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You are here: BAILII >> Databases >> England and Wales High Court (Chancery Division) Decisions >> Hamid v Queen Anne Street Medical Centre Ltd [2025] EWHC 1366 (Ch) (04 June 2025)
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Cite as: [2025] EWHC 1366 (Ch)

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Neutral Citation Number: [2025] EWHC 1366 (Ch)
Case No: CH-2024-000170

IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
CHANCERY APPEALS (ChD)

ON APPEAL FROM THE ORDER OF HHJ MONTY KC MADE ON 24 JUNE 2024 (SEALED ORDER DATED 10 JULY 2024) SITTING AT THE COUNTY COURT AT CENTRAL LONDON

Rolls Building
Fetter Lane
London, EC4A 1NL
4/06/2025

B e f o r e :

MRS JUSTICE JOANNA SMITH
____________________

Between:
ASIF HAMID
Appellant
- and –

QUEEN ANNE STREET MEDICAL CENTRE LIMITED
Respondent

____________________

Mr Winston Jacob (instructed by Bloomsbury Law) for the Appellant
Mr Neil Mendoza (instructed by Spencer West LLP) for the Respondent

Hearing date: 15 May 2025

____________________

HTML VERSION OF APPROVED JUDGMENT
____________________

Crown Copyright ©

    This judgment was handed down remotely by email, at 10.30am on Wednesday 4 June 2025, by circulation to the parties or their representatives, and by release to the National Archives.

    Mrs Justice Joanna Smith:

  1. This is the hearing of an appeal against costs only in respect of an Order made by HHJ Monty KC ("the Judge") on 24 June 2024 (sealed on 10 July 2024) ("the Order") ordering the Appellant to pay 80% of the Respondent's costs in proceedings for a new business tenancy under Part II of the Landlord & Tenant Act 1954 ("LTA 1954"). The Judge also ordered the Appellant to make a payment of costs on account of £45,000.
  2. The Background Facts

  3. Owing to the way in which the submissions were developed before me on the appeal, it is important that I set out in some detail the background to the proceedings and their procedural progress to trial.
  4. The Appellant runs a dental practice from Ground Floor Rooms at 14 Fitzroy Square, London, W1T 6ED ("the Premises"). The Appellant has occupied the Premises (first as a partner in the dental practice and then as its sole owner) subject to an unwritten periodic tenancy ("the Tenancy") upon payment of an all-inclusive rent of £1,250 per month (equivalent to an annual rent of £15,000) for many years.
  5. On 25 March 2019, the Appellant's then landlord, MYA Cosmetic Surgery Limited ("MYA"), served notice on the Appellant under section 25 LTA 1954 to terminate the Tenancy on 30 September 2019, indicating that it would oppose an application to the court for the grant of a new tenancy under section 30(1)(g) LTA 1954 (i.e. landlord's intention to occupy for the purpose of its business) ("ground (g)").
  6. On 23 September 2019, the court issued the Appellant's claim against MYA for a new business tenancy. MYA entered administration in January 2020. Thereafter, on 15 October 2021, the Respondent to this appeal became the Appellant's immediate landlord and (by order of the court dated 4 March 2022) was substituted as defendant to the Appellant's claim.
  7. In his Amended Particulars of Claim, the Appellant claimed that he was entitled to a new business tenancy (i) for a term of 14 years six months from the end of the Tenancy (with rent reviews to take place every 5 years); (ii) at a rent of £18,000 per annum; and (iii) that all other terms should be standard commercial terms.
  8. In its defence to the Appellant's claim, the Respondent opposed the grant of a new tenancy (also on ground (g)). In the alternative, it proposed that any new business tenancy should be (i) for a term of 5 years from 15 October 2021; (ii) at a rent of £80,000 per annum plus service charges; and (iii) with a rent review in the third year of the term. Further, the Respondent applied for the determination of an interim rent under section 24A(1) LTA 1954. In his Reply, the Appellant denied that the Respondent was entitled to rely upon ground (g) in opposition to the claim and noted the application for interim rent (albeit identifying a period between 17 January 2022 and 3 May 2022 when the Appellant had been forced to vacate the Property so as to enable the Respondent to carry out refurbishment works ("the Refurbishment Period")). The Appellant maintained that an appropriate interim rent was £18,000 per annum inclusive of service charges, subject to a deduction to reflect the Refurbishment Period.
  9. Mr Jacob, on behalf of the Appellant, submits that as at close of pleadings there were five main issues between the parties: (i) whether a new tenancy should be granted; if granted (ii) what the rent should be; (iii) whether service charges would be charged in addition to rent; (iv) the term of the new tenancy; and (v) the level of interim rent (albeit that at this stage the Respondent had not set out its case on this - it was not until November 2023 that the Respondent made clear in email correspondence between solicitors that its approach was that interim rent "conventionally should be at the same rate as the final rent").
  10. A CCMC was listed for 28 April 2023 and it was agreed by the parties in advance that the Respondent's ground of opposition to a new tenancy should be tried as a preliminary issue. In the event, the court declined to take this approach and ordered instead that a full trial should take place on all of the issues. The parties were granted permission to rely upon expert evidence from a single joint expert ("the Expert") on the terms of any new tenancy. Given that the parties had prepared costs budgets on the assumption that the court would order the hearing of a preliminary issue, the court gave permission to the parties to file and submit updated costs schedules.
  11. During the lead up to trial, the parties engaged in both open and 'without prejudice save as to costs' correspondence. For present purposes, I refer to two emails in particular upon which the Appellant relies:
  12. a. An open email of 3 October 2023 from his solicitor, Mr Cselko, to the Respondent's solicitor, Mr Rose, ("the October Email") in which he made the following proposal:
    "[i]f the proposed annual rent of £25,000 were to be inclusive of service charge and insurance as well as utilities, we could dispense with the need for expert evidence".
    b. An email of 10 November 2023 from Mr Cselko to Mr Rose marked 'Without Prejudice save as to Costs' ("the November Email") responding to an email of the previous day in which the Respondent had proposed a rent of £27,000 inclusive of service charges and building insurance and a three year term. In his response to this offer, Mr Cselko says this:
    "[r]ent of £27,000 on the basis of a 3-year term is not acceptable to my client unless interim rent could at the same time be agreed at the level of the current rent with no uplift given the disruption caused by Covid and closure of the hospital during your client's refurbishment works during the period since they were granted the headlease. In the meantime and in any event please would you confirm that rent can now be treated as fully inclusive to enable Mr Gelb and I to narrow the remaining issues in the draft lease".

