Walsh v Singh (aka Mark Buddha and Mark Walsh)

Part 36 costs consequences encourage reasonable settlement offers, but do not give the successful offeror immunity from the costs consequences of later misconduct. Where a claimant fails to beat a defendant’s Part 36 offer, the usual costs order follows unless it would be unjust. The court must consider all the circumstances, including the offer, its timing, the information available, party conduct and partial success. A costs order may mark disapproval of conduct even where that conduct did not cause substantial additional costs, provided the disallowance is proportionate. An appellate court will not interfere with the trial judge’s costs discretion unless the judge misdirected himself, took account of irrelevant matters, omitted relevant matters, or reached a clearly wrong or perverse conclusion.

Moira Walsh and Mark Buddha Singh were former cohabitants who litigated competing claims concerning property, payments, an Italian property, rings and an equestrian business. Following the trial, HHJ Purle QC found that Walsh had not established her claimed interest in the Leire properties, but that two payments were repayable loans. Both parties failed to establish sole ownership of the Italian property. Walsh succeeded in recovering the rings and resisted Singh’s counterclaim.

Singh had made a Part 36 offer of £85,000 plus Walsh’s costs, which she did not accept. The judge assessed her claims at about £61,500 and made no order as to costs, relying on Singh’s conduct, including misuse of spyware, oppressive cross-examination and untruthful evidence concerning the rings. Singh appealed, arguing that the judge had failed to balance the parties’ success and conduct properly. The central issue was whether the costs order was unjust or clearly wrong.

1. Appeal dismissed. The judge had a generous ambit of discretion in deciding costs. The Court of Appeal could intervene only if he misdirected himself, considered irrelevant matters, failed to consider relevant matters, or reached a conclusion that was clearly wrong or perverse.
2. Under CPR 36.14, a claimant who fails to obtain a judgment more advantageous than a defendant’s Part 36 offer ordinarily faces the specified costs consequences. The burden lies on the paying party to show that applying them would be unjust. The court must consider all the circumstances, including the offer’s terms, timing, the information available when it was made, and the parties’ conduct concerning information relevant to the offer.
3. A Part 36 offer does not give a party full licence to conduct the subsequent trial without regard to costs. The court may mark its disapproval of conduct by disallowing costs even where the conduct did not cause significant additional expenditure, but any disallowance must be proportionate.
4. The judge was entitled to treat Singh’s use of spyware to obtain and deploy private and privileged material, the resulting cross-examination, attempts to portray Walsh as mentally unstable, bullying cross-examination and knowingly untruthful evidence about the rings as relevant conduct. The appellate court could not revisit those findings merely because it had a transcript of the evidence.
5. The judge was also entitled to take account of the rough assessment of costs thrown away by Singh’s abandoned counterclaim. This was a case-management decision which was not clearly wrong, particularly given his superior knowledge of the pleadings and procedural history.
6. The judge had considered the likely costs position on both sides, including the benefit Singh received from avoiding liability for Walsh’s costs before the offer. His conclusion that it would be unjust to award Singh post-offer costs, while also declining to award Walsh her costs, was not clearly wrong or disproportionate. The point concerning whether the Part 36 offer complied with Part 36 in light of C v D [2010] EWHC Ch 2940 was unnecessary to decide.

• Court of Appeal (Civil Division): Appeal from the costs order made after trial by HHJ Purle QC. Appeal dismissed.
• High Court (Chancery Division): HHJ Purle QC, sitting as a judge of the High Court, decided the substantive proceedings and subsequently made no order as to costs. Judgment citation: [2009] EWHC 3219 (Ch).