Grosvenor v High-Point Rendel Group Plc (Costs)

When exercising the costs discretion under CPR Part 44.3, the court should consider the identity of the successful party, success on individual issues, admissible settlement offers and the parties’ conduct. A claimant who recovers only a small proportion of the sum claimed may not properly be described as successful. Where issues are clearly defined and involve little overlap, an issue-based costs order may be appropriate. A non-Part 36 offer remains relevant under CPR Part 44.3, although it must not be given the same effect as a Part 36 offer or payment. Unreasonable pursuit of exaggerated claims and unreasonable rejection or treatment of a reasonable offer may materially affect costs.

The claimant brought claims for commission and related relief against the defendant. At trial he recovered £1,644.38 including VAT and interest, approximately 2 per cent of the gross sum claimed. The defendant had defeated most of the claims, including the principal commission claims, claims for commission before August 2000 and after August 2001, post-termination commission and a claim for a declaration.

After judgment, the parties disputed costs. The claimant relied on his alleged status as the successful party and on the absence of a Part 36 offer or payment. The defendant relied on its success on the issues, the claimant’s unreasonable conduct and a written offer of £25,000 inclusive of costs and VAT made on 14 January 2004. The central issue was the appropriate exercise of the costs discretion under CPR Part 44.3.

1. Applicable factors. The court identified three matters requiring consideration under CPR Part 44.3: the identity of the successful party, including success on individual issues; the effect of offers; and the parties’ conduct.
2. Success and issue-based costs. The defendant was the successful party. The claimant had succeeded only on two small claims, one of which had been admitted during trial, and had recovered about 2 per cent of the amount claimed. Applying the issue-by-issue approach discussed in Summit Property Ltd v Pitmans [2001] EWCA Civ 2020, the defendant was entitled to the costs of Issues 1, 2, 3, 5 and 6 and most of Issue 4. The court rejected the submission that an issue-based order was confined to exceptional cases. The clear separation of the issues made such an order appropriate. The approach was consistent with the emphasis on separate costs orders in Phonographic Performance Ltd v AIE Reduffusion Music Ltd [1999] 1 WLR 1507.
3. Offers. The defendant’s offer of 14 January 2004 was an admissible offer to settle for the purposes of CPR Part 44.3, applying the principles in Archital Luxfer Ltd v Henry Boot Construction Ltd [1981] 1 Lloyd’s Rep 642, Padmanor Investments Ltd v Soundcraft Electronics Ltd [1995] 4 All ER 683 and Lindner v How [2001] BLR 90. The fact that it was a lump sum inclusive of costs did not make it inadmissible, particularly because the claimant’s own offer had been expressed on the same basis. It was not a Part 36 offer or payment and could not be given the same effect as one, as explained in Amber v Stacey [2001] 1 WLR 1225. It nevertheless remained a significant factor under CPR Part 44.3.
4. Conduct and order. The claimant had unreasonably pursued grossly exaggerated claims and had given no satisfactory explanation for ignoring the defendant’s reasonable offer. The defendant’s conduct did not justify an adjustment. Before 14 January 2004, the claimant recovered 25 per cent of his costs and the defendant recovered 75 per cent of its costs. After that date, the claimant bore his own costs and the defendant recovered 75 per cent of its costs. All costs were to be assessed on the standard basis, not the indemnity basis.