Indemnity Costs for Disproportionate Application to Strike Out Witness Evidence (Curtiss and others v Zurich Insurance plc)
Posted originally on Lexis Nexis on 27 June 2022 - to view click HERE
This analysis was first published on LexisNexis® on 27 June 2022 and can be found here (subscription required).
Dispute Resolution analysis: Judge Keyser QC (sitting as a High Court judge) has given a warning to practitioners who seek to make inappropriate applications to strike out witness evidence prepared for a trial, pursuant to CPR PD 57AC, on the basis of non-compliance with that Practice Direction applicable to trial witness statements in the Business and Property Courts. While this application had partial success (in that parts of the claimants’ witness statements were struck out), the nature of the application, which was judged to be ‘disproportionate’ and ‘oppressive’, including given the scale of the costs which were generated, meant that the applicant was ordered to pay 75% of the respondents’ costs on an indemnity basis. The decision acts as a clear guide to the parameters of the sanctions regime for non-compliance with the Practice Direction on witness statements and a reminder of the consequences of failure to adhere to the principles set out in recent case law. Written by James Bradford, barrister at 39 Essex Chambers.
Curtiss and others v Zurich Insurance plc [2022] EWHC 1514
What are the practical implications of this case?
This decision gives helpful guidance eon when it would be appropriate to seek an order to strike out a trial witness statement for non-compliance with CPR PD 57AC and the approach to take when doing so.
As context for the decision, CPR PD 57AC, para 5 emphasises that the court has its full powers of case management and full range of sanctions but that it may (upon application or of its own motion) strike out part or all of a trial witness statement. Recent case law has given some guidance on when to make an application to strike out: for instance, Mrs Justice O’Farrell in Mansion Place Ltd v Fox Industrial Services Ltd [2021] EWHC 2747 (TCC) at para [49] noted that while an application to the court could be made it should not cause ‘unnecessary costs’ and that the ‘court does not wish to encourage the parties to engage in satellite litigation that is disproportionate to the size and complexity of the dispute’.
In the present case, this approach was similarly in evidence with Judge Keyser QC endorsing the comments of Mellor J at para [98] of Lifestyle Equities CV v Royal County of Berkshire Polo Club Ltd [2022] EWHC 1244 (Ch) that ‘an application is warranted only where there is a substantial breach of PD57 AC’ and that it should be capable of being dealt with on the papers. The total costs in relation to this application exceeded £275,000 and was deemed ‘fundamentally inappropriate’. At para [19], Judge Keyser QC emphasised that ‘applications for the imposition of sanctions for breach of the Practice Direction should not be used as a weapon for the purpose of battering the opposition’ and that ‘when assessing how to respond to a failure to comply with the Practice Direction, a party must use common sense and have regard to proportionality’.
What was the background?
The decision concerned the costs assessment of an application to strike out witness evidence pursuant to CPR PD 57AC.
The substantive proceedings were brought by 150 claimants who were owners of flats in Swansea and who brought claims against the first defendant for damages for deceit. These were in essence on the basis that they had been ‘induced to purchase their flats by fraudulent misrepresentations that were contained in cover notes issued by Zurich’ (per Judge Keyser QC at para [2]). The claimants had served 49 witness statements. The first defendant wrote to the claimants on 8 February 2022 indicating that it would be writing to them about compliance with PD 57AC, which it did two months later alleging ‘numerous breaches’ and attached a 109-page schedule which gave particulars of non-compliance. Though the claimants responded with a letter described by the judge as ‘lengthy’, the first defendant issued its application on 13 May 2022, seeking an order striking out the entirety of four of the trial witness statements and parts of a further 29 of their witness statements.
The judge decided the application by striking out parts of some witness statements as well as striking out parts of another witness statement. The judge directed that written submissions be made dealing with costs, this decision concerned the principle of payment of costs (not their assessment, see para [10]).
What did the court decide?
The applicant was ordered to pay 75% of the respondents’ costs on an indemnity basis. The discount in the payment was said to reflect the ‘modest gains that were achieved by the determination of the points’ pursued at the hearing and the fact that some of the witness statements did not accord with the requirements set by the Practice Direction (at para [20]).
An indemnity basis was ordered as the application could not be regarded as ‘falling within the ordinary and reasonable conduct of litigation’ and this order reflected the ‘oppressive and disproportionate’ nature of the application (at para [21]).
The judge made this order notwithstanding that there had been some merit in the application although he noted that ‘If one makes hundreds of points, there are almost bound to be some good ones. That does not show that the application was justified’ (at para [15]). The judge criticised the conduct of the applicant who prepared a schedule over two months which was assessed to be ‘a waste of time and effort’ and which contained some criticisms of a witness statement which were ‘petty or pointless’ (at para [16]). The judge also commented with ‘dismay’ that the overall costs of the application exceeded £275,000 noting that even though this was ‘substantial litigation’, there was ‘no rational world in which this sort of expenditure can have been justified on an application such as this’ (at para [10]).
Case details:
- Court: Queen’s Bench Division, Technology and Construction Court (Cardiff District Registry)
- Judge: Judge Keyser QC (sitting as a High Court judge)
- Date of judgment: 17 June 2022
James Bradford is a barrister at 39 Essex Chambers. If you have any questions about membership of our Case Analysis Expert Panels, please contact caseanalysiscommissioning@lexisnexis.co.uk
