Kingston & Anor v Francis & Anor

The ordinary rule under the Civil Procedure Rules 1998, r 38.6(1), that a claimant who discontinues pays the defendant’s costs does not dictate the order where related Part 20 claims are interdependent. The court must consider the litigation as a whole, including success on different routes or issues and the practical consequences of linked indemnities. Under r 44.3, no order as to costs may be appropriate where a party succeeds on one route but fails on another, particularly if separate costs orders would circulate through indemnities, become academic, and generate further assessment expense.

The Kingstons sued the Francis brothers concerning the construction of a roadway. The Francis brothers issued third-party proceedings against Mr Moody and the McLays, and Mr Moody issued fourth-party proceedings against the McLays. The county court dismissed the claims against the McLays and made no order as to costs in the Part 20 proceedings.

On an earlier appeal, the Court of Appeal held that the McLays were liable to indemnify Mr Moody for loss arising from their breach of covenant. The restored cross appeal concerned whether the McLays should receive the costs of the discontinued direct claim, while paying Mr Moody’s costs of the fourth-party claim, or whether the original no-costs order should stand.

The cross appeal was dismissed. Chadwick LJ gave the substantive judgment, with Rix LJ agreeing. The no-costs order in the Part 20 proceedings was maintained.

1. Reconsideration of the discretion. The county court judge had treated the third-party and fourth-party proceedings together when deciding costs. Once the Court of Appeal held on the related appeal that Mr Moody was entitled to an indemnity from the McLays, the basis on which the costs discretion had been exercised changed. The discretion therefore had to be revisited.
2. Discontinuance. Under Civil Procedure Rules 1998, r 38.6(1), a claimant who discontinues is ordinarily liable for the defendant’s costs incurred before notice of discontinuance. The rule permits the court to order otherwise. The usual consequence was not decisive because the direct and indirect claims formed part of one connected costs dispute.
3. Assessment of the litigation as a whole. Under Civil Procedure Rules 1998, rr 44.3(6)(f) and 44.3(7), the court could consider the parties’ overall success and failure. The Francis brothers abandoned the direct route against the McLays but succeeded through the interconnected claim against Mr Moody, while the McLays succeeded on the direct claim but failed on the fourth-party claim.
4. Circularity and proportionality. An order requiring the Francis brothers to pay the McLays’ costs could have been recovered through the chain of indemnities and ultimately passed back to the McLays. Separate orders would therefore risk becoming academic and would cause further assessment and indemnity disputes. Considering the litigation in the round, the sensible and appropriate order was no order as to costs between the Francis brothers, Mr Moody and the McLays.

1. Court of Appeal (Civil Division): In the present proceedings, the restored cross appeal was dismissed and the no-costs order was maintained: [2003] EWCA Civ 1093.
2. Court of Appeal (Civil Division): On the related appeal, the court allowed Mr Moody’s appeal, held that the McLays were liable to indemnify him, and ordered an inquiry as to damages.
3. Bristol County Court: On 17 November 2000, His Honour Judge Anthony Tibber dismissed the Part 20 claims against the McLays and made no order as to costs between the parties to the third- and fourth-party proceedings.