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
COMMERCIAL COURT
THE HON. MR JUSTICE POPPLEWELL
[2014] EWHC 3727 (Comm)

		Royal Courts of Justice Strand, London, WC2A 2LL
		20/07/2017

Lord Justice Flaux:

Introduction

1. The appellants appeal the costs order made by Popplewell J after trial of this action in which he awarded the appellants 50% of the amount claimed (subsequently increased to 58% after a partially successful appeal). In his judgment on costs dated 17 October 2014, he ordered that there should be no order as to costs in relation to the period up to the expiry of a Calderbank offer on 28 November 2013 and that from that date to the end of trial, the appellants should pay 80% of the respondent's costs. The subsequent increase in the indemnity awarded after the appeal did not alter that costs order and has no impact on this appeal.
2. The appellants appeal with permission from Briggs LJ against two aspects of that costs order: (i) they contend that it was wrong in principle to make no order for costs up to 28 November 2013, when they were the successful party at trial; and (ii) they contend that the judge wrongly treated the Calderbank letter as having the same effect as an offer made pursuant to CPR Part 36, so that the date after which the appellants should pay 80% of the respondent's costs should be 4 January 2014 (the day after expiry of the Part 36 offer made by the respondent on 12 December 2013, which the appellants failed to beat at trial). Aside from that issue as to whether the relevant date should be 28 November 2013 or 4 January 2014, there is no appeal against the order that the appellants should pay 80% of the respondent's costs after the relevant date.
3. It is necessary to set out a summary of the underlying dispute and of the procedural history of the proceedings in order to put the costs judgment in context.

The underlying dispute and the procedural history of the proceedings

4. The underlying claim related to an indemnity given in a Share Purchase Agreement ("SPA") dated 28 April 2004 whereby the respondent sold the entire issued share capital of the second appellant to the first appellant. The indemnity was contained at clause 5.8.5 of the SPA in these terms:

"5.8 The Seller undertakes to indemnify and keep indemnified the Buyer on behalf of itself and the Company … from any liabilities costs claims demands or expenses which any of them may suffer or incur arising directly or indirectly from …

5.8.5 any services or products supplied by the Company … or any advice provided by the Company (or any of its employees or agents) prior to the Transfer Date [30 April 2004]."