  13. The proposals made in the October and November Emails were rejected by the Respondent.
  14. On 30 November 2023 the Respondent served a witness statement for trial in which it was conceded that the Respondent's opposition to the grant of a new business tenancy could not succeed (i.e. the first of the key issues on which the Appellant relies). In the Appellant's witness statement served on 4 December 2023, a concession was made as to the length of the new term (a reduced period of 10 years was now proposed, albeit this still remained a long way from the 5 year term proposed by the Respondent).
  15. On 8 February 2024, the Expert (who was instructed to report on the market rent for the Premises) produced his report ("the Expert Report") in respect of the Property. In the report he explained that his consideration of market rent was intimately associated with assumed lease terms and he opined that a market rent of £20,569 per annum (which he rounded up to £20,750 per annum) would represent the current market value of the Property. He also opined that service charges and the like should be borne by the Appellant in addition to the market rent and that a minimum lease term of 10 years (with a rent review after 5 years) was appropriate. It appears that the Expert was not instructed to, and did not, opine on the level of any interim rent.
  16. Further to this report, it is common ground that the parties agreed the valuation of £20,750 per annum (thereby resolving the second key issue between them), subject to the question of whether service charges should be payable in addition to this figure.
  17. On 9 April 2024, the Respondent conceded in an open email that interim rent would not be payable for the Refurbishment Period, albeit it made no proposal as to the level of the interim rent.
  18. On 10 April 2024 the parties exchanged trial skeletons for the trial which was due to commence on 15 April 2024. Issues between the parties remained as to various detailed provisions of the new tenancy, but on the three remaining key issues, the parties' positions may be summarised as follows:
  19. a. Length of Term: the Appellant sought a term of 10 years consistent with the Expert Report (together with a 5 year rent review); the Respondent sought a term of 5 years terminating on 15 October 2026;
    b. Service Charges: the Appellant indicated that he would accept service charges on top of the expert's market valuation only if he was given a minimum term of 10 years. If the court were to grant a shorter tenancy, the Appellant stated that that the rent should be fully inclusive of service charges (consistent with the provisions of the existing Tenancy). The Respondent contended that the rental figure arrived at by the expert of £20,750 should be exclusive of service charges (consistent with the expert's view), albeit that it is common ground that on the day of the trial itself, the Respondent conceded that in the event of the court agreeing with the Appellant and ordering a short term, the Respondent would not continue to argue for the service charge to be payable in addition to the agreed rental figure;
    c. Interim Rent: the Appellant suggested in his skeleton argument that the interim rent should "remain the same as the current rent" (equivalent to £15,000 p.a.), a submission which Mr Jacob accepts was "optimistic" (and, in a note provided after a draft of this judgment was circulated, Mr Jacob informed me that this submission was not actually pursued at trial). Alternatively, the Appellant contended that the expert's valuation of £20,750 should be discounted by 10% to tailor it to a tenancy from year to year (producing a figure of £18,512.10) and that the court should then make a second reduction having regard to the need to provide some cushioning in respect of the existing rent. The Appellant submitted that an interim rent of £16,500 would be appropriate and observed that the parties were agreed that there should be no interim rent payable during the Refurbishment Period. The Respondent submitted that the starting position was the expert's valuation of £20,750 and accepted (for the first time) that there should be some cushioning, but observed that it should be "modest". The Respondent said nothing about any additional discount and also made no submission as to the level of the interim rent. It is common ground, however, that in submissions at the trial itself, Mr Mendoza, on behalf of the Respondent, accepted the need for a 10% discount, together with a modest cushion, and proposed interim rent of £17,500.
  20. The trial took place over the course of one day on 15 April 2024. At the outset of the trial the Judge agreed with submissions from the Respondent to the effect that he should focus only on the key areas of dispute (rent/service charge, the term of the tenancy and interim rent) and that the numerous other disputed terms highlighted in a schedule produced by the Respondent on the day before the hearing should be resolved later between the parties' solicitors. This approach (which had been suggested by the Respondent's solicitors in advance of the trial) was accepted by the Appellant, notwithstanding that it had dealt with various of those disputed terms in its skeleton argument for trial.
  21. The Judge reserved his judgment, handing it down on 17 April 2024 ("the Trial Judgment"). At paragraph [3] he made clear that it concerned "the three main issues between the parties, namely (1) the term of the new lease, (2) rent under the new lease, and (3) interim rent". It is clear from paragraphs [14]-[16] of the Trial Judgment that, in addition to the term of the new lease, the parties were also at odds over the date on which the new lease would commence: the Appellant submitted that it should commence 3 months after the date on which the claim was finally determined (consistent with the provisions of section 64(1) LTA as to the termination date of the Tenancy), while the Respondent sought a commencement date of 5 October 2021 (consistent with its pleaded case). The Judge explained in the Trial Judgment that a tenancy ending on 5 October 2026 was important to the Respondent as it would then be able to mount its opposition to any claim for a new tenancy under ground (g) because it would be able to satisfy "the 5-year rule".
  22. The Judge considered the question of the duration of the new tenancy over some 40 paragraphs, concluding that the individual factors to which he had referred pointed away from the 10 year term proposed by the Appellant (and supported by the Expert). He concluded that it would be reasonable for the Appellant to have a new lease ending on 5 April 2027 – in other words, as the Appellant submits, 5 ½ years from 5 October 2021, a six month increase on the 5 year period proposed by the Respondent. I note, however, that in fact the Judge concluded his judgment by explaining that the new tenancy would start on the date provided for under the 1954 Act.
  23. On the subject of rent, the Judge found (at [55]-[56]) that the rent would be £20,750 with no additional charges. He explained this by reference to the parties' (now) agreed position that if the term was 10 years the rent should be £20,750 with service charges etc. on top (as set out in the Expert Report) but that if the term was short the rent would be inclusive such that there would be no additional charges.
  24. On the issue of interim rent, the Judge recorded that it was agreed (i) that the interim rent would run from 15 October 2021; (ii) that there would be no liability for interim rent during the Refurbishment Period; and (iii) that the court should, first, assess an interim market rent for a tenancy from year to year and, second, adjust the interim market rent to have regard to the old rent under the Tenancy. The Judge applied the agreed deduction of 10% to the market rent of £20,750 and then determined that "the appropriate cushion should result in an interim rent of £17,500", thereby accepting the stance adopted by the Respondent.
  25. Pursuant to an Order of 17 April 2024, the Judge then adjourned the trial part-heard to be listed on 24 June 2024 for the purpose of resolving any outstanding issues as to the terms of the new tenancy that remained in dispute. Costs were reserved.
  26. Upon the matter returning to court on 24 June 2024 ("the Adjourned Hearing"), there remained four live issues on the terms of the new tenancy agreement, which, as the Judge recorded in the ex tempore judgment he gave on the same day, were resolved following indications from the court. One matter was more problematic, however, arising out of the first of the four issues, namely whether the Appellant was entitled to use the Premises outside of the permitted hours for emergency treatment. The Judge dealt with this in detail in the ex tempore judgment.
  27. The Judge having determined the outstanding issues on the tenancy agreement, the parties then made submissions on costs. Each side contended that it was the "successful party" in the proceedings and thus each side submitted that it should have its costs.
  28. The Judgment on Costs

