Atlasjet Havacilik Anonim Sirketi v Ozlem Kupeli & Others
| Jurisdiction | England & Wales |
| Judge | Lord Justice Hickinbottom,Lord Justice Davis |
| Judgment Date | 31 May 2018 |
| Neutral Citation | [2018] EWCA Civ 1264 |
| Court | Court of Appeal (Civil Division) |
| Docket Number | Case No: A2/2016/2870 |
| Date | 31 May 2018 |
and
[2018] EWCA Civ 1264
Lord Justice Davis
and
Lord Justice Hickinbottom
Case No: A2/2016/2870
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
THE HON MRS JUSTICE WHIPPLE
Royal Courts of Justice
Strand, London, WC2A 2LL
Jonathan Adkin QC and Robert MarvenQC (instructed by Zimmers Solicitors) for the Appellant
Matthew Bradley and Jamie Carpenter (instructed by Hudson Morgan Williams Solicitors) for the First Respondents
The Second Respondent did not appear and was not represented
Hearing date: 15 May 2018
Judgment Approved
Introduction
This is an appeal against the Order of Whipple J dated 21 June 2016, in which, following a trial of preliminary issues and lead cases in 838 claims against the Second Defendant airline (“Atlasjet”) for breach of contract and of the Denied Boarding Regulation ( Regulation (EC) No 261/2004 of the European Parliament and the Council of 11 February 2004) (“the EC Regulation”), Atlasjet was required to pay 33% of the Claimants' costs of the trial, and to pay £225,000 on account of those costs.
Before us, Jonathan Adkin QC and Robert Marven QC appeared for the Appellant Atlasjet, and Matthew Bradley and Jamie Carpenter, both of Counsel, for the First Respondent Claimants. I thank them all for their helpful submissions. The Second Respondent played no part in the appeal, for reasons that will soon become apparent.
The Law
Section 51 of the Senior Courts Act 1981 provides that the costs of and incidental to court proceedings are in the discretion of the court.
The proper approach of a court to the issue of costs as between parties is set out in CPR rule 44.2 which, under the heading “Court's discretion as to costs”, provides, so far as relevant to this appeal:
“(1) The court has discretion as to –
(a) whether costs are payable by one party to another;
(b) the amount of those costs; and
(c) when they are to be paid.
(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 will have regard to all the circumstances, including –
(a) the conduct of all the parties;
(b) whether a party has succeeded on part of its case, even if that party has not been wholly successful; and
(c) any admissible offer to settle made by a party which is drawn to the court's attention, and which is not an offer to which costs consequences under Part 36 apply.
(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 the Practice Direction – Pre-Action Conduct or 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 its case or a particular allegation or issue; and
(d) whether a claimant who has succeeded in the claim, in whole or in part, exaggerated its 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;
(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) Before the court considers making an order under paragraph (6)(f), it will consider whether it is practicable to make an order under paragraph (6)(a) or (c) instead…”.
In relation to that rule, several points are worthy of note.
i) In considering orders for costs, the court is of course bound to pursue the overriding objective as set out in CPR rule 1.1, i.e. it must make an order that deals justly with the issue of costs as between the parties. Therefore, when considering whether to make a costs order – and, if so, the order it makes – the court has to make an evaluative judgment as to where justice lies, on the facts and circumstances as it has found them to be.
ii) Before an appeal court will interfere with the exercise of that discretion, as with any appeal, it must be satisfied that the decision of the lower court was wrong or unjust because of a serious irregularity in the proceedings below ( CPR rule 52.21(3)). No one suggests that there was a serious irregularity in this case.
iii) Before an appeal court concludes that the costs decision below was “wrong”, it must be persuaded that the judge erred in principle, or left out of account a material factor that he should have taken into account, or took into account an immaterial factor, or that the exercise of his discretion was “wholly wrong” (see, e.g., Adamson v Halifax Plc [2002] EWCA Civ 1134; [2003] 1 WLR 60 at [16] per Sir Murray Stuart-Smith, adopting (post-CPR) the conventional (pre-CPR) approach he described in Roache v News Group Newspapers Limited [1998] EMLR 161 at page 172).
iv) An appeal court will only rarely find that the exercise of discretion below is “wholly wrong”, because not only is that discretion particularly wide but the judge below is usually uniquely well-placed to make the required assessment, having heard the relevant evidence.