5. In 2010, proceedings were commenced against the second appellant by a former client, the Queen Elizabeth's Foundation for Disabled People ("QEF"). Between 2000 and 2008, the second appellant had been retained by QEF and the trustees of its occupational pension scheme to provide advice and other services in relation to the scheme. QEF alleged negligent and deliberate breach of duty, including deceit. Its claim related to five amendments to the scheme announced to members between 6 April 2000 and 1 April 2004. They were not validly made because the deed which established the scheme required amendment and was not amended. The relevant individual at the second appellant, Mr Le Cras, was advised in May 2004 that the amendments had not been validly made and could not be made retrospectively. He failed to draw QEF's attention to the problem or ensure the amendments were validly made prospectively in order to prevent further losses. Rather he falsely represented to QEF that the changes had been validly effected.
6. The QEF proceedings eventuated in a Settlement Agreement dated 11 October 2011, following mediation, pursuant to which the second appellant agreed to pay QEF £3.85 million. It was accepted by the respondent that this was a reasonable settlement.
7. The appellants commenced the present proceedings under CPR Part 8 on 22 August 2012. In the Part 8 Claim Form, they claimed an indemnity from the respondent for the full amount that had been paid to QEF and all the costs of defending the QEF claim. The appellants' case was set out in the witness statement of Mr Beckwith, a partner in Plexus Law, the appellants' solicitors and proceeded on the basis that, even though the QEF claim referred to certain acts and omissions after the transfer date of 30 April 2004, those all arose directly or indirectly from services supplied or advice provided prior to that date. Accordingly, the appellants contended that upon the true construction of the indemnity, the respondent was obliged to indemnify the appellants in full. At that stage, no alternative claim for any lesser sum was pleaded or referred to in the witness statement.
8. The respondent considered that, since there were issues of fact, including as to whether acts or omissions after the transfer date arose directly or indirectly from services or advice provided prior to the transfer date, which could not be resolved by use of the Part 8 procedure, the proceedings should have been issued under Part 7. There was thus a contested case management conference before Popplewell J on 21 December 2012. As the judge noted in [7] of his costs judgment, it was only during oral submissions in answer to questions from the judge that counsel then acting, Mr Patrick Lawrence QC, accepted on behalf of the appellants that, if they were wrong in their contention that the entirety of the liability to QEF fell within the indemnity, they would advance an alternative case to the effect that some of the liability fell within the indemnity and that this would be likely to require a trial under Part 7. The judge ordered the proceedings to continue under Part 7 and set a timetable for exchange of pleadings and disclosure. The costs of the hearing, which were about £80,000 on each side, were ordered to be costs in the case.
9. Notwithstanding that indication at the case management conference, as the judge also noted in [7] of the costs judgment, the Particulars of Claim served on 11 January 2013 still advanced the case on an all or nothing basis. It was not until service of the Reply on 21 February 2013, (after the respondent had served a Defence denying any liability to indemnify, alternatively contending that the indemnity did not cover losses as a result of wrongdoing after the transfer date of 30 April 2004), that an alternative case for partial recovery was pleaded, which even then was not quantified.
10. There was an unsuccessful mediation in May 2013, following which the respondent made a Part 36 offer in June 2013 of £1,309,016 including interest, which was too low compared with the amount awarded in the judgment. The claim proceeded at a leisurely pace in 2013, with disclosure by the appellants in October 2013, after which on 23 October 2013 the respondent made a further offer to settle for £2 million, inclusive of interest and costs. On 7 November 2013, the respondent made a Calderbank offer without prejudice save as to costs which was expressed to be open for 21 days from the date of the letter, i.e. to 28 November 2013. This offer was on the basis of apportionment of the QEF settlement sum between the period before and after the transfer date, which the appellants' own solicitors had calculated in a without prejudice save as to costs letter dated 30 October 2013 as £2,153,690 plus £191,441.17 contractual interest, a total of £2,345,131.17. The Calderbank offer referred to that letter and calculation and offered to settle for that total sum.
11. Shortly after that offer expired, on 11 December 2013, the respondent made a second Part 36 offer in the sum of £2,508,640 inclusive of interest. This proved to be in excess of both the amount awarded by the original judgment and in the revised judgment dated 29 July 2016 after appeal when Popplewell J held that 58% of the QEF settlement sum was recoverable under the indemnity.
12. Neither of these offers was accepted and the case proceeded to trial in June 2014. The judge handed down judgment on 4 July 2014 ([2014] EWHC 2197 (Comm)). He found against the appellants on the transfer date issue, concluding that the respondent was only liable to indemnify the appellants in respect of settlement sums which were in reasonable settlement of QEF losses occurring prior to the transfer date, and was not liable in so far as the settlement sums represented settlement of losses occurring after the transfer date. In those circumstances, on the basis of the expert evidence on apportionment, the judge concluded that 50% of the settlement sums claimed represented the settlement of losses prior to the transfer date.
13. Consequential matters were determined at a hearing on 14 October 2014 at which the judge gave the costs judgment now under appeal.
14. The substantive appeal against the judgment was heard by this Court in October 2015. The judgment dated 21 December 2015 [2015] EWCA Civ 1310 is now reported at [2016] QB 835. In summary, the appellants failed on their principal ground concerning the interpretation of the indemnity and succeeded (by a majority) on a subsidiary point as to whether the second appellant had been under a continuing duty to QEF, as a consequence of which the majority held that only losses post 31 December 2004 (as opposed to post transfer date) were irrecoverable under the indemnity. The relative success of the appeal (or lack of it) was reflected in the order that the appellants pay 50% of the respondent's costs of the appeal.
15. As already noted, a further hearing then took place before Popplewell J on 29 July 2016 at which he assessed that, excluding losses post 31 December 2004, as opposed to post transfer date, increased the proportion of the QEF settlement sum recoverable under the indemnity from 50% to 58%.

