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	England and Wales High Court (Commercial Court) Decisions
You are here: BAILII >> Databases >> England and Wales High Court (Commercial Court) Decisions >> Kersten & Ors v Purvis [2018] EWHC 4002 (Comm) (28 August 2018) URL: http://www.bailii.org/ew/cases/EWHC/Comm/2018/4002.html Cite as: [2018] EWHC 4002 (Comm)

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IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS
LONDON CIRCUIT COMMERCIAL COURT

		The Rolls Building, Fetter Lane, London
		28 August 2018

WARNING: reporting restrictions may apply to the contents transcribed in this document, particularly if the case concerned a sexual offence or involved a child. Reporting restrictions prohibit the publication of the applicable information to the public or any section of the public, in writing, in a broadcast or by means of the internet, including social media. Anyone who receives a copy of this transcript is responsible in law for making sure that applicable restrictions are not breached. A person who breaches a reporting restriction is liable to a fine and/or imprisonment. For guidance on whether reporting restrictions apply, and to what information, ask at the court office or take legal advice."

"This Transcript is Crown Copyright.  It may not be reproduced in whole or in part other than in accordance with relevant licence or with the express consent of the Authority.  All rights are reserved."

His Honour Judge Worster:

1. This matter is listed today for the handing down of judgment and directions. I heard the Defendant's application to set aside judgment in default argument on 4 July and reserved judgment after a full day of argument. A draft judgment has been circulated to the parties in the usual way. The argument ranged far and wide over a number of issues. The outcome is that judgment is set aside. An issue has arisen this morning as to the extent to which I should hear further argument as to the route by which judgment is set aside.
2. One of the arguments raised by the Defendant on 4 July was that because the Claimant had made a request for judgment under 12.4(1) in a mixed claim, the judgment should be set aside as of right. Two authorities were relied upon in particular. The first was Intense Investments Limited v Development Ventures Limited [2005] EWHC 1726 (TCC), a decision of His Honour Judge Coulson QC as he then was, and the second was Media CAT v A-H [2010] EWPCC 017, a decision of His Honour Judge Birss QC as he then was.
3. In the draft judgment I relied on both those authorities, for whilst, strictly, they do not bind me, they are decisions of two highly respected judges which, certainly in the case of Intense, were on the point. My concern about Intense was that there was an issue as to the form of the request for judgment used in that case. That went to the question of whether the facts of Intense could sensibly be distinguished from the facts of this case. During the course of argument, I asked counsel whether they could find out any more about the point. Neither of them could, and nor have I been able to find out any more during the course of preparing the draft judgment.
4. Two points arose which I identify at paragraphs 65 and 66 of the draft judgment. The first related to the way the relevant Practice Form was drafted and the second was the treatment of Intense in the commentary to the rule in the White Book at pages 519 to 520. The terms of the Practice Form suggested that the request in Intense was simply for a money judgment and that the case was on point. But the way in which the notes in the White Book at 12.4.7 were drafted threw some doubt on the conclusions I drew from the way the practice form is drafted. The view I came to in the draft judgment at paragraph 66, without having heard counsel on those points, was that I seriously doubted whether the commentary in the White Book was correct, and I invited further submissions from counsel on that point prior to handing down.
5. I had written submissions from both Mr Friedman and Mr Parker. Mr Parker's submissions were the more extensive and he sought to bring in a number of further arguments. The aim is to cast doubt on what I had decided. In particular whether submitting the practice form leads to the irrevocable abandonment of the other claims, and issues of cause of action estoppel. All of this, he submits, give cause to question the correctness of Intense. He submits that it is open to me to apply the words of Rule 12.4 on the basis that this is not a Part 13.2 application, that the requirements of 13.2 were met and I should consider the matter as a Part 13.3 application..
6. In making his submissions about Intense, Mr Parker refers once again to the case of Robins v Kordowski [2011] EWHC 981 (QB). The point at the forefront of that case was the consequence of the use of a request for judgment, and whether it led to the irrevocable abandonment of other claims. But the question in Robins was different to the question in Intense. It was not whether a default judgment obtained as a consequence of a request in a mixed claim should be set aside. It was - are you prevented from bringing any further claims because you have abandoned all but your money claims by making that request.
7. It may be that I should have dealt with the distinction between Robins and Intense in my draft judgment, so I will revise it to reflect the point I have just made. But whilst I recognise the logic of the points that Mr Parker makes, the draft judgment is couched in terms which identify my reasons, subject to hearing further submissions in relation to the points that I identified at paragraphs 65 and 66. What I was not doing in the draft judgment was inviting the parties to reopen the question of whether or not I should follow Intense absent this distinction, less that I should be seeking to accept that it was wrongly decided.
8. As I indicated in the course of Mr Parker's submission, no judge likes giving a judgment in circumstances where all the arguments have not been fully bottomed out. But the parties had a full opportunity to argue the matter on 4 July, and I prepared a detailed draft judgment dealing with a wide range of issues. I gave the parties an opportunity to make further submissions limited to the issues I identified in the draft judgment. It was not an opportunity to go further.
9. Finality is an important consideration. If there are points which need to be explored in relation to Intense and if there are inconsistencies between that decision, the rules and the decision in Robins, it may be that another court on another occasion may address them. But the extent to which Mr Parker now seeks to explore those issues goes well beyond the scope of the further submissions I invited. As Mr Friedman puts it, it is an attempt to have a second bite at the cherry. It goes beyond what I should properly allow the Claimant in this case.
10. The relevance of the route by which judgment is set aside is costs. It does not affect the principal order that I will make. I intend to deal with costs on the basis of the reasoning and result set out in the draft judgment.