  29. The Judge gave a further ex tempore judgment on the costs of the proceedings which begins at paragraph [18] of the transcript ("the Costs Judgment").
  30. At paragraph [20] he recorded that each side maintained it had won both the substantive trial and the outstanding issues hearing. However, as the Judge said, "[c]learly they cannot both be right". The Judge then went on to say this at [20]:
  31. "…the general rule is that the unsuccessful party will be ordered to pay the costs of the successful party but of course, the court may make a different order. That is what the rules say at CPR 44.2(2)(A-B). In deciding what order, if any, to make about costs, the court will have regard to all the circumstances, including the conduct of the parties, whether a party has succeeded on part of its case, even if that party has not been wholly successful and any admissible offers to settle, other than those made under part 36, see CPR 44.2(4). The court may order that a party may pay a proportion of another party's costs or all of the costs only relating to a distinct part of the proceedings. That is also set out in 44.2 at subparagraph 6 (a), (c) and (f), for example. But before making the latter sort of order, the court must first consider whether it is practical to make a proportional costs order or costs from a certain date order first. Issue-based costs orders are possible but a proportion of costs orders or time-limited orders are rea1ly the starting point. So, the rules make it clear that the court has a very wide discretion as to costs but the starting point is always to identify the successful party. And successful party means successful in the litigation, not successful on any particular issue. See Kastor Navigation v AXA Global Risks [2004] 2LR 119 at [143]".

  32. No criticism is made of this articulation of the applicable rules on costs by the Appellant.
  33. The Judge then addressed the arguments advanced on behalf of the Appellant (at paragraphs [21]-[23]) and the Respondent (at paragraphs [21] and [24]). In summary, the Judge recorded that:
  34. a. the Appellant contended that (i) he had succeeded on the issue of whether there should be a renewed tenancy (an issue which had been conceded by the Respondent upon service of its witness statement), (ii) he had always contended for a lower rent (£18,000) than the Respondent (£80,000) and the Judge had awarded a rent of £20,750; further that he had tried to avoid the costs of the Expert by proposing an all-inclusive rental figure of £25,000 (the Appellant accepts that this is a reference to the October Email); (iii) the Appellant had made an offer of £27,000 rent (inclusive of service charges) for a three year period with an interim rent of £15,000 (the Appellant accepts that this is a reference to the November Email); the Appellant said that overall he had done better financially at trial than would have been the case had this offer been accepted;
    b. the Respondent contended that (i) its concession as to the renewal of the tenancy was "a bit illusory" because it had been clear from an early stage that the substantive issues between the parties would be the terms of the new lease, in particular the appropriate period and the rent; (ii) the primary concerns at trial were the duration of the term and the interim rent; and that (iii) the Appellant had sought a longer term (10 years[1]) than the Respondent (5 years) together with an order for a lower interim rent than the Respondent. It submitted that "[b]oth of those [issues] were resolved in the [Respondent's] favour".
  35. At paragraph [25] the Judge referred to correspondence to which he had been referred by both sides, saying this:
  36. "25. I was taken by both sides to some of the correspondence between the solicitors. Some of it seems to have been on an open basis and some without prejudice, subject to costs. I find it difficult to do anything other than to think that unless one reads all of that correspondence, what one is doing by dipping into it is no more than seeing offers on parts of the case, rent for example, where someone might have done better or worse at the trial but they have done either better or worse on the term. And so, it is difficult to pick one bit of correspondence and have that "ah-ha" moment and say that is the offer that ought to have been accepted by the other side and "I have done so much better than that at the trial." The fact is that neither of the parties can really point to anything which shows that they have bettered an offer that was made".