The judgment under appeal

16. The judge referred at [4] of his costs judgment to the principles set out in Part 44.2 and noted that the court has a discretion in relation to costs, stating in a passage which reflected the terms of (2) and (4) of the Rule:

"The general rule is that the unsuccessful party will be ordered to pay the costs of the successful party but the court may make a different order. In deciding what order to make, the court will have regard to all the circumstances, including the conduct of all the parties, whether a party has succeeded on part of its case, even if that party has not been wholly successful, and any 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."

17. He then said at [5] that he saw no reason to treat the Calderbank offer differently from the Part 36 offer or as being insufficient to afford costs protection. Accordingly, he considered the position before and after 28 November 2013, the date of expiry of the Calderbank offer, rather than before and after 3 January 2014, the date of expiry of the Part 36 offer. He then considered first the period before 28 November 2013. At [6] he noted that the starting point was that the appellants had recovered a substantial sum, 50% of their claim, over £2 million inclusive of interest. This would usually give rise to a costs order in the claimant's favour, because a defendant who owes the claimant a substantial sum albeit less than the amount claimed, has had to be brought to court to enable recovery to be made and can be expected to protect its position on costs in the event of an award of less than the full sum claimed by making either a Part 36 offer or an offer in some other admissible form.
18. At [7] and [8] he said that there were two features of this case which militated against the application of the general rule that the unsuccessful party will be ordered to pay the costs of the successful party. The first was that: "it is an unusual feature of this case that for a significant part of this period [i.e. the period up to 28 November 2013], the Claimants were advancing a case on an all-or-nothing basis, which depended on the transfer date argument on which they lost at trial". The judge then referred to what had occurred at the hearing on 21 December 2012 and that even after that hearing it was not until service of the Reply on 21 February 2013 that the alternative case was pleaded, in passages in [7] of the judgment to which I have already referred.
19. At [8] he said:

"The second feature which militates against the general rule that the successful party should recover its costs is that thereafter, throughout the period, including the period to the end of November 2013, the Claimants maintained their primary case that they were entitled to recover in full by reference to the transfer date issue. That was an issue on which the Claimants lost at trial and an issue on which I judge the majority of the costs were incurred on each side during that period. If an issue-based approach were adopted that would militate, to that extent, in favour of making an award of costs in the Defendant's favour in respect of this period."

20. The judge went on to say at [9] that, on the other hand, at least in the period until February 2013, the respondent was less than clear and constructive in correspondence in articulating its case on the transfer date issue, notwithstanding counsel's opinion sent without prejudice save as to costs in September 2013. He said that, during that period, the respondent took a number of bad points later abandoned or not pursued and maintained the title to sue point on which it failed at trial. He noted that it had always been open to the respondent to make an offer of a proportion of the amount claimed and referred to the offer in June 2013 which was for less than it was liable to pay. He said it would always have been open to the respondent to have protected its position by a Part 36 or other admissible offer.
21. At [10] he said that he took account of the conduct of the parties of which criticism was made on both sides, but said that he did not regard conduct as the primary factor driving the exercise of his discretion. At [11] he said he had to balance these considerations:

"I have not lost sight of the fact that if the only consideration were an issue-based order, which is one which could clearly be justified by reference to separation of the issues, that would result in an order in favour of the Defendant; but nor have I lost sight of the fact that it remains the case that the Claimants were the successful party which would normally result in an order for costs in the Claimants' favour. Taking into account all the considerations I have mentioned, I have come to the conclusion that the fair order, in relation to the period prior to 28 November 2013, is that there should be no order for costs and each party should bear its own costs."

22. He then went on to deal with the period after 28 November 2013, concluding that although prima facie the respondent should recover its costs as a result of protecting its position with the Calderbank offer, he discounted that to reflect issues raised but abandoned, awarding the respondent 80% of its costs. Since that aspect is not the subject of appeal, other than the appellants' contention that the judge should have taken 3 January 2014 as the relevant date, it is not necessary to consider it further.

