England and Wales High Court (Chancery Division) Decisions

IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION

		Royal Courts of Justice
		18th August 1999

1. MR. JUSTICE NEUBERGER: In March and September 1996, the claimant, Liverpool City Council ("the council"), entered into two contracts relating to a piece of land it owned at Chavasse Park, Liverpool. The first ("the RCL agreement") was with the first defendant ("RCL"), which proposed to carry out the council's preferred development. The RCL agreement granted an option to RCL ("the RCL option") exercisable within a specified period subject to extensions which could be granted in certain events. The RCL option would have entitled RCL to acquire a long lease of the land, in effect, if it got funding from the Millennium Commission for its proposed development ("the funding").
2. The second agreement ("the Walton agreement") was with the second defendant ("Walton"). It was a conditional agreement under which the council agreed to sell the land to Walton, subject to the RCL option lapsing or being abandoned. The time for the exercise of the RCL option was extended by the council from time to time owing to delays in RCL's application for funding being determined. Walton was told about the extensions to 30th September 1998 and 31st March 1999 but not about earlier extensions.
3. In early 1999 the council wished to extend the period for exercising the RCL option to 30th September 1999, and Walton would not agree to this. On 29th May 1999, the council issued proceedings against RCL and Walton for a determination as to the rights of the council under the Walton agreement. Those proceedings were served on 1st June 1999 and were followed almost immediately by an application for expedition by the council.
4. Pursuant to that application for expedition, Lloyd J., on 8th June, gave Walton some 14 days to consider documents which had been served by the council, and the matter came on before me in July 1999, and the hearing lasted for a total of nine days. The issues in summary form were these:

1. Was the council entitled to extend time for the exercise of the RCL option as against Walton under the terms of the Walton agreement, as a matter of construction?

2. If not, should the Walton agreement be rectified so as to have that effect?

3. Was Walton estopped by convention from contending that the Walton agreement did not have the effect for which the council contended?

4A. If the council failed in its arguments, was the Walton agreement executed by the acting solicitor to the council without authority?

4B. If so, had the council ratified the agreement?

5. At the end of July, I gave a judgment, of which a full copy was made available to the parties on 11th August, in which I decided: issue 1, no, in Walton's favour; issue 2, yes, in the council's favour; issue 3, no, in Walton's favour; issue 4A, yes, in the council's favour; issue 4B, no, in the council's favour. I now have to deal with the question of costs. The council contends that it should have all the costs; Walton submits that there should be no order for costs.
6. This issue merits particularly careful consideration for two reasons. First, this is a very early substantial contested witness action, where the Civil Procedure Rules apply in an unqualified form, as the proceedings commenced after 26th April 1999. Secondly, both in terms of the actual outcome and in light of other matters to which I have been referred, the position on costs is not simple.
7. I must begin by referring to certain provisions of the Civil Procedure Rules:

"44.3(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.

"(3) ......

"(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 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 (whether or not made in accordance with Part 36).

"(Part 36 contains further provisions about how the court's discretion is to be exercised where a payment into court or an offer to settle is made under that Part.)

"(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;

"(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 particular allegation or issue;

"(d) whether a claimant who has succeeded in his claim, in whole or in part, exaggerated his claim."

8. Rule 44.3(2)(a) can fairly be said to indicate that the starting point in a case such as this is that the council should have its costs. That is because, as Mr. Derek Wood Q.C., who appears on behalf of Walton, accepts (and I quote from his helpful skeleton argument):

"The council has in the event succeeded in its main aim of keeping the RCL action alive and postponing Walton's further rights until the outcome of the application for funding, so that in the broadest possible terms the event of the action is more favourable to the claimant than to Walton."

However, r.44.3(2)(b) indicates that one does not necessarily stop there. In this connection, it seems to me that rule 44.3(4)(b) at least potentially comes into play. Of the four or five issues, Walton was successful on two (issues 1 and 3) and the council were successful on two or three, depending on whether one treats issues 4A and 4B as separate.

