Straker v Tudor Rose (A Firm)
| Jurisdiction | England & Wales |
| Judge | Lord Justice Waller,Lord Justice Tuckey,Lord Justice Jacob |
| Judgment Date | 25 April 2007 |
| Neutral Citation | [2007] EWCA Civ 368 |
| Court | Court of Appeal (Civil Division) |
| Docket Number | Case No: B2/2006/2456 |
| Date | 25 April 2007 |
[2007] EWCA Civ 368
Lord Justice Waller
Vice-President of the Court of Appeal, Civil Division
Lord Justice Tuckey and
Lord Justice Jacob
Case No: B2/2006/2456
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM Liverpool County Court
His Honour Judge Stewart QC
5LV15833
Royal Courts of Justice
Strand, London, WC2A 2LL
Giles Maynard-Connor (instructed by Brabners Chaffe Street LLP) for the Appellant
Neil Hext (instructed by Morgan Cole, Solicitors) for the Respondent
Hearing dates: 22nd March 2007
After a trial lasting some four days HHJ Stewart QC awarded the claimant (the appellant in this court) damages in the sum of £11,688.25 plus interest of £2021.76. The defendants, respondents in this court had, prior to any proceedings, made a part 36 offer backed up soon after the commencement of proceedings with a payment into court under Part 36 of £9000. Despite the sum in damages exceeding the sum in court the judge awarded the appellant only his costs up until a date some months prior to commencement of the proceedings and no costs thereafter. The effect of the judge's order was that the claimant would receive none of the costs of the action, and only limited pre-action costs.
The key issue is whether the judge misdirected himself. It is well known that this court will be loath to interfere with the discretion exercised by a judge in any area but so far as costs are concerned that principle has a special significance. The judge has the feel of a case after a trial which the Court of Appeal cannot hope to replicate and the judge must have gone seriously wrong if this court is to interfere.
I should perhaps start by saying that in the pre-CPR world one would have had no hesitation is saying the judge must have gone wrong. A payment into court was the touchstone in relation to costs – if it was beaten by a plaintiff, the plaintiff got their costs; if the plaintiff failed to beat it the defendant got their costs. There was hardly an exception to that rule.
The position under the CPR is not the same. Part 36 deals with payments in. That rule however does not give any guidance as to what should flow from a situation in which a claimant obtains a money judgment in excess of the sum in court. For that guidance one must go to CPR 44.3, and the relevant rules are in the following terms:—
“44.3(2) If the court decides to make an order about costs –
(a) the general rule is that the unsuccessful party will be ordered to pay the costs of the successful party; but
(b) the court may make a different order.
…
44.3(4) In deciding what order (if any) to make about costs, the court must have regard to all the circumstances, including –
(a) the conduct of all the parties;
(b) whether a party has succeeded on part of his case, even if he has not been wholly successful; and
(c) any payment into court or admissible offer to settle made by a party which is drawn to the court's attention (whether or not made in accordance with Part 36).
44.3(5) The conduct of the parties includes –
(a) conduct before, as well as during, the proceedings, and in particular the extent to which the parties followed any relevant pre-action protocol;
(b) whether it was reasonable for a party to raise, pursue or contest a particular allegation or issue;
(c) the manner in which a party has pursued or defended his case or a particular allegation or issue;
(d) whether a claimant who has succeeded in his claim, in whole or in part, exaggerated his claim.”
It will be seen that 44.3(2) provides the starting point i.e. that the general rule is that the successful party gets an order for his costs to be paid by the losing party, but it provides the court “may” make a different order. 44.3(4) provides for certain matters that “must” be taken into account. Included alongside parties' conduct, and without apparently any special status is whether an offer to settle under part 36 or otherwise has been made.
