In the matter of Sykes & Son Ltd v Teamforce Labour Ltd
18 April 2012
[2012] EWHC 1005 (Ch)
Facts:
The applicant company (C) applied for an order for costs arising from a dismissed petition that had been presented by the respondent petitioner (P) along with the costs of an application to restrain advertisement and to strike out.
P presented a petition on the basis of a relatively small undisputed debt. The debt was paid two days after presentation of the petition but before an application by C to restrain advertisement and to strike out. The petition was subsequently dismissed as the remaining debt gave rise to a genuine and substantial dispute. C said that it had raised a dispute with P over the debt prior to presentation. C had sent a letter wrongly denying that it had received the final account and provided late disclosure of valuations exhibited to C’s evidence.
P said that C should have made its case known and produced valuations earlier and the need for the petition could have been avoided. P also said that C should pay its costs to reflect the late production of its defence.
Held:
(1) There was considerable merit in adhering to the principle that save in exceptional circumstances a petitioner whose petition failed on the basis that the debt was genuinely disputed on substantial grounds should pay the costs of that failure. The court was entitled to take into account the parties’ communications prior to the presentation of the petition in determining whether there were exceptional circumstances (Re Fernforest Limited [1991] BCC 680 and GlaxosmithKline Export Ltd v UK (Aid) Ltd (Costs) [2003] EWHC 1383 (Ch)). Despite being given every opportunity, C did not set out the basis for its dispute in any meaningful way prior to the presentation of the petition and had produced documents late, which could, if authentic support, its case. However, those circumstances did not amount to exceptional circumstances to justify departure from the general rule.
(2) However, in the exceptional circumstances of this case, the most appropriate course to ensure justice was to adjourn the outcome of the proceedings in which disclosure and cross-examination could take place in order to assess the authenticity of the valuations relied upon by C. C was ordered to pay P’s costs up until the date when C paid the undisputed debt with the costs of the application and of the petition after that date adjourned.