Although, as CPR rule 44.3(2)(b), (4), (5) and (6) demonstrate, there may be all sorts of reasons for departing from the principle, in providing that, if the court decides to make an order for costs, the general rule is that “the unsuccessful party will be ordered to pay the costs of the successful party”, CPR rule 44.2(2)(a) represents the prima facie or starting position ( M v The Mayor and Burgesses of the London Borough of Croydon [2012] EWCA Civ 595; [2012] 1 WLR 2607 at [45] per Lord Neuberger of Abbotsbury MR).
As a result, the courts have considered the concept of “success” in these circumstances, as follows.
It is well-established that the question of who is the “successful party” for CPR purposes requires a fact-specific evaluation by reference to the litigation as a whole (see, e.g. Kastor Navigation Company Limited v Axa Global Risks [2004] EWCA Civ 215 (“ Kastor Navigation”) at [143] per Rix LJ).
In the context of private law claims, in Bank of Credit and Commerce International SA (In Liquidation) v Ali (No 4) (1999) 149 NLJ 1734 (“ BCCI”), Lightman J said that:
“For the purposes of the CPR, success is not a technical term but a result in real life, and the question as to who has succeeded is a matter for the exercise of common sense.”
In Day v Day [2006] EWCA Civ 415; [2006] CP Rep 35 at [17], a case involving a dispute as to the beneficial ownership of the net proceeds of sale of a property, having referred to that passage from Lightman J, Ward LJ said:
“I would go further and say that, in a case like this, the question of who is the unsuccessful party can easily be determined by deciding who has to write the cheque at the end of the case…”.
That has been reflected in other money claims. For example, in A L Barnes Limited v Timetalk (UK) Limited [2003] EWCA Civ 402; [2003] BLR 331 at [38] (“ A L Barnes”), a commercial dispute, Longmore LJ observed:
“In deciding who is the successful party the most important thing is to identify the party who is to pay money to the other. That is the surest indication of success and failure.”
The notes in the 2016 White Book, at paragraph 44x.3.6, under the heading “Who is the successful party?” summarise these cases without adverse comment; and, at paragraph 22.17, the learned authors of Cook on Costs (in both the 2016 edition that was before Whipple J and in subsequent editions) endorse the A L Barnes approach on the basis that “it has the virtue of clarity and simplicity”, and thus prevents “costs wars”.
Also worthy of note is the observation of Jackson LJ in Fox v Foundation Piling Limited [2011] EWCA Civ 790 (a case to which Whipple J referred in her costs judgment), at [62], which chimes with the view expressed in Cook on Costs:
“There has been a growing and unwelcome tendency by first instance courts and, dare I say it, this court as well to depart from the starting point set out in CPR rule 44.3(2) [now 44.2(2)] too far and too often. Such an approach may strive for perfect justice in the individual case, but at huge additional cost to the parties and at huge costs to other litigants because of the uncertainty which such an approach generates. This unwelcome approach now manifests itself in (a) numerous first instance hearings in which the only issue is costs and (b) a swarm of appeals to the Court of Appeal about costs, of which this case is an example.”
There are, however, limits to which “the payer of the cheque” must be considered the unsuccessful party in the litigation. In Medway Primary Care Trust v Marcus [2011] EWCA Civ 750; [2011] Med LR 560; [2011] 5 Costs LR 808 (“ Marcus”), the claimant claimed that he had had his left leg amputated as a result of the clinical negligence of the defendant. The defendant admitted breach of duty, but denied causation. On the basis of the claimant's case, quantum was agreed at £525,000. However, the defendant succeeded on the causation issue, and the claimant was awarded only £2,000 for pain and suffering. There had been no offer on quantum by the defendant, either in Part 36...
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