England and Wales High Court (Queen's Bench Division) Decisions

IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION

		Royal Courts of Justice Strand, London, WC2A 2LL
		06/07/2010

Mrs Justice Rafferty:

1. On 20^th May 2007 in a road traffic accident the Claimant/Appellant driving his car and the Defendant/Respondent on his moped were in collision. On 28^th Aug 2008 the Claimant/Appellant issued a claim for damages of £5305.82 with interest. In his defence and counterclaim of December 2008 the Defendant/Respondent denied liability alleging the collision was due to the Claimant/Appellant's negligence or that his negligence had contributed, and he counterclaimed for special damages of £7042.28. A reply and defence to counterclaim need not trouble us.
2. Subject to liability damages were agreed. There was no agreement as to quantum of the Defendant/Respondent's personal injury claim. The case was tried on 26^th June 2009.
3. The judge found the Defendant/Respondent bore 65% of the blame and the Claimant/Appellant 35% so he apportioned liability accordingly. He assessed the Defendant/Respondent's damages as £9284,81 inclusive. He gave judgment on the claim and counterclaim but gave effect to his finding on apportionment as to the overall amounts payable by each party to the other. In net terms the Defendant/Respondent lost to the tune of £311.88.
4. The judge rejected the Claimant/Appellant's application for costs saying:

"LATER:

18. At the conclusion of the case, party applies for their costs. The costs are broadly one in line with the other. In the case of one party, about £5,869; the other £5,829. The costs of the defendant are increased substantially as a consequence of the conditional fee arrangements but the appropriate notices have been served and accordingly the costs are increased to just over £13,000.

19. It seems to me, doing the best I can, that frankly the reality is that the costs are about the same. They are skewed by the arrangements for conditional fee arrangements. I would have thought that each side ought to pay the costs of the other. That reflects the broad justice of this case."

5. The Claimant/Appellant submits that the judge fell into error in the exercise of his discretion. The principle in a case where there has been some success on a monetary claim and counterclaim is he contends set out in Burchell and Bullard [2005] EWCA Civ 358. There, in a partial success on a claim and counterclaim leaving the Defendant/Respondent £5,000 out of pocket where each party was ordered to pay the costs of the other, Ward LJ said:

"25. Appeals against orders for costs are notoriously difficult to sustain. That is because the trial judge has a wide discretion with the result that this court will only interfere with his decision if he has exceeded the generous ambit within which there is usually much room for reasonable disagreement or because, even more unusually, he has erred in principle. …….

26. Nonetheless, aspects of the recorder's approach do cause me concern. He correctly set out the position "before the civil procedure rules" summarising what is set out in the headnote to Medway Oil & Storage Co. Ltd. v Continental Contractors Ltd. [1929] A.C. 88:-

"Where a claim and counterclaim are both dismissed with costs, upon the taxation of the costs, the true rule is that the claim should be treated as if it stood alone and the counterclaim should bear only the amount which the costs of the proceedings have been increased by it. No costs not incurred by reason of the counterclaim can be costs of the counterclaim. In the absence of special directions by the court there should be no apportionment. The same principle applies where both the claim and the counterclaim have succeeded."

I do not know why he said that is no longer the position. ……………

27. Once the recorder had decided to enter judgment on the claim and the counterclaim separately and not to set off one against the other, then to take as his starting point that costs should follow the event on each on claim and counterclaim is understandable. It is, however, only the starting point. In any event he said, "It will make no difference as to costs." He was also correct to direct himself that the court's wide discretion had to be exercised so as to ensure that the case was dealt with justly.

28. CPR 44.3 gives help in coming to the right decision:-

"(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. …

(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).

(5) The conduct of the parties includes –

(a) conduct before, as well as during, the proceedings, …

(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 a particular allegation or issue;

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

(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; …

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

(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)."

29. The modern tendency is at least to consider the award of costs on an issue by issue basis. The recorder addressed that but dismissed it because of the difficulty in the preparation of a bill of costs and the enormous complication of the process of detailed assessment. I agree with that. I also agree with him that it is better if possible to deal with the matter another way. His judgment shows, however, that he did not find another way: he resorted to costs following the event. In doing so I fear he fell into error.

30. His error in my judgment was to fetter his discretion and not to go on to consider, as he should have considered, what alternatives were available to him. The most obvious and frequently most desirable option is that signposted in CPR 44.3 paragraph (6)(a), namely to order a proportion of the party's costs to be paid. The recorder had directed his mind to paragraph 6(f), namely ordering costs relating only to a distinct part of the proceedings but he seems to have overlooked paragraph (7) which required him, where he would otherwise have considered confining costs to part of the proceedings only, to make instead, where practicable, an order under (6)(a) for a proportion of the costs. Ordering a proportion of costs obviates all the difficulties he acknowledged in an assessment of how much is properly to be allocated to each and every issue considered in isolation. Better by far to decide, despite the difficulty and imprecision of the calculation, that the relevant issue or issues should bear a percentage of the costs taken overall. As the recorder erred in principle, the appeal on this aspect must be allowed.