  37. The Judge then went on at [26] to address the November Email, rejecting the argument advanced by the Appellant that this offer established that the Appellant had done better than the Respondent at trial:
  38. "26. The offer that Mr Jacob puts principal reliance on is one in respect of which I am not convinced that the tenant did very much better in financial terms, because of the period that was ordered. One can take, for example, another offer that the landlord made, which was to accept the rental valuation, just leaving the court to determine length of term. It is very difficult to identify an offer and I think impossible to identify an offer which either party can say was bettered, because on everything, term was not agreed and was not part of an offer although it was an essential ingredient for any settlement to have worked, as was rent. I am not convinced that either party has done better than any offers that were made".

  39. At [27] the Judge turned to address the costs of the Adjourned Hearing, saying this:
  40. "27. So far as today is concerned, again, as I identified in this judgment, there were four issues that I had to determine. In the event, the only ones I determined in the strictest sense were the out of hours opening and the CQC point, although I did not give a judgment on those. On the other issues, I tried to steer what I thought was a sensible course in pushing the parties to recognise that, for example, in respect of the cosmetic treatments issue, that there probably was a misunderstanding and I think it turns out there was, as to what each side meant by cosmetic treatment and aesthetic practice. In fact, the position was much simpler and that ended up being resolved. As to access and permitted hours, yes, that was really in favour of the tenant but on out of office hours, the substantive ruling, that was in favour of the landlord".

  41. In the final three paragraphs of the Costs Judgment, the Judge drew the strings of these various paragraphs together:
  42. "28. I have to say, had it been just the costs of today that I was dealing with, I probably would have concluded that this was, in reality, a bit of a score draw or as it were the result of a judge-led negotiation and each party should bear its own costs of today. Of course, that does not deal with the issues of the trial. Weighing all of those things up that I mentioned earlier on when I was looking at the issues that were live before the trial, it seems to me that Mr Mendoza is right and it was the landlord that was the more successful of the two parties. But I think that there are good reasons for reducing the landlord's costs by a percentage and I will do so.
    29. The reasons are that I do not see why the landlord should have all of its costs of today as well, which I think is probably best reflected in a modest percentage reduction. I recognise the force of some of the points made by Mr Jacob, that there was a period where some costs may have been incurred when this was an opposed business lease renewal in the full sense for a period in excess of a year until the concession was made. But in terms of the amount of rent, that was dealt with on the basis of the expert evidence. On the term, it seemed to be the landlord should be properly described as the successful party on that. Similarly with the interim rent.
    30. I have to say, things would have been different if there had been one letter that could have been pointed to where someone could have said, "This is the offer I made and this is how I bettered it." I know that is what Mr Jacob tried to do in respect of that £27,000 for three years with interim rent at £15,000. I am not convinced that it did do that. This was a case that really ought to have been settled and ought not to have troubled the courts at all. I do not think that the court ought to have been troubled by today either. The parties ought to have been able to agree all of the issues that I had to deal with today without the need for a further hearing. Once it was agreed that there should be a new lease on sensible commercial terms, it is a great pity that there was not agreement. So, although the landlord was overall the successful party, I think there should be a reduction to 80 per cent of the landlord's costs and that is what I am going to order".

  43. Further to this judgment, the Judge ordered that the Appellant should pay 80% of the Respondent's costs of the proceedings, together with a payment on account of costs in the sum of £45,000.
  44. The Grounds of Appeal

  45. Against that background, the Appellant has permission to pursue five grounds of appeal, namely that:
  46. a. Ground 1: the Judge was wrong to hold that the Respondent was the "successful party" within the meaning of CPR 44.2(2)(a). He should have held that the Appellant was the successful party.
    b. Ground 2: the Judge failed to take into account sufficiently, or at all, the October Email. The Appellant contends that "the end result was better for the Appellant and acceptance of the offer [made in that email] would have avoided the parties' costs of the expert".
    c. Ground 3: the Judge failed to take into account sufficiently or at all the November Email. The Appellant contends that the end result would have been better for the Appellant had the parties agreed the terms of that email and the costs of witness statements, the expert report, trial preparation and the trial itself could have been avoided.
    d. Ground 4: even if the Judge was right to find that the Respondent was the successful party, he erred in principle and/or failed to take into account relevant features of the litigation and/or made an unfair decision outside the scope of his discretion by failing to consider and/or make an order for the Respondent to pay the Appellant's costs that he had incurred relating to issues on which he was ultimately successful (whether due to judicial finding or concession by the Respondent, including (a) the Respondent's ground of opposition to a new tenancy; (b) the amount of rent payable under the new tenancy; (c) that the rent would be all-inclusive; (d) the interim rent; and/or (e) some of the disputed terms decided at the Adjourned Hearing despite the Appellant having incurred significant costs on these issues.
    e. Ground 5: even if the Judge was correct to conclude that the Adjourned Hearing was a "score draw", he was wrong to order the Appellant to pay 80% of the Respondent's costs relating to it. The Judge erred in principle and/or made an unfair decision outside the scope of his discretion. He should have made no order for costs of that part of the proceedings.
  47. The Appellant's application for permission to appeal was initially refused on the papers by Richard Smith J on 14 October 2024, but was later granted (save in respect of a sixth ground of appeal) by Thompsell J at a renewed oral hearing on 14 November 2024.
  48. The appeal is limited to a review of the decision of the lower court and the appeal court may only allow an appeal where the decision of the lower court was "(a) wrong; or (b) unjust because of a serious procedural or other irregularity in the proceedings in the lower court" (CPR 52.21(3). In this context, "wrong" means that the court below (i) erred in law or (ii) erred in fact or (iii) erred (to the appropriate extent) in the exercise of its discretion (CPR 52.21.5).
  49. Appeals on Costs - Principles

