COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
(Mr Justice Park)
B e f o r e :
LORD JUSTICE TUCKEY
LORD JUSTICE LONGMORE
|SUMMIT PROPERTY LIMITED|
|- v -|
|PITMANS (A FIRM)|
of Smith Bernal Reporting Limited
190 Fleet Street, London EC4A 2HD
Telephone No: 0171-421 4040
Fax No: 0171-831 8838
Official Shorthand Writers to the Court)
MR. P. BROOK SMITH (instructed by Messrs Davies Arnold Cooper, London, EC4) appeared on behalf of the Respondent.
Crown Copyright ©
"On the face of the papers in the case which I read before the trial began, the main issue being raised by the defendants, Pitmans, by way of defence to the claim against them, was that Summit Property had ceased to be their client before the crucial event as described in my main judgment, and that therefore Pitmans were not in breach of their duty to Summit ...
rather than the confidentiality issue. The case turned in the end on the confidentiality issue and on the basis of it Pitmans succeeded. It was, however, in essence a point of law. It was in my judgment a short and convincing point of law but the introduction of the point did not lead to Pitmans deciding to drop what I believe to have been its misguided arguments based on breach of duty. Lest there be any misunderstanding I do not suggest, by saying that the arguments were misguided, that there was, in the terms of the Elgindata case anything improper or unreasonable about them being raised."
"I think that issue based costs orders such as I believe are appropriate in this case will be exceptional. I would not want to be thought to be encouraging or believing that there will develop a general trend in the majority of cases for the courts to make costs orders in both directions. I do, however, consider that the circumstances in this case are special and particularly strong. I believe that it is open to me to make an issue based costs order and I am going to do so. Before I adapt my order so as to produce practical convenience, the principle of it would be that I would order Summit Property to pay to Pitmans its costs attributable to the confidentiality issue. I would order Pitmans to pay to Summit Property Summit Property's costs of and attributable to the breach of duty issues. Further, to introduce a detailed point which I have not mentioned yet, I would make no order for costs in favour of either party on costs of and attributable to the loss of a chance issue."
"(1) The court has discretion as to -
(a) whether costs are payable by one party to another;
(b) the amount of those costs; and
(c) when they are to be paid.
(2) If the court decides to make an order about costs -
(a) the general rule is that the unsuccessful party will be ordered to pay the costs of the successful party; but
(b) the court may make a different order.
(4) In deciding what order (if any) to make about costs, the court must have regard to all the circumstances, including -
(a) the conduct of all the parties;
(b) whether a party has succeeded on part of his case, even if has not been wholly successful; and
(c) any payment into court or admissible offer to settle made by a party which is drawn to the court's attention (whether or not made in accordance with Part 36).
(5) The conduct of the parties includes -
(a) conduct before, as well as during, the proceedings, and in particular the extent to which the parties followed any relevant pre-action protocol; [there is none here]
(b) whether it was reasonable for a party to raise, pursue or contest a particular allegation or issue;
(c) the manner in which a party has pursued or defended his case or a particular allegation or issue;
(d) whether a claimant who has succeeded in his claim, in whole or in part, exaggerated his claim.
(6) The orders which the court may make under this rule include an order that a party must pay -
(a) a proportion of another party's costs."
"I draw attention to the new rules because, while they make clear that the general rule remains that the successful party will normally be entitled to costs, they at the same time indicate the wide range of considerations which will result in the court making different orders as to costs. From 26 April 1999 the 'follow the event principle' will still play a significant role, but it will be a starting point from which a court can readily depart. This is also the position prior to the new rules coming into force. The most significant change of emphasis of the new rules is to require courts to be more ready to make separate orders which reflect the outcome of different issues. In doing this the new rules are reflecting a change of practice which has already started. It is now clear that a too robust application of the 'follow the event principle' encourages litigants to increase the costs of litigation, since it discourages litigants from being selective as to the points they take. If you recover all your costs as long as you win, you are encouraged to leave no stone unturned in your effort to do so."
"The principles are these. (1) Costs are in the discretion of the court. (2) They should follow the event, except where it appears to the court that in the circumstances of the case some other order should be made. (3) The general rule does not cease to apply simply because the successful party raises issues or makes allegations on which he fails, but where that has caused a significant increase in the length or cost of the proceedings he may be deprived of the whole or a part of his costs. (4) Where the successful party raises issues and makes allegations improperly or unreasonably, the court may not only deprive him of his costs but may order him to pay the whole or a part of the unsuccessful party's costs."
"The 'well-established practice' on which Nourse LJ based his third principle is, as I have already indicated, less generally followed than it has been in the past and it is no longer necessary for a party to have acted unreasonably or improperly to be deprived of his costs of a particular issue on which he has failed."
"The principles applicable in the present case may, I think, be summarised as follows: (i) costs cannot be recovered except under an order of the court; (ii) the question whether to make any order as to costs -- and, if so, what order -- is a matter entrusted to the discretion of the trial judge; (iii) the starting point for the exercise of discretion is that costs should follow the event; nevertheless, (iv) the judge may make different orders for costs in relation to discrete issues -- and, in particular, should consider doing so where a party has been successful on one issue but unsuccessful on another issue and, in that event, may make an order for costs against the party who has been generally successful in the litigation; and (v) the judge may deprive a party of costs on an issue on which he has been successful if satisfied that the party has acted unreasonably in relation to that issue; (vi) an appellate court should not interfere with the judge's exercise of discretion merely because it takes the view that it would have exercised that discretion differently.
22. The last of those principles requires an appellate court to exercise a degree of self restraint. It must recognise the advantage which the trial judge enjoys as a result of his feel for the case which he has tried. Indeed, as it seems to me, it is not for an appellate court even to consider whether it would have exercised the discretion differently unless it has first reached the conclusion that the judge's exercise of his discretion is flawed. That is to say, that he has erred in principle, taken into account matters which should have been left out of account, left out of account matters which should have been taken into account; or reached a conclusion which is so plainly wrong that it can be described as perverse."
"The second point is that, although at 30% Pitmans costs may seem in some respects somewhat on the high side if it is simply a question of the time and material specifically devoted to the confidentiality issue, I accept, up to a point, Mr Steinfeld's submission that some of the more general costs incurred by Pitmans in putting the entire background facts of the case before the court, even if believed to have been incurred at the time for purposes other than the confidentiality issue, can be seen to have contributed to the ability later of Pitmans to develop the confidentiality issue on which it succeeded and to my ability to assimilate that issue. That feature accounts for the percentage of 30% rather than a lower percentage which would have been appropriate if I had simply adopted a time based analysis."