Reid Minty v Taylor

JurisdictionEngland & Wales
JudgeLORD JUSTICE WARD,Lord Justice May,LORD JUSTICE MAY,LORD JUSTICE KAY
Judgment Date29 October 2001
Neutral Citation[2001] EWCA Civ 1723
Docket NumberA2/2001/0072
CourtCourt of Appeal (Civil Division)
Date29 October 2001
Reid Minty (a Firm)
Claimant/Respondent
and
Gordon Taylor
Defendant/Appellant

[2001] EWCA Civ 1723

Before:

Lord Justice Ward

Lord Justice May

Lord Justice Kay

A2/2001/0072

IN THE SUPREME COURT OF JUDICATURE

IN THE COURT OF APPEAL (CIVIL DIVISION)

ON APPEAL FROM THE HIGH COURT OF JUSTICE

QUEEN'S BENCH DIVISION

(Mr Justice Gray)

Royal Courts of Justice

Strand

London WC2

MR T SHIELDS QC, MR H STARTE and MR J MORGAN (Instructed by Messrs Gouldens, London EC4M 7NG) appeared on behalf of the Appellant

MR N BACON and MR A MONSON (Instructed by Messrs Reid Minty, London W1K 4PS) appeared on behalf of the Respondent

LORD JUSTICE WARD
1

Lord Justice May will give the first judgment.

LORD JUSTICE MAY
2

This is an appeal by successful defendants from a costs judgment and order of Gray J on 19th December 2000. The judge himself gave permission to appeal.

3

The judgment and the appeal concern costs in a libel action in which the jury, after a 12-day trial, found in favour of the defendant's defence of justification. The publication in issue was on 6th November 1996 in an interview broadcast on Radio 5 Live. The protagonists in the litigation were both concerned with professional football and professional footballers. The occasion was the House of Commons, in advance of a meeting with a Member of Parliament. I do not think it necessary to say any more about the substance of the proceedings.

4

The brief relevant chronology —relevant that is to this appeal —is as follows. The broadcast, as I say, was a radio broadcast on 6th November 1996 and the writ was issued on 8th January 1997. There was exchange of pleadings and amended pleadings, disclosure and so forth and the time came, in 1999, when, on 22nd July, the defendant's application to strike the claim out for want of prosecution or as an abuse of process was dismissed by Master Foster. He made an order for claimant's costs in cause of the application. Questions then aired about further specific discovery were adjourned to the judge in charge of the jury list.

5

It was then that on 1st September 1999 the solicitors acting for the defendant wrote a letter headed "without prejudice, save as to costs" in which they referred to a letter of the same date concerning a proposed amendment to their client's defence. The proposed amendment which was subsequently allowed was strengthening and widening the defence of justification, bringing into it serious allegations against the claimant, including allegations of dishonesty. The letter of 1st September ended in these terms:

"We would also emphasise to you that the Defendant has every intention of resisting this claim as strenuously as possible for as long as necessary.

In these circumstances we are instructed to invite the Claimant to discontinue its claim on the following terms as to costs, namely the Claimant will pay the Defendant's costs of the action on the standard basis up to the date of service of the notice of discontinuance pursuant to CPR Part 38.3, including all costs not already provided for by Orders of the Court, to be taxed if not agreed.

Should this offer of terms for the disposal of these proceedings not be accepted, the Defendant will draw its terms to the attention of the Court on his succeeding at trial and seek all costs incurred after seven days from the date of this letter on an indemnity basis."

6

That suggestion was not acceded to. The action continued. Gray J gave permission to amend the defence. There was an amended reply which reinforced allegations by the claimant that the defendant was malicious. There was a request for further information regarding the amended reply. On 1st December 1999, the claimant made what they referred to as a Part 36 offer to accept £1 and their costs in full and final settlement of the proceedings.

7

In response to that, two days later, on 3rd December 1999, the defendant's solicitors on instructions wrote to say that he would accept £50,000 in full and final settlement of his claim for costs in the proceedings if the action was settled within the next seven days. That was a letter which asserted that the defendant's estimated costs to date were in the order of £100,000. Those proposals did not produce a settlement.

