, where the enforcement address was Bank Chambers, which, as a result of the earlier litigation, was known not to be a property of Mr. Lee himself.  That, again, is a matter of conduct. 
6.	But there is also force in Mr. Benson’s submission that the whole issue of set-off of damages against costs could, and perhaps should, have been raised at the formal hand-down of judgment on 8th November, thereby avoiding the need for it to be argued today.	
7.	I have had regard to those, and all other matters of conduct.  I bear in mind that the court does have a discretion in relation to costs.  I bear in mind that Mr. Lee has not been entirely unsuccessful, but it does seem to me that the greater part of the success has attended Futurist’s position on this application.  I accept that the order for costs should therefore be weighted in favour of Futurist, which has been the substantially successful party, although some allowance should be made for unacceptable aspects of its conduct in the two respects I have indicated.
8.	Bearing all those factors in mind, it seems to me that the appropriate order for costs here, having regard to the steer provided by CPR 44.3 (7) in favour of a proportionate costs order, is that Mr. Lee should pay two-thirds of Futurist’s costs.
JUDGE HODGE:  Am I being invited to make a summary assessment?
Mr.	BENSON:  May I turn my back?
JUDGE HODGE:  Yes.
Mr.	BENSON:  Yes, your Lordship is invited.  A schedule has been served, I think, (indecipherable) to consider it.
JUDGE HODGE:  No, because I have not received it.
Mr.	BENSON:  I am sorry.  I have had Mr. Lee’s costs statement but not Futurist’s.  
Miss	ANDERSON:  My Lord, I have a different view on the matter of principle I would like to put before your Lordship, which is that if both parties are, in any event, proceeding to detailed assessment in relation to the main bills, which they are, and having regard to the time and the fact that your Lordship has got to give another judgment, in fact it may properly be better left to detailed assessment.
JUDGE HODGE:  What do you say about that, Mr. Benson?
Mr.	BENSON:  I say this, my Lord, the detailed assessment process is complicated enough without it being added to by a number of discrete applications that the court has considered and dealt with and is now in the best position to decide, on a summary basis, the merits of the costs.
JUDGE HODGE:  Can I now have a look at the statement of costs?
Mr.	BENSON:  That is, in our submission, a powerful argument for summary assessment now, your Lordship having dealt with, effectively, four particular applications.  It is appropriate that the court should proceed to a summary assessment, in our respectful submission, where the matter can be dealt with in a summary way.  On principle, that is how we invite the court to proceed.
JUDGE HODGE:  Futurist is not registered for VAT then?
Mr.	BENSON:  It is, yes.
JUDGE HODGE:  So the VAT comes out.
Miss	ANDERSON:  Also, it is unclear why it would be being charged at 20%.  It should not be charged at 20% in any event, I wonder if it was pre January.  It is coming out.
JUDGE HODGE:  It depends when the bill was rendered and the tax point.
Mr.	BENSON:  It is coming out in any event.
JUDGE HODGE:  The VAT comes out in any event.  So you are inviting me to make a summary assessment in this sum.  Miss Anderson, I am against you on the point of principle.
Miss	ANDERSON:  I have submissions to make on the amount of the bill.  The first point to make is that the hourly rate is (indecipherable).  As I understand it, the current hourly rate is (indecipherable) for a partner.
JUDGE HODGE:  Miss Evans is right, £118.
Miss	ANDERSON:  But we say it did not need both.  That submission should permeate (indecipherable), in my submission, because when we go on to look at attendances on site, we have three points, or a number of points: firstly, it says “obtaining instructions re: application”, so that must be their application, but then we have “advising on law and facts”.  It is not clear what law has been advised upon.  If it was the law that led to the application before Deputy District Judge Berkson then it was plainly erroneous legal submissions.  It is unclear why you have to advise your client in relation to the law on that.  Advising on fact, that is a new one on me.  I thought it was the other way round, that you took instructions from your clients, not advised them.  Leaving aside that point, I am not sure what it is, genuinely not sure what it is.  If it is taking instructions in relation to statements that would appear to be covered by, it is not clear.  It must be documents.  In any event, I say again: why did it take two parties, these were not difficult statements, so it is either Miss Evans, probably (indecipherable), but it is certainly not both of them.
		Similarly in relation to the attendance on counsel, why on earth does it take both a partner and a trainee solicitor to attend on counsel, the same meeting in relation to that.  I say again it should not be both.  I also say that what was the attendance on counsel necessary?  It is not drafting instructions because you see that in perusal and preparation.  It does not appear that my learned friend had any involvement in the bit on counsel’s fees, fees for conference, skeleton argument hearing is blank, it is just wrapped up into a fee for today.  It looks very much as if my learned friend simply attended today.  We do not understand what attendance on counsel is.
		In any event, I do not challenge my learned friend’s fee, but what I do say is that by choosing to instruct different counsel rather than Mr. Bartley-Jones Q.C., who of course had involvement in this matter, there would be a large element of having to bring counsel up to speed with things that are not related to this application, namely, for example, I assume my learned friend has had to read into the judgment, and the like, things that would not have happened if the same counsel had been instructed.
		When we get to attendance on (indecipherable), there are letters there.  It is not clear to me at all what those letters are, but I do take this point, I do not understand how (indecipherable) distinction between a complex letter and a routine letter given that they are charged at the same rate.  I wonder if that is a mistake, another routine letter are intended to be charged at something rather less, and, similarly, the incoming letters.
		We then have 2.8 hours speaking to the court which we find difficult to accept.  One was in relation to listing the matter before your Lordship today and, as your Lordship observed, your Lordship gave directions informally in relation to that.  We cannot accept that there must have been 2.8 hours speaking about the order of District Judge Berkson, bearing in mind your Lordship read out the letter that was there.  So we say that that, at most, should be something like half an hour.