[Note: the amendment to the draft judgment to reflect the case of Robins appears in the first half of paragraph [68] of the judgment as handed down].

(proceedings continue)

11. I am asked to deal with costs. Firstly the principle. This was an application which had a number of elements. There were two formal applications; the Defendant's application to set aside under Part13.2 and 13.3 and the Claimant's cross application for a Validation Order under Part 6.15(2). Mr Parker has submitted that I ought to make an order in favour of the Claimant on the cross application in any event because whilst it was not determinative, I would have plainly made such an order.
12. I take the view that whilst there are two applications here, the issues are plainly linked and that I should deal with the question of the costs of all these matters together, just as I dealt with the argument in relation to them.
13. The starting point for an order for costs, or the general rule as it is put in the CPR is that that unsuccessful party will be ordered to pay the costs of the successful party, but the Court may make a different order. CPR Part 44.2(4) provides that:

"In deciding what order, if any, to make about the costs the Court will have regard to all the circumstances including (a) the conduct of all the parties, (b) whether a party has succeeded on part of its case even if that party had not been wholly successful."

"Conduct includes, conduct before, as well as during, the proceedings ... whether it was reasonable for a party to raise, pursue or contest a particular allegation or issue and the manner in which a party has pursued or defended its case or a particular allegation or issue."