The parties' submissions

23. On behalf of the appellants, Mr Adam Tolley QC acknowledged, at the outset of his submissions, that an appeal on costs will only succeed if the decision is wrong in principle or involves taking into account a matter which should not have been taken into account or failing to take account of a matter which should have been taken into account, or if it is plainly unsustainable: F & C Alternative Investments v Barthelemy (No. 3) [2012] EWCA Civ 843; [2013] 1 WLR 548 at [42] per Davis LJ. He also acknowledged that the appellate authorities in this area emphasised that the Court of Appeal would be reluctant to interfere with the exercise of discretion by the trial judge who has a significant advantage over this Court, as he has the feel of the case he has tried.
24. However, Mr Tolley QC submitted that factor was of limited importance here, as this was a two day largely paper based trial and the costs judgment had been given three months later. He submitted that this was one of those unusual cases where the judge had gone wrong in principle and this Court should interfere. The issues-based approach the judge had adopted was wrong and had led to the surprising and unsustainable result that, although the appellants had recovered an indemnity in respect of 58% of the QEF claim, in a case where the respondent's primary position was that it was not liable at all, the appellants had been deprived of their costs. Mr Tolley QC accepted that, until the alternative apportionment case was pleaded in the Reply, the appellants had pursued the claim in full on an all or nothing basis, but he emphasised that the alternative case was not a different and new cause of action. There was only ever one cause of action, on which the appellants had succeeded in part.
25. Mr Tolley QC submitted that, in the period prior to the Calderbank offer on 7 November 2013, there was nothing the appellants could reasonably have done to bring the proceedings to a satisfactory conclusion from their point of view, so they had to continue with the claim, no acceptable offer having been previously made. They should not be penalised for having pursued a claim for a full indemnity as a matter of construction of the SPA. That issue of construction was not a binary one in the sense that it did not mean that the respondent was bound to succeed on the issue of apportionment. Furthermore, the respondent had maintained a series of defences to the claim, in relation to which Mr Tolley QC produced a schedule showing the allegations made and the fact that in large measure they were abandoned at trial or determined in the appellants' favour.
26. He submitted that, in adopting the issue-based approach, the judge had overlooked that the rationale for such an approach was to avoid the "kitchen sink" approach to litigation. As Potter LJ put it in Fleming v Chief Constable of the Sussex Police [2004] EWCA Civ 643; [2005] 1 Costs LR 1 at [35]:

"The rationale in the more flexible deployment of the "issues" approach which has been encouraged to develop since introduction of the CPR is the necessity to discourage litigation in respect of inessential issues, which are either bound to fail, or are irrelevant to the central and essential issues necessary to be decided between the parties in the resolution of the dispute. The "issues" approach may be reflected in an order for costs in respect of particular issues for identification and quantification upon later detailed assessment, or in the preferable course of making an order for recovery of a percentage of the award of costs of the successful party based on the judge's overall estimate of the time wasted upon unnecessary issues. It is based upon the perceived need for a quasi-disciplinary measure in respect of the fair and expeditious conduct of the litigation. Nonetheless the starting point is still an order for costs in favour of the successful party: see CPR 44.3(2). Put more generally, the successful party is the party who has really won at trial, by establishing the essentials of his case and his rights to a particular remedy or remedies sought, the time spent on the issues being broadly that reasonably necessary for the exploration and determination of the dispute."

In this case, there was no need for such a quasi-disciplinary approach. The judge had erred in assuming that approach was appropriate, when it was not.

