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England and Wales Court of Appeal (Civil Division) Decisions
You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> Budgen v Andrew Gardner Partnership  EWCA Civ 1125 (31 July 2002)
Cite as:  EWCA Civ 1125
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COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN’S BENCH DIVISION
(The Hon Mr Justice Wright)
London, WC2A 2LL
B e f o r e :
(Vice-President of the Court of Appeal Civil Division)
LORD JUSTICE MANCE
LORD JUSTICE LATHAM
|- and -|
ANDREW GARDNER PARTNERSHIP
Smith Bernal Reporting Limited, 190 Fleet Street
London EC4A 2AG
Tel No: 020 7421 4040, Fax No: 020 7831 8838
Official Shorthand Writers to the Court)
(instructed by Messrs Thomson Snell Passmore) for the Appellant
Dermot O’Brien Esq, QC & Tim Lord Esq
(instructed by Messrs Druces & Attlee) for the Respondent
AS APPROVED BY THE COURT
Crown Copyright ©
Lord Justice Simon Brown:
“That the defendant should pay the costs of the action save those relating to the HIS issue and the claimant should pay the defendant’s costs of this issue.”
“4.5 In these circumstances, unless there were a good reason for exercising his discretion in a judicial manner to the contrary, the Learned Judge ought to have awarded the costs of litigating the HIS issue to the defendant.
4.6 There was not any circumstance, good or otherwise, which can have constituted a sufficient reason for not making an award of the costs of fighting the HIS issue in favour of the defendant.
4.7 The Learned Judge was wrong to conclude that he was in the best position to determine what proportion of costs was just. He did not have the information to be able to do so. The only person who could have done this was a taxing officer.
4.8 The reduction of the claimant’s costs by only 25% (where the claimant’s costs were £174,000 and the defendant’s were over £200,000 and a broad estimate made by the defendant suggested that the costs of litigating the issue were about 66% of the action) was mathematically equivalent to an order that the defendant paid to the claimant 85% of the costs of litigating the issue on which he had lost.
4.9 Such an order was unjust.”
“First of all, recent authority, particularly after the Civil Procedure Rules, has indicated that it may be appropriate to take a wider view of issue based costs orders than was the practice previously. The two authorities in particular that point in that direction are the well-known observations of Lord Woolf MR (as he then was) in AEI Rediffusion Music Limited -v- Phonographic Performance Limited  1 WLR 1507, and the case put before me this morning by Mr Livesey, unreported, Winter -v- Winter 10th November 2000. None of those authorities, of course, come anywhere near to saying that a judge must always consider an issue based order. But I think it is arguable that in the present climate this case was such a strong one in respect of the separate HIS issue, and that that issue played such a large part in the trial, that it was necessary, even allowing for the wide ambit of the judge’s discretion, to make such an order. That is the first point.” (paragraph 12)
i) “the HIS software ‘was virtually complete … The injuries sustained in the accident prevented [the respondent] from getting out and about to sell the package and the company has since dwindled away to a point where it makes no sales and simply ticks over …”
ii) “although the development was virtually complete at the time of the accident, Mr Budgen’s lack of mobility prevented him from getting to potential customers to sell it to them. Indeed, the housing association which joined in the development of the software took some of Datared’s staff when Mr Budgen could no longer keep them occupied to capacity and had to let them go.”
iii) “Datared has now been run down to maintaining one contract, generating a turnover of about £65,000 per annum with costs of £57,000 per annum making a token contribution to overheads and no surplus to pay Mr Budgen’s salary”
“The injuries suffered by Mr Budgen as a result of the accident of February 1990 did not cause or contribute in any way to the subsequent failure of the HIS project … [As to the accountant’s report] [i]t is sufficient to say that in the light of the evidence that has been developed before me in relation to matters which had occurred before this report was written, the contents of that report are so unrealistic and so remote from the true situation that I have to agree with Mr Livesey QC that a court that had been presented with such a report would have been forced to the conclusion that any claim for loss of profits arising out of the failure of the HIS package was simply unsustainable.”