14. This was an interlocutory application. It is accepted that having set aside judgment, both on the basis that the wrong procedure was used and, as I would have done had I not set aside on that basis, on the facts under 13.3, that the successful party in terms of achieving the order that he sought is the Defendant. So that should be my starting point.
15. I am not going to rehearse all the evidence and the conclusions that I have reached in my judgment. The parties have had a copy of the draft and have been able to tailor their submissions accordingly. But to order that the Defendant should have his costs in all the circumstances of this case is nether just nor equitable. He has conducted himself in a way that at least in part, was causative of the failure to acknowledge service and led to the situation in which the parties found themselves. He also failed to give the evidence in a way which would have assisted the Court and perhaps the other party in reaching a proper conclusion.
16. Mr Friedman was concerned that I would take my approach to costs from paragraph 77 of the judgment, namely that had I been setting aside under part 13.3, I would have made it a condition that his client pay the Claimant's costs on an indemnity basis immediately. As Mr Friedman says, that is an order that the Court may make to signify its disapproval or to compensate somebody in the position of the Claimant, and to ensure that its order was proportionate. I am not approaching the matter on that basis.
17. What I am looking at here is the question of the costs of the applications, rather than imposing some form of condition. I have to approach the matter on the basis of the test in the CPR at 44.2, rather than look at the matter in the way I did at paragraph 77 of the draft.
18. I come back to the central point that I made - that I regard the Defendant's conduct as making it simply wrong to make an order that he should have his costs today.
19. I am also conscious that some of the issues that have been raised in the course of the application before me, particularly the issue as to valid service, have a wider consequence for the claim. For if there were no valid service there would be a defence, or a very arguable defence, to a breach of warranty claim. This was a case where the stakes were high, if you like, because of the contractual limitation provisions. If this matter proceeds to trial no doubt there will be further investigation of the parties' actions in relation to these matters involving disclosure and cross-examination. I should look at the question of costs at this stage acknowledging that this is but one step in the claim.
20. Mr Parker argues that the conduct of the Defendant is so egregious that it justifies not simply a disallowance of his costs - not simply an order reducing or in this case, making no provision for the Defendant's costs - but an order that the Claimant has its costs of this application. He puts the matter very persuasively both orally and in writing. He reminded me of certain of the findings I made, and drew my attention to the consequences of those findings. His point is that when you step back and look at the cause of the situation generally, it was caused by the Defendant's conduct. That point has real force in it. I refer in the judgment to the games that the Defendant played, and one can see that those matters had a causal relationship with the default in this case.
21. I am not convinced that I should go so far as to make an order that the Claimant should have all his costs, for undeniably – and this just comes back to the starting point - the Defendant has succeeded in obtaining the relief that he sought.
22. In relation to the application under 13.3 that was largely because, at the end of it all, I regarded it as disproportionate to shut out somebody from a substantial claim alleging fraud in circumstances such as this. It was conceded there was a good arguable case and I found that the application was made "promptly enough" – which was the phrase I used. If that had been the only basis upon which the application had succeeded then it may well be that I would have made an order for costs to compensate the Claimant. As I indicate at paragraph 77 of the judgment, there would be good reasons for doing so - essentially the ones that Mr Parker has identified. But that is not the approach that I should adopt, for the decisive element of this application is the application under 13.2.
23. The application under Part 13.2 as it was initially formulated failed. I decided that the claim form had been validly served and if it had not have been, then I would make the order under Part 6.15. The point about the use of the request to get the default judgment was only raised in mid-May, so five or six weeks before the hearing. That was the point which succeeded. A significant amount of the costs had been incurred by that time - it is hard to avoid that point.
24. Should I make an order that the party who failed to successfully defend the application should nonetheless have all his costs? I see the point that the Defendant's conduct affects his entitlement to an order in his favour, but as I say, I am not convinced that it justifies an order which goes all the way round and ends up with an order for costs in favour of the losing party. In all the circumstances, whilst as I say the Defendant should not have his costs, I accept that the Claimant should have some of his costs. That is to reflect the fact that he won on some parts of the application, and lost on others. Given the connection that the issues of valid service have with the proceedings generally, I take the view that those should be in the case. So the Claimants are to have 50% of their costs of the applications.

(proceedings continue)

25. I am asked to consider permission to appeal on the limited points that Mr Parker has just outlined. It is an interesting area and I acknowledge the potential inconsistencies between the authorities and, as Mr Parker points out, the fact that the notes in the White Book are perhaps not accurate. It seems to me that if there is an issue as to the proper construction of the rules and the procedure to be used, that it is not really for me to grant permission, but it may be for the Court of Appeal. So, I refuse permission to appeal. Of course, that can be reviewed.

This Transcript has been approved by the Judge. The Transcription Agency hereby certifies that the above is an accurate and complete recording of the proceedings or part thereof.

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