Decoma UK Ltd v Haden Drysys International Ltd.

Costs may be determined by reference to discrete issues or heads of claim, rather than by treating the litigation as a single event. The court should identify the successful party on each issue and may make separate costs orders reflecting partial success.

Acceptance of a Part 36 payment relating to part only of a claim does not create an automatic entitlement to costs. Where acceptance is late, or costs are not agreed, the court must determine costs having regard to the final result, the issues decided and the overriding objective. A payment covering claims later dismissed does not prevent the successful defendant recovering the costs of those claims.

Decoma pursued nine heads of claim valued at about £18 million, together with a counterclaim issue. On preliminary issues, five heads valued at about £10.5 million were dismissed. The remaining heads were held valid in principle but subject to a contractual cap, including a substantial remedial-work claim.

Haden had paid £350,000 into court in respect of part of the claims and the whole counterclaim. Decoma sought permission to accept the payment after the 21-day period. The parties agreed that permission should be given but disputed the costs consequences, particularly for the dismissed heads and the preliminary issues.

1. Issue-based costs. The court applied the approach under CPR 44.3 that the general rule is a starting point and that costs may be allocated by discrete issue or head of claim. The authorities, including Phonographic Performance Ltd v AIE Rediffusion Music Ltd, Johnsey Estates (1990) Ltd v Secretary of State for the Environment and Summit Property Ltd v Pitmans (A Firm), supported that approach.
2. Successful parties. Haden was the successful party on the five dismissed heads because they had been rejected in full. Haden was also successful on the preliminary issues because the claims were dismissed or subjected to the contractual cap. Decoma therefore had to pay Haden’s costs of both elements.
3. Part 36 payment. The payment related to part only of the claim. Accordingly, acceptance would have stayed only that part and, absent agreement, costs would still have been for the court under CPR 36.15(3). There was no automatic entitlement to costs even if Decoma had accepted within 21 days. Because acceptance was late, permission was required under CPR 36.11(2)(b)(ii), and the court had to determine costs under CPR 36.11(3).
4. Effect of the payment. The payment did not alter the final assessment of success. Factortame Ltd & Ors v Secretary of State for the Environment concerned a payment relating to the whole claim and did not govern this part-claim situation. Decoma was permitted to take the money out of court, but only in respect of the surviving claims. Haden paid Decoma’s costs of the counterclaim and Heads 1, 2 and 7, excluding preliminary-issues costs.
5. The court declined to apportion a percentage of costs to Head 3 because the evidence did not permit a fair assessment. All ordered costs were to be assessed on the standard basis if not agreed. Decoma also paid Haden’s costs of the costs hearing.