RESPONDENTS ALLOWED TO COMMENT AT HEARING : NEVERTHELESS SURVIVES A COSTS ORDER ON APPEAL

In  Bhogal & Anor v Knight [2018] EWHC 2952 (Ch) the appellants failed in their appeal following an order that the respondent pay the costs of their initial application. The procedure described in the judgment is instructive.  It was yet another case in which a party puts in no evidence and manages to mix up making submissions and giving evidence at the hearing of the application.  In this case the court found that there was irregularity in admitting oral evidence in this way, however it was not material.  The respondent survived, despite putting in no evidence and being allowed to give statements at the hearing.

“If the comments made by Mr Knight, which the Judge took into account, had been unsupported by the documentary evidence, then I would have been more concerned by Ms Jones’ submissions. However, in my view those comments were consistent with the documentary evidence, which was clearly considered and taken into account by the Judge. In the circumstances, if there was any irregularity in terms of the admission of oral evidence, then I do not think it was a serious one that would satisfy the requirements of CPR 52.21(3) and justify an interference with a decision about costs.”

THE CASE

The applicants sought an order that money they were owed be admitted in an Individual Voluntary arrangement, stating that the money had been loaned to the individual. The defendant was the Supervisor of the IVA.  The applicants issued an application and put in evidence. The respondent did not put in any evidence. The judge granted the applicants’ application but made no order for costs. The applicants appealed, seeking the costs of the application (and of the appeal).

THE GROUNDS OF APPEAL

One ground of the appeal was that the judge had erred in taking into accounts matters stated by the respondent during the hearing.  The respondent, it was argued, was effectively giving evidence.

“Ground One: Evidence taken into account

1. 1. I have read not only the judgment but also the transcript of the hearing about costs. It is clear that the Judge had read all the papers and took the documentary evidence, including both witness statements, into account. It is also clear from the judgment that the Judge took account of statements made by Mr Knight in the proceedings in which he explained the action he had taken. Specifically the transcript records Mr Knight explaining that the only evidence he had had was that the claim was not a claim against Mr Broughton but against one of his companies; that he had asked for evidence in support of the appellants’ claim and had not received it, and as a result had felt that he had no alternative but to reject the claim. Mr Knight had gone on to say that he thought it was unreasonable for the creditors to bear the cost of the failure to provide evidence. In making these statements Mr Knight was effectively both giving oral evidence and making submissions. In the judgment the Judge referred to what Mr Knight had said and he clearly accepted it.

   2. I have carefully considered Ms Jones’ submissions that it was not appropriate for the Judge to take account of these statements. I have considered both CPR 32.2 and CPR 32.6, to the effect that the general rule is that any fact needed to be proved by the evidence of witnesses must be proved by evidence in writing, and that evidence at hearings other than a trial is to be by witness statement unless the court orders otherwise. I also accept Ms Jones’ submission that in relation to oral evidence the comments relied on by Ms Rogers in Computer Machinery were obiter and also relate primarily to the principle of whether additional oral evidence may be given, not the method by which it should be given. Having said that, however, there is a clear statement by the Judge in that case, Sir Robert Megarry VC, that the matter is for determination by the Judge when considering how to exercise his discretionary power, and a further statement that he did not consider the Judge to be affected by any rule which would exclude oral evidence. I should add that I agree with Ms Rogers that the Business Environment case does not assist. The comments relied on there, especially at paragraph 102(c), reflect comments by Chadwick LJ in the Court of Appeal decision in BCT Software Solutions Ltd v C Brewer & Sons Ltd [2003] EWCA Civ 939, paragraphs 22 and 23, to the effect that in a case where a claim is settled the court needs to satisfy itself whether it is in a position to make an order about costs at all, and that:

“In addressing that question the court must have regard to the need (if an order about costs is to be made) to have a proper basis of agreed or determined facts upon which to decide… what order should be made.”

The point being, of course, that where a claim is settled there will generally have been no findings of fact and often no clear winner. The reference in the Business Environment case at paragraph 102 to the court not departing from the “normal order” should be read with care and in that context.

1. If the comments made by Mr Knight, which the Judge took into account, had been unsupported by the documentary evidence, then I would have been more concerned by Ms Jones’ submissions. However, in my view those comments were consistent with the documentary evidence, which was clearly considered and taken into account by the Judge. In the circumstances, if there was any irregularity in terms of the admission of oral evidence, then I do not think it was a serious one that would satisfy the requirements of CPR 52.21(3) and justify an interference with a decision about costs.”

THE RESULT

Mrs Justice Falk found that the order that there be no costs of the original application was within the reasonable discretion of the judge. The appeal was dismissed.