England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM WORCESTER COUNTY COURT
(HIS HONOUR JUDGE GEDDES)

		Royal Courts of Justice Strand, London, WC2A 2LL
		9th July 2009

Lord Justice Rimer:

1. This is an appeal by the claimant, Christopher Parkes, against a costs order made by HHJ Geddes on 13 November 2008 in the Worcester County Court at the conclusion of a trial on liability. The defendant, who is the respondent before us, is Laurence Martin. The relevant facts can be stated shortly.
2. At about 4.15 am on 7 December 2006 Mr Parkes was driving his Citroen car along the A41 between Sandford and Market Drayton. It was a dark and very wet night. The car hit a large pool of water on Mr Parkes' side of the road. Mr Parkes lost control, the car turned onto its side and ended up partially on the other side of the road, with the underside of the car facing the oncoming traffic. As Mr Parkes was attempting to climb out of the driver's window, a lorry driven by Mr Martin coming from the other direction collided with the Citroen, the force of the collision pushing it some way down the road. The Citroen was a write-off and Mr Parkes suffered serious injury. The lorry was also damaged and Mr Martin was also injured, although very much less seriously than Mr Parkes.
3. On 7 February 2008 Mr Parkes commenced a claim for damages for negligence against Mr Martin. Mr Martin's defence denied negligence on his part and asserted that Mr Parkes's negligent driving, manifested by his loss of control of the car, was the cause of the accident. The trial on the issue of liability alone came before HHJ Geddes on 13 November 2008 and was dispatched with efficiency in the course of the morning. Each of the parties gave oral evidence and was cross-examined, there were brief submissions, and the judge then gave judgment.
4. The judge found that Mr Parkes was driving faster than the 50 mph he had claimed. He also found that there was no doubt that Mr Parkes was negligent in failing to keep a proper lookout and so not seeing the pool of water. The collision with that pool caused the loss of control and resulted in the Citroen presenting the hazard it did to other road users.
5. Mr Martin's evidence was that he was travelling at about 40 mph, the speed limit applicable to lorries on the road, but the judge found that that was also too fast for the road and driving conditions with which Mr Martin was faced that morning. The judge found that Mr Martin was also partly to blame for the accident. He found that if he had been driving at an appropriate speed and had kept a proper lookout he should have seen the Citroen and should have been able to stop in time without hitting it. The judge's conclusion was that Mr Parkes was 65% to blame for the accident and Mr Parkes was 35% to blame. Put the other way, he found for Mr Martin on liability but reduced his claim by 65% for contributory negligence.
6. At the conclusion of the judge's judgment, counsel for Mr Parkes, who is not counsel before us on this appeal, then asked the judge for Mr Parkes's costs. No costs schedule had been adduced and she was, I infer, going to ask for a detailed assessment of any costs ordered. There followed this exchange with Mr Friday, being counsel for Mr Martin, who has also appeared before us:

"JUDGE GEDDES: Should costs not be divided in the same proportions?

MR FRIDAY: Given the fact that the Claimant is more to blame than the Defendant I invite your Honour to consider that. It is right that there is not in this action a counterclaim, but there is a claim the Defendant brought that stands by the wayside. My learned friend will quite properly say that there is no counterclaim in this action, so therefore she has succeeded, albeit that she has only succeeded to the extent of 35% and a win is a win, and I can see the merit in that. It is also right to say the Defendant had made no offers because the Defendant's case was that liability was denied. The Claimant made two offers, one of 75% in his favour and one of 50/50, both of which were rejected and both of which were justifiably rejected.

I invite your Honour to make apportioned costs on liability, notwithstanding those facts because the greater degree of liability is laid on the Claimant. It is a matter for your Honour.

JUDGE GEDDES: Ordinarily the rules provide that the winner would get her costs or his costs. But I think in a case of this kind (bearing in mind the provisions of CPR 44.34) justice is definitely best done by awarding costs in the same proportion as liability. Therefore it seems to me the Defendant should pay 35% of the Claimant's costs.