9. Issue 1 was a question of construction which obviously took no significant amount of time so far as the oral evidence was concerned, and not much time so far as the documents were concerned. It involved some argument, but not a great deal.
10. Issue 2, rectification, involved, as one might expect, a fairly detailed consideration of documents and of oral evidence, including cross-examination, relating to the position from early 1996 until the execution of the Walton agreement in September 1996. However, it also involved some consideration of events following September 1996, as they could, as I held, provide some assistance as to what the parties said and did prior to September 1996.
11. Issue 3, estoppel, involved fairly detailed consideration of documents and oral evidence relating to events after September 1996, although the events before that date were of some very limited relevance.
12. Issue 4A, authority, involved consideration primarily of documents, although it is fair to say that some oral evidence was of relevance.
13. As to issue 4B, ratification, although Miss Lesley Anderson, who appears on behalf of the council, suggests otherwise, it seems to me that, while the oral evidence was of a little relevance, Walton's case, as is clear from para.35A of the amended defence, was really based on documents.
14. Forgetting for the moment two other matters, namely an offer upon which reliance is placed by the council and procedural matters upon which Walton relies, I turn to consider the question of how I would award costs in light of the substantive outcome. In this connection it is right to refer to rules 44.3(6) and (7).

"44.3(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;

"(b) a stated amount in respect of another party's costs;

"(c) costs from or until a certain date only;

"(d) costs incurred before proceedings have begun;

"(e) costs relating to particular steps taken in the proceedings;

"(f) costs relating only to a distinct part of the proceedings; and

"(g) interest on costs from or until a certain date, including a date before judgment.

"(7) Where the court would otherwise consider making an order under paragraph (6)(f), it must instead, if practicable, make an order under paragraph (6)(a) or (c)."

15. It seems to me that, at least on this aspect, it would be appropriate, if I do not decide to go for one extreme or the other, to make a proportionate award of costs. First, that is what rule 44.3(7) encourages. Secondly, there was a significant overlap in relation to evidence (oral and documentary) and, albeit to a lesser extent in relation to argument, between the various issues.
16. In deciding how I would have awarded costs if the only issue were the relative success of the parties on the issues it seems to me the following factors should be taken into account:

(a) The council was the overall winner.

(b) However, bearing in mind Walton's success on issues 1 and 3, it would be wrong to award the council all of its costs.

(c) Bearing in mind the overlap and r.44.3(7) it would be right to give the council a proportion of its costs rather than to divide up the costs more critically in relation to the various issues.

(d) When making a proportional order for costs it is important to recall that one is making an order for costs which involves one party paying the other party some of its costs, and having to pay all its own costs. Thus it is worth bearing in mind that if, for instance, the court were to order Walton to pay half the council's costs this would roughly involve Walton paying 75% of the total costs and the council only paying 25%, and it would not involve a 50/50 distribution.

(e) Where evidence, be it documentary or oral, was reasonably appropriate both for a point on which the council won and for a point on which Walton won, then it seems to me that the costs relating to that evidence should at least prima facie be those of the council because that evidence would have been reasonably necessary for the council's case and the council was the overall winner. It is perhaps in this connection that it is most important to bear in mind that the council was the overall winner.

(f) In rectification claims it often used to be the practice that a successful claimant would not be awarded his costs on the basis that he was claiming an indulgence from the court. That is a course much less frequently taken these days. An order that a person claiming rectification would not get his costs if he succeeds is only appropriate in special circumstances. In this case Mr. Wood has certainly not relied on the mere fact that the claim is one for rectification as justifying the contention that the council should be deprived of its costs on this issue.

17. In my judgment, doing the best I can and bearing in mind that I consider that Miss Anderson has a strong point for saying that the evidence relating to issue 3, upon which Walton won, did involve to an extent evidence which was relevant and reasonably relevant to issue 2, and to a much lesser extent issue 4(b), but also accepting Mr. Wood's contention that the evidence relating to the estoppel issue was not insignificant and the arguments relating to the estoppel issue were not insignificant, I would have thought it right to award the council three-quarters of its costs.
18. However, matters do not stop there. First of all, it is convenient to consider the complaints that are made by Walton about the procedure adopted by the council. I have already referred to rule 44.3(4)(b) and rule 44.3(5)(a). It is also right to refer briefly to the Practice Direction Protocols.