27. Mr Tolley QC submitted that the continued pursuit of the claim for a full indemnity had had no causative effect on costs, in that the same costs would have been incurred in the same way even if the claim had always been limited to an indemnity for a proportion of the QEF claim. He said that there was nothing to suggest that, if the appellants had only made a claim for a partial indemnity, the respondent would have adopted a different approach. The respondent had never offered to make a payment on account, so the appellants had to pursue the claim to recover anything.
28. It seems to me, however, that an important qualification to this submission was made later in Mr Tolley QC's oral submissions. When Longmore LJ put to him the passage from [8] of the judgment which I have quoted above, that the "transfer date" issue was a major issue on which the appellants had lost at trial and on which the majority of costs had been incurred, Mr Tolley QC indicated that he was not saying that the judge was not entitled to take that view and was not challenging that finding. However, he contended that before it was appropriate for the judge to adopt the issues-based approach that he did, cause and effect had to be established in the sense that it had to be shown that the incurring of the relevant costs was caused by the appellants running the particular issue. He suggested that that cause and effect was absent here, in circumstances where the judge had said the conduct of the parties was not the primary factor in the exercise of discretion.
29. Mr Tolley QC submitted that, in any event, however much it was taken into account that the majority of costs were incurred on the transfer date issue, it could not be ignored that overall, the appellants were the victors. This should have been reflected in an order that the appellants have their costs up to the relevant date, alternatively a substantial proportion of their costs, say 80%.
30. He submitted that, although the judge had said in [11] that he was engaging in a balancing exercise, he had not done so in the usual sense. He relied upon the judgment of Jackson LJ in Fox v Foundation Piling [2011] EWCA Civ 790; [2011] 6 Costs LR 961 at [62] which he had cited to the judge:

"There has been a growing and unwelcome tendency by first instance courts and, dare I say it, this court as well to depart from the starting point set out in rule 44.3 (2) (a) too far and too often. Such an approach may strive for perfect justice in the individual case, but at huge additional cost to the parties and at huge costs to other litigants because of the uncertainty which such an approach generates. This unwelcome trend now manifests itself in a (a) numerous first instance hearings in which the only issue is costs and (b) a swarm of appeals to the Court of Appeal about costs, of which this case is an example."

31. In support of his case that the judge should have awarded the appellants all their costs up to the relevant date, alternatively a substantial proportion of those costs, Mr Tolley QC also relied upon various judgments of this Court which have emphasised the importance in the exercise of the discretion on costs of who was the winning party:

(1) A.L. Barnes Ltd v Time Talk (UK) Ltd [2003] EWCA Civ 402; [2003] BLR 331 per Longmore LJ at [28]:

"In what may generally be called commercial litigation…the disputes are ultimately about money. In deciding who is the successful party the most important thing is to identify the party who is to pay money to the other. That is the surest indication of success and failure."

(2) Day v Day [2006] EWCA Civ 415 per Ward LJ at [17]:

"I would go further and say that in a case like this, the question of who is the unsuccessful party can easily be determined by deciding who has to write the cheque at the end of the case; and there is absolutely no doubt at all that the person who has to put his hand in his pocket and pay up the money that is in dispute was [the defendant]."

(3) Budgen v Andrew Gardner Partnership [2002] EWCA Civ 1125 per Simon Brown LJ at [35]:

"To my mind, however, the court can properly have regard to the fact that in almost every case even the winner is likely to fail on some issues and it should be less ready to reflect that sort of failure in the eventual costs order than the altogether more fundamental failure to make an offer sufficient to meet the winner's true entitlement."