		I have made the point about perusal and preparation, we have wrapped up quite a significant sum of money, £4,600 comprising 21 hours of work said to be on perusal of applications made by the defendant, drafting the application, drafting the statements, drafting instructions to counsel and preparation of the bundle.  My Lord, your Lordship sees them; we cannot accept that is anything like 21 hours, it is more like 10 hours.  Again, in my submission, so far as a number of those things are concerned there does appear to be repetition between the partner and, forgive me, not repetition, they appear to be dealt with separately.  It is not clear who has done what, but, for example, the preparation of bundles and drafting written statements should be expected to be done by somebody more junior.
		I also take a point in relation to the attendance at the hearings, it is the same point:  why did it need two fee earners to attend in relation to.
JUDGE HODGE:  Yes, but as against that, the hearing has gone on for considerably longer than three hours.
Miss	ANDERSON:  The hearing has gone on longer, and your Lordship, I accept that, and your Lordship has the point about VAT.  In all the circumstances, my Lord, I (indecipherable) but what I do say is one should, in effect, reduce it all to one fee earner throughout which will significantly reduce it.  If your Lordship indicates what the ruling is on it I am sure we can work out the particular maths.
JUDGE HODGE:  Mr. Benson, is there anything you want to say in response to that?
Mr.	BENSON:  Not unreasonable in a case of this complexity, in my respectful submission, for a trainee to accompany a partner.  Secondly, advising on law and facts, that is advising on law and evidence it should be, I have taken some instructions.  The hourly rate of partner £310, did I hear your Lordship---
JUDGE HODGE:  £217 is the guideline rate.
Mr.	BENSON:  I notice from the bill of costs submitted this morning that rates of £300 are particular to a number of particular fee earners, but if that is the going rate then I do not say anything further about that.
		Attendance on counsel, that relates to a conference.  There is no specific item for a conference fee, but there is a global fee for counsel’s involvement, both attendance at conference, preparation of skeleton argument and attending at the hearing today, which my learned friend does not challenge.  The 1.4 hours for the attendance on counsel is, in my respectful submission, entirely reasonable.
		The advising on evidence, the point here is that Mr. Steel, to whom your Lordship made reference in the judgment, had prepared a very lengthy witness statement in this matter with a large number of exhibits, all of which had to be considered, and all of which had to be dealt with in one way or another.  In our respectful submission the advising on the law and the evidence, and the preparation of witness statements thereafter, took up a time which is set out is entirely reasonable given that there are four applications extending over a timescale of 15th December to today’s date and, in all, those are hours claimed do not represent an unreasonable level of activity given the various issues involved.  Nothing turns, in my respectful submission, on the use of the word “complex” to “routine”, the appropriate charge for those letters, we suggest, is entirely appropriate.  Can I assist any further?
JUDGE HODGE:  No, thank you.  
R U L I N G
JUDGE HODGE:  Mr. Benson invites me to undertake a summary assessment of the costs. I am satisfied that it is appropriate to undertake a summary assessment so as to avoid the further costs of detailed assessment.
2.	On a summary assessment the court takes very much a broad brush approach.  The base solicitor’s profit costs are claimed at £9,256.80.  I am satisfied, first, that the partner hourly rate charged at £310 is considerably in excess of the guideline rate of £217.  I am satisfied that there has been an unnecessary use of two fee earners in the matter, particularly in attending the hearing, but also elsewhere.  It does seem to me that certain work has been unnecessarily undertaken, and is unreasonable and disproportionate.  Although the supporting statement of Mr. Steel is lengthy, a lot of it has not contributed to the resolution of this application.
3.	Adopting a broad brush approach, it seems to me that I should take a base figure for solicitor’s profit costs of £6,000 and, therefore, awarding two-thirds of those costs the resulting figure is £4,000.  No objection is, rightly, taken to Mr. Benson’s brief fee, which includes all the preparatory work he undertook; two-thirds of that is £2,666.    
4.	It does seem to me that the two items of expenses were properly incurred and should be allowed in full, the court issue fee which has brought this matter to the court today, and also the transcription services in respect of the post judgment dialogue, which did inform the court’s decision.
5.	In those circumstances I will propose to allow that in full.  The resulting figure is, I think, £6,781.32, on which VAT is not chargeable.  I think that is correct, is it?
Miss	ANDERSON:  Yes.
JUDGE HODGE:  It may be chargeable on counsel’s fee but it is recoverable back.
Miss	ANDERSON:  It is recoverable back by Futurist.
JUDGE HODGE:  That is the point.  It is recoverable back.  I will summarily assess the costs at £6,781.32.
Miss	ANDERSON:  My Lord, I was considering the question of set off but I am not sure if it arises.
JUDGE HODGE:  It seems to me that this was a discrete matter arising subsequent to the other costs orders and it would be inappropriate to direct a set off in relation to it.  Are there any other matters?
Mr.	BENSON:  Sum is paid within 7 days.
JUDGE HODGE:  The normal rule is 14 days.  
Miss	ANDERSON:  We are very grateful to you for sitting late.  
JUDGE HODGE:  I will now take the other matter back so you can retire.  I will remain here, and then I will have to let you have the N460.
Miss	ANDERSON:  If it is more convenient to your Lordship, my instructing solicitor, is your Lordship sitting tomorrow because my instructing solicitor can come and pick it up tomorrow if that is more convenient to the court.
JUDGE HODGE:  It will not be convenient to him; I am in Manchester.
Miss	ANDERSON:  We can get the Manchester office to do it, if it is easier for your Lordship.
JUDGE HODGE:  Yes, I will complete it in Manchester tomorrow.
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