"General

"1.1 This Practice Direction applies to the pre-action protocols which have been approved by the Head of Civil Justice.

"1.2 The pre-action protocols which have been approved are specified in the schedule to this Practice Direction. Other pre-action protocols may subsequently be added.

"1.3 Pre-action protocols outline the steps parties should take to seek information from and to provide information to each other about a prospective legal claim.

"1.4 The objectives of pre-action protocols are:

"(1) to encourage the exchange of early and full information about the prospective claim,

"(2) to enable parties to avoid litigation by agreeing a settlement of the claim before the commencement of proceedings,

"(3) to support the efficient management of proceedings where litigation cannot be avoided. .....

"4 Pre-Action Behaviour in Other Cases

"In cases not covered by any approved protocol, the court will expect parties, in accordance with the overriding objective and the matters referred to in CPR, 1.1(2)(a), (b) and (c), to act reasonably in exchanging information and documents relevant to the claim and generally in trying to avoid the necessity for the start of proceedings."

19. Walton contends that the conduct of the council in relation to this case is such that any order for costs which might otherwise be made in the council's favour should either be abrogated so that there be no order for costs or should at least be reduced from the three-quarters figure I would otherwise award. In this context, as I see it, the following facts are relied on by Walton.
20. First, the senior officers of the council were informed by a junior officer, Mr. Green, of the fact that the Walton agreement as executed did not have the effect which the council intended or believed, within a month or so of the Walton agreement having been executed and yet the senior officers kept their heads in the sand and did nothing about it.
21. Secondly, the senior officers were subsequently informed by RCL's solicitors in 1997 of this fact. Initially they did nothing about it and then they took steps to try and (to use Mr. Wood's earlier expression) sweet-talk, or as one might say, finesse, Walton into agreeing to a variation of the Walton agreement, which failed.
22. Thirdly, after those negotiations failed there were discussions between the parties in correspondence with their respective solicitors where issues 2, 3 and 4 were never even raised, referred to or hinted at by the council or its advisers. In fact the first time that Walton had even an inkling that issues 2, 3 or 4 were going to be relied on was when they received the claim form and the particulars of claim of the council on 1st June 1999.
23. Fourthly, Walton, through its solicitors, suggested in the first half of May that the council should state what its case was, and the council's solicitors specifically rejected that suggestion in a letter dated 21st May 1999, in which they said this:

"You say that our clients should set out in detail the basis and justification for a claim before litigation is commenced. With respect, the necessity for our client to commence proceedings arises from the bald statement on behalf of your client with the option in favour of RCL has terminated."

The next event was the service of the claim ten days later.

24. Fifthly, it is said that although the council wanted matters expedited, their disclosure was one day late and even after that, further documents were being produced until well towards the end of June 1999.
25. Sixthly, it is said that the documents put before the court were far in excess of what was needed. Mr. Wood suggested that about half the documents and pages of documents contained in the substantial court bundles were irrelevant and should not have been included.
26. Lastly, Mr. Wood relied on the fact that Mr. Green and Mr. Kelly, two junior officers of the council who were closely involved in negotiating the Walton agreement, were not called, and unexpectedly not called.
27. It seems to me that when considering these sort of arguments the court should, particularly at this early stage of the application of the new regime and the new rules on costs, grasp the opportunity of making it clear to litigants in general, as well as to the parties in the proceedings, that the provisions of the Civil Procedure Rules with regard to attitudes which have to be adopted and steps which have to be taken mean what they say. They are there to be observed and if they are not observed then the court will not be slow to visit the person who fails to observe them with appropriate sanctions. In this connection, it seems to me that the whole policy behind the new rules was summarised by Mr. Wood in his submissions when he said this:

"The whole of Lord Woolf's reforms are directed to enabling the parties to understand what their position is before trial in order to relieve them of the considerable burden of a full-scale hearing" --

and, I would add, if there is a hearing, in order to cut down the length and cost of the hearing, to cut down the number of documents, the number of witnesses and the number of arguments, and, therefore, to cut down the time taken and the cost of the trial.

