23 March 2015Print This Post

High Court: Judges should do “broad justice” when attributing costs between cases

RCJ

Norris: costs order must be “practically workable”

Judges should be content to do “broad justice” when making costs orders to avoid “complicated attempts” to attribute them between a number of cases, the High Court has ruled.

The ruling follows the success of Redstone Mortgages last October in two of four negligence test cases it brought in the against Home Counties law firm B Legal.

Mr Justice Norris said a costs order must do justice between the parties, but “the judge must be content to do broad justice if an attempt to do exact justice is likely to involve the parties and the costs judge in complicated attempts to attribute what are essentially common costs between different claims and different issues within those claims.

“That is particularly true where (as here) these were four separate sample actions directed to be tried together.”

Norris J went on: “Whilst of course one has to consider the order for costs on an issue by issue basis, one ultimately has to arrive at an order that fairly reflects the outcome, that is practically workable (bearing in mind the difficulties faced by skilled costs judges) and which does not commit or encourage the parties to indulge in expensive satellite costs litigation.

“My solution is not perfect, but its imperfections are no greater than the alternatives.”

Delivering judgment on costs in Redstone Mortgages v B Legal [2015] EWHC 745 (Ch), the judge said the general principles to be applied were not in doubt.

“First the court must decide whether to make an order about costs at all. Second, if the court decides to make an order about costs then it will in relation to each action seek to identify who is the successful party, in which event the general rule will be that the successful party is entitled to its costs.

“Third, before making such an order the court must, however, consider all the circumstances of the case, which might indicate a departure from the general rule.”

Norris J said the court was “not confined to considering the costs as a whole”, and may make an issues-based costs order, but in this case it must bear in mind that “almost invariably overall success involves losing on some issues”.

In the two of the four test cases which Redstone lost, Welch and Sher, the judge ordered that the lender should pay B Legal’s costs on the standard basis, together with a quarter of the “generic costs” of all the cases. He defined “generic costs” as costs incurred by B Legal which were not attributable to a particular case.

In the other two, Howard and McOwen, Norris J said Redstone established at the earlier, preliminary issues hearing that B Legal had failed in its duties to the lender, but causation and damages had still to be determined.

Rejecting arguments put forward by B Legal in a “35 page and 92 paragraph skeleton argument”, the judge ruled that Redstone’s costs in Howard and McOwen should be treated as claimant’s costs in the case. In each of them, a quarter of the generic costs should be added, and the parties should be free to apply to vary the order if a part 36 or other offer was made.

By Nick Hilborne

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