England and Wales Court of Appeal (Civil Division) Decisions

IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
His Honour Judge Seymour
HQ09X01140

		Royal Courts of Justice Strand, London, WC2A 2LL
		27/07/2012

Mr Justice Henderson:

1. This is our determination of the costs issues in this case pursuant to paragraph 6 of the order made by the court when judgment was handed down on 9 May 2012. Although afforded the opportunity to do so by paragraph 5 of the order, neither side has supplemented the skeleton arguments and written submissions on costs which it provided on 8 and 9 May. A bundle of relevant documentary material (which should have included the skeleton arguments, but did not do so) was submitted on 18 May. We have taken all this material into account in reaching our conclusions.
2. The matters upon which a decision is needed are:

a) the costs of the substantive appeal;

b) the costs of the proceedings below, including the costs of the three day hearing in June 2011 before His Honour Judge Seymour QC;

c) the costs of the separate costs appeal; and

d) whether an interim payment on account of costs should be made, and if so in what amount.

(a)The costs of the substantive appeal

3. The appellant ("the Council") is clearly the successful party on the appeal. We agree with Mr Knox QC, for the reasons given in his written submissions of 8 May, that the Council has not only done better than the respondents' Part 36 offer made on 23 February 2012, but has also in all material respects matched the offer contained in its own Part 36 offer of 6 March 2012. Accordingly, the judgment entered against the respondents on 9 May 2012 is "at least as advantageous" to the Council as the proposals contained in its Part 36 offer, within the meaning of CPR 36.14(1)(b). The court will therefore make an order for costs on the indemnity basis, with interest on those costs at a rate not exceeding 10% above base rate, from 27 March 2012 (the expiry of the three week period for acceptance of the offer), "unless it considers it unjust to do so": see rule 36.14(3).
4. We can see no reason why it would be unjust for the usual costs consequences of a successful Part 36 offer to follow, or why the Council should not recover its full costs of the appeal on the standard basis down to 27 March 2012. It was only by the successful prosecution of its appeal that the Council was able to overturn the award of nominal damages made by the judge below, and although the Council did not succeed with some of its more ambitious arguments, we do not consider that the hearing before us was thereby unduly lengthened, or that it was unreasonable for them to be canvassed in an area where the relevant legal principles arguably allow the court a considerable degree of latitude.
5. We will therefore order the respondents to pay the Council's costs of the appeal, on the standard basis down to 27 March 2012 and on the indemnity basis thereafter, in each case to be the subject of detailed assessment if not agreed, together with interest on those costs at 5% above base rate from 28 March 2012 onwards.

(b) The costs below

6. The costs below were very substantial: so much so, indeed, that in commercial terms they were frankly acknowledged to be the real subject matter of the appeal.
7. It is clear that the costs judgment delivered by Judge Seymour on 6 July 2011 cannot stand, in so far as it was based on his views that the Council's claim for substantial damages was misconceived and the expert evidence of Mr Goodyear was of no assistance. We think, however, that there is force in the points made by the judge in paragraphs 6 and 7 of the costs judgment, to the effect that the claim was extravagant in seeking damages on the basis of an account of the gross profits made from the hoarding, and including a claim for exemplary damages for which "[t]here was not a shred of evidence in support". The total amount recovered by the Council in respect of the two hoardings at 67 Bowes Road and Nobel Road, including rates and interest to date, comes to approximately £73,840, which is less than 25% of the £300,000 referred to in the claim form; while the damages and interest recovered for the Bowes Road hoarding, following the trial and the appeal, exceed the respondents' second Part 36 offer below (of £34,000, including interest, made on 15 February 2010) by approximately £10,400 today, and only about £7,000 at the date when the offer was made.
8. Nevertheless, the fact remains that the respondents misjudged their Part 36 offer below, albeit by a fairly narrow margin. Furthermore, if the judge had applied the correct legal principles, the Council would have won at trial. In those circumstances, we consider that the costs below should in principle follow the event in the usual way, although subject to a percentage reduction to reflect the element of exaggeration in the claim, as well as the claims for an account of profits and for exemplary damages which in our view never stood a reasonable chance of success. We would add, however, that we are unimpressed by the point now made by Ms Bhaloo QC for the respondents that the claim should have been begun in the County Court. With the benefit of hindsight, that is probably correct; but neither side applied for the case to be transferred from the High Court, and as far as we can see each side was prepared to devote disproportionately large resources to a dispute of modest dimensions.
9. Taking everything into account, the conclusion which we have reached is that the respondents should pay 80% of the Council's costs below, to be assessed if not agreed on the standard basis.

(c) The costs of the costs appeal

10. Permission to bring the separate costs appeal was granted to the Council by Dame Janet Smith. We agree with the submission of Mr Knox QC that it was properly brought, and that the costs order made by the judge would have required re-examination by this court even if the substantive appeal had failed. No submissions to the contrary have been made by the respondents.
11. We will therefore order the respondents to pay the Council's costs of the costs appeal, again to be assessed if not agreed on the standard basis.

(d) Payment on account

12. The Council asks for an interim payment on account in the sum of £30,000. In our view it would be appropriate to order an interim payment, and the suggested figure is reasonable. We will therefore order a payment on account of £30,000 to be made within the usual 14 days.