Iain Laurie Shearer & Ors v Spring Capital Ltd & Ors (2013)
Where claimants had been granted an interim injunction and the defendant's applications for strike out and summary judgment had been dismissed, it was appropriate to depart from the general approach to costs to reflect the nature, degree and circumstances of the claimants' success.
The court dealt with matters arising out of its main judgment ( EWHC 3148 (Ch)), where it granted the claimants (C) an interim injunction and dismissed the applications of the first defendant (S) for strike out and summary judgment.
The third claimant (C3) operated a money lending business with a number of retail shops, and most of C3's shares were owned by the first and second claimants (C1 and C2). A significant issue in the main action related to an alleged tender by C1 and C2 of sums owed to S. The issues to be determined were (i) the appropriate fortification of the security provided by C in relation to its cross-undertaking in damages; (ii) whether costs in the case was the appropriate order; (iii) whether permission to appeal should be granted.
(1) Sufficient security was provided by C's proposal for fortification, namely that existing charges over C1 and C2's shares in C3 would stand charged as security. C1 had provided valuations of the shares from independent professionals, and the shares were likely to provide ample security for any realistic damages which might be ordered on a cross-undertaking (see paras 7, 10, 12, 16 of judgment). (2) The general approach to costs should be the starting point in the instant case but it should not, especially in the light of CPR r.44.2, operate as a straightjacket. There were particular reasons for some departure to reflect the nature, degree and circumstances of C's success: (a) there was likely to be very significant overlap between the evidence to be given at trial and that provided for the instant application. A significant amount of the work for the trial had been done in respect of the parties' evidence, which could largely stand as those witnesses' written evidence in chief; (b) much of the legal analysis at trial was likely to follow some of the arguments canvassed, so preparation of the argument for the instant hearing would not have been wasteful; (c) the application helped all parties refine and focus their positions and arguments for trial; (d) C defeated the strike out and summary judgment application comparatively late in the day; (e) argument on the strike out/summary judgment application covered substantially the same ground as much of the argument on the application for an interim injunction. It was not uncommon for the costs of a successful interim injunction application to be a claimant's costs in the case rather than an unqualified order in favour of a claimant; (f) although C were successful, they were required to provide fortification of the cross-undertaking; (g) if C lost at trial on the issue of tender, it would not be right to require them to pay S's costs of arguing at the interim stage about whether there should have been a trial of that issue at all, when S was unjustifiably objecting to that. On the other hand, if C were to succeed on the issue of tender, there would not be any undue prejudice in C being somewhat delayed in receiving their costs. An order for costs in the case would insufficiently reflect C's success but an order entirely in their favour would not adequately reflect the nature and circumstances of their success. The court would order that the costs of both applications would be "[C's] costs in the issue of the validity of the tender", Berezovsky v Abramovich  EWCA Civ 153,  1 W.L.R. 2290 considered (paras 21-31). (3) There was no real possibility of the Court of Appeal stating that the case was one in which the court could or should be certain that the points were without merit before a trial, or of it holding that the allegation of validity of tender was bound to fail in the circumstances, regardless of any further consideration and/or factual investigation at trial. An appeal would stand no real prospect of success (paras 45-48).
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04 Nov 2013
Daniel Alexander QC
LTL 8/11/2013 :  EWHC 3373 (Ch)
James Aldridge QC