….

33. I take as my starting point the recorder's decision, which I would honour, to exercise his discretion to give separate judgments on claim and counterclaim on the basis that it would make no difference as to the costs. The order as drawn did in fact allow the set off because para 3 of the judgment ordered the Defendants to pay the claimant the difference between the sum awarded to the claimant on his claim and the sum awarded against the Defendant's counterclaim. How, in circumstances like that, does one decide who the unsuccessful party is? This was, after all, a form of commercial litigation where each side was claiming money from the other. Costs following the event is the general rule and in this kind of litigation the event is determined by establishing who writes the cheque at the end of the case. Here the Defendants do. They were the unsuccessful parties and my starting point is that the claimant is entitled to the costs of the proceedings, claim and counterclaim taken together."

6. In the present case, the Claimant/Appellant submits, since the judge rejected the Defendant/Respondent's principal allegation of negligence and accepted the Claimant/Appellant's evidence, the effect of the costs order is to make the Claimant/Appellant pay all the Defendant/Respondent's costs, of claim and of counterclaim and, in aggravation of that injustice, since the Defendant/Respondent's lawyers operated under a CFA with a 100% uplift, the Defendant/Respondent's costs exceeded those of the Claimant/Appellant by some £8,000. He relies upon the opinion of the authors of Cook on Costs who write:

"The most obvious and frequently most desirable option is that in CPR 44.3(6)(a), that of ordering a proportion of the party's costs to be paid. Costs following the event was the general rule and in this type of litigation, the event was determined by who had written the cheque at the end of the case. In this case the defendants had done and so they were the unsuccessful party. The starting point was that the claimant was entitled to the costs of the proceedings, claim and counterclaim taken together."

7. Hence the submission is that since in real terms the Defendant/Respondent was the loser and the Claimant/Appellant the winner the starting point should have been the payment by the Defendant/Respondent of the Claimant/Appellant's costs of claim and counterclaim as per CPR 44.3(2)(a)
8. I have been taken to Parkes and Martin [2009] EWCA Civ 883, an appeal by the Claimant/Appellant against costs ordered at the conclusion of a trial on liability. Like the instant case it arose from a road traffic accident. The judge found the Claimant/Appellant 65% and the Defendant/Respondent 35% to blame. In dialogue counsel for the Defendant/Respondent sought costs in like proportion. The Judge, reminding himself of CPR 44.34, nevertheless agreed to the extent that he awarded the Claimant/Appellant 35% of his costs on liability. Though dialogue between Bench and Bar might have suggested that the eventual Order would require the Defendant/Respondent to pay to the Claimant/Appellant 65% of his costs, it did not so read, and the Defendant/Respondent was left to pay his own costs. The appeal challenged the Order as involving a misdirection since the Claimant/Appellant was the winner having established liability albeit with a substantial reduction for contributory negligence. Thus the appropriate course it was contended would have been a conventional order awarding him his costs. Putting it another way, there was nothing before the judge to justify depriving him of 65% of his costs. The counterargument before Rix and Smith LJJ was that each party had a damages claim arising from the accident. It was but chance that the Claimant/Appellant was "first off the grid" in issuing his claim form. The result of a robust and efficient decision by the judge was that the Claimant/Appellant would recover 35% and the Defendant/Respondent 65% of their respective costs. For completeness it should be added that though there was no counterclaim, the Defendant/Respondent brought a claim which stood by the wayside. Had there been a formal counterclaim, it was submitted, the judge could have awarded to the Claimant/Appellant the costs of the claim and to the Defendant/Respondent those of the counterclaim.
9. The court in Parkes was referred to the decision of the House of Lords in Medway Oil and Storage Company Ltd v Continental Contractors Ltd & Ors [1929] AC 88 that absent a direction by the court on apportionment any such order made on detailed assessment will produce injustice where a like issue arises on claim and on counterclaim. A court would be justified in apportioning costs. Dismissing the appeal, Rix LJ with whom Smith LJ agreed concluded that the judge had realised that the outcome of the issue as to liability was determinative both of claim and of counterclaim and that the award as he made it was within his discretion.
10. The Claimant/Appellant's final point is that this trial was allocated to the fast track thus engaging CPR 36.3(6) which reads as follows:

"(6) Where a defendant has made a counterclaim against the claimant, and –

(a) the claimant has succeeded on his claim; and

(b) the defendant has succeeded on his counterclaim,

the court will quantify the amount of the award of fast track trial costs to which –

(i) but for the counterclaim, the claimant would be entitled for succeeding on his claim; and

(ii) but for the claim, the defendant would be entitled for succeeding on his counterclaim, and make one award of the difference, if any, to the party entitled to the higher awards costs.

