Small v Martin & Anor

Costs remain a matter of judicial discretion. The starting point is that costs follow the event, but the court must consider all the circumstances, including conduct before and during proceedings, partial success, and relevant offers or payments into court.

Part 36 consequences depend on the information reasonably available when the offer was made. A party cannot fairly rely on an offer where its own disclosure or particularisation prevented realistic assessment. Beating an offer is important but is not conclusive.

Dishonest conduct that distorts litigation and abuses the court process may justify indemnity costs in related proceedings.

The judgment concerned ancillary costs and enforcement matters following two actions. In the first, a building claim by Small v Martin, judgment was entered for the claimant for £48,532.25. In the second, a harassment claim by Mr Martin against Mr Small and Mr Fenton, judgment was entered for £12,256, together with a permanent injunction.

The court had to determine the appropriate allocation and basis of costs, the effect of the parties’ Part 36 offers and payment into court, whether Mr Small’s conduct amounted to an abuse of the court process, and whether interim payment and permission to appeal should be granted.

1. The court ordered Mr Small to pay Mr Martin’s costs of the building proceedings on an indemnity basis. Mr Small and Mr Fenton were jointly and severally liable for the costs of the harassment proceedings on an indemnity basis. A permanent injunction was continued against both defendants.
2. Under Part 44.3 CPR, the starting point is that costs follow the event, but the court may make a different order after considering all the circumstances. Relevant matters include conduct before and during proceedings, success on individual issues, and payments into court or admissible settlement offers. The court also has a wide discretion to order costs on the standard or indemnity basis.
3. The court found that Mr Small had deliberately participated in a campaign of harassment intended to pressure Mr Martin in the building dispute, had persisted in denying his involvement, and had presented dishonest evidence. This conduct distorted both actions and amounted to a cynical and dishonest abuse of the court process. It justified indemnity costs in both actions.
4. Part 36 offers had to be assessed against the information reasonably available when they were made. The April 2004 offer did not offer a final injunction and was accompanied by an untrue denial. The August 2005 offer substantially undervalued the damages and costs in the harassment proceedings. Neither was an effective Part 36 offer.
5. The February 2005 payment into court and later offers in the building claim had to be considered in light of claims later introduced or inadequately particularised. The court held that Mr Small could not fairly rely on those offers to obtain favourable Part 36 costs consequences. Had the overriding abuse conclusion not been reached, Mr Small would have recovered building costs only to 16 February 2005, with indemnity costs thereafter in Mr Martin’s favour.
6. The court ordered the £35,000 paid into court, with interest, to be paid to Mr Martin’s solicitors. Payment of the £48,532.25 judgment in Mr Small’s favour was stayed pending resolution of the proposed appeal. No additional interim payment of costs was ordered. Permission to appeal was refused because there were no real prospects of success and no other compelling reason for an appeal.