  50. I did not understand it to be controversial that the appeal court will exercise considerable caution before it intervenes to overturn the exercise of discretion by the trial judge on the question of costs.
  51. Mr Mendoza referred me to a number of authorities which emphasise this point, but I need only refer for present purposes to the recent review of the relevant principles carried out by Hill J in Steven Mlundra v The Secretary of State for the Home Department [2025] EWHC 189 (KB) (on appeal from the Senior Courts Costs Office) at [34]-[38] as follows:-
  52. "34. The Court of Appeal has stated on a number of occasions that appeal courts should adopt "a conservative approach" when considering costs appeals: the White Book 2024 at 52.1.14.
    35. In SCT Finance v Bolton [2002] EWCA Civ 56 at [2] Wilson LJ observed that…:
    "an appeal…in relation to costs…is overcast from start to finish by the heavy burden faced by any appellant in establishing that the judge's decision falls outside the discretion in relation to costs conferred upon him under rule 44.3(1) of the [CPR]. For reasons of general policy, namely that it is undesirable for further costs to be incurred in arguing about costs, this court discourages such appeals by interpreting such discretion very widely".
    36. The "conventional approach" to costs appeals is that:
    "Before the court can interfere it must be shown that the judge has either erred in principle in his approach, or has left out of account, or taken into account, some feature that he should, or should not, have considered, or that his decision is wholly wrong because the court is forced to the conclusion that he has not balanced the various factors in the scale": AEI Rediffusion Music Ltd v Phonographic Performance Ltd [1999] 1 WLR 1507 at 1523, per Lord Woolf MR, citing Roache v News Group Newspapers [1998] EMLR 161 at 172 .
    37. In Straker v Turner Rose [2007] EWCA Civ 368[2] at [2] Waller LJ reiterated the general principle that an appellate court "will be loath to interfere with the discretion exercised by a judge in any area". However, "so far as costs are concerned that principle has a special significance". This is because "[t]he judge has the feel of a case after a trial which the [appellate court] cannot hope to replicate and the judge must have gone seriously wrong if this court is to interfere"
    38. The fact that an appeal court would have come to a different decision to that of the judge is neither here nor there; rather it has to conclude that the judge's decision was "perverse": Abdulle and others v Commissioner of Police of the Metropolis [2015] EWCA Civ 1260 at [25]-[28], per Lewison LJ.".
  53. The Appellant did not dispute this summary of the relevant principles. However, Mr Jacob says that this appeal is concerned with errors of principle together with a failure to take relevant features into account and thus he points out that it is not necessary for this court to find that the Costs Judgment was perverse in the sense that it exceeded the ambit of the Judge's discretion. I note however, that the Grounds of Appeal appear to rely (amongst other things) upon the proposition that in relation to each of the individual grounds, the Judge made a decision that was outside the scope of his discretion. Furthermore, as developed in Mr Jacob's written submissions, the appeal (at least in relation to Grounds 1, 4 and 5) also relies on this proposition.
  54. In any event, I bear firmly in mind in considering the various Grounds of Appeal that the rules confer a wide discretion on the trial judge on questions of costs and that the appeal court must exercise restraint when it is asked to upset an order for costs; it should only do so if that order is seriously flawed. I also bear in mind that, by reason of his involvement in the trial and at the Adjourned Hearing, when dealing with submissions from the parties on costs the Judge will have had a feel for, and understanding of, the details of the case before him, the nature of the evidence and the nuances of the arguments which, as Waller LJ observed in Straker v Tudor Rose, simply cannot be replicated on an appeal.
  55. Against that background, I now turn to deal with the various Grounds of Appeal
  56. Ground 1: the "successful party ground"