32. Fast track trial costs are defined in CPR 46.1(1) thus

46.1 (1) This Part deals with the amount of costs which the court may award as the costs of an advocate for preparing for and appearing at the trial of a claim in the fast track (referred to in this rule as 'fast track trial costs');

33. Therefore, one looks to CPR Part 46.2

46.2 (1) The following table shows the amount of fast track trial costs which the court may award (whether by summary or detailed assessment).

Value of Claim	Amount of fast track trial costs which the Court may award
More than £10,000 but not more than £15,000	£1,035
For proceedings issued on or after 6th April 2009	£1,650

(b) for the purpose of quantifying fast track trial costs awarded to a defendant, the value of the claim is –

….

….

(iii) more than £15,000, if the claim form states that the claimant cannot reasonably say how much is likely to be recovered."

11. Hence, as I understand his contentions, the Claimant/Appellant argues that save for the counterclaim he would be entitled to fast track trial costs of £690, that save for the counterclaim the Defendant/Respondent would be entitled to a like sum having succeeded on it, that the difference atwixt the awards is nil, and thus that nil is payable, party to party, in relation to the fast track trial costs. However, as the Defendant/Respondent's lawyers had a CFA with 100% uplift, CPR46.4(2A) is engaged. It reads:

"(2A) The court may in addition award a sum representing an additional liability.

CPR 43.2 defines additional liability as:

(a) 'additional liability' means the percentage increase, ……… 'percentage increase' means the percentage by which the amount of a legal representative's fee can be increased in accordance with a conditional fee agreement which provides for a success fee."

12. The resting position of the Claimant/Appellant is that awarding the Defendant/Respondent an additional liability of 100% uplift on fees in addition to his £690 would be perverse, given the Defendant/Respondent's overall failure.
13. For the Defendant/Respondent Mr Mooney makes three points. First, that the learned judge did not make a decision wrong in principle. The default position in litigation is that costs follow the event. Mr Mooney distinguished Burchill as concerning a building dispute, a commercial agreement inter partes, in which inevitably there would be a set-off, to which the judge gave effect at least in spirit. The instant case has nothing of the commercial about it. In a personal injury case, he argues, insurers are typically content to pay damages to the other party and to that extent both parties write out the cheque.
14. Second, he relies on the correctness of the approach adopted by the judge, no worse for being succinct. Since parties emerged from the litigation in much the same position, there is nothing, Mr Mooney argues remotely impugnable in the judge's conclusion.
15. Third, were the court against him on his first two points he submits that it would be wrong were his lay client denied all his costs and that the court should configure its decision to acknowledge that.
16. As to fast track costs he submits that the discretion in CPR 46.3.(2A) permitting the court to award a further sum reflecting an additional liability is by CPR45.17(1) removed in road traffic cases. CPR 45.17(1) reads as follows:

"Subject to Rule 45.18 the percentage increase which is to be allowed in relation to counsel's fees is 100% where the claim concludes at trial."

Though grateful to counsel for this assistance in the light of my conclusion as to the CFA it has not proved necessary to consider it.

17. I am not persuaded that the existence of the CFA is of relevance to this appeal. True it is, as the judge remarked, that it skews the costs, but it is permitted by the Rules, it was declared as it should be, and that it exists with a100% uplift is simply a fact of litigation life. The judge was aware of it, as is clear from his comment "The costs of the Defendant/Respondent are increased substantially as a consequence of the conditional fee arrangements but the appropriate notices have been served" and I do not accept the suggestion that awarding the Defendant/Respondent an additional liability of 100% uplift on fees could be described as perverse.
18. , In reviewing the competing arguments I have reminded myself of the wide discretion as to costs identified in Burchell and that an appellate court should interfere "only if the judge exceeded the generous ambit within which there is usually much room for reasonable disagreement or because……….he has erred in principle". Thus before I could interfere I should have to conclude either that HHJ Richards erred in principle or that his decision was one no reasonable tribunal could have reached.
19. No error of principle has in my judgment been identified. The judge approached the question of costs with an eye to the Rules and evidently aware of authority. His conclusion, that the costs were broadly one in line with the other, £5,869 and £5,829, is plainly right. That he did not reflect in costs the apportionment as to liability was a decision well within reasonable limits.
20. His conclusion is one which may well aggrieve the Claimant/Appellant and is I accept one which a different judge might not have reached. However, neither of those considerations persuades me that this judge fell into error. Before interfering I would have to find that no reasonable tribunal could have concluded as he did and this appeal comes nowhere near clearing that hurdle and is rejected.