28. In the present case it seems to me that, at least on the face of it, Mr. Wood's contention that Walton were "bounced" unfairly on 1st June when they first learned of the existence of issues 2, 3 and 4 has force, particularly as the only claim which had previously been raised was claim 1, upon which Walton rightly thought he would win. Even under the old dispensation it would be unusual for a claim for rectification, estoppel and/or want of authority to be visited on a party without at least a letter before action. At least on the face of it, such a course is a wholesale breach of the new approach of the protocols and the rules the parties are encouraged to adopt of being open with each other ahead of proceedings to enable the litigation to be concluded in accordance with The Overriding Objective.
29. On the face of it, therefore, Mr. Wood's argument that the council acted in flagrant disregard of the new approach and rules has force. In my judgment unless it can be satisfactorily explained the court should not fail to meet that clear failure with a strong and appropriate sanction.
30. However, Miss Anderson has taken me through the correspondence relating to this matter and has explained the background in a way which renders more explicable and excusable what appears to be a quite extraordinary failure to comply with the new procedures. She tells me that, until they instructed outside solicitors on 17th May, the council was unaware of the possibility of anything other than a question of construction being raised, and that, until about 25th May, the solicitors were not clear as to whether there was a possibility of any other claim than construction being run. Counsel was then instructed and within a short period the issues were raised through the pleadings.
31. In my judgment, confining oneself to the period from about 17th May, when solicitors were first instructed, it would be wrong to visit any criticism on the council or its legal advisers. Indeed, bearing in mind the research that had to be done, the difficulty in finding papers and the number of papers, if anything one would take a benign view of the solicitors' conduct. Nonetheless, that is, to my mind, not the end of the matter.
32. The reason why everything had to be done in such a hurry was because the council had left matters to the last minute. They were either happy to take the view that they were right as a matter of construction, which they were plainly not, or they were content to continue burying their heads in the sand, hoping for the best, without properly considering the position until very much the last minute. Whichever was the case, it resulted everything in having to be done at great hurry. I have no doubt that this resulted in matters proceeding both less satisfactorily and at greater expense to the parties. To my mind that is something which the court not merely can, but should take into account when assessing costs. I consider that to be not merely in accordance with the general philosophy behind the new rules but, as Mr. Wood says, it is explicitly contemplated by rule 44.3(5)(a), which refers to the conduct of the parties before the proceedings. As I have said, the council stuck its head in the sand for part of 1996 and much of 1997. Thereafter, there was a combination of inactivity, sticking the head in the sand and trying slightly half-hearted negotiations in what I described in my judgment as not a particularly attractive way (but certainly not a way which anyone could characterise as immoral or unprincipled, it is fair to add).
33. In my judgment this was not an attitude and behaviour which the court should stand by and allow to go unmarked. On the other hand, it would be inappropriate for the court to go overboard on this issue. There is force in Miss Anderson's submission that in the end the costs are not intended to be penal in their effect; they should reflect what is fair and proportionate as between the parties. It seems to me that the essential point in this case is that there were aspects of the case which must have involved extra expenditure and extra time as a result of the expedition, which was (a) primarily for the council's benefit rather than for that of Walton, and (b) caused by the fact that the council, having done literally nothing for years to resolve the situation which was in danger of blowing up, then acted at the last minute and in a rush.
