Malmesbury & Ors v Strutt & Parker (a partnership)

Costs are not determined by identifying a single winner where a claimant succeeds on liability but recovers only a fraction of the sum claimed. Under CPR 44.3, the court must assess all the circumstances, including success on discrete issues, exaggeration, conduct and settlement offers. There is no fixed formula. Unintentional exaggeration may justify a reduction where the claim advanced was substantially greater than the recovery. A party who agrees to mediation but adopts an unreasonable position may also face costs consequences. Interest on damages is compensatory and may be assessed by reference to the borrowing rate reasonably available to a claimant of the relevant description.

The claimants succeeded in negligence proceedings concerning airport car-park leases. Earlier judgments found negligence in relation to the 2002 and 2003 leases and awarded damages of £915,139, while rejecting the claim concerning the 2000 lease and substantially reducing the claimed percentage split and measure of loss.

This judgment determined interest, costs and applications for permission to appeal. The principal costs issues were whether the claimants or defendant should be treated as successful, what consequences followed from losses on discrete issues and an exaggerated claim, and whether the parties’ conduct in mediation and settlement justified further adjustment.

1. Costs. The court’s discretion under CPR 44.3 required a broad assessment of all the circumstances. The usual rule that costs follow the event was only a starting point. The authorities, including Johnsey Estates (1990) Limited v Secretary of State for the Environment, [2001] EWCA Civ 535, and National Westminster Bank v Kotonou, [2007] EWCA Civ 223, supported issue-based orders where appropriate.
2. The claimants had achieved a substantial success on liability and damages, but had lost on discrete issues and recovered far less than they claimed. Their claim had become unreasonable as the evidence developed, particularly in maintaining an 80 per cent income split and a decking claim. Exaggeration did not require dishonesty before it could affect costs. The appropriate order was that the claimants recover 59.5 per cent of their liability costs and 68 per cent of their damages costs, subject to the specified issue-based deductions.
3. The defendant’s tactical joinder of Wilsons without a proper basis meant that the claimants were not required to reimburse the defendant’s costs relating to Wilsons. The claimants were, however, to pay 15 per cent of the defendant’s liability and damages costs and were to bear one eighth of the defendant’s costs of disclosure from Manchester Airport Group.
4. Applying Halsey v Milton Keynes General NHS Trust, [2004] 1 WLR 3002, and Hickman v Blake Lapthorn, [2006] EWHC 12 (QB), the failure of the first mediation could not fairly be attributed to one party. The claimants’ unreasonable position at the later mediation could be taken into account, and justified the reduction of their damages costs.
5. Interest was awarded on the damages attributable to each lease from the date of that lease, at 2.5 per cent above base rate, reflecting the claimant’s evidenced borrowing rate. Permission to appeal was refused on the remaining proposed grounds.

The judgment followed earlier High Court judgments on liability and damages in the same proceedings. Permission to appeal had previously been granted on the measure of damages but refused on other issues. In this judgment, further applications for permission to appeal were refused.