England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM ORDER OF DISTRICT JUDGE EWING
(Wrexham County Court)

		Royal Courts of Justice Strand London WC2 Friday, 5th July 2002

1. LORD JUSTICE DYSON: This is an appeal by the claimant against a decision of District Judge Ewing who, on 31st May 2002, made an order that the parties should bear their own costs of the action. The claimant says that she was the successful party in the litigation and she should have been awarded her costs. Although she did not succeed on all the issues, she was obliged to come to court to vindicate her claim on the issues on which she did succeed and the issue on which she was unsuccessful did not significantly increase the costs.
2. Before I examine these questions more closely, I need to set out some of the relevant facts. The claimant purchased a house at Llangollen known as Tan-y-Graig in 1983. In 1997 the defendants purchased Sun Bank Cottage, a nearby house. The claimant started these proceedings on 29th June 1998. She claimed by reference to a plan (a) a right of way for vehicular purposes over the land coloured brown, green and yellow, and (b) a right to turn and stop vehicles on that land. She also claimed damages and injunctive relief to prevent obstruction by the defendants of her claimed rights. In November 1999 she amended her claim to include a right to park on the yellow land. The brown and green land was shown on the plan as two contiguous lengths of a lane some 9 feet wide which provided access from the main road to Sun Bank Cottage. Access to Tan-y-Graig was on foot only by means of a public footpath between the end of the lane and the house. Adjacent to the end of the lane and abutting it was a triangular piece of land; this is the land that was shown yellow on the plan. There is no dispute that the claimant was entitled to a right of way on foot over the brown and green land.
3. By their defence the defendants disputed the claim. All they admitted was that the claimants had a right to use the green and brown land as a public footpath. When the claim was amended, the defendants amended their defence to deny that an easement of parking could be acquired by prescription, but, by subsequent amendment, contended that if there was a right to park on the yellow land it was limited to one vehicle.
4. Mr Bickford Smith helpfully states in his skeleton argument that by 1999 the issues between the parties were therefore as follows: (a) Did the claimant enjoy a prescriptive right of way for vehicular purposes over the land coloured green, brown and yellow? (b) Did the claimant have the right to stop vehicles and turn on the land coloured yellow? (c) Was she entitled to a prescriptive right to park on the land coloured yellow? The claim to damages and injunctive relief fell away at an early part of these proceedings.
5. On 20th September 1999 the case was allocated to the multi-track and directions given for trial. On 8th February 2001 the trial date was fixed to 30th May 2001. By this time it was proposed that there would be five witnesses including the claimant on one side, and six witnesses including the defendant on the other.
6. On 1st May 2001 the claimant's solicitors gave the defendants' solicitors notice of the claimant's intention to discontinue her claim to a right to park. By this time there had been protracted negotiations between the parties. I need to refer to some of these so that the events of May 2001 may be seen in their proper context. After the proceedings had been issued there were periodic attempts to negotiate a compromise. On 23rd May 2000 the defendants' solicitors made an offer under Part 36 of the CPR in the following terms:

"1. That your client should have a vehicular right along the lane leading to our clients' property and a right to park on the land solely for the purposes of loading and unloading limited to one vehicle. We wish to make it perfectly clear that no right is being offered for your client to park there for any other purpose.

2. That this vehicular right be recorded by way of documentation and that each side pay their own costs of noting the same against their respective titles.

3. No damages to be paid by either party.

4. That there be no injunction.

5. Each party pay their own costs."

7. The claimants' solicitors replied on 27th June saying:

"Whilst your offer is not in its present terms acceptable it may well form the basis of terms which can be agreed but we put to you the following counter proposals -

1. Your client should acknowledge that our clients have a vehicular right of way along the lane leading to our clients' property. That right will include a right of stopping for the purpose of loading and unloading for such time as is reasonable. We would not seek to include in the right of way a right to park but simply the normal associated right of stopping for the purpose of loading and unloading.

2. Your client should mark out an area sufficient for the parking of one average sized car. This can be at any point on your clients' land either adjacent to the house or on the formal parking space or at any convenient point alongside the lane and that will be made available to our client and a right will be acknowledged for our client to park on that space. Alternatively she will be prepared to purchase a freehold interest in that parking space at a price to be agreed or to be fixed by a valuer."