34. One has to ask oneself, as Miss Anderson says, to what extent that caused prejudice. The first way in which it caused prejudice, to my mind, is that Walton did not have the amount of time which it might reasonably have expected to have to consider matters such as settlement or whether it would be prepared to concede on certain issues. Had Walton not been rushed to trial, it might have considered the documents more carefully with a view to settling, rather than concentrating on them, as it was forced to do, for the purpose of trial. Secondly, it did not have a sufficient and full opportunity to consider whether some of the arguments it might be putting forward should not be advanced. Thirdly, it did not have as much opportunity as it might have had to decide what should be contained and what should not be contained in witness statements. Fourthly, a case brought on in a hurry tends to take longer to hear.
35. It appears to me that this is not a case where Walton can fairly say that, had it had more time to consider matters, it would have conceded: not only did it fight the case to a conclusion but it is appealing. However, I am satisfied that matters would have been conducted somewhat more cheaply and more quickly, and the bundles would have been significantly smaller, had there not been so much pressure of time.
36. So far as bundles specifically are concerned, the correspondence shows that the council, as one would expect, was responsible for the preparation of the bundles and did not have as much assistance as it might have hoped in ideal circumstances with the contents of the bundles from Walton's solicitors, bearing in mind the modern obligation to co-operate. However, I acquit Walton's solicitors of any blame in this connection, because they were under such pressure to get their clients' case together for the purpose of presentation in court: that was due to the hurry caused by the council. To my mind, therefore, the fact that there were excessive documents in the bundle, which there were, is down to the council.
37. I should add that it is primarily the responsibility of the council as the claimant to prepare the bundles, particularly as the great majority of the documents came from the council. Furthermore, although Miss Anderson has relied on some of the inter-solicitor correspondence, it does not greatly help the council on the excess documentation which was included in the bundles. The correspondence is more concerned with disclosure which Walton was seeking: that is made clear in at least one letter by Walton. Again it would be unfair not to mention that I am not criticising the council's solicitors; in the context of instructions in the middle of May and trial in the middle of July with the effort that that involved it would be unfair to criticise them.
38. The effect of the prejudice is hard to assess. In my judgment, subject to the final point to which I come, the right order to make would be that the council should have half its costs; but, when those costs are assessed, its costs of the documents in the bundles should only be as to 5/8ths. In other words, the council is to have half its costs, save that it can only have 5/16ths of the cost of the preparation of the bundles.
39. I think that I must mention two other points. The first is the fact that Mr. Green and Mr. Kelly, two potentially relevant witnesses, were not called by the council. As I mentioned in my judgment, that was somewhat surprising. But I cannot see how that can be said, in all fairness, to have prejudiced Walton in relation to the costs of the action. By 2nd July, when witness statements were served by the council, it was clear that Mr. Kelly and Mr. Green were not going to be called. I am not persuaded that any significant increase in costs was caused thereby or that it would be right to reflect any such increase in the order for costs I make.
40. Secondly, there is a matter which I do find surprising, albeit it may be there is an explanation for it. I understand that each firm of solicitors is proposing to charge the other for photocopying at 26 pence per sheet plus VAT. One cannot but be aware that photocopying is available at any corner shop at 4 or 5 pence per sheet. It may be that there is a good reason for charging this rate but I believe that it is right that I should record my view that this looks to me to be more than excessive. It is also right, in fairness, to record the fact that I have heard no argument on the point. I should emphasise that I do not propose to make any order about it, but I think it would not be right for me to let that go unnoticed.
41. Finally, there is a letter, dated Friday, 9th July 1999, which the council's solicitors sent to Walton's solicitors, and which they received at 5.20 that evening. The trial was due to start on the following Monday, 12th July. The letter is headed as follows:

