Harrington v Wakeling

An appellate court will rarely interfere with a first-instance judge’s discretionary decision on costs. A summary assessment is permissible where the judge considers it appropriate, and the resulting assessment will stand unless an error of principle or other recognised basis for intervention is shown.

An indemnity costs order requires the judge to be satisfied that the case merits that exceptional approach. Where proceedings are compromised before the evidence has been fully tested, the judge may be unable to make the necessary findings. That does not mean that the judge misunderstood or lacked jurisdiction to award indemnity costs.

Two renewed applications for permission to appeal arose from proceedings brought by Patrick Harrington, as liquidator of Chelmsford City Football Club (1980) Limited, against Dennis Wakeling.

The first application challenged Patten J’s decision to summarily assess costs in a compromised wasted-costs application and the assessment itself. The second challenged the judge’s decision to award the liquidator costs on the standard basis rather than the indemnity basis after the substantive proceedings were compromised.

The central questions were whether the judge had erred in exercising his discretion to order summary assessment and whether he had applied an impermissibly narrow approach to indemnity costs.

1. Summary assessment. The application challenging the summary assessment of the wasted costs was dismissed. The decision whether to assess costs summarily, and the assessment itself, were matters within the judge’s discretion. They fell well within the ambit of that discretion, and no arguable ground of appeal or error of principle was shown.
2. Indemnity costs. The application concerning the substantive proceedings was also dismissed. Patten J had not concluded that he lacked jurisdiction to award indemnity costs. He concluded that, at the stage reached, he was unable to make the necessary finding that the case was suitable for such an award.
3. The proceedings had been compromised after the liquidator had opened the case and given approximately half a day’s evidence, but before Wakeling had given evidence or been cross-examined. The judge was therefore entitled to decline to infer either that the defence had been hopeless or that there had never been a proper basis for advancing it.
4. The judge had not adopted an exhaustive or legally narrow test for indemnity costs. His reference to conduct that was disgraceful or deserving of moral condemnation, including a claim or defence advanced without an honest belief in its success, explained one recognised context for indemnity costs. His actual decision rested on the inability, in the circumstances, to make the findings required for such an order.
5. Both renewed applications for permission to appeal were dismissed.

• Court of Appeal (Civil Division): Harrington v Wakeling [2001] EWCA Civ 620. Both renewed applications for permission to appeal were dismissed.
• Chancery Division, Companies Court: Patten J summarily assessed costs in the wasted-costs application and awarded costs in the substantive proceedings on the standard basis.