Shore v Sedgwick Financial Services Ltd & ors

The general rule that costs follow the event remains the starting point. A party’s success on individual issues does not, by itself, justify an issues-based costs order. The court must assess who won in substance and reality, considering all the circumstances, including the parties’ conduct, partial success, payments into court and admissible settlement offers.

An issues-based order may be appropriate where a discrete issue materially enlarged the trial or where the overall result cannot fairly be reflected by the general rule. Where issues are intertwined, the claimant’s principal case failed, and the defendant’s successful limitation case was properly raised and explored, the general rule will ordinarily continue to apply. A broad reduction may nevertheless reflect time spent on issues on which the successful party did not prevail.

The claimant’s professional negligence claim arising from pension advice had been dismissed as time barred. The court had nevertheless found breaches of duty on several aspects of the advice. The claimant sought an issues-based costs order, contending that he had succeeded on most substantive issues and that the defendants had conducted the litigation and settlement unreasonably.

The defendants relied on the general rule in CPR 44.3(2) and disputed that the claimant’s partial findings justified departure from it. The issue was whether the claimant should pay the defendants’ costs in full, or whether the costs should be apportioned by reference to the issues and the parties’ conduct.

1. The claimant was not entitled to an issues-based costs order. The defendants were the successful parties in substance and reality because the claim was dismissed as time barred. Success on some points did not, without more, displace the general rule in CPR 44.3(2).

2. The court accepted the principles summarised in McGlinn v Waltham Contractors Ltd [2007] EWHC 698 (TCC). The court must identify the successful party, consider whether a discrete issue materially affected the length or substance of the trial, and take account of conduct and settlement offers. An issues-based order is exceptional in the general run of cases.

3. The claimant’s primary case depended on three fundamental factual contentions, all of which had been rejected. The limitation issue had been squarely raised and explored before trial and was not a late, short point of law of the kind considered in Summit Property Ltd v Pitmans [2001] EWCA Civ 2020. The issues were also sufficiently intertwined that no discrete unsuccessful issue justified apportionment.

4. The claimant’s conduct and the defendants’ conduct were neutral factors. In assessing settlement offers, the relevant matters were what had been offered and whether the offer had been beaten, rather than which party had behaved more unreasonably. The approach in David West T/A Eastenders v Fuller Smith and Turner plc [2003] EWCA Civ 429 was applied.

5. Although the ordinary costs order was appropriate, a broad reduction was justified for trial time spent on explanations of the transaction, warnings about investment risks, assumed growth rates and, to a lesser extent, regulatory breaches. The claimant was therefore ordered to pay 75 per cent of the defendants’ costs.