8. Further terms were proposed ending with a proposal that each party pay their own costs.
9. Further correspondence ensued. It is not necessary to refer to all of it by any means. There came a time when the defendants' solicitors wrote to the Legal Services Commission suggesting that the decision to grant the claimant legal aid should be reviewed. Negotiations continued over the possible sale of a piece of land by the defendants to the claimant for the purposes of parking.
10. On 25th September 2000 the defendants' solicitors wrote again offering, inter alia, that the claimant -

"should have a vehicular right along the drive leading to our clients' property and a right to park on the land solely for the purpose of loading and unloading limited to one vehicle. It should be observed that no right is being offered for your client to park there for any other purpose."

11. That provoked a response on 5th October in which the claimant's solicitors made it explicitly clear that the offer of a right of way with one vehicle was not acceptable.
12. On 6th December the claimant's solicitors made a further Part 36 offer again requiring the defendants to acknowledge that the claimant had a vehicular right of way for all purposes. This produced a further reply from the defendants' solicitors on 14th December saying that they were willing to accept the offer in relation to the right of way claim, but only on the basis that it was restricted to one vehicle. The offer that had been made in respect of the parking claim was rejected. So matters remained until the claimant's solicitors wrote the important letter on 1st May 2001 in which they offered to settle the action upon the following terms:

"1. The defendants to acknowledge that our client has the vehicular right of way for all purposes along the lane leading to our clients' properties. That right to include a right of stopping for the purpose of loading and unloading for such time as is reasonable.

2. This right of way to be recorded in an appropriate document and registered upon both the clients' titles.

3. The defendants to pay the claimants' costs of this action to date, such costs to be subject to detailed assessment if not agreed."

13. Before making that offer, the solicitors stated in the letter that the claimant would be giving notice of discontinuance of her claim in relation to the parking claim, but that she would pursue the matter to obtain a declaration as to her right of way. This provoked a flurry of intense negotiations. The outstanding issues were (1) whether or not the right of way was limited to one vehicle, and (2) the question of the costs. For example, on 18th May the defendants' solicitors wrote saying that the defendants insisted that the right of way was limited to one vehicle only -

"our client is not prepared to deviate from this."

14. The letter went on to say:

"If your client is not prepared to agree the above, then obviously the matter must proceed."