32. In relation to the other ground of appeal concerning the relevant date, in his oral submissions, Mr Tolley QC accepted that the judge had been entitled to take the Calderbank offer into account in exercising his discretion. In his ruling on costs on 29 July 2016, the judge said that the appellants would have been better off accepting that offer and taking less by way of damages than they eventually recovered, in particular because the judge had made no order as to costs. However, Mr Tolley QC submitted that, looking at the position as at the date of expiry of the offer, 28 November 2013, as the Court should, the outcome after judgment was better than would have been the position if the offer had been accepted. Accordingly, the judge should have taken 3 January 2014 as the relevant date.
33. For the respondent, Mr Neil Kitchener QC submitted that, as had become clear during the course of Mr Tolley QC's oral submissions, the appellants had no argument of principle that the judge had been in error. Once it was accepted, as Mr Tolley QC had accepted in argument, that the judge was entitled to take account of the matters set out in [8] to [11] of the judgment, there was no principled basis for attacking his decision. Mr Kitchener QC submitted that the appellant's case ignored the earlier Order of the Court of Appeal which, on the basis that the appeal had succeeded on one point but failed on the other, ordered the appellants to pay 50% of the respondent's costs. That Order, which was not challenged by the appellants, was, if anything, less generous to the appellants than the judge had been.
34. Mr Kitchener QC submitted that, for the first ground of appeal to succeed, Mr Tolley QC would have to persuade this Court that the judge was not justified in making any allowance at all in relation to points on which the appellants lost and the respondent won. However, once Mr Tolley QC advanced his alternative argument that, if the appellants were not entitled to all their costs, they should recover a substantial proportion of them, that was an implicit recognition that some deduction could in principle be made to reflect the points on which the appellants had lost, which was fatal to any suggestion that the judge had erred in principle here. The extent of any deduction was within the discretion of the judge.
35. He submitted that the finding in [8] of the judgment (quoted at [19] above) was a finding of fact which the judge was entitled to make. The respondent had put in evidence from its solicitor for the costs hearing that the parties had incurred the majority of the costs of the claim on the transfer date issue, that is, both the point of contractual construction and the question of fact relating to continuing breach. He submitted that the appellants could not go behind that finding of fact.
36. Mr Kitchener QC submitted that, in the balancing exercise, at [9] of his judgment the judge had taken account of the fact that the respondent could have protected its position by making a Part 36 offer earlier. However, he submitted that the respondent had still been entitled to invite the judge to make an issues-based Order since Part 36 protects on issues on which a defendant loses at trial, whereas the transfer date issue was one on which the respondent won. He relied upon [32] of the judgment of Patten LJ in Hullock v East Riding of Yorkshire [2009] EWCA Civ 1039. He submitted that, where it was possible to say that specific costs were incurred in relation to a particular issue, here the transfer date issue, there was no error of principle in the court adopting an issues-based approach.
37. In reaching the decision he did, the judge had not lost sight of the fact that the appellants had been the successful parties, as Mr Tolley QC suggested. Indeed that was his express starting point in [6] of the judgment. Unless there was an error of principle by Popplewell J which there was not, the fact that other judges might have exercised their discretion differently was irrelevant. As Longmore LJ said in Summit Property Ltd v Pitmans [2001] EWCA Civ 2020 at [23]:

"The judge recognized that he was making an exceptional order but he said in terms that the circumstances of the case were special and particularly strong. No doubt, other judges would not necessarily have come to that view, but it was plainly a possible view of the case as a whole. It is of the essence of a discretion that different judges might exercise their discretion differently. For my part, I can discern no error of principle, let alone perversity."

38. In relation to the second ground of appeal, Mr Kitchener QC submitted that there was nothing in the suggestion that the judge had erred in principle in treating the Calderbank offer as having the same effect as regards costs as a Part 36 offer. That in an appropriate case a Calderbank offer can have such an effect is well-recognised: see for example per Jackson LJ in Fox at [45]:

"Secondly, parties are quite entitled to make Calderbank offers outside the framework of Part 36. Where a party makes such an offer and then achieves a more advantageous result, the court's discretion is wider. Nevertheless it may well be appropriate to order the party which has optimistically rejected the Calderbank offer to pay all costs since the date when that offer expired. This was what the court ordered in Stokes."

39. Mr Kitchener QC submitted that in the present case it had been entirely appropriate for the judge to take account of the Calderbank offer and consider that it had the same effect as a Part 36 offer would have done. Before the judge, Mr Tolley QC had offered no explanation as to why the Calderbank offer should not have that effect. The only respect in which the offer did not comply with Part 36 was that it was not open for acceptance after the date of expiry of the offer, but that was not a material difference: the appellants had shown no interest in accepting the Calderbank offer at any time and almost as soon as it expired on 28 November 2013, on 11 December 2013, the respondent made a higher Part 36 offer that was still not accepted. Accordingly, it was only in the short period of time between those two dates (a period in which practically no costs were incurred in any event) that the appellants did not have available to them an offer which was better than the result they achieved at trial.
40. Mr Kitchener QC submitted that the "mathematical" point raised by Mr Tolley QC in his oral submissions, comparing the position as at 29 July 2016 with the position as at 28 November 2013, was not a point upon which the appellants had sought permission to appeal, even on a contingent basis and it should not be open to them to argue the point now.

