Costs Of Late Amendment Which Did Not Substantially Alter The Case

The underlying dispute in this case concerned a share transfer and the enforceability of a shareholders’ agreement. A key issue was how the Fitzpatrick Trustees had become parties to the 2010 Shareholders’ Agreement (SHA) in place of Camelot Trust Corporation Limited.

Initially, the Fitzpatrick Trustees’ case was based on assignment and promissory estoppel. They argued that they had stepped into Camelot’s shoes as a party to the 2010 SHA through these mechanisms.

However, Mr Crocker had pointed out in his Defence, specifically in paragraph 25(5), that an assignment of rights could not achieve the substitution of the Fitzpatrick Trustees as a party to the 2010 SHA because there could be no assignment of the burden of the agreement.

Despite this critique in Mr Crocker’s Defence, the Fitzpatrick Trustees did not address this point in their Reply. It was only in their Opening Submissions at trial that they introduced the concept of novation as an alternative legal basis for their position.

As a result, on the first day of the trial (23 April 2024), the Fitzpatrick Trustees made an application to amend their Claim Form, Particulars of Claim, and Amended Reply and Defence to Counterclaim. This amendment sought to specifically plead that there had been a novation in respect of the 2010 SHA, along with making some other required corrections to their pleaded case.

Mr Crocker opposed this late amendment, arguing that it wasted court time and that the Fitzpatrick Trustees should have addressed this issue much earlier, given that he had highlighted the problem with their assignment argument in his Defence some three years prior.

The judge allowed the amendment, but this late change became a significant point of contention in the subsequent arguments about costs.

The Fitzpatrick Trustees argued that:

• Once the novation point had emerged and was clearly identified in their Opening Submissions, Mr Crocker could and should have consented to the Amendment Application.
• If Mr Crocker had consented, it would have avoided wasting court time.
• There should be no order for costs regarding the Amendment Application, recognizing that some different order was appropriate given the circumstances.
• The amendment did not substantially alter the case Mr Crocker had to meet, as the underlying factual dispute remained the same.

Mr Crocker argued that:

• The Fitzpatrick Trustees should pay his costs of the Amendment Application.
• The amendment was made to correct late required corrections to their pleaded case, particularly to specifically plead novation.
• He had alerted the Fitzpatrick Trustees to the issue with their assignment argument in his Defence some three years earlier (paragraph 25(5) of his Defence).
• The Fitzpatrick Trustees’ Reply did not engage with this point, and it was only in their Opening Submissions that the novation issue emerged.
• The Fitzpatrick Trustees brought the requirement for the late Amendment Application upon themselves.
• The amendment wasted the best part of a day of the trial.
• This late amendment substantially altered the case he had to meet, justifying a split costs order with the Fitzpatrick Trustees paying his costs up to the date of the amendment.
• The decision in Beoco Ltd v Alfa Laval Co. Ltd supported his argument for a split costs order.

Standard or indemnity basis costs

Judge’s findings

The judge rejected Crocker’s argument for a split costs order based on the late amendment to plead novation. He found that the amendment did not substantially alter the case Crocker had to meet, as the underlying factual dispute remained the same:

“On this basis, I am satisfied that even if a case in novation had been included in the Fitzpatrick Trustees’ claim as initially formulated, or introduced by way of amendment at a very much earlier stage, the claim would still have been vigourously resisted. In the circumstances, I do not consider that it can realistically be suggested that Mr Crocker was deprived of the opportunity of making a Part 36 offer or of otherwise seeking to compromise the proceedings, or any aspect thereof, because the case in novation was only formally introduced at a late stage during the course of the trial.” [32]

However, the judge did reduce the trustees’ costs recovery by 10% to reflect their lack of success on some arguments and issues with evidence:

“On balance, I am persuaded that I should make a modest reduction of 10% to reflect the fact that Mr Crocker and those acting for him are likely to have spent some not inconsiderable time at least in having to address this aspect of the Fitzpatrick Trustees’ case concerning the parties to the 2010 SHA as formulated in terms of assignment or promissory estoppel that he would not otherwise have had to address despite the common factual basis to these and the novation case.” [34]

The judge awarded standard basis costs to Fitzpatrick against Crocker for the Part 20 claim, rejecting arguments for indemnity costs. While serious allegations of dishonesty were made, he did not find Crocker was necessarily lying:

“I recognise that the allegations of deceit that were made by Mr Crocker against Mr Fitzpatrick were serious allegations of dishonesty. However, this was not a case where I concluded that Mr Crocker was necessarily lying in making the serious allegations that he was, and I consider it more likely that he had confused and/or persuaded himself with the passage of time, perhaps in the light of the intervention of members of his family such as Mr Boyes, as to a false version of events concerning the key discussions with Mr Fitzpatrick leading to the making of the 2014 Transfer, and other historical events, including as to Mr Murray’s role as settlor of the Nisma Settlement, and what he might been told by Mr Fitzpatrick with regard to the Nisma Settlement – see paragraphs 246 and 247 of the Judgement.” [45]

For the payment on account, the judge largely accepted the proposed calculations of 90% of budgeted costs and 50% of incurred costs, with some adjustments:

“I shall thus order Mr Crocker to make a payment on account of costs of £400,000 to the Fitzpatrick Trustees, and £385,723.14 to Mr Fitzpatrick. I will order that the sums be paid within 28 days, being the period specified in the each of the versions of the draft Order provided by all the parties.” [58]

In his final determination, the judge ordered Crocker to pay 90% of the trustees’ costs, subject to the trustees paying Crocker’s costs of the amendment application. He also ordered Crocker to pay Fitzpatrick’s costs of the Part 20 claim, all on the standard basis.