Allen v Matthews

On an appeal from a discretionary costs order, the Court of Appeal intervenes only for an error of law or principle, an irrelevant consideration, failure to consider a relevant matter, or a plainly wrong assessment. The discretion must also prevent a party obtaining the benefit of the same costs twice. Where an action is dismissed on a preliminary locus point and a second action is likely to reuse work already done, the first action’s costs should be qualified or deferred, except costs wasted on the unsuccessful point. Costs should ordinarily be determined after the second action is finally resolved, with provision for what happens if it is not brought or is retried.

This was an appeal against an order of HHJ Simpson in Bow County Court dated 12 July 2005. The claimant sought possession of two parcels of land but, having been bankrupt, lacked locus to bring the proceedings until the trustee in bankruptcy assigned the right to proceed to him.

At trial, the judge decided that the claimant had no locus, refused an application to reissue the proceedings immediately, dismissed the action and ordered the claimant to pay the defendant’s costs. A second action was later issued and tried, although the result was under appeal.

The issue was whether the first-instance judge should have ordered all the costs of the dismissed action immediately, or should have deferred or reserved some costs because work done in the first action might reduce the costs of the second.

Lady Justice Arden gave the leading judgment. Lord Justice Pill agreed. The appeal was allowed.

1. Appellate intervention. The court applied the principles stated by Stephenson LJ in Alltrans Express Ltd v CVA Holdings Ltd [1984] 1 WLR 394. An appellate court faces a high hurdle when reviewing a discretionary costs decision, but may intervene for an error of law or principle, an irrelevant consideration, failure to consider a relevant matter, or a plainly wrong assessment of the weight of relevant factors.
2. First-action costs. The judge should not have dealt unconditionally with all the costs of the first action. The pleadings, disclosure and preparatory work might save costs in the second proceedings. An unconditional order could therefore give the defendant a duplicated practical benefit if he later obtained costs in the second action.
3. Re-exercise of discretion. The Court of Appeal re-exercised the discretion. The costs of the first action were to remain undetermined until the second action had been finally resolved, save for the costs thrown away on the unsuccessful locus point, which the claimant was to bear in any event. The costs issue should preferably be determined by HHJ Collins, or, if the second action were retried, by the judge conducting the retrial.
4. Procedural points. The costs appeal did not collaterally challenge the dismissal of the first action. It challenged only the consequential exercise of discretion as to costs. The active case-management obligations reflected in the Civil Procedure Rules meant that the judge could address the obvious costs issue on his own initiative. The propriety of the order had to be assessed on the circumstances known at the time, not on later knowledge that the second action involved different facts.

• Court of Appeal (Civil Division): In [2006] EWCA Civ 1499, the appeal was allowed and the costs order was varied.
• Bow County Court: HHJ Simpson’s order dated 12 July 2005 dismissed the claimant’s action and ordered him to pay the defendant’s costs.