  57. It is clear from paragraph [20] of the Costs Judgment that the Judge was well aware of the need to determine the identity of the successful party in considering where the burden of costs should lie. He expressly referred to the provisions of CPR 44.2(2)(a) and (b) which provide, as the Judge said, that the general rule is that the unsuccessful party will be ordered to pay the costs of the successful party but that the court may make a different order. The Judge went on to refer to each of the sub-paragraphs of CPR 44.2(4) when dealing with the fact that in determining what order to make about costs, the court must have regard to all the circumstances of the case. He then referred specifically to the available options under CPR 44.2(6), albeit, as he correctly said, "the starting point is always to identify the successful party".
  58. The Judge was also alive to the fact that the reference in CPR 44.2(2)(a) to the successful party is a reference to the successful party in the litigation and not to the successful party on any particular issue. He expressly referred for this proposition to the decision of the Court of Appeal in Kastor Navigation Co Ltd v Axa Global Risks (UK) Ltd [2004] EWCA Civ 277 at [143]. While he did not expressly acknowledge that success includes success in the action or by concession (see Rashid v London Borough of Merton [2016] EWCA Civ 622 per Arden LJ at [19]), it is clear from his judgment that he had this firmly in mind – he recorded (at [21]) Mr Jacob's submissions as to the abandonment by the Respondent of its defence to the renewal of the Tenancy and it is clear from [29] that he took this concession into account in reducing the level of the costs recoverable by the Respondent to 80%.
  59. The Appellant contends that considering the litigation as a whole, he was clearly the successful party. He accepts the Judge's conclusion that the outcome of the Adjourned Hearing was a "score draw", but he says that when one takes proper account of the outcome of the trial, the only logical consequence should have been a costs order in his favour.
  60. In support of this proposition, Mr Jacob makes essentially the same submissions that he made to the Judge (that the Appellant was successful in claiming a business tenancy, that the rent of £20,750 all inclusive was approximately the same as his pleaded case of £18,000 and nowhere near the Respondent's pleaded case of £80,000 plus service charges and that the interim rent was assessed at £17,500 and not at the same figure as the new rent (which had been the Respondent's case up to trial). While Mr Jacob accepts that the Respondent's success on the length of the term "required recognition" he contends that this should have been recognised by a deduction from a costs award in the Appellant's favour.
  61. In addition, Mr Jacob submits that the Judge made three errors of principle: first that he failed to take into account the Appellant's success on the issue of whether service charges were to be paid on top of rent; second that the Judge failed to acknowledge that the determination of the level of rent was a success for the Appellant; and third that the Judge wrongly accepted the Respondent's submission that it was the successful party on the issue of interim rent.
  62. In my judgment, close analysis of these submissions only serves to illustrate the need for caution emphasised in the authorities to which I have referred. The Judge recorded the parties' submissions on the subject of the identity of the successful party at [21]-[24], as referred to above, and given his understanding of the issues raised at the trial and the Adjourned Hearing he was best placed to determine the merits of the points raised on each side. He was certainly not 'wrong' when he held at [24] that "[t]he tenant wanted a much longer term and wanted to pay less interim rent and that is where we were going into the trial. Both of those were resolved in the landlord's favour". Mr Jacob accepted during the hearing before me that this is a fair assessment of the outcome of the issues that the Judge had to decide after closing submissions.
  63. While it is true that the Judge did not expressly refer to the issue of service charges (a point on which Mr Jacob placed particular emphasis in his submissions on the appeal), a reading of the Trial Judgment suggests that as matters developed at trial, service charges were not a significant stand-alone issue. Although service charges were plainly an important issue between the parties prior to the trial, owing to concessions made on both sides, the question of whether service charges were to be paid in addition to the rent was a question which was ultimately inextricably linked to the length of the term. Thus the Trial Judgment dealt in great detail with the question of the length of the term, making a finding (in the Respondent's favour) which then effectively determined the question of whether service charges were to be additional to the rent or not.
  64. In circumstances where the Judge did not identify service charges as a major issue in his Trial Judgment, I cannot see that he erred in principle in failing to take service charges into account in dealing with costs. The Appellant only succeeded on the issue of service charges because the Respondent succeeded in its argument for a short term and because it had conceded that in the event of a short term, service charges should be included in the rent. Had the Appellant succeeded on its argument for a longer term, service charges would have been additional to the rent owing to his concession to that effect.
  65. As to the remaining "points of principle" identified by Mr Jacob:
  66. a. the Judge correctly identified at [29] that the rental figure had been determined by reference to the evidence of the Expert. That the Judge did not take account of the fact that the parties were originally very far apart on the rental figure in the pleadings and that the ultimate figure awarded was much closer to the figure proposed by the Appellant does not appear to me to be an error of principle. The fact is that the rental figure could not be agreed and ultimately was determined by reference to evidence from the Expert, which both parties realistically accepted. I do not regard that as being "obviously" a win for the Appellant and nor do I consider the Judge to have made an error of principle in not identifying it as such.
    b. While it is true that the Judge did not address in the Costs Judgment the concessions made by the Respondent as to the need for deductions to be made to the headline figure of £20,750 to arrive at an interim rent of £17,500, he was not wrong to conclude that the Appellant "wanted to pay less interim rent" (at [24]). Indeed, the Appellant's skeleton for trial suggested, first, that the Judge might feel able to conclude that the level of the interim rent should be the same as the current rent (i.e. even less than its pleaded position) – an argument which does not appear to have been advanced at the trial itself. The Respondent's case prior to trial had been for an interim rent of £20,750. In light of the Appellant's alternative case[3] (that there should be deductions to the Expert's figure of £20,750 to arrive at a figure of £16,500) and the Respondent's concession that there should be a "cushioning" but that any deduction should be 'modest', the Judge determined interim rent at £17,500. In so doing he applied a more modest reduction than had been suggested by the Appellant. I cannot see that he was wrong to determine that the Respondent was successful on this point just as I cannot see that his failure to deal in detail in his judgment with the concession made by the Respondent was obviously wrong or amounted to an error of principle.
  67. In summary, I reject Mr Jacob's submission that the Judge could not have arrived at his decision as to the identity of the successful party had he given sufficient recognition to the issues arising before trial. I also reject the Appellant's case that the Judge made the errors of principle I have identified above. In arriving at a decision as to the successful party in the proceedings, the Judge was entitled to (and did) look at matters in the round and, in my judgment, he was not wrong (or 'perverse') to place substantial emphasis on the issues that were live before the trial and decided at the trial, particularly given that he also acknowledged the need to make deductions to the overall costs award to account (amongst other things) for the Respondent's concession in relation to the renewal of the Tenancy.
  68. As the Judge said at [28] he carried out a balancing exercise (or "weighing up") of all the submission he had heard and it was on the basis of that balancing exercise that he considered Mr Mendoza's submission to be correct that the Respondent was "the more successful of the two parties" (at [28]). There is no scope for this court to interfere with that decision, and (as I shall turn to next) there is nothing in the approach taken by the Judge to either the October Letter or the November Letter that would undermine this conclusion.
  69. Ground 2: The October Email