"Without prejudice save as to costs and subject to contract, claimants Part 36 offer."

After a couple of introductory paragraphs, the letter says this:

"We would preface the following offer by saying that it is only open for acceptance subject to formal committee approval. Subject thereto, our clients would be prepared to agree:-

1. To get a long-stop date of 31st December 1999 beyond which no further extension is to be granted for the RTL option;

2. To confirm by way of deed that the Walton option is valid, i.e. intra vires;

3. In view of the fact that an offer in similar terms was made prior to the commencement of these proceedings and not accepted by your clients, our clients require a contribution of 50% of their costs on the standard basis to be subject to detailed assessment, if not agreed."

This offer was then withdrawn on 15th July 1999, that is the following Thursday, at the end of the fourth day of the hearing.

42. It is clear that this is not a Part 36 offer. In the first place, it is "subject to contract" and "subject to committee approval" and, therefore, was not an offer capable of acceptance in the normal sense of the word. Secondly, it was withdrawn - see rule 36.5(8). Nonetheless, it seems to me that, subject to one point as to admissibility, it is an offer which I can take into account in the light of rule 44.3(4)(c).
43. There are three points made about this offer. The first is that it is not an offer capable of acceptance: note the heading "subject to contract", and the reference to "subject to formal committee approval". Secondly, bearing in mind the reference in the paragraph numbered 3 to the offer, the whole letter is inadmissible because it incorporates reference not merely to "without prejudice" discussions but the contents of those "without prejudice" discussions, albeit by reference. Thirdly, bearing in mind the pressure on the parties and in particular on Walton at the time, it was unreasonable to expect Walton to react.
44. In my judgment, it certainly was an offer which would not have led to a binding contract, if agreed. However, it is fair to assume that, if Walton had indicated that the terms were acceptable, there would have been a reasonably good prospect of it being approved by the committee and, thereafter, not being subject to contract. However, that is a matter of speculation and one cannot be sure; I have no evidence, for instance, either that the committee was ready for approving the proposal or that Walton was told that. Furthermore, I note that the original approval to the Walton agreement was only originally given by the sub-committee on the Chairman's casting vote. However, it does not seem to me that that prevents this offer being taken into account, albeit it would be a little difficult to know what weight to give it.
45. As to the point that it refers to "without prejudice" negotiations, I have not been referred to any relevant authority. It seems to me that the wording at the beginning of paragraph 3 renders it certainly arguable that this letter would not have been admissible because it relies on the content of the "without prejudice" negotiations. As at present advised, I am inclined to think that, with the new regime and with the emphasis on encouraging parties to settle, the court would have been prepared to treat as deleted the first 26 words of paragraph 3 for the purpose of considering this offer. In other words, the court would have been concerned with the essence of the offer rather than with concentrating on an irregularity which is not in practice embarrassing and not central to the proposals.
46. However, what gives me further cause for concern on this issue is that I am told by Mr. Wood that this offer was discussed between Counsel on the 12th July and that he told Mr. Smith for the council that he took the view that this offer was not admissible. If seems to me that was, at the very least, a defensible view. The right thing for the council to have done, in these circumstances, if they wished to proceed with this offer would have been to renew it, deleting the offending opening words of paragraph 3. That factor, coupled with the facts that there was such pressure on the parties and that the letter was subject to contract, makes me conclude, particularly given that the great bulk of the expense had already been incurred, that it would not be right to give weight to this letter, particularly bearing in mind that it was withdrawn four working days later.
47. Thus, bearing in mind the defects in this letter, coupled with the great pressure under which Walton found itself on 12th July, through no fault of its own, it would be wrong to improve the council's position with regard to costs by reflecting the terms of this letter in the order for costs.
48. Accordingly, I consider the right order is that Walton should pay half the council's costs, save that the council's costs should only extend to 5/8ths of the preparation of the bundles.
