Peakman v Linbrooke Services Ltd

When exercising its discretion as to costs, the court must consider all the circumstances, including the parties’ conduct before and during the proceedings. It should consider whether it was reasonable to raise or pursue an issue and the manner in which it was advanced. A party who pursues a substantial claim with no evidential basis, thereby causing disproportionate costs and an inappropriate track allocation, may face a costs order reflecting that conduct even if the opposing party has not achieved complete success. The costs discretion must also be exercised with proper control of the proceedings and regard to the overriding objective.

Mr David Peakman brought a claim in the Sheffield County Court against Linbrooke Services Ltd for payment for work, fuel costs, damages for termination, and missing tools. Linbrooke brought a counterclaim for defective workmanship and alleged consequential losses, including profits from contracts said to have been lost with Thales. The claim was allocated to the multi-track and proceeded through an eight-day trial. The judge awarded Mr Peakman £1,145 and Linbrooke £1,410, with interest, and made no order as to costs.

Mr Peakman appealed the costs order. The central issues were whether the judge had properly considered Linbrooke’s conduct, the evidential basis and pursuit of the Thales counterclaim, and the effect of that counterclaim on track allocation and the parties’ costs.

1. Appeal allowed as to costs. The trial judge had a wide discretion, but the Court of Appeal could intervene where he had erred in principle or was plainly wrong, including by failing to take account of a relevant factor.
2. Under CPR44.3, the general rule concerns the unsuccessful party, but the court must consider all the circumstances, including conduct before and during the proceedings. Relevant conduct includes whether it was reasonable to raise or pursue an issue, how a case or issue was pursued or defended, and whether a claim was exaggerated.
3. The Thales counterclaim had no evidential basis when pleaded, remained unsupported after further information was provided, and was pursued until the first day of trial. It caused the case to be allocated to the multi-track and caused Mr Peakman substantially greater costs. The counterclaim should never have been brought and should have been abandoned earlier.
4. Absent that counterclaim, the dispute would have been a straightforward claim involving at most a little over £3,000. Applying the overriding objective and the court’s case-management powers, it would have been appropriate for the case to proceed in the small claims track. The court should have controlled the evidence and prevented the trial from becoming disproportionate.
5. The basic claim and counterclaim produced no overall winner. Mr Peakman succeeded in part, while Linbrooke recovered £265 plus interest on defective workmanship and Mr Peakman failed on other aspects of his claim. The appropriate order was therefore that Linbrooke pay 50% of Mr Peakman’s costs from the date of allocation. The no-order costs decision was set aside.

• Court of Appeal (Civil Division) [2008] EWCA Civ 1239: allowed the appeal against the costs order, set aside the order that there be no order as to costs, and ordered Linbrooke to pay 50% of Mr Peakman’s costs from the date of allocation.
• Sheffield County Court: after an eight-day trial, awarded Mr Peakman £1,145 and Linbrooke £1,410 plus interest, and made no order as to costs.