Community Gateway Association Ltd v Beha Williams Norman Ltd

Costs are determined by the overall outcome, while taking account of partial success, conduct and admissible settlement offers. Success on individual issues does not ordinarily justify an issues-based order where the successful party won the case overall. A valid Part 36 offer may be considered in deciding costs even after withdrawal, although the automatic consequences of Part 36 do not apply to a withdrawn offer. Indemnity costs may be ordered where the claimant failed to beat the offer and its case had become materially weak. The court may also make a proportionate reduction to reflect issues on which the successful party unnecessarily incurred costs.

The claimant had previously succeeded on one liability allegation against the defendant, but its substantial damages claim failed on causation. The court deferred costs and permission to appeal. The claimant sought an issues-based costs order, relying on several issues on which it had succeeded. The defendant sought its costs, a reduction to reflect limited failures, and indemnity costs based on a withdrawn Part 36 offer and the weakness of the causation case.

The court also considered four proposed grounds of appeal concerning causation, breach and funding evidence.

1. Costs. The defendant was the successful party overall. The claimant succeeded on one belatedly pleaded breach allegation, but failed on causation and on most liability and quantum issues. The general rule under CPR Part 44.3 therefore applied, subject to the court’s discretion.
2. The claimant’s limited successes did not justify an issues-based order. They were taken into account by reducing the defendant’s recoverable costs by 15 per cent. The reduction reflected unnecessary expenditure on issues on which the defendant failed, including the abandoned duty point, the undisclosed email issue, additional funding and capital diminution.
3. A valid Part 36 offer may be taken into account even if later withdrawn. Withdrawal prevents the ordinary default provisions from applying readily to the period after withdrawal, but it does not prevent the court considering the offer when exercising its general costs discretion. The court considered the approach discussed in Trustees of Stokes Pension Fund v Western Power Distribution (South West) plc [2005] 1 WLR 3595.
4. The claimant had failed to obtain any judgment, and its case on causation should have appeared increasingly weak after disclosure and exchange of evidence. The defendant was therefore awarded 85 per cent of its costs on the standard basis up to and including 2 May 2011, and 85 per cent on the indemnity basis from 3 May 2011 onwards.
5. The proposed grounds of appeal raised factual matters or matters already addressed in the judgment. None had a real prospect of success. Permission to appeal was refused.

The judgment was a first-instance decision on costs and permission to appeal following the court’s earlier liability and causation judgment. No appellate history is stated.