CA overturns costs order that penalised one party when other was also at fault

Court of Appeal: costs overshadowing main dispute

Court of Appeal: costs overshadowing main dispute

The Court of Appeal has overturned a circuit judge’s decision to make a costs order against a successful claimant who failed to accept an offer he should have done, because the judge had failed to take account of the defendant’s conduct as well.

Lord Justice Gross described it as “another unfortunate case where costs have come to overshadow the issues as to liability originally in dispute. With respect, the failure to separate wood from trees has brought the parties to the position in which they now find themselves”.

Patience v Tanner & Anor [2016] EWCA Civ 158 concerned a dispute over an easement that began in 2012. In May 2014, the defendants made an offer which said nothing about costs. The offer was not accepted by 29 May, the 21-day deadline, and the defendants withdrew it in mid-June. Shortly before the trial in November 2014, the defendants made the offer again and this time it was accepted. The trial still lasted two and a half days, however, to deal with the costs.

HHJ Rutherford in Bristol ordered that the defendants pay the Mr Patience’s costs up to 29 May, but that Mr Patience pay their costs, on the standard basis, thereafter because he should have accepted the offer first time around.

Mr Patience’s costs for the post-29 May period were £35-40,000, including VAT, while the defendants’ costs were £80,000, excluding VAT.

Giving the unanimous judgment of the Court of Appeal, Gross LJ said: “In my judgment, just as there was no good reason for Mr Patience not to accept the May offer, so there was no good reason for the [defendants] to have withdrawn the May offer – rather than letting it stand – until they re-issued the identical offer on 3 November, one week before the trial was due to commence.”

The conduct of both parties “contributed substantially” to the case reaching court “when it should long since have settled”, he continued.

“The force of the point is emphasised by the undisputed fact that the November and May offers were identical. Given the parties’ sustained determination to pursue this dispute, no one can be sure that, if the May offer had been accepted or allowed to stand, the hearing before the Judge would not have taken place.

“But the dynamics of the situation would have been dramatically altered had the May offer been accepted or allowed to stand so the probabilities are that the case would have settled well before then. Moreover, I would not wish to do anything to encourage the approach to litigation demonstrated by the parties before us – in needlessly prolonging this litigation, to their own cost.”

This meant that “while the judge correctly focused on the failings of Mr Patience after 29 May, the judgment suggests that, in reaching his conclusions, he lost sight of and did not take into account the failings of the [defendants] after that date. However understandable, that is a material omission”.

Gross LJ concluded: “To my mind, the justice of the case cries out for ‘no order as to costs’ after 29 May 2014. That is the order I would make.”

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