Infiniteland Ltd v Artisan Contracting Ltd

Where a respondent achieves overall victory on the principal issue in an appeal, the appellant may be ordered to pay the respondent’s costs on the standard basis even if subsidiary issues were decided against the respondent. An issue-based costs order is not justified where those issues did not arise in light of the principal result or received only minimal argument. A without prejudice save as to costs offer may be relevant to the overall costs order. An otherwise unnecessary application should not be determined solely to resolve costs.

The appellants appealed from a decision of the High Court of Justice, Chancery Division, concerning alleged breaches of warranty. The Court of Appeal had overturned one factual finding concerning the existence of principal accounts, but the respondents succeeded on the principal issue of whether any breach of warranty had occurred. The court determined the costs of the appeal, including the effect of subsidiary issues, an application to adduce new evidence, security paid into court, and an earlier settlement offer.

Disposition

The appeal was dismissed. Permission to appeal to the House of Lords was refused.

1. The respondents obtained the overall victory because they succeeded on the principal issue, namely whether there had been any breach of warranty. The appellants were therefore ordered to pay the respondents’ costs of the appeal on the standard basis.

2. The court declined to make an indemnity costs order or a discounted or issue-based costs order. Although the respondents failed on certain issues, those issues did not arise in circumstances where the respondents won on the principal issue. The argument concerning the existence of principal accounts occupied no more than five minutes in the Court of Appeal and did not justify a separate costs order.

3. The respondents’ without prejudice save as to costs offer of £350,000, inclusive of interest and costs, was material to the overall costs decision. The appellants were entitled to pursue the appeal, but by refusing the offer they accepted the litigation risk that the parties might succeed on different issues while the respondents retained the overall victory.

4. The court made no order on the respondents’ application to adduce new evidence or on the costs of that application. It was inappropriate to determine whether the application would have succeeded when that issue did not otherwise require determination.

5. Of £85,000 paid into court as security for costs, £75,000 was directed to be paid to the appellants on account of their costs of the appeal. The balance remained in court as security pending detailed assessment. The undertakings offered were accepted subject to correction concerning the residential property occupied by the second appellant.

1. Court of Appeal (Civil Division): Infiniteland Ltd v Artisan Contracting Ltd, [2005] EWCA Civ 791. Appeal dismissed and permission to appeal refused.

2. High Court of Justice, Chancery Division (Mr Justice Park): decision under appeal; citation not stated in the judgment.