MR FRIDAY: I am content, of course, for that to be limited to the costs of liability.

JUDGE GEDDES: Yes, that is on liability.

MR FRIDAY: I would not be so bold as to enlarge that to any point from here on.

JUDGE GEDDES: Thank you very much."

7. The outcome was, therefore, that the judge awarded Mr Parkes 35% of his costs of the liability issue. Whilst certain of the judge's observations and also the order as drawn may be read as suggesting that he was ordering Mr Parkes to pay 65% of Mr Martin's costs of that issue, it is agreed that he did not in fact do so. Mr Martin was left to pay his own costs. It will be noted that Mr Parkes' counsel, having made the application for costs, took no part in the discussion that followed, but there is no suggestion that she was prevented from doing so.
8. Mr Parkes's appeal, brought with the permission of my Lady, Smith LJ, challenges the judge's order as to costs as being one whose making involved a misdirection. Ms Ayling, who appears before us for Mr Parkes, said that under CPR Part 44.3 the judge had first to decide whether it was appropriate to make an order for costs, and it is apparent that he thought it was. No question arises as to that. Having so decided, the general rule is that the unsuccessful party must pay the costs of the successful party although the court can make a different order. Part 44.3(4), to which the judge made reference, provides as follows:

"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 he 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, and which is not an offer to which costs consequences under Part 36 apply."

9. In the present case, said Ms Ayling, Mr Parkes was the winner because he established liability, albeit with a substantial reduction for contributory negligence. There had been no settlement offers from Mr Martin and so no basis for regarding him as having been the substantial winner. Mr Friday, his counsel, expressly acknowledged in the cited exchange that Mr Parkes was the winner. It follows, submitted Ms Ayling, that the conventional order for the judge to make was to give Mr Parkes his costs. There was, of course, a discretion not to do so or not to award him all his costs if the circumstances of the case justified it and I have referred to Part 44.2(4). But it was said that there was nothing in the circumstances of this case that did justify depriving Mr Parkes of 65% of his costs. There was, in particular, no suggestion that his conduct on the liability issue involved any wasting of costs or the exploration of issues that did not justify exploration. The judge identified no such basis for discounting Mr Parkes's recoverable costs but merely proceeded on the, it is said, irrational basis that his costs should be reduced in the same proportion as the extent of his contributory negligence. That is said to be wrong. Having decided that Mr Parkes was in principle entitled to the costs of proving liability against Mr Martin, there was nothing which permitted a reduction of those costs.
10. The rival argument by Mr Friday is that the background was that it was not just Mr Parkes who had a damages claim arising out of this accident but also Mr Martin. By February 2008 both sides were proposing to start proceedings, and it was merely by chance that Mr Parkes issued his claim form first. By April 2008 the parties had agreed that the determination of liability in Mr Parkes' claim would be determinative of the liability outcome of both claims without Mr Martin having to issue a counterclaim of his own. As a result, the practical outcome of HHJ Geddes' judgment is that Mr Parkes will recover 35% of his claim and Mr Martin 65% of his. Mr Friday submitted that, whilst the judge dealt with the question of costs robustly and efficiently, there was nevertheless nothing wrong with the way he did so. The judge himself referred to the general principles in Part 44.3 and plainly had them in mind. He was, it is said, aware of the fact that Mr Martin had his own claim and Mr Friday relied on his own remark in the quoted exchange that it "stands by the wayside" whilst also acknowledging, as he did before the judge, that there was no counterclaim. The only other reference in the material before the judge to the existence of Mr Martin's "wayside" claim was paragraph 32 of Mr Martin's witness statement, which said "I have my own claim for damages". It was not suggested to us that that paragraph was expressly drawn to the judge's attention but we were told that he had read the witness statements in advance of the hearing.
