Budgen v Andrew Gardner Partnership (A Firm)

Permission to appeal against a costs order may be granted where there is an arguable question whether, under the modern approach reflected in the Civil Procedure Rules, a substantial and discrete issue should attract an issue-based costs order. The trial judge retains a wide discretion, and the Court of Appeal approaches interference with that discretion cautiously. Permission may nevertheless be justified where the judge may have misunderstood the submission or approached the costs question from the wrong perspective, including by focusing on alleged misconduct rather than whether the issue should have been pursued and whether the loss on that issue should be separately reflected in costs.

Mr Budgen recovered substantial damages from the defendant solicitors after a lengthy trial. Liability was uncontested, but quantum was disputed. A substantial claim concerning the lost opportunity to develop a computer business failed and was found to have been doomed to failure.

The defendant sought a special costs order in respect of that issue. Wright J instead reduced the claimant’s costs recovery by 25 per cent, considering a payment towards the defendant’s costs too draconian. The defendant applied for permission to appeal, arguing that the judge had erred in principle or was plainly wrong in exercising his costs discretion. The central questions were whether an issue-based order should have been made and whether the judge had approached the application on the correct basis.

1. Permission granted. The application concerned a costs order made after a substantial trial. The Court of Appeal normally shows considerable diffidence before permitting an appeal on costs, because the trial judge has a very wide discretion and is best placed to assess the litigation as a whole.
2. Permission was nevertheless appropriate because recent authority, particularly AEI Redifusion Music Ltd v Phonographic Performance Ltd [1999] 1 WLR 1507 and the unreported decision in Winter v Winter (10 November 2000), indicated that the modern procedural approach may justify a wider consideration of issue-based costs orders than had previously been customary. Those authorities did not require an issue-based order in every case, but the failed issue here was sufficiently substantial and distinct to make the point reasonably arguable.
3. It was also reasonably arguable that Wright J had misunderstood the submissions. The application was principally concerned with whether the issue should have been pursued at all and whether the resulting loss should be separately reflected in the costs order. The judge may instead have viewed the matter mainly as one of misconduct in the conduct of the claim, while referring to the otherwise proper conduct of the litigation.
4. The Court of Appeal did not determine the merits of those arguments. Permission was granted because the proposed appeal raised a matter of general importance concerning issue-based costs and a substantial question whether the discretion had been exercised on an incorrect basis. The appeal was ordered to be listed before a court of three members, one of whom might be a High Court judge.

• Court of Appeal (Civil Division): Permission to appeal granted from the costs order made by Wright J after the trial. The appeal was directed to be listed before a three-judge court, one of whom might be a High Court judge.
• High Court, Queen’s Bench Division: Wright J made a costs order reducing the claimant’s costs recovery by 25 per cent rather than ordering a contribution towards the defendant’s costs.