15. As late as 22nd May the claimant was offering to settle on the terms proposed by the defendants provided that the defendants agreed to an unlimited right of way over the land coloured brown and green.
16. Finally, on 30th May the parties compromised the claim on terms which were incorporated in an order of the court. The compromise included the following features: (a) an undertaking by the claimant not to park except for loading and unloading; (b) an undertaking not to obstruct the land hatched and edged red on the plan annexed to the compromise except by parking one vehicle in the blue area. The land hatched and edged red corresponded roughly, but not precisely, with the land shown green, brown and yellow on the plan annexed to the amended particulars of claim. The land marked blue corresponded roughly with the land marked yellow on that plan. (c) Agreement that the claimant had a right of way for vehicles over the land hatched and edged red on the plan; (d) abandonment of the claim for damages; (e) general adjournment of the claims for injunctive relief.
17. Costs were not agreed and they were left to be determined by the court. The claim was due to be heard on 30th May with an estimated duration of 2½ days. On 31st May District Judge Ewing heard evidence on the question of costs. He was not asked to decide costs on the basis of an agreement of what would have been awarded by the judge following a trial. He accepted that the defendants' insistence that the right of way be limited to one vehicle would put the claimant in a strong position as to costs after 18th May 2001 when the point was taken clearly in the correspondence. Before that date he said it was not clear whether the claimant was insisting that the right of way was unlimited. But equally he said that the defendants were in a strong position following the intimation by the claimant on 1st May that she would not be pursuing her claim in respect of parking. The district judge rejected the submission that he should make a separate order as to costs on the claim and counterclaim. That would "involve very considerable complexity in assessing what costs were going to be attributable to what aspect of the issues between the parties". He applied the overriding objective of the CPR and made no order for costs.
18. On behalf of the claimant Mr Bickford Smith submits as follows. The well established general rule is that a successful party is entitled to his costs (see CPR 44.3 (2)). The court must have regard to all the circumstances including the conduct of the parties, whether a party has succeeded on part of his case even if not wholly successful, and any admissible offer to settle whether or not in accordance with Rule 36 (see CPR 44.3 (4)). The defendants never conceded a right of way in the terms claimed and ultimately agreed. On 23rd May 2000 the defendants offered a right of way limited to one vehicle. This remained their position throughout, until the agreement of 30th May 2001. Accordingly, the claimant had to go to court in order to achieve an acceptance that she was entitled to an unlimited vehicular right of way. It is true that the claimant's claim for an easement of parking failed, but this was withdrawn 30 days before trial and the claimant still had to come to court to obtain the relief that she sought in respect of the right of way. Mr Bickford-Smith submitted that there was no warrant in law for the defendants to seek to restrict the right of way to one vehicle only.
19. In short, Mr Bickford-Smith submits that the claimant obtained by the compromise what she had sought in respect of the right of way claim. In principle, therefore, she was the successful party as far as that issue was concerned and she should have her costs throughout. He recognises that this is a somewhat ambitious submission. His alternative submission is that, if the claimant is not entitled to all of her costs of the entire proceedings, then she should have been awarded a substantial part of those costs to reflect her success on the right of way claim and the fact that she had abandoned the parking claim 30 days before trial.
20. On behalf of the defendants, Mr Oughton submits that the district judge was right for the reasons that he gave or, at all events, that he was not so plainly wrong in the way he exercised his discretion that this court should interfere. He does not accept that the defendants did not get anything of benefit from the compromise. He says that there was an issue as to the precise extent of the right of way and that this was not clarified until the final decision by the compromise. He also does not accept that there was no legal basis for his contention that the right of way should be limited to one vehicle. He submits that that contention was arguably based on the previous user of the lane and, as he put it, the geography of the lane. He submits to us, as he did below, that there should have been no order for costs until 23rd May 2000, the date of the offer to which I have already referred, and that the defendants should have been awarded their costs thereafter. He submits that the claimant should have accepted the offer of 23rd May 2000. That is why he makes the submission as to costs that he does. He contends that the claimant was not really interested in removing the limitation to the number of vehicles. Her real concern, as evidenced by the correspondence, was to obtain the right to park. He submits that this is a fair and proper analysis of the correspondence. Accordingly, he argues that, for that reason too, it would not be right to place undue emphasis on the fact that the claimant ultimately succeeded on the right of way point.
21. Mr Oughton also makes the point that the claimant must have been aware from a very early stage - no later than the time when the defence was served - that the parking claim was untenable. The reason for that submission is that a licence to park over the yellow land had been granted by the defendants' predecessor to the claimant's predecessor. So, says Mr Oughton, it must have been obvious that this claim to a right to park was hopeless and that this was an additional factor that should be etaken into account in deciding the question of costs. Mr Oughton submits, finally, that the district judge was entitled in the exercise of his discretion to take a broad view of the matter, to have regard to the fact that this was a dispute between neighbours and that this was, in essence, modest litigation involving relatively small costs. The district judge was therefore entitled to say, as he did, that an extensive assessment of costs should be avoided and that the litigation should be swiftly brought to an end.
22. I prefer in general terms the submissions of Mr Bickford-Smith. It seems to me that what happened here was that two principal issues were in play from the start of the litigation until 1st May 2001: the claim to a right to park and the right of way claim. The claimant gave notice that she was abandoning the claim to a right to park on 1st May 2001, but she continued to press her claim for an unlimited a vehicular right of way. The defendants continued strenuously to contest her right to a declaration of entitlement to such a right of way until 30th May. It was only on that date that her right to that declaration was conceded. This is not one of those cases where the claim has resulted in a compromise between two extreme positions. The right of way claim was conceded in its entirety. Accordingly, it seems to me that the approach adopted in cases such as Brawley v Marczynski [2002] EWCA Civ 756 does not apply to a case such as this. In such cases, it is necessary for the court which is deciding the question of costs pursuant to the terms of a compromise to make some evaluation of what would have happened if the case had been fought out. In Boxall v London Borough of Waltham Forest, Scott Baker J (in a passage approved by Lord Justice Longmore in Brawley (paragraph 21)), gave helpful guidance as to the approach that should be adopted in cases of that kind.
23. The present case, however, is different. Here the claimant made a claim for certain relief which was contested throughout, and the defendant conceded that relief in its entirety only at or shortly before the trial. In such a case, it seems to me that the court should normally approach the question of costs on the basis that - in relation to that relief at least - the claimant has achieved what he or she sought to achieve, and should be treated as the successful party.
24. One can test the matter this way. Suppose the parking claim had never been included in the claim at all, and the claim had been confined to a claim for a declaration for an unlimited vehicular right of way, and the defendants had maintained throughout that if the claimant was entitled to a right of way at all, it was limited to the use of one vehicle. Suppose further that they had conceded the claim the day before the trial was due to start. It seems to me that in such a case, the claimant would have been the successful party.
25. I cannot accept the submission by Mr Bickford Smith that the claimant should be entitled to all her costs. That seems to me to be unrealistic having regard to the fact the parking claim was in play from the outset until 1st May 2001. No one has suggested that the costs referable to the parking claim were minimal. Indeed, no submissions have been made to us as to the amount of costs specifically referable to the individual issues at all. It is clear from what we have been told that the costs referable to the parking claim must have been substantial. All the witnesses who would have been called to deal with the right of way claim would also have been called to deal with the parking claim.
26. In my view, the interest of justice would have been properly served by an order that each side bear their own costs until 1st May, but as regards the period after 1st May, for the reasons I have given, the claimant was the successful party. I see no reason why she should not have been awarded her costs from 1st May.
27. Before I conclude this judgment I should deal with a submission made by Mr Oughton which is of some more general importance. When it was suggested to him in the course of argument that the district judge should have made an order that the claimant receive only a proportion of her costs to reflect the fact that she abandoned the parking claim, Mr Oughton submitted that as a matter of principle, such an order was, or might not have been, appropriate. He referred us to the decision of this court on 14th June 2000 inShirley v Caswell [2001] CLR 1. If that decision were authorityfor the proposition that such an order for costs could not be made in a case like the present, that would be a serious matter. Mr Oughton tells us that it is being so interpreted by costs judges. It would be surprising if the decision were authority for that proposition because CPR 44.3 (6) states:

"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."

28. CPR 44.3 (7) states:

"Where the court would otherwise consider making an order under paragraph (6) (f),"

29. I interpolate, paragraph (6) (f) provides for an order where a party must pay "costs relating only to a distinct part of the proceedings",

"it must instead, if practicable, make an order under paragraph 6 (a) or (c)."

30. The rules, therefore, not only permit an order that a proportion of a successful party's costs may be made, but require such an order to be made, if practicable, as an alternative to an order under CPR 44.3 (6) (f).
31. The question therefore arises whether Shirley v Caswell is authority for the proposition suggested by Mr Oughton. In that case the claimant sought damages in excess of £2m from a barrister and, after abandoning various heads at trial, was eventually awarded only £157,000. The judge awarded the claimant 60 per cent of his costs. The leading judgment was given by Lord Justice Chadwick who said at paragraph 60:

"60. But there is, I think, more force in the criticism of the judge's approach to the first element in his order for costs. Prima facie the claimants were entitled to recover the costs properly incurred in relation to the issues fought at trial, save in so far as the judge thought it right to deprive them of costs on issues on which they failed. He was plainly entitled to deprive the claimants of issues on which they had failed and which ought never to have been advanced. But there is, as it seems to me, a strong inference that, in reaching the figure of 60% as the appropriate percentage by which to discount the claimants' costs, the judge went further than that; and took account of costs which had been incurred in relation to issues which had been abandoned. The costs of issues abandoned, or not pursued at trial, ought, prima facie, to be disallowed against the party incurring them on an assessment of the costs of that party by the costs judge because, again prima facie, they are costs which have been unnecessarily incurred in the litigation. To take them into account in making a special costs order carries the risk that the claimants will be doubly penalised. They will be deprived of costs under the order; and again deprived of the same costs on an assessment or taxation.

61. I am not satisfied that, in making the order which he did, the judge appreciated that the effect of the first element in his order was likely to be to deprive the claimants of costs which would, in any event, be disallowed on any assessment or taxation; and so to penalise them twice in respect of the costs of issues abandoned or not pursued. It is necessary to keep in mind that the first element of the costs order in this case does not (or should not) contain any discount by way of set-off in relation to costs unnecessarily incurred by the defendant."