There would however be no point in having a machinery for making a payment into court or for making a part 36 offer if the question whether it has been beaten or not did not form an important starting point for considering at least who the successful party is and to whom the general rule should at least prima facie apply. As to the proper approach where a Part 36 offer or payment has been made, Thomas J in Quorum A.S. v Charles William Schramm November 21 st 2001 unreported cited an important passage in the judgment of Chadwick LJ in Johnsey Estates(1990) Ltd v Secretary of State for the Environment [2001] EWCA Civ 535:—
“32. The submission has some superficial attraction on the facts of the present case; but, for my part, I would reject it. It seems to me that a court should resist invitations to speculate whether offers to settle litigation which were not in fact made might or might not have been accepted if they had been made. There are, I think, at least two reasons why a court should not allow itself to be led down that road. First, the rules of court provide the means by which a party who thinks that his opponent is not open to reason can protect himself from costs. He can make a payment in; he can make a Calderbank offer; now, under the Civil Procedure Rules 1998, he can make a payment or an offer under CPR pt 36. The advantage of the courses open under the rules is that they remove speculation. The court can see what offer was made, when it was made, and whether it was accepted. Second, speculation is likely to be a most unsatisfactory tool by which to determine questions of costs at the end of a trial. It is not, I think, suggested that each party would be required to disclose, at that stage, what advice it had received, from time to time, as to the strengths and weaknesses of its claim or defence. But without knowing that – and without a detailed knowledge of the financial and other pressures to which each party was subject from time to time – speculation would be hopelessly ill-informed. If Mr Gaunt's submission were to be accepted generally, there would, I think, be a serious danger that, at the end of each trial, the court (in order to decide what order for costs it should make) would be led into another, potentially lengthy, inquiry on incomplete material into “what would have happened if …?” I am not persuaded that that could be compatible with the overriding objective to deal with cases justly.”
Thomas J himself then said this at paragraph 29:—
“It was urged upon me by the claimants that this evinced a clear attitude on behalf of the underwriters not to improve their offer; that they were therefore being unreasonable. It seems to me implicit in any Part 36 payment that a party must be taking the position that, at any rate at that stage, it is their final Part 36 payment. Thus what was stated expressly on behalf of underwriters in the letter to which I have referred is no more than would be implicit. It is, however, open to each party to negotiate. But is it for the court then to assess, after the Part 36 offers have been made, whether the parties should have negotiated and, if so, which party was unreasonable in not doing so? It seems to me to follow from the judgment of Chadwick LJ in Johnsey Estates that the court should not in a case such as the present examine the question of the reasonableness of the payment in or whether one or the other party should have negotiated. Answering such a question would lead to the need for an extensive enquiry at the end of any case and would create uncertainty. A payment under Part 36 or a Part 36 offer should be regarded as the best to which a party is prepared to go; if the defendant goes no further, and the claimant recovers more, that should in the usual case be an end of it.”
That is not to say that beating a payment in will always have the consequence that the “successful party” will get an order for costs. In Painting v University of Oxford [2005] EWCA Civ 161 Maurice Kay LJ said:—
“22. There are two additional points which seem to me to have called for the affording of considerable weight by the Recorder, whereas the transcript does not suggest that he afforded them any weight at all. The first is the strong likelihood that, but for exaggeration, the claim would have been settled at an early stage and with modest costs. The second is that at no stage did Mrs Painting manifest any willingness to negotiate or to put forward a counter-proposal to the Part 36 payment. No one can compel a claimant to take such steps. However to contest and lose an issue of exaggeration without having made ever a counter-proposal is a matter of some significance in this kind of litigation. It must not be assumed that beating a Part 36 payment is conclusive. It is a factor and will often be conclusive, but one has to have regard to all the circumstances of the case.”
The Court of Appeal in that case, having found that the recorder had misdirected himself, actually made an order in the defendants' favour despite the claimant beating a payment in, but the circumstances were extreme with a vastly exaggerated case supported by untruthful evidence from the claimant.
Other Court of Appeal decisions were cited to us. I do not gain much assistance from them. In the area of costs, where all cases are different and fact specific, I would suggest that authorities apart from those that lay down clear principles are of little assistance. It is to the rules that one should go, and it is by reference to the rules that one should test whether the judge has gone wrong in any particular case.
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