8

On 3rd May 2000 the claimant wrote saying that they had received an offer of insurance in relation to the proceedings and that the premium they were going to be paying was £157,500 and that they would accept this proposal unless the defendant responded with a view to settlement within five days. Subsequently, on 8th November 2000, the claimant gave notice of entering into a conditional fee agreement with itself (the claimant being a firm of solicitors) and gave notice of a policy of insurance having been entered into.

9

Accordingly, these offers and counteroffers having been made and turned down, in a trial in which each side was alleging that the other was dishonest and where the judge had ruled that the publication was on an occasion of qualified privilege, the jury found in favour of the defendant on the issue of justification. So there was judgment for the defendant. The judge was invited to make an indemnity costs order in favour of the defendant. He declined to do so, saying this:

"I am by no means unsympathetic with the application that is made on behalf of the Defendant that the Claimant should be ordered to pay the costs of the action on an indemnity basis. But I have to say that it appears to me that Mr Shields is unable to bring himself within Part 36 and, in particular, sub-rule 21 of Part 36. That sub-rule is concerned with the position where the claimant does better than his Part 36 offer. There is, in the Rules, no, as it were, converse provision which governs the position that arises where a defendant has made a proposal as to the way in which an action may be compromised. In those circumstances, it appears to me that I am driven back, when considering an application for indemnity costs, to the more general basis on which costs can be ordered on an indemnity footing.

The relevant rule is 44.4, the note to which I think accurately summarises what I understand to be the effect of the authorities on this topic by saying that indemnity costs should only be awarded on an indemnity basis if there has been some sort of moral lack of probity or conduct deserving of moral condemnation on the part of the paying party. I do not think that I can go so far as to say that applies in this case. Accordingly, I order that the Defendant should have his costs on a standard basis, not an indemnity basis."

10

The essence of the main ground of appeal is that the judge misdirected himself in saying that costs should only be awarded on an indemnity basis if there has been some sort of moral lack of probity or conduct deserving of moral condemnation on the part of the paying party.

11

Mr Shields opened his submissions today by saying that the letter of 1st September 1999 was pivotal. But he developed submissions in the circumstances of the pleaded case, its result and the various offers and counteroffers that have been made, to say not only that the judge applied the wrong principle but that this court should in substitution award indemnity costs to the defendant.

12

It is axiomatic, I think, to start with Rule 1.1 of the Civil Procedure Rules, which (as everybody knows) say that:

"These Rules are a new procedural code with the overriding objective of enabling the court to deal with cases justly."

13

Being a new procedural code, the Rules are not to be taken as embodying or taking on board the baggage of the old Rules; and generally speaking, although there are exceptions, most of the procedural cases decided under the Rules of the Supreme Court (or indeed the County Court Rules) are not of relevance —or certainly not of central relevance —to an interpretation of these new Rules.

14

It is necessary to see what Rule 36.21 says. It says this:

"(1) This rule applies where at trial—

(a) a defendant is held liable for more; or

(b) the judgment against a defendant is more advantageous to the claimant, than the proposals contained in a claimant's Part 36 offer.

(2) The court may order interest on the whole or part of any sum of money (excluded interest) awarded to the claimant at a rate not exceeding 10% above base rate for some or all of the period starting with the latest date on which the defendant could have accepted the offer without needing the permission of the court.

(3) The court may also order that the claimant is entitled to—

(a) his costs on the indemnity basis from the latest date when the defendant could have accepted the offer without needing the permission of the court; and

(b) interest on those costs at a rate not exceeding 10% above base rate."

15

That of course applies, as Gray J observed, to a claimant's Part 36 offer. There is no equivalent provision in Part 36 for a defendant's Part 36 offer. Mr Shields submits that it should be applied by analogy so that where an offer such as was made on 1st September 1999 is not accepted a defendant should be entitled to indemnity costs if the defence succeeds.

16

As Gray J observed, the court has to look to Rule 44 for provisions relevant to this matter. They are Rule 44.3 and parts of Rule 44.4. Dealing with Rule 44.3 first, we find this:

"44.3 (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.

(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...

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