Lowe & Anor v W Machell Joinery Ltd

In an appeal where the successful party had lost on substantial issues below, the court’s discretion as to costs remained unusually wide. The ordinary rule that the successful party should recover costs under CPR rule 44.3(2) could be adjusted by an issue-based order reflecting unsuccessful and time-consuming issues, the parties’ conduct, and relevant offers under CPR 44.3(4)(c). The court could therefore order no costs as to the first-instance proceedings, while awarding the successful appellants their costs of the appeal.

The claimants appealed from a decision of the Leeds County Court, Technology and Construction Court List, before His Honour Judge Cockcroft. They had failed at first instance and had been ordered to pay the defendant’s costs on the indemnity basis.

The Court of Appeal had allowed the substantive appeal. The claim concerned the price of a staircase. The claimants succeeded on implied terms under the Sale of Goods Act but had failed decisively on an express-terms allegation, which had consumed substantial court time. The parties disputed the appropriate costs orders for both levels of proceedings, including the effect of their conduct and offers made without prejudice save as to costs.

Appeal allowed. The judge’s order was set aside. The respondent was ordered to pay the appellants £18,400 plus £1,104 interest, and their costs of the appeal. There was no order as to the costs below.

1. The ordinary starting point under CPR rule 44.3(2) was that the successful party should receive its costs. That principle applied to the appeal: the appellants had won, and the respondent’s arguments based on conduct below did not justify depriving them of their appeal costs.
2. The court’s discretion concerning costs below was unusually wide. A reasonable court could award the successful claimants most of their costs, subject to a reduction for issues on which they had lost. It could also award little or nothing, or require them to pay costs, where the manner of conducting the case, the unsuccessful pursuit of a major issue and the late presentation of the critical issue warranted that result.
3. The court was entitled to adopt an issue-based approach. The appellants had succeeded on implied terms under the Sale of Goods Act, but had lost badly on express terms. That issue had absorbed substantial time and money and was properly reflected in the costs order.
4. Offers made without prejudice save as to costs, although not Part 36 offers, were relevant under CPR 44.3(4)(c). The appellants’ offer during the appeal supported awarding them their appeal costs and was also relevant to the costs below.
5. Balancing the appellants’ ultimate success against their conduct and the resources attributable to the express-terms issue, the appropriate order below was no order as to costs. Appeal costs were to be assessed in the Senior Courts Costs Office under CPR 47.4 and Costs PD para 31.1(2) if not agreed.

• Court of Appeal (Civil Division): The substantive appeal was allowed. The first-instance order was set aside. The respondent was ordered to pay £18,400 plus interest and the appellants’ appeal costs; there was no order as to the costs below.
• Leeds County Court, Technology and Construction Court List: His Honour Judge Cockcroft had ordered the claimants to pay the defendant’s costs on the indemnity basis after they failed at trial.