Dispute Resolution analysis: The case involved a useful examination of the rules on the requirement for parties to provide a physical address for service and whether an email address is suitable. His Honour Justice Paul Matthews held that the wording of CPR 6.23 is clear and that an address ‘must be an address within the UK or EEA state at which the party resides or carries on business’. For these purposes, an email address will not satisfy the rules. Paul Matthews HHJ also held that under CPR 5.4B, the court can dispense with or qualify the requirement to provide a physical address to another party. The court must decide in case of any dispute. The judgment also highlights circumstances in which the conduct of the parties involved in litigation can justify an award of costs against them to be assessed on an indemnity basis. Finally, the judgment confirmed that parties can agree variations to costs budgets between themselves (but are still subject to court approval) and clarified the law on an interim payment to court on account of mesne profits. Written by Michael Anderson, solicitor at Lee Bolton Monier-Williams LLP.

Axnoller Events Ltd v Brake and another; Brake and others v Chedington Court Estate Ltd

[2022] EWHC 1162 (Ch)

What are the practical implications of this case?

The case is significant because it provides clarification as to some important procedural aspects of court proceedings. The court specifically examined whether a party must disclose their address for service to the other party in proceedings. It clarified that the rules are governed by CPR 6.23 and CPR 6.24 and that a party to proceedings must give an address at which that party may be served with documents relating to those proceedings. The court confirmed that an email address will not satisfy the rules as a person cannot ‘reside’ at or ‘carry on business’ at such an address.

The case also clarified the position in relation to indemnity costs and interim payments on account of profits and costs in cases of trespass. Indemnity costs were granted in the case. The judge stated that the test for indemnity costs is whether there are circumstances and conduct which take the case out of the norm.

Under CPR 25.1(1)(k), the court has the power to grant an interim remedy of an order under CPR 25.6 for interim payment by the defendant on account of any damages, debt or other sum (except costs) which the court may hold the defendant liable to pay. The judge clarified that mesne profits are not rent in the legal sense, because the defendant is a trespasser.

Instead, they are damages and they are measured by reference to the benefit obtained by the trespasser rather than by reference to the actual loss suffered by the claimant. In the case of trespass, the court looked to the ordinary letting value of the premises, without the need for evidence to show that they could or would have been otherwise let, and whether or not the letting would have resulted in any actual profit to the landlord.

What was the background?

Address for service

The judgment involved a possession claim and a related eviction claim and the judge had handed down judgment some three months earlier. The tenants in the case (the ‘Brakes’) were not represented by solicitors and did not provide an address for service to the court or to the landlords (different parties for the possession claim and eviction claim, together the ‘Guy Parties’) as they claimed they had moved into ‘holiday accommodation’ and were content to be served by email.

Costs of possession claim

The Brakes accepted that they lost the possession action and that Axnoller Events’ (AEL) were the successful party. However, they resisted AEL application for an order that costs should be assessed on the indemnity basis instead of the standard basis. AEL said that the conduct of the Brakes supported an indemnity assessment as the Brakes had invented allegations during the litigation which made it unnecessarily complex and increased both the length and cost of the proceedings. This included allegedly false evidence, concealment of roughly £2.6 m worth of assets and a negative press campaign against the defendant.

Variation of budgets and payment on account of costs and mesne profits

The Guy Parties also raised questions about variations of costs budgets in the light of the various developments in the litigation, and a payment on account of costs from the Brakes. The Guy Parties wished for directions in relation to submitting a revised budget for approval and a payment on account for costs. AEL also made an application for a payment of £300,000 on account of mesne profits due to their exclusion from the premises from 2018–22. As the judge had held that AEL was entitled to possession of the premises, there was no defence to the claim for mesne profits, but the quantum of such profits still had to be decided.

What did the court decide?

Address for service

The wording of CPR 6.23 clearly sets out that an address for service must be an address within the UK or EEA state at which the party resides or carries on business. For these purposes, an email address will not satisfy the rules, because you cannot reside or carry-on business at such an address.

Costs of possession claim

Paul Matthews HHJ held that the standard basis of assessment for costs is ‘the norm’ and that costs on the indemnity basis are to be awarded only when there is some conduct which takes the case ‘out of the norm’ (Excalibur Ventures v Texas Keystone & Others (No.2) [2017] 1 WLR 2221 and Whaleys (Bradford) Ltd v Bennett [2017] EWCA Civ 2143). On the facts, it was held that the conduct of the litigation by the Brakes justified the award of costs against them to be assessed on the indemnity basis.

Variation of budgets and payment on account of costs and mesne profits

The judge held that it was not necessary for him to receive and consider submissions on the proposed variation or payment on account of costs. The judge held that CPR 25.1(1)(k) provides the court may grant an order (referred to as an order for interim payment) under CPR 25.6 for payment by the defendant on account of any damages, debt or other sum (except costs) which the court may hold the defendant liable to pay. The judge held that mesne profits are not rent in the legal sense, because the defendant is a trespasser. Instead, they are damages. The amount of mesne profits to be awarded is calculated by reference to the ordinary letting value of the premises, without adducing evidence that the landowner could or would have let the property to someone else in the absence of the trespassing defendant (Swordheath Properties Ltd v Tabet [1979] 1 WLR 285, CA, per Lord Justice Megaw at page 288E). They should be measured by reference to the benefit obtained by the trespasser rather than by reference to the actual loss suffered by the claimant.