The London Borough of Enfield v Outdoor Plus Ltd & Anor

Where a party makes a successful Part 36 offer, the court should apply the usual costs consequences unless doing so would be unjust. A successful appellant may recover costs on the standard basis up to the expiry of the offer period and on the indemnity basis thereafter where the judgment is at least as advantageous as the offer. Costs below ordinarily follow the event, but may be reduced to reflect exaggerated or substantially hopeless heads of claim. An unsuccessful costs appeal may be avoided where the lower costs decision required re-examination even if the substantive appeal had failed. The court may also order a reasonable interim payment on account of costs.

The Council appealed against the substantive judgment and a separate costs decision arising from proceedings against Outdoor Plus Limited and JCDecaux (UK) Limited. The substantive appeal succeeded, overturning the nominal damages awarded below. The Court of Appeal then determined the consequential costs issues pursuant to its order of 9 May 2012, including the costs of the substantive appeal, the proceedings below, the separate costs appeal and an interim payment on account.

The central questions were the appropriate consequences of the parties’ Part 36 offers, the proper allocation and reduction of costs below, and whether the Council should receive an interim payment.

1. Substantive appeal costs. The Council was the successful party and had achieved a result at least as advantageous as its Part 36 offer, within the meaning of CPR 36.14(1)(b). The usual consequences therefore applied under rule 36.14(3): costs on the indemnity basis, with interest on those costs at a rate not exceeding 10% above base rate, from expiry of the three-week acceptance period. The Council also recovered its full appeal costs on the standard basis up to that date.
2. Costs below. The costs judgment below could not stand insofar as it rested on the judge’s view that the claim for substantial damages was misconceived and that the expert evidence was unhelpful. If the correct legal principles had been applied, the Council would have won at trial. Costs below should therefore in principle follow the event. An 80% award was appropriate to reflect the exaggeration in the claim and the claims for an account of profits and exemplary damages, which never had a reasonable prospect of success.
3. Costs appeal. The separate costs appeal was properly brought. The costs order below would have required re-examination even if the substantive appeal had failed. The respondents were therefore ordered to pay the Council’s costs of that appeal on the standard basis.
4. Interim payment. An interim payment on account of costs was appropriate, and £30,000 was reasonable. The respondents were ordered to pay that sum within 14 days.

• Court of Appeal (Civil Division) — [2012] EWCA Civ 1052: determined the costs consequences following the successful substantive appeal and ordered the respondents to pay the Council’s appeal costs, 80% of its costs below, the costs of the separate costs appeal, and £30,000 on account.
• High Court of Justice, Queen’s Bench Division — Judge Seymour: made the costs judgment of 6 July 2011. The Court of Appeal held that it could not stand insofar as it was based on the erroneous views identified above.