Analysis and conclusions

41. The finding at [8] of the judgment that the majority of costs on each side in the period up to 28 November 2013 were incurred in relation to the transfer date issue on which the appellants lost is a finding of fact which the judge was entitled to make and, in any event, Mr Tolley QC accepted that he could not go behind that finding of fact. In my judgment, in those circumstances, the first ground of appeal must fail. There was no error of principle by the judge in adopting an issues-based approach in relation to the transfer date issue in the light of that finding. I simply did not understand Mr Tolley QC's argument seeking to avoid that conclusion by reference to cause and effect: the judge clearly found at [8] that the continued pursuit of that issue had caused the incurring of the majority of the costs. The fact that he did not conclude that it was unreasonable for the appellants to continue to pursue that issue is irrelevant. It is well-established that unreasonableness is not a precondition to the making of an issues-based order: see per Longmore LJ in Summit at [16]-[17] and, most recently, per Nugee J in R (Viridor Waste Management Ltd) v HMRC [2016] EWHC 2502 (Admin) at [13]-[14].
42. Contrary to Mr Tolley QC's submissions, this is not a case in which the judge lost sight of the fact that overall the appellants were the victors. That was his express starting point at [6] of his judgment and he referred to it again in [11] when engaging in the balancing exercise. The appellants' real complaint here is not that the judge has failed to take that point into account, but that he failed to give it sufficient weight. However, that was a matter for the judge's discretion. I agree with Mr Kitchener QC that, once the appellants advanced the alternative argument that this Court should substitute for the judge's order of no order for costs an order that the appellants should recover a substantial proportion, say 80%, of their costs, that was an implicit recognition that some reduction of their costs recovery could in principle be appropriate to reflect the fact that they had pursued throughout the transfer date issue on which they lost at trial.
43. In those circumstances, there is no principled basis for attacking the judge's judgment. He has stated the applicable principles correctly and then exercised his discretion. The fact that other judges might have exercised the discretion differently is neither here nor there and certainly does not demonstrate an error of principle, as Longmore LJ said in Summit in the passage quoted at [37] above.
44. Once it is recognised that there was no error of principle and the real complaint is as to how the judge exercised his discretion, there is no reason for this Court to interfere with the judgment and every reason why it should not. The judge had not only conducted the trial but the earlier interlocutory hearing in December 2012. What Davis LJ said in F & C Alternative Investments at [42] is thus particularly apt:

"Decisions on costs after a trial are pre-eminently matters of discretion and evaluation. Further, it is particularly important to bear in mind that a trial judge – especially after a trial such as this one – will have a knowledge of and feel for a case which an appellate court cannot begin to replicate. The ultimate test, of course, for the purposes of an appeal of this kind is whether the decision challenged is wrong. But it is well established that an appellate court may only interfere if the decision on costs is wrong in principle; or if it involves taking into account a matter which should not have been taken into account or failing to take into account a matter which should have been taken into account; or if it is plainly unsustainable."

45. In my judgment the second ground of appeal is unsustainable. It is well-established that, in an appropriate case, the court may treat a Calderbank offer as having the same effect as regards costs as a Part 36 offer. Whether or not the case is an appropriate one is quintessentially a matter for the discretion of the trial judge and there was no error of principle by Popplewell J in concluding that the Calderbank offer here should have that effect.
46. I did not consider that there was anything in what Mr Kitchener QC described as the "mathematical" point. The appeal is in relation to the judgment dated 10 October 2014 and there is no appeal against the judge's later judgment of 29 July 2016 following remission of the case by the Court of Appeal. In any event, given that practically no costs were incurred between the expiry of the Calderbank offer and the making of the Part 36 offer, I would have regarded the appeal on this point as academic, even if I had thought that Popplewell J was wrong, which I do not.
47. For those reasons, this appeal must be dismissed.

Lord Justice Henderson

48. I agree.

Lord Justice Longmore

49. I also agree.