“I think that this scenario is far too pessimistic. I have no doubt of Mr Budgen’s native intelligence and ability. The resourcefulness with which he was able to overcome disabilities flowing from his poliomyelitis and the courage with which he had prior to the accident confronted and overcome the handicaps deriving therefrom can only be the subject of admiration. … I am reasonably certain that Mr Budgen, if he had been functioning at his full pre-accident level would have realised at an early stage that the HIS project was showing ominous signs of turning sour and … would have turned his formidable energies into the task of building up Datared’s remaining customer base in order to guard against the possibility, which was rapidly ripening into a certainty, that Hyde were going to pull out of the project in any event. I am absolutely sure that Mr Budgen’s pride and self-esteem would have led him to strain every sinew to maintain his position of independence as, in effect, the sole proprietor of his business, rather than having to accept employment under the direction of another.”
In the result the judge awarded 11 years’ loss of earnings at £25,000 pa
“1. Effectively what Mr Livesey says is that a very substantial part of the claimant’s claim [the HIS claim] here was unsustainable and that that fact was or should have been obvious to the claimant … really from before this action ever started or, at the very latest, once the evidence began to come out from the witness box. … As I am reminded, the originally pleaded case was on the basis that this was a loss for which the claimant was entitled to be compensated in excess of £1 million.
2. The fact is, and it is apparent from my judgment that it is the fact, from a very early stage in the trial - in other words to that aspect of the case to which I was able to observe for myself - the factual weakness of that contention was becoming increasingly obvious. So obvious was it that I thought it appropriate, not without a great deal of hesitation … to give certain indications as to what I feared might happen at a time in the early stages of the case and before the case had to go off for a substantial period because of Mr Budgen’s injury.
3. I am bound to say that I think Mr Livesey is right in saying that there must have been a point in this case at which it became plain that the HIS project claim was untenable and it should at that stage have been abandoned. Indeed it is right to say that the defendants’ solicitors wrote [the letter of 27 June 2001] effectively pointing that fact out to them and inviting them to take the obvious steps. It is a pity, as it seems to me, that that letter, which I am bound to say seems to have been written with the best possible intentions, was treated, as Mr Lord has urged upon me, as merely another step in what he describes as a campaign of harassment which he suggests the defendants’ solicitors have conducted in this case.
4. The next problem is how I should give effect to my view under [rule] 44.3 - the view that I have taken about the claimant’s claim. Mr Livesey submits that I should in effect reflect that conclusion by ordering the claimant to pay a proportion, indeed a substantial proportion, of the defendant’s costs attributable to that issue. That would be a very draconian step to take. Mr Livesey raises cogent criticisms about the way in which this part of the claim has been presented. He criticises the partial way in which the witness statements were composed. He criticises failures … as far as discovery of documents is concerned - so much so that the defendants [had to go to Hyde themselves] in order to obtain the documentation which was available from that source.
5. I have hesitated long as to how I should deal with this but in the end I have come to the conclusion that it would be going too far, when dealing with a claim which was otherwise made in good faith (and to some extent the way in which it has been conducted may reflect an obsessive belief by Mr Budgen in the likely benefits that he would have been able to obtain from his package) to require him to make a positive payment towards the defendants’ costs, but I am absolutely clear that I should reflect the view I have formed by depriving him of a substantial proportion of his own costs. Such an order will of course enure to the benefit of the defendants pro-rata in the sense that they will not have to find that amount. I have considered what the proportion ought to be and in the end I have come to the conclusion that the appropriate deduction would be one of 25%.
