Pertemps Group Ltd v Needham & Needham Ltd

Where costs are not governed by the automatic consequences of Part 36, the court must exercise its discretion under CPR 44 rule 3. A small payment does not necessarily mean that a claimant has substantially succeeded or should recover its costs. The court may consider the substance of the litigation, the parties’ conduct, the scale of the claim pursued, and settlement offers. Where there is no real winner or loser, each party may properly be ordered to bear its own costs. An appellate court will not interfere where the lower court directed itself correctly and reached a conclusion open to it on the facts.

The claimant brought a contractual claim arising from hospitality facilities arranged for the 1997 Cheltenham Gold Cup meeting. It initially advanced substantial claims, including loss of custom, partial failure of consideration, and distress and humiliation. The proceedings continued on the multi-track after the introduction of the Civil Procedure Rules.

Shortly before trial, the claimant offered to accept £50 in damages plus its costs. The offer was outside the relevant 21-day period. The defendant proposed discontinuance with each party bearing its own costs. The county court ordered no costs to either party up to 30 October 2000 and awarded subsequent costs to the defendant. The claimant sought permission to appeal, arguing that its Part 36 offer should have led to a costs order in its favour.

1. Application refused. The proposed appeal had no real prospect of success. The order below was properly open to the judge.

2. Costs were at large because the claimant’s late Part 36 offer did not attract the relevant Part 36 consequences. Acceptance therefore required agreement on costs or the court’s permission. The relevant matters were those set out in CPR 44 rule 3, and the judge had directed himself in accordance with that rule.

3. The judge was entitled to consider that the claimant had pursued the proceedings as a substantial damages claim but had ultimately offered to accept only £50. A small payment did not establish substantial success or create an entitlement to costs. The judge could also consider the parties’ conduct, their failure to engage promptly with settlement, and the costs consequences that would have applied had a claim of that size been pursued from the outset.

4. The defendant’s proposal that the action be discontinued with no order as to costs was reasonably regarded as appropriate. In substance, there was no real winner or loser. Each party should therefore bear its own costs.

5. There was no misdirection of law. The appellate court would not interfere with a discretionary costs order where the judge considered the relevant matters and reached a conclusion available on the facts.

Order: Permission to appeal refused.

• Court of Appeal (Civil Division): Application for permission to appeal against the county court’s costs order dismissed; permission refused.
• Luton County Court: His Honour Judge Viljoen ordered no costs up to 30 October 2000 and awarded the defendants’ subsequent costs.