Ashley- Carter & Anor v Hofmann & Mountford Ltd & Ors

In exercising its discretion as to costs, the court must consider all the circumstances, including the parties’ conduct before and during proceedings, the reasonableness of pursuing issues, the manner in which the case was conducted, and settlement offers. Where defendants knowingly pursue wholly unmeritorious claims and defences in an unreasonable or reprehensible manner, the court may order them jointly and severally to pay the successful claimant’s costs of the entire action on an indemnity basis. The same order may be appropriate against them as non-parties where they controlled and funded another defendant’s litigation. Costs may be summarily assessed, and interest may be awarded on costs already paid from the dates of the relevant invoices.

The claimants succeeded at trial in claims arising from the sale and subsequent operation of a motor business. Judgment had been entered against the second and third defendants for conversion of the first claimant’s Bentley engine, while claims also remained against the first defendant company. The defendants relied principally on an alleged settlement agreement, which the court found had never been concluded, and maintained other defences and cross-claims that lacked substance.

The present hearing concerned the claimants’ costs. The issues were whether the second and third defendants should pay the costs of the whole action, whether costs should be awarded on an indemnity basis, whether they should be jointly and severally liable, and whether costs should be summarily assessed with interest.

1. Costs discretion. Under Civil Procedure Rules 1998, r 44.3, the court had to consider all the circumstances, including conduct before and during proceedings, whether it was reasonable to raise or pursue particular issues, the manner in which the case was conducted, and settlement offers. The second and third defendants had controlled the litigation, jointly defended the company’s claims, pursued a hopeless settlement defence, advanced unmeritorious cross-claims, rejected reasonable offers, and conducted the proceedings unreasonably.

2. Extent and basis of liability. The second and third defendants were jointly and severally liable for the claimants’ costs of the entire action. Their involvement was not confined to the personal engine claim. They controlled and funded the company’s defence, used a common legal team, and pursued defences based on the same central issues. The exceptional and reprehensible nature of their conduct justified costs on the indemnity basis.

3. Alternative non-party basis. The court held that, if the second and third defendants had been treated as non-parties in relation to the claims against the company, the same order would have been justified under section 51(3) of the Supreme Court Act and CPR 48.2, because they had controlled and financed the company’s litigation.

4. Assessment and interest. The costs were to be summarily assessed under CPR 44.7. Interest was permissible under CPR 44.3 and was awarded on costs already paid by the claimants from the dates on which their solicitors invoiced them. Judgment was also entered against the second and third defendants jointly and severally for £10,000 in the engine claim, with interest at 5% from the date of the customer’s payment.

The judgment itself records that the claim form was issued in the Chancery Division on 30 July 2008 and transferred to the Queen’s Bench Division on 17 October 2008. The present decision was a first-instance costs judgment following the trial and an earlier judgment on the conversion claim.