Litigation: adopting a balanced method
Looking at a recent costs decision, Ed Patton argues for litigators to adopt a fair approach
The recent costs decision in Angela Denise Curtiss and others v Zurich Insurance Plc, East West Insurance Company Limited (in administration  EWHC 1514 (TCC, 2022 WL 02192974 provides a useful reminder of the responsibility incumbent on all practitioners to pursue litigation in a proportionate way.
Curtiss provides a salient reminder that where an inappropriate application is made, even where some elements of it are successful, if it falls foul of the overriding objective any success may be Pyrrhic. In Curtiss, that limited ‘success’ resulted in a significant costs award in favour of the other party. This reflected the Judge’s view that the defendant’s application was oppressive and unnecessary, despite some successful elements.
This on-going litigation involves approximately 150 claimants who each bought flats in a residential development in Swansea. The claimants allege that they were induced to buy their flats by Zurich’s fraudulent misrepresentation that they had received a final inspection from Zurich’s surveyors and that that inspection was satisfactory. It is alleged that no such inspection took place and significant issues with the properties were only identified after completion. The damages claimed exceed £25 million.
The Witness Statements
The claim against East West Insurance Company Limited was stayed after it entered administration. In January 2022 the claimants’ solicitors served 49 witness statements on the first defendant, Zurich. These mainly consisted of statements from claimants, conveyancers and mortgage lenders. Further statements were provided by Zurich’s surveyor, Mr Dummer, who carried out warranty inspections, and the solicitor who acted for the developer.
After receipt of the statements, Zurich’s solicitors notified the claimants that they would write separately on the statements’ compliance with PD57AC (this being the practice direction for witness statements for use in the Business and Property Courts effective from 6 April 2021). This approach to non-compliance was consistent with the one recommended in Mansion Place Ltd v Fox Industrial Services Ltd  EWHC 2747 (TCC). When these objections were received, they were accompanied by a 109 page schedule detailing the statements’ alleged non-compliance with PD57AC.
Unmoved by the claimants’ protests as to the disproportionate approach taken to what were (mostly) minor issues and citing non-compliance with PD57AC, in May 2022, Zurich applied to strike out four of the witness statements in their entirety. Zurich also applied to strike out parts of a further 29 witness statements. A revised schedule of non-compliance was provided, as well as a witness statement from Zurich’s solicitors with an exhibit of several hundred pages.
In his oral judgment His Honour Judge Keyser QC, struck out four of the witness statements on the basis they provided no relevant personal knowledge and introduced opinion evidence. He also struck out elements of the developer’s solicitor’s statement for containing unnecessary commentary and opinion. However, the Judge declined to strike out all of the elements from that statement as sought by Zurich. The Judge also refused to strike out ‘stock phrases’ common in six of the statements, inferring they were likely indicative of a common draftsman.
While Zurich’s application was successful in parts, the judge described his “dismay” that the application had resulted in combined costs of £275,000 plus VAT. In his view, this expenditure could not be justified for an application of this type and Zurich’s argument that much of these costs would have been incurred in any event was rejected, particularly with regards to the claimants’ costs. In the Judge’s view, these issues could have been adequately (and more proportionately) addressed in cross-examination.
Ultimately, exercising his discretion under CPR 44.2, the Judge ordered that Zurich pay 75 per cent of the claimants’ costs of the application on the indemnity basis.
With almost 50 witness statements served, any common non-compliance would have inevitably resulted in a lengthy application. However, the schedule (which took two months to prepare) was in the Judge’s view, grossly excessive, and in relation to which he provided examples of that excess. For example, Mr Dummer’s statement provided:
"On more complex projects, such as the Development where there were a number of different buildings being constructed at the same time, I would usually be expected to inspect every 2 weeks or thereabouts during the busy stages of construction but in any event at least once a month as, without this, it would be impossible to keep up with the work, let alone re-inspect works which had not been signed off due to the appearance of defects."
Zurich sought to strike out this passage on the grounds that witness statements “must indicate which statements in it are matters of information or belief and the source for any matters of information or belief. Mr Dummer has provided no basis for these assertions”. This was deemed ‘absurd’ and not worthy of an application.
Zurich had also objected to the following passage:
“Therefore, with regular inspections you should be able to identify each stage of construction as you ascend the building. This form of construction, or linear development, should also allow you to have access to and see the common parts so that you can identify a uniformity and quality of workmanship being established on each floor which means that a quality and safe outcome will be predictable.”
Zurich’s ground for strike out in this instance was that the paragraph was not written in the first person.
As it transpired, the claimants’ solicitors’ original response to Zurich’s objections was prescient and the Judge referenced this positively:
“Practice Direction 57AC was not intended to encourage a party to perform a line-by-line analysis of a witness statement with a metaphorical scalpel in hand ready to object to or excise a sentence in a witness statement that might stray beyond the bounds of Practice Direction 57AC. That would be inconsistent with the overriding objective, for it would generate satellite litigation and cause the parties to incur unnecessary cost in protracted pre-trial skirmishing. That is particularly so in a case such as this where there is an inequality in the financial resources of the parties.”
The judge was clear that, just because he had made an order striking out elements of the statements, this was not the same as the application being justified. The issues raised could have just as easily have been dealt with at trial and it would have been more proportionate to simply place little or no weight on offending passages at that stage.
The costs approach in Curtiss will need to be considered by practitioners when making similar applications. Zurich’s application broadly followed the approach in Mansion Place Limited, led to approximately 10 per cent of all the witness statements being struck out, as well as sections of other statements, and it was not the case that there were no issues with the statements filed. Further, if not dealt with by way of application, at least some time would have to be devoted to these issues at trial.
However, the most serious breaches of PD57AC were relatively minor and the excessive costs incurred were a consequence of the oppressive and strategic approach adopted by Zurich, identifying and criticising every possible infringement of PD57AC. Mansion Place Limited had been clear that any application should not generate ‘unnecessary costs’ so a thematic approach, identifying categories of non-compliance and providing the most pertinent examples, may have been received more favourably.
As is clear from Curtiss there is an important balancing act to be struck by practitioners between the ability to make an application, and whether to do so. The exhaustive approach adopted by Zurich in Curtiss is unlikely to be considered reasonable or productive. In summary, the fact that a particular application can be made does not mean that it always should be.
Ed Patton is an associate at Russell Cooke Russell-cooke.co.uk