Department of the Environment, Food & Rural Affairs v Feakins & Anor

Costs must be assessed by reference to the litigation in which the order is sought. Potential success in separate proceedings, even involving serious alleged misconduct, does not justify a stay or alter the costs order. A substantially successful party’s recovery may be reduced to recognise discrete points on which the other party succeeded. Part 36 offers may determine when costs consequences begin. Where an offer should have been accepted, the offeree may bear costs after the period allowed for acceptance, while earlier costs may reflect mixed success and the terms of the offers.

This was a further judgment in an appeal from the Chancery Division before Mr Justice Hart. The Court of Appeal had given judgment on 9 December, leaving the date for reinstatement of the tenancy and costs issues to be determined.

The reinstatement date was agreed as 5 October 2001. The remaining issues concerned costs on the claim and counterclaim, including the effect of the defendants’ success on the reinstatement point, a respondent’s notice alleging sham, Part 36 offers, and an application for a stay pending separate proceedings concerning sums allegedly wrongfully taken by the intervention board.

The central questions were the appropriate allocation of costs and whether the orders should await the outcome of the separate proceedings.

The Court of Appeal determined the adjourned costs issues and refused a stay.

1. The agreed date for reinstatement of the tenancy was 5 October 2001. A variation of the costs order in the court below was also agreed.
2. As to the claim, DEFRA was essentially the successful party. The defendants had nevertheless succeeded on the reinstatement point, and DEFRA had advanced a respondent’s notice alleging sham. A small discount was therefore appropriate. The defendants were ordered to pay 90 per cent of DEFRA’s costs.
3. As to the counterclaim, the court treated the Part 36 offers as the starting point. The defendants should have accepted the terms of the ultimate offer and should have had 14 days to consider it. DEFRA was therefore awarded 100 per cent of its costs from 14 days after 26 September 2005. For the period before that offer, each side was to bear its own costs, reflecting the mixed success and the terms of the offers.
4. The court rejected a stay. Even assuming that the defendants were wholly successful in separate proceedings, including findings of serious misconduct and false evidence by the intervention board, that would not have justified a different costs order. The present litigation had to be assessed separately from the other proceedings.

The resulting order was that the defendants pay 90 per cent of DEFRA’s costs.

1. Court of Appeal (Civil Division): Following judgment given on 9 December, the court determined the outstanding reinstatement and costs issues on 6 April 2006 in [2006] EWCA Civ 621, and refused a stay.
2. Chancery Division: Appeal from a decision of Mr Justice Hart. The citation and merits disposition of the lower-court decision are not stated in the judgment.