  70. On this Ground, during submissions, the Appellant made the short point that the October Email justified an order that the Respondent pay the Appellant's costs of and occasioned by the expert evidence and that it should bear its own costs in connection with that evidence. The Appellant submitted that the Judge failed to take this into account in his Costs Judgment and that this was an error of principle.
  71. In his skeleton argument, the Appellant submitted (consistent with the terms of Ground 2 as set out in the Grounds of Appeal) that on any objective assessment, the Appellant "has done better than the offer" made in the October Email because "had [the Respondent] accepted that offer, the parties would have saved the costs of the expert" and because the Appellant would have been obliged to pay the Respondent an extra £4,250 per annum in rent for the new tenancy. Thus, the Appellant said that the Judge was wrong to state that "neither of the parties can really point to anything which shows that they have bettered an offer that was made" (Costs Judgment at [25]).
  72. I reject this Ground. While it is true that there would have been a saving of costs if this offer had been accepted, it would not have brought the proceedings to an end because there would have remained the fundamental question of the term of the new tenancy, together with the other issues that remained outstanding at the time of the October Email. The Judge plainly took the October Email into account in his judgment because he referred to it at [22] and he was entitled to take the view that it should be dealt with as part of his overall assessment, as opposed to making an issues based order by reference to it. The Appellant accepts that the October Email was not an offer that could have settled the entire dispute between the parties.
  73. During the hearing, Mr Jacob submitted that it was clear from the Costs Judgment that the Judge had not in fact taken account of the October Email in his overall assessment because of the sentence "[b]ut in terms of the amount of rent, that was dealt with on the basis of the expert evidence", in [29], which he says precludes the possibility that the October Email (which expressly related to rent) had been taken into account in making the deduction of 80% to the overall costs award. I disagree.
  74. As I have mentioned, at [28] the Judge referred to the fact that he was "[w]eighing [up] all of those things that I mentioned earlier on when I was looking at the issues that were live before the trial", a reference which plainly includes the October Email mentioned at [22]. In the context of this balancing exercise he observed that there were "good reasons for reducing [the Respondent's] costs by a percentage" and at [29] he observed that he recognised "the force of some of the points that were made by Mr Jacob". I reject the submission (based on the niceties of construction of an ex tempore judgment) that the Judge failed in this analysis to include consideration of the October Email. The sentence on which Mr Jacob relies appears to me, in any event, to be returning to the question of the identity of the successful party – in common with the two sentences following it. The Judge is merely observing at the end of [29] that the question of the rent was dealt with by the Expert, but that the Respondent was the successful party on both the issues of the term and the interim rent.
  75. Accordingly, I do not consider that the one sentence on which Mr Jacob relies would justify a finding that the Judge failed to take the October Email into account in his overall assessment. There was no error of principle and, in so far as may be necessary, I also reject any suggestion that the Judge's decision in this regard was 'wrong' or 'perverse'.
  76. Ground 3: the November Email

  77. In support of this ground, Mr Jacob relies upon a sheet of calculations (not made available to the Judge at the hearing) upon which he relies in an attempt to establish that the Appellant did better at trial than he would have done had the offer made in the November Email (to the effect that the Appellant was willing to accept an annual rent of £27,000 and a term of 3 years if the interim rent could be agreed at £15,000 per year) been accepted. The sheet of calculations seeks to compare possible outcomes in the event of acceptance of the offer against the actual outcome following the trial.
  78. However, the difficulty with this approach is that, as at the date of this offer, there was no agreement between the parties as to the date on which the tenancy would commence (the start and finish dates being of particular importance to the Respondent for reasons set out in the Trial Judgment). For this reason, Mr Jacob's sheet of calculations has had to make assumptions as to what might have been agreed as to the possible start date of the tenancy and includes two different scenarios for the outcome had the offer been accepted. The first outcome assumes that the parties would have agreed the grant of a new tenancy three months after the offer, while the second outcome assumes that the offer would have been accepted but that the court would then have ordered the grant of a new tenancy on 15 April 2024.
  79. I consider this approach to be wholly unrealistic and unworkable as a means of attempting to show that the Appellant has done better at trial and that the Judge was wrong not to appreciate that. Aside from the fact that these various scenarios (in the detail given to me) were not made available to the Judge at the time, they proceed on assumptions which are inherently uncertain. The Judge alluded to this when he said at [30] that:
  80. "…things would have been different if there had been one letter that could have been pointed to where someone could have said 'This is the offer I made and this is how I bettered it'. I know that is what Mr Jacob tried to do in respect of that £27,000 for three years with interim rent at £15,000. I am not convinced that it did do that".
  81. I do not consider that this was an error of principle. The Judge expressly considered the November Email but was unconvinced that it represented a trump card. He was entitled to come to that view and I am unsurprised that he did. As I understood Mr Jacob to accept during the hearing before me, the date on which the new tenancy starts affects the overall rental figures in such a way as to make it impossible to be sure about the outcome of an acceptance of the offer made in the November Email. Furthermore, because the November Email did not deal with the start date (or indeed any of the other remaining outstanding terms), it did not amount to an offer to settle the entirety of the proceedings and could not have been accepted on that basis. The second of the suggested outcomes in Mr Jacob's calculation sheet acknowledges the potential for the issue of the start date to have had to be determined at trial. It is also worthy of note, as Mr Mendoza pointed out in his submissions, that as soon as one stops trying to work out the ultimate effect of the offer made in the November Email, one is faced with the fact that it still sought interim rent (effectively by way of a condition of the offer) at £15,000 (which the Appellant most certainly did not 'better' at trial).
  82. In all the circumstances I reject the Appellant's case that the Judge failed to take the offer in the November Email into account and/or that having taken it into account he was wrong to take the view that the Appellant had not bettered that offer at trial. For the reasons I have given there is no proper basis on which I could find an error of principle in relation to the Judge's treatment of the November Email, just as I could not possibly find that he was 'wrong' in the approach he took to it.
  83. Ground 4: failure to order the Respondent to pay the Appellant's costs of issues on which he was successful