6. I was asked to consider whether I should simply say that the costs attributable to the HIS issue should be left to the tax costs judge for himself to assess. I am bound to say that I think that would be an almost impossible task for the costs judge to undertake. I have heard the case, I am in the best position to assess, even on a very broad brush basis, the extent to which the maintenance of the HIS profits claim has increased the costs involved in the action overall and the additional days in court that have been necessary as a result and I take the view that it is for me to say what proportion of the overall costs of the parties can be dealt with in that way. …”
“There is a danger of us looking at the figures because they are someone’s assessment in a broad brush approach and at the end of the day would be subject to taxation, and this not a taxation, and I am not going to discuss the actual figures in detail because they do not actually matter … What neither of us are able to do today without taking further instructions, and an adjournment, and putting before you detailed arguments, is to explain to you what percentage is right. And if you did it on a broad brush basis you would not be doing justice.”
“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 …
(5) The conduct of the parties includes -
(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;
(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;
(c) costs from or until a certain date only;
(f) costs relating only to a distinct part of the proceedings;
(7) Where the court would otherwise consider making an order under paragraph 6(f), it must instead if practicable, make an order under paragraph 6(a) or (c).
“24. Orders for costs should reflect not only whether the general outcome of the proceedings is favourable to the party seeking an order in his favour but also how the proceedings have been conducted on his behalf. … Judges must therefore be prepared to make more detailed orders than they are accustomed to do now. The general order in favour of one party or another will less frequently be appropriate. Different orders will need to be made on different issues, eg, where … an offer to settle that issue has been unreasonably refused.
26. Unless the court is prepared to take the time necessary to elevate decisions as to costs above the conventional approach adopted at present, the parties will not take as seriously as they should the obligations which a managed system will place on them. …
“The most significant change of emphasis of the new Rules is to require courts to be more ready to make separate orders which reflect the outcome of different issues.”
“… before the Civil Procedure Rules came into effect … if a claimant substantially succeeded he was likely to be awarded an order for costs even though he failed on certain issues. The new Rules provide a break from that tradition and enable a court to do greater justice if a party has caused court costs to be expended on an issue on which he ultimately fails.”
“In our view there are good reasons for this rule. An order which allows or disallows costs of certain issues creates difficulties at the stage of the assessment of costs because the costs judge will have to master the issue in detail to understand what costs were properly incurred in dealing with it and then analyse the work done by the receiving party’s legal advisors to determine whether or not it was attributable to the issue the costs of which had been disallowed. All this adds to the costs of assessment and to the amount of time absorbed in dealing with costs on this basis. The costs incurred on assessment may thus be disproportionate to the benefit gained. In all the circumstances, contrary to what might be thought to be the case, a ‘percentage’ order (under CPR 44.3(6)(a)) made by the judge who heard the application will often produce a fairer result than an ‘issues based’ order under CPR 44.3(6)(f). Moreover, such an order is consistent with the overriding objective of the CPR.”
“When the judge said … that it would be draconian to make an order of the sort that the defendant sought, and also when he referred to the otherwise proper conduct of the trial, it is difficult to avoid the possibility that he was regarding the matter solely in the perspective of what I would call for the purposes of identification only misbehaviour on the part of the claimant … rather than in the primary context of whether the issue should have been ventilated at all; and secondly whether in those circumstances the loss on that issue should be distinctively reflected in an order for costs.” (paragraph 14)
“29 However, the CPR sometimes require a more complex approach to costs and judgments dealing with costs will more often need to identify the provisions of the rules that have been in play and why these have led to the order made. It is regrettable that this imposes a considerable burden on judges, but we feel that it is inescapable.”
Lord Justice Mance:
“it would be going too far, when dealing with a claim which was otherwise made in good faith (and to some extent the way in which it has been conducted may reflect an obsessive belief by Mr Budgen in the likely benefits that he would have been able to obtain from the HIS package) to require him to make a positive payment towards the defendant’s costs, but I am absolutely clear that I should reflect the view I have formed by depriving him of a substantial proportion of his own costs”.
“Money can be and very often is paid into court and even though the claimant may accept it within the time permitted, there is always the opportunity for a defendant to argue costs in the way that Mr Livesey has done today, notwithstanding the acceptance of the payment in.”
Lord Justice Latham:
ORDER: The appeal is dismissed with costs to be paid on the standard basis. The application to set aside judgment is dismissed with no order as to costs.