Darougar v Belcher (t/a Park Street Garage)

On an appeal concerning costs, the Court of Appeal may interfere with a discretionary costs order where the judge erred in principle, omitted a material factor, or failed fairly to weigh the relevant circumstances. The court must consider the litigation as a whole, including the parties’ respective success on separate issues, abandoned claims, offers, conduct, and the costs attributable to distinct periods. A party’s modest success on one claim does not justify a substantial costs award if that party abandoned a much larger claim and the opposing party substantially succeeded on the counterclaim. A split costs order may be appropriate where the circumstances materially changed during the proceedings.

The claimant brought proceedings in Tunbridge Wells County Court to recover an E-type Jaguar retained by the defendant repairer, and the defendant counterclaimed for unpaid repair charges. The car was returned after money was paid into court. The claimant later added claims for misrepresentation and defective workmanship.

On the first day of trial, the parties settled on judgment for the defendant for £5,000 plus interest. The claimant’s misrepresentation claim was abandoned, while the defective-work claim was reflected by an allowance of about £1,000. The recorder ordered the defendant to pay the claimant’s costs up to delivery of the car and one-third of the claimant’s later costs. The defendant appealed that costs order.

1. Appeal allowed. The order was varied so that the costs position up to 15 February 1999 remained unchanged, but the claimant was required to pay one-half of the defendant’s costs incurred after that date.
2. Costs are discretionary, but an appellate court may intervene where the judge erred in principle, omitted a factor which ought to have been considered, considered an irrelevant factor, or reached a decision which was wholly wrong because the factors were not fairly balanced. The principles stated in AEI Ltd v Phonographic Performance Ltd and Roache v News Group Newspapers Limited were applied.
3. The recorder was entitled to order the defendant to pay the claimant’s costs up to delivery of the vehicle. The claimant had been justified in commencing proceedings to recover it because the defendant maintained a repairer’s lien for substantially more than the amount ultimately recovered and had not offered to release the car for a lesser sum.
4. The later costs order failed to account for the abandonment of the claimant’s substantial misrepresentation claim, which had increased the costs of both parties, and failed to recognise that the defendant had substantially succeeded on the counterclaim. The claimant recovered only about £1,000 on defective workmanship, whereas the defendant obtained judgment for £5,000.
5. Under Civil Procedure Rules 1998, r 44.3, the court was required to consider the overall circumstances, including the parties’ conduct and whether it was reasonable to raise, pursue or contest a particular allegation or issue.

The respondent’s costs were summarily assessed at £3,270 including VAT, subject to deduction of VAT if the respondent was VAT registered.

• Court of Appeal (Civil Division): allowed the appeal from the costs order of Mr Recorder Gerrey at Tunbridge Wells County Court dated 9 January 2002, and varied the order as to costs incurred after 15 February 1999.