  84. The Appellant contends that even if the Judge was right that the Respondent was the successful party, nonetheless the Judge should have made an order that the Respondent pay at least some of the Appellant's costs. Specifically, the Appellant points to (i) the costs he incurred in connection with the Respondent's initial opposition to the grant of a new tenancy; (ii) the court's acceptance of the Expert evidence as to the level of rent – the Appellant makes a comparison between the original rent proposed by the Respondent in its Defence of £80,000 and the rent proposed in the Particulars of Claim of £18,000; and (iii) his success on the issue of whether the rent would be all-inclusive; his success in obtaining an interim rent that was less than the sum of the new rent and his success on issues that were in dispute at the Adjourned Hearing.
  85. The Appellant submits that the Judge's failure to order the Respondent to pay any part of his costs demonstrates an error of principle and/or an unfair decision outside the scope of his discretion.
  86. I reject this Ground of appeal. The Judge was well aware of the orders that were available to him under CPR 44.2(6). He expressly referred in the Costs Judgment at [20] to the potential to make an order that one party must pay:
  87. a. a proportion of another party's costs (CPR 44.2(6)(a));
    b. costs from or until a certain date only (CPR 44.2(6)(c)); and
    c. costs relating only to a distinct part of the proceedings (CPR 44.2(6)(f)).
  88. He also referred to CPR 44.2(7), to the effect that before making an order under CPR 44.2(6)(f) the court will consider whether it is practicable to make an order under paragraphs (6)(a) and (c) instead.
  89. Having carried out the balancing exercise to which I have referred, the Judge plainly considered that this was a case in which it was appropriate to order that the Appellant pay a proportion (80%) of the Respondent's costs. On the premise that the Respondent was the successful party, the Judge was plainly entitled to take this approach and did not err in failing to make an issues based costs order.
  90. The Appellant's approach to this ground of appeal seeks in many ways to re-hash the arguments that I have already rejected as to the Judge's failure adequately to appreciate the level of success achieved by the Appellant. Those arguments are flawed for reasons I have already given. The deduction of 20% from the Respondent's overall costs award plainly took into account the fact that the issue around the grant of a new tenancy had been conceded and that the outcome of the issues raised at the Adjourned Hearing had been "a score draw".
  91. Essentially Mr Jacob invites me to find that the Judge was wrong not to 'salami slice' the issues; but I consider that, not only was the Judge entitled to take the global approach that he did, it would also have been wholly impractical to try to deal with the issues on an issue by issue basis. A global assessment can never be an exact science, but (as I have found) the Judge weighed the relevant factors in the balance and determined that a 20% deduction to the Respondent's costs was appropriate in light of the submissions made by Mr Jacob. That was very much a matter of impression for the Judge in light of his detailed understanding of the issues before him at the trial and at the Adjourned Hearing. I reject the submission that he was wrong in the result he arrived at. That another Judge might have taken a different approach is not the test.
  92. In his oral submissions, Mr Jacob suggested for the first time that the Judge should have made a reduction of at least 75% to reflect the degree of success on the part of the Appellant on the key issues. But again that does no more than circle back to the arguments he made under Ground 1 and I reject this submission for the same reasons I have given in respect of Ground 1.
  93. Ground 5: error in failing to award the Respondent its costs of a score draw

  94. This Ground adds little to Ground 4. Mr Jacob accepts that the Judge was right to characterise the result of the Adjourned Hearing as a score draw, but he contends that this has not been adequately reflected in the Costs Judgment. Specifically he says that the Judge should have made no order for costs in respect of the Adjourned Hearing and that by dealing with the costs of the trial and the Adjourned Hearing together, the Judge has given the Respondent a windfall.
  95. For similar reasons to those I have already identified, I also reject this ground of appeal. It is plain from the Costs Judgment that the Judge decided to deal with the costs of the trial and the Adjourned Hearing together, and (although other options were available to him) he was entitled to take that view. In making a deduction of 20%, there can be no question that the Judge took into account his decision on the Adjourned Hearing. He was in by far the best position to determine the amount of any appropriate deduction and it is not for the appeal court to second guess his decision. I do not consider that I can find that the Judge was obviously wrong in the percentage deduction that he arrived at, just as (put another way) I can not find that he made an order that no judge could reasonably have made.
  96. Conclusion

  97. For all the reasons I have given, and notwithstanding Mr Jacob's skilful submissions, I reject the appeal. The Judge's decision on costs was not outside the ambit of his very considerable discretion and nor did it involve the alleged errors of principle identified by the Appellant. In the circumstances there is no basis for this court to interfere with that decision.

Note 1   The Judge made an error in referring to “the landlord” going into the trial seeking a term of 14 ½ years in paragraph 23. It is common ground that he should have said that the tenant was seeking a term of 10 years. The Judge also mistakenly referred in this paragraph to the tenant seeking interim rent of £16,000 going into the trial (when in fact the tenant was seeking £16,500). However, Mr Jacob does not suggest that these errors made any difference to his reasoning.     [Back]

Note 2   This appears to be a typo – the case reference should read Straker v Tudor Rose (A Firm) [2007] EWCA Civ 368.    [Back]

Note 3   This case was described as an alternative in the Appellant’s trial skeleton but appears to have been the only case that was actually advanced on the issue of interim rent at trial.    [Back]

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