32. I do not read this passage as laying down any broad statement of principle other than the obvious one that an order should not penalise a party twice over. It is plain, for the reasons I have already mentioned, that there is jurisdiction to order the paying party to pay only a proportion of the receiving party's costs. That will commonly be appropriate where the receiving party has failed on one or more issues in the case having succeeded on others. Of course, if an order is made disallowing part of a receiving party's costs, then the costs judge must take account of that fact when making the assessment of costs and take great care to make sure that a double penalty is not imposed. There should be no difficulty about this, since the costs judge should know from the terms of the judgment of the trial judge ordering payment of a proportion of a party's costs, that that is what the trial judge did and the reasons why he or she did it.
33. Accordingly, I would say that, if the judgment of Lord Justice Chadwick has been interpreted as meaning either that there is no power to make an order that a party receive only a proportion of his costs or that, if there is such a power, it should never be exercised in case that the costs judge will penalise the paying party twice over, then that is to misunderstand what Lord Justice Chadwick was saying. I have already indicated the extent to which any statement of principle is to be derived from his judgment. It is clear that he was not satisfied on the facts of that case that the judge was alive to the risk of double penalty.
34. But to return to the present case, for the reasons I have given, whilst recognising that the district judge has a broad discretion and that this court should be slow to interfere with its exercise, it does seem to me that there were no sufficient reasons in this case for depriving the claimant of her costs between 1st and 30th May when the only live issue during that period was the claimant's claim to an unlimited vehicular right of way which was only conceded the day when the trial was due to take place. For all these reasons I would allow the appeal and substitute the order that I have indicated.
35. MR JUSTICE WALL: I agree. I add a few words of my own because we are differing from the district judge. I say at once that I have some sympathy for the district judge. The way I see the matter is this that up until 1st May 2001 there was plainly deadlock between the rival contentions, that is, the claimant's claim for a vehicular right of way and for a parking space; and the defendant's insistence that the particular right of way should be limited to one vehicle without any right to park. That situation was altered by the letter of 1st May in which the claimant gave up, effectively, her right to claim a parking space. When the matter therefore came before the district judge in the terms of the compromise, the claimant had succeeded because the defendants had persisted up until the very last moment with their claim that a vehicular right of way should be limited to one vehicle.
36. I say I have sympathy for the district judge because he came to the case on its second day. He was not the allocated judge. The first day was taken up, as I understand it, with negotiation and conferences. The district judge was therefore faced, on the second day, with a compromise with only the question of costs outstanding. In my judgment, one gets the feeling of how he really dealt with it not so much from the judgment itself but from something he said during the course of the post-judgment discussion. In a tidying up process he suggested to counsel that it would be proper if he invited Mr Oughton to seek his clients' instructions to agree for previous costs orders to be revoled failing which he would impose a stay on the assessment; Mr Oughton agreed that, whereupon the district judge said:

"Then that should achieve what I think in dealing justly with this case should be achieved, and that is an end to this litigation and the removal of the need to incur considerable further costs, considerable further use of the court's resources, and although that is not the only factor, which has caused me to reach the conclusion I have, it is a factor, taking into account also the other matters I have mentioned."

37. As I say, for that view I have some sympathy. The district judge appears to have based it on his understanding of Shirley v Caswell which he envisaged would result in the district judge, as cost judge, having to trawl through the case at some length to decide what costs would be attributable to what work in a case which was plainly one of some complexity. That was a proposition which caused him anxiety.
38. In my judgment there was a much simpler and more appropriate answer in this case which is the one my Lord has outlined. Up to 1st May 2001 it seems there is every argument for saying no order as to costs. After 1st May 2001, however, the claimant definitely succeeded in what she was setting out to achieve. She should, accordingly, have her costs order from 1st May 2001. I see no basis upon which Shirley v Caswell can be used as a means of gainsaying that proposition. It may be that the district judge misunderstood it because at the time he had only a note of it in Butterworths. It had not then been fully reported, but now that it has and my Lord has analysed it, it seems to me that it fits into the overall process of the court exercising a general discretion to apply an appropriate method of assessing the basis upon which costs are to be paid, particularly related to the facts of the individual case. For all those reasons, I agree with the order my Lord proposes.
39. LORD JUSTICE RIX: I agree with both judgments.
Order: Appeal allowed with the costs of appeal at 50 per cent, and those below from 1st May