11. Mr Friday submitted that the existence of that cross-claim was fundamental and was the key to the way in which the judge exercised his discretion. He pointed out that had there been a formal claim and counterclaim before the judge, it would have been open to the judge to give Mr Parkes the costs of the claim and Mr Martin the costs of the counterclaim. He also referred us to the decision of the House of Lords in Medway Oil and Storage Company Ltd v Continental Contractors Ltd & Ors [1929] AC 88, which reflects that in the absence of a special direction by the court as to the apportionment of costs between the parties, any such order made on a detailed assessment will produce an element of injustice between the parties in a case where, as in this case, the same issue arises on both claim and counterclaim. That consideration can, in an appropriate case, of which the present is an example, justify the court in making an apportionment of costs as between the parties. It was said that in this case, even though there was no formal counterclaim, the judge was entitled to proceed on the basis that he was in substance deciding an issue that was determinative of the question of liability on both claim and cross-claim, and he did it by awarding 35% of the costs to Mr Parkes. He did not of course award any costs to Mr Martin, about which Mr Friday makes no complaint, but he did make the point that that is a consideration that made the 35% order in favour of Mr Parkes a more generous one than it might appear.
12. It follows, submitted Mr Friday, that the order the judge made was one properly in his discretion and which this court should not disturb. He fairly recognised however that it was critical to this argument that the judge did appreciate that he was in effect dealing with both a claim and notional cross-claim. But he says that he indicated that to the judge, albeit in a somewhat shorthand way, in his reference to Mr Martin having a claim that "stands by the wayside". He said that when the judge agreed with him in his support for the costs order that the judge had himself proposed, and in doing so referred to Part 44.3(4), the judge must be taken to have had in mind that the existence of the cross-claim was a relevant circumstance. I understood Mr Friday to accept that, were it not for the existence of the cross-claim, he would find it difficult to defend the judge's decision to award Mr Parkes less than 100% of his costs.
13. I admit to reservations as to whether, in making the costs order that he did, the judge did have regard to the cross-claim. First, he had himself proposed a division of the costs in the same proportions as those of liability before any mention of the cross-claim, even in the oblique way in which it was referred to had been made. Second, when it was mentioned to him, it was only mentioned in a shorthand way and the transcript does not inform us explicitly as to whether he had in fact picked up the point that Mr Friday was making in defence of the costs order that the judge had himself proposed. Third, the order he then made was in line with the order that he had originally proposed.
14. I have, however, although with some hesitation, come to the view that the judge did recognise that his liability determination was relevant to both the claim and Mr Martin's cross-claim. First, it is to be noted that, when the judge first indicated his thoughts on costs, his proposal was that costs should be "divided in the same proportion". That choice of words can perhaps be said to reflect that he had in mind that both sides might be entitled to costs and it is interesting to note that the amended form of order that was drawn provided that:

"costs [be] awarded in the same as liability, 65% in favour of the Defendant and 35% in favour of the Claimant",

although I have indicated that the parties are agreed that in fact no costs order in favour of the defendant was made. Secondly, I consider that Mr Friday did sufficiently make the point that the liability determination was also relevant to the cross-claim by Mr Martin. What else was the sense of his reference to that claim standing "by the wayside"? Thirdly, there is no dispute that Mr Parkes' lawyers knew perfectly well the agreement they had reached with regard to that claim. They would have understood the sense of Mr Friday's observations and chose to say nothing to the judge about them. In those circumstances, in a case in which, as I am prepared to accept, the judge recognised that the outcome of the liability issue was determinative not just of the extent of Mr Parkes' claim against Mr Martin but of the cross-claim against Mr Parkes, I consider that the award to Mr Parkes of 35% of his costs of the liability issue was properly within the judge's discretion.

15. It follows that I would dismiss the appeal. If I am wrong about that, and the judge was unaware of any such cross-claim when making his costs order, then it seems to me that for reasons I have indicated his order would have been an erroneous one arrived at as the result of a self-misdirection. On this hypothesis, he would, I consider, have had no proper ground for depriving Mr Parkes of 65% of his costs. To justify doing so, he would have had to point to other considerations: compare, for example, the costs decision made by David Steel J in the Owners, Demise Charterers and Time Charterers of Ship "Western Neptune" et al v Owners and Demise Charterers of the Ship "Philadelphia Express" [2009] EWHC 1522 (Admlty). That too followed a trial of liability in which the judge apportioned liability between the parties, in that case two thirds and one-third in favour of the claimant. There was no cross-claim. The judge awarded the claimant 65% of its costs, making no award as to the defendant's costs. I do not, however, regard his decision as establishing any sort of principle that that is a conventional order to make in favour of a claimant who establishes liability but is also found to be contributorily negligent. The judge recognised that, having established liability, the claimant was the successful party and accepted also that it did not automatically follow that, because it was one third to blame, its costs should be reduced proportionately, although he did indicate that if, for example, the apportionment had been say 10% / 90% in favour of the defendant that might have justified a reduction, pointing out that it was a question of degree. But what ultimately decided the judge to limit the claimant to a recovery of only 65% of its costs was not just that it had been found to be the author of its own misfortune to the extent that it was, but also because of the claimant's unsatisfactory conduct in relation to a possible settlement of the litigation and, in particular, its conduct of the litigation in relation to some very late disclosure of some highly relevant material.
16. If, contrary to my view, the judge had made his order in ignorance of the cross-claim, then I consider that it would be open to us to set his order aside and re-exercise the discretion ourselves afresh. Ms Ayling, of course, asks us to do that and to award Mr Parkes all his costs. Mr Friday, however, submitted that in doing so we should have regard to the agreement between the parties as to Mr Martin's cross-claim. There was no dispute as to that agreement. It had been referred to if only, on this hypothesis, in inadequate shorthand by Mr Friday, and Mr Friday said that justice requires that the costs order should be one that paid proper regard to it. He relied on a Respondent's Notice that sought to justify the judge's order on that basis.
17. Ms Ayling's answer to that submission was that to the extent that it depended on adducing evidence of the parties' agreement that was not before the judge, we should not permit it. That evidence could have been put before the judge but was not, and the attempt to put it before us now was said to be precluded by an inability to satisfy the first of the three conditions reflected in the principles to be found in Ladd v Marshall [1954] 1 WLR 1489.
18. Since the inception of the Civil Procedure Rules, the adducing of fresh evidence on an appeal is now governed by CPR Part 52.11(2). That provides that:

"Unless it orders otherwise, the appeal court will not receive --

(a) oral evidence; or

(b) evidence which was not before the lower court

That does not mean that the principles reflected in the rules in Ladd v Marshall are no longer relevant, and this court recognised in Hertfordshire Investments Ltd v Bubb & Anr [2000] 1 WLR 2318 that they will be relevant to the exercise of the discretion. I do not, however, accept that an application under CPR Part 52.11(2) to adduce fresh evidence will automatically be determined according to whether all three conditions are or are not satisfied. The court must, I consider, still have a discretion in the matter, which it will exercise in the light of the particular circumstances of the case. Of the three conditions to which Denning LJ referred in Ladd v Marshall, it seems to me that the second and third are both satisfied here. The only one that might be said not to be satisfied is the first, namely that evidence of the parties' agreement as to the cross-claim could with reasonable diligence have been put before the judge but was not. But I would not regard that consideration as precluding this court from allowing reliance on the agreement. The agreement was one between parties to the litigation. There was and is no dispute about it, and Mr Friday did at least impliedly refer the judge to it, if not as explicitly as he might have done. This was a case in which Mr Martin's lawyers knew what Mr Friday was referring to even if the judge did not.

19. For my part, were I not of the view that the judge was anyway sufficiently aware of the existence of the cross-claim when making his costs order I would permit Mr Friday to rely before this court on the parties' agreement relating to it. On the hypothesis that I am considering, it would therefore be for this court to exercise afresh a discretion as to the appropriate costs order, having regard also to the agreement between the parties as to the cross-claim. I propose to say no more than that, for the reasons I have already broadly indicated, I consider that a fair order would be the very order that the judge did make, namely that Mr Parkes should have 35% of his costs of the liability issue.
20. As I have said, I would dismiss the appeal.

Lady Justice Smith:

21. I agree

Order: Appeal dismissed