Firle Investments Ltd v Datapoint International Ltd

Costs discretion must be exercised predictably and according to principle, while recognising that litigation presents infinitely varied circumstances. The general rule remains that the successful party receives its costs, but the court may consider payments into court, settlement offers, party conduct and success on particular issues under Civil Procedure Rules 1998 rule 44.3.

Courts should not speculate about whether hypothetical settlement offers would have been accepted. Formal mechanisms, particularly payments or offers under Part 36, provide greater clarity and certainty. Written offers remain relevant but are not precise equivalents of Part 36 payments. Where a successful claimant has beaten payments into court, substantial costs recovery will ordinarily follow, subject to deductions justified by unreasonable conduct or unnecessary complexity.

Firle Investments Ltd succeeded at trial in a dilapidations claim against its former tenant, Datapoint International Ltd, recovering £53,695.25. Datapoint had made payments into court totalling £50,000, while Firle had made a Part 36 offer of £135,000.

The Technology & Construction Court nevertheless awarded Firle only one third of its costs up to 10 March 2000 and 15 per cent thereafter. Firle appealed, contending that the costs order failed properly to reflect its success against the payments into court. The central issues were the proper approach to costs discretion, the relevance of formal settlement mechanisms, and the extent to which the parties’ conduct justified reducing the successful claimant’s costs.

1. Appeal allowed. The costs order was varied so that Firle recovered its costs in full up to and including 10 March 2000, and 70 per cent thereafter. The decision was unanimous.
2. Under Civil Procedure Rules 1998 rule 44.3, the general rule is that the unsuccessful party pays the successful party’s costs, although the court may make a different order after considering matters including payments into court or offers to settle, party conduct and success on particular issues.
3. Following Johnsey Estates (1990) Ltd v Secretary of State for the Environment [2001] EWCA Civ 535, courts should resist speculation about offers which were not made or whether they might have been accepted. Payments into court, Calderbank offers and Part 36 offers provide an objective basis for costs decisions.
4. The court approved the principle identified in Amber v Stacey: genuine monetary settlement offers should ordinarily be made through Part 36 because that mechanism provides greater clarity and certainty. Payments into court also address genuineness, ability to pay, openness and settlement terms, although written offers remain relevant.
5. Firle had substantially beaten both payments into court. There were no clear separate issues on which Datapoint could rely to justify reducing Firle’s costs before 10 March. The one-third award was therefore plainly wrong in principle. After that date, Firle’s persistence in certain positions had lengthened the trial and its correspondence had discouraged negotiation. Those matters justified a deduction, but not the reduction to 15 per cent imposed below.

• Technology & Construction Court: Firle recovered £53,695.25 in damages, but was awarded one third of its costs up to 10 March 2000 and 15 per cent thereafter.
• Court of Appeal (Civil Division): The appeal was allowed. Firle was awarded its costs in full up to and including 10 March 2000, and 70 per cent thereafter.