49. MR. ANDERSON: My Lord, I am very much obliged for that judgment being delivered so soon after we have made submissions. There are two matters which I should deal with; the first is that, where an order for costs is being made where two counsel were involved, your Lordship will know there is provision for your Lordship giving an indication that that was appropriate in the circumstances of this particular case.
50. MR. JUSTICE NEUBERGER: It is to be found where?
51. MR. ANDERSON: It is at page 476 in the Supreme Court Practice. It is the equivalent, as I understand it, to some sort of certification.
52. MR. JUSTICE NEUBERGER: Yes, I see: 478, I had not considered that.
53. MR. ANDERSON: 476, my Lord, at the top of the page: "Where there is to be an assessment of a hearing at which one or more counsel appear, where an order for costs ..."
54. MR. JUSTICE NEUBERGER: Yes.
55. MR. ANDERSON: It is perhaps ... as to its overall facts. To the extent that this may be of assistance, I would invite your Lordship to make ----
56. MR. JUSTICE NEUBERGER: So I could say it was only fit for one or I could say it was fit for two or I could say nothing.
57. MR. ANDERSON: My Lord, yes. In the circumstances ----
58. MR. JUSTICE NEUBERGER: Well, I certainly do not propose to say it was fit for one.
59. MR. ANDERSON: I am obliged for that indication. In my submission, it runs along the lines of the assistance that a trial judge can give to the Court of Appeal; the assistance they can give to the court is generally very much appreciated.
60. MR. JUSTICE NEUBERGER: I see. I will hear Mr. Wood on that, but I have what you say in mind.
61. MR. WOOD: Of course, I do not have the slightest objection to that; this was a heavy case on any view. I am slightly taken by surprise that that particular rule applies to costs at trial, but if and insofar as it does, then it would seem to me right that your Lordship should give that indication as requested.
62. MR. JUSTICE NEUBERGER: I am grateful. Well, if it is any help to either party, my view is that it would be appropriate. Like Mr. Wood, I am very surprised it is here but, as it is here, it does seem to apply and I do not see why you should not have that indication, Miss Anderson.
63. MR. ANDERSON: My Lord, it certainly seems to apply to ----
64. MR. JUSTICE NEUBERGER: Yes, no doubt.
65. MR. ANDERSON: The second matter is, your Lordship has accepted my friend's submission this being an early indication on costs that the costs indications in this case are almost insignificant in terms of general interest than the underlying decision. In those circumstances and in view of the decision your Lordship has made, which is in effect to reduce the amount of costs that would otherwise be payable to Liverpool City Council, I do ask for leave to appeal on that part of the decision. I clearly need it.
66. MR. JUSTICE NEUBERGER: It is somewhat academic, is it not, because you are going to the Court of Appeal or at least
67. Mr. Wood is going to the Court of Appeal in a couple of weeks time. No doubt, the question ----
68. MR. ANDERSON: He is, although my understand is that if I seek leave had this been all done at once I would need leave ----
69. MR. JUSTICE NEUBERGER: Yes, you do need leave. The question is whether the Court of Appeal will consider your application for leave and then consider your appeal or dismiss your application for leave.
70. MR. ANDERSON: My Lord, quite. In my submission, the proper thing for your Lordship to do to reflect the significance of the costs matter in this case is to grant permission here. It may be my learned friend will have a similar application to make, in fact he has not got everything he wants.
71. MR. JUSTICE NEUBERGER: Well, I will hear Mr. Wood on that. I see your point.
72. MR. WOOD: I would not have sought permission to appeal against your Lordship's order for costs, but if there is going to be an appeal on that side I would seek permission to cross-appeal.
73. MR. JUSTICE NEUBERGER: Can I help. If I give Miss Anderson permission, then I should certainly give you permission. That must follow. But is your primary position that you should each have permission or that neither of you should have permission?
74. MR. WOOD: Yes, so far as the advent to the Court of Appeal proceedings are concerned, there are two issues in the Court of Appeal, want of authority and rectification. My appeal may be dismissed, in which case your Lordship's order for costs here will stand ----
75. MR. JUSTICE NEUBERGER: Or if it succeeds ----
76. MR. WOOD: And if Liverpool are unhappy with it, I would suggest it is right that they should be given permission to appeal, subject to my having the right to cross-appeal.
77. MR. JUSTICE NEUBERGER: So you would say you should both have permission. That is primarily your position?
78. MR. WOOD: Yes. As my friend has said, in fact I think I said in my skeleton argument, this is probably the first detailed judgment since April 26th on costs -----
79. MR. JUSTICE NEUBERGER: I am not sure what my attitude would have been on permission to appeal if it had been opposed. But, if you both want permission to appeal and the case is going to go to the Court of Appeal anyway on the substantive issues, then ----
