High Court brands claim of late budget filing “manifest nonsense”

High Court: indemnity costs ordered

A High Court judge yesterday sought to “reinforce the message that the Commercial Court will firmly discourage the taking of futile and time-wasting procedural points” as it appeared the message from last month’s Summit Navigation ruling “may not yet have been heard”.

In a strongly worded ruling, Mr Justice Males deprecated what he described as a “misguided piece of opportunism” in the claimant trying to argue that a costs budget had been filed late.

In Summit Navigation, Mr Justice Leggatt had warned that the Mitchell ruling is not to be used as a tactical weapon.

Rattan v UBS AG, London Branch [2014] EWHC 665 (Comm) concerns the mis-selling of investments and it had been agreed that costs management would apply on its transfer from the Chancery Division.

The claimant argued that the defendant provided its costs budget on 28 February 2014, only six clear days before the case management conference (CMC), and not seven as required – having served its own budget the day before. However, three weeks earlier, the claimant’s solicitors had written to the defendant’s to say it believed the parties were obliged to file budgets by 28 February.

Males J noted: “The unsophisticated reader might think that this was the clearest possible agreement that a costs budget exchanged on 28 February 2014 would be in time, but Mr Ohrenstein [for the claimant] submits that such a reader would have failed to grasp the true subtlety of this correspondence.”

The barrister submitted that the claimant’s solicitors had merely provided their interpretation of the rules, which was wrong. Further, he said, the defendant’s solicitors responded by saying that they would serve ‘by’ 28 February, which they failed to do.

Males J ruled: “In my judgment Mr Ohrenstein’s argument is manifest nonsense. It is clear that there was an agreement. Even if Mr Ohrenstein’s strained construction of the correspondence had been justified, the defendant’s solicitors’ understanding of the position was entirely reasonable. If relief from sanctions had been necessary, which in my judgment it was not, the case for such relief would have been overwhelming.”

He said he preferred to think that it was “a misguided piece of opportunism by the claimant or his lawyers”, rather than the 7 February letter setting “a cunning trap for the defendant to fall into”.

“However, the fact that such a suggestion could be made demonstrates that the claimant’s argument has not only increased the expense of this CMC but has also, in all probability, damaged the relationship of co-operation and trust which ought to exist between the parties’ legal representatives and which is necessary for the efficient conduct of litigation.

“The taking of such a point is all the more unfortunate in a case where the parties’ initial costs budgets (for a combined total in excess of £2m) are already disproportionate to the amount in dispute (the US dollar equivalent of about £1.3m), so that the parties ought to have been concentrating on ways in which the case could be conducted at more proportionate cost.”

He said that although a CMC would have been necessary in any event, “this argument appears to have taken a significant part of the parties’ energy in preparation for it”. As a result, he ordered that the claimant pay the defendant’s costs of this argument on the indemnity basis, which he assessed summarily at £4,500.

The judge indicated that at the CMC he had reduced the parties’ budgets to “more proportionate figures”, but given that it would still be expensive to fight having regard to the amount at stake, “it is in my view a case which cries out for mediation”.

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