In Signia Wealth Limited v Marlborough Trust Company Limited & Dauriac-Stoebe EWHC 2141 (Ch) Chief Master Marsh directed that the matter be cost managed, notwithstanding its £13 Million pound value.
The claim concerns the actions taken by the Claimant company, regarding its former Chief Executive Officer’s departure.
The Claimant sought a number of declarations concerning the ending of the Second Defendant's employment and the effect of that termination upon her entitlement to be paid for shares held in the company. The Second Defendant brought an additional claim seeking further declaratory relief and financial remedies arising from the Second Defendant's departure from the Claimant.
The claim was originally said to be valued at approximately £20m, which was later adjusted to £13m.
The Court had to determine whether the claim should be taken out of the costs management regime and whether there should be a split trial. This blog deals with the first issue.
• Neither the claim form nor the additional claim had specified a monetary value in excess of £10 million and so did not automatically fall outside of the regime.
• However, the amount in dispute was over £10m.
• The Court had been told that the parties agreed the claim should be taken out of the costs management regime. The court fixed a case management conference rather than a costs case management conference accordingly.
• However, the Defendants’ skeleton argument raised the issue of costs management and so the CMC was relisted as a CCMC.
• There had been 12 months of litigation before the first CCMC was listed, so substantial costs had already been incurred.
• Although budgeting was taking place at a late stage there were substantial future costs to be incurred.
• If there is no value stated on a Claim Form, irrespective of the actual value of the claim, cost management applies automatically.
• The test in CPR 3.15(2) was therefore relevant: the Court should make a costs management order unless it is satisfied that the litigation can be conducted justly and at proportionate cost in accordance with the overriding objective without such an order being made.
• The parties’ combined costs budgets totalled £4.14m. The value of the claim was in the value of £13m. The aggregate costs meant that the case represented an expensive piece of litigation.
• It would be inappropriate to make a costs management order if predicted costs were de minimus. However, in this case, future costs were around £2.4m excluding the costs of experts attending trial.
• The difference in the parties’ budgets should be taken into account.
• In the circumstances, the Court could not be satisfied that the case could be conducted at proportionate cost without costs management.
Whilst this decision can be seen to be widening the costs management regime, the issue may not have arisen if the Claim Form had specified the value of the claim.
It is not the first time that a Court has made a costs management order in a case which, on its face, fell outside of the budgeting regime. In CIP Properties (AIPT) Ltd v Galliford Try Infrastructure Ltd & Ors  EWHC 3546 (TCC) the High Court considered that the facts of that case justified a costs management order even though the claim was pleaded at £18m.
It is perhaps not surprising that the Second Defendant – an individual – sought for the case to be costs managed. When faced with potentially open-ended and ruinous litigation costs, parties can take great comfort from a costs management order. It allows them to identify their likely maximum exposure and to plan their litigation strategy accordingly.
By Phil Bradbury - Head of Costs Management and Senior Associate.