80. MR. WOOD: My Lord, my position is, if your Lordship -- I am not supporting my friend's application ----
81. MR. JUSTICE NEUBERGER: But you are not opposing it? Are you opposing it?
82. MR. WOOD: Yes, I am opposing it because - I am sorry it is my fault.
83. MR. JUSTICE NEUBERGER: No, it is my fault.
84. MR. WOOD: No, it is not; it is my fault. Having heard your Lordship, my feeling was that I would not be asking for permission to appeal because your Lordship has exercised a discretion. My position is simply that if your Lordship is minded to give the other side permission to appeal, then I would seek to have permission to cross-appeal. But, apart from that, no, I do not support the application.
85. MR. JUSTICE NEUBERGER: You say it is really the exercise of discretion?
86. MR. WOOD: Yes. I am sorry, I did not make that clear.
87. MR. JUSTICE NEUBERGER: No, it is my fault. As I say, if you both wanted permission to appeal in support, as it were, and did not oppose the other, then I would have granted permission. But that is not the position. Your primary position is no permission but, if I grant it one way, I should grant it the other?
88. MR. WOOD: Yes. Just to give me some leeway on the appeal should it be brought, but not otherwise.
89. MR. JUSTICE NEUBERGER: Anything else you want to say?
90. MR. ANDERSON: Just on the question of discretion. In my submission, it is not only a matter of discretion, because your Lordship has in fact interpreted various parts of the rules, the interaction between them and, for example, on the question of conduct to what extent the conduct of the parties can be taken into account. This is not purely a question of discussion, because we are in the rather embryonic stage of development of particular rules.
91. MR. JUSTICE NEUBERGER: Having given my judgment on costs, Miss Anderson on behalf of the council now asks for permission to appeal. Walton's position, through Mr. Wood, is, first, I should not grant permission to appeal but, secondly, if I grant the council permission to appeal, I should grant Walton permission to cross-appeal.
92. I have no doubt that if I grant the council permission, then it would only be right to grant Walton permission to appeal the decision on costs; and if both parties were encouraging me to grant permission to appeal,
93. I think it would be right to grant it, given that the substantive issues of rectification and want of authority are due to be heard by the Court of Appeal inside the next two weeks. However, the question I have to consider is whether
94. I should give the council permission to appeal, when it is opposed by Walton. An order for costs involves the exercise of a discretion and the court should be slow to grant permission to appeal. There are three reasons for saying that maybe I should grant permission to appeal here. The first, as I have mentioned, is that this is a case, possibly the first substantial witness action, where the new rules apply with all their force; secondly, that a substantial amount of money is involved; and, thirdly, that the matter is due to be before the Court of Appeal in a short time anyway.
95. I have come to the conclusion that, despite those factors, I should refuse permission to appeal. While it is not for me to tell the parties how to conduct their appeals, and it is certainly not for me to tell the Court of Appeal how to proceed, it seems to me that it may be appropriate for the council, if it wishes to obtain permission from the Court of Appeal to appeal against my order for costs, to raise the matter before the Court of Appeal when it is there on the substantive issues. The Court of Appeal may reverse me on one or both of the grounds which are raised, which would mean that the issue for costs was to be reconsidered. Secondly, even if they uphold my decision, they would still be in a fairly good position to decide whether the application for permission to appeal should proceed and, if so, whether they should hear it.
96. It appears to me that there is nothing particularly controversial about the CPR themselves. So far as my application of them is concerned, it has been an application to the facts of this case. I do not think there have been any great issues of principle between the parties. In these circumstances, I think the more appropriate course is for me to refuse the council permission to appeal. But, I should make it clear again for the benefit of the Court of Appeal that, if I had been minded to grant the council permission to appeal, I would certainly have granted Walton permission to cross-appeal as well.
97. MR. WOOD: There is just a question now of the costs of and occasioned by today's hearing which I presume would be simply part of the costs of the action and distributed in accordance with your Lordship's order.
98. MR. JUSTICE NEUBERGER: Absolutely.
99. MR. WOOD: Thank you very much. Thank you, my Lord, for taking so much time to deal with a far from straightforward costs issue.
100. MR. JUSTICE NEUBERGER: Thank you very much. I have been ably assisted by oral arguments in both cases and your skeleton argument, Mr. Wood. Thank you.
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